10-K

UNITED STATES 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 February 29, 2004

[   ] Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 for the Transition Period from _______ to _______.

EMMIS COMMUNICATIONS CORPORATION	EMMIS OPERATING COMPANY
(Exact name of registrant as specified in its charter)	(Exact name of registrant as specified in its charter)

INDIANA	INDIANA
(State of incorporation or organization)	(State of incorporation or organization)

0-23264	333-62172-13
(Commission file number)	(Commission file number)

35-1542018	35-2141064
(I.R.S. Employer Identification No.)	(I.R.S. Employer Identification No.)

ONE EMMIS PLAZA	ONE EMMIS PLAZA
40 MONUMENT CIRCLE	40 MONUMENT CIRCLE
SUITE 700	SUITE 700
INDIANAPOLIS, INDIANA 46204	INDIANAPOLIS, INDIANA 46204
(Address of principal executive offices)	(Address of principal executive offices)

(317) 266-0100	(317) 266-0100
(Registrant’s Telephone Number, Including Area Code)	(Registrant’s Telephone Number, Including Area Code)

     SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None

     SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: Class A common stock, $.01 par value of Emmis Communications Corporation; 6.25% Series A Cumulative Convertible Preferred Stock, $.01 par value of Emmis Communications Corporation.

     Indicate by check mark whether the registrant (1) has filed all documents and 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 whether the registrant is an accelerated filer (as defined in Rule 126-2 of the Act). Yes [X] No [   ].

     The aggregate market value of the voting stock held by non-affiliates of the registrant, as of August 31, 2003, the Registrant’s most recently-completed second fiscal quarter, was approximately $1,042,248.

     The number of shares outstanding of each of Emmis Communications Corporation’s classes of common stock, as of April 30, 2004, was:

51,095,435	Class A Common Shares, $.01 par value
4,838,920	Class B Common Shares, $.01 par value
0	Class C Common Shares, $.01 par value

     Emmis Operating Company has 1,000 shares of common stock outstanding as of April 30, 2004, and all of these shares are owned by Emmis Communications Corporation.

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DOCUMENTS INCORPORATED BY REFERENCE

Documents	Form 10-K Reference
Proxy Statement for 2004 Annual Meeting	Part III

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s Knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [   ]

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
AND EMMIS OPERATING COMPANY AND SUBSIDIARIES

FORM 10-K

TABLE OF CONTENTS

	Page
PART I		4
Item 1. Business		4
Item 2. Properties		20
Item 3. Legal Proceedings		23
Item 4. Submission of Matters to a Vote of Security Holders		23
PART II		23
Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters		23
Item 6. Selected Financial Data		25
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation		28
Item 7A. Quantitative and Qualitative Disclosures About Market Risk		57
Item 8. Financial Statements and Supplementary Data		59
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		116
Item 9A. Controls and Procedures		116
PART III		116
Item 10. Directors and Executive Officers of the Registrant		116
Item 11. Executive Compensation		117
Item 12. Security Ownership of Certain Beneficial Owners, and Management, and Related Stockholder Matters		117
Item 13. Certain Relationships and Related Transactions		117
Item 14. Principal Accountant Fees and Services		117
PART IV		117
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K		117
Signatures		122
Supplemental Indenture
Supplemental Indenture
Indenture dated May 10, 2004
Revolving Credit and Term Loan Agreement
Registration Rights Agreement
Aircraft Time Sharing Agreement
Tax Sharing Agreement
Subsidiaries
Consent of Accountants
Powers of Attorney
Certification of Principal Executive Officer
Certification of Principal Financial Officer
Certification of Principal Executive Officer
Certification of Principal Financial Officer
Certification of Principal Executive Officer
Certification of Principal Financial Officer
Certification of Principal Executive Officer
Certification of Principal Financial Officer

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PART I

ITEM 1. BUSINESS.

GENERAL

     We are a diversified media company with radio broadcasting, television broadcasting and magazine publishing operations. We operate the ninth largest publicly traded radio portfolio in the United States based on total listeners. We own and operate six FM radio stations serving the nation’s top three markets – New York, Los Angeles and Chicago. Additionally, we own and operate seventeen FM and four AM radio stations with strong positions in Phoenix, St. Louis, Austin (we have a 50.1% controlling interest in our radio stations located there), Indianapolis and Terre Haute, IN. We also own and operate a leading portfolio of television stations covering geographically diverse mid-sized markets in the U.S., as well as the large markets of Portland and Orlando. The sixteen television stations we own and operate have a variety of network affiliations: five with CBS, five with FOX, three with NBC, one with ABC and two with WB.

     Our focus is on maintaining our leadership position in broadcasting by continuing to enhance the operating performance of our broadcast properties, and by acquiring underdeveloped properties that offer the potential for significant improvements through the application of our operational expertise. We have created top performing radio stations that rank, in terms of primary demographic target audience share, among the top ten stations in the New York, Los Angeles and Chicago radio markets according to the Fall 2003 Arbitron Survey. We believe that this strong large market radio presence and our diversity of station formats make us attractive to a broad base of radio advertisers and reduces our dependence on any one economic sector or specific advertiser. We seek to be the largest local television presence in our television markets by combining network-affiliated programming with leading local news. We have created television stations with a strong local “brand” within the station’s market, allowing viewers and advertisers to identify with the station while building the station’s franchise value. We have generally improved the profitability of our television stations since our acquisition of them by applying the focused research and marketing techniques we utilize successfully in our radio operations and by concentrating our sales efforts locally.

     In addition to our domestic radio and TV broadcasting properties, we operate a news information radio network in Indiana, publish Texas Monthly, Los Angeles, Atlanta, Indianapolis Monthly, Cincinnati and Country Sampler and related magazines, and operate an international radio business. Internationally, we operate nine FM radio stations in the Flanders region of Belgium, have a 59.5% interest in a national top-ranked radio station in Hungary, and own 75% of one FM and one AM radio station in Buenos Aires, Argentina. In December 2003, we agreed to sell our radio stations in Buenos Aires, Argentina and expect the transaction to close in our fiscal quarter ended May 31, 2004. We also engage in various businesses ancillary to our broadcasting business, such as consulting and broadcast tower leasing.

     The following discussion pertains to Emmis Communications Corporation (“ECC”) and its subsidiaries (collectively, “Emmis” or the “Company”) and to Emmis Operating Company and its subsidiaries (collectively “EOC”). EOC became a wholly owned subsidiary of ECC in connection with the Company’s reorganization (see Note 1c. to our consolidated financial statements) on June 22, 2001. Unless otherwise noted, all disclosures contained in this Form 10-K apply to Emmis and EOC.

BUSINESS STRATEGY

     We are committed to maintaining our leadership position in broadcasting, enhancing the performance of our broadcast and publishing properties, and distinguishing ourselves through the quality of our operations. Our strategy is focused on the following operating principles:

Develop Innovative Local Programming. We believe that knowledge of local markets and innovative programming developed to target specific demographic groups are the most important determinants of individual radio and television station success. We conduct extensive market research to identify underserved segments of our markets and to assure that we are meeting the needs of our target audience. Utilizing the research results, we concentrate on providing a focused programming format carefully tailored to the demographics of our markets and our audiences’ preferences. Our local sales force has capitalized on our local presence to increase the percentage of our net revenues from local advertising. Historically, local advertising revenues have been a more stable revenue source for the broadcast industry and we believe local sales will continue to be less susceptible to economic swings than national sales.

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Focus Our Sales And Marketing Efforts. We design our local and national sales efforts based on advertiser demand and our programming compared to the competitive formats within each market. We provide our sales force with extensive training and the technology for sophisticated inventory management techniques, which provide frequent price adjustments based on regional and market conditions. Our sales philosophy is to maintain the price integrity of our available inventory. We will accept a lower sell-out percentage in periods of weak advertiser demand instead of cutting price to fill all available inventory. Additional company resources have been allocated to locate, hire, train and retain top sales people. Under the Emmis Sales Assault Plan, a company-wide initiative geared toward attracting and developing sales leaders in the radio, television and magazine industries, we have added and trained scores of sales people to our workforce in the last two fiscal years, which was incremental to hirings in the normal course of business. As a result, we have significantly increased our share of local television revenues and maintained our share of local radio revenues, despite direct format attacks from competitors in our New York and Chicago markets.

Develop Strong Local Identities For Our Television Stations. We strive to create television stations with a strong local “brand” within the station’s market, allowing viewers and advertisers to identify with the station while building the station’s franchise value. We believe that aggressive promotion and strong local station management, strategies which we have found successful in our radio operations, are critical to the creation of strong local television stations as well. Additionally, we believe that the production and broadcasting of local news and events programming can be an important link to the community and an aid to the station’s efforts to expand its viewership. Local news and events programming can provide access to advertising sources targeted specifically to the local or regional community. We believe that strong local news generates high viewership and results in higher ratings both for programs preceding and following the news.

Pursue Strategic Acquisitions. We have built our portfolio by selectively acquiring underdeveloped media properties in desirable markets at reasonable purchase prices where our experienced management team has been able to enhance value. We have been successful in acquiring these types of media properties and improving their ratings, revenues and cash flow with our marketing focus and innovative programming expertise. We intend to continue to selectively acquire media properties in desirable markets to create value by developing those properties to increase their cash flow. We find underdeveloped properties particularly attractive because they offer greater potential for revenue and cash flow growth than mature properties through the application of our operational experience.

Encourage A Performance-Based, Entrepreneurial Management Approach. We believe that broadcasting is primarily a local business and that much of its success is the result of the efforts of regional and local management and staff. We have attracted and retained an experienced team of broadcast professionals who understand the viewing and listening preferences, demographics and competitive opportunities of their particular market. Our decentralized approach to station management gives local management oversight of station spending, long-range planning and resource allocation at their individual stations, and rewards all employees based on those stations’ performance. In addition, we encourage our managers and employees to own a stake in the company, and most of our full-time employees have an equity ownership position in Emmis. We believe that our performance-based, entrepreneurial management approach has created a distinctive corporate culture, making Emmis a highly desirable employer in the broadcasting industry and significantly enhancing our ability to attract and retain experienced and highly motivated employees and management.

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RADIO STATIONS

     In the following table, “Market Rank by Revenue” is the ranking of the market revenue size of the principal radio market served by the station among all radio markets in the United States. Market revenue and ranking figures are from BIA’s Investing in Radio 2004 (1st Edition). “Ranking in Primary Demographic Target” is the ranking of the station among all radio stations in its market based on the Fall 2003 Arbitron Survey. A “t” indicates the station tied with another station for the stated ranking. “Station Audience Share” represents a percentage generally computed by dividing the average number of persons over age 12 listening to a particular station during specified time periods by the average number of such persons for all stations in the market area as determined by Arbitron.

				RANKING IN
	MARKET		PRIMARY	PRIMARY	STATION
STATION AND	RANK BY		DEMOGRAPHIC	DEMOGRAPHIC	AUDIENCE
MARKET	REVENUE	FORMAT	TARGET AGES	TARGET	SHARE
Los Angeles, CA	1
KPWR-FM		Hip-Hop/R&B	18-34	1	5.1
KZLA-FM		Country	25-54	12	2.6
New York, NY	2
WQHT-FM		Hip-Hop	18-34	1	4.7
WRKS-FM		Classic Soul / Today's R&B	25-54	3	4.4
WQCD-FM		Smooth Jazz	25-54	8t	3.5
Chicago, IL	3
WKQX-FM		Alternative Rock	18-34	6	2.0
Phoenix, AZ	14
KKFR-FM		Rythmic CHR	18-34	4	4.0
KTAR-AM		News/Talk/Sports	35-64	7	4.3
KKLT-FM		Adult Contemporary	25-54	12	3.0
KMVP-AM		Sports	25-54	23	1.2
St. Louis, MO	20
KPNT-FM		Alternative Rock	18-34	1	4.8
KIHT-FM		Classic Hits	25-54	2t	4.1
KSHE-FM		Album Oriented Rock	25-54	4t	4.6
WRDA-FM		New Standards	25-54	15	1.6
KFTK-FM		Talk	25-54	19	1.5
Indianapolis, IN	31
WIBC-AM		News/Talk/Sports	35-64	4	6.0
WNOU-FM		CHR	18-34	5	5.0
WYXB-FM		Soft Adult Contemporary	25-54	5t	4.6
WENS-FM		Adult Contemporary	25-54	13t	1.7
Austin, TX	37
KDHT-FM		Rythmic CHR	18-34	1	5.5
KLBJ-AM		News/Talk	25-54	3	6.0
KLBJ-FM		Album Oriented Rock	25-54	4	4.5
KGSR-FM		Adult Alternative	25-54	5	3.9
KROX-FM		Alternative Rock	18-34	7t	2.7
KEYI-FM		Oldies	25-54	10	3.4
Terre Haute, IN	223
WTHI-FM		Country	25-54	1	20.8
WWVR-FM		Classic Rock	25-54	3	9.2

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In addition to our other domestic radio broadcasting operations, we own and operate Network Indiana, a radio network that provides news and other programming to nearly 70 affiliated radio stations in Indiana. Internationally, we operate nine FM radio stations in the Flanders region of Belgium, have a 59.5% interest in a national top-ranked radio station in Hungary, and own 75% of one FM and one AM radio station in Buenos Aires, Argentina. In December 2003, we agreed to sell our radio stations in Buenos Aires, Argentina and expect the transaction to close in our fiscal quarter ended May 31, 2004. We also engage in various businesses ancillary to our broadcasting business, such as consulting and broadcast tower leasing.

TELEVISION STATIONS

     In the following table, “DMA Rank” is estimated by the A.C. Nielsen Company (“Nielsen”) as of January 2004. Rankings are based on the relative size of a station’s market among the 210 generally recognized Designated Market Areas (“DMAs”), as defined by Nielsen. “Number of Stations in Market” represents the number of television stations (“Reportable Stations”) designated by Nielsen as “local” to the DMA, excluding public television stations and stations which do not meet minimum Nielsen reporting standards (i.e., a weekly cumulative audience of less than 2.5%) for reporting in the Sunday through Saturday, 9:00 a.m. to midnight time period. “Station Rank” reflects the station’s rank relative to other Reportable Stations based upon the DMA rating as reported by Nielsen from 9:00 a.m. to midnight, Sunday through Saturday during February 2004. A “t” indicates the station tied with another station for the stated ranking. “Station Audience Share” reflects an estimate of the share of DMA households viewing television received by a local commercial station in comparison to other local commercial stations in the market as measured from 9:00 a.m. to midnight, Sunday through Saturday.

				NUMBER OF		STATION
TELEVISION	METROPOLITAN	DMA	AFFILIATION/	STATIONS	STATION	AUDIENCE	AFFILIATION
STATION	AREA SERVED	RANK	CHANNEL	IN MARKET	RANK	SHARE	EXPIRATION
WKCF-TV	Orlando, FL	20	WB/18	5	5	5	December 31, 2009
KOIN-TV	Portland, OR	24	CBS/6	6	2	12	September 18, 2006
WVUE-TV	New Orleans, LA	42	Fox/8	6	3	9	March 5, 2006
KRQE-TV	Albuquerque, NM	49	CBS/13	6	2t	10	September 18, 2006
WALA-TV	Mobile, AL/
	Pensacola, FL	62	Fox/10	5	4	9	August 24, 2006
WBPG-TV	Mobile, AL/
	Pensacola, FL	62	WB/55	5	N/A	2	August 31, 2006
WSAZ-TV	Huntington, WV/
	Charleston, WV	63	NBC/3	4	1	21	January 1, 2009
KSNW-TV	Wichita, KS	67	NBC/3	5	2	14	January 1, 2009
WLUK-TV	Green Bay, WI	68	Fox/11	4	4	9	November 1, 2005
WFTX-TV	Fort Myers, FL	70	Fox/36	5	4	6	N/A
KGUN-TV	Tucson, AZ	71	ABC/9	6	3	12	February 6, 2005
KHON-TV(1)	Honolulu, HI	72	Fox/2	5	1	15	August 2, 2006
KGMB-TV(1)	Honolulu, HI	72	CBS/9	5	2	14	September 18, 2006
KMTV-TV	Omaha, NE	77	CBS/3	5	2	15	September 18, 2006
KSNT-TV	Topeka, KS	137	NBC/27	4	2	13	January 1, 2009
WTHI-TV	Terre Haute, IN	148	CBS/10	3	1	23	December 31, 2005

(1) We are currently operating KGMB-TV under a temporary waiver issued by the FCC. We may be required to sell one of these stations. See Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion.

     Emmis also owns and operates nine satellite stations that primarily re-broadcast the signal of certain of our local stations. A local station and its satellite station are considered one station for FCC and multiple ownership purposes, provided that the stations are in the same market.

     Each of our television stations is affiliated with CBS, NBC, ABC, Fox or WB (each a “Network”) pursuant to a written network affiliation agreement, except WFTX in Ft. Myers, FL, which is affiliated with Fox pursuant to an oral affiliation agreement. Each affiliation agreement provides the affiliated television station with the right to rebroadcast all programs transmitted by the Network with which the television station is affiliated. In return, the Network has the right to sell a substantial portion of the advertising time during such broadcasts.

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     The long established Networks (ABC, CBS and NBC) have historically paid the affiliated station to broadcast the Network’s programming. This Network compensation payment used to vary depending on the time of day that a station broadcast the Network programming. Typically, prime-time programming generated the highest hourly Network compensation payments. In the recent years, however, ABC, CBS and NBC have begun to eliminate or sharply reduce compensation payments to stations for clearance of Network programming. In some cases, Networks have undertaken to cut compensation when a station is to be sold and the affiliation agreement is to be assigned or transferred, or when an old affiliation agreement has expired. The more recently established Networks (Fox and WB) generally pay little or no cash compensation for the clearance of Network programming. They tend, however, to offer the affiliated station more advertising availability for local sale within Network programming than do the long established Networks.

     In the years ended February 2002, 2003 and 2004, we received approximately $4.6 million, $3.3 million and $2.0 million in Network compensation payments, which represented less than 1% of our total net revenues in each year.

PUBLISHING OPERATIONS

     We publish the following magazines through our publishing division:

	Monthly
	Paid
	Circulation
Regional Magazines:
Texas Monthly		300,000
Los Angeles		153,000
Atlanta		67,000
Indianapolis Monthly		45,000
Cincinnati Magazine		28,000
Specialty Magazines*:
Country Sampler		325,000
Country Sampler Decorating Ideas		160,000
Country Sampler Decorating with Paint		102,000
Country Marketplace		145,000

* Our specialty magazines are circulated bimonthly.

     In addition to our monthly and bimonthly magazines, Emmis also owns and operates a regional book publisher, Emmis Books.

INTERNET AND NEW TECHNOLOGIES

     We believe that the development and explosive growth of the Internet present not only a challenge, but an opportunity for broadcasters and publishers. The primary challenge is increased competition for the time and attention of our listeners, viewers and readers. The opportunity is to further enhance the relationships we already have with our listeners, viewers and readers by expanding products and services offered by our stations and magazines. For that reason, we have individuals at each of our properties dedicated to website maintenance and generating revenues from the property’s website.

     We believe that there are opportunities to improve and expand our television operations utilizing new technologies such as those that capitalize on the digital spectrum. Each television broadcaster has spent considerable capital complying with the digital conversion mandated by the FCC. Emmis has spent approximately $23.5 million converting its stations to digital. We believe we have developed a compelling business model to monetize this digital spectrum. Our model contemplates local television operators pooling their digital spectrum in individual markets and offering an over-the-air, low cost alternative to cable and satellite. Although we believe this subscription based model is viable, its ultimate success will depend upon industry involvement, customer penetration and certain other contingencies. Emmis expects to incur approximately $3 to $5 million of costs in fiscal 2005 related to the development of a formal business plan and the organization of an industry consortium in a separate joint venture. These costs will be included in corporate expenses. Once the joint venture has been formed, our future costs, which are indeterminable at this time, will likely be accounted for under the equity method as Emmis will not control the new joint venture entity.

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COMMUNITY INVOLVEMENT

     We believe that to be successful, we must be integrally involved in the communities we serve. To that end, each of our stations participates in many community programs, fundraisers and activities that benefit a wide variety of organizations. Charitable organizations that have been the beneficiaries of our marathons, walkathons, dance-a-thons, concerts, fairs and festivals include, among others, United Way’s September 11th Fund, The March of Dimes, American Cancer Society, Riley Children’s Hospital, The Salvation Army and research foundations seeking cures for ALS, cystic fibrosis, leukemia and AIDS and helping to fight drug abuse. In addition to our planned activities, our stations and magazines take leadership roles in community responses to natural disasters, such as commercial-free news broadcasts covering the events of September 11th and the war in Iraq. The National Association of Broadcasters Education Foundation honored us with the Hubbard Award, honoring a broadcaster “for extraordinary involvement in serving the community.” Emmis was only the second broadcaster to receive this prestigious honor.

INDUSTRY INVOLVEMENT

     We have an active leadership role in a wide range of industry organizations. Our senior managers have served in various capacities with industry associations, including as directors of the National Association of Broadcasters, the Television Operators Caucus, the Radio Advertising Bureau, the Radio Futures Committee, the Arbitron Advisory Council, and as founding members of the Radio Operators Caucus. Our chief executive has been honored with the National Association of Broadcasters’ “National Radio Award” and as Radio Ink’s “Radio Executive of the Year.” At various times we have been voted Most Respected Broadcaster in polls of radio industry chief executive officers and managers and our management and on-air personalities have won numerous prestigious industry awards.

COMPETITION

     Radio and television broadcasting stations compete with the other broadcasting stations in their respective market areas, as well as with other advertising media such as newspapers, cable, magazines, outdoor advertising, transit advertising, the Internet and direct mail marketing. Competition within the broadcasting industry occurs primarily in individual market areas, so that a station in one market (e.g., New York) does not generally compete with stations in other markets (e.g., Chicago). In each of our markets, our stations face competition from other stations with substantial financial resources, including stations targeting the same demographic groups. In addition to management experience, factors which are material to competitive position include the station’s rank in its market in terms of the number of listeners or viewers, authorized power, assigned frequency, audience characteristics, local program acceptance and the number and characteristics of other stations in the market area. We attempt to improve our competitive position with programming and promotional campaigns aimed at the demographic groups targeted by our stations, and through sales efforts designed to attract advertisers that have done little or no broadcast advertising by emphasizing the effectiveness of radio and television advertising in increasing the advertisers’ revenues. Changes in the policies and rules of the FCC permit increased joint ownership and joint operation of local stations. Those stations taking advantage of these joint arrangements (including our New York, Los Angeles, Phoenix, St. Louis, Indianapolis and Terre Haute clusters) may in certain circumstances have lower operating costs and may be able to offer advertisers more attractive rates and services. Although we believe that each of our stations can compete effectively in its market, there can be no assurance that any of our stations will be able to maintain or increase its current audience ratings or advertising revenue market share.

     Although the broadcasting industry is highly competitive, barriers to entry exist. The operation of a broadcasting station in the United States requires a license from the FCC. Also, the number of stations that can operate in a given market is limited by the availability of the frequencies that the FCC will license in that market, as well as by the FCC’s multiple ownership rules regulating the number of stations that may be owned and controlled by a single entity and cross ownership rules which limit the types of media properties in any given market that can be owned by the same person.

     The broadcasting industry historically has grown in terms of total revenues despite the introduction of new technology for the delivery of entertainment and information, such as cable television, the Internet, satellite television, audio tapes and compact discs. We believe that radio’s portability in particular makes it less vulnerable than other media to competition from new methods of distribution or other technological advances. There can be no assurance, however, that the development or introduction in the future of any new media technology will not have an adverse effect on the radio or television broadcasting industry.

ADVERTISING SALES

     Our stations and magazines derive their advertising revenue from local and regional advertising in the marketplaces in which they

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operate, as well as from the sale of national advertising. Local and most regional sales are made by a station’s or magazine’s sales staff. National sales are made by firms specializing in such sales which are compensated on a commission-only basis. We believe that the volume of national advertising revenue tends to adjust to shifts in a station’s audience share position more rapidly than does the volume of local and regional advertising revenue. During the year ended February 29, 2004, approximately 28% of our total advertising revenues were derived from national sales and 72% were derived from local and regional sales. For the year ended February 29, 2004, our radio stations derived a higher percentage of their advertising revenues from local and regional sales (81%) than our television (67%) and publishing entities (49%).

EMPLOYEES

     As of February 29, 2004 Emmis had approximately 2,529 full-time employees and approximately 585 part-time employees. We have approximately 218 employees at various radio and television stations represented by unions. We consider relations with our employees to be good.

INTERNET ADDRESS AND INTERNET ACCESS TO SEC REPORTS

     Our Internet address is www.emmis.com. You may obtain through our Internet website, free of charge, copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. These reports will be available the same day we electronically file such material with, or furnish such material to, the SEC. We have been making such reports available on the same day as they are filed during the period covered by this report.

FEDERAL REGULATION OF BROADCASTING

     Television and radio broadcasting are subject to the jurisdiction of the Federal Communications Commission (the “FCC”) under the Communications Act of 1934, as amended (in part by the Telecommunications Act of 1996 (the “1996 Act”)) (the “Communications Act”). Television or radio broadcasting is prohibited except in accordance with a license issued by the FCC upon a finding that the public interest, convenience and necessity would be served by the grant of such license. The FCC has the power to revoke licenses for, among other things, false statements made in applications or willful or repeated violations of the Communications Act or of FCC rules. In general, the Communications Act provides that the FCC shall allocate broadcast licenses for television and radio stations in such a manner as will provide a fair, efficient and equitable distribution of service throughout the United States. The FCC determines the operating frequency, location and power of stations; regulates the equipment used by stations; and regulates numerous other areas of television and radio broadcasting pursuant to rules, regulations and policies adopted under authority of the Communications Act. The Communications Act, among other things, prohibits the assignment of a broadcast license or the transfer of control of an entity holding such a license without the prior approval of the FCC. Under the Communications Act, the FCC also regulates certain aspects of the operation of cable television systems and other electronic media that compete with broadcast stations.

     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 as well as FCC rules, public notices and rulings for further information concerning the nature and extent of federal regulation of radio and television stations. Other legislation has been introduced from time to time which would amend the Communications Act in various respects, and the FCC from time to time considers new regulations or amendments to its existing regulations. We cannot predict whether any such legislation will be enacted or new or amended FCC regulations will be adopted or what their effect would be on Emmis.

LICENSE RENEWAL. Radio and television stations operate pursuant to broadcast licenses that are ordinarily granted by the FCC for maximum terms of eight years and are subject to renewal upon approval by the FCC. Our licenses currently have the following expiration dates, until renewed:

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WENS(FM) (Indianapolis)	August 1, 2004
WIBC(AM) (Indianapolis)	August 1, 2004
WNOU(FM) (Indianapolis)	August 1, 2004
WYXB(FM) (Indianapolis)	August 1, 2004
WTHI(FM) (Terre Haute)	August 1, 2004
WWVR(FM) (Terre Haute)	August 1, 2004
WSAZ(TV) (Huntington)	October 1, 2004
WKQX(FM) (Chicago)	December 1, 2004
WMLL(FM) (St. Louis)	December 1, 2004
KSHE(FM) (St. Louis)	February 1, 2005
WFTX(TV) (Fort Myers)	February 1, 2005
WKCF(TV) (Orlando)	February 1, 2005
KFTK(FM) (St. Louis)	February 1, 2005
KIHT(FM) (St. Louis)	February 1, 2005
KPNT(FM) (St. Louis)	February 1, 2005
WALA(TV) (Mobile)	April 1, 2005
WBPG(TV) (Mobile)	April 1, 2005
WVUE(TV) (New Orleans)	June 1, 2005
KLBJ(AM) (Austin)	August 1, 2005
KLBJ(FM) (Austin)	August 1, 2005
KDHT(FM) (Austin)	August 1, 2005
KGSR(FM) (Austin)	August 1, 2005
KROX(FM) (Austin)	August 1, 2005
KEYI(FM) (Austin)	August 1, 2005
WTHI(TV) (Terre Haute)	August 1, 2005
KKLT(FM) (Phoenix)	October 1, 2005
KKFR(FM) (Phoenix)	October 1, 2005
KTAR(AM) (Phoenix)	October 1, 2005
KMVP(AM) (Phoenix)	October 1, 2005
KPWR(FM) (Los Angeles)	December 1, 2005
WLUK(TV) (Green Bay)	December 1, 2005
KZLA(FM) (Los Angeles)	December 1, 2005
KREZ(TV) (Durango)	April 1, 2006
WQHT(FM) (New York)	June 1, 2006
WQCD(FM) (New York)	June 1, 2006
WRKS(FM) (New York)	June 1, 2006
KSNW(TV) (Wichita)	June 1, 2006
KMTV(TV) (Omaha)	June 1, 2006
KSNT(TV) (Topeka)	June 1, 2006
KSNG(TV) (Garden City)	June 1, 2006
KSNC(TV) (Great Bend)	June 1, 2006
KSNK(TV) (McCook-Oberlin)	June 1, 2006
KRQE(TV) (Albuquerque)	October 1, 2006
KGUN(TV) (Tucson)	October 1, 2006
KBIM(TV) (Roswell)	October 1, 2006
KHON(TV) (Honolulu)	February 1, 2007
KAII(TV) (Maui)	February 1, 2007
KHAW(TV) (Hawaii)	February 1, 2007
KOIN(TV) (Portland)	February 1, 2007
KGMB(TV) (Honolulu)	February 1, 2007
KGMD(TV) (Hawaii)	February 1, 2007
KGMV(TV) (Maui)	February 1, 2007

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     Under the Communications Act, at the time an application is filed for renewal of a station license, parties in interest, as well as members of the public, may apprise the FCC of the service the station has provided during the preceding license term and urge the denial of the application. If such a petition to deny presents information from which the FCC concludes (or if the FCC concludes on its own motion) that there is a “substantial and material” question as to whether grant of the renewal application would be in the public interest under applicable rules and policy, the FCC may conduct a hearing on specified issues to determine whether the renewal application should be granted. The Communications Act provides for the grant of a renewal application upon a finding by the FCC that the licensee:

• has served the public interest, convenience and necessity;

• has committed no serious violations of the Communications Act or the FCC rules; and

• has committed no other violations of the Communications Act or the FCC rules which would constitute a pattern of abuse.

     If the FCC cannot make such a finding, it may deny the renewal application, and only then may the FCC consider competing applications for the same frequency. In a vast majority of cases, the FCC renews a broadcast license even when petitions to deny have been filed against the renewal application.

     REVIEW OF OWNERSHIP RESTRICTIONS. The 1996 Act required the FCC to review all of its broadcast ownership rules every two years and to repeal or modify any of its rules that are no longer “necessary in the public interest.” Pursuant to recent congressional appropriations legislation, these reviews now must be conducted once every four years.

     On June 2, 2003, the FCC adopted its most recent broadcast ownership review decision, in which it modified several of its regulations governing the ownership of radio and television stations in local markets. These rule modifications are currently subject to further FCC and judicial review as well as possible congressional action. Specifically, multiple petitions for review of the Commission’s June 2 decision have been consolidated in a proceeding before the U.S. Court of Appeals for the Third Circuit. In September 2003, the Third Circuit issued a stay order preventing the FCC from putting the new media ownership rules into effect pending the outcome of the appeal. As a result, the former broadcast ownership rules will remain in effect at least until the Court issues a decision. Further, there are several legislative efforts currently in process that ultimately may alter, roll back, or suspend the new media ownership rules.

     The following describes the FCC’s broadcast ownership rules prior to the FCC’s June 2, 2003 decision, and the changes that will occur if the new rules go into effect:

     LOCAL RADIO OWNERSHIP:

Pre-Existing Rule: The local radio ownership rule currently in effect limits the number of radio stations that may be owned by one entity in a given radio market based on the number of commercial radio stations in that market:

• if the market has 45 or more commercial radio stations, one entity may own up to eight stations, not more than five of which may be in the same service (AM or FM);

• if the market has between 30 and 44 commercial radio stations, one entity may own up to seven stations, not more than four of which may be in the same service;

• if the market has between 15 and 29 commercial radio stations, a single entity may own up to six stations, not more than four of which may be in the same service; and

• if the market has fourteen or fewer commercial radio stations, one entity may own up to five stations, not more than three of which may be in the same service, except that one entity may not own more than fifty percent of the stations in the market.

     Each of the markets in which our radio stations are located has at least 15 commercial radio stations.

     New Rule: Although the FCC’s June 2 decision did not change the numerical caps under the local radio rule, the Commission adjusted the rule by deciding that both commercial and noncommercial stations could be counted in determining the number of stations in a radio market. The decision also altered the definition of the relevant local market for purposes of the rule. In addition, the agency determined that radio station Joint Sales Agreements (“JSAs”) will be attributable under the local ownership rule where the brokering party sells more than 15 percent of the brokered station’s advertising time per week and owns or has an attributable interest in another station in the

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local market. Existing JSAs that result in attribution and cause the brokering station to exceed the ownership limits will be grandfathered from the effective date of the Commission’s decision (which, as of this writing, has not occurred pursuant to the judicial stay discussed above).

In addition, over the past several years, the FCC has been aggressive in examining issues of market concentration when considering radio station acquisitions, even where the numerical limits described above are not violated. In some instances, the FCC has delayed its approval of proposed radio station purchases because of market concentration concerns, and in several recent cases, the FCC has ordered evidentiary hearings to determine whether a proposed transaction would result in excessive concentration.

LOCAL TELEVISION OWNERSHIP:

Pre-Existing Rule: The current local television ownership rule (or so-called “duopoly” rule) permits an entity to own two or more television stations in separate Designated Market Areas (“DMAs”). The rule also permits an entity to own two or more television stations in the same DMA if:

• the coverage areas of the stations do not overlap, or

• at least eight, independently-owned and -operated full-power non-commercial and commercial operating TV stations will remain in the market post-merger, and one of the two commonly-owned stations is not among the top four television stations in the market (based on audience share ratings).

Permanent waivers of the television duopoly rule are considered if one of the stations is:

• a “failed station,” i.e., off-air for more than four months, or involved in an involuntary bankruptcy proceeding;

• a “failing station,” i.e., having a low audience share and financially struggling; or

• an unbuilt facility, where the permittee has made substantial progress towards constructing the facility.

New Rule: The FCC’s June 2 decision significantly relaxed the restriction on television duopolies by permitting a company to own two TV stations in any DMA with at least five television stations (regardless of whether the stations are separately owned), but retaining the restriction on common ownership of two top four stations. In DMAs with 18 or more TV stations, the new rule allows a company to own three TV stations so long as no more than one is among the market’s top four. In addition to retaining the failed, failing, and unbuilt station waiver standards, the new rule also allows parties to seek waivers of the “top four” restriction in DMAs with 11 or fewer stations.

     Emmis’ acquisition of the Lee Enterprises stations required a waiver of the pre-existing television duopoly rule because the signals of KHON-TV and KGMB-TV (one of the Lee Enterprises stations) overlap, the stations serve the same market, and both stations are rated among the top four in that market. In approving the acquisition, the FCC granted a temporary waiver of the rule, ordering that an application for divestiture of either KHON-TV or KGMB-TV (plus associated “satellite” stations) be filed on or before April 1, 2001; that deadline was subsequently extended at our request to April 1, 2002. In February 2002, we filed a request for a further extension to April 1, 2003, which was opposed by a Honolulu broadcaster. In response to our further extension request, the FCC required us to file additional information concerning our divestiture efforts. Pending its review of the information we submitted, the FCC granted us an interim extension of our waiver until July 1, 2002. In addition, in May 2002, we filed a request for interim relief with the Commission, asking that the divestiture requirement be stayed pending the outcome of the 2002 broadcast ownership review. That request was opposed by the same Honolulu broadcaster who opposed the February extension request, as well as by two local public interest groups. In September 2002, we supplemented the request for interim relief with additional information.

     As part of its June 2003 ownership decision, the Commission required all entities (including Emmis) with pending waiver requests of the local television ownership rule to come into compliance with the revised rule within 60 days of the effective date of the Order. The effectiveness of the Commission’s decision has been stayed, however, pending the outcome of judicial review. Since both KHON-TV and KGMB-TV are among the top four stations in the Honolulu market, Emmis’ Hawaii television holdings are not in compliance with the modified version of the ownership rule. Further, because the Honolulu market contains more than 11 television stations, Emmis is not eligible for a waiver of the rule under the additional waiver standard adopted in the June 2003 decision. Accordingly, when and if the stay is lifted, Emmis likely will be required either to divest one of its Honolulu stations or to seek a permanent waiver of the television duopoly rule. If such a waiver is requested and ultimately denied, divestiture of one station will be required.

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NATIONAL TELEVISION OWNERSHIP

Pre-Existing Rule: The 1996 Act required the FCC to relax its restriction on the number of television stations that a single entity may own nationwide. Specifically, the rule was adjusted to restrict ownership to stations reaching, in the aggregate, no more than 35 percent of the total national audience. An owner of a UHF station is attributed with only 50% of the TV households in the station’s market (“UHF discount”).

New Rule: In its June 2003 decision, the Commission adjusted the national cap to 45 percent and retained the UHF discount. Congress subsequently prevented implementation of the revised national cap through appropriations legislation. The recent Consolidated Appropriations Act of 2004 includes a compromise provision directing the FCC to set the cap at 39 percent. As a result of this congressional intervention, the national ownership cap is no longer under consideration in the pending judicial review of the June 2003 decision. In addition, there may be further legislative efforts to restore the former 35 percent cap.

CROSS-MEDIA OWNERSHIP

Pre-Existing Radio/Television Cross-Ownership Rule: The FCC’s radio/television cross-ownership rule generally permits the common ownership of the following combinations in the same market, to the extent permitted under the FCC’s television duopoly rule:

• up to two commercial television stations and six commercial radio stations or one commercial television station and seven commercial radio stations in a market where at least 20 independent media voices will remain post-merger;

• up to two commercial television stations and four commercial radio stations in a market where at least 10 independent media voices will remain post-merger; and

• two commercial television stations and one commercial radio station in a market with less than 10 independent media voices that will remain post-merger.

For purposes of this rule, the FCC counts as “voices” commercial and non-commercial broadcast television and radio stations as well as some daily newspapers and cable operators. The Commission will consider permanent waivers of its revised radio/television cross-ownership rule only if one of the stations is a “failed station.”

Pre-Existing Newspaper/Broadcast Cross-Ownership Rule: The FCC rules also prohibit common ownership of a daily newspaper and a radio or television station in the same local market.

New Cross-Media Limits: The cross-media limits adopted in the June 2003 decision would replace both the newspaper/broadcast cross-ownership restriction and the radio/television cross-ownership limits as follows:

• In DMAs with three or fewer commercial and noncommercial television stations, the FCC will not permit cross-ownership between TV stations, radio stations, and daily newspapers.

• In DMAs with 4 to 8 television stations, the FCC will permit parties to have one of the three following combinations: (a) one or more daily newspaper(s), one TV station, and up to 50% of the radio stations that would be permissible under the local radio ownership limits; (b) one or more daily newspaper(s) and as many radio stations as can be owned pursuant to the local radio ownership limits (But no television stations); or (c) two television stations (so long as ownership would be permissible under the local television ownership rule) and as many radio stations as the local radio ownership limits permit (but no daily newspapers).

• In DMAs with nine or more television stations, the FCC will permit any newspaper and broadcast cross-media combinations so long as they comply with the local television ownership rule and local radio ownership limits.

     We cannot predict the ultimate outcome of the proceedings described above, future biennial reviews or other agency or legislative initiatives or the impact, if any, that they will have on our business.

     ALIEN OWNERSHIP. Under the Communications Act, no FCC license may be held by a corporation if more than one-fifth of its capital stock is owned or voted by aliens or their representatives, a foreign government or representative thereof, or an entity organized under the laws of a foreign country (collectively, “Non-U.S. Persons”). Furthermore, the Communications Act provides that no FCC license may be granted to an entity directly or indirectly controlled by another entity of which more than one-fourth of its capital stock is

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owned or voted by Non-U.S. Persons if the FCC finds that the public interest will be served by the denial of such license. The FCC staff has interpreted this provision to require an affirmative public interest finding to permit the grant or holding of a license, and such a finding has been made only in limited circumstances. The foregoing restrictions on alien ownership apply in modified form to other types of business organizations, including partnerships and limited liability companies. Our Second Amended and Restated Articles of Incorporation and Amended and Restated Code of By-Laws authorize the Board of Directors to prohibit such restricted alien ownership, voting or transfer of capital stock as would cause Emmis to violate the Communications Act or FCC regulations.

     ATTRIBUTION OF OWNERSHIP INTERESTS. In applying its ownership rules, the FCC has developed specific criteria in order to determine whether a certain ownership interest or other relationship with a Commission licensee is significant enough to be “attributable” or “cognizable” under its rules. Specifically, among other relationships, certain stockholders, officers, and directors of a broadcasting company are deemed to have an attributable interest in the licenses held by that company, such that there would be a violation of the Commission’s rules where the broadcasting company and such a stockholder, officer, or director together hold attributable interests in more than the permitted number of stations or a prohibited combination of outlets in the same market. The FCC’s regulations generally deem the following relationships and interests to be attributable for purposes of its ownership restrictions:

• all officer and director positions in a licensee or its (in)direct parent(s);

• voting stock interests of at least five percent (or twenty percent, if the holder is a passive institutional investor, i.e., a mutual fund, , insurance company, or bank);

• any equity interest in a limited partnership or limited liability company where the limited partner or member is “materially involved” in the media-related activities of the LP or LLC and has not been “insulated” from such activities pursuant to specific FCC criteria;

• equity and/or debt interests which, in the aggregate, exceed 33 percent of the total asset value of a station or other media entity (the “equity/debt plus policy”), if the interest holder supplies more than 15 percent of the station’s total weekly programming (usually pursuant to a time brokerage, local marketing or network affiliation agreement) or is a same-market media entity (i.e., broadcast company or newspaper).

     To assess whether a voting stock interest in a direct or indirect parent corporation of a broadcast licensee is attributable, the FCC uses a “multiplier” analysis in which non-controlling voting stock interests are deemed proportionally reduced at each non-controlling link in a multi-corporation ownership chain.

     As a result of a recent transaction, Jeffrey H. Smulyan’s voting interest in the Company has fallen below 50% for FCC control purposes. The FCC does not take into account stock options exercisable within 60 days as does the Exchange Act Rule 13D-1. As a result, the Company is no longer eligible for an exemption from the broadcast attribution rules under which minority shareholders are not deemed to hold attributable interests in the Company. Accordingly, the other media interests of any shareholders whose voting interests in the Company meet or exceed the attribution thresholds described above will now be combined with the Company’s interests for purposes of determining compliance with FCC ownership rules. Under FCC policy, a one-year grace period is provided for resolving any ownership conflicts between the Company and its shareholders arising from the loss of the exemption.

     Ownership rule conflicts arising as a result of aggregating the media interests of the Company and its attributable shareholders could require divestitures by either the Company or the affected shareholders. Any such conflicts could result in Emmis being unable to obtain FCC consents necessary for future acquisitions. Conversely, Emmis’ media interests could operate to restrict other media investments by shareholders having or acquiring an interest in Emmis.

     ASSIGNMENTS AND TRANSFERS OF CONTROL. 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 such approval, the FCC considers a number of factors, including compliance with the various rules limiting common ownership of media properties, the “character” of the licensee and those persons holding attributable interests therein, and compliance with the Communications Act’s limitations on alien ownership as well as other statutory and regulatory requirements. When evaluating an assignment or transfer of control application, the FCC is prohibited from considering whether the public interest might be served by an assignment of the broadcast license or transfer of control of the licensee to a party other than the assignee or transferee specified in the application.

     PROGRAMMING AND OPERATION. The Communications Act requires broadcasters to serve the “public interest.” Since the late 1970s, the FCC gradually has relaxed or eliminated many of the more formalized procedures it had developed to promote the broadcast of certain types of programming responsive to the needs of a station’s community of license. However, licensees continue to be required

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to present programming that is responsive to community problems, needs and interests and to maintain certain records demonstrating such responsiveness.

     Federal law prohibits the broadcast of obscene material at any time and the broadcast of indecent material during specified time periods; these prohibitions are subject to enforcement action by the FCC. The agency recently has engaged in more aggressive enforcement of its indecency regulations than has generally been the case in the past. In addition to imposing more stringent fines, the Commission has indicated that it may begin license revocation procedures for “serious” violations of the indecency law. Furthermore, Congress is considering legislation that would substantially increase the current per-violation maximum fine for indecency violations and would mandate license revocation proceedings for licensees with repeated violations. The FCC has imposed six (6) monetary forfeitures on Emmis based on a finding that indecent material was broadcast on station WKQX. In addition, the FCC has issued letters of inquiry to Emmis concerning five (5) additional broadcasts on station WKQX and six (6) broadcasts on station KPNT. Those inquiries could result in the imposition of additional forfeitures. Further, there may be additional third-party complaints of which Emmis is unaware that could lead to additional enforcement action.

     In addition to imposing forfeitures or initiating license revocation proceedings for indecent broadcasts, the FCC could initiate proceedings and take materially adverse actions relating to the license renewal applications for stations WKQX and KPNT, which we must file this year. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Risk Factors — The FCC has recently begun more vigorous enforcement of its indecency rules against the broadcast industry, which could have a material adverse effect on our business”.

     Stations also must pay regulatory and application fees and follow various rules promulgated under the Communications Act that regulate, among other things, political advertising, sponsorship identification, contest and lottery advertisements, and technical operations, including limits on radio frequency radiation.

     In 1992, Congress enacted the Cable Television Consumer Protection and Competition Act of 1992 (the “1992 Cable Act”). Certain provisions of this law, such as signal carriage and retransmission consent, have a direct effect on television broadcasting.

     In April 1997, the FCC adopted rules that require television broadcasters to provide digital television (“DTV”) to consumers. The FCC also adopted a table of allotments for DTV, which assigns eligible broadcasters a second channel on which to provide DTV service. The FCC’s DTV allotment plan is based on the use of a “core” DTV spectrum between channels 2-51. Although the Communications Act mandates that each television station return one of its two channels to the FCC by the end of 2006, the Balanced Budget Act of 1997 may effectively extend the transition deadline in some markets by allowing broadcasters to keep both their analog and digital licenses until at least 85 percent of television households in their respective markets can receive a digital signal. Local zoning laws and the lack of qualified tall-tower builders to construct the facilities necessary for DTV operations, among other factors, including the pace of DTV production and sales, may cause delays in the DTV transition. The FCC has announced that it will review the progress of DTV every two years and make adjustments to the 2006 target date, if necessary.

     Television broadcasters are allowed to use their DTV channels according to their best business judgment, provided that they continue to offer at least one free programming service that is at least comparable to today’s analog service. Digital services and programming can include multiple standard definition program channels, data transfer, subscription video, interactive materials, and audio signals (so-called “ancillary” services). The FCC has imposed a fee of five percent of the annual gross revenues for television broadcasters’ use of the DTV spectrum to offer ancillary services. The form and amount of these fees may have a significant effect on the profitability of such services. Broadcasters will not be required to air “high definition” programming. Beginning April 1, 2003, broadcasters operating in digital mode were required to simulcast at least 50 percent of their analog programming on the digital channel. Affiliates of ABC, CBS, NBC and Fox in the top 10 television markets were required to be on the air with a digital signal by May 1, 1999, and affiliates of those networks in markets 11-30, including KOIN-TV, were required to be on the air with a digital signal by November 1, 1999; KOIN-TV complied with this deadline. The remaining commercial stations, including all other television stations owned by Emmis, were required to file DTV construction permit applications by November 1, 1999, and were required to be on the air with a digital signal by May 1, 2002, absent an extension on a station-by-station basis. All Emmis’ stations met the November 1, 1999 application deadline. Stations WALA, WKCF, and WFTX met the May 1, 2002 on-air deadline, and all other stations subsequently initiated DTV service prior to their extended deadlines, except stations KAII-TV, KHAW-TV, KGMD-TV, and KGMV-TV, which, as “satellite” stations, have been granted an extension pending a decision by the FCC on when to require buildout of such stations. Additionally, all of the Emmis stations filed timely applications to “maximize” (expand the coverage of) the DTV facilities to ensure the DTV coverage is equal to or better than the coverage of our analog channels.

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     WBPG is not subject to the usual DTV deadlines because it was not issued a second channel for DTV operation; rather, WBPG will be required to convert to DTV operation by the conclusion of the DTV transition period. Further, since Channel 55, on which WBPG operates, is to be reallocated by the FCC for other use at the end of the DTV transition period, the FCC will assign the station to a different channel at that time unless it has already changed its channel.

     In January 2001, the FCC issued a further order on DTV transition issues, setting a number of deadlines for commercial broadcasters. The order required commercial stations with both analog and digital channel assignments within the DTV core spectrum (channels 2-51) to elect by the end of December 2003 the channel they will use for broadcasting after the transition is complete. Similarly, the FCC decided in the order that, by the end of December 2004, commercial broadcasters not replicating their existing analog service areas will lose interference protection in those portions of their existing service areas not covered by their digital signals. The order further held that, by the end of December 2004, commercial broadcasters must provide a stronger digital signal to their communities of license than was previously required.

     In November 2001, the FCC issued a reconsideration order on DTV transition issues, which modified many of the rules established in January 2001. Specifically, the reconsideration order temporarily defers the FCC’s previously established deadlines for broadcasters to: (1) choose their permanent post-transition DTV channel; (2) provide a DTV signal that replicates their analog service area; and (3) build maximized DTV facilities. The order also permits broadcasters to request special temporary authority to construct initial minimal DTV facilities (i.e., facilities that only cover their cities of license) while retaining interference protection for their allotted and maximized facilities. In addition, the order allows commercial stations subject to the May 1, 2002 construction deadline (i.e., stations not in the top 30 markets) to initially broadcast a digital signal during prime time hours only.

     In April 2002 the FCC Chairman challenged the broadcast, cable, satellite, and consumer electronics industries to take certain voluntary actions designed to speed the DTV transition. Although members of the broadcast, cable, and satellite industries were quick to make commitments to comply with Chairman Powell’s proposals, the consumer electronics industry was reluctant to embrace the plan. Consequently, the Commission found it necessary to formally mandate a phased-in DTV tuner requirement. As a result, all new television sets 13 inches and larger and all TV interface devices (VCRs, etc.) must include the capability of tuning and decoding over-the-air digital signals by 2007.

     In January 2003, the FCC launched its second periodic review of its DTV rules and proposed new deadlines for stations to choose their post-transition digital channels, to replicate their analog service areas and maximize their digital facilities in order to maintain protection of their allotted and/or expanded service areas. The Commission proposed July 1, 2005 as the date for affiliates of ABC, NBC, CBS and Fox in the top 100 markets to build out their full facilities or lose protection for the “unused” areas. This deadline would apply to all the Emmis television stations except WTHI, KSNT and WKCF. All other stations, including WTHI, KSNT and WKCF, would be required to build out their full facilities by July 1, 2006 under the Commission’s proposal. The FCC proposed May 1, 2005 as the deadline for choosing a permanent DTV channel. The FCC also will decide in the proceeding how to evaluate when the transition to digital television has been achieved and, accordingly, when broadcasters will be required to operate exclusively in digital mode and turn in the channel not used for digital broadcasting. Under current law, that date is set at December 31, 2006 or the date by which 85 percent of the television households in a licensee’s market are capable of receiving the signals of DTV stations.

     The FCC also is considering cable operators’ obligations to carry the digital signals of broadcast television stations, including the obligations that should exist during the DTV transition period, when broadcasters’ analog and digital signals will be operating simultaneously. The agency tentatively has concluded that dual carriage (simultaneous carriage of analog and digital signals) would be unconstitutional. With respect to broadcasters that choose to use their digital capacity for multicasting—airing multiple programming streams concurrently—the FCC has decided that cable operators will be required to carry only the “primary” programming stream. This decision currently is under reconsideration at the Commission. In addition, one carriage proposal that has been suggested by the agency’s Media Bureau could have the effect of accelerating the transition. Specifically, the proposal would require cable operators to carry the digital signals of all broadcasters within their communities asserting mandatory carriage rights. The FCC would then base the 85 percent threshold on the number of households within a community that subscribe to cable services that carry digital broadcast signals, rather than on the actual capability of individual households to receive such signals through digital television sets. This proposal is of concern to broadcasters because it would push forward the date by which they must return their analog channels to the FCC and potentially could leave those consumers that do not subscribe to pay television services and do not own digital television sets without access to broadcast programming.

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     Another area of concern for the DTV transition is the technical standards needed to ensure that digital television sets can connect to cable systems. At the request of the FCC, the cable and consumer electronics industries entered into a Memorandum of Understanding (“MOU”) setting forth an agreement on a cable compatibility standard. The Commission put the MOU out for public comment in January of 2003. On September 10, 2003 the FCC adopted “plug-and-play” rules for cable adaptability that are substantially similar to those proposed in the MOU. Under these rules, consumers will be able to plug their cable directly into their digital televisions, without the need for a set-top box. These rules cover one-way programming only, and the cable and electronics industries continue to work towards an agreement on two-way “plug-and-play” standards that would eliminate the need for set-top boxes for advanced services such as video on demand, impulse pay-per-view, and cable operator-enhanced electronic programming guides. Emmis cannot predict the outcome of those negotiations.

     More recently, the FCC issued a decision regarding how over-the-air digital broadcasts may be protected from unauthorized copying and distribution. Specifically, on November 4, 2003 the Commission adopted anti-piracy protection for digital television in the form of a “broadcast flag” mechanism, which allows a broadcaster to prevent mass distribution of its digital signal over the Internet, without affecting consumers’ ability to make digital copies. The Commission also adopted a Further Notice of Proposed Rulemaking seeking comment on a permanent objective process for the approval of digital recording and output content protection technologies that will foster innovation and marketplace competition. This proceeding remains pending.

     The FCC has authorized the provision of video programming directly to home subscribers through high-powered direct broadcast satellites (“DBS”). DBS systems currently are capable of broadcasting over 500 channels of digital television service directly to subscribers’ equipment with 18-inch receiving dishes and decoders. At this time, several entities provide DBS service to consumers throughout the country. In order to protect network-affiliated broadcast stations from the effects of satellite importation of non-local network signals into their markets, DBS operators are permitted to deliver distant network signals only to unserved households in so-called “white areas” (i.e., locations too distant from a local network affiliate to receive a sufficiently strong “over-the-air” signal). In addition, in November 1999, Congress enacted the Satellite Home Viewer Improvement Act (“SHVIA”), which authorizes DBS companies to provide local television signals to their subscribers pursuant to a retransmission consent agreement with the station. In March 2000, the FCC adopted regulations governing the statutory requirements for “good faith” negotiations and non-exclusive agreements in retransmission consent contracts between broadcasters (and all multichannel video program distributors). Broadcasters are required to negotiate non-exclusive retransmission consent agreements in good faith until January 1, 2006; however, the law explicitly provides that broadcasters may enter into agreements with competing DBS carriers on different terms.

     Moreover, effective January 1, 2002, local television stations became entitled to “must-carry” rights on a DBS system if the system is providing any local television station(s) to its subscribers. In such markets, stations now can choose whether to demand carriage on a DBS system by electing must-carry status or to negotiate with the DBS operator for specific carriage terms by electing retransmission consent status. SHVIA also “grandfathered” delivery of the signals of television stations via DBS to certain subscribers who may have been receiving such signals in violation of prior law. In November 2000, the FCC adopted rules to implement SHVIA provisions regarding “local-into-local” satellite service, must-carry election cycle rules and related policies for satellite carriage of broadcast signals. Under the new FCC rules, a broadcast television station must affirmatively elect must-carry status to require a DBS operator to carry its station; the first elections were due by July 1, 2001. In response to a challenge to certain provisions of SHVIA, a panel of the U.S. Court of Appeals for the Fourth Circuit upheld the requirement that DBS operators carry the signal of all local television stations in markets where they elect to carry any local signals. The court also upheld an FCC rule that permits DBS operators to offer all local television stations on a single tier or on an a la carte basis. The rule allows consumers to choose between the two options. In response to broadcasters’ first elections, DBS operators issued a large number of carriage denial letters, prompting the FCC to issue an order in September 2001 clarifying the DBS mandatory carriage rules. In particular, the FCC emphasized that a satellite carrier must have a “reasonable basis” for rejecting a broadcast station’s carriage request.

     There are FCC rules and policies, and rules and policies of other federal agencies, that regulate matters such as the use of auctions to resolve mutually exclusive application requests, network-affiliate relations, the ability of stations to obtain exclusive rights to air syndicated programming, cable systems’ carriage of syndicated and network programming on distant stations, political advertising practices, application procedures and other areas affecting the business or operations of broadcast stations.

     Failure to observe FCC rules and policies can result in the imposition of various sanctions, including monetary fines, the grant of “short” (less than the maximum term) license renewals or, for particularly egregious violations, the denial of a license renewal application or the revocation of a license.

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     ADDITIONAL DEVELOPMENTS AND PROPOSED CHANGES. The Commission has adopted rules implementing a new low power FM (“LPFM”) service. The FCC has begun accepting applications for LPFM stations and has granted some of those applications. We cannot predict whether any LPFM stations will interfere with the coverage of our radio stations.

     The FCC also has authorized two companies to launch and operate satellite digital audio radio service (“SDARS”) systems. Both companies—Sirius Satellite Radio, Inc. and XM Radio—are now providing nationwide service. In addition, Sirius and XM recently have launched channels providing local traffic and weather information in major cities. Broadcasters have objected to these local services, contending that the provision of local news programming conflicts with the FCC’s intent to license satellite radio solely as a national service. XM and Sirius contend, in response, that the services are not in contravention of their FCC authorizations because the channels offering local information are being offered nationwide, not on a local basis. We cannot predict the impact of SDARS on our radio stations’ listenership.

     In October 2002, the FCC issued an order selecting a technical standard for terrestrial digital audio broadcasting (“DAB”). The in-band, on-channel (“IBOC”) technology chosen by the agency allows AM and FM radio broadcasters to introduce digital operations and permits existing stations to operate on their current frequencies in either full analog mode, full digital mode, or a combination of both (at reduced power).

     In January 2001, the D.C. Circuit concluded that the FCC’s Equal Employment Opportunity (“EEO”) regulations were unconstitutional. The FCC adopted new EEO rules in November 2002, which went into effect in March 2003.

     Congress and the FCC have 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, ownership and profitability of our broadcast stations, result in the loss of audience share and advertising revenues for our broadcast stations and/or affect our ability to acquire additional broadcast stations or finance such acquisitions. Such matters include, but are not limited to:

• proposals to impose spectrum use or other fees on FCC licensees;

• proposals to repeal or modify some or all of the FCC’s multiple ownership rules and/or policies;

• proposals to change rules relating to political broadcasting;

• technical and frequency allocation matters;

• AM stereo broadcasting;

• proposals to permit expanded use of FM translator stations;

• proposals to restrict or prohibit the advertising of beer, wine and other alcoholic beverages;

• proposals to tighten safety guidelines relating to radio frequency radiation exposure;

• proposals permitting FM stations to accept formerly impermissible interference;

• proposals to reinstate holding periods for licenses;

• changes to broadcast technical requirements, including those relative to the implementation of SDARS and DAB;

• proposals to limit the tax deductibility of advertising expenses by advertisers.

     We cannot predict whether any proposed changes will be adopted, what other matters might be considered in the future, or what impact, if any, the implementation of any of these proposals or changes might have on our business.

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

19

GEOGRAPHIC FINANCIAL INFORMATION

     The Company’s segments operate primarily in the United States with one national radio station located in Hungary, two radio stations located in Argentina and nine radio stations located in Belgium. We have signed an agreement to sell our 75% interest in our two radio stations in Argentina. We expect this transaction to close in our quarter ended May 31, 2004. The following tables summarize relevant financial information by geographic area. Financial information relating to our two stations in Argentina is included in 2002 and 2003, but excluded in 2004.

	2002		2003		2004
Net Revenues:
Domestic	$	523,124	$	550,553	$	580,246
International		16,698		11,810		11,622
Total	$	539,822	$	562,363	$	591,868

	2002		2003		2004
Noncurrent Assets:
Domestic	$	2,278,680	$	1,991,069	$	2,116,536
International		16,867		14,663		12,014
Total	$	2,295,547	$	2,005,732	$	2,128,550

     With respect to EOC, the above information would be identical, except domestic noncurrent assets would be $2,267,750, $1,983,540, and $2,109,953, and total noncurrent assets would be $2,284,617, $1,998,203, and $2,121,967 as of February 28 (29), 2002, 2003, and 2004 respectively.

ITEM 2. PROPERTIES.

     The following table sets forth information as of February 29, 2004 with respect to offices, studios and broadcast towers of stations and magazines currently owned by Emmis. Management believes that the properties are in good condition and are suitable for Emmis’ operations.

				EXPIRATION
	YEAR PLACED		OWNED OR	DATE
PROPERTY	IN SERVICE		LEASED	OF LEASE
Corporate and Publishing Headquarters/		1998	Owned		—
WENS-FM/ WIBC-AM/WNOU-FM/
WYXB-FM/ Indianapolis Monthly One Emmis Plaza
40 Monument Circle
Indianapolis, Indiana
WENS-FM Tower		1985	Owned		—
WNOU-FM Tower		1979	Owned		—
WIBC-AM Tower		1966	Owned		—
WYXB-FM Tower		2003	Owned		—
WRDA-FM/KFTK-FM/KIHT-FM/KPNT-FM/KSHE-FM		1998	Leased	December 2007
800 St. Louis Union Station
St. Louis, Missouri
WRDA-FM Tower		1984	Owned		—
KFTX-FM Tower		1987	Leased	August 2009 with option to March 2023
KIHT-FM Tower		1995	Leased	September 2005 with two 5-year options
KPNT-FM Tower		1987	Owned		—
KSHE-FM Tower		1985	Leased	April 2009

20

				EXPIRATION
	YEAR PLACED		OWNED OR	DATE
PROPERTY	IN SERVICE		LEASED	OF LEASE
KPWR-FM		1988	Leased	October 2017
KZLA-FM		2002	Leased	October 2017
2600 West Olive
Burbank, California
KPWR-FM Tower		1993	Leased	Month-to-Month
KZLA-FM tower		1991	Leased	December 2004
WQHT-FM/WRKS-FM/WQCD-FM		1996	Leased	January 2013
395 Hudson Street, 7th Floor
New York, New York
WQHT-FM Tower		1984	Leased	January 2010
WRKS-FM Tower		1984	Leased	November 2005
WQCD-FM Tower		1984	Leased	February 2007
KTAR-AM/KMVP-AM/KKLT-FM/KKFR-FM		1994	Owned		—
5300 N. Central Ave.
Phoenix, AZ
KTAR-AM Tower		1958	Owned		—
KMVP-AM Tower		1996	Leased	December 2008
KKLT-FM Tower		1990	Owned		—
KKFR-FM Tower		1998	Leased	April 2003 (1)
WKQX-FM		2000	Leased	December 2015 with 5 year option
230 Merchandise Mart Plaza
Chicago, Illinois
WKQX-FM Tower		1975	Leased	September 2009
KLBJ-AM/FM/KDHT-FM/KGSR-FM/KROX-FM/		1998	Leased	March 2008
KEYI-FM
8309 N. IH 35
Austin, TX
KLBJ-AM Tower		1963	Owned		—
KLBJ-FM Tower		1972	Leased	July 2008
KDHT-FM Tower		1986	Owned		—
KGSR-FM Tower		1997	Owned		—
KROX-FM Tower		1999	Leased	September 2008
KEYI-FM Tower		1985	Leased	August 2010
Atlanta Magazine Office		1997	Leased	July 2013
260 Peachtree St, Suite 300
Atlanta, Georgia
Cincinnati Magazine		1996	Leased	November 2006
705 Central Ave., Suite 175
Cincinnati, OH
Texas Monthly		1989	Leased	August 2009
701 Brazos, Suite 1600
Austin, TX
KHON-TV		1999	Owned		—
88 Piikoi Street
Honolulu, HI
KHON-TV Tower		1978	Leased	December 2008 with 10 year option
WALA-TV		2002	Owned		—
WBPG-TV		2003	Owned		—
1501 Satchel Paige Dr.
Mobile, AL
WALA-TV Tower		1962	Owned		—
WBPG-TV Tower		2001	Leased	July 2010
WFTX-TV		1987	Owned		—
621 Pine Island Road
Cape Coral, FL
WFTX-TV Tower		1985	Owned		—

21

				EXPIRATION
	YEAR PLACED		OWNED OR	DATE
PROPERTY	IN SERVICE		LEASED	OF LEASE
WLUK-TV		1966	Owned		—
787 Lombardi Avenue
Green Bay, WI
WLUK-TV Tower		1961	Owned		—
WTHI-TV/FM/WWVR-FM		1954	Owned		—
918 Ohio Street
Terre Haute, IN
WTHI-TV Tower		1965	Owned		—
WTHI-FM Tower		1954	Owned		—
WWVR-FM Tower		1966	Owned		—
WVUE-TV		1972	Owned		—
1025 South Jefferson Davis Highway
New Orleans, LA
WVUE-TV Tower		1963	Owned		—
WKCF-TV		1998	Owned		—
31 Skyline Drive
Lake Mary, FL
WKCF-TV Tower		2001	Leased	April 2016
Los Angeles Magazine		2000	Leased	November 2010
5900 Wilshire Blvd., Suite 1000
Los Angeles, CA 90036
Country Sampler		1988	Owned		—
707 Kautz Road
St. Charles, IL 60174
RDS/Co-Opportunities		1989	Leased	March 2007
324 Campus Lane, Suite B
Suisun, CA 94585
Emmis West (Corporate)		2004	Leased	February 20142
3500 West Olive Avenue, Suite 1450
Burbank, CA
Slager Radio		1998	Leased	December 2004
Szabadsag Ut 117 (Atronyx Bldg. B)
H-2040 Budaors, Hungary
Slager Tower		1998	Leased	November 2004
KOIN-TV		1984	Leased	June 2083 with 99 year option
222 S.W. Columbia St.
Portland, OR
KOIN-TV Tower		1953	Owned		—
KSNT-TV		1967	Owned		—
6835 N.W. U.S. Hwy 24
Topeka, KS
KSNT-TV Tower		1967	Owned		—
WSAZ-TV		1971	Owned		—
645 5th Avenue
Huntington, WV
WSAZ-TV Tower		1954	Owned		—
KGMB-TV		1952	Owned		—
1534 Kapiolani Blvd.
Honolulu, HI
KGMB-TV Tower		1962	Owned		—
KMTV-TV		1978	Owned		—
10714 Mockingbird Dr.
Omaha, NE
KMTV-TV Tower		1967	Owned		—

22

				EXPIRATION
	YEAR PLACED		OWNED OR	DATE
PROPERTY	IN SERVICE		LEASED	OF LEASE
KGUN-TV		1990	Owned		—
7280 E. Rosewood
Tucson, AZ
KGUN-TV Tower		1956	Leased	July 2016
KRQE-TV		1953	Owned		—
13 Broadcast Plaza S.W.
Albuquerque, NM
KRQE-TV Tower		1959	Owned		—
KSNW-TV		1955	Owned		—
833 N. Main St.
Wichita, KS
KSNW-TV Tower		1955	Owned		—

¹ Verbal agreement to lease on month-to-month basis

² Emmis has the right to terminate 5 years from inception of the lease

ITEM 3. LEGAL PROCEEDINGS.

     The Company is a party to various legal proceedings arising in the ordinary course of business. In the opinion of management of the Company, however, there are no legal proceedings pending against the Company likely to have a material adverse effect on the Company.

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

     Not applicable.

PART II

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

     Emmis’ Class A common stock is traded in the over-the-counter market and is quoted on the National Association of Securities Dealers Automated Quotation (NASDAQ) National Market System under the symbol EMMS. There is no established public trading market for Emmis’ Class B common stock or Class C common stock or for the common stock of EOC.

     The following table sets forth the high and low bid prices of the Class A common stock for the periods indicated. No dividends were paid during any such periods.

QUARTER ENDED	HIGH		LOW
May 2002		31.85		26.15
August 2002		30.15		11.65
November 2002		24.05		14.25
February 2003		24.86		17.82
May 2003		21.24		14.84
August 2003		23.87		18.68
November 2003		24.06		18.00
February 2004		28.65		22.74

     At April 23, 2004 there were 4,841 record holders of the Class A common stock, and there was one record holder of the Class B common stock. As of April 23, 2004, there was one record holder of the EOC common stock.

23

     Emmis intends to retain future earnings for use in its business and does not anticipate paying any dividends on shares of its common stock in the foreseeable future.

Equity Compensation Plan Information

     The following table gives information about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of February 29, 2004. These plans include the 1994 Equity Incentive Plan, the 1995 Equity Incentive Plan, the Non-Employee Director Stock Option Plan, the 1997 Equity Incentive Plan, the 1999 Equity Incentive Plan, the 2001 Equity Incentive Plan, the 2002 Equity Compensation Plan and the Employee Stock Purchase Plan. Our shareholders have approved all of these plans.

							Number of Securities Remaining
	Number of Securities to be Issued			Weighted-Average Exercise			Available for Future Issuance under
	Upon Exercise of Outstanding			Price of Outstanding Options,			Equity Compensation Plans (Excluding
	Options, Warrants and Rights			Warrants and Rights			Securities Reflected in Column (a))
	(a)			(b)			(c)
Plan Category
Equity Compensation Plans Approved by Security Holders		5,724,902	(1)	$	25.77	(1)		3,045,945	(2)
Equity Compensation Plans Not Approved by Security Holders		—			—			—
Total		5,724,902	(1)	$	25.77	(1)		3,045,945	(2)

(1) Includes 435,000 shares estimated to be issuable in 2004 to employees in lieu of current salary pursuant to contract rights under our stock compensation program. See Note 1h to our Consolidated Financial Statements. The exact number and price of shares to be issued depends upon actual compensation during the period prior to issuance and changes in our share price, neither of which can be determined at this time. Thus, the weighted averages in Column B do not reflect these shares. The amount in Column A excludes obligations under employment contracts to issue bonus shares in the future.

(2) Includes 319,945 shares currently available under the initial authorization for the Employee Stock Purchase Plan. The number of shares reserved for issuance under this plan is automatically increased on the first day of each fiscal year by the lesser of 0.5% of the common shares outstanding on the last day of the immediately preceding fiscal year or a lesser amount determined by our board of directors. On March 1, 2004, options were granted to employees to purchase an additional 1,391,645 shares of Emmis Communications Corporation common stock at $25.53 per share.

24

ITEM 6. SELECTED FINANCIAL DATA

Emmis Communications Corporation
FINANCIAL HIGHLIGHTS

	YEAR ENDED FEBRUARY 28 (29)
	(Dollars in thousands, except share data)
	2000			2001		2002			2003			2004
OPERATING DATA:
Net revenues	$	325,265		$	473,345	$	539,822		$	562,363		$	591,868
Station operating expenses, excluding noncash compensation		199,818			299,132		354,157			349,251			371,423
Corporate expenses, excluding noncash compensation		15,430			17,601		20,283			21,359			24,105
Time brokerage fees		—			7,344		479			—			—
Depreciation and amortization (1)		44,161			74,018		100,258			43,370			46,468
Noncash compensation		7,357			5,400		9,095			22,528			23,450
Restructuring fees		—			2,057		768			—			—
Impairment loss and other (2)		896			2,000		10,672			—			12,400
Operating income		57,603			65,793		44,110			125,855			114,022
Interest expense		51,986			72,444		129,100			103,835			85,958
Loss on debt extinguishment		3,272			—		1,748			13,506			—
Other income (loss), net (3)		3,247			38,037		(3,657	)		5,294			(3,339	)
Income (loss) before income taxes, discontinued operations and cumulative effect of accounting change		5,592			31,386		(90,395	)		13,808			24,725
Income (loss) from continuing operations		(33	)		13,736		(64,108	)		2,932			12,275
Net income (loss) (4)		(33	)		13,736		(64,108	)		(164,468	)		2,256
Net income (loss) available to common shareholders		(3,177	)		4,752		(73,092	)		(173,452	)		(6,728	)
Net income (loss) per share available to common shareholders:
Basic:
Continuing operations	$	(0.09	)	$	0.10	$	(1.54	)	$	(0.11	)	$	0.06
Discontinued operations, net of tax		—			—		—			—			(0.18	)
Cumulative effect of accounting change, net of tax		—			—		—			(3.16	)		—
Net income (loss) available to common shareholders	$	(0.09	)	$	0.10	$	(1.54	)	$	(3.27	)	$	(0.12	)
Diluted:
Continuing operations	$	(0.09	)	$	0.10	$	(1.54	)	$	(0.11	)	$	0.06
Discontinued operations, net of tax		—			—		—			—			(0.18	)
Cumulative effect of accounting change, net of tax		—			—		—			(3.16	)		—
Net income (loss) available to common shareholders	$	(0.09	)	$	0.10	$	(1.54	)	$	(3.27	)	$	(0.12	)
Weighted average common shares outstanding (5):
Basic		36,156			46,869		47,334			53,014			54,716
Diluted		36,156			47,940		47,334			53,014			55,066

25

	FEBRUARY 28 (29),
	(Dollars in thousands)
	2000		2001		2002		2003		2004
BALANCE SHEET DATA:
Cash	$	17,370	$	59,899	$	6,362	$	16,079	$	19,970
Working capital (6)		28,274		97,885		19,828		28,024		53,127
Net intangible assets		1,033,970		1,852,259		1,953,331		1,725,733		1,858,857
Total assets		1,376,306		2,555,872		2,559,069		2,165,413		2,300,569
Long-term credit facility, senior subordinated debt and senior discount notes (7)		300,000		1,380,000		1,343,507		1,194,789		1,261,568
Shareholders’ equity		776,367		807,471		735,557		704,705		748,946

	YEAR ENDED FEBRUARY 28 (29),
	(Dollars in thousands)
	2000			2001			2002			2003			2004
OTHER DATA:
Cash flows from (used in):
Operating activities	$	26,360		$	97,730		$	69,377		$	95,149		$	118,165
Investing activities		(271,946	)		(1,110,755	)		(175,105	)		106,301			(146,359	)
Financing activities		256,839			1,055,554			52,191			(191,733	)		32,085
Capital expenditures		29,316			26,225			30,135			30,549			30,191
Cash paid for taxes		9,589			550			1,281			887			1,143

(1) Included in depreciation and amortization expense for fiscal 2000, 2001, and 2002 is amortization expense of $28.4 million, $39.5 million, and $58.2 million, respectively, related to amortization of our goodwill and FCC licenses. We ceased amortization of our goodwill and FCC licenses in fiscal 2003 in connection with our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.”

(2) The loss in the fiscal year ended February 28, 2001 resulted from a $2.0 million impairment charge in connection with the sale of a radio asset. The loss in the fiscal year ended February 28, 2002 resulted from a $9.1 million asset impairment charge in connection with the planned sale of a radio station and a $1.6 million charge related to the early termination of certain TV contracts. The loss in the fiscal year ended February 29, 2004 resulted from our annual SFAS No. 142 review.

(3) Other income (loss), net for the fiscal year ended February 28, 2001 includes a $22.0 million gain on exchange of assets and a $17.0 million break-up fee received in connection with the sale of WALR-FM in Atlanta, Georgia to Cox Radio, Inc., net of related expenses.

(4) The net loss in fiscal year ended February 28, 2003 includes a charge of $167.4 million, net of tax, to reflect the cumulative effect of an accounting change in connection with our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.”

(5) In February 2000, Emmis effected a 2 for 1 stock split of the outstanding shares of common stock. Accordingly, all data shown has been retroactively adjusted to reflect the stock split.

(6) February 28, 2002 balance excludes assets held for sale of $123.4 million and credit facility debt to be repaid with proceeds of assets held for sale of $135.0 million.

(7) February 28, 2002 balance excludes $135.0 million of credit facility debt to be repaid with proceeds of assets held for sale.

26

Emmis Operating Company
FINANCIAL HIGHLIGHTS

	YEAR ENDED FEBRUARY 28 (29),
	(Dollars in thousands, except share data)
	2000			2001		2002			2003			2004
OPERATING DATA:
Net revenues	$	325,265		$	473,345	$	539,822		$	562,363		$	591,868
Station operating expenses, excluding noncash compensation		199,818			299,132		354,157			349,251			371,423
Corporate expenses, excluding noncash compensation		15,430			17,601		20,283			21,359			24,105
Time brokerage fees		—			7,344		479			—			—
Depreciation and amortization (1)		44,161			74,018		100,258			43,370			46,468
Noncash compensation		7,357			5,400		9,095			22,528			23,450
Restructuring fees		—			2,057		768			—			—
Impairment loss and other (2)		896			2,000		10,672			—			12,400
Operating income		57,603			65,793		44,110			125,855			114,022
Interest expense		51,986			72,444		104,102			78,058			59,434
Loss on debt extinguishment		3,272			—		1,748			4,444			—
Other income (loss), net (3)		3,247			38,037		(4,643	)		5,293			(3,338	)
Income (loss) before income taxes, discontinued operations and cumulative effect of accounting change		5,592			31,386		(66,383	)		48,646			51,250
Income (loss) from continuing operations		(33	)		13,736		(47,886	)		27,835			29,438
Net income (loss) (4)		(33	)		13,736		(47,886	)		(139,565	)		19,419

	FEBRUARY 28 (29),
	(Dollars in thousands)
	2000		2001		2002		2003		2004
BALANCE SHEET DATA:
Cash	$	17,370	$	59,899	$	6,362	$	16,079	$	19,970
Working capital (5)		28,274		97,885		20,951		29,147		54,250
Net intangible assets		1,033,970		1,852,259		1,953,331		1,725,733		1,858,857
Total assets		1,376,306		2,555,872		2,548,139		2,157,884		2,293,986
Long-term credit facility and senior subordinated debt (6)		300,000		1,380,000		1,117,000		996,945		1,038,145
Shareholder’s equity		776,367		807,471		944,467		878,418		939,822

	YEAR ENDED FEBRUARY 28 (29),
	(Dollars in thousands)
	2000			2001			2002			2003			2004
OTHER DATA:
Cash flows from (used in):
Operating activities	$	23,471		$	86,871		$	67,393		$	94,189		$	115,390
Investing activities		(271,946	)		(1,110,755	)		(175,105	)		106,301			(146,359	)
Financing activities		259,728			1,066,413			54,175			(190,773	)		34,860
Capital expenditures		29,316			26,225			30,135			30,549			30,191
Cash paid for taxes		9,589			550			1,281			887			1,143

(1) Included in depreciation and amortization expense for fiscal 2000, 2001, and 2002 is amortization expense of $28.4 million, $39.5 million, and $58.2 million, respectively, related to amortization of our goodwill and FCC licenses. We ceased amortization of our goodwill and FCC licenses in fiscal 2003 in connection with our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.”

(2) The loss in the fiscal year ended February 28, 2001 resulted from a $2.0 million impairment charge in connection with the sale of a radio asset. The loss in the fiscal year ended February 28, 2002 resulted from a $9.1 million asset impairment charge in connection with the planned sale of a radio station and a $1.6 million charge related to the early termination of certain TV contracts. The loss in the fiscal year ended February 29, 2004 resulted from our annual SFAS No. 142 review.

(3) Other income (loss), net for the fiscal year ended February 28, 2001 includes a $22.0 million gain on exchange of assets and a $17.0 million break-up fee received in connection with the sale of WALR-FM in Atlanta, Georgia to Cox Radio, Inc., net of related expenses.

27

(4) The net loss in fiscal year ended February 28, 2003 includes a charge of $167.4 million, net of tax, to reflect the cumulative effect of an accounting change in connection with our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.”

(5) February 28, 2002 balance excludes assets held for sale of $123.4 million and credit facility debt to be repaid with proceeds of assets held for sale of $ 135.0 million.

(6) February 28, 2002 balance excludes $135.0 million of credit facility debt to be repaid with proceeds of assets held for sale.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

GENERAL

     The following discussion pertains to Emmis Communications Corporation (“ECC”) and its subsidiaries (collectively, “Emmis” or the “Company”) and to Emmis Operating Company and its subsidiaries (collectively “EOC”). EOC became a wholly owned subsidiary of ECC in connection with the Company’s reorganization (see Note 1c. to our consolidated financial statements) on June 22, 2001. Unless otherwise noted, all disclosures contained in the Management’s Discussion and Analysis of Financial Condition and Results of Operation in the Form 10-K apply to Emmis and EOC.

     We own and operate radio, television and publishing properties located primarily in the United States. Our revenues are mostly affected by the advertising rates our entities charge, as advertising sales represent more than 85% of our consolidated revenues. These rates are in large part based on our entities’ ability to attract audiences/subscribers in demographic groups targeted by their advertisers. Broadcast entities’ ratings are measured principally four times a year by Arbitron Radio Market Reports for radio stations and by A.C. Nielsen Company for television stations. Because audience ratings in a station’s local market are critical to the station’s financial success, our strategy is to use market research and advertising and promotion to attract and retain audiences in each station’s chosen demographic target group.

     Our revenues vary throughout the year. As is typical in the broadcasting industry, our revenues and operating income are usually lowest in our fourth fiscal quarter. Our television division’s revenues typically fluctuate from year to year due to political spending, which is the highest in our odd-numbered fiscal years.

     In addition to the sale of advertising time for cash, stations typically exchange advertising time for goods or services, which can be used by the station in its business operations. We generally confine the use of such trade transactions to promotional items or services for which we would otherwise have paid cash. In addition, it is our general policy not to pre-empt advertising spots paid for in cash with advertising spots paid for in trade.

     The following table summarizes the sources of our revenues for each of the past three years. The category “Non Traditional” principally consists of ticket sales and sponsorships of events our stations and magazines conduct in their local markets. The category “Other” includes, among other items, revenues generated by the websites of our entities and barter.

	Year ended February 28 (29),
	2002		% of Total			2003		% of Total			2004		% of Total
Net revenues:
Local	$	339,899		63.0	%	$	333,264		59.3	%	$	364,065		61.5	%
National		130,939		24.3	%		132,486		23.6	%		139,865		23.6	%
Political		1,232		0.2	%		17,836		3.2	%		4,049		0.7	%
Publication Sales		19,659		3.6	%		20,683		3.7	%		21,765		3.7	%
Non Traditional		27,060		5.0	%		27,550		4.9	%		29,897		5.1	%
Other		21,033		3.9	%		30,544		5.3	%		32,227		5.4	%
Total net revenues	$	539,822				$	562,363				$	591,868

     A significant portion of our expenses varies in connection with changes in revenue. These variable expenses primarily relate to

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costs in our sales department, such as salaries, commissions, and bad debt. Our costs that do not vary as much in relation to revenue are mostly in our programming and general and administrative departments, such as talent costs, syndicated programming fees, utilities and office salaries. Lastly, our costs that are highly discretionary are costs in our marketing and promotions department, which we primarily incur to maintain and/or increase our audience and market share.

CRITICAL ACCOUNTING POLICIES

     Critical accounting policies are defined as those that encompass significant judgments and uncertainties, and potentially derive materially different results under different assumptions and conditions. We believe that our critical accounting policies are those described below.

     Impairment of Goodwill and Indefinite-lived Intangibles

     The annual impairment tests for goodwill and indefinite-lived intangibles under SFAS No. 142 require us to make certain assumptions in determining fair value, including assumptions about the cash flow growth rates of our businesses. Additionally, the fair values are significantly impacted by macro-economic factors, including market multiples at the time the impairment tests are performed. Accordingly, we may incur additional impairment charges in future periods under SFAS No. 142 to the extent we do not achieve our expected cash flow growth rates, or to the extent that market values decrease.

     Allocations for Purchased Assets

     We typically engage an independent appraisal firm to value assets acquired in a material acquisition. We use the appraisal report to allocate the purchase price of the acquisition. To the extent that purchased assets are not allocated appropriately, depreciation and amortization expense could be materially different.

     Allowance for Doubtful Accounts

     Our allowance for doubtful accounts requires us to estimate losses resulting from our customers’ inability to make payments. When evaluating the adequacy of the allowance for doubtful accounts, we specifically review historical write-off activity by market, large customer concentrations, and changes in our customer payment patterns. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, then additional allowances might be required.

ACQUISITIONS, DISPOSITIONS AND INVESTMENTS

          During the three year period ended February 29, 2004, we acquired three domestic radio stations, one television station, nine international radio stations, and a controlling interest in six domestic radio stations for an aggregate cash purchase price of $281.9 million. We also disposed of two domestic radio stations for an aggregate cash sales price of $135.5 million and we have agreed to sell our interest in two international radio stations for $7.3 million. A recap of the transactions completed during the three years ended February 29, 2004 is summarized hereafter. These transactions impact the comparability of operating results year over year.

          On December 23, 2003, Emmis agreed to sell its controlling interest in Votionis, S.A. (“Votionis”), which owns and operates two radio stations in Buenos Aires, Argentina, to its minority partners for $7.3 million in cash. The sale is subject to Argentine regulatory approvals and is expected to close during our quarter ended May 31, 2004. Emmis acquired its interest in Votionis in November 1999. In October 2003, we exercised our right to purchase the equity interests of our minority partners. During negotiations with our minority partners, we instead elected to sell our controlling interest. In connection with the sale, Emmis recorded a loss from discontinued operations of $10.0 million in fiscal 2004. The Argentine peso substantially devalued relative to the U.S. dollar early in 2002. The loss is primarily attributable to the devaluation of the peso. Votionis has historically been included in the radio reporting segment.

          On December 19, 2003, the Flemish Government awarded licenses to operate nine FM radio stations in the Flanders region of Belgium to several not-for-profit entities that have granted Emmis the exclusive right to provide the programming and sell the advertising on the stations. Five of these licenses are for the stations that Emmis began programming in August 2003 and the remaining four related to new stations that Emmis began operating in February 2004. The licenses are for an initial term of nine years and do not require the payment of any license fees to the Flemish Government.

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          On July 1, 2003, Emmis effectively acquired a controlling interest of 50.1% in a partnership that owns six radio stations in the Austin, Texas metropolitan area for a cash purchase price of approximately $106.5 million, including transaction costs of $1.0 million. These six stations are KLBJ-AM, KLBJ-FM, KDHT-FM, (formerly KXMG-FM), KROX-FM, KGSR-FM and KEYI-FM. This acquisition allowed Emmis to diversify its radio portfolio and participate in another large, high-growth radio market. The acquisition was financed through borrowings under the credit facility and was accounted for as a purchase. The Company recorded $35.3 million of goodwill, all of which is deductible for income tax purposes. In addition, Emmis has the option, but not the obligation, to purchase its partner’s entire 49.9% interest in the partnership after December 2007 based on an 18-multiple of trailing 12-month cash flow.

     Effective March 1, 2003, Emmis completed its acquisition of substantially all of the assets of television station WBPG-TV in Mobile, AL-Pensacola, FL from Pegasus Communications Corporation for approximately $11.7 million, including transaction costs of $0.2 million. We financed the acquisition through borrowings under the credit facility and the acquisition was accounted for as a purchase. This acquisition will allow us to achieve duopoly efficiencies in the market, such as lower programming acquisition costs and consolidation of general and administrative functions, since we already own a television station in the market, WALA.

     Effective May 1, 2002 Emmis completed the sale of substantially all of the assets of KALC-FM in Denver, Colorado to Entercom Communications Corporation for $88.0 million. Emmis had purchased KALC-FM on January 17, 2001, from Salem Communications Corporation for $98.8 million in cash plus a commitment fee of $1.2 million and transaction related costs of $0.9 million. On February 12, 2002, Emmis entered into a definitive agreement to sell KALC-FM to Entercom and Entercom began operating KALC-FM under a time brokerage agreement on March 16, 2002. Proceeds were used to repay amounts outstanding under our credit facility. Since the agreed-upon sales price for this station was less than its carrying amount as of February 28, 2002, we recognized an impairment loss of $9.1 million in fiscal 2002. Additionally, in fiscal 2003 we recorded an incremental $1.3 million loss in connection with the sale. Both of these losses are reflected in the accompanying consolidated statements of operations.

     Effective May 1, 2002 Emmis completed the sale of substantially all of the assets of KXPK-FM in Denver, Colorado to Entravision Communications Corporation for $47.5 million. Emmis had purchased KXPK-FM on August 24, 2000, from AMFM, Inc. for an allocated purchase price of $35.0 million in cash plus liabilities recorded of $1.2 million and transaction related costs of $0.4 million. Emmis entered into a definitive agreement to sell KXPK-FM to Entravision on February 12, 2002. Proceeds were used to repay amounts outstanding under our credit facility. In fiscal 2003 we recorded a gain on sale of assets of $10.2 million.

     On March 28, 2001, Emmis completed its acquisition of substantially all of the assets of radio stations KTAR-AM, KMVP-AM and KKLT-FM in Phoenix, Arizona from Hearst-Argyle Television, Inc. for $160.0 million in cash, plus transaction related costs of $0.7 million. The Company financed the acquisition through a $20.0 million advance payment borrowed under the credit facility in June 2000 and the remainder with borrowings under the credit facility and proceeds from ECC’s March 2001 senior discount notes offering. The acquisition was accounted for as a purchase. Emmis began programming and selling advertising on the radio stations on August 1, 2000 under a time brokerage agreement. The total purchase price was allocated to property and equipment and broadcast licenses based on an independent appraisal. Broadcast licenses are included in intangible assets in the accompanying consolidated balance sheets and, effective March 1, 2002, are no longer amortized in the consolidated statements of operations in accordance with SFAS No. 142.

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RESULTS OF OPERATIONS

YEAR ENDED FEBRUARY 29, 2004 COMPARED TO YEAR ENDED FEBRUARY 28, 2003

Net revenue pro forma reconciliation:

          Since March 1, 2002, we have sold two radio stations in Denver, Colorado, acquired a 50.1% controlling interest in six radio stations in Austin, Texas, purchased one television station in Mobile, Alabama, announced the sale of two radio stations in Argentina and sold a television production company (see Note 6 in the accompanying Notes to Consolidated Financial Statements). The following table reconciles actual results to pro forma results.

	Year ended February 28 (29),
	2004			2003			$ Change		% Change
Reported net revenues
Radio	$	279,822		$	254,818		$	25,004		9.8	%
Television		235,938			234,752			1,186		0.5	%
Publishing		76,108			72,793			3,315		4.6	%
Total		591,868			562,363			29,505		5.2	%
Plus: Net revenues from stations acquired
Radio		8,860			23,395
Television		—			1,033
Publishing		—			—
Total		8,860			24,428
Less: Net revenues from stations disposed
Radio		—			(3,884	)
Television		(1,140	)		(3,401	)
Publishing		—			—
Total		(1,140	)		(7,285	)
Pro forma net revenues
Radio		288,682			274,329			14,353		5.2	%
Television		234,798			232,384			2,414		1.0	%
Publishing		76,108			72,793			3,315		4.6	%
Total	$	599,588		$	579,506		$	20,082		3.5	%

For further disclosure of segment results, see Note 12 to the accompanying consolidated financial statements. For additional pro forma results, see Note 7 to the accompanying consolidated financial statements. Consistent with management’s review of the company, the pro forma results above include the impact of all announced or consummated acquisitions and dispositions, irrespective of materiality. These pro forma results include the impact of the sale of our two radio stations in Denver and our television production company and thus differ from the pro forma financial results reflected in Note 7 to the accompanying consolidated financial statements, which were prepared in accordance with GAAP.

Net revenues discussion:

          Radio net revenues increased principally as a result of our acquisition of six radio stations in Austin in July 2003. On a pro forma basis (assuming the Austin radio stations had been purchased on March 1, 2002 and the Denver radio stations had been sold on March 1, 2002), radio net revenues for the year ended February 29, 2004 would have increased $14.4 million, or 5.2%. We monitor the

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performance of our stations against the aggregate performance of the markets in which we operate. On a pro forma basis, for the year ended February 29, 2004 net revenues of our domestic radio stations were up 4.5%, whereas net revenues in the domestic radio markets in which we operate were up only 2.7%, based on reports for the periods prepared by Miller, Kaplan, Arase & Co., LLP. We believe we were able to outperform the markets in which we operate due to our commitment to training and developing local sales forces, as well as higher ratings, resulting, in part, from increased promotional spending in prior quarters. The higher ratings allowed us to charge higher rates for the advertisements we sold in the current period versus the same period in the prior year. Our advertising inventory sellout decreased slightly year over year.

          The increase in television net revenues for the year ended February 29, 2004 is due to strong growth in local advertising revenues offset by a substantial reduction in net political revenues as there were fewer political election campaigns in our fiscal 2004. Net political advertising revenues for the year ended February 29, 2004 were approximately $4.0 million. Net political advertising revenues for the year ended February 28, 2003 were approximately $17.5 million. Despite this decrease in net political revenues, ratings improvements and our commitment to training and developing local sales forces have enabled us to increase our share of local advertising revenues.

          Although publishing revenues increased for the year ended February 29, 2004 as compared to the same period in the prior year, the national advertising environment continues to be challenging for our publishing division. However, our magazines have been able to overcome shortfalls in national advertising revenues by producing more custom publications and by increasing special advertiser sections in our magazines.

          On a consolidated basis, net revenues for the year ended February 29, 2004 increased due to the effect of the items described above. On a pro forma basis, net revenues for the year ended February 29, 2004 increased $20.1 million, or 3.5% due to the effect of the items described above.

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Station operating expenses, excluding noncash compensation pro forma reconciliation:

          Since March 1, 2002, we have sold two radio stations in Denver, Colorado, acquired a 50.1% controlling interest in six radio stations in Austin, Texas, purchased one television station in Mobile, Alabama, announced the sale of two radio stations in Argentina and sold a television production company (see Note 6 in the accompanying Notes to Consolidated Financial Statements). The following table reconciles actual station operating expenses, excluding noncash compensation to pro forma station operating expenses, excluding noncash compensation:

	Year ended February 28 (29),
	2004			2003			$ Change		% Change
Reported station operating expenses, excluding noncash compensation
Radio	$	155,129		$	138,385		$	16,744		12.1	%
Television		150,485			148,041			2,444		1.7	%
Publishing		65,809			62,825			2,984		4.7	%
Total		371,423			349,251			22,172		6.3	%
Plus: Station operating expenses, excluding noncash compensation from stations acquired:
Radio		5,182			13,704
Television		—			2,431
Publishing		—			—
Total		5,182			16,135
Less: Station operating expenses, excluding noncash compensation from stations disposed:
Radio		—			(3,286	)
Television		(944	)		(2,322	)
Publishing		—			—
Total		(944	)		(5,608	)
Pro forma station operating expenses, excluding noncash compensation
Radio		160,311			148,803			11,508		7.7	%
Television		149,541			148,150			1,391		0.9	%
Publishing		65,809			62,825			2,984		4.7	%
Total	$	375,661		$	359,778		$	15,883		4.4	%

For further disclosure of segment results, see Note 12 to the accompanying consolidated financial statements. For additional pro forma results, see Note 7 to the accompanying consolidated financial statements. Consistent with management’s review of the company, the pro forma results above include the impact of all announced or consummated acquisitions and dispositions, irrespective of materiality. These pro forma results include the impact of the sale of our two radio stations in Denver and our television production company and thus differ from the pro forma financial results reflected in Note 7 to the accompanying consolidated financial statements, which were prepared in accordance with GAAP.

Station operating expenses, excluding noncash compensation discussion:

          Radio station operating expenses, excluding noncash compensation increased as a result of our acquisition of six radio stations in Austin in July 2003. The increase also relates to higher sales-related costs, higher insurance and health-related costs, higher programming costs and the reduction of $2.5 million in noncash compensation expense as more bonuses were paid in cash as opposed to

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stock in fiscal 2004, which had the impact of increasing cash expenses by an equal amount. On a pro forma basis (assuming the Austin radio stations had been purchased on March 1, 2002 and the Denver radio stations had been sold on March 1, 2002), radio station operating expenses, excluding noncash compensation, for the year ended February 29, 2004 would have increased $11.5 million, or 7.7%.

          Our acquisition of WBPG-TV in March 2003 contributed to the increase in television station operating expenses, excluding noncash compensation. On a pro forma basis (assuming the purchase of WBPG-TV and sale of Mira Mobile Television had occurred on March 1, 2002), television station operating expenses, excluding noncash compensation, for the year ended February 29, 2004 would have increased $1.4 million, or 0.9%. Higher programming costs and higher insurance and health-related costs were generally offset by lower sales-related costs.

          As previously discussed, our publishing division has replaced lost national advertising revenues with revenues from custom publications and special advertiser sections, which are more expensive to produce due principally to higher editorial and production costs. Our publishing division also experienced higher insurance and health-related costs.

          On a consolidated basis, station operating expenses, excluding noncash compensation, for the year ended February 29, 2004 increased due to the effect of the items described above. On a pro forma basis, station operating expenses, excluding noncash compensation, for the year ended February 29, 2004 increased $15.9 million, or 4.4% due to the effect of the items described above.

Noncash compensation expenses:

	For the years ended February 28 (29),
	2004		2003		$ Change			% Change
	(As reported, amounts in thousands)
Noncash compensation expense:
Radio	$	7,682	$	10,151	$	(2,469	)		(24.3	)%
Television		7,715		6,528		1,187			18.2	%
Publishing		2,780		2,358		422			17.9	%
Corporate		5,273		3,491		1,782			51.0	%
Total noncash compensation expense	$	23,450	$	22,528	$	922			4.1	%

          Noncash compensation includes compensation expense associated with restricted common stock issued under employment agreements, common stock issued to employees in lieu of cash bonuses, Company matches in our 401(k) plans, and common stock issued to employees in exchange for cash compensation pursuant to our stock compensation program. Our stock compensation program resulted in noncash compensation expense of approximately $16.5 million and $16.7 million for the years ended February 28 (29), 2003 and 2004, respectively. Effective March 1, 2003, Emmis elected to double its 401(k) match to $2 per employee, with one-half of the contribution made in Emmis stock. The increased 401(k) match was made instead of making a contribution to the Company’s profit sharing plan. This resulted in approximately $1.5 million of additional noncash compensation expense for the year ended February 29, 2004, over the same period in the prior year. These increases were partially offset by the payment of more bonuses in cash as opposed to stock in fiscal 2004 as compared to fiscal 2003.

          Effective January 1, 2004, we curtailed our stock compensation program by eliminating mandatory participation for employees making less than $52,000 per year. For calendar 2004, this change will result in an estimated $8 million decrease in the Company’s non-cash compensation expense and a corresponding increase in the Company’s cash operating expense. In all other respects, the 2004 stock compensation program remains comparable to the stock compensation programs in effect for each of the last two calendar years. No formal decisions have been made regarding its status beyond December 2004.

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Corporate expenses, excluding noncash compensation:

	For the years ended February 28 (29),
	2004		2003		$ Change		% Change
	(As reported, amounts in thousands)
Corporate expenses, excluding noncash compensation	$	24,105	$	21,359	$	2,746		12.9	%

          Corporate expenses, excluding noncash compensation increased due to higher insurance and health care costs, professional fees associated with our television digital spectrum initiative, funding for training and diversity initiatives, and higher corporate governance costs.

Depreciation and amortization:

	For the years ended February 28 (29),
	2004		2003		$ Change			% Change
	(As reported, amounts in thousands)
Depreciation and amortization:
Radio	$	9,331	$	8,133	$	1,198			14.7	%
Television		30,174		28,453		1,721			6.0	%
Publishing		873		1,917		(1,044	)		(54.5	)%
Corporate		6,090		4,867		1,223			25.1	%
Total depreciation and amortization	$	46,468	$	43,370	$	3,098			7.1	%

          Substantially all of the increase in radio depreciation and amortization expense is attributable to our Austin radio acquisition, which closed on July 1, 2003.

          Television depreciation and amortization expense increased due to additional depreciation of digital equipment upgrades.

          Publishing depreciation and amortization expense decreased due to certain definite-lived intangible assets becoming fully amortized during fiscal 2003.

          Corporate depreciation and amortization expense increased due to higher depreciation expense related to computer equipment and software purchases over the past twelve months.

          Consolidated depreciation and amortization expense increased due to the effect of the items described above.

Operating income:

	For the years ended February 28 (29),
	2004			2003			$ Change			% Change
	(As reported, amounts in thousands)
Operating income:
Radio	$	107,680		$	98,149		$	9,531			9.7	%
Television		35,164			51,730			(16,566	)		(32.0	)%
Publishing		6,646			5,693			953			16.7	%
Corporate		(35,468	)		(29,717	)		(5,751	)		19.4	%
Total operating income	$	114,022		$	125,855		$	(11,833	)		(9.4	)%

          Radio operating income increased due to our Austin radio acquisition, partially offset by higher station operating expenses at our existing stations and depreciation and amortization expense, as discussed above. Also noncash compensation in our radio segment decreased by approximately $2.5 million in fiscal 2004 as we paid more bonuses in cash as opposed to stock. As discussed above, the

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net revenue growth of our stations exceeded the revenue growth in the markets in which we operate. We expect our stations to continue to outperform the markets in which we operate as we seek to monetize sustained audience ratings momentum.

          Television operating income in fiscal 2005 includes a $12.4 million impairment charge relating to the company’s annual SFAS No. 142 review. The remaining decrease is attributable to higher noncash compensation expense, higher depreciation and amortization expense, and the reduction in political net revenues, as discussed above. We expect our television division to increase operating income in fiscal 2005 as our stations will benefit from political advertising spending and revenues from the Olympics.

          Publishing operating income increased due to higher net revenues and lower depreciation and amortization, partially offset by higher station operating expenses, as discussed above. Our publishing division has experienced slow, steady growth, which we expect to continue. Our magazines are generally mature properties with limited direct competition.

          Corporate operating income declined due to higher corporate expenses, noncash compensation expense, and depreciation and amortization, as discussed above. We expect corporate expenses to increase in fiscal 2005 by approximately 30%, the majority of which results from professional fees incurred in developing a business plan for our television digital spectrum initiative as well as higher governance costs attributable to Sarbanes-Oxley compliance and higher insurance costs.

          On a consolidated basis, total operating income decreased due to the changes in radio, television and publishing operating income and higher corporate expenses, as discussed above.

Interest expense:

	For the years ended February 28 (29),
	2004		2003		$ Change			% Change
	(As reported, amounts in thousands)
Interest expense:
Emmis	$	85,958	$	103,835	$	(17,877	)		(17.2	)%
EOC	$	59,434	$	78,058	$	(18,624	)		(23.9	)%

          With respect to Emmis, interest expense decreased primarily due to a decrease in the interest rates we pay on amounts outstanding under our credit facility, which is variable rate debt, repayments of amounts outstanding under our credit facility and redemption of amounts outstanding under our senior discount notes. The decreased interest rates reflect both a decrease in the base interest rate for our credit facility due to a lower overall interest rate environment, and a decrease in the margin applied to the base rate resulting from the June 2002 credit facility amendment. A portion of the decrease in interest expense is attributable to the expiration of interest rate swap agreements originally entered into in fiscal 2001. These swaps, which began expiring in February 2003, had an original aggregate notional amount of $350.0 million and fixed LIBOR at a weighted-average 4.76%. As of February 29, 2004, we had no interest rate swap agreements outstanding and LIBOR was at approximately 1.13%. In the quarter ended May 31, 2002, we repaid amounts outstanding under our credit facility with the proceeds of our Denver radio asset sales in May 2002 and a portion of the proceeds from our equity offering in April 2002, with the remaining portion being used to redeem amounts outstanding under our senior discount notes in the quarter ended August 31, 2002. We reduced our total debt outstanding by $270.6 million during the year ended February 28, 2003.

          With respect to EOC, interest expense decreased primarily due to a decrease in the interest rates we pay on amounts outstanding under our credit facility, and repayments of amounts outstanding under our credit facility as discussed for Emmis above. The difference between interest expense for Emmis and EOC is due to interest expense associated with the senior discount notes, for which ECC is the obligor, and thus it is excluded from the results of operations of EOC.

          Subsequent to the balance sheet date, we refinanced our credit facility and senior subordinated notes and retired substantially all of our senior discount notes. These debt refinancings will result in significantly lower interest expense in fiscal 2005. See Note 15 to the accompanying consolidated financial statements for more discussion.

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Income (loss) before income taxes, discontinued operations and accounting change:

	For the years ended February 28 (29),
	2004		2003		$ Change		% Change
	(As reported, amounts in thousands)
Income (loss) before income taxes, discontinued operations and accounting changes:
Emmis	$	24,725	$	13,808	$	10,917		79.1	%
EOC	$	51,250	$	48,646	$	2,604		5.4	%

     With respect to Emmis, income before income taxes, discontinued operations and accounting change increased due to lower interest expense, partially offset by lower operating income as discussed above and due to the following prior year items: (1) the gain on sale of our Denver radio assets of $8.9 million in fiscal 2003, offset by (2) loss on debt extinguishment of $13.5 million in fiscal 2003, and (3) a loss from unconsolidated affiliates of $4.5 million in fiscal 2003.

     With respect to EOC, income before income taxes, discontinued operations and accounting change increased due to lower interest expense, partially offset by lower operating income as discussed above and due to the following prior year items: (1) the gain on sale of our Denver radio assets of $8.9 million in fiscal 2003, offset by (2) loss on debt extinguishment of $4.4 million in fiscal 2003, and (3) a loss from unconsolidated affiliates of $4.5 million in fiscal 2003.

Net loss:

	For the years ended February 28 (29),
	2004		2003			$ Change		% Change
	(As reported, amounts in thousands)
Net income (loss):
Emmis	$	2,256	$	(164,468	)	$	166,724		(101.4	)%
EOC	$	19,419	$	(139,565	)	$	158,984		(113.9	)%

          With respect to Emmis, net income increased mainly due to (1) the inclusion in the prior year of a $167.4 million impairment charge, net of a deferred tax benefit, under the cumulative effect of accounting change as an accumulated transition adjustment attributable to the adoption on March 1, 2002 of SFAS No. 142, “Goodwill and Other Intangible Assets”, and (2) a reduction in interest expense as a result of the factors described above, partially offset by the gain on sale of our Denver radio assets of $8.9 million, loss on debt extinguishment of $13.5 million and loss from unconsolidated affiliates of $4.5 million, all included in the prior year, all net of tax.

          With respect to EOC, net income increased mainly due to (1) the inclusion in the prior year of a $167.4 million impairment charge, net of a deferred tax benefit, under the cumulative effect of accounting change as an accumulated transition adjustment attributable to the adoption on March 1, 2002 of SFAS No. 142, “Goodwill and Other Intangible Assets”, and (2) a reduction in interest expense as a result of the factors described above, partially offset by the gain on sale of our Denver radio assets of $8.9 million, loss on debt extinguishment of $4.4 million and loss from unconsolidated affiliates of $4.5 million, all included in the prior year, and all net of tax.

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RESULTS OF OPERATIONS

YEAR ENDED FEBRUARY 28, 2003 COMPARED TO YEAR ENDED FEBRUARY 28, 2002

Net revenue pro forma reconciliation:

          During fiscal 2003, we sold two radio stations in Denver (see Note 6 in the accompanying Notes to Consolidated Financial Statements). The following table reconciles actual net revenue to pro forma net revenue:

	Year ended February 28,
	2003			2002			$ Change			% Change
Reported net revenues
Radio	$	254,818		$	262,077		$	(7,259	)		(2.8	)%
Television		234,752			206,529			28,223			13.7	%
Publishing		72,793			71,216			1,577			2.2	%
Total		562,363			539,822			22,541			4.2	%
Less: Net revenues from stations disposed
Radio		(1,238	)		(11,968	)
Television		—			—
Publishing		—			—
Total		(1,238	)		(11,968	)
Pro forma net revenues
Radio		253,580			250,109			3,471			1.4	%
Television		234,752			206,529			28,223			13.7	%
Publishing		72,793			71,216			1,577			2.2	%
Total	$	561,125		$	527,854		$	33,271			6.3	%

For further disclosure of segment results, see Note 12 to the accompanying consolidated financial statements. For additional pro forma results, see Note 7 to the accompanying consolidated financial statements. Consistent with management’s review of the company, the pro forma results above include the impact of all announced or consummated acquisitions and dispositions, irrespective of materiality. These pro forma results include the impact of the sale of our two radio stations in Denver and thus differ from the pro forma financial results reflected in Note 7 to the accompanying consolidated financial statements, which were prepared in accordance with GAAP.

Net revenues discussion:

          Radio net revenues decreased due to the sale of our two radio stations in Denver in May 2002. On a pro forma basis (assuming the sale of our two radio stations in Denver occurred on March 1, 2001), radio net revenues for the year ended February 28, 2003 would have increased $3.5 million, or 1.4%. Radio net revenues were negatively impacted by the devaluation of the peso in Argentina, as international radio net revenues for the year ended February 28, 2003 decreased $4.9 million, or 29.3%. Domestic radio net revenues were negatively impacted by a format change by one of our competitors in the New York market. The negative impact in our New York market, which represents approximately 30% of our radio net revenues, was offset by improved performance in our other radio markets, especially Los Angeles and Phoenix.

          Television net revenues increased due to our television stations selling a higher percentage of their inventory and charging higher rates due to ratings improvements, coupled with approximately $17.5 million of political advertising net revenues in the year ended February 28, 2003.

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          Publishing revenues were essentially flat for the year, as our publishing business has not seen the same level of recovery in advertisement spending that, in general, our radio and television businesses have experienced.

          On a pro forma basis consolidated net revenues for the year ended February 28, 2003 would have increased $33.2 million, or 6.3% due to the effect of the items described above.

Station operating expenses, excluding noncash compensation pro forma reconciliation:

          During fiscal 2003, we sold two radio stations in Denver (see Note 6 in the accompanying Notes to Consolidated Financial Statements). The following table reconciles actual station operating expenses, excluding noncash compensation to pro forma station operating expenses, excluding noncash compensation:

	Year ended February 28,
	2003			2002			$ Change			% Change
Reported station operating expenses, excluding noncash compensation
Radio	$	138,385		$	149,059		$	(10,674	)		(7.2	)%
Television		148,041			140,325			7,716			5.5	%
Publishing		62,825			64,773			(1,948	)		(3.0	)%
Total		349,251			354,157			(4,906	)		(1.4	)%
Less: Station operating expenses, excluding noncash compensation from stations disposed:
Radio		(708	)		(8,649	)
Television		—			—
Publishing		—			—
Total		(708	)		(8,649	)
Pro forma station operating expenses, excluding noncash compensation
Radio		137,677			140,410			(2,733	)		(1.9	)%
Television		148,041			140,325			7,716			5.5	%
Publishing		62,825			64,773			(1,948	)		(3.0	)%
Total	$	348,543		$	345,508		$	3,035			0.9	%

For further disclosure of segment results, see Note 12 to the accompanying consolidated financial statements. For additional pro forma results, see Note 7 to the accompanying consolidated financial statements. Consistent with management’s review of the company, the pro forma results above include the impact of all announced or consummated acquisitions and dispositions, irrespective of materiality. These pro forma results include the impact of the sale of our two radio stations in Denver and thus differ from the pro forma financial results reflected in Note 7 to the accompanying consolidated financial statements, which were prepared in accordance with GAAP.

Station operating expenses, excluding noncash compensation discussion:

          Radio station operating expenses, excluding noncash compensation decreased principally due to the sale of our two radio stations in Denver in May 2002. On a pro forma basis (assuming the sale of our two radio stations in Denver occurred on March 1, 2001), radio operating expenses, excluding noncash compensation for the year ended February 28, 2003 would have decreased $2.7 million, or 1.9%. Increases in promotional spending for our radio stations were offset by the implementation of our stock compensation

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program in December 2001, whereby the salaries of our full-time employees were generally reduced by 10% and supplemented with a corresponding stock grant that is reflected in noncash compensation expense.

          Television station operating expenses, excluding noncash compensation increased due to higher programming, promotion and sales-related costs, partially offset by the impact of our stock compensation program.

          Publishing operating expenses, excluding noncash compensation, decreased due to cost control measures and our stock compensation program.

          On a pro forma basis, consolidated station operating expenses, excluding noncash compensation for the year ended February 28, 2003 would have increased $3.0 million, or 0.9% due to the effect of the items described above.

Noncash compensation expenses:

	For the years ended February 28,
	2003		2002		$ Change		% Change
	(As reported, amounts in thousands)
Noncash compensation expense:
Radio	$	10,151	$	5,505	$	4,646		84.4	%
Television		6,528		2,345		4,183		178.4	%
Publishing		2,358		428		1,930		450.9	%
Corporate		3,491		817		2,674		327.3	%
Total noncash compensation expense	$	22,528	$	9,095	$	13,433		147.7	%

          Noncash compensation includes compensation expense associated with restricted common stock issued under employment agreements, common stock issued to employees at our discretion, and common stock issued to employees pursuant to our stock compensation program. Our stock compensation program resulted in noncash compensation expense of approximately $16.5 million for the year ended February 28, 2003. Our stock compensation program began December 2001; therefore, only $3.1 million of expense was included in noncash compensation expense in the year ended February 28, 2002.

Corporate expenses, excluding noncash compensation:

	For the years ended February 28,
	2003		2002		$ Change		% Change
	(As reported, amounts in thousands)
Corporate expenses, excluding noncash compensation	$	21,359	$	20,283	$	1,076		5.3	%

          The increase in corporate expenses, excluding noncash compensation increased due to higher professional fees associated with financing and other transactions, and higher health care costs, partially offset by lower cash compensation due to our stock compensation program.

Depreciation and amortization:

	For the years ended February 28,
	2003		2002		$ Change			% Change
	(As reported, amounts in thousands)
Depreciation and amortization:
Radio	$	8,133	$	33,516	$	(25,383	)		(75.7	)%
Television		28,453		53,513		(25,060	)		(46.8	)%
Publishing		1,917		8,477		(6,560	)		(77.4	)%
Corporate		4,867		4,752		115			2.4	%
Total depreciation and amortization	$	43,370	$	100,258	$	(56,888	)		(56.7	)%

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          The Radio depreciation and amortization decrease was mainly attributable to our adoption on March 1, 2002 of SFAS No. 142, “Goodwill and Other Intangible Assets.” Adoption of this accounting standard had the impact of eliminating our amortization expense for goodwill and FCC licenses. For comparison purposes, for the year ended February 28, 2002, we recorded radio amortization expense for goodwill and FCC licenses of $24.8 million.

          The Television depreciation and amortization expense decrease was also mainly attributable to our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.” For comparison purposes, for the year ended February 28, 2002, we recorded television amortization expense for goodwill and FCC licenses of $28.0 million.

          The Publishing depreciation and amortization expense decrease was also mainly attributable to our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.” For comparison purposes, for the year ended February 28, 2002, we recorded publishing amortization expense for goodwill of $5.4 million.

          On a consolidated basis, the depreciation and amortization expense decrease was also mainly attributable to our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.” For comparison purposes, for the year ended February 28, 2002, we recorded amortization expense for goodwill and FCC licenses of $58.2 million.

Operating income:

	For the years ended February 28,
	2003			2002			$ Change			% Change
	(As reported, amounts in thousands)
Operating income:
Radio	$	98,149		$	64,455		$	33,694			52.3	%
Television		51,730			8,737			42,993			492.1	%
Publishing		5,693			(2,462	)		8,155			(331.2	)%
Corporate		(29,717	)		(26,620	)		(3,097	)		11.6	%
Total operating income	$	125,855		$	44,110		$	81,745			185.3	%

          Radio operating income increased due to our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.” Adoption of this accounting standard had the impact of eliminating our radio amortization expense for goodwill and FCC licenses, which totaled $24.8 million in the year ended February 28, 2002. Fiscal 2002 radio operating income included a $9.1 million impairment loss related to the sale of a radio station.

          Television operating income increased due to higher revenues, as previously described, and our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.” Adoption of this accounting standard had the impact of eliminating our television amortization expense for goodwill and FCC licenses, which totaled $28.0 million in the year ended February 28, 2003.

          Publishing operating income increased primarily due to our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.” Adoption of this accounting standard had the impact of eliminating our publishing amortization expense for goodwill, which totaled $5.4 million in the year ended February 28, 2002.

          On a consolidated basis, operating income increased due to better operating performance at our stations, especially our television stations, and our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets,” each as described above. Adoption of this accounting standard had the impact of eliminating our amortization expense for goodwill and FCC licenses, which totaled $58.2 million in the year ended February 28, 2002.

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Interest expense:

	For the years ended February 28,
	2003		2002		$ Change			% Change
	(As reported, amounts in thousands)
Interest expense:
Emmis	$	103,835	$	129,100	$	(25,265	)		(19.6	)%
EOC	$	78,058	$	104,102	$	(26,044	)		(25.0	)%

     Emmis interest expense decreased due to a decrease in the interest rates we pay on amounts outstanding under our credit facility, which is variable rate debt, repayments of amounts outstanding under our credit facility and redemption of amounts outstanding under our senior discount notes. The decreased interest rates reflected both a decrease in the base interest rate for our credit facility due to a lower overall interest rate environment, and a decrease in the margin applied to the base rate resulting from the June 2002 credit facility amendment. In the quarter ended May 31, 2002, we repaid amounts outstanding under our credit facility with the proceeds of our Denver radio asset sales in May 2002 and a portion of the proceeds from our equity offering in April 2002, with the remaining portion being used to redeem amounts outstanding under our senior discount notes in the quarter ended August 31, 2002. We reduced our total debt outstanding by $270.6 million during the year ended February 28, 2003.

        EOC interest expense decreased due to a decrease in the interest rates we pay on amounts outstanding under our credit facility, and repayments of amounts outstanding under our credit facility as discussed for Emmis above. The difference between interest expense for Emmis and EOC is due to interest expense associated with the senior discount notes, for which ECC is the obligor, and thus it is excluded from the results of operations of EOC.

Income (loss) before income taxes, discontinued operations and accounting change:

	For the years ended February 28,
	2003		2002			$ Change		% Change
	(As reported, amounts in thousands)
Income (loss) before income taxes, discontinued operations and accounting changes:
Emmis	$	13,808	$	(90,395	)	$	104,203		N/A
EOC	$	48,646	$	(66,383	)	$	115,029		N/A

        Emmis income before income taxes, discontinued operations and accounting change increased mainly due to: (1) better operating results at our stations, (2) the elimination of our amortization expense for goodwill and broadcasting licenses of $58.2 million, (3) a reduction in interest expense as a result of the factors described above under interest expense, and (4) the gain on sale of our Denver radio assets of $8.9 million. The prior year loss before income taxes, extraordinary loss and accounting change included a $9.1 million impairment loss related to the sale of a radio station.

        EOC income before income taxes, discontinued operations and accounting change increased mainly due to: (1) better operating results at our stations, (2) the elimination of our amortization expense for goodwill and broadcasting licenses of $58.2 million, (3) a reduction in interest expense as a result of the factors described above under interest expense, (4) the gain on sale of our Denver radio assets of $8.9 million, partially offset by a $13.5 million loss on debt extinguishment relating to the premium paid on the redemption of our discount notes and the write-off of deferred debt fees associated with debt redeemed during the year. The prior year loss before income taxes, extraordinary loss and accounting change included a $9.1 million impairment loss related to the sale of a radio station.

Net loss:

	For the years ended February 28,
	2003			2002			$ Change			% Change
	(As reported, amounts in thousands)
Net loss:
Emmis	$	(164,468	)	$	(64,108	)	$	(100,360	)		(156.5	)%
EOC	$	(139,565	)	$	(47,886	)	$	(91,679	)		(191.5	)%

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        Emmis net loss increased mainly due to (1) a $167.4 million impairment charge, net of a deferred tax benefit, under the cumulative effect of accounting change as an accumulated transition adjustment attributable to the adoption on March 1, 2002 of SFAS No. 142, “Goodwill and Other Intangible Assets.” and (2) a $13.5 million loss on debt extinguishment relating to the premium paid on the redemption of our discount notes and the write-off of deferred debt fees associated with debt repaid during the year, partially offset by, better operating results, the elimination of amortization expense, the gain on asset sales and the reduction in interest expense, all described above, and all net of taxes.

        EOC net loss increased mainly due to (1) a $167.4 million impairment charge, net of a deferred tax benefit, under the cumulative effect of accounting change as an accumulated transition adjustment attributable to the adoption on March 1, 2002 of SFAS No. 142, “Goodwill and Other Intangible Assets;” and (2) a $4.4 million loss on debt extinguishment relating to the write-off of deferred debt fees associated with debt repaid during the year, partially offset by better operating results, the elimination of amortization expense, the gain on asset sales and the reduction in interest expense, all described above, and all net of taxes.

LIQUIDITY AND CAPITAL RESOURCES

     OFF-BALANCE SHEET FINANCINGS AND LIABILITIES

     Other than lease commitments, legal contingencies incurred in the normal course of business, agreements for future barter and program rights not yet available for broadcast at February 29, 2004, and employment contracts for key employees, all of which are disclosed in Note 9 to the consolidated financial statements, the Company does not have any off-balance sheet financings or liabilities. The Company does not have any majority-owned and controlled subsidiaries that are not included in the consolidated financial statements, nor does the Company have any interests in or relationships with any “special-purpose entities” that are not reflected in the consolidated financial statements or disclosed in the Notes to Consolidated Financial Statements.

     SUMMARY DISCLOSURES ABOUT CONTRACTUAL CASH OBLIGATIONS

     The following table reflects a summary of our contractual cash obligations as of February 29, 2004:

	PAYMENTS DUE BY PERIOD
	(AMOUNTS IN THOUSANDS)
			Less than		1 to 3		4 to 5		After 5
Contractual Cash Obligations:	Total		1 Year		Years		Years		Years
Long-term debt (1)	$	1,336,868	$	6,539	$	15,520	$	15,520	$	1,299,289
Operating leases		67,018		8,951		15,742		13,139		29,186
TV program rights payable (2)		53,768		27,502		19,915		5,728		623
Future TV program rights payable (2)		89,542		9,315		37,984		26,789		15,454
Radio broadcast agreements		5,265		1,769		2,394		1,102		—
Employment agreements		56,455		27,224		24,635		4,198		398
Total Contractual Cash Obligations	$	1,608,916	$	81,300	$	116,190	$	66,476	$	1,344,950

(1) Includes ECC’s senior discount notes accrete to a face value of $286.3 million in March 2006 and become due in March 2011. As of February 29, 2004, the carrying value of the senior discount notes was $223.4 million. With respect to EOC, the above table would be the same except ECC’s senior discount notes would be excluded. Subsequent to the balance sheet date, we refinanced substantially all of our long-term debt. The payment amounts in the above table are based on the terms of the new indebtedness. See Note 15 to the accompanying consolidated financial statements for more discussion.

(2) TV program rights payable represents payments to be made to various program syndicators and distributors in accordance with current contracts for the rights to broadcast programs. Future TV program rights payable represents commitments for program rights not available for broadcast as of February 29, 2004.

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We expect to fund these payments primarily with cash flows from operations, but we may also issue additional debt or equity or sell assets.

SOURCES OF LIQUIDITY

        Our primary sources of liquidity are cash provided by operations and cash available through revolving loan borrowings under our credit facility. Our primary uses of capital have been historically, and are expected to continue to be, capital expenditures, working capital, debt service and funding acquisitions and, in the case of ECC, preferred stock dividend requirements. Since we manage cash on a consolidated basis, any cash needs of a particular segment or operating entity are met by intercompany transactions. See Investing Activities below for discussion of specific segment needs.

        At February 29, 2004, we had cash and cash equivalents of $20.0 million and net working capital for Emmis and EOC of $53.1 million and $54.3 million, respectively. At February 28, 2003, we had cash and cash equivalents of $16.1 million and net working capital for Emmis and EOC of $28.0 million and $29.1 million, respectively. The increase in net working capital primarily relates to the reclassification of the assets of our 75% interest in two radio stations in Argentina to current as the sale is expected to be completed within ninety days of the balance sheet date.

     Operating Activities

        With respect to Emmis, net cash flows provided by operating activities were $118.2 million for the year ended February 29, 2004 compared to $95.1 million for the same period of the prior year. With respect to EOC, net cash flows provided by operating activities were $115.4 million for the year ended February 29, 2004 compared to net cash flows provided by operating activities of $94.2 million for the same period of the prior year. The increase in cash flows provided by operating activities for the year ended February 29, 2004 as compared to the same period in the prior year is due to our increase in net revenues less station operating expenses and corporate expenses. Cash flows provided by operating activities are historically the highest in our third and fourth fiscal quarters as a significant portion of our accounts receivable collections is derived from revenues recognized in our second and third fiscal quarters, which are our highest revenue quarters.

     Investing Activities

        Cash flows used in investing activities were $146.4 million for the year ended February 29, 2004 compared to cash provided by investing activities of $106.3 million in the same period of the prior year. The decrease is primarily attributable to our purchase of radio stations in the year ended February 29, 2004 as opposed to our sale of radio stations in the year ended February 28, 2003. Investing activities include capital expenditures and business acquisitions and dispositions.

        As discussed in results of operations above and in Note 6 to the accompanying consolidated financial statements, on July 1, 2003, Emmis effectively acquired a controlling interest of 50.1% in a partnership that owns six radio stations in the Austin, Texas metropolitan area for a cash purchase price of approximately $106.5 million, including transaction costs of $1.0 million, all of which was funded with borrowings under the credit facility. Emmis sold radio stations KALC-FM and KXPK-FM in Denver, Colorado for $135.5 million in cash in the quarter ended May 31, 2002. The net cash proceeds of $135.5 million were used to repay outstanding borrowings under the credit facility.

        In the years ended February 28 (29), 2002, 2003 and 2004, we had capital expenditures of $30.1 million, $30.5 million, and $30.2 million, respectively. These capital expenditures primarily relate to leasehold improvements to various office and studio facilities, broadcast equipment purchases, tower upgrades and costs associated with our conversion to digital television. We anticipate that future requirements for capital expenditures will include capital expenditures incurred during the ordinary course of business, including approximately $3.1 million in fiscal 2005 for the conversion to digital television. Although all but one of our stations as of April 2004 were broadcasting a digital signal, we will incur approximately $12 million of additional costs, after fiscal 2005, to upgrade the digital signals of three of our local stations and six of our satellite stations and to accommodate the channel changes required as analog licenses are retracted. We expect to fund such capital expenditures with cash generated from operating activities and borrowings under our credit facility.

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     Financing Activities

        Cash flows provided by financing activities for Emmis and EOC were $32.1 million and $34.9 million, respectively, for the year ended February 29, 2004. Cash flows used in financing activities for Emmis and EOC were $191.7 million and $190.8 million, respectively, for the same period of the prior year.

        As discussed in Note 2 to the accompanying consolidated financial statements, in April 2002, ECC completed the sale of 4.6 million shares of its Class A common stock at $26.80 per share resulting in total proceeds of $123.3 million. The net proceeds of $120.2 million were contributed to EOC and 50% of the net proceeds were used in April 2002 to repay outstanding borrowings under our credit facility. The remainder was invested, and in July 2002 distributed to ECC to redeem approximately 22.6% of ECC’s $370.0 million, face value, senior discount notes (see discussion below). As indicated in Investing Activities above, we paid $106.5 million on July 1, 2003 for a controlling 50.1% interest in six radio stations in Austin, Texas. These funds were borrowed under our senior credit facility. Also, net proceeds of $135.5 million from the sale of two radio stations in Denver were also used to repay outstanding indebtedness under the credit facility during the year ended February 28, 2003.

        On March 27, 2001, ECC received $202.6 million of proceeds from the issuance of $370.0 million face value, 12 1/2% senior discount notes due 2011. The net proceeds of $190.6 million, less $93.0 million held in escrow at ECC, were distributed to EOC and used to fund the acquisition of the Phoenix radio stations. In June 2001, upon completion of the Company’s reorganization to form EOC and make ECC a holding company, the proceeds held in escrow were released and used to reduce outstanding borrowings under the credit facility.

        As of February 29, 2004, EOC had $1,039.8 million of corporate indebtedness outstanding under our credit facility ($739.8 million) and senior subordinated notes ($300.0 million), and other indebtedness ($10.8 million). As of February 29, 2004, total indebtedness outstanding for Emmis included all of EOC’s indebtedness as well as $223.4 million of ECC’s senior discount notes. ECC also had $143.8 million of our convertible preferred stock outstanding. All outstanding amounts under our credit facility bear interest, at our option, at a rate equal to LIBOR or an alternative Base Rate plus a margin. As of February 29, 2004, our weighted average borrowing rate under our credit facility was approximately 3.4% and our overall weighted average borrowing rate, after taking into account amounts outstanding under our senior subordinated notes and senior discount notes, was approximately 6.1%. The overall weighted average borrowing rate for EOC, which would exclude the senior discount notes, was approximately 4.8%.

        The debt service requirements of EOC over the next twelve month period (net of interest under our credit facility) are expected to be $27.5 million, after giving effect to the refinancing of the credit facility and senior subordinated notes in May 2004 (see below). This amount is comprised of $25.8 million for interest under our new senior subordinated notes and $1.7 million for repayment of term notes under our new credit facility. Although interest will be paid under the credit facility at least every three months, the amount of interest is not presently determinable given that the credit facility bears interest at variable rates. ECC has no additional debt service requirements in the next twelve-month period since interest on its senior discount notes accretes into the principal balance of the notes until March 2006. However, ECC has preferred stock dividend requirements of $9.0 million for the next twelve-month period. The terms of ECC’s preferred stock provide for a quarterly dividend payment of $.78125 per share on each January 15, April 15, July 15 and October 15. While Emmis had sufficient liquidity to declare and pay the dividends as they become due, it was not permitted to do so for the April 15, 2002 payment because Emmis’ leverage ratio under the senior discount notes indenture exceeded 8:1 and its leverage ratio under the senior subordinated notes indenture exceeded 7:1. ECC’s board of directors set a record date for the April 15, 2002 payment, but did not declare the dividend. Instead, a wholly-owned, unrestricted subsidiary of EOC made a payment of $.78125 per share to each preferred shareholder of record. This subsidiary was permitted under the senior discount notes and senior subordinated notes indentures to make the payment to the preferred shareholders. Currently, Emmis meets its leverage ratio requirements under both the senior discount notes indenture and the senior subordinated notes indenture. On July 2, 2002, ECC’s board of directors declared the April 15, 2002 dividend, as well as dividends payable October 15, 2001 and January 15, 2002, and deemed the obligation to pay each dividend to have been discharged by the subsidiary’s prior payment.

        At April 23, 2004, we had $170.5 million available under our credit facility, net of $2.5 million in outstanding letters of credit. As part of our business strategy, we continually evaluate potential acquisitions of radio and television stations, as well as publishing properties. If we elect to take advantage of future acquisition opportunities, we may incur additional debt or issue additional equity or debt securities, depending on market conditions and other factors. In addition, Emmis has the option, but not the obligation, to purchase our minority partner’s entire interest in six radio stations in Austin, Texas after a period of approximately five years based on an 18-multiple of trailing 12-month cash flow.

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        On May 10, 2004, we refinanced substantially all of our long-term debt. EOC received $368.4 million in proceeds from the issuance of its 6 7/8% senior subordinated notes due 2012 in the principal amount of $375 million, net of the initial purchasers’ discount of $6.6 million, and EOC borrowed $978.5 million under a new $1.025 billion senior credit facility. The gross proceeds from these transactions and $2.8 million of cash on hand were used to (i) repay the remaining principal indebtedness under EOC’s former credit facility of approximately $744.3 million, (ii) repurchase $295.1 million aggregate principal amount of EOC’s 8 1/8% senior subordinated notes due 2009, (iii) repurchase $227.7 million aggregate accreted value of our 12 1/2% senior discount notes due 2011, (iv) pay $4.6 million in accrued interest, (v) pay an estimated $12.6 million in transaction fees and (vi) pay $72.0 million in prepayment and redemption fees. In connection with the transactions, we incurred an estimated loss of $97.1 million, consisting of (i) $72.0 million for the prepayment and redemption fees, (ii) $24.3 million for the write-off of deferred debt costs associated with the retired debt, and (iii) an estimated $0.8 million in expenses related to the repurchase of indebtedness existing at February 29, 2004.

        On May 10, 2004, EOC gave notice to redeem the remaining $4.9 million of principal amount of its 8 1/8% senior subordinated notes due 2009. These notes will be redeemed at 104.063% plus accrued and unpaid interest and will be financed with additional borrowings on our new credit facility. The transaction is expected to close on June 10, 2004 and will result in an additional loss of $0.3 million.

        The new senior credit facility provides for total borrowings of up to $1.025 billion, including (i) a $675 million term loan and (ii) a $350 million revolver, of which $100.0 million may be used for letters of credit. The new senior credit facility also provides for the ability to have incremental facilities of up to $675.0 million, of which up to $350.0 million may be allocated to a revolver. EOC issued $375.0 million aggregate principal amount of its 6 7/8% senior subordinated notes. The notes have no sinking fund requirement and are due in full on May 15, 2012. Interest is payable semi-annually on May 15 and November 15 of each year. See Note 15 to the accompanying consolidated financial statements for more discussion.

        Emmis has explored the possibility of separating its radio and television businesses into two publicly traded companies. Emmis continues to monitor the operating environment and evaluate the possibility of effecting a separation. Emmis would consider the separation in connection with a significant acquisition of either radio or television properties. However, a potential separation is not dependent upon the occurrence of such an event.

INTANGIBLES

     At February 29, 2004, approximately 81% of our total assets consisted of intangible assets, such as FCC broadcast licenses, goodwill, subscription lists and similar assets, the value of which depends significantly upon the operational results of our businesses. In the case of our radio and television stations, we would not be able to operate the properties without the related FCC license for each property. FCC licenses are renewed every eight years; consequently, we continually monitor the activities of our stations for compliance with all regulatory requirements. Historically, all of our licenses have been renewed at the end of their respective eight-year periods, and we expect that all of our FCC licenses will continue to be renewed in the future.

NEW ACCOUNTING PRONOUNCEMENTS

        In June 2001, the FASB issued SFAS No. 141, “Business Combinations.” SFAS No. 141 addresses financial accounting and reporting for business combinations and supersedes Accounting Principle Board (“APB”) Opinion No. 16, “Business Combinations” and SFAS No. 38, “Accounting for Preacquisition Contingencies of Purchased Enterprises.” SFAS No. 141 is effective for all business combinations initiated after June 30, 2001 and eliminates the pooling-of-interest method of accounting for business combinations except for qualifying business combinations that were initiated prior to July 1, 2001. SFAS No. 141 also changes the criteria to recognize intangible assets apart from goodwill. The Company adopted this Statement on July 1, 2001. The Company has historically used the purchase method to account for all business combinations and the adoption of this Statement did not have a material impact on the Company’s financial position, cash flows or results of operations.

        In June 2001, the FASB issued SFAS No. 142 “Goodwill and Other Intangible Assets” that requires companies to cease amortizing goodwill and certain other indefinite-lived intangible assets, including broadcast licenses. Under SFAS 142, goodwill and certain indefinite-lived intangibles will not be amortized into results of operations, but instead the recorded value of certain indefinite-lived intangibles will be tested for impairment at least annually with impairment being measured as the excess of the asset’s carrying amount over its fair value. Intangible assets that have finite useful lives will continue to be amortized over their useful lives and

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measured for impairment in accordance with SFAS 121. In connection with the adoption of SFAS 142 effective March 1, 2002, we recorded an impairment loss of $167.4 million, net of tax, reflected as the cumulative effect of an accounting change in the accompanying consolidated statements of operations. The adoption of this accounting standard reduced our amortization of goodwill and intangibles by approximately $61.0 million in the year ended February 28, 2003. However, our future impairment reviews may result in additional periodic write-downs, such as our $12.4 million impairment loss in fiscal 2004 (see Note 8 to the accompanying consolidated financial statements).

        In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations” that applies to legal obligations associated with the retirement of a tangible long-lived asset that results from the acquisition, construction, or development and/or the normal operation of a long-lived asset. Under this standard, guidance is provided on measuring and recording the liability. The Company adopted this Statement on March 1, 2003 and it did not have a material impact on the Company’s financial position, cash flows or results of operations.

        Effective March 1, 2002, the Company adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” that addresses financial accounting and reporting for the impairment or disposal of long-lived assets. While SFAS No. 144 supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” it removes certain assets such as deferred tax assets, goodwill and intangible assets not being amortized from its scope and retains the requirements of SFAS No. 121 regarding the recognition of impairment losses on other long-lived assets held for use. SFAS No. 144 also supersedes the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring events and Transactions” for the disposal of a segment of a business. However, SFAS No. 144 retains the requirement in Opinion 30 to report separately discontinued operations and extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in a distribution to owners) or is classified as held for sale. Adoption of this statement did not have a material impact on the Company’s financial position, cash flows or results of operations.

        In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 supersedes Emerging Issues Task Force Issue No. 94-3. SFAS No. 146 requires that the liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, not at the date of an entity’s commitment to an exit or disposal plan. The provisions of SFAS No. 146 are effective for exit or disposal activities initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

        As of December 2002, we adopted SFAS No. 148, “Accounting for Stock-Based Compensation-Transaction and Disclosure, an Amendment of SFAS No. 123.” SFAS No. 148 revises the methods permitted by SFAS No. 123 of measuring compensation expense for stock-based employee compensation plans. We use the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, as permitted under SFAS No. 123. Therefore, this change did not have a material effect on our financial statements. SFAS No. 148 requires us to disclose pro forma information related to stock-based compensation, in accordance with SFAS No. 123, on a quarterly basis in addition to the current annual basis disclosure. We reported the pro forma information on an interim basis beginning with our May 31, 2003 Form 10-Q.

        On January 1, 2003, the Financial Accounting Standards Board issued Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46”). FIN 46 addresses consolidation of business enterprises of variable interest entities. FIN 46 is effective immediately for all variable interest entities created after January 31, 2003 and for the first fiscal year or interim period ending after March 15, 2004 for variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The Company has not acquired any variable interest entities subsequent to January 31, 2003 and has no interests in structures that are commonly referred to as special-purpose entities. The Company will therefore adopt FIN 46 in its interim report for the quarter ending May 31, 2004. The Company does not expect this pronouncement will have a material impact on its future consolidated results of operations or financial position.

        On March 1, 2003, the Company adopted Financial Accounting Standards Board Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN 45”). FIN 45 applies to contracts or indemnification agreements that contingently require the guarantor to make payments to the guaranteed party based on changes in an underlying obligation that is related to an asset, liability, or an equity security of the guaranteed party. FIN 45’s disclosure requirements were effective for financial statements of interim or annual periods ending after December 15, 2002. FIN 45’s initial recognition and initial measurement provisions were applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s fiscal year-end. The Company adopted the disclosure requirements of FIN 45 for its

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fiscal 2003 annual report. Adoption of the initial recognition and initial measurement requirements of FIN 45 did not materially impact the Company’s financial position, results of operations or applicable disclosures.

        On March 1, 2003, the Company adopted Statement of Financial Accounting Standards No. 145, Rescission of SFAS Nos. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections (SFAS No. 145”). SFAS No. 145 rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that Statement, and SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. SFAS No. 145 also rescinds SFAS No. 44, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS No. 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. This pronouncement requires gains and losses related to debt transactions to be classified in income from continuing operations. Although we did not have any gains or losses from debt transactions in the current year, ECC had recorded an extraordinary loss of $11.1 million, net of tax, in the year ended February 28, 2003, and EOC had recorded an extraordinary loss of $2.9 million, net of tax, in the year ended February 28, 2003, in connection with debt extinguishments. Accordingly, we retroactively reclassified the losses of $13.5 million for ECC and $4.4 million for EOC and the related income tax effects to include them in income from continuing operations.

        In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (SFAS No. 150”). SFAS No. 150 requires financial instruments within its scope to be classified as a liability (or an asset in some circumstances). Many of these instruments were previously classified as equity. The provisions of SFAS 150 regarding limited life subsidiaries have been deferred indefinitely. These provisions applied to one of our subsidiaries. The settlement value of the minority partner’s interest in our subsidiary was not material at February 29, 2004. However, the subsidiary is held for sale as of February 29, 2004.

SEASONALITY

     Our results of operations are usually subject to seasonal fluctuations, which result in higher second and third quarter revenues and operating income. For our radio operations, this seasonality is due to the younger demographic composition of many of our stations. Advertisers increase spending during the summer months to target these listeners. In addition, advertisers generally increase spending across all of our segments during the months of October and November, which are part of our third quarter, in anticipation of the holiday season. Finally, particularly in our television operations, revenues from political advertising tend to be higher in our odd-numbered fiscal years.

INFLATION

     The impact of inflation on our operations has not been significant to date. However, there can be no assurance that a high rate of inflation in the future would not have an adverse effect on our operating results, particularly since our senior bank debt is entirely floating rate debt.

RISK FACTORS

     The risk factors listed below, in addition to those set forth elsewhere in this report, could affect the business and future results of the Company. Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.

Decreased spending by advertisers or a decrease in our market ratings or market share can adversely affect our advertising revenues.

     We believe that advertising is a discretionary business expense. Spending on advertising tends to decline disproportionately during an economic recession or downturn as compared to other types of business spending. Consequently, the recent downturn in the United States economy had an adverse effect on our advertising revenue and, therefore, our results of operations. A recession or another downturn in the United States economy or in the economy of any individual geographic market, particularly a major market such as Los Angeles, New York or Orlando, in which we own and operate sizeable stations, could have a significant effect on us. The overall weakness of the United States economy resulted in an economic downturn in New York, and the terrorist attacks of September 11, 2001 exacerbated the downturn. The slow New York economy had an adverse effect on the revenues of our New York stations in the fiscal

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years ended February 28, 2002 and 2003. The New York stations accounted for approximately 12% of our net revenue for the year ended February 29, 2004.

     Even in the absence of a general recession or downturn in the economy, an individual business sector that tends to spend more on advertising than other sectors might be forced to reduce its advertising expenditures if that sector experiences a downturn. If that sector’s spending represents a significant portion of our advertising revenues, any reduction in its advertising expenditures may affect our revenue.

     In addition, since political advertising at times accounts for a significant portion of our advertising revenues, normal election cycles may cause our revenues to fluctuate. Changes in government limitations on spending or fundraising for campaign advertisements may also have a negative effect on our earnings derived from political advertising.

We may lose audience share and advertising revenue to competing television and radio stations or other types of media competitors.

     We operate in highly competitive industries. Our television and radio stations compete for audiences and advertising revenue with other television and radio stations and station groups, as well as with other media. Shifts in population, demographics, audience tastes and other factors beyond our control could cause us to lose market share. Any adverse change in a particular market, or adverse change in the relative market positions of the stations located in a particular market, could have a material adverse effect on our revenue or ratings, could require increased promotion or other expenses in that market, and could adversely affect our revenue in other markets. Other television and radio broadcasting companies may enter the markets in which we operate or may operate in the future. These companies may be larger and have more financial resources than we have. Our television and radio stations may not be able to maintain or increase their current audience ratings and advertising revenue in the face of such competition.

     In addition, from time to time, other stations may change their format or programming, a new station may adopt a format to compete directly with our stations for audiences and advertisers, or stations might engage in aggressive promotional campaigns. These tactics could result in lower ratings and advertising revenue or increased promotion and other expenses and, consequently, lower earnings and cash flow for us. Any failure by us to respond, or to respond as quickly as our competitors, could have an adverse effect on our business and financial performance.

     Because of the competitive factors we face, we cannot assure you that we will be able to maintain or increase our current audience ratings and advertising revenue.

We must respond to the rapid changes in technology, services and standards that characterize our industry in order to remain competitive.

     The television and radio broadcasting industries are subject to rapid technological change, evolving industry standards and the emergence of competition from new media technologies and services. We cannot assure you that we will have the resources to acquire new technologies or to introduce new services that could compete with these new technologies. Various new media technologies and services are being developed or introduced, including:

- satellite-delivered digital audio radio service, which has resulted in the introduction of new subscriber-based satellite radio services with numerous niche formats;

- audio programming by cable systems, direct-broadcast satellite systems, personal communications systems, Internet content providers and other digital audio broadcast formats;

- in-band on-channel digital radio, which provides multi-channel, multi-format digital radio services in the same bandwidth currently occupied by traditional AM and FM radio services;

- low-power FM radio, which could result in additional FM radio broadcast outlets; and

- digital video recorders that allow viewers to digitally record and play back television programming, which may decrease viewership of commercials and, as a result, lower our advertising revenues.

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     In addition, cable providers and direct broadcast satellite companies are developing new techniques that allow them to transmit more channels on their existing equipment to highly targeted audiences, reducing the cost of creating channels and potentially leading to the division of the television industry into ever more specialized niche markets. Competitors who target programming to such sharply defined markets may gain an advantage over us for television advertising revenues. Lowering the cost of creating channels may also encourage new competitors to enter our markets and compete with us for advertising revenue.

     We cannot predict the effect, if any, that competition arising from new technologies or regulatory change may have on the television and radio broadcasting industries or on our financial condition and results of operations.

Our substantial indebtedness could adversely affect our financial health.

     We have a significant amount of indebtedness. At February 29, 2004, our total indebtedness was approximately $1,274.0 million, and our shareholders’ equity was approximately $748.9 million. Our substantial indebtedness could have important consequences to you. For example, it could:

- make it more difficult for us to satisfy our obligations with respect to our indebtedness;

- increase our vulnerability to general adverse economic and industry conditions;

- require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;

- result in higher interest expense in the event of increases in interest rates because some of our debt is at variable rates of interest;

- limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate;

- place us at a competitive disadvantage compared to our competitors that have less debt; and

- limit, along with the financial and other restrictive covenants in our credit facility and our other debt instruments, our ability to borrow additional funds. Failing to comply with those covenants could result in an event of default, which if not cured or waived, could have a material adverse effect on our businesses.

The terms of our indebtedness and the indebtedness of our direct and indirect subsidiaries may restrict our current and future operations, particularly our ability to respond to changes in market conditions or to take some actions.

     Our credit facility and our bond indentures impose significant operating and financial restrictions on us. These restrictions significantly limit or prohibit, among other things, our ability and the ability of our subsidiaries to incur additional indebtedness, issue preferred stock, incur liens, pay dividends, enter into asset sale transactions, merge or consolidate with another company, dispose of all or substantially all of our assets or make certain other payments or investments.

     These restrictions currently limit our ability to grow our business through acquisitions and could limit our ability to respond to market conditions or meet extraordinary capital needs. They also could restrict our corporate activities in other ways. These restrictions could adversely affect our ability to finance our future operations or capital needs.

To service our indebtedness and other obligations, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

     Our ability to make payments on and to refinance our indebtedness, to pay dividends and to fund capital expenditures will depend on our ability to generate cash in the future. This ability to generate cash, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our businesses might not generate sufficient cash flow from operations. We might not be able to complete future offerings, and future borrowings might not be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our

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indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all.

Our operating results have been and may again be adversely affected by acts of war and terrorism.

     Acts of war and terrorism against the United States, and the country’s response to such acts, may negatively affect the U.S. advertising market, which could cause our advertising revenues to decline due to advertising cancellations, delays or defaults in payment for advertising time, and other factors. In addition, these events may have other negative effects on our business, the nature and duration of which we cannot predict.

     For example, the war in Iraq caused the networks to pre-empt regularly scheduled programming in the last month of the first quarter of fiscal 2003 and caused several advertisers to cancel their advertising spots, resulting in a loss of revenue in the first quarter of fiscal 2003. After the September 11, 2001 terrorist attacks, we decided that the public interest would be best served by the presentation of continuous commercial-free coverage of the unfolding events on our stations. This temporary policy had a material adverse effect on our advertising revenues and operating results for the month of September 2001. Future events like those of September 11, 2001 or the war in Iraq may cause us to adopt similar policies, which could have a material adverse effect on our advertising revenues and operating results.

     Additionally, the attacks on the World Trade Center on September 11, 2001 resulted in the destruction of the transmitter facilities that were located there. Although we had no transmitter facilities located at the World Trade Center, broadcasters that had facilities located in the destroyed buildings experienced temporary disruptions in their ability to broadcast. Since we tend to locate transmission facilities for stations serving urban areas on tall buildings or other significant structures, such as the Empire State Building in New York, further terrorist attacks or other disasters could cause similar disruptions in our broadcasts in the areas affected. If these disruptions occur, we may not be able to locate adequate replacement facilities in a cost-effective or timely manner or at all. Failure to remedy disruptions caused by terrorist attacks or other disasters and any resulting degradation in signal coverage could have a material adverse effect on our business and results of operations.

Television programming costs may negatively impact our operating results.

     One of our most significant operating cost components is television programming. We may be exposed in the future to increased programming costs which may adversely affect our operating results. Acquisitions of program rights are usually made two or three years in advance and may require multi-year commitments, making it difficult to accurately predict how a program will perform. In some instances, programs must be replaced before their costs have been fully amortized, resulting in write-offs that increase station operating costs. In addition, we have recently experienced increased competition to acquire programming, primarily due to the increased acquisition of syndicated programming by cable operators.

Our television stations depend on affiliations with major networks that may be canceled or revoked by the networks.

     All of our television stations are affiliated with a network. Under the affiliation agreements, the networks possess, under certain circumstances, the right to terminate the agreement without giving the station enough advance notice to implement a contingency plan. The affiliation agreements may not remain in place, and the networks may not continue to provide programming to affiliates on the same basis that currently exists. The non-renewal or termination of any of our stations’ network affiliation agreements could have a material adverse effect on our operations.

The success of our television stations depends on the success of the network each station carries.

     The ratings of each of the television networks, which is based in large part on their programming, vary from year to year, and this variation can significantly impact a station’s revenues. The future success of any network or its programming is unpredictable.

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To continue to grow our business, we will require significant additional capital.

     The continued development, growth and operation of our businesses will require substantial capital. In particular, additional acquisitions will require large amounts of capital. We intend to fund our growth, including acquisitions, if any, with cash generated from operations, borrowings under our new credit facility, and proceeds from future issuances of debt and equity both public and private. Our ability to raise additional debt or equity financing is subject to market conditions, our financial condition and other factors. If we cannot obtain financing on acceptable terms when needed, our results of operations and financial condition could be adversely impacted.

Our ability to grow through acquisitions may be limited by competition for suitable properties or other factors we cannot control.

     We intend to selectively pursue acquisitions of radio and television stations and publishing properties, when appropriate, in order to grow. To be successful with this strategy, we must be effective at quickly evaluating markets, obtaining financing to buy stations and publishing properties on satisfactory terms and obtaining the necessary regulatory approvals, including, as discussed below, approvals of the FCC and the Department of Justice. We also must accomplish these tasks at reasonable costs. The radio industry in particular has rapidly consolidated. In general, we compete with many other buyers for radio and television stations as well as publishing properties. These other buyers may be larger and have more resources. We cannot predict whether we will be successful in buying stations or publishing properties, or whether we will be successful with any station or publishing property we acquire. Our strategy is generally to buy underperforming properties and use our experience to improve their performance. Thus, the benefits resulting from the properties we buy may not manifest themselves immediately, and we may need to pay large initial costs for these improvements.

If we are not able to obtain regulatory approval for future acquisitions, our growth may be impaired.

     Although part of our growth strategy is the acquisition of additional radio and television stations, we may not be able to complete all the acquisitions that we agree to make. Station acquisitions are subject to the approval of the FCC and, potentially, other regulatory authorities. Also, the FCC sometimes undertakes review of transactions to determine whether they would result in excessive concentration, even where the transaction complies with the numerical ownership limits. Specifically, the staff has had a policy of ''flagging’’ for closer scrutiny the anticompetitive impact of any transactions that will put one owner in a position to earn 50% or more of the market’s radio advertising revenues or will result in the two largest owners receiving 70% or more of those revenues. While the FCC has noted ''flagging’’ in public notices in the past, current transactions may be ''flagged’’ internally by the FCC without public notice. As discussed below, the FCC’s new rules with respect to media ownership are under court review. We cannot predict how the FCC’s approval process will change based on the outcome of the FCC’s media ownership proceeding or whether such changes would adversely impact us.

     Additionally, since the passage of the Telecommunications Act of 1996, the U.S. Department of Justice has become more involved in reviewing proposed acquisitions of radio stations and radio station networks. The Justice Department is particularly concerned when the proposed buyer already owns one or more radio stations in the market of the station it is seeking to buy. Recently, the Justice Department has challenged a number of radio broadcasting transactions. Some of those challenges ultimately resulted in consent decrees requiring, among other things, divestitures of certain stations. In general, the Justice Department has more closely scrutinized radio broadcasting acquisitions that result in local market shares in excess of 40% of radio advertising revenue.

We may not be able to integrate acquired stations successfully, which could affect our financial performance.

     Our ability to operate our company effectively depends, in part, on our success in integrating acquired stations into our operations. These efforts may impose significant strains on our management and financial resources. The pursuit and integration of acquired stations will require substantial attention from our management, and will limit the amount of time they can devote to other important matters. Successful integration of acquired stations will depend primarily on our ability to manage our combined operations. If we fail to successfully integrate acquired stations or manage our growth or if we encounter unexpected difficulties during expansion, it could have a negative impact on the performance of acquired stations as well as on our company as a whole.

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A recently adopted change in accounting principles that affects the accounting treatment of goodwill and FCC licenses could cause future losses due to asset impairment.

     In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 142 ''Goodwill and Other Intangible Assets’’ that requires companies to cease amortizing goodwill and certain other indefinite-lived intangible assets, including broadcast licenses. Under SFAS 142, goodwill and some indefinite-lived intangibles will not be amortized into results of operations, but instead will be tested for impairment at least annually, with impairment being measured as the excess of the carrying value of the goodwill or intangible over its fair value. In addition, goodwill and intangible assets will be tested more often for impairment as circumstances warrant. Intangible assets that have finite useful lives will continue to be amortized over their useful lives and will be measured for impairment in accordance with SFAS 144, ''Accounting for the Impairment or Disposal of Long-Lived Assets.’’ After initial adoption, any impairment losses under SFAS 142 or 144 will be recorded as operating expenses. In connection with the adoption of SFAS 142 effective March 1, 2002, we recorded an impairment loss of $167.4 million, net of tax, reflected as the cumulative effect of an accounting change in the accompanying consolidated statements of operations. The adoption of this accounting standard reduced our amortization of goodwill and intangibles by approximately $61.0 million in the year ended February 28, 2003. We also incurred a $12.4 million impairment loss in the fiscal year ended February 29, 2004 as a result of our annual SFAS 142 review. Our future impairment reviews could result in additional write-downs.

One shareholder controls a majority of the voting power of our common stock, and his interest may conflict with yours.

     As of April 30, 2004, our Chairman of the Board of Directors, Chief Executive Officer and President, Jeffrey H. Smulyan, beneficially owned shares representing approximately 52% of the outstanding combined voting power of all classes of our common stock, as calculated pursuant to Rule 13D-1 of the Exchange Act. He therefore is in a position to exercise a majority of the outstanding combined voting power of all classes of our common stock. Accordingly, Mr. Smulyan is able to control the outcome of most matters submitted to a vote of our shareholders, including the election of a majority of the directors.

The FCC has recently begun more vigorous enforcement of its indecency rules against the broadcast industry, which could have a material adverse effect on our business.

     The FCC’s rules prohibit the broadcast of obscene material at any time and indecent material between the hours of 6 am and 10 pm. Broadcasters risk violating the prohibition on the broadcast of indecent material because of the FCC’s broad definition of such material, coupled with the spontaneity of live programming.

     Recently, the FCC has begun more vigorous enforcement of its indecency rules against the broadcasting industry as a whole. Two Congressional committees have recently conducted hearings relating to indecency. Legislation has also been introduced in Congress that would increase the penalties for broadcasting indecent programming, and depending on the number of violations engaged in, would automatically subject broadcasters to license revocation, renewal or qualifications proceedings in the event that they broadcast indecent material. The FCC has indicated that it is stepping up its enforcement activities as they apply to indecency, and has threatened to initiate license revocation proceedings against broadcast licensees for future ''serious indecency violations.’’ The FCC has found on a number of occasions recently, chiefly with regard to radio stations, that the content of broadcasts has contained indecent material. The FCC issued fines to the offending licensees. Moreover, the FCC has recently begun imposing separate fines for each allegedly indecent ''utterance,’’ in contrast with its previous policy, which generally considered all indecent words or phrases within a given program as constituting a single violation.

     The FCC has imposed fines totaling $42,000 for six allegedly-indecent broadcasts at our Chicago station; we have filed administrative appeals of four of those fines, totaling $28,000, and are currently considering what action, if any, to take regarding the remaining fines, as to which the administrative appeal process has recently concluded. Further, the FCC has sent letters of inquiry to us relating to five additional broadcasts on the Chicago station and five broadcasts on one of our St. Louis stations. These inquiries could result in additional fines or other enforcement action. In addition, the FCC has dismissed a number of complaints alleging indecent broadcasts at the Chicago station, but the complainant has asked the FCC to reinstate eleven of them. There may also be additional complaints of which we are currently unaware alleging indecent broadcasts by our stations. The foregoing inquiries and complaints could result in additional fines or other enforcement action. The FCC has so far assessed fines against us of $7,000 for each alleged

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indecency violation. During the period since those fines were imposed the Commission has frequently imposed fines against broadcasters at the statutory maximum of $27,500 per violation, particularly where there have been prior violations. Accordingly, any additional fines imposed on us could be at that level. Moreover, five of the broadcasts which are under inquiry by the FCC are sufficiently recent that they could be subject to the ''per utterance’’ approach described above, which could increase the total amount of any fines imposed.

     If the FCC were to bring enforcement proceedings against any of our television or radio stations, our results of operations could be adversely affected. Further, the alleged violations described above, along with any additional violations that may be asserted by the FCC in the future, could have a material adverse effect on our ability to obtain renewal of the Chicago and St. Louis broadcast licenses, for which we must file license renewal applications this year. The Communications Act provides that the FCC must renew a broadcast license if (i) the station involved has served the ''public interest, convenience and necessity’’ and (ii) there have been no ''serious violations’’ of the Act or FCC rules, and no ''other violations’’ of the Act or rules which ''taken together, would constitute a pattern of abuse.’’ If the Commission were to determine that the alleged violations described above fall within either or both of those definitions, the agency could (x) grant one or both license renewal applications with burdensome conditions, such as requirements for periodic reports, (y) grant one or both applications for less than the full eight-year term in order to allow an early reassessment of the station or stations, or (z) order an evidentiary hearing before an administrative law judge to determine whether renewal of either or both licenses should be denied. If a station’s license renewal were ultimately denied, the station would be required to cease operation permanently. As a result of these developments, we have implemented measures to reduce the risk of broadcasting indecent material in violation of the FCC’s rules. These and other future modifications to our programming to reduce the risk of indecency violations could have an adverse effect on our competitive position.

Our need to comply with comprehensive, complex and sometimes unpredictable federal regulations could have an adverse effect on our businesses.

     We are dependent on licenses from the FCC, which regulates the radio and television broadcasting industries in the United States. The radio and television broadcasting industries in the United States are subject to extensive and changing regulation by the FCC. Among other things, the FCC is responsible for the following:

- assigning frequency bands for broadcasting;

- determining the particular frequencies, locations and operating power of stations;

- issuing, renewing, revoking and modifying station licenses;

- determining whether to approve changes in ownership or control of station licenses;

- regulating equipment used by stations; and

- adopting and implementing regulations and policies that directly affect the ownership, operation, programming and employment practices of stations.

     The FCC has the power to impose penalties for violation of its rules or the applicable statutes. While in the vast majority of cases licenses are renewed by the FCC, we cannot be sure that any of our United States stations’ licenses will be renewed at their expiration date. Even if our licenses are renewed, we cannot be sure that the FCC will not impose conditions or qualifications that could cause problems in our businesses.

     The FCC regulations and policies also affect our growth strategy because the FCC has specific regulations and policies about the number of stations, including radio and television stations, and daily newspapers that an entity may own in any geographic area. As a result of these rules, we may not be able to acquire more properties in some markets or on the other hand, we may have to sell some of our properties in a particular market. For example, as a result of our acquisition of Lee Enterprises in October 2000, we own two ''top 4’’ rated television stations in the Honolulu market, which is not permitted by FCC rules. As a result, we have been operating both stations under various temporary waivers to the FCC’s ownership rules. The FCC has adopted new local television ownership rules which continue to prohibit the ownership of two top-rated television stations in a single market, and in so doing the FCC ordered companies with temporary waivers (including us) to file divesting applications to achieve compliance. However, the implementation of the new rules has been appealed in Federal court by a number of broadcasters (including us) and other groups, and the court has issued

54

an indefinite stay, which has prevented the new rules from becoming effective. We cannot predict when or how the court will rule on the appeal. When and if the stay is lifted, we will likely have to either file a divesting application or seek a permanent waiver of the new rules. If we are required to divest a station on short notice, we may not realize the full value of that station.

     As a result of a recent transaction, Jeffrey H. Smulyan’s voting interest in the Company has fallen below 50% for FCC control purposes. The FCC does not take into account stock options exercisable within 60 days as does the Exchange Act Rule 13D-1. As a result, the Company is no longer eligible for an exemption from the FCC’s “ownership attribution” rules. Therefore, the media interests of minority shareholders who have voting interests in the company of 5% or more—20% or more in the case of certain categories of institutional investors—will be attributed to us. The FCC rules provide for a one-year “grace period” for resolving ownership conflicts resulting from loss of the exemption. Attribution of minority shareholders’ media interests to us could materially and adversely affect our business as a result of the increased cost of regulatory compliance and monitoring activities, the increased obstacles to our growth strategy or the mandatory divestment of our properties. Further, though we obtained FCC approval for the recent reduction in Mr. Smulyan’s voting interest, we may need to seek additional approval prior to further material reductions in his interest.

     FCC regulations also limit the ability of non-U.S. persons to own our capital stock and to participate in our affairs, which could limit our ability to raise equity. Our articles of incorporation contain provisions which place restrictions on the ownership, voting and transfer of our capital stock in accordance with the law.

     A 2002 court decision invalidated an FCC rule that prohibited common ownership of a broadcast station and a cable television system in the same market. The elimination of that restriction could increase the amount of competition that our television stations face. Finally, a number of federal rules governing broadcasting have changed significantly in recent years and additional changes may occur, particularly with respect to the rules governing digital television, digital audio broadcasting, satellite radio services, multiple ownership and attribution. We cannot predict the effect that these regulatory changes may ultimately have on our operations.

Any changes in current FCC ownership regulations may negatively impact our ability to compete or otherwise harm our business operations.

     In June of 2003, the FCC substantially modified its rules governing ownership of broadcast stations. The new rules (i) increase to 45% the national ''cap’’ on the number of television stations that can be owned nationwide by an entity or affiliated group, (ii) generally permit common ownership of two television stations within a given market (and three stations in some of the largest markets), (iii) allow, for the first time in many years, common ownership of broadcast stations and daily newspapers in most markets, (iv) generally allow common ownership of television and radio stations within a given market, and (v) change the definition of ''market’’ for purposes of the rules restricting the number of radio stations that may be commonly owned within a given market. The new rules were appealed in federal court, and in September of 2003, the court stayed the effectiveness of the new rules, pending a decision in the appeal. As a result of the stay, the former ownership rules were reinstated. We cannot predict the outcome of the appeal.

     Recent federal legislation set the national TV ownership ''cap’’ at 39%, superseding the increase to 45% adopted by the FCC. This represents an increase from the 35% limit previously in place, and its immediate effect is to allow on a permanent basis the existing levels of station ownership by the Fox and CBS networks, which previously had been allowed only as a result of a temporary waiver of the 35% limit. This may give Fox and CBS a competitive advantage over us, since they have much greater financial and other resources than we have.

     We cannot predict the impact of these developments on our business. In particular, we cannot predict the outcome of FCC’s media ownership proceeding or its effect on our ability to acquire broadcast stations in the future or to continue to own and freely transfer stations that we have already acquired.

     In 2003, we acquired a controlling interest in five FM stations and one AM station in the Austin, Texas market. Under the method of defining radio markets contained in the new ownership rules, it appears that we would be permitted to own or control only four FM stations in the Austin market (ownership of one AM station would continue to be allowed). The new rules do not require divestiture of existing non-conforming station combinations, but do provide that such clusters may be transferred only to defined small business entities. Consequently, if the new rules go into effect and we wish to sell our interest in the Austin stations, we will have to either sell to an entity that meets the FCC definition or exclude at least one FM station from the transaction.

     As a result of the Lee Enterprises acquisition, we own two ''top-4’’ rated television stations in the Honolulu market. The new ownership rules, like the former rules, generally prohibit common ownership of such stations, and in adopting the new rules, the FCC

55

ordered companies that had requested temporary waivers (including us) to file divesting applications to achieve compliance. When and if the court stay of the new rules is lifted, we will likely have to either file a divesting application or request a permanent waiver of the new rules. If we are required to divest a station on short notice, we may not realize the full value of that station.

Our business strategy and our ability to operate profitably depends on the continued services of our key employees, the loss of whom could materially adversely affect our business.

     Our ability to maintain our competitive position depends to a significant extent on the efforts and abilities of our senior management team and certain key employees. Their managerial, technical and other services would be difficult to replace and if we lose the services of one or more of our executive officers or key personnel. Our business could be seriously harmed if one of them decides to join a competitor or otherwise competes directly or indirectly against us.

     Our radio and television stations employ or independently contract with several on-air personalities and hosts of syndicated radio and television programs with significant loyal audiences in their respective broadcast areas. These on-air personalities are sometimes significantly responsible for the ranking of a station, and thus, the ability of the station to sell advertising. These individuals may not remain with our radio and television stations and may not retain their audiences.

Our current and future operations are subject to certain risks that are unique to operating in a foreign country.

     We currently have several international operations, including a 59.5% interest in a national radio station in Hungary and operations in Belgium and, therefore, we are exposed to risks inherent in international business operations. We may pursue opportunities to buy additional broadcasting properties in other foreign countries. The risks of doing business in foreign countries include the following:

- changing regulatory or taxation policies;

- currency exchange risks;

- changes in diplomatic relations or hostility from local populations;

- seizure of our property by the government, or restrictions on our ability to transfer our property or earnings out of the foreign country;

- potential instability of foreign governments, which might result in losses against which we are not insured; and

- difficulty of enforcing agreements and collecting receivables through some foreign legal systems.

You may be unable to pursue any legal claims against Arthur Andersen LLP, our former independent public accountants.

     Our consolidated financial statements for the fiscal years ending February 28, 2002 and 2001 were audited by Arthur Andersen LLP, our former independent public accountant. Arthur Andersen LLP was convicted on federal obstruction of justice charges arising from the federal government’s investigation of Enron Corp. In light of the conviction, Arthur Andersen ceased practicing before the SEC on August 31, 2003. As a result, Arthur Andersen LLP has not reissued its audit report with respect to our consolidated financial statements. Further, Arthur Andersen LLP has not consented to the inclusion of its audit report in our various “shelf” registration statements currently in effect. As a result, our current and future security holders may not have an effective remedy against Arthur Andersen LLP in connection with a material misstatement or omission in the consolidated financial statements for the fiscal years ending February 28, 2002 and 2001. Even if our security holders were able to assert such a claim, because Arthur Andersen LLP’s operations have ceased, there will likely be insufficient assets to satisfy claims made by investors or by us that might arise under federal securities laws or otherwise.

FORWARD-LOOKING STATEMENTS

     This report includes or incorporates forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by our use of words such as “intend,” “plan,” “may,” “will,” “project,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “opportunity,” and similar expressions, whether in the negative or affirmative. We cannot guarantee that we actually will achieve these plans, intentions or expectations. All statements

56

regarding our expected financial position, business and financing plans are forward-looking statements.

     Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important facts in various cautionary statements in this report that we believe could cause our actual results to differ materially from forward-looking statements that we make. These include, but are not limited to, the following:

• material adverse changes in economic conditions in the markets of our company;

• the ability of our stations and magazines to attract and retain advertisers;

• loss of key personnel

• the ability of our stations to attract quality programming and our magazines to attract good editors, writers, and photographers;

• uncertainty as to the ability of our stations to increase or sustain audience share for their programs and our magazines to increase or sustain subscriber demand;

• competition from other media and the impact of significant competition for advertising revenues from other media;

• future regulatory actions and conditions in the operating areas of our company;

• the necessity for additional capital expenditures and whether our programming and other expenses increase at a rate faster than expected;

• financial community and rating agency perceptions of our business, operations and financial condition and the industry in which we operate;

• the effects of terrorist attacks, political instability, war and other significant events;

• whether pending transactions, if any, are completed on the terms and at the times set forth, if at all;

• other risks and uncertainties inherent in the radio and television broadcasting and magazine publishing businesses.

The forward-looking statements do not reflect the potential impact of any future acquisitions, mergers or dispositions. We undertake no obligation to update or revise any forward-looking statements because of new information, future events or otherwise.

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

GENERAL

     Market risk represents the risk of loss that may impact the financial position, results of operations or cash flows of Emmis due to adverse changes in financial and commodity market prices and rates. Emmis is exposed to market risk from changes in domestic and international interest rates (i.e. prime and LIBOR) and foreign currency exchange rates. To manage interest rate exposure Emmis periodically enters into interest rate derivative agreements. Emmis does not use financial instruments for trading and is not a party to any leveraged derivatives.

        On June 15, 1998, the FASB issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended in June of 2000 by SFAS No. 138, “Accounting for Derivative Instruments and Hedging Activities.” These statements, which were effective for Emmis on March 1, 2001, establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts. These statements require that every derivative instrument be recorded in the balance sheet as either an asset or a liability measured at its fair value. Changes in the fair value of derivatives are to be recorded each period in earnings or comprehensive income, depending on whether the derivative is designated and effective as part of a hedged transaction, and on the type of hedge transaction. Gains or losses on derivative instruments reported in the other comprehensive income must be reclassified as earnings in the period in which earnings are affected by the underlying hedged item, and the ineffective portion of all hedges must be recognized in earnings in the current period. These standards result in additional volatility in reported assets, liabilities, earnings and other comprehensive income.

        SFAS No. 133 requires that as of the date of initial adoption the difference between the fair value of the derivative instruments to be recorded on the balance sheet and the previous carrying amount of those derivatives be reported in net income or other

57

comprehensive income, as appropriate, as the cumulative effect of a change in accounting principle in accordance with APB 20 “Accounting Changes.”

        On March 1, 2001, Emmis recorded the effect of the adoption of SFAS No. 133 which resulted in an immaterial impact to the results of operations and the financial position of Emmis.

        SFAS No. 133 further requires that the fair value and effectiveness of each hedging instrument must be measured quarterly. The result of each measurement could result in fluctuations in reported assets, liabilities, other comprehensive income and earnings as these changes in fair value and effectiveness are recorded to the financial statements.

INTEREST RATES

        At February 29, 2004, the entire outstanding balance under our credit facility, approximately 70% of EOC’s total outstanding debt (credit facility and senior subordinated debt) and 58% of Emmis’ total outstanding debt (EOC’s debt plus our senior discount notes), bears interest at variable rates. The credit facility requires EOC to have fixed interest rates for a two year period on at least 50% of its total outstanding debt, as defined (including the senior subordinated debt), if EOC’s total leverage ratio, as defined, is greater than 6:1 at any quarter end. EOC currently has no interest rate swap arrangements as its total leverage ratio, as defined, was less than 6:1 as of February 29, 2004.

     Based on amounts outstanding at February 29, 2004, if the interest rate on our variable debt were to increase by 1.0%, our annual interest expense would be higher by approximately $7.4 million.

FOREIGN CURRENCY

     Emmis owns a 59.5% interest in a Hungarian subsidiary which is consolidated in the accompanying financial statements. This subsidiary’s operations are measured in its local currency (forint). Emmis has a natural hedge against currency fluctuations between the forint and the U.S. dollar since most of the subsidiary’s long-term obligations are denominated in Hungarian forints. Emmis owns nine radio stations in Belgium, which are consolidated in the accompanying financial statements, and its investment to date is approximately $3 million. These subsidiaries’ operations are measured in their local currency (Euro). Emmis owns a 75% interest in an Argentinean subsidiary, but Emmis has agreed to sell its interest to the minority partner. Consequently, the operations for this subsidiary have been classified as discontinued operations and the assets are classified as held for sale as of February 29, 2004. While Emmis management cannot predict the most likely average or end-of-period forint to dollar, or Euro to dollar exchange rates for calendar 2004, we believe any devaluation of the forint or Euro would have an immaterial effect on our financial statements taken as a whole, as the Hungarian and Belgium stations accounted for approximately 2% of Emmis’ total revenues and approximately 1% of Emmis’ total assets as of, and for the year ended, February 29, 2004.

     At February 29, 2004, the Hungarian subsidiary had $0.7 million of U.S. dollar denominated loans outstanding. The Hungarian subsidiary repaid $0.6 million of U.S. dollar denominated loans during fiscal 2004. The Argentinean subsidiary had no U.S. dollar denominated loans outstanding during fiscal 2004 or at February 29, 2004.

     Emmis currently does not maintain any derivative instruments to mitigate the exposure to foreign currency translation and/or transaction risk. However, this does not preclude the adoption of specific hedging strategies in the future.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

	FOR THE YEARS ENDED FEBRUARY 28 (29),
	2002			2003			2004
GROSS REVENUES	$	620,456		$	646,157		$	679,927
LESS: AGENCY COMMISSIONS		80,634			83,794			88,059
NET REVENUES		539,822			562,363			591,868
OPERATING EXPENSES:
Station operating expenses, excluding noncash compensation		354,157			349,251			371,423
Corporate expenses, excluding noncash compensation		20,283			21,359			24,105
Time brokerage fees		479			—			—
Depreciation and amortization		100,258			43,370			46,468
Noncash compensation		9,095			22,528			23,450
Restructuring fees		768			—			—
Impairment loss and other		10,672			—			12,400
Total operating expenses		495,712			436,508			477,846
OPERATING INCOME		44,110			125,855			114,022
OTHER INCOME (EXPENSE):
Interest expense		(129,100	)		(103,835	)		(85,958	)
Gain on sale of assets		—			9,313			1,130
Loss in unconsolidated affiliates		(5,003	)		(4,544	)		(375	)
Loss on debt extinguishment		(1,748	)		(13,506	)		—
Minority interest income (expense)		59			(428	)		(3,029	)
Other income (expense), net		1,287			953			(1,065	)
Total other income (expense)		(134,505	)		(112,047	)		(89,297	)
INCOME (LOSS) BEFORE INCOME TAXES, DISCONTINUED OPERATIONS AND ACCOUNTING CHANGE		(90,395	)		13,808			24,725
PROVISION (BENEFIT) FOR INCOME TAXES		(26,287	)		10,876			12,450
INCOME (LOSS) FROM CONTINUING OPERATIONS		(64,108	)		2,932			12,275
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX OF $0 IN 2004		—			—			(10,019	)
INCOME (LOSS) BEFORE ACCOUNTING CHANGE		(64,108	)		2,932			2,256
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX OF $102,600		—			(167,400	)		—
NET INCOME (LOSS)		(64,108	)		(164,468	)		2,256
PREFERRED STOCK DIVIDENDS		8,984			8,984			8,984
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS	$	(73,092	)	$	(173,452	)	$	(6,728	)

The accompanying notes to consolidated financial statements are an integral part of these statements.

In the years ended February 28 (29), 2002, 2003, and 2004, $8.3 million, $19.0 million, and $18.2 million respectively, of our
noncash compensation was attributable to our stations, while $0.8 million, $3.5 million, and
$5.3 million was attributable to corporate.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS – (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

BASIC NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS:
Continuing operations, before accounting change	$	(1.54	)	$	(0.11	)	$	0.06
Discontinued operations, net of tax		—			—			(0.18	)
Cumulative effect of accounting change, net of tax		—			(3.16	)		—
Net income (loss) available to common shareholders	$	(1.54	)	$	(3.27	)	$	(0.12	)
DILUTED NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS:
Continuing operations, before accounting change	$	(1.54	)	$	(0.11	)	$	0.06
Discontinued operations, net of tax		—			—			(0.18	)
Cumulative effect of accounting change, net of tax		—			(3.16	)		—
Net income (loss) available to common shareholders	$	(1.54	)	$	(3.27	)	$	(0.12	)

The accompanying notes to consolidated financial statements are an integral part of these statements.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

	FEBRUARY 28 (29),
	2003		2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	16,079	$	19,970
Accounts receivable, net of allowance for doubtful accounts of $3,240 and $3,453, respectively		102,345		105,225
Current portion of TV program rights		11,309		13,373
Prepaid expenses		15,596		15,273
Other		14,352		10,190
Assets held for sale		—		7,988
Total current assets		159,681		172,019
PROPERTY AND EQUIPMENT:
Land and buildings		93,660		95,298
Leasehold improvements		14,591		15,224
Broadcasting equipment		172,489		186,779
Office equipment and automobiles		54,082		60,217
Construction in progress		7,111		12,929
		341,933		370,447
Less-Accumulated depreciation and amortization		118,503		153,145
Total property and equipment, net		223,430		217,302
INTANGIBLE ASSETS:
Indefinite lived intangibles		1,638,171		1,736,966
Goodwill		58,701		94,042
Other intangibles		64,189		69,548
		1,761,061		1,900,556
Less-Accumulated amortization		35,328		41,699
Total intangible assets, net		1,725,733		1,858,857
OTHER ASSETS:
Deferred debt issuance costs, net of accumulated amortization of $11,482 and $16,120, repectively		29,260		25,268
TV program rights, net of current portion		10,416		10,909
Investments		9,261		10,025
Deposits and other		7,632		6,189
Total other assets, net		56,569		52,391
Total assets	$	2,165,413	$	2,300,569

The accompanying notes to consolidated financial statements are an integral part of these statements.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS — (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

	FEBRUARY 28 (29),
	2003			2004
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	39,526		$	35,791
Current maturities of long-term debt		14,912			6,539
Current portion of TV program rights payable		27,424			27,502
Accrued salaries and commissions		14,247			14,519
Accrued interest		11,641			11,697
Deferred revenue		15,805			14,393
Other		8,102			7,813
Liabilities associated with assets held for sale		—			638
Total current liabilities		131,657			118,892
CREDIT FACILITY AND SENIOR SUBORDINATED DEBT, NET OF CURRENT PORTION		996,945			1,038,145
SENIOR DISCOUNT NOTES		197,844			223,423
OTHER LONG-TERM DEBT, NET OF CURRENT PORTION		13,087			5,909
TV PROGRAM RIGHTS PAYABLE, NET OF CURRENT PORTION		32,044			26,266
OTHER NONCURRENT LIABILITIES		17,065			9,322
MINORITY INTEREST		721			47,672
DEFERRED INCOME TAXES		71,345			81,994
Total liabilities		1,460,708			1,551,623
COMMITMENTS AND CONTINGENCIES (NOTE 10)
SHAREHOLDERS’ EQUITY:
Series A cumulative convertible preferred stock, $0.01 par value; $50.00 liquidation preference; authorized 10,000,000 shares; issued and outstanding 2,875,000 shares in 2003 and 2004		29			29
Class A common stock, $0.01 par value; authorized 170,000,000 shares; issued and outstanding 48,874,017 shares and 50,689,834 shares in 2003 and 2004, respectively		489			507
Class B common stock, $0.01 par value; authorized 30,000,000 shares; issued and outstanding 5,011,348 shares and 5,038,920 shares in 2003 and 2004, respectively		50			50
Additional paid-in capital		990,770			1,025,483
Accumulated deficit		(269,274	)		(276,002	)
Accumulated other comprehensive loss		(17,359	)		(1,121	)
Total shareholders’ equity		704,705			748,946
Total liabilities and shareholders’ equity	$	2,165,413		$	2,300,569

The accompanying notes to consolidated financial statements are an integral part of these statements.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE THREE YEARS ENDED FEBRUARY 29, 2004
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

	Series A				Class A				Class B
	Preferred Stock				Common Stock				Common Stock
	Shares		Amount		Shares		Amount		Shares			Amount
BALANCE, FEBRUARY 28, 2001		2,875,000	$	29		41,900,315	$	419		5,230,396		$	52
Issuance of Class A Common Stock in exchange for Class B Common Stock		—		—		—		—		—			—
Exercise of stock options and related income tax benefits		—		—		314,258		3		—			—
Issuance of Class A Common Stock to profit sharing plan		—		—		—		—		—			—
Issuance of Class A Common Stock to employees and officers and related income tax benefits		—		—		520,579		6		19,731			1
Sale of Class A Common Stock to employees through ESPP		—		—		26,147		—		—			—
Preferred stock dividends paid		—		—		—		—		—			—
Comprehensive Income:
Net income (loss)		—		—		—		—		—			—
Cumulative translation adjustment		—		—		—		—		—			—
Change in fair value of hedged derivatives		—		—		—		—		—			—
Total comprehensive loss		—		—		—		—		—			—
BALANCE, FEBRUARY 28, 2002		2,875,000		29		42,761,299		428		5,250,127			53
Issuance of Class A Common Stock in exchange for Class B Common Stock		—		—		300,000		3		(300,000	)		(3	)
Issuance of common stock to employees and officers and related income tax benefits		—		—		1,212,718		12		61,221			—
Sale of Class A Common Stock via secondary offering		—		—		4,600,000		46		—			—
Preferred stock dividends paid		—		—		—		—		—			—
Comprehensive Income:
Net income (loss)		—		—		—		—		—			—
Cumulative translation adjustment		—		—		—		—		—			—
Change in fair value of hedged derivatives		—		—		—		—		—			—
Total comprehensive loss		—		—		—		—		—			—
BALANCE FEBRUARY 28, 2003		2,875,000		29		48,874,017		489		5,011,348			50
Issuance of Class A Common Stock in exchange for Class B Common Stock		—		—		—		—		—			—
Exercise of stock options and related income tax benefits		—		—		657,857		6		—			—
Issuance of Class A Common Stock to employees and officers and related income tax benefits		—		—		1,157,960		12		27,572			—
Preferred stock dividends paid		—		—		—		—		—			—
Comprehensive Income:
Net income (loss)		—		—		—		—		—			—
Cumulative translation adjustment		—		—		—		—		—			—
Total comprehensive income		—		—		—		—		—			—
BALANCE, FEBRUARY 29, 2004		2,875,000	$	29		50,689,834	$	507		5,038,920		$	50

The accompanying notes to consolidated financial statements are an integral part of these statements.

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EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY – (CONTINUED)
FOR THE THREE YEARS ENDED FEBRUARY 29, 2004
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

						Accumulated
	Additional					Other			Total
	Paid-in		Accumulated			Comprehensive			Shareholders’
	Capital		Deficit			Loss			Equity
BALANCE, FEBRUARY 28, 2001	$	830,299	$	(22,730	)	$	(598	)	$	807,471
Issuance of Class A Common Stock in exchange for Class B Common Stock		—		—			—			—
Exercise of stock options and related income tax benefits		3,610		—			—			3,613
Issuance of Class A Common Stock to profit sharing plan		—		—			—			—
Issuance of Class A Common Stock to employees and officers and related income tax benefits		8,770		—			—			8,777
Sale of Class A common stock to employees through ESPP		575		—			—			575
Preferred stock dividends paid		—		(8,984	)		—			(8,984	)
Comprehensive Income:
Net income (loss)		—		(64,108	)		—
Cumulative translation adjustment		—		—			(6,303	)
Change in fair value of hedged derivatives		—		—			(5,484	)
Total comprehensive loss		—		—			—			(75,895	)
BALANCE, FEBRUARY 28, 2002		843,254		(95,822	)		(12,385	)		735,557
Issuance of Class A Common Stock in exchange for Class B Common Stock		—		—			—			—
Issuance of common stock to employees and related income tax benefits		27,323		—			—			27,335
Sale of Class A Common Stock via secondary offering		120,193		—			—			120,239
Preferred stock dividends paid		—		(8,984	)		—			(8,984	)
Comprehensive Income:
Net income (loss)		—		(164,468	)		—
Cumulative translation adjustment		—		—			(8,079	)
Change in fair value of hedged derivatives		—		—			3,105
Total comprehensive loss		—		—			—			(169,442	)
BALANCE, FEBRUARY 28, 2003		990,770		(269,274	)		(17,359	)		704,705
Issuance of Class A Common Stock in exchange for Class B Common Stock		—		—			—			—
Exercise of stock options and related income tax benefits		12,826		—			—			12,832
Issuance of Class A Common Stock to employees and officers and related income tax benefits		21,887		—			—			21,899
Preferred stock dividends paid		—		(8,984	)		—			(8,984	)
Comprehensive Income:
Net income (loss)		—		2,256			—
Cumulative translation adjustment		—		—			13,859
Change in fair value of hedged derivatives		—		—			2,379
Total comprehensive income		—		—			—			18,494
BALANCE, FEBRUARY 29, 2004	$	1,025,483	$	(276,002	)	$	(1,121	)	$	748,946

The accompanying notes to consolidated financial statements are an integral part of these statements.

64

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

	FOR THE YEARS ENDED FEBRUARY 28 (29),
	2002			2003			2004
OPERATING ACTIVITIES:
Net income (loss)	$	(64,108	)	$	(164,468	)	$	2,256
Adjustments to reconcile net income (loss) to net cash provided by operating activities -
Loss on discontinued operations		—			—			8,615
Impairment loss		9,063			—			12,400
Loss on debt extinguishment		1,748			13,506			—
Cumulative effect of accounting change		—			167,400			—
Depreciation and amortization		124,335			68,193			74,911
Accretion of interest on senior discount note including amortization of related debt costs		24,998			25,777			26,524
Provision for bad debts		4,005			4,102			3,290
Provision (benefit) for deferred income taxes		(26,287	)		10,876			12,450
Noncash compensation		9,095			22,528			23,450
Gain on sale of assets		—			(9,313	)		(1,130	)
Tax benefits of exercise of stock options		999			958			2,775
Other		(5,928	)		(8,079	)		3,640
Changes in assets and liabilities -
Accounts receivable		(2,118	)		(11,207	)		(4,132	)
Prepaid expenses and other current assets		5,127			(3,392	)		359
Other assets		(5,953	)		(4,181	)		(2,760	)
Accounts payable and accrued liabilities		(2,709	)		804			(2,314	)
Deferred revenue		(963	)		(587	)		(1,458	)
Payments of TV program rights payable and other		(1,927	)		(17,768	)		(40,711	)
Net cash provided by operating activities		69,377			95,149			118,165
INVESTING ACTIVITIES:
Purchases of property and equipment		(30,135	)		(30,549	)		(30,191	)
Disposal of property and equipment		1,719			2,354			2,106
Cash paid for acquisitions		(140,746	)		—			(121,126	)
Proceeds from sale of stations, net		—			135,500			3,650
Deposits on acquisitions and other		(5,943	)		(1,004	)		(798	)
Net cash provided by (used in) investing activities		(175,105	)		106,301			(146,359	)

The accompanying notes to consolidated financial statements are an integral part of these statements.

65

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS — (CONTINUED)
(DOLLARS IN THOUSANDS)

	FOR THE YEARS ENDED FEBRUARY 28 (29),
	2002			2003			2004
FINANCING ACTIVITIES:
Payments on long-term debt		(133,000	)		(313,525	)		(105,066	)
Proceeds from long-term debt		5,000			15,000			138,000
Proceeds from the issuance of the Company’s Class A Common Stock, net of transaction costs		—			120,239			—
Purchase of Class A Common Stock		—			(1,937	)		(1,774	)
Proceeds from senior discount notes offering		202,612			—			—
Premium paid to redeem senior discount notes		—			(6,678	)		—
Proceeds from exercise of stock options and employee stock purchases		3,189			6,906			10,555
Payments for debt related costs		(16,626	)		(2,754	)		(646	)
Preferred stock dividends		(8,984	)		(8,984	)		(8,984	)
Net cash provided by (used in) financing activities		52,191			(191,733	)		32,085
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(53,537	)		9,717			3,891
CASH AND CASH EQUIVALENTS:
Beginning of period		59,899			6,362			16,079
End of period	$	6,362		$	16,079		$	19,970
SUPPLEMENTAL DISCLOSURES:
Cash paid for-
Interest	$	99,824		$	77,090		$	56,720
Income taxes		1,281			887			1,143
Non-cash financing transactions-
Value of stock issued to employees under stock compensation program and to satisfy accrued incentives		9,766			22,308			25,932
ACQUISITION OF KKLT-FM, KTAR-AM, AND KMVP-AM:
Fair value of assets acquired	$	160,746
Cash paid, net of deposit		140,746
Deposit paid in June 2000		20,000
Liabilities recorded	$	—
ACQUISITION OF WBPG-TV
Fair value of assets acquired							$	11,854
Cash paid								11,656
Liabilities recorded							$	198
ACQUISITION OF AUSTIN RADIO
Fair value of assets acquired							$	154,867
Cash paid								106,478
Liabilities recorded							$	48,389
ACQUISITION OF BELGIUM RADIO
Fair value of assets acquired							$	2,992
Cash paid								2,992
Liabilities recorded							$	—

The accompanying notes to consolidated financial statements are an integral part of these statements.

66

EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)

	FOR THE YEARS ENDED FEBRUARY 28 (29),
	2002			2003			2004
GROSS REVENUES	$	620,456		$	646,157		$	679,927
LESS: AGENCY COMMISSIONS		80,634			83,794			88,059
NET REVENUES		539,822			562,363			591,868
OPERATING EXPENSES:
Station operating expenses, excluding noncash compensation		354,157			349,251			371,423
Corporate expenses, excluding noncash compensation		20,283			21,359			24,105
Time brokerage fees		479			—			—
Depreciation and amortization		100,258			43,370			46,468
Noncash compensation		9,095			22,528			23,450
Restructuring fees		768			—			—
Impairment loss and other		10,672			—			12,400
Total operating expenses		495,712			436,508			477,846
OPERATING INCOME		44,110			125,855			114,022
OTHER INCOME (EXPENSE):
Interest expense		(104,102	)		(78,058	)		(59,434	)
Gain on sale of assets		—			9,313			1,130
Loss in unconsolidated affiliates		(5,003	)		(4,544	)		(375	)
Loss on debt extinguishment		(1,748	)		(4,444	)		—
Minority interest income (expense)		59			(428	)		(3,029	)
Other income (expense), net		301			952			(1,064	)
Total other income (expense)		(110,493	)		(77,209	)		(62,772	)
INCOME (LOSS) BEFORE INCOME TAXES, DISCONTINUED OPERATIONS AND ACCOUNTING CHANGE		(66,383	)		48,646			51,250
PROVISION (BENEFIT) FOR INCOME TAXES		(18,497	)		20,811			21,812
INCOME (LOSS) FROM CONTINUING OPERATIONS		(47,886	)		27,835			29,438
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX OF $0 IN 2004		—			—			(10,019	)
INCOME (LOSS) BEFORE ACCOUNTING CHANGE		(47,886	)		27,835			19,419
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX OF $102,600		—			(167,400	)		—
NET INCOME (LOSS)	$	(47,886	)	$	(139,565	)	$	19,419

The accompanying notes to consolidated financial statements are an integral part of these statements.

     In the years ended February 28 (29), 2002, 2003, and 2004, $8.3 million, $19.0 million, and $18.2 million respectively, of our noncash compensation was attributable to our stations, while $0.8 million, $3.5 million, and $5.3 million was attributable to corporate.

67

EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

	FEBRUARY 28 (29),
	2003		2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	16,079	$	19,970
Accounts receivable, net of allowance for doubtful accounts of $3,240 and $3,453, respectively		102,345		105,225
Current portion of TV program rights		11,309		13,373
Prepaid expenses		15,596		15,273
Other		14,352		10,190
Assets held for sale		—		7,988
Total current assets		159,681		172,019
PROPERTY AND EQUIPMENT:
Land and buildings		93,660		95,298
Leasehold improvements		14,591		15,224
Broadcasting equipment		172,489		186,779
Office equipment and automobiles		54,082		60,217
Construction in progress		7,111		12,929
		341,933		370,447
Less-Accumulated depreciation and amortization		118,503		153,145
Total property and equipment, net		223,430		217,302
INTANGIBLE ASSETS:
Indefinite lived intangibles		1,638,171		1,736,966
Goodwill		58,701		94,042
Other intangibles		64,189		69,548
		1,761,061		1,900,556
Less-Accumulated amortization		35,328		41,699
Total intangible assets, net		1,725,733		1,858,857
OTHER ASSETS:
Deferred debt issuance costs, net of accumulated amortization of $9,704 and $13,396, repectively		21,731		18,685
TV program rights, net of current portion		10,416		10,909
Investments		9,261		10,025
Deposits and other		7,632		6,189
Total other assets, net		49,040		45,808
Total assets	$	2,157,884	$	2,293,986

The accompanying notes to consolidated financial statements are an integral part of these statements.

68

EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS — (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

	FEBRUARY 28 (29),
	2003			2004
LIABILITIES AND SHAREHOLDER’S EQUITY
CURRENT LIABILITIES:
Accounts payable	$	39,526		$	35,791
Current maturities of long-term debt		14,912			6,539
Current portion of TV program rights payable		27,424			27,502
Accrued salaries and commissions		14,247			14,519
Accrued interest		11,641			11,697
Deferred revenue		15,805			14,393
Other		6,979			6,690
Liabilities associated with assets held for sale		—			638
Total current liabilities		130,534			117,769
CREDIT FACILITY AND SENIOR SUBORDINATED DEBT, NET OF CURRENT PORTION		996,945			1,038,145
OTHER LONG-TERM DEBT, NET OF CURRENT PORTION		13,087			5,909
TV PROGRAM RIGHTS PAYABLE, NET OF CURRENT PORTION		32,044			26,266
OTHER NONCURRENT LIABILITIES		17,065			9,322
MINORITY INTEREST		721			47,672
DEFERRED INCOME TAXES		89,070			109,081
Total liabilities		1,279,466			1,354,164
COMMITMENTS AND CONTINGENCIES (NOTE 10)
SHAREHOLDER’S EQUITY:
Common stock, no par value; authorized, issued and outstanding 1,000 shares in 2003 and 2004		1,027,221			1,027,221
Additional paid-in capital		95,582			130,313
Accumulated deficit		(227,026	)		(216,591	)
Accumulated other comprehensive loss		(17,359	)		(1,121	)
Total shareholder’s equity		878,418			939,822
Total liabilities and shareholder’s equity	$	2,157,884		$	2,293,986

The accompanying notes to consolidated financial statements are an integral part of these statements.

69

EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY
FOR THE THREE-YEARS ENDED FEBRUARY 29, 2004
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

	Common Stock
										Accumulated
					Additional					Other			Total
	Shares				Paid-in		Accumulated			Comprehensive			Shareholder’s
	Outstanding		Amount		Capital		Deficit			Loss			Equity
BALANCE, FEBRUARY 28, 2001		1,000	$	830,799	$	—	$	(22,730	)	$	(598	)	$	807,471
Accrued dividend at reorganization		—		—		—		1,123			—			1,123
Distrubutions to parent		—		—		—		(8,984	)		—			(8,984	)
Contributions from parent		—		196,422		8,108		—			—			204,530
Comprehensive Income:
Net income (loss)		—		—		—		(47,886	)		—
Cumulative translation adjustment		—		—		—		—			(6,303	)
Change in fair value of hedged derivatives		—		—		—		—			(5,484	)
Total comprehensive loss		—		—		—		—			—			(59,673	)
BALANCE, FEBRUARY 28, 2002		1,000		1,027,221		8,108		(78,477	)		(12,385	)		944,467
Distrubutions to parent		—		—		—		(8,984	)		—			(8,984	)
Contributions from parent		—				87,474		—			—			87,474
Comprehensive Income:
Net income (loss)		—		—		—		(139,565	)		—
Cumulative translation adjustment		—		—		—		—			(8,079	)
Change in fair value of hedged derivatives		—		—		—		—			3,105
Total comprehensive loss		—		—		—		—			—			(144,539	)
BALANCE, FEBRUARY 28, 2003		1,000		1,027,221		95,582		(227,026	)		(17,359	)		878,418
Distrubutions to parent		—		—		—		(8,984	)		—			(8,984	)
Contributions from parent		—		—		34,731		—			—			34,731
Comprehensive Income:
Net income (loss)		—		—		—		19,419			—
Cumulative translation adjustment		—		—		—		—			13,859
Change in fair value of hedged derivatives		—		—		—		—			2,379
Total comprehensive income		—		—		—		—			—			35,657
BALANCE, FEBRUARY 29, 2004		1,000	$	1,027,221	$	130,313	$	(216,591	)	$	(1,121	)	$	939,822

The accompanying notes to consolidated financial statements are an integral part of these statements.

70

EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

	FOR THE YEARS ENDED FEBRUARY 28 (29),
	2002			2003			2004
OPERATING ACTIVITIES:
Net income (loss)	$	(47,886	)	$	(139,565	)	$	19,419
Adjustments to reconcile net income (loss) to net cash provided by operating activities -
Loss on discontinued operations		—			—			8,615
Impairment loss		9,063			—			12,400
Loss on debt extinguishment		1,748			4,444			—
Cumulative effect of accounting change		—			167,400			—
Depreciation and amortization		124,335			68,193			74,911
Provision for bad debts		4,005			4,102			3,290
Provision (benefit) for deferred income taxes		(18,497	)		20,811			21,812
Noncash compensation		9,095			22,528			23,450
Gain on sale of assets		—			(9,313	)		(1,130	)
Other		(5,928	)		(8,079	)		3,640
Changes in assets and liabilities -
Accounts receivable		(2,118	)		(11,207	)		(4,132	)
Prepaid expenses and other current assets		5,127			(3,392	)		359
Other assets		(5,952	)		(4,182	)		(2,761	)
Accounts payable and accrued liabilities		(2,709	)		804			(2,314	)
Deferred revenue		(963	)		(587	)		(1,458	)
Payments of TV program rights payable and other		(1,927	)		(17,768	)		(40,711	)
Net cash provided by operating activities		67,393			94,189			115,390
INVESTING ACTIVITIES:
Purchases of property and equipment		(30,135	)		(30,549	)		(30,191	)
Disposal of property and equipment		1,719			2,354			2,106
Cash paid for acquisitions		(140,746	)		—			(121,126	)
Proceeds from sale of stations, net		—			135,500			3,650
Deposits on acquisitions and other		(5,943	)		(1,004	)		(798	)
Net cash provided by (used in) investing activities		(175,105	)		106,301			(146,359	)

The accompanying notes to consolidated financial statements are an integral part of these statements.

71

EMMIS OPERATING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
(DOLLARS IN THOUSANDS)

	FOR THE YEARS ENDED FEBRUARY 28 (29),
	2002			2003			2004
FINANCING ACTIVITIES:
Payments on long-term debt		(133,000	)		(260,101	)		(105,066	)
Proceeds from long-term debt		5,000			15,000			138,000
Distributions to parent		(8,984	)		(8,984	)		(8,984	)
Contributions from parent		195,753			66,066			11,556
Payments for debt related costs		(4,594	)		(2,754	)		(646	)
Net cash provided by (used in) financing activities		54,175			(190,773	)		34,860
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(53,537	)		9,717			3,891
CASH AND CASH EQUIVALENTS:
Beginning of period		59,899			6,362			16,079
End of period	$	6,362		$	16,079		$	19,970
SUPPLEMENTAL DISCLOSURES:
Cash paid for-
Interest	$	99,824		$	77,090		$	56,720
Income taxes		1,281			887			1,143
Non-cash financing transactions-
Value of stock issued to employees under stock compensation program and to satisfy accrued incentives		9,766			22,308			25,932
ACQUISITION OF KKLT-FM, KTAR-AM, AND KMVP-AM:
Fair value of assets acquired	$	160,746
Cash paid, net of deposit		140,746
Deposit paid in June 2000		20,000
Liabilities recorded	$	—
ACQUISITION OF WBPG-TV
Fair value of assets aquired							$	11,854
Cash paid								11,656
Liabilities recorded							$	198
ACQUISITION OF AUSTIN RADIO
Fair value of assets acquired							$	154,867
Cash paid								106,478
Liabilities recorded							$	48,389
ACQUISITION OF BELGIUM RADIO
Fair value of assets acquired							$	2,992
Cash paid								2,992
Liabilities recorded							$	—

The accompanying notes to consolidated financial statements are an integral part of these statements.

72

EMMIS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
AND EMMIS OPERATING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS UNLESS INDICATED OTHERWISE, EXCEPT SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Principles of Consolidation

     The following discussion pertains to Emmis Communications Corporation (“ECC”) and its subsidiaries (collectively, “Emmis”, the “Company”, or “We”) and to Emmis Operating Company and its subsidiaries (collectively “EOC”). EOC became a wholly owned subsidiary of ECC in connection with the Company’s reorganization (see Note 1c. below) on June 22, 2001. Unless otherwise noted, all disclosures contained in these Notes to Consolidated Financial Statements apply to Emmis and EOC. Emmis’ foreign subsidiaries report on a fiscal year ending December 31, which Emmis consolidates into its fiscal year ending February 28 (29). All significant intercompany balances and transactions have been eliminated.

b. Organization

     Emmis Communications Corporation is a diversified media company with radio broadcasting, television broadcasting and magazine publishing operations. We own and operate six FM radio stations serving the nation’s top three markets – New York, Los Angeles and Chicago. Additionally, we own and operate seventeen FM and four AM radio stations with strong positions in Phoenix, St. Louis, Austin (we have a 50.1% controlling interest in our radio stations located there), Indianapolis and Terre Haute. The sixteen television stations Emmis operates serve geographically diverse, mid-sized markets in the U.S., as well as the large markets of Portland and Orlando, and have a variety of television network affiliations: five with CBS, five with Fox, three with NBC, one with ABC and two with WB. In addition to our domestic radio and TV broadcasting properties, we operate a radio news network in Indiana, publish Texas Monthly, Los Angeles, Atlanta, Indianapolis Monthly, Cincinnati and Country Sampler and related magazines. Internationally, we operate nine FM radio stations in the Flanders region of Belgium and have a 59.5% interest in a national top-ranked radio station in Hungary. Our 75% interest in one FM and one AM radio station in Buenos Aires, Argentina is held for sale. We expect the transaction to close in our fiscal quarter ended May 31, 2004. We also engage in various businesses ancillary to our broadcasting business, such as consulting, broadcast tower leasing and book publishing.

c. Reorganization

     On June 22, 2001, ECC transferred all of its assets and substantially all of its liabilities, including its credit facility and its outstanding senior subordinated notes, to EOC, a newly formed, wholly-owned subsidiary in exchange for 1,000 shares of no par value common stock. As a result, effective June 22, 2001, EOC became the only direct subsidiary of ECC and ECC became a holding company that conducts its business operations through EOC and its subsidiaries. ECC remains the issuer of the Class A, Class B and Class C common stock and the convertible preferred stock, and is the obligor of the senior discount notes. However, EOC is the obligor of the senior subordinated notes and the borrower under the credit facility. Under the terms of the senior subordinated notes, EOC is required to file, pursuant to SEC rules and regulations, periodic reports on Forms 10-Q, 10-K and 8-K. EOC’s financial statements are presented herein for all periods required as if EOC had existed at the beginning of the earliest period presented because the corporate reorganization was accounted for as a reorganization of entities under common control. Subsequent to the balance sheet date, EOC refinanced the senior subordinated notes. The new senior subordinated notes do not contain this separate reporting requirement for EOC so long as ECC files consolidated financial statements. See Note 15 for more discussion.

     Substantially all of ECC’s business is conducted through its subsidiaries. The credit facility and senior subordinated notes indenture contain certain provisions that may restrict the ability of ECC’s subsidiaries to transfer funds to ECC in the form of cash dividends, loans or advances. See the accompanying financial statements of EOC and its subsidiaries for the net assets of the restricted subsidiaries.

d. Revenue Recognition

     Broadcasting revenue is recognized as advertisements are aired. Publication revenue is recognized in the month of delivery of the publication.

73

e. Allowance for Doubtful Accounts

     A provision for doubtful accounts is recorded based on management’s judgement of the collectibility of receivables. When assessing the collectibility of receivables, management considers, among other things, historical loss activity and existing economic conditions. The activity in the allowance for doubtful accounts during the years ended February 2002, 2003 and 2004 was as follows:

	Balance At							Balance
	Beginning							At End
	Of Year		Provision		Write-Offs			Of Year
Year ended February 28, 2002	$	2,202		4,005		(3,407	)	$	2,800
Year ended February 28, 2003	$	2,800		4,102		(3,662	)	$	3,240
Year ended February 29, 2004	$	3,240		3,290		(3,077	)	$	3,453

f. Television Programming

     Emmis has agreements with distributors for the rights to television programming over contract periods which generally run from one to five years. Each contract is recorded as an asset and a liability at an amount equal to its gross contractual commitment when the license period begins and the program is available for its first showing. The portion of program contracts which become payable within one year is reflected as a current liability in the accompanying consolidated balance sheets.

     The rights to program materials are reflected in the accompanying consolidated balance sheets at the lower of unamortized cost or estimated net realizable value. Estimated net realizable values are based upon management’s expectation of future advertising revenues, net of sales commissions, to be generated by the program material. Amortization of program contract costs is computed under either the straight-line method over the contract period or based on usage, whichever yields the greater amortization for each program on a monthly basis. Program contract costs that management expects to be amortized in the succeeding year are classified as current assets. Program contract liabilities are typically paid on a scheduled basis and are not affected by adjustments for amortization or estimated net realizable value. Certain program contracts provide for the exchange of advertising air time in lieu of cash payments for the rights to such programming. These contracts are recorded as the programs are aired at the estimated fair value of the advertising air time given in exchange for the program rights.

g. Time Brokerage Fees

     The Company often enters into time brokerage agreements in connection with acquisitions, pending regulatory approval of transfer of license assets. Under the terms of these agreements, the Company makes specified periodic payments to the owner-operator in exchange for the grant to the Company of the right to program and sell advertising of a specified portion of the station’s inventory of broadcast time. The Company records revenues and expenses associated with the portion of the station’s inventory of broadcast time it manages. Nevertheless, as the holder of the FCC license, the owner-operator retains control and responsibility for the operation of the station, including responsibility over all programming broadcast on the station.

     Included in the accompanying consolidated statements of operations for the year ended February 2002 are time brokerage fees of $0.5 million.

h. Noncash Compensation

     Noncash compensation includes compensation expense associated with restricted common stock issued under employment agreements, common stock issued to employees in lieu of cash bonuses, Company matches in our 401(k) plans, and common stock issued to employees in exchange for cash compensation pursuant to our stock compensation program. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation.”

     In December 2001, Emmis instituted a 10% pay cut for substantially all of its non-contract employees and also began a stock compensation program under its 2001 Equity Incentive Plan. All Emmis employees who were affected by the pay cut were automatically eligible to participate in the stock compensation program and all other employees are eligible to participate in the program

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by taking a voluntary pay cut. Each participant in the program could elect to receive the portion of their compensation that was cut in the form of payroll stock that was issued every two weeks or in the form of restricted stock that vested and was issued after the end of the award year in January 2003. The payroll stock was awarded based on the fair market value of Emmis’ Class A Common Stock on the date it was issued. The restricted stock was awarded based on a discount off the initial value of Emmis’ Class A Common Stock. During the years ended February 2002, 2003 and 2004, the stock compensation program reduced cash compensation expense by approximately $3.1 million, $16.5 million, and $16.7 million, respectively, but noncash compensation increased by the same amount. We issued approximately 0.7 million shares of common stock during the calendar 2002 award year and 0.8 million shares of common stock during the calendar 2003 award year. Effective January 1, 2004, we curtailed our stock compensation program by eliminating mandatory participation for employees making less than $52,000 per year. For calendar 2004, this change will result in an estimated $8 million decrease in the Company’s non-cash compensation expense and a corresponding increase in the Company’s cash operating expense. In all other respects, the 2004 stock compensation program remains comparable to the stock compensation programs in effect for each of the last two calendar years. No formal decisions have been made regarding its status beyond December 2004.

     Effective March 1, 2003, Emmis elected to double its 401(k) match to $2 per employee, with one-half of the contribution made in Emmis stock. The increased 401(k) match was made instead of a contribution to the Company’s profit sharing plan. This resulted in approximately $1.5 million of additional noncash compensation expense for the year ended February 29, 2004, as compared to the prior year.

i. Restructuring Fees

     In fiscal 2002, Emmis incurred restructuring fees of $768. These restructuring fees principally consist of severance and related costs associated with centralizing certain technical functions of the television division.

j. Cash and Cash Equivalents

     Emmis considers time deposits, money market fund shares, and all highly liquid debt instruments with original maturities of three months or less to be cash equivalents.

k. Property and Equipment

     Property and equipment are recorded at cost. Depreciation is generally computed by the straight-line method over the estimated useful lives of the related assets which are 31.5 years for buildings, not more than 32 years or the life of the lease, whichever is lower for leasehold improvements, and 5 to 7 years for broadcasting equipment, office equipment and automobiles. Maintenance, repairs and minor renewals are expensed; improvements are capitalized. On a continuing basis, the Company reviews the carrying value of property and equipment for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” If events or changes in circumstances were to indicate that an asset carrying value may not be recoverable, a write-down of the asset would be recorded through a charge to operations. Depreciation expense for the years ended February 2002, 2003, and 2004 was $34.3 million, $36.3 million, and $39.5 million respectively.

l. Intangible Assets

     Intangible assets are recorded at cost. The cost of the broadcast license for Slager Radio is being amortized over the term of the license, which expires in November 2009. The cost of the broadcast licenses in Belgium is being amortized over the initial nine year term of the licenses. The cost of the broadcast license for the two stations in Buenos Aires, Argentina was being amortized over the twenty-three year term of the license. We have announced the sale of these two stations and we expect the transaction to close in our quarter ended May 31, 2004. Other definite-lived intangibles are amortized using the straight-line method over varying periods, not in excess of 37 years. Effective March 1, 2002, we ceased amortization of goodwill and FCC licenses in connection with our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets” (See Note 8). FCC licenses are renewed every eight years for a nominal amount and historically all of our FCC licenses have been renewed at the end of their respective eight-year periods. Since we expect that all of our FCC licenses will continue to be renewed in the future, we believe they have indefinite lives.

     Subsequent to the acquisition of an intangible asset, Emmis evaluates whether later events and circumstances indicate the remaining estimated useful life of that asset may warrant revision or that the remaining carrying value of such an asset may not be recoverable in accordance with SFAS No. 142, “Goodwill and other Intangible Assets”.

     In connection with our fiscal 2004 annual impairment review, we recognized an impairment loss of $12.4 million, which related to

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our television division. This impairment charge is reflected in impairment loss and other in the accompanying consolidated statements of operations.

     In fiscal 2002, the Company adjusted the carrying value of KALC-FM to net realizable value less cost of sale, which resulted in a $9.1 million impairment charge. This impairment charge is reflected in impairment loss and other in the accompanying consolidated statements of operations. This station was sold in May 2002.

m. Discontinued operations and assets held for sale

     On December 23, 2003, Emmis agreed to sell all of its interest in Votionis, S.A. (“Votionis”), which owns and operates two radio stations in Buenos Aires, Argentina, to its minority partners for $7.3 million in cash. The sale is subject to Argentine regulatory approvals and is expected to close during our quarter ended May 31, 2004. Emmis acquired its interest in Votionis in November 1999. In October 2003, we exercised our right to purchase the equity interests of our minority partners. During negotiations with our minority partners, we instead elected to sell our interest. In connection with the pending sale, Emmis recorded a loss from discontinued operations of $10.0 million in fiscal 2004. This consisted of a $10.4 million loss on disposal in the fourth quarter, net of $0.4 million of income recognized from the operations of Votionis in fiscal 2004. The Argentine peso substantially devalued relative to the U.S. dollar early in 2002. The loss is primarily attributable to the devaluation of the peso. Revenues, operating expenses, depreciation and amortization, and pre-tax income for Votionis were approximately $4.7 million, $3.7 million, $0.4 million, and $0.9 million, respectively, in fiscal 2004. As of February 29, 2004, the net carrying amount of the assets held for sale was $7.4 million. Assets held for sale principally consist of accounts receivable ($2.0 million), property and equipment ($1.1 million) and foreign broadcast licenses ($3.8 million). Votionis was historically included in the radio reporting segment.

n. Advertising and Subscription Acquisition Costs

     Advertising and subscription acquisition costs are expensed the first time the advertising takes place, except for certain direct-response advertising related to the identification of new magazine subscribers, the primary purpose of which is to elicit sales from customers who can be shown to have responded specifically to the advertising and that results in probable future economic benefits. These direct-response advertising costs are capitalized as assets and amortized over the estimated period of future benefit, ranging from six months to two years subsequent to the promotional event. As of February 28 (29), 2003 and 2004, we had approximately $1.6 million in direct-response advertising costs capitalized as assets. On an interim basis, the Company defers major advertising campaigns for which future benefits can be demonstrated. These costs are amortized over the shorter of the period benefited or the remainder of the fiscal year. Advertising expense for the years ended February 2002, 2003 and 2004 was $15.0 million, $19.5 million, and $19.7 million, respectively.

o . Investments

     Emmis has a 50% ownership interest (approximately $5,114 as of February 28 (29), 2003 and 2004) in a partnership in which the sole asset is land on which a transmission tower is located. The other owner has voting control of the partnership. Emmis has a 25% ownership interest (approximately $2,060 and $1,957 as of February 28 (29), 2003 and 2004, respectively) in a company that operates a tower site in Portland, Oregon. These investments are accounted for using the equity method of accounting. Emmis has numerous other investments that are accounted for using the equity method of accounting as Emmis does not control these entities, but none had a balance exceeding $1.0 million as of February 28 (29), 2003 or 2004. Collectively, these investments totaled $0.4 million and $1.8 million, respectively, as of February 28 (29), 2003 and 2004.

     Emmis has numerous investments accounted for using the cost method of accounting. No cost method investment balance exceeded $1.0 million as of February 28, (29), 2003 or 2004. Collectively, these investments totaled $1.6 million and $1.2 million, respectively, as of February 28 (29), 2003 and 2004. In fiscal 2004, Emmis reduced the carrying value of one of its cost method investments from approximately $1.0 million to zero as the decline in the value of the investment, as determined by management, was deemed to be other than temporary. This expense is reflected in other income (expense), net in the accompanying consolidated statements of operations.

     In fiscal 2003, the Company and other partners in the local media internet venture (LMIV) agreed to dissolve the joint venture. Consequently, in addition to recording our share of LMIV’s losses for the year, the Company recorded a $2.1 million charge to write off our investment in LMIV. This charge is reflected in loss from unconsolidated affiliates in the accompanying consolidated statements of operations.

p. Deferred Revenue and Barter Transactions

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     Deferred revenue includes deferred magazine subscription revenue and deferred barter revenue. Magazine subscription revenue is recognized when the publication is shipped. Barter transactions are recorded at the estimated fair value of the product or service received. Broadcast revenue from barter transactions is recognized when commercials are broadcast or publication is delivered. The appropriate expense or asset is recognized when merchandise or services are used or received. Barter revenues for the years ended February 2002, 2003, and 2004 were $15.8 million, $15.3 million, and $18.7 million, respectively, and barter expenses were $15.2 million, $16.1 million, and $18.4 million, respectively.

q. Foreign Currency Translation

     The functional currency of Slager Radio is the Hungarian forint. Slager Radio’s balance sheet has been translated from forints to the U.S. dollar using the current exchange rate in effect at the subsidiary’s balance sheet date (December 31). Slager Radio’s results of operations have been translated using an average exchange rate for the period. The translation adjustment resulting from the conversion of Slager Radio’s financial statements was ($754), $2,474, and ($1,197) for the years ended February 2002, 2003, and 2004, respectively. This adjustment is reflected in shareholders’ equity in the accompanying consolidated balance sheets.

     The functional currency of the two stations in Argentina is the Argentinean peso, which until January 2002 was tied to the U.S. dollar through the Argentine government’s convertibility plan. In January 2002, the Argentine government allowed the peso to devalue and trade against the U.S. dollar independently. These two stations’ balance sheets have been translated from pesos to U.S. dollars using the exchange rate in effect at the subsidiary’s balance sheet date. The results of operations have been translated using an average exchange rate for the period. The translation adjustment resulting from the conversion of their financial statements was $7,057, $5,605, and ($12,662) for the years ended February 2002, 2003 and 2004, respectively. This adjustment is reflected in shareholders’ equity in the accompanying consolidated balance sheets. The 2004 adjustment relates primarily to the reclassification to loss on discontinued operations of translation losses previously reported in other comprehensive income.

r.	Earnings Per Share
	Emmis

     Statement of Financial Accounting Standards (SFAS) No. 128, “Earnings Per Share”, requires dual presentation of basic and diluted earnings per share (“EPS”) on the face of the income statement for all entities with complex capital structures. Basic EPS is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period (47,334,038, 53,014,268 and 54,716,221 shares for the years ended February 2002, 2003, and 2004, respectively). Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. Potentially dilutive securities at February 2002, 2003, and 2004 consisted of stock options and the 6.25% Series A cumulative convertible preferred stock. The conversion of the preferred stock is not included in the calculation of diluted net income per common share for each of the three years ended February 29, 2004 as the effect of these conversions would be antidilutive. Additionally, the conversion of stock options is not included in the calculation of diluted net income per common share for the years ended February 28, 2002 and 2003 as the effect of their conversion would be antidilutive. Weighted average common equivalent shares outstanding for the period for purposes of computing diluted EPS are 47,334,038, 53,014,268 and 55,065,669 for the years ended February 2002, 2003, and 2004, respectively. Excluded from the calculation of diluted net income per share are 3.7 million weighted average shares that would result from the conversion of preferred shares for the years ended February 2002, 2003, and 2004, respectively. In the years ended February 28, 2002 and 2003, approximately 0.5 million and 0.2 million options, respectively, were excluded from the calculation of diluted net income per share as the effect of their conversion would be antidilutive.

EOC

     Because EOC is a wholly-owned subsidiary of Emmis, disclosure of earnings per share for EOC is not required.

s. Estimates

     The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements and in disclosures of contingent assets and liabilities. Actual results could differ from those estimates.

t. Fair Value of Financial Instruments

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     The carrying amounts of cash, accounts receivable, and accounts payable approximate fair value because of the short maturity of these financial instruments. The company had $230.0 million notional amount of interest rate swap agreements outstanding as of February 28, 2003 and none outstanding as of February 29, 2004. The carrying amounts of interest rate swaps are recorded at their fair value of $4.3 million, as of February 28, 2003, and are included in other noncurrent liabilities in the accompanying consolidated balance sheets. The cumulative amount of change in fair value of interest rate swaps at February 28, 2003 was $2.4 million, net of tax, and is recorded in accumulated other comprehensive income in the accompanying consolidated balance sheets. Except for the senior subordinated notes and senior discount notes, the carrying amounts of long-term debt approximate fair value due to the variable interest rate on such debt. On February 28 (29), 2003 and 2004, the fair value of the senior subordinated notes was approximately $308.8 million and $312.0 million, respectively, and the fair value of the senior discount notes was approximately $234.6 million and $267.7 million, respectively. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument.

u. Derivative Financial Instruments

     On March 1, 2001, Emmis adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138, “Accounting for Derivative Instruments and Hedging Activities.” These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts. These statements require that every derivative instrument be recorded in the balance sheet as either an asset or a liability measured at its fair value. Changes in the fair value of derivatives are to be recorded each period in earnings or comprehensive income, depending on whether the derivative is designated and effective as part of a hedged transaction, and on the type of hedge transaction. Gains or losses on derivative instruments reported in the other comprehensive income must be reclassified as earnings in the period in which earnings are affected by the underlying hedged item, and the ineffective portion of all hedges must be recognized in earnings in the current period. These standards result in additional volatility in reported assets, liabilities, earnings and other comprehensive income. SFAS No. 133 further requires that the fair value and effectiveness of each hedging instrument must be measured quarterly. The result of each measurement could result in fluctuations in reported assets, liabilities, other comprehensive income and earnings as these changes in fair value and effectiveness are recorded to the financial statements.

     SFAS No. 133 requires that as of the date of initial adoption the difference between the fair value of the derivative instruments to be recorded on the balance sheet and the previous carrying amount of those derivatives be reported in net income or other comprehensive income, as appropriate, as the cumulative effect of a change in accounting principle in accordance with APB 20 “Accounting Changes.” On March 1, 2001, Emmis recorded the effect of the adoption of SFAS No. 133 which resulted in an immaterial impact to the results of operations and the financial position of Emmis. See footnote 4 for discussion of the interest rate swap agreements in effect during fiscal 2002, 2003, and 2004.

v. Recent Accounting Pronouncements

          In June 2001, the FASB issued SFAS No. 141, “Business Combinations.” SFAS No. 141 addresses financial accounting and reporting for business combinations and supersedes Accounting Principle Board (“APB”) Opinion No. 16, “Business Combinations” and SFAS No. 38, “Accounting for Preacquisition Contingencies of Purchased Enterprises.” SFAS No. 141 is effective for all business combinations initiated after June 30, 2001 and eliminates the pooling-of-interest method of accounting for business combinations except for qualifying business combinations that were initiated prior to July 1, 2001. SFAS No. 141 also changes the criteria to recognize intangible assets apart from goodwill. The Company adopted this Statement on July 1, 2001. The Company has historically used the purchase method to account for all business combinations and the adoption of this Statement did not have a material impact on the Company’s financial position, cash flows or results of operations.

          In June 2001, the FASB issued SFAS No. 142 “Goodwill and Other Intangible Assets” that requires companies to cease amortizing goodwill and certain other indefinite-lived intangible assets, including broadcast licenses. Under SFAS 142, goodwill and certain indefinite-lived intangibles will not be amortized into results of operations, but instead the recorded value of certain indefinite-lived intangibles will be tested for impairment at least annually with impairment being measured as the excess of the asset’s carrying amount over its fair value. Intangible assets that have finite useful lives will continue to be amortized over their useful lives and measured for impairment in accordance with SFAS 121. In connection with the adoption of SFAS 142 effective March 1, 2002, we recorded an impairment loss of $167.4 million, net of tax, reflected as the cumulative effect of an accounting change in the accompanying consolidated statements of operations. The adoption of this accounting standard reduced our amortization of goodwill and intangibles by approximately $61.0 million in the year ended February 28, 2003. However, our future impairment reviews may result in additional periodic write-downs, such as our $12.4 million impairment loss in fiscal 2004 (see Note 8).

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          In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations” that applies to legal obligations associated with the retirement of a tangible long-lived asset that results from the acquisition, construction, or development and/or the normal operation of a long-lived asset. Under this standard, guidance is provided on measuring and recording the liability. The Company adopted this Statement on March 1, 2003 and it did not have a material impact on the Company’s financial position, cash flows or results of operations.

          Effective March 1, 2002, the Company adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” that addresses financial accounting and reporting for the impairment or disposal of long-lived assets. While SFAS No. 144 supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” it removes certain assets such as deferred tax assets, goodwill and intangible assets not being amortized from its scope and retains the requirements of SFAS No. 121 regarding the recognition of impairment losses on other long-lived assets held for use. SFAS No. 144 also supersedes the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring events and Transactions” for the disposal of a segment of a business. However, SFAS No. 144 retains the requirement in Opinion 30 to report separately discontinued operations and extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in a distribution to owners) or is classified as held for sale. Adoption of this statement did not have a material impact on the Company’s financial position, cash flows or results of operations.

          In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 supersedes Emerging Issues Task Force Issue No. 94-3. SFAS No. 146 requires that the liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, not at the date of an entity’s commitment to an exit or disposal plan. The provisions of SFAS No. 146 are effective for exit or disposal activities initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

          As of December 2002, we adopted SFAS No. 148, “Accounting for Stock-Based Compensation-Transaction and Disclosure, an Amendment of SFAS No. 123.” SFAS No. 148 revises the methods permitted by SFAS No. 123 of measuring compensation expense for stock-based employee compensation plans. We use the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, as permitted under SFAS No. 123. Therefore, this change did not have a material effect on our financial statements. SFAS No. 148 requires us to disclose pro forma information related to stock-based compensation, in accordance with SFAS No. 123, on a quarterly basis in addition to the current annual basis disclosure. We reported the pro forma information on an interim basis beginning with our May 31, 2003 Form 10-Q.

          On January 1, 2003, the Financial Accounting Standards Board issued Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46”). FIN 46 addresses consolidation of business enterprises of variable interest entities. FIN 46 is effective immediately for all variable interest entities created after January 31, 2003 and for the first fiscal year or interim period ending after March 15, 2004 for variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The Company has not acquired any variable interest entities subsequent to January 31, 2003 and has no interests in structures that are commonly referred to as special-purpose entities. The Company will therefore adopt FIN 46 in its interim report for the quarter ending May 31, 2004. The Company does not expect this pronouncement will have a material impact on its future consolidated results of operations or financial position.

          On March 1, 2003, the Company adopted Financial Accounting Standards Board Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN 45”). FIN 45 applies to contracts or indemnification agreements that contingently require the guarantor to make payments to the guaranteed party based on changes in an underlying obligation that is related to an asset, liability, or an equity security of the guaranteed party. FIN 45’s disclosure requirements were effective for financial statements of interim or annual periods ending after December 15, 2002. FIN 45’s initial recognition and initial measurement provisions were applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s fiscal year-end. The Company adopted the disclosure requirements of FIN 45 for its fiscal 2003 annual report. Adoption of the initial recognition and initial measurement requirements of FIN 45 did not materially impact the Company’s financial position, results of operations or applicable disclosures.

          On March 1, 2003, the Company adopted Statement of Financial Accounting Standards No. 145, Rescission of SFAS Nos. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections (SFAS No. 145”). SFAS No. 145 rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that Statement, and SFAS No. 64, Extinguishments of Debt Made

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to Satisfy Sinking-Fund Requirements. SFAS No. 145 also rescinds SFAS No. 44, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS No. 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. This pronouncement requires gains and losses related to debt transactions to be classified in income from continuing operations. Although we did not have any gains or losses from debt transactions in the current year, ECC had recorded an extraordinary loss of $11.1 million, net of tax, in the year ended February 28, 2003, and EOC had recorded an extraordinary loss of $2.9 million, net of tax, in the year ended February 28, 2003, in connection with debt extinguishments. Accordingly, we retroactively reclassified the losses of $13.5 million for ECC and $4.4 million for EOC and the related income tax effects to include them in income from continuing operations.

          In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (SFAS No. 150”). SFAS No. 150 requires financial instruments within its scope to be classified as a liability (or an asset in some circumstances). Many of these instruments were previously classified as equity. The provisions of SFAS 150 regarding limited life subsidiaries have been deferred indefinitely. These provisions applied to one of our subsidiaries. The settlement value of the minority partner’s interest in our subsidiary was not material at February 29, 2004. Subsequent to the balance sheet date, we sold our interest in the subsidiary.

w. Pro Forma Information Related To Stock-Based Compensation

     As permitted under SFAS No. 123, “Accounting for Stock-Based Compensation,” the Company measures compensation expense for its stock-based employee compensation plans using the intrinsic value method prescribed by Accounting Principles Board Option No. 25, “Accounting for Stock Issued to Employees,” and provides pro forma disclosures of net income and earnings per share as if the fair value-based method prescribed by SFAS No. 123 had been applied in measuring compensation expense.

     Had compensation cost for the Company’s 2002, 2003 and 2004 grants for stock-based compensation plans been determined consistent with SFAS No. 123, the Company’s net loss available to common shareholders for these years would approximate the pro forma amounts below (in thousands, except per share data):

	Year Ended February 28 (29),
	2002			2003			2004
Net Loss Available to Common Shareholders:
As Reported	$	(73,092	)	$	(173,452	)	$	(6,728	)
Pro Forma	$	(85,760	)	$	(179,695	)	$	(16,543	)
Basic EPS:
As Reported	$	(1.54	)	$	(3.27	)	$	(0.12	)
Pro Forma	$	(1.81	)	$	(3.39	)	$	(0.30	)
Diluted EPS:
As Reported	$	(1.54	)	$	(3.27	)	$	(0.12	)
Pro Forma	$	(1.81	)	$	(3.39	)	$	(0.30	)

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     Because the fair value method of accounting has not been applied to options prior to March 1, 1995, the resulting pro forma compensation cost may not be representative of that to be expected in future years. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model utilizing the following weighted average assumptions:

	Year Ended February 28 (29),
	2002	2003	2004
Risk-Free Interest Rate:	3.6% - 5.4%	3.6% - 5.4%	3.6% - 5.4%
Expected Dividend Yield:	0%	0%	0%
Expected Life (Years):	8.3 - 8.6	8.3 - 8.6	8.3 - 8.6
Expected Volatility:	57.7% - 58.4%	57.7% - 58.4%	57.7% - 58.4%

x. Reclassifications

     Certain reclassifications have been made to the prior years financial statements to be consistent with the February 29, 2004 presentation. The reclassifications have no impact on net income (loss) previously reported.

2. COMMON STOCK

     ECC has authorized 170,000,000 shares of Class A common stock, par value $.01 per share, 30,000,000 shares of Class B common stock, par value $.01 per share, and 30,000,000 shares of Class C common stock, par value $.01 per share. The rights of these three classes are essentially identical except that each share of Class A common stock has one vote with respect to substantially all matters, each share of Class B common stock has 10 votes with respect to substantially all matters, and each share of Class C common stock has no voting rights with respect to substantially all matters. Class B common stock is owned by our Chairman, CEO and President, Jeffrey H. Smulyan. All shares of Class B common stock convert to Class A common stock upon sale or other transfer to a party unaffiliated with Mr. Smulyan. At February 28 (29), 2003 and 2004, no shares of Class C common stock were issued or outstanding. The financial statements presented reflect the issuance of Class A and Class B common stock.

     In April 2002, ECC completed the sale of 4.6 million shares of its Class A common stock at $26.80 per share resulting in total proceeds of $123.3 million. The net proceeds of $120.2 million were contributed to EOC and 50% of the net proceeds were used in April 2002 to repay outstanding obligations under our credit facility. The remainder was invested, and in July 2002 distributed to ECC and used to redeem approximately 22.6% of ECC’s outstanding 12 1/2% senior discount notes (see Note 4).

3. PREFERRED STOCK

     ECC has authorized 10,000,000 shares of preferred stock, which may be issued with such designations, preferences, limitations and relative rights as Emmis’ Board of Directors may authorize.

     ECC has 2.875 million shares of 6.25% Series A cumulative convertible preferred stock outstanding, which have a liquidation preference of $50 per share and a par value of $.01 per share. Each preferred share is convertible at the option of the holder into 1.28 shares of Class A common stock, subject to certain events. Dividends are cumulative and payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year at an annual rate of $3.125 per preferred share. While Emmis had sufficient liquidity to declare and pay the dividends as they become due, it was not permitted to do so for the October 15, 2001, January 15, 2002, and April 15, 2002 payments because Emmis’ leverage ratio under the senior discount notes indenture exceeded 8:1 and its leverage ratio under the senior subordinated notes indenture exceeded 7:1. ECC’s board of directors set a record date for payments, but did not declare the dividends. Instead, a wholly-owned, unrestricted subsidiary of EOC made a payment of $.78125 per share to each preferred shareholder of record. This subsidiary was permitted to make the payments to the preferred shareholders under the senior discount notes and senior subordinated notes indentures. Currently, Emmis meets its leverage ratio requirements under both the senior discount notes indenture and the senior subordinated notes indenture. On July 2, 2002, ECC’s board of directors declared the April 15, 2002, October 15, 2001 and January 15, 2002 dividend, and deemed the obligation to pay each dividend to have been discharged by the subsidiary’s prior payment. Commencing with the July 15, 2002 dividend, all subsequent dividends have been timely declared and paid by ECC.

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     ECC may redeem the preferred stock for cash at the following redemption premiums (which are expressed as a percentage of the liquidation preference per share and which step down on October 15 of each subsequent year), plus in each case accumulated and unpaid dividends, if any, whether or not declared to the redemption date:

Year	Amount
2004		101.786	%
2005		100.893	%
2006 and thereafter		100.000	%

4. CREDIT FACILITY, SENIOR SUBORDINATED NOTES AND SENIOR DISCOUNT NOTES

     The credit facility, senior subordinated notes and senior discount notes were comprised of the following at February 28 (29), 2003 and 2004:

	2003		2004
Credit Facility
Revolver	$	2,112	$	45,000
Term Note A		204,786		196,083
Term Note B		500,000		498,750
8 1/8% Senior Subordinated Notes Due 2009		300,000		300,000
		1,006,898		1,039,833
Less: Current Maturities		9,953		1,688
EOC total		996,945		1,038,145
12 1/2% Senior Discount Notes Due 2011		197,844		223,423
Emmis total	$	1,194,789	$	1,261,568

     Subsequent to the balance sheet date, Emmis refinanced its credit facility, senior subordinated notes and retired substantially all of its senior discount notes. Current maturities have been determined based on the terms of the new indebtedness. (see Note 15 for more discussion).

CREDIT FACILITY

     On December 29, 2000 ECC entered into an amended and restated credit facility for $1.4 billion (consisting of a $320.0 million revolver, a $480.0 million term note A and a $600.0 million term note B). Effective May 10, 2004, EOC entered into a new credit facility (see Note 15 for more discussion). The following describes the credit facility in existence as of the balance sheet date and previous amendments thereto. In June 2001, upon completion of the Company’s reorganization (see Note 1c), the Company repaid $93.0 million of term notes and transferred the credit facility to EOC. The repayment resulted in the cancellation of a portion of the term notes and the Company recorded a loss on debt extinguishment of approximately $1.7 million related to unamortized deferred debt issuance costs for the year ended February 28, 2002. During fiscal 2002, EOC repaid and cancelled an additional $35.0 million in term notes. On November 30, 2001, EOC amended the financial covenants of its credit facility through November 30, 2002, which, among other things, reduced total availability under the revolver to $220.0 million and resulted in the amortization of $1.4 million of deferred debt issuance costs into interest expense during the year ended February 28, 2002.

     On June 21, 2002, EOC amended its credit facility to (1) issue a $500.0 million new term B loan which was used to repay amounts outstanding under the existing $552.1 million term B loan, (2) reset financial covenants for the remaining term of the credit facility, and (3) permit EOC to make a one time cash distribution to ECC for the purpose of redeeming a portion of its 12 1/2% senior discount notes. In connection with the repayment of the existing term B loan, the Company recorded a loss on debt extinguishment of $0.8 million relating to the write off of deferred debt fees.

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     In the first quarter of fiscal 2003, we repaid approximately $195.1 million of credit facility debt with the net proceeds from our Denver radio station asset sales and 50% of the net proceeds from our April 2002 equity offering. In connection with the repayment of existing term loans outstanding, the Company recorded loss on debt extinguishment of $3.6 million relating to the write off of deferred debt fees.

     On June 6, 2003, EOC amended its credit facility to allow for the acquisition of the controlling interest in the Austin partnership (see Note 6). Specifically, the amendment increased the amount of Investments (as defined in the credit facility) that EOC could make to allow for the investment in the partnership. In addition to permitting the Austin acquisition, previously required decreases in senior leverage and total leverage ratios were delayed from November 30, 2003 to June 1, 2004.

     The revolver and term note A mature February 28, 2009 and the term note B matures August 31, 2009. Net deferred debt costs of approximately $15.8 million and $13.8 million, respectively, relating to the credit facility are reflected in the accompanying consolidated balance sheets as of February 28 (29), 2003 and 2004, and are being amortized over the life of the credit facility as a component of interest expense.

     The amended and restated credit facility provides for letters of credit to be made available to EOC not to exceed $100.0 million. The aggregate amount of outstanding letters of credit and amounts borrowed under the revolver cannot exceed the revolver commitment. At February 28 (29), 2003 and 2004, $1.4 million and $2.5 million, respectively, in letters of credit were outstanding.

     All outstanding amounts under the credit facility bear interest, at the option of EOC, at a rate equal to the Eurodollar Rate or an alternative base rate (as defined in the credit facility) plus a margin. The margin over the Eurodollar Rate or the alternative base rate varies (ranging from 0% to 2.9% and 0.5% to 2.5%, respectively), depending on Emmis’ ratio of debt to operating cash flow, as defined in the agreement. The weighted-average interest rate on borrowings outstanding under the credit facility, including the effects of interest rate swaps was approximately 4.7% and 3.4% at February 28 (29), 2003 and 2004, respectively. Interest is due on a calendar quarter basis under the alternative base rate and at least every three months under the Eurodollar Rate. The credit facility required EOC to have fixed interest rates for a two year period on at least 50% of its total outstanding debt, as defined (including the senior subordinated debt). After the first two years, this ratio of fixed to floating rate debt must be maintained if EOC’s total leverage ratio, as defined, is greater than 6:1 at any quarter end. All interest rate swap agreements in place during fiscal 2003 and 2004 have expired as of February 29, 2004.

     As indicated in footnote 1u., Emmis accounts for interest rate swap arrangements under SFAS No. 133 as amended by SFAS No. 138. The fair market value of these swaps at February 28, 2003, was a liability of $4.3 million which is reflected in the accompanying consolidated balance sheets, with an associated income tax asset of $1.9 million. As Emmis has designated these interest rate swap agreements as cash flow hedges and the swaps were highly effective during the year ended February 29, 2004, the net liability was recorded as a component of comprehensive income and the ineffectiveness was not material. Interest paid under these swap arrangements was $3.6 million, $11.0 million, and $3.4 million for the years ended February 28 (29), 2002, 2003 and 2004, respectively. The Company had no swap arrangements as of February 29, 2004.

     The aggregate amount of term notes A and B began amortizing in December 2003. As previously mentioned, subsequent to the balance sheet date, the Company refinanced its credit facility. See Note 15 for a scheduled amortization table of the new credit facility. The annual amortization and reduction schedule for debt outstanding as of February 29, 2004, is classified based on the terms of the new credit facility:

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SCHEDULED AMORTIZATION/REDUCTION OF CREDIT FACILITY

	Term Loan A/
Year Ended	Revolver		Term Loan B		Total
February 28 (29),	Amortization		Amortization		Amortization
2005	$	—	$	1,688	$	1,688
2006		—		6,750		6,750
2007		—		6,750		6,750
2008		—		6,750		6,750
2009		—		6,750		6,750
2010		—		6,750		6,750
2011		241,083		463,312		704,395
Total	$	241,083	$	498,750	$	739,833

     Proceeds from raising additional equity, issuing additional subordinated debt or from asset sales, as well as excess cash flow may be required to repay amounts outstanding under the credit facility. These mandatory repayment provisions may apply depending on EOC’s total leverage ratio, as defined under the credit facility. Additionally, EOC may reborrow amounts paid in accordance with these provisions under certain circumstances.

     The credit facility contains various financial and operating covenants and other restrictions with which EOC must comply, including, among others, restrictions on additional indebtedness, incurrence of liens, engaging in businesses other than its primary business, paying cash dividends on common stock, redeeming or repurchasing capital stock of ECC, acquisitions and asset sales, as well as requirements to maintain certain financial ratios. EOC was in compliance with these covenants at February 29, 2004. The credit facility provides that an event of default will occur if there is a change of control of ECC, as defined. A change of control includes, but is not limited to, Jeffrey H. Smulyan ceasing to own, directly or indirectly, at least 35% of the general voting rights of the capital stock of ECC. Substantially all of Emmis’ assets, including the stock of Emmis’ wholly-owned subsidiaries, are pledged to secure the credit facility.

SENIOR SUBORDINATED NOTES

     On February 12, 1999, ECC issued $300 million of 8 1/8% senior subordinated notes. Approximately 98% of these notes were repurchased on May 10, 2004, and the remainder are to be redeemed shortly (see Note 15 for more discussion). The following describes the senior subordinated notes outstanding as of the balance sheet date. The senior subordinated notes were sold at 100% of the face amount. In March 1999, ECC filed an Exchange Offer Registration Statement with the SEC to exchange the senior subordinated notes for new series B notes registered under the Securities Act. The terms of the series B notes are identical to the terms of the senior subordinated notes. In June 2001, ECC transferred the senior discount notes to EOC as part of the company’s reorganization (see Note 1c).

     On or after March 15, 2004 and until March 14, 2007, the notes may be redeemed at the option of EOC in whole or in part at prices ranging from 104.063% to 101.354% plus accrued and unpaid interest. On or after March 15, 2007, the notes may be redeemed at 100% plus accrued and unpaid interest. Upon a change of control (as defined), EOC is required to make an offer to purchase the notes then outstanding at a purchase price equal to 101% plus accrued and unpaid interest. Interest on the notes is payable semi-annually. The notes have no sinking fund requirements and are due in full on March 15, 2009.

     The notes are guaranteed by certain subsidiaries of EOC and expressly subordinated in right of payment to all existing and future senior indebtedness (as defined) of EOC. The notes will rank pari passu with any future senior subordinated indebtedness (as defined) and senior to all subordinated indebtedness (as defined) of EOC.

     The indenture relating to the notes contains covenants with respect to EOC which include limitations of indebtedness, restricted payments (including preferred stock dividend payments, see Note 3), transactions with affiliates, issuance and sale of capital stock of restricted subsidiaries, sale/leaseback transactions and mergers, consolidations or sales of substantially all of EOC’s assets. EOC was in compliance with these covenants at February 29, 2004.

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SENIOR DISCOUNT NOTES

     On March 27, 2001, Emmis received $202.6 million of proceeds from the issuance of senior discount notes due 2011, less approximately $12.0 million of debt issuance costs. Substantially all of these notes were repurchased on May 10, 2004 (see Note 15 for more discussion). The notes, for which ECC is the obligor, accrete interest at a rate of 12.5% per year, compounded semi-annually to an aggregate principal amount of $286.3 million on March 15, 2006, after considering the July 2002 redemption. Commencing on September 15, 2006, interest is payable in cash on each March 15 and September 15, with the aggregate principal amount of $286.3 million due on March 15, 2011. The notes have no sinking fund requirement. A portion of the net proceeds was used to fund the acquisition of three radio stations in Phoenix, Arizona and the remaining net proceeds ($93.0 million) were placed in escrow. In June 2001, upon completion of the Company’s reorganization (see Note 1c), the proceeds held in escrow were released and used to reduce outstanding borrowings under the credit facility.

     On July 1, 2002, ECC redeemed approximately 22.6% of its senior discount notes. Approximately $60.1 million of the proceeds from the Company’s April 2002 equity offering were used to repay approximately $53.4 million of the carrying value of the discount notes at July 1, 2002 and pay approximately $6.7 million for a redemption premium. The redemption premium and approximately $2.4 million of deferred debt fees related to the discount notes were recorded as loss on debt extinguishment in the year ended February 28, 2003.

     Prior to March 15, 2004, the Company may, at its option, use the net cash proceeds of one or more Public Equity Offerings (as defined), to redeem up to an additional 12.4% of the aggregate principal amount of the notes at a redemption price equal to 112.5% plus accrued and unpaid interest, provided that at least $240.5 million of the aggregate principal amount at maturity of the notes originally issued remains outstanding after such redemption. Additionally, any time prior to March 15, 2006, the Company may redeem all or part of the notes at a redemption price equal to 100% of the accreted value (as defined) of the notes plus the applicable premium (as defined) as of, and liquidating damages (as defined), if any, to the date of redemption. On or after March 15, 2006 and until March 14, 2009, the notes may be redeemed at the option of the Company in whole or in part at prices ranging from 106.25% to 102.083% plus accrued and unpaid interest. On or after March 15, 2009, the notes may be redeemed at 100% plus accrued and unpaid interest. Upon a change of control (as defined), the Company is required to make an offer to purchase the notes then outstanding. Prior to March 15, 2006, the purchase price will be 101% of the accreted value of the notes. On or after March 15, 2006, the purchase price will be 101% of the outstanding principal amount of the notes plus accrued and unpaid interest.

     In June 2001, ECC filed an Exchange Offer Registration Statement with the SEC to exchange the senior discount notes for new senior discount notes registered under the Securities Act. The terms of the new senior discount notes are identical to the terms of the senior discount notes they replaced.

     The notes are unsecured obligations of ECC and will rank pari passu with all future senior indebtedness (as defined) and senior in right of payment to future subordinated indebtedness (as defined). The notes are subordinated to all indebtedness and liabilities (as defined) of ECC’s subsidiaries.

     The indenture relating to the notes contains covenants with respect to the Company which include limitations of indebtedness, restricted payments (including preferred stock dividend payments, see Note 3), transactions with affiliates, issuance and sale of capital stock of restricted subsidiaries, and mergers, consolidations or sales of substantially all of the Company’s assets. The Company was in compliance with these covenants at February 29, 2004.

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5. OTHER LONG-TERM DEBT

     Other long-term debt was comprised of the following at February 28 (29), 2003 and 2004:

	2003		2004
Hungary:
License Obligation	$	13,363	$	9,901
Bonds Payable		3,099		—
Loans Payable		1,277		687
Other		307		172
Total Other Long-Term Debt		18,046		10,760
Less: Current Maturities		4,959		4,851
Other Long-Term Debt, Net of Current Maturities	$	13,087	$	5,909

     Our 59.5% owned Hungarian subsidiary, Slager Radio Rt., has certain obligations which are consolidated in our financial statements due to our majority ownership interest. However, Emmis is not a guarantor of or required to fund these obligations. In particular, subsequent to the license restructuring completed in December 2002, Slager Radio must pay, in Hungarian forints, the original obligation due in November 2004, and five additional equal annual installments that will commence in November 2005 and end in November 2009, for a radio broadcast license to the Hungarian government. The original obligation is non-interest bearing; however, in accordance with the license purchase agreement, a Hungarian cost of living adjustment is calculated annually and is payable, concurrent with the principal payments, on the outstanding obligation. The cost of living adjustment is estimated each reporting period and is included in interest expense. The original license obligation has been discounted at an imputed interest rate of approximately 3% to reflect the obligation at its fair value. The additional obligation that stems from the restructuring is also non-interest bearing and no cost of living adjustment applies. The additional license obligation has been discounted at an imputed interest rate of approximately 7% to reflect the additional obligation at its fair value. The total license obligation of $9.9 million (in U.S. dollars) as of February 29, 2004, is reflected net of an unamortized discount of $1.3 million.

     In addition, Slager Radio is obligated to pay certain loans to its shareholders. At February 29, 2004, loans payable to the minority shareholders were (in U.S. dollars) approximately $0.7 million. The loans are due at maturity in September 2009 and bear interest at LIBOR plus 4% (5% at February 29, 2004). Interest payments on the loans are made quarterly.

     During the quarter ended August 31, 2003, the partners in our Hungarian subsidiary, including Emmis, agreed to forgive certain indebtedness and accrued interest owed to the partners by the subsidiary. The activity relating to Emmis eliminates in consolidation. The forgiveness of debt by our minority partners was accounted for as a capital transaction. Since the accrued interest was charged to expense by the Hungarian subsidiary, reversal of the portion of accrued interest attributable to the minority partners of $1.3 million was credited to income and is reflected in other income (expense), net in the accompanying consolidated statements of operations.

6. ACQUISITIONS, DISPOSITONS AND INVESTMENTS

Sale of Radio Stations in Argentina

     On December 23, 2003, Emmis agreed to sell its interest in Votionis, S.A. (“Votionis”), which owns and operates two radio stations in Buenos Aires, Argentina, to its minority partners for $7.3 million in cash. The sale is subject to Argentine regulatory approvals and is expected to close during our quarter ended May 31, 2004. Emmis acquired its interest in Votionis in November 1999. In October 2003, we exercised our right to purchase the equity interests of our minority partners. During negotiations with our minority partners, we instead elected to sell our controlling interest. In connection with the sale, Emmis recorded a loss from discontinued operations of $10.0 million in fiscal 2004. The Argentine peso substantially devalued relative to the U.S. dollar early in 2002. The loss is primarily attributable to the devaluation of the peso. Votionis has historically been included in the radio reporting segment. See Note 1m for further discussion.

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Belgium radio licenses

     On December 19, 2003, the Flemish Government awarded licenses to operate nine FM radio stations in the Flanders region of Belgium to several not-for-profit entities that have granted Emmis the exclusive right to provide the programming and sell the advertising on the stations. Five of these licenses are for the stations that Emmis began programming in August 2003 and the remaining four related to new stations that Emmis began operating in February 2004. The licenses are for an initial term of nine years and do not require the payment of any license fees to the Flemish Government. Emmis consolidates these stations for financial reporting purposes.

Austin Radio Acquisition

     On July 1, 2003, Emmis effectively acquired a controlling interest of 50.1% in a partnership that owns six radio stations in the Austin, Texas metropolitan area for a cash purchase price of approximately $106.5 million, including transaction costs of $1.0 million. These six stations are KLBJ-AM, KLBJ-FM, KDHT-FM (formerly KXMG-FM), KROX-FM, KGSR-FM and KEYI-FM. This acquisition allowed Emmis to diversify its radio portfolio and participate in another large, high-growth radio market. The acquisition was financed through borrowings under the credit facility and was accounted for as a purchase. The Company recorded $35.3 million of goodwill, all of which is deductible for income tax purposes. In addition, Emmis has the option, but not the obligation, to purchase its partner’s entire 49.9% interest in the partnership after December 2007 based on an 18-multiple of trailing 12-month cash flow.

     For this transaction, the aggregate purchase price, including transaction costs of $1.0 million, was allocated as follows based upon a preliminary independent appraisal. Material changes to the purchase price allocation are not expected.

Asset Description	Amount			Asset Lives
Accounts receivable	$	4,893		Less than one year
Other current assets		85		Less than one year
Land and buildings		757		31.5 years for buildings
Broadcasting equipment		4,031		5 to 7 years
Office equipment		568		5 to 7 years
Vehicles		117		5 to 7 years
Other		176		Various
Total tangible assets		5,649
Customer list		2,974		1 year
Talent contract		456		3.5 years
Lease rights		389		5 to 9 years
Affiliation agreement		189		15 years
FCC license (Indefinite-lived intangible)		103,291		Non-amortizing
Goodwill		35,329		Non-amortizing
Total intangible assets		142,628
Investment and other long-term assets		1,612
Less: minority interest		(47,894	)
Less: current liabilities		(495	)
Total purchase price	$	106,478

Sale of Mira Mobile

     Effective June 5, 2003, Emmis sold its mobile television production company, Mira Mobile Television, to Shooters Production Services, Inc. for $3.9 million in cash, plus payments for working capital. Emmis received $3.3 million of the purchase price at closing and received a promissory note due October 31, 2005 for the remaining $0.6 million. Emmis had acquired this business in connection with the Lee acquisition in October 2000. The book value of the long-lived assets as of May 31, 2003 was $3.1 million and the operating performance of Mira Mobile was not material to the Company. Emmis recorded a gain on the sale of these assets of approximately $0.9 million in the accompanying consolidated statements of operations.

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WBPG-TV Acquisition

     Effective March 1, 2003, the Company acquired substantially all of the assets of television station WBPG-TV in Mobile, AL – Pensacola, FL from Pegasus Communications Corporation for a cash purchase price of approximately $11.7 million, including transaction costs of $0.2 million. This acquisition will allow the Company to achieve duopoly efficiencies in the market, such as lower programming acquisition costs and consolidation of general and administrative functions, since Emmis already owns the Fox-affiliated television station in the market, WALA. The acquisition was financed through borrowings under the credit facility and was accounted for as a purchase. The Company recorded $0.2 million of goodwill, all of which is deductible for income tax purposes.

     For this transaction, the aggregate purchase price, including transaction costs of $0.2 million, was allocated as follows based upon an independent appraisal.

Asset Description	Amount			Asset Lives
Accounts Receivable	$	154		Less than one year
Prepaids		35		Less than one year
Broadcasting equipment		2,458		5 to 7 years
Office equipment		97		5 to 7 years
Vehicles		42		5 to 7 years
Total tangible assets		2,597
Customer list		229		1 year
Affiliation agreement		559		3.5 years
FCC license (Indefinite-lived intangible)		7,971		Non-amortizing
Goodwill		150		Non-amortizing
Total intangible assets		8,909
Programming acquired		159
Less: Programming liabilities assumed		(198	)
Total purchase price	$	11,656

     Effective May 1, 2002 Emmis completed the sale of substantially all of the assets of KALC-FM in Denver, Colorado to Entercom Communications Corporation for $88.0 million. Emmis had purchased KALC-FM on January 17, 2001, from Salem Communications Corporation for $98.8 million in cash plus a commitment fee of $1.2 million and transaction related costs of $0.9 million. On February 12, 2002, Emmis entered into a definitive agreement to sell KALC-FM to Entercom and Entercom began operating KALC-FM under a time brokerage agreement on March 16, 2002. Proceeds were used to repay amounts outstanding under our credit facility. Since the agreed-upon sales price for this station was less than its carrying amount as of February 28, 2002, we recognized an impairment loss of $9.1 million in fiscal 2002. Additionally, in fiscal 2003 we recorded an incremental $1.3 million loss in connection with the sale.

     Effective May 1, 2002 Emmis completed the sale of substantially all of the assets of KXPK-FM in Denver, Colorado to Entravision Communications Corporation for $47.5 million. Emmis had purchased KXPK-FM on August 24, 2000, from AMFM, Inc. for an allocated purchase price of $35.0 million in cash plus liabilities recorded of $1.2 million and transaction related costs of $0.4 million. Emmis entered into a definitive agreement to sell KXPK-FM to Entravision on February 12, 2002. Proceeds were used to repay amounts outstanding under our credit facility. In fiscal 2003 we recorded a gain on sale of assets of $10.2 million.

     On March 28, 2001, Emmis completed its acquisition of substantially all of the assets of radio stations KTAR-AM, KMVP-AM and KKLT-FM in Phoenix, Arizona from Hearst-Argyle Television, Inc. for $160.0 million in cash, plus transaction related costs of $0.7 million. The Company financed the acquisition through a $20.0 million advance payment borrowed under the credit facility in June 2000 and the remainder with borrowings under the credit facility and proceeds from ECC’s March 2001 senior discount notes offering. The acquisition was accounted for as a purchase. Emmis began programming and selling advertising on the radio stations on August 1, 2000 under a time brokerage agreement. The total purchase price was allocated to property and equipment and broadcast licenses based on an appraisal. Broadcast licenses are included in intangible assets in the accompanying consolidated balance sheets and, effective March 1, 2002, are no longer amortized in the consolidated statements of operations in accordance with SFAS No. 142.

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7.	PRO FORMA FINANCIAL INFORMATION
	Emmis

     Unaudited pro forma summary information is presented below for the years ended February 28 (29), 2003 and 2004, assuming the acquisition (and related borrowings) of (i) a controlling interest of 50.1% in a partnership that owns six radio stations in the Austin, Texas metropolitan area in July 2003 and (ii) WBPG-TV in March 2003 had occurred on the first day of the pro forma periods presented below.

     Preparation of the pro forma summary information was based upon assumptions deemed appropriate by the Company’s management. The pro forma summary information presented below is not necessarily indicative of the results that actually would have occurred if the transactions indicated above had been consummated at the beginning of the periods presented, and is not intended to be a projection of future results.

	Pro Forma
	2003			2004
Net revenues	$	586,791		$	600,728
Net income from continuing operations	$	2,851		$	13,050
Net income available to common shareholders from continuing operations	$	(6,133	)	$	4,066
Net income per share available to common shareholders from continuing operations:
Basic	$	(0.12	)	$	0.07
Diluted	$	(0.12	)	$	0.07
Weighted average shares outstanding:
Basic		53,014			54,716
Diluted		53,014			55,066

     The pro forma results exclude approximately $0.9 million of costs recorded by the seller directly attributable to their sale of the Austin radio stations to us in the year ended February 29, 2004.

     EOC

     Unaudited pro forma summary information is presented below for the years ended February 28 (29), 2003 and 2004, assuming the acquisition (and related borrowings) of (i) a controlling interest of 50.1% in a partnership that owns six radio stations in the Austin, Texas metropolitan area in July 2003 and (ii) WBPG-TV in March 2003 had occurred on the first day of the pro forma periods presented below.

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     Preparation of the pro forma summary information was based upon assumptions deemed appropriate by the Company’s management. The pro forma summary information presented below is not necessarily indicative of the results that actually would have occurred if the transactions indicated above had been consummated at the beginning of the periods presented, and is not intended to be a projection of future results.

	Pro Forma
	2003		2004
Net revenues	$	586,791	$	600,728
Net income from continuing operations	$	27,754	$	30,213

     The pro forma results exclude approximately $0.9 million of costs recorded by the seller directly attributable to their sale of the Austin radio stations to us in the year ended February 29, 2004.

8. INTANGIBLE ASSETS AND GOODWILL

     Effective March 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” which requires the Company to cease amortizing goodwill and certain intangibles. Instead, these assets will be reviewed at least annually for impairment, and will be written down and charged to results of operations in periods in which the recorded value of goodwill and certain intangibles is more than its fair value. On February 28, 2002, prior to the adoption of SFAS No. 142, the Company reflected unamortized goodwill and unamortized FCC licenses in the amounts of $175.1 million and $1,743.2 million, respectively. FCC licenses are renewed every eight years for a nominal amount and historically all of our FCC licenses have been renewed at the end of their respective eight-year periods. Since we expect that all of our FCC licenses will continue to be renewed in the future, we believe they have indefinite lives. The Company had previously amortized these assets over the maximum period allowed of 40 years. Adoption of this accounting standard eliminated the Company’s amortization expense for goodwill and FCC licenses. For comparison purposes, for the year ended February 28, 2002, the Company recorded amortization expense for goodwill and FCC licenses of $58.2 million.

     The following unaudited pro forma summary presents the Company’s estimate of the effect of the adoption of SFAS No. 142 as of the beginning of the periods presented. Reported income (loss) before extraordinary loss and accounting change and reported net loss available to common shareholder are adjusted to eliminate the amortization expense recognized in those periods related to goodwill and FCC licenses as these assets are not amortized under this new accounting standard.

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EMMIS

	Years ended February 28 (29),
(Dollars in thousands, except per share data)	2002			2003			2004
Reported income (loss) before discontinued operations and accounting change	$	64,108		$	2,932		$	12,275
Add back: amortization of goodwill, net of tax provision of $2,343 for the year ended February 28, 2002		5,348			—			—
Add back: amortization of FCC licenses, net of tax provision of $15,378 for the year ended February 28, 2002		35,098			—			—
Adjusted income (loss) before discontinued operations and accounting change	$	104,554		$	2,932		$	12,275
Reported net income (loss) available to common shareholders	$	(73,092	)	$	(173,452	)	$	(6,728	)
Add back: amortization of goodwill, net of tax provision of $2,343 for the year ended February 28, 2002		5,348			—			—
Add back: amortization of FCC licenses, net of tax provision of $15,378 for the year ended February 28, 2002		35,098			—			—
Adjusted net income (loss) available to common shareholders	$	(32,646	)	$	(173,452	)	$	(6,728	)
Basic net income (loss) available to common shareholders:
Reported net income (loss) available to common shareholders	$	(1.54	)	$	(3.27	)	$	(0.12	)
Amortization of goodwill, net of taxes		0.11			—			—
Amortization of FCC licenses, net of taxes		0.74			—			—
Adjusted net income (loss) available to common shareholders	$	(0.69	)	$	(3.27	)	$	(0.12	)
Diluted net income (loss) available to common shareholders:
Reported net income (loss) available to common shareholders	$	(1.54	)	$	(3.27	)	$	(0.12	)
Amortization of goodwill, net of taxes		0.11			—			—
Amortization of FCC licenses, net of taxes		0.74			—			—
Adjusted net income (loss) available to common shareholders	$	(0.69	)	$	(3.27	)	$	(0.12	)
Basic Shares		47,334			53,014			54,716
Diluted Shares		47,334			53,014			54,716

91

EOC

	Years Ended Feburary 28 (29),
(Dollars in thousands)	2002			2003			2004
Reported income (loss) before discontinued operations and accounting change	$	(47,886	)	$	27,835		$	29,438
Add back: amortization of goodwill, net of tax provision of $2,343 for the year ended February 28, 2002		5,348			—			—
Add back: amortization of FCC licenses, net of tax provision of $15,378 for the year ended February 28, 2002		35,098			—			—
Adjusted income (loss) before discontinued operations and accounting change	$	(7,440	)	$	27,835		$	29,438
Reported net income (loss)	$	(47,886	)	$	(139,565	)	$	19,419
Add back: amortization of goodwill, net of tax provision of $2,343 for the year ended February 28, 2002		5,348			—			—
Add back: amortization of FCC licenses, net of tax provision of $15,378 for the year ended February 28, 2002		35,098			—			—
Adjusted net income (loss)	$	(7,440	)	$	(139,565	)	$	19,419

Because EOC is a wholly-owned subsidiary of Emmis, per share data is excluded.

          Indefinite-lived Intangibles

          Under the guidance in SFAS No. 142, the Company’s FCC licenses are considered indefinite-lived intangibles. These assets, which the Company determined were its only indefinite-lived intangibles, are not subject to amortization, but will be tested for impairment at least annually. As of February 28 (29), 2003 and 2004, the carrying amounts of the Company’s FCC licenses were $1,638.2 million and $1,737.0 million, respectively.

          In accordance with SFAS No. 142, the Company tested these indefinite-lived intangible assets for impairment as of March 1, 2002 by comparing their fair value to their carrying value at that date. Prior to March 1, 2002, an impairment adjustment was recorded if the carrying value of an intangible asset exceeded its estimated undiscounted cash flows in accordance with SFAS No. 121. Upon adoption of SFAS No. 142, the Company recognized impairment on its FCC licenses of approximately $145.0 million, net of $88.8 million in tax benefit, which is recorded as a component of the cumulative effect of accounting change during the year ended February 28, 2003. Approximately $14.8 million of the charge, net of tax, related to our radio segment and $130.2 million of the charge, net of tax, related to our television segment. The fair value of our FCC licenses used to calculate the impairment charge was determined using an independent appraiser or by management, using an enterprise valuation approach. Management determined enterprise value by applying an estimated market multiple to the broadcast cash flow generated by each reporting unit. Market multiples were determined based on information available regarding publicly traded peer companies, recently completed or contemplated transactions within the industry, and reporting units’ competitive position in their respective markets. Appropriate allocation was then made to the tangible assets and unrecognized intangible assets, including network affiliation agreements and customer lists, with the residual amount representing the implied fair value of our indefinite lived intangible assets. To the extent the carrying amount of the indefinite-lived intangible exceeded this implied fair value, the difference was recorded in the statement of operations, as described above. For FCC licenses valued using the residual method, the impairment test was based on a two-step approach, analogous to the two-step goodwill impairment test. In the case of radio, the Company determined the reporting unit to be all of our stations in a local market, and in the case of television and publishing, the Company determined the reporting unit to be each individual station or magazine. Throughout our fiscal 2002, unfavorable economic conditions persisted in the industries in which the Company engages. These conditions caused customers to reduce the amount of advertising dollars spent on the Company’s media inventory as compared to prior periods, adversely impacting the cash flow projections used to determine the fair value of each reporting unit and public trading multiples of media stocks, resulting in the write-off of a portion of the carrying amount of our FCC licenses.

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          As of March 1, 2002, Emmis had two radio stations with a value for both FCC license and goodwill recorded. The FCC license value was determined using the residual method. The goodwill was recorded pursuant to book/tax basis differences existing at the time of stock acquisitions. We have reclassified the goodwill recorded at these stations to FCC licenses in the accompanying balance sheets. Goodwill recorded at these stations was approximately $80.3 million and the reclassification to FCC licenses resulted in additional goodwill and deferred taxes of approximately $49.0 million. This reclassification had no impact on impairment results previously reported.

          Our annual impairment test for fiscal 2003 did not result in any further write-downs. However, in connection with our fiscal 2004 annual impairment review, we recognized an impairment loss of $12.4 million, which related to two stations in our television division. Although our television division as a whole performed very well in fiscal 2004, one of our television stations underperformed its market and experienced a decline in its cash flows. We have replaced certain management personnel at this station. Also, a recently contemplated transaction in a market in which we operate led us to re-evaluate the value we had assigned to our station. The annual required impairment tests may result in future periodic write-downs.

          Goodwill

          SFAS No. 142 requires the Company to test goodwill for impairment at least annually using a two-step process. The first step is a screen for potential impairment, while the second step measures the amount of impairment. The Company completed the initial two-step impairment test during the first quarter of fiscal 2003. As a result of this test, the Company recognized impairment of approximately $22.4 million, net of $13.8 million in tax benefit, as a component of the cumulative effect of an accounting change during the year ended February 28, 2003. Approximately $18.5 million of the charge, net of tax, related to our television segment and $3.9 million of the charge, net of tax, related to our publishing segment. Consistent with the Company’s approach to determining the fair value of our FCC licenses, the enterprise valuation approach was used to determine the fair value of each of the Company’s reporting units, and a portion of the carrying value of our goodwill was written-off due to reductions in cash flow and public trading multiples of media stocks resulting from the unfavorable economic conditions that reduced advertising expenditures throughout our fiscal 2002.

          As of March 1, 2002, Emmis had two radio stations with a value for both FCC license and goodwill recorded. The goodwill was recorded pursuant to book/tax basis differences existing at the time of stock acquisitions. We have reclassified the goodwill recorded at these stations to FCC licenses in the accompanying balance sheets. Goodwill recorded at these stations was approximately $80.3 million and the reclassification to FCC licenses resulted in additional goodwill and deferred taxes of approximately $49.0 million. As a result of this reclassification, we have no goodwill recorded for any broadcasting property for which the value of the property’s FCC license was determined using the residual method. As of February 28 (29), 2003 and 2004 the carrying amount of the Company’s goodwill was $58.7 million and $94.0 million, respectively. As of February 28, 2003, approximately $0.5 million of our goodwill was attributable to our radio division and the remaining $58.2 million was attributable to our publishing division. As of February 29, 2004, approximately $35.6 million, $0.2 million and $58.2 million was attributable to our radio, television and publishing divisions, respectively. The required impairment tests may result in future periodic write-downs, but the annual impairment tests for fiscal 2003 and 2004, completed in the fourth quarter of each year, did not result in any further write-downs.

          Definite-lived intangibles

          The Company has definite-lived intangible assets recorded that continue to be amortized in accordance with SFAS No. 142. These assets consist primarily of foreign broadcasting licenses, subscription lists, lease rights, customer lists and non-compete agreements, all of which are amortized over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows. In accordance with the transitional requirements of SFAS No. 142, the Company reassessed the useful lives of these intangibles and determined that no changes to their useful lives were necessary. The following table presents the weighted-average remaining life, gross carrying amount and accumulated amortization for each major class of definite-lived intangible asset at February 28 (29), 2003 and 2004 (dollars in thousands):

93

			February 28, 2003						February 29, 2004
	Weighted Average		Gross				Net		Gross				Net
	Useful Life		Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	(in years)		Amount		Amortization		Amount		Amount		Amortization		Amount
Foreign Broadcasting Licenses		7.3	$	23,178	$	10,993	$	12,185	$	23,308	$	11,879	$	11,429
Subscription Lists		3.0		12,189		12,176		13		12,189		12,189		—
Favorable Office Leases		38.1		11,502		695		10,807		12,190		1,054		11,136
Customer Lists		1.0		7,371		4,336		3,035		10,574		8,607		1,967
Non-Compete Agreements		1.3		5,738		5,601		137		5,738		5,641		97
Other		12.4		4,211		1,527		2,684		5,549		2,329		3,220
TOTAL			$	64,189	$	35,328	$	28,861	$	69,548	$	41,699	$	27,849

          Total amortization expense from definite-lived intangibles for the years ended February 28 (29), 2002, 2003 and 2004 was $7.8 million, $7.1 million and $7.2 million, respectively. The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangibles recorded on our books as of February 29, 2004 (dollars in thousands):

FISCAL YEAR ENDED FEBRUARY,
2005	$	4,921
2006		2,943
2007		2,837
2008		2,661
2008		2,495

9. EMPLOYEE BENEFIT PLANS

     a. 1994 Equity Incentive Plan

     At the 1994 annual meeting, the shareholders of Emmis approved the 1994 Equity Incentive Plan. Under this Plan, awards equivalent to 2,000,000 shares of common stock may be granted. The awards, which have certain restrictions, may be for incentive stock options, nonqualified stock options, shares of restricted stock, stock appreciation rights, performance units or limited stock appreciation rights. Under this Plan, all awards are granted with an exercise price equal to the fair market value of the stock except for shares of restricted stock which may be granted with a purchase price at amounts greater than or equal to the par value of the underlying stock. No more than 1,000,000 shares of Class B common stock are available for grant and issuance under this Plan. The stock options under this Plan are generally not exercisable for one year after the date of grant and expire not more than 10 years from the date of grant. Under this Plan, awards equivalent to approximately 11,000 shares of common stock are available for grant at February 29, 2004, but the Plan terminated on March 1, 2004, so no further grants will be made from this Plan. Certain stock options awarded remained outstanding as of February 28 (29), 2003 and 2004.

     b. 1995 Equity Incentive Plan

     At the 1995 annual meeting, the shareholders of Emmis approved the 1995 Equity Incentive Plan. Under this Plan, awards equivalent to approximately 1,300,000 shares of common stock may be granted pursuant to employment agreements. Under the Plan, no further awards were available for grant at February 29, 2004. Certain stock options awarded remained outstanding as of February 28 (29), 2003 and 2004.

     c. Non-Employee Director Stock Option Plan

     At the 1995 annual meeting, the shareholders of Emmis approved a Non-Employee Director Stock Option Plan. Under this Plan, each non-employee director, as of January 24, 1995, was granted an option to acquire 10,000 shares of the Company’s Class A common stock. Thereafter, upon election or appointment of any non-employee director or upon a continuing director becoming a non-employee director, such individual will also become eligible to receive a comparable option. In addition, an equivalent option will be automatically granted on an annual basis to each non-employee director. All awards are granted with an exercise price equal to the fair market value of the stock on the date of grant. Under this Plan, awards equivalent to approximately 50,000 shares of Class A common stock are available for grant at February 29, 2004. ECC no longer makes awards under this Plan. However, certain previously awarded stock options remained outstanding as of February 28 (29), 2003 and 2004.

94

     d. 1997 Equity Incentive Plan

     At the 1997 annual meeting, the shareholders of Emmis approved the 1997 Equity Incentive Plan. Under this plan, awards equivalent to 2,000,000 shares of common stock may be granted. The awards, which have certain restrictions, may be for incentive stock options, nonqualified stock options, shares of restricted stock, stock appreciation rights or performance units. Under this Plan, all awards are granted with a purchase price equal to the fair market value of the stock except for shares of restricted stock which may be granted with an exercise price at amounts greater than or equal to the par value of the underlying stock. No more than 1,000,000 shares of Class B common stock are available for grant and issuance under this Plan. The stock options under this Plan are generally not exercisable for one year after the date of grant and expire not more than 10 years from the date of grant. Under this Plan, awards equivalent to approximately 12,000 shares of common stock were available for grant at February 29, 2004. Certain stock options and restricted stock awarded remained outstanding as of February 28 (29), 2003 and 2004.

     e. 1999 Equity Incentive Plan

     At the 1999 annual meeting, the shareholders of Emmis approved the 1999 Equity Incentive Plan. Under this plan, awards equivalent to 3,000,000 shares of common stock may be granted. The awards, which have certain restrictions, may be for incentive stock options, nonqualified stock options, shares of restricted stock, stock appreciation rights or performance units. Under this Plan, all awards are granted with a purchase price equal to the fair market value of the stock except for shares of restricted stock which may be granted with an exercise price at amounts greater than or equal to the par value of the underlying stock. No more than 1,000,000 shares of Class B common stock are available for grant and issuance under this Plan. The stock options under this Plan are generally not exercisable for one year after the date of grant and expire not more than 10 years from the date of grant. Under this Plan, awards equivalent to approximately 332,000 shares of common stock were available for grant at February 29, 2004. Certain stock options and restricted stock awarded remained outstanding as of February 28 (29), 2003 and 2004.

     f. 2001 Equity Incentive Plan

     At the 2001 annual meeting, the shareholders of Emmis approved the 2001 Equity Incentive Plan. Under this plan, awards equivalent to 3,000,000 shares of common stock may be granted. The awards, which have certain restrictions, may be for incentive stock options, nonqualified stock options, shares of restricted stock, stock appreciation rights or performance units. Under this Plan, all awards are granted with a purchase price equal to the fair market value of the stock except for shares of restricted stock which may be granted with an exercise price, if any, at amounts greater than or equal to the par value of the underlying stock. No more than 1,000,000 shares of Class B common stock are available for grant and issuance under this Plan. The stock options under this Plan generally expire not more than 10 years from the date of grant. Under this Plan, awards equivalent to approximately 595,000 shares of common stock were available for grant at February 29, 2004. Certain stock awards remained outstanding as of February 28 (29), 2003 and 2004.

     g. 2002 Equity Compensation Plan

     At the 2002 annual meeting, the shareholders of Emmis approved the 2002 Equity Compensation Plan. Under this plan, awards equivalent to 3,000,000 shares of common stock may be granted. The awards, which have certain restrictions, may be for incentive stock options, nonqualified stock options, shares of restricted stock, stock appreciation rights or performance units. Under this Plan, all awards are granted with a purchase price equal to the fair market value of the stock except for shares of restricted stock which may be granted with an exercise price, if any, at amounts greater than or equal to the par value of the underlying stock. No more than 1,000,000 shares of Class B common stock are available for grant and issuance under this Plan. The stock options under this Plan generally expire not more than 10 years from the date of grant. Under this Plan, awards equivalent to approximately 1,726,000 shares of common stock were available for grant at February 29, 2004. On March 1, 2004, options were granted to employees under the 2002 Equity Compensation Plan to purchase an additional 1,391,645 shares of Emmis Communications Corporation common stock at $25.53 per share. Certain stock awards remained outstanding as of February 28 (29), 2003 and 2004.

     h. Other Disclosures Related to Stock Option and Equity Incentive Plans

     A summary of the status of options and restricted stock at February 2002, 2003, and 2004 and the related activity for the year is as follows:

95

	2002					2003					2004
	Number of			Weighted		Number of			Weighted		Number of			Weighted
	Options/			Average		Options/			Average		Options/			Average
	Restricted			Exercise		Restricted			Exercise		Restricted			Exercise
	Stock			Price		Stock			Price		Stock			Price
Outstanding at Beginning of Year		4,144,793			23.14		4,753,513			25.39		5,259,479			26.53
Granted		1,089,369			29.01		1,926,228			14.96		2,289,915			8.11
Exercised		(250,420	)		17.56		(311,234	)		17.90		(657,857	)		15.74
Lapsing of restrictions on stock awards		(190,162	)		—		(920,571	)		—		(1,180,706	)		—
Expired and other		(40,067	)		23.68		(188,457	)		25.75		(420,929	)		22.69
Outstanding at End of Year		4,753,513			25.39		5,259,479			26.53		5,289,902			25.77
Exercisable at End of Year		2,464,827			21.10		2,602,475			23.90		2,754,389			27.78
Total Available for Grant		3,333,000					4,595,000					2,726,000

     During the years ended February 2002, 2003 and 2004, all options were granted with an exercise price equal to the fair market value of the stock on the date of grant. During the years ended February 2002, 2003 and 2004, the Company entered into employment agreements providing for grants of 26,190, 22,500, and 87,500 shares, respectively, at a weighted average fair value of $27.57, $27.16 and $17.29, respectively.

     The following information relates to options outstanding and exercisable at February 29, 2004:

	Options Outstanding					Options Exercisable
			Weighted		Weighted			Weighted
Range of			Average		Average			Average
Exercise	Number of		Exercise		Remaining	Number of		Exercise
Prices	Options		Price		Contract Life	Options		Price
$3.80-$7.60		1,200	$	6.63	0.2 years		1,200	$	6.63
7.60-11.40		0		0	0.0 years		0		0
11.40-15.20		0		0	0.0 years		0		0
15.20-19.00		1,123,670		16.43	8.3 years		116,245		16.58
19.00-22.80		706,430		21.06	3.2 years		613,100		20.97
22.80-26.60		81,200		24.63	1.2 years		81,200		24.63
26.60-30.40		2,788,051		28.74	6.5 years		1,358,293		28.75
30.40-34.20		0		0	0.0 years		0		0
34.20-38.00		589,351		35.40	5.5 years		584,351		35.38

     In addition to the benefit plans noted above, Emmis has the following employee benefit plans:

     i. Profit Sharing Plan

     In December 1986, Emmis adopted a profit sharing plan that covers all nonunion employees with six months of service. Contributions to the plan are at the discretion of the Emmis Board of Directors and can be made in the form of newly issued Emmis common stock or cash. Historically, all contributions to the plan have been in the form of Emmis common stock. No contributions were made to the profit sharing plan in the three years ended February 29, 2004.

     j. 401(k) Retirement Savings Plan

     Emmis sponsors two Section 401(k) retirement savings plans. One is available to substantially all nonunion employees age 18 years and older who have at least six months of service and the other is available to substantially all union employees that meet the same qualifications. Employees may make pretax contributions to the plans up to 15% of their compensation, not to exceed the annual limit prescribed by the Internal Revenue Service. Emmis may make discretionary matching contributions to the plans in the form of cash or shares of the Company’s Class A common stock. Effective March 1, 2003, Emmis elected to double its 401(k) match to $2 per employee, with one-half of the contribution made in Emmis stock. The increased 401(k) match was made instead of making a contribution to the company’s profit sharing plan. Emmis’ contributions to the plans totaled $1,684, $1,503 and $3,037 for the years ended February 2002, 2003 and 2004, respectively.

     k. Defined Contribution Health and Retirement Plan

96

     Emmis contributes to a multi-employer defined contribution health and retirement plan for employees who are members of a certain labor union. Amounts charged to expense related to the multi-employer plan were approximately $465, $414, and $503 for the years ended February 2002, 2003 and 2004, respectively.

     l. Employee Stock Purchase Plan

     The Company has in place an employee stock purchase plan that allows employees to purchase shares of the Company’s Class A common stock at the lesser of 90% of the fair value of such shares at the beginning or end of each semi-annual offering period. Purchases are subject to a maximum limitation of $22.5 annually per employee. The Company does not record compensation expense pursuant to this plan as it is designed to meet the requirements of Section 423(b) of the Internal Revenue Code.

10. OTHER COMMITMENTS AND CONTINGENCIES

     a. TV Program Rights Payable

     The Company has obligations to various program syndicators and distributors in accordance with current contracts for the rights to broadcast programs. Future payments scheduled under contracts for programs available as of February 29, 2004, are as follows:

Fiscal year ended February 28 (29),
2005	$	27,502
2006		13,331
2007		6,584
2008		4,066
2009		1,662
Thereafter		623
		53,768
Less: Current Portion		27,502
TV Program Rights Payable, Net of Current Portion	$	26,266

     In addition, the Company has entered into commitments for future program rights (programs not available as of February 29, 2004). Future payments scheduled under these commitments are summarized as follows: Year ended February 2005 — $9,315, 2006 — $19,276, 2007 — $18,708, 2008 — $15,054, 2009 - $11,735 and thereafter — $15,454.

     b. Radio Broadcast Agreements

     The Company has entered into agreements to broadcast certain syndicated programs and sporting events. Future payments scheduled under these agreements are summarized as follows: Year ended February 2005 — $1,769, 2006 — $1,299, 2007 — $1,095, 2008 — $1,022, 2009 — $80 and thereafter — $0. Expense related to these broadcast rights totaled $2,522, $1,771, and $1,993 for the years ended February 2002, 2003, and 2004, respectively.

     c. Operating Leases

     The Company leases certain office space, tower space, equipment, an airplane and automobiles under operating leases expiring at various dates through August 2019. Some of the lease agreements contain renewal options and annual rental escalation clauses (generally tied to the Consumer Price Index or increases in the lessor’s operating costs), as well as provisions for payment of utilities and maintenance costs. Maintenance costs are recorded using the accrual method.

     Future minimum rental payments (exclusive of future escalation costs) required by non-cancelable operating leases, with an initial term of one year or more as of February 29, 2004, are as follows:

97

Fiscal year ended February 28(29),
2005	$	8,951
2006		8,173
2007		7,569
2008		6,670
2009		6,469
Thereafter		29,186
	$	67,018

     Rent expense totaled $7,995, $9,798, and $8,764 for the years ended February 2002, 2003, and 2004, respectively. Rent expense for the years ended February 2002, 2003, and 2004 is net of sublease income of approximately $0 , $34, and $32, respectively.

     d. Employment Agreements

     The Company regularly enters into employment agreements with various officers and employees. These agreements generally specify base salary, along with bonuses and grants of stock and/or stock options based on certain criteria. Future minimum cash payments scheduled under terms of these agreements are summarized as follows: Year ended February 2005 — $27,224, 2006 - - $17,380, 2007 — $7,255, 2008 — $2,339, 2009 — $1,859 and thereafter — $398.

     In addition to future cash payments, at February 29, 2004, 7,500 shares of common stock and options to purchase 417,000 shares of common stock have been granted in connection with current employment agreements. Additionally, up to 116,325 shares, and options to purchase up to 537,000 shares of common stock may be granted (or have been granted subject to forfeiture) under the agreements in the next two years.

     e. Litigation

     The Company is a party to various legal and regulatory proceedings arising in the ordinary course of business. In the opinion of management of the Company, there are no legal or regulatory proceedings pending against the Company that are likely to have a material adverse effect on the Company.

11. INCOME TAXES

     The provision (benefit) for income taxes for the years ended February 2002, 2003, and 2004, consisted of the following:

EMMIS:

	2002			2003			2004
Current:
Federal	$	—		$	—		$	—
State		—			—			—
		—			—			—
Deferred:
Federal		(25,853	)		10,057			11,708
State		(434	)		819			742
		(26,287	)		10,876			12,450
Provision (benefit) for income taxes		(26,287	)		10,876			12,450
Tax benefit of discontinued operations		—			—			—
Tax benefit of accounting change		—			(102,600	)		—
Net provision (benefit) for income taxes	$	(26,287	)	$	(91,724	)	$	12,450

98

EOC:

	2002			2003			2004
Current:
Federal	$	—		$	—		$	—
State		—			—			—
		—			—			—
Deferred:
Federal		(18,063	)		19,218			20,275
State		(434	)		1,593			1,537
		(18,497	)		20,811			21,812
Provision (benefit) for income taxes		(18,497	)		20,811			21,812
Tax benefit of discontinued operations		—			—			—
Tax benefit of accounting change		—			(102,600	)		—
Net provision (benefit) for income taxes	$	(18,497	)	$	(81,789	)	$	21,812

     The provision (benefit) for income taxes for the years ended February 2002, 2003, and 2004, differs from that computed at the Federal statutory corporate tax rate as follows:

EMMIS:

	2002			2003		2004
Computed income taxes at 35%		(31,638	)		4,833		8,654
State income tax		(334	)		819		742
Nondeductible foreign losses		1,084			1,061		(54	)
Nondeductible goodwill		2,637			—		—
Nondeductible interest		616			3,033		716
Other		1,348			1,130		2,392
Provision (benefit) for income taxes		(26,287	)		10,876		12,450

EOC:

	2002			2003		2004
Computed income taxes at 35%	$	(23,232	)	$	17,027	$	17,937
State income tax		(334	)		1,593		1,537
Nondeductible foreign losses		1,084			1,061		(54	)
Nondeductible goodwill		2,637			—		—
Nondeductible interest		—			—		—
Other		1,348			1,130		2,392
Provision (benefit) for income taxes	$	(18,497	)	$	20,811	$	21,812

99

     The components of deferred tax assets and deferred tax liabilities at February 28 (29), 2003 and 2004 are as follows:

EMMIS:

	2003			2004
Deferred tax assets:
Net operating loss carryforwards	$	61,929		$	78,970
Compensation relating to stock options		6,660			4,152
Noncash interest expense		14,250			23,254
Impairment loss		—			—
Other		6,452			5,511
Valuation allowance		(5,031	)		(4,948	)
Total deferred tax assets		84,260			106,939
Deferred tax liabilities
Intangible assets		(152,700	)		(185,724	)
Other		(2,905	)		(3,209	)
Total deferred tax liabilities		(155,605	)		(188,933	)
Net deferred tax liabilities	$	(71,345	)	$	(81,994	)

EOC:

	2003			2004
Deferred tax assets:
Net operating loss carryforwards	$	58,454		$	75,137
Compensation relating to stock options		6,660			4,152
Noncash interest expense		—			—
Impairment loss		—			—
Other		6,452			5,511
Valuation allowance		(5,031	)		(4,948	)
Total deferred tax assets		66,535			79,852
Deferred tax liabilities
Intangible assets		(152,700	)		(185,724	)
Other		(2,905	)		(3,209	)
Total deferred tax liabilities		(155,605	)		(188,933	)
Net deferred tax liabilities	$	(89,070	)	$	(109,081	)

     A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. A valuation allowance has been provided for the net operating loss carryforwards related to the Company’s foreign subsidiaries since these subsidiaries have not yet generated taxable income against which the net operating losses could be utilized. Additionally a valuation allowance has been provided for the net operating loss carryforwards related to certain state net operating losses as it is more likely than not that a portion of the state net operating losses will expire unutilized. With respect to Emmis, net operating loss carryforwards, excluding those at the Company’s Hungarian and Belgium subsidiaries which do not expire, of approximatey $186,398 begin to expire in 2022. With respect to EOC, net operating loss carryforwards, excluding those at the Company’s Hungarian and Belgium subsidiaries which do not expire, of approximatey $176,311 begin to expire in 2022. The net operating loss carryforwards primarily result from the amortization of indefinite-lived intangibles for tax purposes.

12. SEGMENT INFORMATION

     The Company’s operations are aligned into three business segments: Radio, Television, and Publishing. These business segments are consistent with the Company’s management of these businesses and its financial reporting structure. Corporate represents expense not allocated to reportable segments. Amounts included in Interactive in fiscal 2002 have been reclassified into the Radio segment. Noncash compensation expense for fiscal 2002 attributable to our stations, previously included in Corporate, has been reclassified to the appropriate business segment.

100

     The Company’s segments operate primarily in the United States with one radio station located in Hungary, nine radio stations in Belgium (acquired in fiscal 2004) and two radio stations located in Argentina. We have agreed to sell our controlling interest in the two radio stations in Argentina. Results from operations for these two stations have been classified as discontinued operations in fiscal 2004 and their assets and liabilities have been classified as held for sale as of February 29, 2004. Total revenues of the radio station in Hungary for the years ended February 28 (29) 2002, 2003, and 2004 were $7.2 million, $9.2 million, and $11.6 million, respectively. This station’s long lived assets as of February 28 (29), 2003 and 2004 were $9.9 million and $8.9 million, respectively. Total revenues of the radio stations in Belgium beginning February 2004 were not significant for the year ended February 29, 2004 and total assets as of February 29, 2004 were $3.3 million. Total revenues of the radio stations in Argentina for the years ended February 28, 2002 and 2003 were $9.5 million and $2.6 million, respectively. Long lived assets for these stations as of February 28, 2003 were $4.7 million.

YEAR ENDED FEBRUARY 29, 2004	Radio		Television		Publishing		Corporate			Consolidated
Net revenues	$	279,822	$	235,938	$	76,108	$	—		$	591,868
Station operating expenses, excluding noncash compensation		155,129		150,485		65,809		—			371,423
Corporate expenses, excluding noncash compensation		—		—		—		24,105			24,105
Depreciation and amortization		9,331		30,174		873		6,090			46,468
Noncash compensation		7,682		7,715		2,780		5,273			23,450
Impairment loss and other		—		12,400		—		—			12,400
Operating income (loss)	$	107,680	$	35,164	$	6,646	$	(35,468	)	$	114,022
Total assets	$	1,096,893	$	1,042,754	$	82,984	$	77,938		$	2,300,569

With respect to EOC, the above information would be identical, except corporate total assets would be $71,355 and consolidated total assets would be $2,293,986.

YEAR ENDED FEBRUARY 28, 2003	Radio		Television		Publishing		Corporate			Consolidated
Net revenues	$	254,818	$	234,752	$	72,793	$	—		$	562,363
Station operating expenses, excluding noncash compensation		138,385		148,041		62,825		—			349,251
Corporate expenses, excluding noncash compensation		—		—		—		21,359			21,359
Depreciation and amortization		8,133		28,453		1,917		4,867			43,370
Noncash compensation		10,151		6,528		2,358		3,491			22,528
Operating income (loss)	$	98,149	$	51,730	$	5,693	$	(29,717	)	$	125,855
Total assets	$	947,010	$	1,050,486	$	81,073	$	86,844		$	2,165,413

With respect to EOC, the above information would be identical, except corporate total assets would be $79,315 and consolidated total assets would be $2,157,884.

YEAR ENDED FEBRUARY 28, 2002	Radio		Television		Publishing			Corporate			Consolidated
Net revenues	$	262,077	$	206,529	$	71,216		$	—		$	539,822
Station operating expenses, excluding noncash compensation		149,059		140,325		64,773			—			354,157
Corporate expenses, excluding noncash compensation		—		—		—			20,283			20,283
Depreciation and amortization		33,516		53,513		8,477			4,752			100,258
Time brokerage fees		479		—		—			—			479
Noncash compensation		5,505		2,345		428			817			9,095
Impairment loss and other		9,063		1,609		—			—			10,672
Restructuring fees		—		—		—			768			768
Operating income (loss)	$	64,455	$	8,737	$	(2,462	)	$	(26,620	)	$	44,110

13. RELATED PARTY TRANSACTIONS

     No loans were made to directors, officers or employees during periods covered by these financial statements. However, one loan to Jeffrey H. Smulyan remains outstanding. The approximate amount of such loan at February 28 (29), 2003 and 2004 was $1,158 and $1,185, respectively. This loan bears interest at the Company’s average borrowing rate, which was approximately 4.7% and 3.6% as of February 28 (29), 2003 and 2004, respectively.

     During the year ended February 29, 2004, the Company made payments of approximately $6 to a company owned by Mr. Smulyan

101

for use of an airplane to transport employees to various trade shows and meetings. Subsequently, Emmis leased a plane of its own and entered into a timeshare agreement with Mr. Smulyan. Under the timeshare agreement, whenever Mr. Smulayn uses the plane for non-business purposes, he pays Emmis for the total direct cost of operating the plane up to the maximum amount permitted by Federal Aviation Authority regulations (which maximum generally approximates the total direct cost). In addition, under Internal Revenue Service regulations, to the extent Mr. Smulyan allows non-business guests to travel on the plane on a business trip or takes the plane on a non-business detour as part of a business trip, additional compensation is attributed to Mr. Smulyan. Generally, these trips on which compensation is assessed pursuant to IRS regulations do not result in any material additional cost or expense to Emmis. With respect to the last fiscal year, Mr. Smulyan paid $149 under the timeshare arrangement. The Company believes that the terms of these transactions were no less favorable to the Company than terms available from independent third parties.

     A significant amount of business is conducted between EOC and its parent company, ECC. This activity includes equity financing and certain debt financing arrangements as well as reimbursement by EOC to ECC for corporate overhead expenses. Corporate overhead expenses are third party costs incurred in the ordinary course of conducting business as a parent holding company and include, but are not limited to, SEC filing fees and expenses, and legal, accounting, trustee and outside director fees.

14. FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND SUBSIDIARY NON-GUARANTORS

     Emmis conducts a significant portion of its business through subsidiaries. The 8 1/8% senior subordinated notes of EOC are fully and unconditionally guaranteed, jointly and severally, by certain direct and indirect subsidiaries of EOC (the “Subsidiary Guarantors”). As of February 29, 2004, subsidiaries holding EOC’s interest in its radio stations in Austin, Texas, Hungary, Belgium and Argentina, as well as certain other subsidiaries (such as those conducting joint ventures with third parties), did not guarantee the senior subordinated notes (the “Subsidiary Non-Guarantors”). The claims of creditors of Subsidiary Non-Guarantors have priority over the rights of EOC to receive dividends or distributions from such subsidiaries.

     Presented below is condensed consolidating financial information for the EOC Parent Company Only, the Subsidiary Guarantors and the Subsidiary Non-Guarantors as of February 28 (29), 2003 and 2004 and for each of the three years in the period ended February 29, 2004.

     Emmis uses the equity method with respect to investments in subsidiaries when preparing the financial information for subsidiary guarantors and subsidiary non-guarantors. Separate financial statements for Subsidiary Guarantors are not presented based on management’s determination that they do not provide additional information that is material to investors.

102

Emmis Operating Company
Condensed Consolidating Balance Sheet
As of February 29, 2004

									Eliminations
	Parent					Subsidiary			and
	Company			Subsidiary		Non-			Consolidating
	Only			Guarantors		Guarantors			Entries			Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	7,424		$	9,032	$	3,514		$	—		$	19,970
Accounts receivable, net		—			98,391		6,834			—			105,225
Prepaid expenses		747			14,399		127			—			15,273
Other		3,203			20,299		1,505			(1,444	)		23,563
Assets held for sale		—			—		7,988			—			7,988
Total current assets		11,374			142,121		19,968			(1,444	)		172,019
Property and equipment, net		34,551			176,326		6,425			—			217,302
Intangible assets, net		434			1,705,892		152,609			(78	)		1,858,857
Investment in affiliates		2,038,929			—		—			(2,038,929	)		—
Other assets, net		39,536			15,116		1,386			(10,230	)		45,808
Total assets	$	2,124,824		$	2,039,455	$	180,388		$	(2,050,681	)	$	2,293,986
CURRENT LIABILITIES:
Accounts payable	$	10,676		$	19,652	$	7,257		$	(1,794	)	$	35,791
Current maturities of long-term debt		1,688			—		5,210			(359	)		6,539
Current portion of TV program rights payable		—			27,502		—			—			27,502
Accrued salaries and commissions		3,782			10,385		352			—			14,519
Accrued interest		11,697			—		—			—			11,697
Deferred revenue		—			14,393		—			—			14,393
Other		2,229			4,157		304			—			6,690
Liabilities associated with assets held for sale		—			—		638			—			638
Total current liabilities		30,072			76,089		13,761			(2,153	)		117,769
Long-term debt, net of current maturities		1,038,145			—		—			—			1,038,145
Other long-term debt, net of current maturities		41			130		15,337			(9,599	)		5,909
TV program rights payable, net of current portion		—			26,266		—			—			26,266
Other noncurrent liabilities		7,663			1,648		11			—			9,322
Minority Interest		—			—		47,672			—			47,672
Deferred income taxes		109,081			—		—			—			109,081
Total liabilities		1,185,002			104,133		76,781			(11,752	)		1,354,164
SHAREHOLDER’S EQUITY:
Common stock		1,027,221			—		—			—			1,027,221
Additional paid-in capital		130,313			—		4,393			(4,393	)		130,313
Subsidiary investment		—			1,521,507		131,070			(1,652,577	)		—
Retained earnings/(accumulated deficit)		(216,591	)		413,815		(28,521	)		(385,294	)		(216,591	)
Accumulated other comprehensive loss		(1,121	)		—		(3,335	)		3,335			(1,121	)
Total shareholder’s equity		939,822			1,935,322		103,607			(2,038,929	)		939,822
Total liabilities and shareholder’s equity	$	2,124,824		$	2,039,455	$	180,388		$	(2,050,681	)	$	2,293,986

103

Emmis Operating Company
Condensed Consolidating Statement of Operations
For the Year Ended February 29, 2004

										Eliminations
	Parent						Subsidiary			and
	Company			Subsidiary			Non-			Consolidating
	Only			Guarantors			Guarantors			Entries			Consolidated
Net revenues	$	946		$	562,493		$	28,429		$	—		$	591,868
Operating expenses:
Station operating expenses, excluding noncash compensation		670			351,672			19,081			—			371,423
Corporate expenses, excluding noncash compensation		24,105			—			—			—			24,105
Time brokerage fees		—			—			—			—			—
Depreciation and amortization		6,090			36,589			3,789			—			46,468
Noncash compensation		5,273			18,177			—			—			23,450
Restructuring fees and other		—			—			—			—			—
Impairment loss and other		—			12,400			—			—			12,400
Total operating expenses		36,138			418,838			22,870			—			477,846
Operating income (loss)		(35,192	)		143,655			5,559			—			114,022
Other income (expense):
Interest expense		(58,719	)		(144	)		(1,484	)		913			(59,434	)
Gain on sale of assets		—			1,130			—			—			1,130
Loss in unconsolidated affiliates		(375	)		—			—			—			(375	)
Loss on debt extinguishment		—			—			—			—			—
Minority interest expense		—			—			(3,029	)		—			(3,029	)
Other income (expense), net		(642	)		36			1,006			(1,464	)		(1,064	)
Total other income (expense)		(59,736	)		1,022			(3,507	)		(551	)		(62,772	)
Income (loss) before income taxes, discontinued operations and accounting change		(94,928	)		144,677			2,052			(551	)		51,250
Provision (benefit) for income taxes		(33,680	)		54,977			515			—			21,812
Income (loss) from continuing operations		(61,248	)		89,700			1,537			(551	)		29,438
Loss from discontinued operations		—			—			(10,019	)		—			(10,019	)
Income (loss) before accounting change		(61,248	)		89,700			(8,482	)		(551	)		19,419
Equity in earnings (loss) of subsidiaries		80,667			—			—			(80,667	)		—
Net income (loss)	$	19,419		$	89,700		$	(8,482	)	$	(81,218	)	$	19,419

104

Emmis Operating Company
Condensed Consolidating Statement of Cash Flows
For the Year Ended February 29, 2004

										Eliminations
	Parent						Subsidiary			and
	Company			Subsidiary			Non-			Consolidating
	Only			Guarantors			Guarantors			Entries			Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	19,419		$	89,700		$	(8,482	)	$	(81,218	)	$	19,419
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities -
Loss on discontinued operations		—			—			8,615			—			8,615
Impairment loss		—			12,400			—			—			12,400
Loss on debt extinguishment		—			—			—			—			—
Cumulative effect of accounting change		—			—			—			—			—
Depreciation and amortization		9,782			60,968			4,161			—			74,911
Provision for bad debts		—			3,290			—			—			3,290
Provision (benefit) for deferred income taxes		(33,680	)		54,977			515			—			21,812
Noncash compensation		5,273			18,177			—			—			23,450
Equity in earnings of subsidiaries		(80,667	)		—			—			80,667			—
Gain on sale of assets		—			(1,130	)		—			—			(1,130	)
Other		—			—			3,089			551			3,640
Changes in assets and liabilities -
Accounts receivable		—			(3,775	)		(357	)		—			(4,132	)
Prepaid expenses and other current assets		(1,712	)		4,829			(2,758	)		—			359
Other assets		13,190			(16,792	)		841			—			(2,761	)
Accounts payable and accrued liabilities		(2,248	)		(2,253	)		2,187			—			(2,314	)
Deferred liabilities		—			(1,412	)		(46	)		—			(1,458	)
Payments of TV program rights payable and other		1,712			(35,517	)		(6,906	)		—			(40,711	)
Net cash provided by (used in) operating activities		(68,931	)		183,462			859			—			115,390
INVESTING ACTIVITIES:
Purchases of property and equipment		(4,767	)		(25,539	)		115			—			(30,191	)
Disposals of property and equipment		—			2,106			—			—			2,106
Cash paid for acquisitions		—			(11,656	)		(109,470	)		—			(121,126	)
Proceeds from sale of stations, net		—			3,650			—			—			3,650
Deposits on acquisitions and other		(798	)		—			—			—			(798	)
Net cash used in investing activities		(5,565	)		(31,439	)		(109,355	)		—			(146,359	)
FINANCING ACTIVITIES:
Payments on long-term debt		(105,066	)		—			—			—			(105,066	)
Proceeds from long-term debt		138,000			—			—			—			138,000
Intercompany, net		45,747			(148,835	)		105,660			—			2,572
Payments for debt related costs		(646	)		—			—			—			(646	)
Net cash provided by (used in) financing activities		78,035			(148,835	)		105,660			—			34,860
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		3,539			3,188			(2,836	)		—			3,891
CASH AND CASH EQUIVALENTS:
Beginning of period		3,885			5,844			6,350			—			16,079
End of period	$	7,424		$	9,032		$	3,514		$	—		$	19,970

105

Emmis Operating Company
Condensed Consolidating Balance Sheet
As of February 28, 2003

									Eliminations
	Parent					Subsidiary			and
	Company			Subsidiary		Non-			Consolidating
	Only			Guarantors		Guarantors			Entries			Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	3,885		$	5,844	$	6,350		$	—		$	16,079
Accounts receivable, net		—			98,799		3,546			—			102,345
Prepaid expenses		2,016			13,462		118			—			15,596
Other		222			23,249		2,190			—			25,661
Assets held for sale		—			—		—			—			—
Total current assets		6,123			141,354		12,204			—			159,681
Property and equipment, net		35,874			186,004		1,552			—			223,430
Intangible assets, net		3,035			1,710,513		12,185			—			1,725,733
Investment in affiliates		1,923,882			—		—			(1,923,882	)		—
Other assets, net		52,373			13,916		926			(18,175	)		49,040
Total assets	$	2,021,287		$	2,051,787	$	26,867		$	(1,942,057	)	$	2,157,884
CURRENT LIABILITIES:
Accounts payable	$	13,161		$	18,530	$	7,835		$	—		$	39,526
Current maturities of long-term debt		9,976			—		7,151			(2,215	)		14,912
Current portion of TV program rights payable		—			27,424		—			—			27,424
Accrued salaries and commissions		3,326			10,746		175			—			14,247
Accrued interest		13,844			—		—			(2,203	)		11,641
Deferred revenue		—			15,805		—			—			15,805
Other		3,339			3,640		—			—			6,979
Liabilities associated with assets held for sale		—			—		—			—			—
Total current liabilities		43,646			76,145		15,161			(4,418	)		130,534
Long-term debt, net of current maturities		996,945			—		—			—			996,945
Other long-term debt, net of current maturities		41			2,412		24,391			(13,757	)		13,087
TV program rights payable, net of current portion		—			32,044		—			—			32,044
Other noncurrent liabilities		13,167			3,898		721			—			17,786
Deferred income taxes		89,070			—		—			—			89,070
Total liabilities		1,142,869			114,499		40,273			(18,175	)		1,279,466
SHAREHOLDER’S EQUITY:
Common stock		1,027,221			—		—			—			1,027,221
Additional paid-in capital		95,582			—		4,393			(4,393	)		95,582
Subsidiary investment		—			1,613,173		20,249			(1,633,422	)		—
Retained earnings/(accumulated deficit)		(227,026	)		324,115		(23,068	)		(301,047	)		(227,026	)
Accumulated other comprehensive loss		(17,359	)		—		(14,980	)		14,980			(17,359	)
Total shareholder’s equity		878,418			1,937,288		(13,406	)		(1,923,882	)		878,418
Total liabilities and shareholder’s equity	$	2,021,287		$	2,051,787	$	26,867		$	(1,942,057	)	$	2,157,884

106

Emmis Operating Company
Condensed Consolidating Statement of Operations
For the Year Ended February 28, 2003

										Eliminations
	Parent						Subsidiary			and
	Company			Subsidiary			Non-			Consolidating
	Only			Guarantors			Guarantors			Entries			Consolidated
Net revenues	$	923		$	549,630		$	11,810		$	—		$	562,363
Operating expenses:
Station operating expenses, excluding noncash compensation		702			339,176			9,373			—			349,251
Corporate expenses, excluding noncash compensation		21,359			—			—			—			21,359
Time brokerage fees		—			—			—			—			—
Depreciation and amortization		4,867			35,519			2,984			—			43,370
Noncash compensation		3,491			19,037			—			—			22,528
Restructuring fees and other		—			—			—			—			—
Impairment loss and other		—			—			—			—			—
Total operating expenses		30,419			393,732			12,357			—			436,508
Operating income (loss)		(29,496	)		155,898			(547	)		—			125,855
Other income (expense):
Interest expense		(77,050	)		(771	)		(912	)		675			(78,058	)
Gain on sale of assets		—			9,313			—			—			9,313
Loss in unconsolidated affiliates		(4,544	)		—			—			—			(4,544	)
Loss on debt extinguishment		(4,444	)		—			—			—			(4,444	)
Minority interest income (expense)		—			—			(428	)		—			(428	)
Other income (expense), net		983			873			(229	)		(675	)		952
Total other income (expense)		(85,055	)		9,415			(1,569	)		—			(77,209	)
Income (loss) before income taxes and accounting change		(114,551	)		165,313			(2,116	)		—			48,646
Provision (benefit) for income taxes		(42,008	)		62,819			—			—			20,811
Income (loss) before accounting change		(72,543	)		102,494			(2,116	)		—			27,835
Cumulative effect of accounting change, net of tax		(167,400	)		(167,400	)		—			167,400			(167,400	)
Equity in earnings (loss) of subsidiaries		100,378			—			—			(100,378	)		—
Net income (loss)	$	(139,565	)	$	(64,906	)	$	(2,116	)	$	67,022		$	(139,565	)

107

Emmis Operating Company
Condensed Consolidating Statement of Cash Flows
For the Year Ended February 28, 2003

										Eliminations
	Parent						Subsidiary			and
	Company			Subsidiary			Non-			Consolidating
	Only			Guarantors			Guarantors			Entries			Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	(139,565	)	$	(64,906	)	$	(2,116	)	$	67,022		$	(139,565	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities -
Loss on discontinued operations		—			—			—			—			—
Impairment loss		—			—			—			—			—
Loss on debt extinguishment		4,444			—			—			—			4,444
Cumulative effect of accounting change		167,400			167,400			—			(167,400	)		167,400
Depreciation and amortization		8,806			56,403			2,984			—			68,193
Provision for bad debts		—			4,102			—			—			4,102
Provision (benefit) for deferred income taxes		20,811			—			—			—			20,811
Noncash compensation		3,491			19,037			—			—			22,528
Equity in earnings of subsidiaries		(100,378	)		—			—			100,378			—
Gain on sale of assets		—			(9,313	)		—			—			(9,313	)
Other		(428	)		—			(7,651	)		—			(8,079	)
Changes in assets and liabilities -
Accounts receivable		—			(11,657	)		450			—			(11,207	)
Prepaid expenses and other current assets		(1,355	)		11			(2,048	)		—			(3,392	)
Other assets		(10,398	)		6,615			(399	)		—			(4,182	)
Accounts payable and accrued liabilities		(2,899	)		965			2,738			—			804
Deferred liabilities		—			(587	)		—			—			(587	)
Payments of TV program rights payable and other		1,483			(34,604	)		15,353			—			(17,768	)
Net cash provided by (used in) operating activities		(48,588	)		133,466			9,311			—			94,189
INVESTING ACTIVITIES:
Purchases of property and equipment		(5,354	)		(25,195	)		—			—			(30,549	)
Disposals of property and equipment		—			1,752			602			—			2,354
Cash paid for acquisitions		—			—			—			—			—
Proceeds from sale of assets		—			135,500			—			—			135,500
Deposits on acquisitions and other		(1,004	)		—			—			—			(1,004	)
Net cash provided by (used in) investing activities		(6,358	)		112,057			602			—			106,301
FINANCING ACTIVITIES:
Payments on long-term debt		(260,101	)		—			—			—			(260,101	)
Proceeds from long-term debt		15,000			—			—			—			15,000
Intercompany, net		306,686			(244,649	)		(4,955	)		—			57,082
Payments for debt related costs		(2,754	)		—			—			—			(2,754	)
Net cash provided by (used in) financing activities		58,831			(244,649	)		(4,955	)		—			(190,773	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		3,885			874			4,958			—			9,717
CASH AND CASH EQUIVALENTS:
Beginning of period		—			4,970			1,392			—			6,362
End of period	$	3,885		$	5,844		$	6,350		$	—		$	16,079

108

Emmis Operating Company
Condensed Consolidating Statement of Operations
For the Year Ended February 28, 2002

										Eliminations
	Parent						Subsidiary			and
	Company			Subsidiary			Non-			Consolidating
	Only			Guarantors			Guarantors			Entries			Consolidated
Net revenues	$	1,695		$	521,429		$	16,698		$	—		$	539,822
Operating expenses:
Station operating expenses, excluding noncash compensation		1,204			338,353			14,600			—			354,157
Corporate expenses, excluding noncash compensation		20,283			—			—			—			20,283
Time brokerage fees		—			479			—			—			479
Depreciation and amortization		4,752			91,979			3,527			—			100,258
Noncash compensation		817			8,278			—			—			9,095
Restructuring fees and other		768			—			—			—			768
Impairment loss and other		—			10,672			—			—			10,672
Total operating expenses		27,824			449,761			18,127			—			495,712
Operating income (loss)		(26,129	)		71,668			(1,429	)		—			44,110
Other income (expense):
Interest expense		(102,109	)		(285	)		(2,324	)		616			(104,102	)
Gain on sale of assets		—			—			—			—			—
Loss in unconsolidated affiliates		(4,232	)		(771	)		—			—			(5,003	)
Loss on debt extinguishment		(1,748	)		—			—			—			(1,748	)
Minority interest income (expense)		—			—			59			—			59
Other income (expense), net		1,403			(466	)		(756	)		120			301
Total other income (expense)		(106,686	)		(1,522	)		(3,021	)		736			(110,493	)
Income (loss) before income taxes and accounting change		(132,815	)		70,146			(4,450	)		736			(66,383	)
Provision (benefit) for income taxes		(45,152	)		26,655			—			—			(18,497	)
Income (loss) before accounting change		(87,663	)		43,491			(4,450	)		736			(47,886	)
Equity in earnings (loss) of subsidiaries		39,777			—			—			(39,777	)		—
Net income (loss)	$	(47,886	)	$	43,491		$	(4,450	)	$	(39,041	)	$	(47,886	)

109

Emmis Operating Company
Condensed Consolidating Statement of Cash Flows
For the Year Ended February 28, 2002

										Eliminations
	Parent						Subsidiary			and
	Company			Subsidiary			Non-			Consolidating
	Only			Guarantors			Guarantors			Entries			Consolidated
OPERATING ACTIVITIES:
Net income (loss)	$	(47,886	)	$	43,491		$	(4,450	)	$	(39,041	)	$	(47,886	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities -
Loss on discontinued operations		—			—			—			—			—
Impairment loss		—			9,063			—			—			9,063
Loss on debt extinguishment		1,748			—			—			—			1,748
Cumulative effect of accounting change		—			—			—			—			—
Depreciation and amortization		10,226			110,582			3,527			—			124,335
Provision for bad debts		—			4,005			—			—			4,005
Provision (benefit) for deferred income taxes		(18,497	)		—			—			—			(18,497	)
Noncash compensation		817			8,278			—			—			9,095
Equity in earnings of subsidiaries		(39,777	)		—			—			39,777			—
Gain on sale of assets		—			—			—			—			—
Other		795			375			(6,362	)		(736	)		(5,928	)
Changes in assets and liabilities -
Accounts receivable		—			(3,649	)		1,531			—			(2,118	)
Prepaid expenses and other current assets		3,082			1,202			843			—			5,127
Other assets		2,057			(9,364	)		1,355			—			(5,952	)
Accounts payable and accrued liabilities		5,035			(6,965	)		(779	)		—			(2,709	)
Deferred liabilities		—			(963	)		—			—			(963	)
Payments of TV program rights payable and other		24,482			(15,553	)		(10,856	)		—			(1,927	)
Net cash provided by (used in) operating activities		(57,918	)		140,502			(15,191	)		—			67,393
INVESTING ACTIVITIES:
Purchases of property and equipment		(2,252	)		(29,018	)		1,135			—			(30,135	)
Disposals of property and equipment		—			1,719			—			—			1,719
Cash paid for acquisitions		—			(140,746	)		—			—			(140,746	)
Proceeds from sale of assets		—			—			—			—			—
Deposits on acquisitions and other		(5,943	)		—			—			—			(5,943	)
Net cash provided by (used in) investing activities		(8,195	)		(168,045	)		1,135			—			(175,105	)
FINANCING ACTIVITIES:
Payments on long-term debt		(133,000	)		—			—			—			(133,000	)
Proceeds from long-term debt		5,000			—			—			—			5,000
Intercompany, net		143,532			28,495			14,742			—			186,769
Payments for debt related costs		(4,594	)		—			—			—			(4,594	)
Net cash provided by (used in) financing activities		10,938			28,495			14,742			—			54,175
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(55,175	)		952			686			—			(53,537	)
CASH AND CASH EQUIVALENTS:
Beginning of period		55,175			4,018			706			—			59,899
End of period	$	—		$	4,970		$	1,392		$	—		$	6,362

110

15. SUBSEQUENT EVENTS

          On May 10, 2004, we refinanced substantially all of our long-term debt. EOC received $368.4 million in proceeds from the issuance of its 67/8% senior subordinated notes due 2012 in the principal amount of $375 million, net of the initial purchasers’ discount of $6.6 million, and EOC borrowed $978.5 million under a new $1.025 billion senior credit facility. The gross proceeds from these transactions and $2.8 million of cash on hand were used to (i) repay the remaining principal indebtedness under EOC’s former credit facility of approximately $744.3 million, (ii) repurchase $295.1 million aggregate principal amount of EOC’s 81/8% senior subordinated notes due 2009, (iii) repurchase $227.7 million aggregate accreted value of our 121/2% senior discount notes due 2011, (iv) pay $4.6 million in accrued interest, (v) pay an estimated $12.6 million in transaction fees and (vi) pay $72.0 million in prepayment and redemption fees. In connection with the transactions, we incurred an estimated loss of $97.1 million, consisting of (i) $72.0 million for the prepayment and redemption fees, (ii) $24.3 million for the write-off of deferred debt costs associated with the retired debt, and (iii) an estimated $0.8 million in expenses related to the repurchase of indebtedness existing at February 29, 2004.

          On May 10, 2004, EOC gave notice to redeem the remaining $4.9 million of principal amount of its 8 1/8% senior subordinated notes due 2009. These notes will be redeemed at 104.063% plus accrued and unpaid interest and will be financed with additional borrowings on our new credit facility. The transaction is expected to close on June 10, 2004 and will result in an additional loss of $0.3 million.

          The new senior credit facility provides for total borrowings of up to $1.025 billion, including (i) a $675 million term loan and (ii) a $350 million revolver, of which $100.0 million may be used for letters of credit. The new senior credit facility also provides for the ability to have incremental facilities of up to $675.0 million, of which up to $350.0 million may be allocated to a revolver. EOC may access the incremental facility on one or more occasions, subject to certain provisions, including a potential market adjustment to pricing of the entire credit facility. All outstanding amounts under the new credit facility bear interest, at the option of EOC, at a rate equal to the Eurodollar Rate or an alternative base rate (as defined in the new credit facility) plus a margin. The margin over the Eurodollar Rate or the alternative base rate varies under the revolver (ranging from 0% to 2.5%), depending on EOC’s ratio of debt to operating cash flow, as defined in the agreement. The margins over the Eurodollar Rate or the alternative base rate are 1.75% and 0.75%, respectively, for the term loan facility. Interest is due on a calendar quarter basis under the alternative base rate and at least every three months under the Eurodollar Rate. Beginning one year after closing, the new credit facility requires EOC to fix interest rates for a two year period on at least 30% of its total outstanding debt, as defined (including the senior subordinated debt). After the first two years, this ratio of fixed to floating rate debt must be maintained if EOC’s total leverage ratio, as defined, is greater than 6:1 at any quarter end. Both the term loan and revolver mature on November 10, 2011. The borrowings due under the term loan are payable in equal quarterly installments in an annual amount equal to 1% of the term loan during each of the first six and one quarter years of the loan (beginning on February 28, 2005), with the remaining balance payable November 10, 2011. The annual amortization and reduction schedule for the new credit facility is as follows:

SCHEDULED AMORTIZATION/REDUCTION OF NEW CREDIT FACILITY

Year Ended	Revolver		Term Loan B		Total
February 28 (29),	Amortization		Amortization		Amortization
2005	$	—	$	1,688	$	1,688
2006		—		6,750		6,750
2007		—		6,750		6,750
2008		—		6,750		6,750
2009		—		6,750		6,750
2010		—		6,750		6,750
2011		350,000		639,562		989,562
Total	$	350,000	$	675,000	$	1,025,000

          Proceeds from raising additional equity, issuing additional subordinated debt or from asset sales, as well as excess cash flow may be required to repay amounts outstanding under the new credit facility. These mandatory repayment provisions may apply depending on EOC’s total leverage ratio, as defined under the new credit facility.

111

          Availability under the new senior credit facility depends upon our continued compliance with certain operating covenants and financial ratios including leverage, interest coverage and fixed charge coverage as specifically defined. The operating covenants and other restrictions with which EOC must comply, include, among others, restrictions on additional indebtedness, incurrence of liens, engaging in businesses other than its primary business, paying cash dividends on common stock, redeeming or repurchasing capital stock of ECC, acquisitions and asset sales, as well as requirements to maintain certain financial ratios. The new credit facility provides that an event of default will occur if there is a change of control of ECC, as defined. The payment of principal, premium and interest on the loans is fully and unconditionally guaranteed, jointly and severally, by ECC and most of its existing wholly-owned domestic subsidiaries that guarantee the new credit facility. Substantially all of Emmis’ assets, including the stock of Emmis’ wholly-owned, domestic subsidiaries, are pledged to secure the new credit facility.

          EOC issued $375.0 million aggregate principal amount of its 67/8% senior subordinated notes. On or within 90 days from closing, EOC will file an Exchange Offer Registration Statement with the SEC to exchange the senior subordinated notes for a new series of notes registered under the Securities Act. The terms of the new series of notes will be identical to the terms of the senior subordinated notes. The notes have no sinking fund requirement and are due in full on May 15, 2012. Interest is payable semi-annually on May 15 and November 15 of each year. Prior to May 15, 2008, EOC may redeem the notes, in whole or in part, at a price of 100% of the principal amount thereof plus the payment of a make-whole premium. After May 15, 2008, EOC can choose to redeem some or all of the notes at specified redemption prices ranging from 101.719% to 103.438% plus accrued and unpaid interest. On or after May 15, 2010, the notes maybe redeemed at 100% plus accrued and unpaid interest. Upon a change of control (as defined), EOC is required to make an offer to purchase the notes then outstanding at a purchase price equal to 101% plus accrued and unpaid interest. The indenture governing the notes contains covenants limiting EOC’s ability, among other things, to (1) incur additional indebtedness, (2) pay dividends or make other distributions to stockholders, (3) purchase or redeem capital stock or subordinated indebtedness, (4) make certain investments, (5) create restrictions on the ability of our subsidiaries to pay dividends or make payments to EOC, (6) engage in certain transactions with affiliates, and (7) sell all or substantially all of the assets of EOC and its subsidiaries, or consolidate or merge with or into other companies. The payment of principal, premium and interest on the notes is fully and unconditionally guaranteed, jointly and severally, by ECC and most of EOC’s existing wholly-owned domestic subsidiaries that guarantee the new credit facility.

16. QUARTERLY FINANCIAL DATA (UNAUDITED)

          EMMIS

	Quarter Ended											Full
	May 31			Aug. 31			Nov. 30		Feb. 28 (29)			Year
Year ended February 29, 2004
Net revenues	$	141,548		$	154,618		$	158,762	$	136,940		$	591,868
Operating income		28,553			37,035			41,703		6,731			114,022
Net income (loss) before accounting change		2,602			9,754			11,316		(21,416	)		2,256
Net income (loss) available to common shareholders		356			7,508			9,070		(23,662	)		(6,728	)
Basic earnings (loss) per common share:
Before accounting change	$	0.01		$	0.14		$	0.17	$	(0.43	)	$	(0.12	)
Net income (loss) available to common shareholders	$	0.01		$	0.14		$	0.17	$	(0.43	)	$	(0.12	)
Diluted earnings (loss) per common share:
Before accounting change	$	0.01		$	0.14		$	0.16	$	(0.43	)	$	(0.12	)
Net income (loss) available to common shareholders	$	0.01		$	0.14		$	0.16	$	(0.43	)	$	(0.12	)
Year ended February 28, 2003
Net revenues	$	136,806		$	143,222		$	155,544	$	126,791		$	562,363
Operating income		29,229			35,843			44,984		15,799			125,855
Net income (loss) before accounting change		1,826			(4,556	)		10,814		(5,152	)		2,932
Net income (loss) available to common shareholders		(167,820	)		(6,802	)		8,568		(7,398	)		(173,452	)
Basic earnings (loss) per common share:
Before accounting change	$	(0.01	)	$	(0.13	)	$	0.16	$	(0.14	)	$	(0.11	)
Net income (loss) available to common shareholders	$	(3.28	)	$	(0.13	)	$	0.16	$	(0.14	)	$	(3.27	)
Diluted earnings (loss) per common share:
Before accounting change	$	(0.01	)	$	(0.13	)	$	0.16	$	(0.14	)	$	(0.11	)
Net income (loss) available to common shareholders	$	(3.28	)	$	(0.13	)	$	0.16	$	(0.14	)	$	(3.27	)

112

EOC

	Quarter Ended										Full
	May 31			Aug. 31		Nov. 30		Feb. 28 (29)			Year
Year ended February 29, 2004
Net revenues	$	141,548		$	154,618	$	158,762	$	136,940		$	591,868
Operating income		28,553			37,035		41,703		6,731			114,022
Net income (loss) before accounting change		6,831			13,969		15,613		(16,994	)		19,419
Net income (loss)		6,831			13,969		15,613		(16,994	)		19,419
Year ended February 28, 2003
Net revenues	$	136,806		$	143,222	$	155,544	$	126,791		$	562,363
Operating income		29,229			35,843		44,984		15,799			125,855
Net income (loss) before accounting change		6,891			7,986		14,772		(1,814	)		27,835
Net income (loss)		(160,509	)		7,986		14,772		(1,814	)		(139,565	)

     Our results of operations are usually subject to seasonal fluctuations, which result in higher second and third quarter revenues and operating income. Net loss available to common shareholders in the quarter ended February 29, 2004 includes a $12.4 million impairment loss resulting from the company’s annual SFAS No. 142 review and a $10.4 million loss from discontinued operations. Operating results for the first nine months of fiscal 2004 have been reclassified to reflect the discontinued operations. Net loss available to common shareholders in the quarter ended May 31, 2002 includes a loss from the cumulative effect of an accounting change of $167.4 million, net of tax, related to our adoption of SFAS No. 142.

113

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of Emmis Communications Corporation and Subsidiaries:

     We have audited the accompanying consolidated balance sheets of Emmis Communications Corporation and Subsidiaries as of February 29, 2004 and February 28, 2003, and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for the years then ended. We have also audited the accompanying consolidated balance sheets of Emmis Operating Company (a wholly owned subsidiary of Emmis Communications Corporation) and Subsidiaries as of February 29, 2004 and February 28, 2003 and the related consolidated statements of operations, changes in shareholder’s equity and cash flows for the years then ended. These financial statements are the responsibility of the Companies’ management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of Emmis Communications Corporation and Subsidiaries and Emmis Operating Company and Subsidiaries for the year ended February 28, 2002 were audited by other auditors who have ceased operations and whose report dated May 2, 2002, expressed an unqualified opinion on those statements and included an explanatory paragraph that disclosed the adoption of SFAS No. 133 as discussed in Note 1 to the consolidated financial statements.

     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 Emmis Communications Corporation and Subsidiaries at February 29, 2004 and February 28, 2003, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States and the consolidated financial position of Emmis Operating Company and Subsidiaries at February 29, 2004 and February 28, 2003 and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.

     As discussed in Note 8 to the consolidated financial statements, effective March 1, 2002, the Companies changed the manner in which they account for goodwill and indefinite lived intangible assets upon the adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”.

     As discussed above, the financial statements of Emmis Communications Corporation and Subsidiaries and Emmis Operating Company and Subsidiaries for the year ended February 28, 2002 were audited by other auditors who have ceased operations. As described in Note 8, these consolidated financial statements have been revised to include the transitional disclosures required by Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets”. Our audit procedures with respect to the disclosures in Note 8 with respect to fiscal 2002 included (a) agreeing the previously reported net income (loss) to the previously issued financial statements, (b) agreeing the amortization expense and associated tax benefit recognized in those periods related to goodwill and other intangible assets that are no longer being amortized as a result of applying SFAS No. 142 to the Companies’ underlying records obtained from management and (c) testing the mathematical accuracy of the reconciliation of adjusted net income (loss) to reported net income (loss), and the related earnings-per-share amounts. In our opinion, the disclosures for fiscal 2002 in Note 8 are appropriate. However, we were not engaged to audit, review, or apply any procedures to the fiscal 2002 financial statements of the Companies other than with respect to such disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2002 financial statements taken as a whole.

/s/ ERNST & YOUNG LLP

Indianapolis, Indiana,
April 14, 2004
except for Note 15, as to which the date is
May 10, 2004

114

THE FOLLOWING IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of Emmis Communications Corporation and Subsidiaries:

     We have audited the accompanying consolidated balance sheets of EMMIS COMMUNICATIONS CORPORATION (an Indiana corporation) and Subsidiaries as of February 28, 2002 and 2001, and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for each of the three years in the period ended February 28, 2002. We have also audited the accompanying consolidated balance sheets of EMMIS OPERATING COMPANY (an Indiana corporation and wholly owned subsidiary of Emmis Communications Corporation) and Subsidiaries as of February 28, 2002 and 2001, and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for each of the three years in the period ended February 28, 2002. These financial statements are the responsibility of the Companies’ management. Our responsibility is to express an opinion on these financial statements 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 audits 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 financial position of Emmis Communications Corporation and Subsidiaries as of February 28, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended February 28, 2002 in conformity with accounting principles generally accepted in the United States and the financial position of Emmis Operating Company and Subsidiaries as of February 28, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended February 28, 2002 in conformity with accounting principles generally accepted in the United States.

     As discussed in Note 1v. of the notes to consolidated financial statements, effective March 1, 2001, the Company changed its accounting for derivative instruments and hedging activities pursuant to the provisions of Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Hedging Activities.”

/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

Indianapolis, Indiana,

May 2, 2002.

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

     Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

     As of the end of the period covered by this annual report, the Company evaluated the effectiveness of the design and operation of its “disclosure controls and procedures” (“Disclosure Controls”). This evaluation (the “Controls Evaluation”) was performed under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).

     Based upon the Controls Evaluation, our CEO and CFO concluded that our Disclosure Controls are effective to provide reasonable assurance that information relating to Emmis Communications Corporation and Subsidiaries that is required to be disclosed by us in the reports that we file or submit, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

     During the last fiscal quarter covered by this annual report, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

     It should be noted that any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The information required by this item with respect to directors or nominees to be directors of Emmis is incorporated by reference from the sections entitled “Proposal No. 1: Election of Directors”, “Corporate Governance – Certain Committees of the Board of Directors,” Corporate Governance – Code of Ethics” and “Compliance with Section 16(a) of the Securities Exchange Act of 1934” in the Emmis 2004 Proxy Statement. All directors of ECC are also directors of EOC.

     Listed below is certain information about the executive officers of Emmis or its affiliates who are not directors or nominees to be directors. All such persons are executive officers of both ECC and EOC.

		AGE AT		YEAR FIRST
		FEBRUARY 29,		ELECTED
NAME	POSITION	2004		OFFICER
Randall D. Bongarten	Television Division President		53		2000
Richard F. Cummings	Radio Division President		51		1984
Michael Levitan	Senior Vice President – Human Resources		46		2002
Gary Thoe	Publishing Division President		47		1998
Paul W. Fiddick	International Division President		53		2002

     Set forth below is the principal occupation for the last five years of each executive officer of the Company or its affiliates who is not also a director.

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     Randall D. Bongarten has been employed as President of Emmis Television since October 2000. He served as President of Emmis International from June 1998 to September 2002. Prior to June 1998, Mr. Bongarten had served as President of GAF Broadcasting and as Executive Vice President of Operations for Emmis Radio Division.

     Richard F. Cummings was the Program Director of WENS from 1981 to March 1984, when he became the National Program Director and a Vice President of Emmis. He became Executive Vice President—Programming in 1988 and became Radio Division President in December 2001.

     Michael Levitan has been employed as Senior Vice President – Human Resources since September 2002, but he has served as a human resources consultant to Emmis since 2000. Prior to joining Emmis, Mr. Levitan served as Director of Human Resources for Apple Computer and as Executive Director of Organizational Effectiveness and Assistant to the President of Cummins Engine.

     Gary Thoe has been employed as President of Emmis Publishing since February 1998. Prior to February 1998, Mr. Thoe served as President and part owner of Mayhill Publications, Inc.

     Paul Fiddick has been employed as President of Emmis International since September 2002. Prior to joining Emmis, Mr. Fiddick served as Assistant Secretary for Administration of the U.S. Department of Agriculture from November 1999 until May 2001.

ITEM 11. EXECUTIVE COMPENSATION.

     The information required by this item is incorporated by reference from the sections entitled “Corporate Governance – Compensation of Directors,” “Compensation Committee Interlocks and Insider Participation,” “Employment and Change in Control Agreements” and “Compensation Tables” in the Emmis 2004 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required by this item with respect to ECC is incorporated by reference from the section entitled “Voting Securities and Beneficial Owners” in the Emmis 2004 Proxy Statement. ECC is the only holder of the common stock of EOC.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this item is incorporated by reference from the sections entitled “Corporate Governance – Certain Transactions” and “Equity Compensation Plan Information” in the Emmis 2004 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by this item is incorporated by reference from the section entitled “Matters Relating to Independent Auditors” in the Emmis 2004 Proxy Statement.

PART IV

ITEM 15. EXHIBITS, FIANANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

Financial Statements

     The financial statements filed as a part of this report are set forth under Item 8.

Financial Statement Schedules

     No financial statement schedules are required to be filed with this report.

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Reports on Form 8-K

     On December 15, 2003, the company filed a Form 8-K, reporting an Item 12 Regulation FD Disclosure regarding comments made by the company’s CEO and CFO at a media conference.

     On January 8, 2004, the company included on Form 8-K its press release announcing its financial results for the three and nine months ended November 30, 2002 and 2003.

     On January 8, 2004, the company filed a Form 8-K/A to correct the press release contained in the Form 8-K filed earlier the same day.

Exhibits

The following exhibits are filed or incorporated by reference as a part of this report:

3.1	Second Amended and Restated Articles of Incorporation of Emmis Communications Corporation, incorporated by reference from Exhibit 3.1 to the Company’s Form 10-K/A for the fiscal year ended February 29, 2000, and an amendment thereto relating to certain 12 1/2% Senior Preferred Stock incorporated by reference from Exhibit 3.1 to the Company’s current report on Form 8-K filed December 13, 2001.
3.2	Amended and Restated Bylaws of Emmis Communications Corporation, incorporated by reference from Exhibit 3.2 to the Company’s Form 10-Q for the quarter ended November 30, 2002.
3.3	Articles of Incorporation of Emmis Operating Company, incorporated by reference from Exhibit 3.4 to the Company’s Form S-3/A (File No. 333-62172) filed on June 21, 2001.
3.4	Bylaws of Emmis Operating Company, incorporated by reference from Exhibit 3.5 to the Company’s Form S-3/A (File No. 333-62172) filed on June 21, 2001.
4.1	Indenture dated February 12, 1999 (the “8 1/8% Subordinated Notes Indenture”) among Emmis Communications Corporation, certain subsidiary guarantors and IBJ Whitehall Bank and Trust Company, as trustee, including as an exhibit thereto the form of note, incorporated by reference to Exhibit 4.1 to Emmis’ Registration Statement on Form S-4, File No. 333-74377, as amended (the “1999 Registration Statement”).
4.2	Indenture dated March 27, 2001 (the “12 1/2% Senior Discount Notes Indenture”) among Emmis Communications Corporation and The Bank of Nova Scotia Trust Company of New York, as trustee, including as an exhibit thereto the form of note, incorporated by reference to Exhibit 4.1 to Emmis’ Registration Statement on Form S-4, File No. 333-621604, as amended (the “2001 Registration Statement”).
4.3	Form of stock certificate for Class A common stock, incorporated by reference from Exhibit 3.5 to the 1994 Emmis Registration Statement on Form S-1, File No. 33-73218, the “1994 Registration Statement”.
4.4	Supplemental Indenture dated April 26, 2004 to the 8 1/8% Subordinated Notes Indenture.*
4.5	Supplemental Indenture dated April 26, 2004 to the 12 1/2% Senior Discount Notes Indenture.*
4.6	Indenture dated May 10, 2004 (the “6 7/8% Subordinated Notes Indenture”) among Emmis Operating Company and The Bank of Nova Scotia Trust Company of New York, as trustee, including as an exhibit thereto the form of note.*
10.1	Revolving Credit and Term Loan Agreement dated May 10, 2004.*
10.2	Emmis Operating Company Profit Sharing Plan, as amended, effective March 1, 1997 incorporated by reference from Exhibit 10.1 to Emmis’ Annual Report on Form 10-K for the fiscal year ended February 28, 2003 (the “2003 10-K”).++
10.3	Emmis Communications Corporation 1994 Equity Incentive Plan, incorporated by reference from Exhibit 10.5 to the 1994 Registration Statement.++

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10.4	The Emmis Communications Corporation 1995 Non-Employee Director Stock Option Plan, incorporated by reference from Exhibit 10.15 to Emmis’ Annual Report on Form 10-K for the fiscal year ended February 28, 1995 (the “1995 10-K”).++
10.5	The Emmis Communications Corporation 1995 Equity Incentive Plan incorporated by reference from Exhibit 10.16 to the 1995 10-K.++
10.6	Emmis Communications Corporation 1997 Equity Incentive Plan, incorporated by reference from Exhibit 10.5 to Emmis’ Annual Report on Form 10-K for the fiscal year ended February 28, 1998 (the “1998 10-K”).++
10.7	Emmis Communications Corporation 1999 Equity Incentive Plan, incorporated by reference from the Company’s proxy statement dated May 26, 1999.++
10.8	Emmis Communications Corporation 2001 Equity Incentive Plan, incorporated by reference from the Company’s proxy statement dated May 25, 2001.++
10.9	Emmis Communications Corporation 2002 Equity Compensation Plan, incorporated by reference from the Company’s proxy statement dated May 30, 2002.++
10.10	Employment Agreement dated as of March 1, 1994, by and between Emmis Broadcasting Corporation and Jeffrey H. Smulyan, incorporated by reference from Exhibit 10.13 to Emmis’ Annual Report on Form 10-K for the fiscal year ended February 28, 1994 and amendment to Employment Agreement, effective March 1, 1999, between the Company and Jeffrey H. Smulyan, incorporated by reference from Exhibit 10.2 to Emmis’ Quarterly Report on Form 10-Q for the quarter ended November 30, 1999.++
10.11	Employment Agreement dated as of March 1, 2002, by and between Emmis Operating Company and Richard Cummings, incorporated by reference from Exhibit 10.21 to the 2003 10-K. ++
10.12	Employment Agreement dated as of September 9, 2002, by and between Emmis Operating Company and Michael Levitan, incorporated by reference from Exhibit 10.22 to the 2003 10-K. ++
10.13	Employment Agreement dated as of March 1, 2003, by and between Emmis Operating Company and Gary A. Thoe, incorporated by reference from Exhibit 10.23 to the 2003 10-K. ++
10.14	Employment Agreement dated as of March 1, 2002, by and between Emmis Operating Company and Walter Z. Berger, incorporated by reference from Exhibit 10.24 to the 2003 10-K. ++
10.15	Employment Agreement, dated as of March 1, 2003, by and between Emmis Operating Company and Randall D. Bongarten, incorporated by reference from Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended May 31, 2003. ++
10.16	Employment agreement effective as of March 1, 2003, by and between Emmis Operating Company and Gary L. Kaseff, incorporated by reference from Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended August 31, 2003. ++
10.17	Change in Control Severance Agreement, dated as of August 11, 2003, by and between Emmis Communications Corporation and Walter Z. Berger, incorporated by reference from Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended August 31, 2003. ++
10.18	Change in Control Severance Agreement, dated as of August 11, 2003, by and between Emmis Communications Corporation and Gary L. Kaseff, incorporated by reference from Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended August 31, 2003. ++
10.19	Change in Control Severance Agreement, dated as of August 11, 2003, by and between Emmis Communications Corporation and Randall D. Bongarten, incorporated by reference from Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended August 31, 2003. ++

119

10.20	Change in Control Severance Agreement, dated as of August 11, 2003, by and between Emmis Communications Corporation and Richard F. Cummings, incorporated by reference from Exhibit 10.5 to the Company’s Form 10-Q for the quarter ended August 31, 2003. ++
10.21	Change in Control Severance Agreement, dated as of August 11, 2003, by and between Emmis Communications Corporation and Michael Levitan, incorporated by reference from Exhibit 10.6 to the Company’s Form 10-Q for the quarter ended August 31, 2003. ++
10.22	Change in Control Severance Agreement, dated as of August 11, 2003, by and between Emmis Communications Corporation and Paul Fiddick, incorporated by reference from Exhibit 10.7 to the Company’s Form 10-Q for the quarter ended August 31, 2003. ++
10.23	Change in Control Severance Agreement, dated as of August 11, 2003, by and between Emmis Communications Corporation and Gary Thoe, incorporated by reference from Exhibit 10.8 to the Company’s Form 10-Q for the quarter ended August 31, 2003. ++
10.24	Agreement for Purchase of Limited Partner and Member Interests, dated as of March 3, 2003, by and between Emmis Operating Company and Sinclair Telecable, Inc., incorporated by reference from Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended May 31, 2003.
10.25	Fourth Amended and Restated Revolving Credit and Term Loan Agreement, and First Amendment to Fourth Amended and Restated Revolving Credit and Term Loan Agreement, incorporated by reference from Exhibits 10.1 and 10.2, respectively, to Emmis’ Form 8-K filed on April 12, 2001.
10.26	Second Amendment to Fourth Amended and Restated Revolving Credit and Term Loan Agreement, incorporated by reference from Exhibit 10.10 to Emmis’ Annual Report on Form 10-K for the fiscal year ended February 28, 2001.
10.27	Third Amendment to Fourth Amended and Restated Revolving Credit and Term Loan Agreement, incorporated by reference from Exhibit 10.1 to Emmis’ Quarterly Report on Form 10-Q for the quarter ended November 30, 2001.
10.28	Fourth Amendment to Fourth Amended and Restated Revolving Credit and Term Loan Agreement, incorporated by reference from Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended May 31, 2002.
10.29	Fifth Amendment to Fourth Amended and Restated Revolving Credit and Term Loan Agreement, incorporated by reference from Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended May 31, 2003.
10.30	Registration rights agreement dated May 10, 2004 by and between Emmis Operating Company and Goldman, Sachs & Co..*
10.31	Aircraft Time Sharing Agreement dated January 22, 2003, by and between Emmis Operating Company and Jeffrey H. Smulyan. *
10.32	Tax Sharing Agreement dated May 10, 2004, by and between Emmis Communications Corporation and Emmis Operating Company. *
16.10	Arthur Andersen LLP letter to the SEC dated June 20, 2002, incorporated by reference to the Company’s Current Report on Form 8-K/A filed June 20, 2002.
21	Subsidiaries of Emmis.*
23	Consent of Accountants.*
24	Powers of Attorney.*
31.1	Certification of Principal Executive Officer of Emmis Communications Corporation pursuant to Rule 13a-14(a) under the Exchange Act.*

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31.2	Certification of Principal Financial Officer of Emmis Communications Corporation pursuant to Rule 13a-14(a) under the Exchange Act.*
31.3	Certification of Principal Executive Officer of Emmis Operating Company pursuant to Rule 13a-14(a) under the Exchange Act.*
31.4	Certification of Principal Financial Officer of Emmis Operating Company pursuant to Rule 13a-14(a) under the Exchange Act.*
32.1	Certification of Principal Executive Officer of Emmis Communications Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification of Principal Financial Officer of Emmis Communications Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.3	Certification of Principal Executive Officer of Emmis Operating Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.3	Certification of Principal Financial Officer of Emmis Operating Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

*	Filed with this report.
++	Management contract or compensatory plan or arrangement.

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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.

	EMMIS COMMUNICATIONS CORPORATION
Date: May 14, 2004	By:	/s/	Jeffrey H. Smulyan
			Jeffrey H. Smulyan
			Chairman of the Board

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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.

	EMMIS OPERATING COMPANY
Date: May 14, 2004	By:	/s/	Jeffrey H. Smulyan
			Jeffrey H. Smulyan
			Chairman of the Board

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     Pursuant to the requirements of the Securities Exchange Act of 1934, these reports have been signed below by the following persons on behalf of the registrants and on the dates indicated.

		SIGNATURE	TITLE
Date:	May 14, 2004	/s/ Jeffrey H. Smulyan Jeffrey H. Smulyan	President, Chairman of the Board and Director (Principal Executive Officer)
Date:	May 14, 2004	/s/ Walter Z. Berger Walter Z. Berger	Executive Vice President, Treasurer, Chief Financial Officer and Director (Principal Accounting Officer)
Date:	May 14, 2004	Susan B. Bayh* Susan B. Bayh	Director
Date:	May 14, 2004	Gary L. Kaseff* Gary L. Kaseff	Executive Vice President, General Counsel and Director
Date:	May 14, 2004	Richard A. Leventhal* Richard A. Leventhal	Director
Date:	May 14, 2004	Peter A. Lund* Peter A. Lund	Director
Date:	May 14, 2004	Greg A. Nathanson* Greg A. Nathanson	Director
Date:	May 14, 2004	Frank V. Sica* Frank V. Sica	Director
Date:	May 14, 2004	Lawrence B. Sorrel* Lawrence B. Sorrel	Director

*By:	/s/ J. Scott Enright
	J. Scott Enright
	Attorney-in-Fact

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EX-4.4

EXHIBIT 4.4

Execution Copy

SECOND SUPPLEMENTAL INDENTURE

     SECOND SUPPLEMENTAL INDENTURE (the “Supplemental Indenture”), dated as of April 26, 2004, among Emmis Operating Company, an Indiana corporation (the “Company”), and The Bank of New York, a New York banking corporation, as trustee (the “Trustee”).

     WHEREAS, the Company, the guarantors named therein and the Trustee are parties to that certain Indenture, dated as of February 12, 1999 (as supplemented on June 22, 2001, the “Indenture”), pursuant to which the Company’s 8-1/8% Senior Subordinated Notes due 2009 (the “Notes”) were issued. Capitalized terms used but not defined herein shall have the same meanings ascribed to such terms in the Indenture;

     WHEREAS, Section 9.02 of the Indenture provides that the Company and the Trustee may make certain amendments to the Indenture with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding;

     WHEREAS, the Company distributed an Offer to Purchase and Consent Solicitation Statement dated as of April 14, 2004 (the “Offer to Purchase”) in order to, among other things, make an offer to purchase (the “Offer”) all outstanding Notes upon terms and conditions described in the Offer to Purchase and to solicit consents (the “Consents”) from the Holders to amendments to the Indenture (the “Amendments”);

     WHEREAS, Holders of at least a majority in aggregate principal amount of the Notes outstanding have given and, as of the date hereof, have not withdrawn their consent to the Amendments; and

     WHEREAS, the execution of this Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Indenture, the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel with respect to such authorization, and all things necessary to make this Supplemental Indenture a valid agreement of the Company and the Trustee in accordance with its terms have been done.

     NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company and the Trustee mutually covenant and agree as follows:

     1. Effect. This Supplemental Indenture shall become effective upon its execution and delivery by the parties hereto. Notwithstanding the foregoing, the amendments set forth in Section 2 below will only become operative when validly tendered Notes are accepted for purchase pursuant to the Offer. If, after the date hereof, either the Offer is terminated or withdrawn or all payments in respect of the Notes accepted for payment pursuant to the Offer are not made on the applicable Settlement Date (as defined in the Offer to Purchase), the amendments set forth in Section 2 shall have no effect and the Indenture shall be deemed to be amended so that it reads the same as it did immediately prior to the date hereof.

     2. Amendments.

     The Indenture is hereby amended as follows:

          (a) Section 1.01 is hereby amended as follows:

               (i) The definitions of “Acquired Debt,” “Attributable Debt,” “Cash Equivalents,” “Change of Control,” “Consolidated EBITDA,” “Consolidated Net Income,” “Consolidated Net Worth,” “Continuing Directors”, “Disqualified Stock,” “Domestic Restricted Subsidiary,” “Existing Indebtedness,” “Fixed Changes,” “Investments,” “Leverage Ratio,” “Marketable Securities,” “Net Income,” “Offering,” “Permitted Business,” “Permitted Investments,” “Permitted Joint Ventures,” “Permitted Liens,” “Permitted Refinancing Indebtedness,” “Principal,” “Productive Assets,” “Reference Period,” “Related Party,” “Restricted Investment,” “S&P,” “Stated Maturity,” “Weighed Average Life to Maturity,” and “Wholly Owned Restricted Subsidiary” are hereby deleted in their entirety.

               (ii) the definition of “Additional Notes” is hereby amended by deleting the words “Sections 2.02 and 4.09” and by replacing such text with the words “Section 2.02”.

               (iii) the definition of “Asset Sale” is hereby amended to read as follows:

“(1)	the sale, lease, conveyance or other disposition of any assets or rights, other than sales of inventory in the ordinary course of business consistent with past practices; provided that the sale, conveyance or other disposition of all or substantially all of the assets of Emmis and its Restricted Subsidiaries taken as a whole will be governed by Section 5.01 of this Indenture; and
(2)	the issuance of Equity Interests by any of Emmis’ Restricted Subsidiaries or the sale of Equity Interests in any of its Subsidiaries.

Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales:

(1)	any single transaction or series of related transactions that: (a) involves assets having a fair market value of less than $1.0 million; or (b) results in net proceeds to Emmis and its Restricted Subsidiaries of less than $1.0 million;
(2)	a transfer of assets between or among Emmis and any of its Guarantors;
(3)	an issuance of Equity Interests by a Guarantor to Emmis or to a Guarantor; and

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(4) a transfer by Emmis of assets in a transaction that qualifies as a charitable contribution or donation and which does not exceed $2.0 million in the aggregate.”

               (iv) The last paragraph of the definition of “Unrestricted Subsidiary” is hereby amended to read as follows:

“Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if no Default or Event of Default would be in existence following such designation.”

          (b) Section 1.02 is hereby amended by deleting the following terms in their entirety: “Affiliate Transaction,” “Change of Control Offer,” “Change of Control Payment,” “Change of Control Payment Date,” “Excess Proceeds,” “incur,” “Permitted Debt” and “Restricted Payment”.

          (c) Section 4.03 is hereby amended to read as follows:

“The Company shall at any time comply with TIA § 314(a).”

          (d) The text of Sections 4.04, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19 and 4.20 of the Indenture is hereby deleted in its entirety and these Sections shall be of no further force and effect and the words “[INTENTIONALLY DELETED]” shall be inserted, in each case, in place of the deleted text.

          (e) Section 4.21 is hereby amended to read as follows:

“The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. The Board of Directors may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default.”

          (f) Section 5.01 is hereby amended to read as follows:

“The Company shall not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of

3

its properties or assets, in one or more related transactions, to another Person; unless:

(1)	either: (a) the Company is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; and
(2)	the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Notes and this Indenture pursuant to agreements reasonably satisfactory to the Trustee.

This “Merger, Consolidation, or Sale of Assets” covenant will not apply to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of its Wholly Owned Subsidiaries.”

          (g) Section 6.01 is hereby amended by deleting the text of clauses (c), (d), (e) and (f) and by replacing such text with the words “[INTENTIONALLY DELETED]”.

          (h) Section 8.04 is hereby amended by deleting the text of clause (c) and by replacing such text with the words “[INTENTIONALLY DELETED]”.

          (i) Section 11.05 is hereby amended by deleting the text of clauses (3) and (4) by replacing such text with the words “[INTENTIONALLY DELETED].”

     3. Notice of Supplemental Indenture. The Company shall mail notice of this Supplemental Indenture to the Holders as required by Section 9.02 of the Indenture.

     4. Governing Law. This Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York.

     5. Counterparts. This Supplemental Indenture may be executed in one or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same document.

     6. Effect on Indenture. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. Except as expressly set forth herein, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect, including with respect to this Supplemental Indenture.

     7. Conflict with Trust Indenture Act. If any provision of this Supplemental Indenture limits, qualifies or conflicts with any provision of the Trust Indenture Act that may not be so limited, qualified or conflicted with, such provision of such Act shall control. If any

4

provision of this Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provision of such Act shall be deemed to apply to the Indenture as so modified or to be excluded by this Supplemental Indenture, as the case may be.

     8. Separability Clause. In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

     9. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

     10. Benefits of Supplemental Indenture, etc. Nothing in this Supplemental Indenture, the Indenture or the Notes, express or implied, shall give to any person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of Notes, any benefit of any legal or equitable right, remedy or claim under the Indenture, this Supplemental Indenture or the Notes.

     11. Successors and Assigns. All agreements of the Company in this Supplemental Indenture and the Notes shall bind its successors.

     12. Trustee. The Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture. The recitals and statements herein are deemed to be those of the Company and not of the Trustee.

[Remainder of page intentionally left blank]

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     IN WITNESS WHEREOF, the parties have executed this Supplemental Indenture as of the date first written above.

EMMIS OPERATING COMPANY
By:	/s/ J. Scott Enright
	Name:	J. Scott Enright
	Title:	Vice President and Associate General Counsel

THE BANK OF NEW YORK, as Trustee
By:	/s/ Steven D. Torgeson
	Name:	Steven D. Torgeson
	Title:	Vice President

Acknowledged and Agreed by:

Emmis FM Broadcasting Corporation of Indianapolis
Emmis FM Broadcasting Corporation of St. Louis
KPWR, Inc.
Emmis Broadcasting Corporation of New York
Emmis FM Broadcasting Corporation of Chicago
Emmis FM License Corporation of Indianapolis
Emmis FM License Corporation of St. Louis
KPWR License, Inc.
Emmis License Corporation of New York
Emmis FM License Corporation of Chicago
Emmis Meadowlands Corporation
Emmis Publishing Corporation
Emmis AM Radio Corporation of Indianapolis
Emmis FM Radio Corporation of Indianapolis
Emmis AM Radio License Corporation of Indianapolis
Emmis FM Radio License Corporation of Indianapolis
Emmis Radio License Corporation of New York
Emmis 104.1 FM Radio Corporation of St. Louis
Emmis 104.1 FM Radio License Corporation of St. Louis
Emmis 106.5 FM Broadcasting Corporation of St. Louis
Emmis 106.5 FM License Corporation of St. Louis
Emmis 1310 AM Radio Corporation of Indianapolis
Emmis 1310 AM Radio License Corporation of Indianapolis
Emmis 105.7 FM Radio Corporation of Indianapolis
Mediatex Communications Corporation

6

Mediatex Development Corporation
Texas Monthly, Inc.
Emmis License Corporation
Emmis International Broadcasting Corporation
Emmis DAR, Inc.
Emmis Publishing, L.P.
Emmis International Corporation
Emmis 1380 AM Radio Corporation of St. Louis
Emmis Television License Corporation of Honolulu
Emmis Television License Corporation of Mobile
Emmis Television License Corporation of Cape Coral
Emmis Television License Corporation of Green Bay
Emmis FM Holding Corporation of New York
Emmis 101.9 FM Radio Corporation of New York
Emmis Radio Corporation of New York
Emmis 1480 AM Radio License Corporation of Terre Haute
Emmis Television License Corporation of Terre Haute
Emmis 99.9 FM Radio License Corporation of Terre Haute
Emmis 105.7 FM Radio License Corporation of Indianapolis
Emmis Television License Corporation of New Orleans
Emmis 105.5 FM Radio License Corporation of Terre Haute
Emmis Indiana Broadcasting, L.P.
Emmis Television Broadcasting, L.P.

By:	/s/ J. Scott Enright
Name:	J. Scott Enright
Title:	Vice President and
	Associate General Counsel

7

EX-4.5

EXHIBIT 4.5

Execution Copy

SECOND SUPPLEMENTAL INDENTURE

     SECOND SUPPLEMENTAL INDENTURE (the “Supplemental Indenture”), dated as of April 26, 2004, among Emmis Communications Corporation, an Indiana corporation (the “Company”), and The Bank of Nova Scotia Company of New York, a New York trust company, as trustee (the “Trustee”).

     WHEREAS, the Company, and the Trustee are parties to that certain Indenture, dated as of March 27, 2001 (as supplemented on June 22, 2001, the “Indenture”), pursuant to which the Company’s 12-1/2% Senior Discount Notes due 2011 (the “Notes”) were issued. Capitalized terms used but not defined herein shall have the same meanings ascribed to such terms in the Indenture;

     WHEREAS, Section 9.02 of the Indenture provides that the Company and the Trustee may make certain amendments to the Indenture with the consent of the Holders of at least a majority in principal amount at maturity of the Notes then outstanding;

     WHEREAS, the Company distributed an Offer to Purchase and Consent Solicitation Statement dated as of April 14, 2004 (the “Offer to Purchase”) in order to, among other things, make an offer to purchase (the “Offer”) all outstanding Notes upon terms and conditions described in the Offer to Purchase and to solicit consents (the “Consents”) from the Holders to amendments to the Indenture (the “Amendments”);

     WHEREAS, Holders of at least a majority in aggregate principal amount at maturity of the Notes outstanding have given and, as of the date hereof, have not withdrawn their consent to the Amendments; and

     WHEREAS, the execution of this Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Indenture, the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel with respect to such authorization, and all things necessary to make this Supplemental Indenture a valid agreement of the Company and the Trustee in accordance with its terms have been done.

     NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company and the Trustee mutually covenant and agree as follows:

     1. Effect. This Supplemental Indenture shall become effective upon its execution and delivery by the parties hereto. Notwithstanding the foregoing, the amendments set forth in Section 2 below will only become operative when validly tendered Notes are accepted for purchase pursuant to the Offer. If, after the date hereof, either the Offer is terminated or withdrawn or all payments in respect of the Notes accepted for payment pursuant to the Offer are not made on the applicable Settlement Date (as defined in the Offer to Purchase), the amendments set forth in Section 2 shall

have no effect and the Indenture shall be deemed to be amended so that it reads the same as it did immediately prior to the date hereof.

     2. Amendments.

     The Indenture is hereby amended as follows:

          (a) Section 1.01 is hereby amended as follows:

               (i) The definitions of “Acquired Debt,” “Asset Sale,” “Attributable Debt,” “Beneficial Owner,” “Cash Equivalents,” “Change of Control,” “Consolidated EBITDA,” “Consolidated Indebtedness,” “Consolidated Net Income,” “Consolidated Net Worth,” “Continuing Directors”, “Debenture Exchange Date,” “Dividend Payment Date,” “Domestic Restricted Subsidiary,” “Escrow Account,” “Escrow Agreement,” “Exchange Indenture,” “Existing Indebtedness,” “Fixed Changes,” “Investments,” “Leverage Ratio,” “Marketable Securities,” “Moody’s,” “Net Income,” “Net Proceeds,” “New Exchange Debentures,” “Obligations,” “Offering,” “Permitted Business,” “Permitted Investments,” “Permitted Joint Ventures,” “Permitted Liens,” “Permitted Refinancing Indebtedness,” “Principals, “ “Productive Assets,” “Related Party,” “Restricted Investment,” “S&P,” “Senior Subordinated Notes Indenture,” “Stated Maturity,” “Weighed Average Life to Maturity,” and “Wholly Owned Restricted Subsidiary” are hereby deleted in their entirety.

               (ii) the definition of “Disqualified Stock” is hereby amended by deleting in its entirety the following text: “unless such repurchase or redemption complies with Section 4.07 of this Indenture.”

               (iii) The last paragraph of the definition of “Unrestricted Subsidiary” is hereby amended to read as follows:

“Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such

2

Unrestricted Subsidiary and such designation shall only be permitted if no Default would occur or be in existence following such designation.”

          (b) Section 1.02 is hereby amended by deleting the following terms in their entirety: “Affiliate Transaction,” “Change of Control Offer,” “Change of Control Payment,” “Change of Control Payment Date,” “Excess Proceeds,” “incur,” “Permitted Debt” and “Restricted Payment”.

          (c) Section 4.03 is hereby amended to read as follows:

“The Company shall at any time comply with TIA § 314(a).”

          (d) The text of Sections 4.04, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14 and 4.15 of the Indenture is hereby deleted in its entirety and these Sections shall be of no further force and effect and the words "[INTENTIONALLY DELETED]” shall be inserted, in each case, in place of the deleted text.

          (e) Section 5.01 is hereby amended to read as follows:

“The Company may not consolidate or merge with or into (whether or not Company is the surviving corporation), or sell, assign, transfer, lease, convey, or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless:

(1)	the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; and
(2)	the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Notes and this Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee.

Notwithstanding the foregoing, the Company may consummate the Escrow Corp. Merger or the Reorganization, or merge with an Affiliate incorporated for the purpose of reincorporating the Company in another jurisdiction and/or for the purpose of forming a holding company.

This Section 5.01 will not apply to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of its Wholly Owned Restricted Subsidiaries.”

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          (f) Section 6.01 is hereby amended by deleting the text of clauses (c), (d), (e) and (f) and by replacing such text with the words “[INTENTIONALLY DELETED]”.

          (g) Section 8.04 is hereby amended by deleting the text of clause (c) and by replacing such text with the words “[INTENTIONALLY DELETED]”.

     3. Notice of Supplemental Indenture. The Company shall mail notice of this Supplemental Indenture to the Holders as required by Section 9.02 of the Indenture.

     4. Governing Law. This Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York.

     5. Counterparts. This Supplemental Indenture may be executed in one or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same document.

     6. Effect on Indenture. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. Except as expressly set forth herein, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect, including with respect to this Supplemental Indenture.

     7. Conflict with Trust Indenture Act. If any provision of this Supplemental Indenture limits, qualifies or conflicts with any provision of the Trust Indenture Act that may not be so limited, qualified or conflicted with, such provision of such Act shall control. If any provision of this Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provision of such Act shall be deemed to apply to the Indenture as so modified or to be excluded by this Supplemental Indenture, as the case may be.

     8. Separability Clause. In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

     9. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

     10. Benefits of Supplemental Indenture, etc. Nothing in this Supplemental Indenture, the Indenture or the Notes, express or implied, shall give to any person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of Notes, any benefit of any legal or equitable right, remedy or claim under the Indenture, this Supplemental Indenture or the Notes.

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     11. Successors and Assigns. All agreements of the Company in this Supplemental Indenture and the Notes shall bind its successors.

     12. Trustee. The Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture. The recitals and statements herein are deemed to be those of the Company and not of the Trustee.

[Remainder of page intentionally left blank]

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     IN WITNESS WHEREOF, the parties have executed this Supplemental Indenture as of the date first written above.

EMMIS COMMUNICATIONS CORPORATION
By:	/s/ J. Scott Enright
	Name:	J. Scott Enright
	Title:	Vice President and Associate General Counsel

THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK, as Trustee
By:	/s/ John Neylan
	Name:	John Neylan
	Title:	Trust Officer

6

EX-4.6

EXHIBIT 4.6

EXECUTION COPY

Emmis Operating Company

and each of the Guarantors party hereto

6 7/8% Senior Subordinated Notes Due 2012

INDENTURE

Dated as of May 10, 2004

The Bank of Nova Scotia Trust Company of New York

Trustee

CROSS-REFERENCE TABLE*

Trust Indenture
Act Section		Indenture Section
310	(a) (1)	7.10
	(a) (2)	7.10
	(a) (3)	N.A.
	(a) (4)	N.A.
	(a) (5)	7.10
	(b)	7.10
	(c)	N.A.
311	(a)	7.11
	(b)	7.11
	(c)	N.A.
312	(a)	2.05
	(b)	13.03
	(c)	13.03
313	(a)	7.06
	(b) (1)	10.03
	(b) (2)	7.06; 7.07
	(c)	7.06; 10.03;13.02
	(d)	7.06
314	(a)	4.03;13.02; 13.05
	(b)	10.02
	(c)(1)	13.04
	(c)(2)	13.04
	(c)(3)	N.A.
	(d)	10.03; 10.04; 10.05
	(e)	13.05
	(f)	N.A.
315	(a)	7.01
	(b)	7.05; 13.02
	(c)	7.01
	(d)	7.01
	(e)	6.11
316	(a) (last sentence)	2.09
	(a)(1)(A)	6.05
	(a)(1)(B)	6.04
	(a)(2)	N.A.
	(b)	6.07
	(c)	2.12
317	(a)(1)	6.08
	(a)(2)	6.09
	(b)	2.04
318	(a)	13.01
	(b)	N.A.
	(c)	13.01

N.A. means not applicable.

* This Cross Reference Table is not part of this Indenture.

TABLE OF CONTENTS

		Page
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01	Definitions		1
Section 1.02	Other Definitions		22
Section 1.03	Incorporation by Reference of Trust Indenture Act		23
Section 1.04	Rules of Construction		23
ARTICLE 2.
THE NOTES
Section 2.01	Form and Dating		24
Section 2.02	Execution and Authentication		24
Section 2.03	Registrar and Paying Agent		25
Section 2.04	Paying Agent to Hold Money in Trust		25
Section 2.05	Holder Lists		25
Section 2.06	Transfer and Exchange		25
Section 2.07	Replacement Notes		37
Section 2.08	Outstanding Notes		37
Section 2.09	Treasury Notes		37
Section 2.10	Temporary Notes		37
Section 2.11	Cancellation		38
Section 2.12	Defaulted Interest		38
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01	Notices to Trustee		38
Section 3.02	Selection of Notes to Be Redeemed or Purchased		38
Section 3.03	Notice of Redemption		39
Section 3.04	Effect of Notice of Redemption		40
Section 3.05	Deposit of Redemption or Purchase Price		40
Section 3.06	Notes Redeemed or Purchased in Part		40
Section 3.07	Optional Redemption		40
Section 3.08	Mandatory Redemption		41
Section 3.09	Offer to Purchase by Application of Excess Proceeds		41
ARTICLE 4.
COVENANTS
Section 4.01	Payment of Notes		43
Section 4.02	Maintenance of Office or Agency		43
Section 4.03	Reports		44
Section 4.04	Compliance Certificate		44
Section 4.05	Taxes		45
Section 4.06	Stay, Extension and Usury Laws		45
Section 4.07	Restricted Payments		45
Section 4.08	Dividend and Other Payment Restrictions Affecting Subsidiaries		49
Section 4.09	Incurrence of Indebtedness and Issuance of Preferred Stock		50

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		Page
Section 4.10	Asset Sales		52
Section 4.11	Transactions with Affiliates		54
Section 4.12	Liens		55
Section 4.13	INTENTIONALLY OMITTED		55
Section 4.14	Offer to Repurchase Upon Change of Control		55
Section 4.15	No Senior Subordinated Debt		57
Section 4.16	Sale and Leaseback Transactions		57
Section 4.17	Limitation on Issuances and Sales of Equity Interests in Wholly-Owned Restricted Subsidiaries		58
Section 4.18	INTENTIONALLY OMITTED		58
Section 4.19	Additional Subsidiary Guarantees		58
Section 4.20	Designation of Restricted and Unrestricted Subsidiaries		58
ARTICLE 5.
SUCCESSORS
Section 5.01	Merger, Consolidation, or Sale of Assets		59
Section 5.02	Successor Corporation Substituted		60
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01	Events of Default		60
Section 6.02	Acceleration		62
Section 6.03	Other Remedies		62
Section 6.04	Waiver of Past Defaults		62
Section 6.05	Control by Majority		62
Section 6.06	Limitation on Suits		62
Section 6.07	Rights of Holders of Notes to Receive Payment		63
Section 6.08	Collection Suit by Trustee		63
Section 6.09	Trustee May File Proofs of Claim		63
Section 6.10	Priorities		64
Section 6.11	Undertaking for Costs		64
ARTICLE 7.
TRUSTEE
Section 7.01	Duties of Trustee		64
Section 7.02	Rights of Trustee		65
Section 7.03	Individual Rights of Trustee		66
Section 7.04	Trustee’s Disclaimer		66
Section 7.05	Notice of Defaults		66
Section 7.06	Reports by Trustee to Holders of the Notes		66
Section 7.07	Compensation and Indemnity		66
Section 7.08	Replacement of Trustee		67
Section 7.09	Successor Trustee by Merger, etc		68
Section 7.10	Eligibility; Disqualification		68
Section 7.11	Preferential Collection of Claims Against Company		68
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01	Option to Effect Legal Defeasance or Covenant Defeasance		68
Section 8.02	Legal Defeasance and Discharge		69
Section 8.03	Covenant Defeasance		69

ii

		Page
Section 8.04	Conditions to Legal or Covenant Defeasance		70
Section 8.05	Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions		71
Section 8.06	Repayment to Company		71
Section 8.07	Reinstatement		71
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01	Without Consent of Holders of Notes		72
Section 9.02	With Consent of Holders of Notes		73
Section 9.03	Compliance with Trust Indenture Act		74
Section 9.04	Revocation and Effect of Consents		74
Section 9.05	Notation on or Exchange of Notes		74
Section 9.06	Trustee to Sign Amendments, etc		74
ARTICLE 10.
SUBORDINATION
Section 10.01	Agreement to Subordinate		75
Section 10.02	Liquidation; Dissolution; Bankruptcy		75
Section 10.03	Default on Designated Senior Debt		75
Section 10.04	Acceleration of Notes		76
Section 10.05	When Distribution Must Be Paid Over		76
Section 10.06	Notice by Company		77
Section 10.07	Subrogation		77
Section 10.08	Relative Rights		77
Section 10.09	Subordination May Not Be Impaired by Company		77
Section 10.10	Distribution or Notice to Representative		77
Section 10.11	Rights of Trustee and Paying Agent		78
Section 10.12	Authorization to Effect Subordination		78
Section 10.13	Amendments		78
ARTICLE 11.
NOTE GUARANTEES
Section 11.01	Guarantee		78
Section 11.02	Subordination of Note Guarantee		79
Section 11.03	Limitation on Guarantor Liability		80
Section 11.04	Execution and Delivery of Note Guarantee		80
Section 11.05	Guarantors May Consolidate, etc., on Certain Terms		80
Section 11.06	Releases		81
ARTICLE 12.
SATISFACTION AND DISCHARGE
Section 12.01	Satisfaction and Discharge		82
Section 12.02	Application of Trust Money		83
ARTICLE 13.
MISCELLANEOUS
Section 13.01	Trust Indenture Act Controls		83
Section 13.02	Notices		83
Section 13.03	Communication by Holders of Notes with Other Holders of Notes		84
Section 13.04	Certificate and Opinion as to Conditions Precedent		85

iii

		Page
Section 13.05	Statements Required in Certificate or Opinion		85
Section 13.06	Rules by Trustee and Agents		85
Section 13.07	No Personal Liability of Directors, Officers, Employees and Stockholders		85
Section 13.08	Governing Law		86
Section 13.09	No Adverse Interpretation of Other Agreements		86
Section 13.10	Successors		86
Section 13.11	Severability		86
Section 13.12	Counterpart Originals		86
Section 13.13	Table of Contents, Headings, etc		86

EXHIBITS

Exhibit A	FORM OF NOTE
Exhibit B	FORM OF CERTIFICATE OF TRANSFER
Exhibit C	FORM OF CERTIFICATE OF EXCHANGE
Exhibit D	FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E	FORM OF NOTATION OF GUARANTEE
Exhibit F	FORM OF SUPPLEMENTAL INDENTURE

iv

     INDENTURE dated as of May 10, 2004 among Emmis Operating Company, an Indiana corporation (the “Company”), the Guarantors (as defined herein) and The Bank of Nova Scotia Trust Company of New York, as trustee.

     The Company, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined herein) of the 6 7/8% Senior Subordinated Notes due 2012 (the “Notes”):

ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE

Section 1.01 Definitions.

     “12½% Notes” means ECC’s 12½% Senior Discount Notes due 2011 issued under an indenture, dated March 27, 2001, between ECC and The Bank of Nova Scotia Trust Company of New York, as trustee, as supplemented, amended or otherwise modified.

     “144A Global Note” means a Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.

     “Acquired Debt” means, with respect to any specified Person:

     (1) Indebtedness or Disqualified Stock of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness or Disqualified Stock is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and

     (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

     “Additional Notes” means additional Notes (other than the Initial Notes) issued under this Indenture in accordance with Sections 2.02 and 4.09 hereof, as part of the same series as the Initial Notes.

     “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” shall have correlative meanings.

     “Agent” means any Registrar, co-registrar, Paying Agent or additional paying agent.

     “Applicable Premium” means, with respect to any Note on any redemption date, the greater of:

     (1) 1.0% of the principal amount of the Note; or

     (2) the excess of:

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     (a) the present value at such redemption date of (i) the redemption price of the Note at May 15, 2008, (such redemption price being set forth in the table appearing in Section 3.07 hereof) plus (ii) all required interest payments due on the Note through May 15, 2008, (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over

     (b) the principal amount of the Note, if greater.

     “Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange.

     “Asset Sale” means:

     (1) the sale, lease, conveyance or other disposition of any assets or rights, other than sales of inventory, licenses of intellectual property or leases of assets, in each case in the ordinary course of business; provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of Section 4.14 hereof and/or the provisions of Section 5.01 hereof and not by the provisions of Section 4.10 hereof; and

     (2) the issuance of Equity Interests by any of the Company’s Restricted Subsidiaries or the sale of Equity Interests in any of its Subsidiaries,

Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales:

     (1) any single transaction or series of related transactions that: (a) involves assets having a fair market value of less than $10.0 million; or (b) results in net proceeds to the Company and its Restricted Subsidiaries of less than $10.0 million;

     (2) a transfer of assets between or among the Company and any of its Restricted Subsidiaries;

     (3) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary;

     (4) a transfer by the Company of assets in a transaction that qualifies as a charitable contribution or donation and which does not exceed $10.0 million in the aggregate;

     (5) a Restricted Payment or Permitted Investment that is permitted under Section 4.07 hereof;

     (6) a granting of Liens not prohibited by this Indenture;

     (7) a sale or other disposition of cash or Cash Equivalents; and

     (8) a sale or lease of obsolete equipment, inventory or other assets in the ordinary course of business.

2

     “Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.

     “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as such term is used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to have beneficial ownership of all securities that such “person” has the right to acquire, whether such right is currently exercisable or is exercisable only after the passage of time.

     “Board of Directors” means:

     (1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

     (2) with respect to a partnership, the Board of Directors of the general partner of the partnership;

     (3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and

     (4) with respect to any other Person, the board or committee of such Person serving a similar function.

     “Broker-Dealer” has the meaning set forth in the Registration Rights Agreement.

     “Business Day” means any day other than a Legal Holiday.

     “Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP.

     “Capital Stock” means:

     (1) in the case of a corporation, corporate stock;

     (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

     (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

     (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

     “Cash Equivalents” means:

     (1) United States dollars;

     (2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the

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date of acquisition;

     (3) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $250.0 million and a Thompson Bank Watch Rating of “B” or better;

     (4) repurchase obligations with a term of not more than ten days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

     (5) commercial paper or marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case, having one of the two highest ratings obtainable from Moody’s or S&P and in each case maturing within one year after the date of acquisition; and

     (6) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition.

     “Cash Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:

     (1) the cash component of consolidated interest expense determined in accordance with GAAP of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, excluding, without limitation, original issue discount, non-cash interest expense, amortization and write-off of debt issuance costs, the interest component of any deferred payment obligations and net payments, if any, pursuant to Hedging Obligations; plus

     (2) the cash component of consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus

     (3) any cash interest payment on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon and limited to the amount of such Guarantee or the fair market value of the property secured by such Lien, as the case may be.

     “Change of Control” means the occurrence of any of the following:

     (1) the sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any “person” (as such term is used in Section 13(d)(3) of the Exchange Act) other than the Principal or its Related Parties;

     (2) the adoption of a plan relating to the liquidation or dissolution of the Company;

     (3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as defined above), other than the Principal and its Related Parties and disregarding any holding company whose principal asset is capital stock of the Company, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Company, measured by voting power rather than number of shares,

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provided no Change of Control shall have occurred under this clause (3) if the Principal or its Related Parties maintains the right to elect the majority of the Board of Directors; or

     (4) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors;

provided that a Person shall not be deemed to have beneficial ownership of securities subject to a stock purchase, merger or similar agreement until the consummation of the transactions contemplated by such agreement. For avoidance of doubt, it is understood that under no circumstances shall a sale, assignment, transfer, conveyance or other disposition, in one or a series of related transactions, of assets of the Company and its Restricted Subsidiaries that represent less than 50% of the Consolidated EBITDA of the Company for the Reference Period immediately preceding such transaction or transactions constitute a Change of Control.

     “Clearstream” means Clearstream Banking, S.A.

     “Company” has the meaning assigned to it in the preamble of this Indenture and shall include any and all successors thereto.

     “Consolidated EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus:

     (1) an amount equal to any extraordinary loss on an after tax basis plus any loss realized in connection with an Asset Sale or any refinancing of Indebtedness on an after tax basis, to the extent such losses were deducted in computing such Consolidated Net Income; plus

     (2) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus

     (3) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization or write-off of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, deferred financing costs, the interest component of all payments associated with Capital Lease Obligations, commissions, consent fees, premiums, prepayment penalties, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net payments, if any, pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income; plus

     (4) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; plus

     (5) all one-time cash compensation payments in connection with employment agreements as in effect on the date of this Indenture; plus

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     (6) all other non-cash charges of such Person and its Restricted Subsidiaries (excluding any such non-cash to the extent that it represents an accrual of or reserve for cash expenditures in any future period); plus

     (7) minority interest expense of Restricted Subsidiaries (to the extent not otherwise included in Consolidated Net Income), non-recurring restructuring costs, expenses and charges and non-recurring acquisition costs and fees, including expenses and payments directly attributable to employee reduction or employee relocation (including cash severance payments), integration of acquired businesses or Persons, disposition of one or more Subsidiaries or businesses, exiting one or more lines of business and expenses and payments directly attributable to the termination of real estate leases or real estate sales and other non-ordinary course, non-operating costs and expenses in connection therewith; minus

     (8) non-cash items increasing such Consolidated Net Income for such period, other than items that were accrued or earned in the ordinary course of business,

in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash charges of, a Restricted Subsidiary of the Company shall be added to Consolidated Net Income to compute Consolidated EBITDA of the Company only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders (other than encumbrances or restrictions on such declaration or payment that are permitted by Section 4.08(b) hereof).

     “Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:

     (1) the Net Income or loss of any Person (other than the Company) that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be excluded; provided, however, that such Net Income shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary thereof;

     (2) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders (other than encumbrances or restrictions on such declaration or payment that are permitted by Section 4.08(b) hereof);

     (3) the Net Income or loss of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the specified Person or one of its Subsidiaries; and

     (4) the cumulative effect of a change in accounting principles shall be excluded.

     “Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Company who:

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     (1) was a member of the Board of Directors of ECC or of the Company on the date of this Indenture; or

     (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of either Board at the time of such nomination or election; or

     (3) is a designee of the Principal or a Related Party thereof or was nominated by the Principal or a Related Party thereof.

     “Corporate Trust Office of the Trustee” will be at the address of the Trustee specified in Section 13.02 hereof or such other address as to which the Trustee may give notice to the Company.

     “Credit Agreement” means that certain credit agreement, dated as of the date hereof, by and among the Company, ECC, each of the financial institutions from time to time a party thereto, Bank of America, N.A., as administrative agent, Credit Suisse First Boston, acting through its Cayman Islands Branch, Wachovia Bank, N.A. and Deutsche Bank Securities Inc., as co- documentation agents, and Goldman Sachs Credit Partners L.P., as syndication agent, as further amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time.

     “Credit Facilities” means one or more debt facilities (including, without limitation, the Credit Agreement, if applicable) providing for revolving credit loans, term loans, letters of credit, receivables financing, commercial paper or any other form of debt securities and, in each case, as amended, restated, supplemented, modified, renewed, refunded, replaced, extended, refinanced or otherwise restructured in whole or in part from time to time (including increasing the amount of available borrowings thereunder or adding subsidiaries as additional borrowers or guarantors thereunder) with respect to all or any portion of the Indebtedness under such agreement or agreements by any successor or replacement agreement or agreements and whether by the same or any other agent, lender or group of lenders.

     “Custodian” means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto.

     “Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

     “Definitive Note” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

     “Depositary” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture.

     “Designated Senior Debt” means (i) any and all Indebtedness and other obligations under, or in respect of, the Credit Agreement and (ii) any other Senior Debt permitted under this Indenture the principal amount of which is $25.0 million or more and that has been designated by the Company as “Designated Senior Debt.”

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     “Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the Holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07 hereof.

     “Domestic Restricted Subsidiary” means any Restricted Subsidiary organized under or incorporated in any State of the United States or the District of Columbia and has its principal place of business in the United States.

     “ECC Preferred Stock” means ECC’s 61/4% Series A Cumulative Convertible Preferred Stock.

     “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock) whether or not currently exercisable.

     “Equity Offering” means an offer and sale in an amount equal to or greater than $25.0 million of Capital Stock (other than Disqualified Stock) of the Company or any direct or indirect parent of the Company to the extent that the proceeds are contributed to the Company in the form of Capital Stock or as consideration for the issuance and sale of Capital Stock, in each case, other than Disqualified Stock of the Company.

     “Euroclear” means Euroclear Bank, S.A./N.V., as operator of the Euroclear system.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Exchange Notes” means the Notes issued in the Exchange Offer pursuant to Section 2.06(f) hereof.

     “Exchange Offer” has the meaning set forth in the Registration Rights Agreement.

     “Exchange Offer Registration Statement” has the meaning set forth in the Registration Rights Agreement.

     “Existing Indebtedness” means Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the date of this Indenture, until such amounts are repaid.

     “GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect as of the date of this Indenture.

     “Global Note Legend” means the legend set forth in Section 2.06(g)(2) hereof, which is required to be placed on all Global Notes issued under this Indenture.

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     “Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes deposited with or on behalf of and registered in the name of the Depository or its nominee, substantially in the form of Exhibit A hereto and that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, issued in accordance with Section 2.01, 2.06(b)(3), 2.06(b)(4), 2.06(d)(2) or 2.06(f) hereof.

     “Government Securities” means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit.

     “Guarantee” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness.

     “Guarantors” means each of:

     (1) the Parent Guarantor;

     (2) the Subsidiary Guarantors; and

     (3) any other Subsidiary of the Company that executes a Subsidiary Guarantee in accordance with the provisions of this Indenture;

and their respective successors and assigns, in each case, until the Note Guarantee of such Person has been released in accordance with the provisions of this Indenture.

     “Hedging Obligations” means, with respect to any specified Person, the net obligations of such Person under:

     (1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements, forward purchase agreements and interest rate collar agreements;

     (2) other agreements or arrangements designed to manage interest rates or interest rate risk; and

     (3) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices, in any case either generally or under specific contingencies.

     “Holder” means a Person in whose name a Note is registered in the books of the Registrar.

     “IAI Global Note” means a Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold to Institutional Accredited Investors.

     “Indebtedness” means, without duplication, with respect to any specified Person, any indebtedness of such Person, whether or not contingent, in respect of:

     (1) borrowed money;

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     (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

     (3) banker’s acceptances;

     (4) representing Capital Lease Obligations;

     (5) the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or

     (6) representing any Hedging Obligations; provided that the aggregate amount of Indebtedness outstanding pursuant to any Hedging Obligation shall be zero until such Person has the obligation to make any payment in respect of such Hedging Obligations and such payment is not made within 10 days after its due date,

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) (limited to the lesser of the fair market value of the property securing such Lien and the amount of the obligation so secured) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person.

     The amount of any Indebtedness outstanding as of any date shall be:

     (1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and

     (2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness.

     Notwithstanding the foregoing, Indebtedness shall not include:

     (1) trade accounts payable and other similar accrued liabilities arising in the ordinary course of business;

     (2) obligations of such Person other than principal;

     (3) any liability for federal, state, local or other taxes owed or owing to any governmental entity;

     (4) obligations of such Person with respect to performance and surety bonds and completion guarantees in the ordinary course of business; or

     (5) in connection with the purchase by such Person or any Restricted Subsidiary of any business, any post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 30 days thereafter.

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     “Indenture” means this Indenture, as amended or supplemented from time to time.

     “Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

     “Initial Notes” means the first $375,000,000 aggregate principal amount of Notes issued under this Indenture on the date hereof.

     “Initial Purchasers” means Goldman, Sachs & Co., Deutsche Bank Securities Inc., Banc of America Securities, Credit Suisse First Boston LLC, Wachovia Capital Markets, LLC, Harris Nesbitt Corp., NatCity Investments, Inc., Rabo Securities USA, Inc. and SunTrust Capital Markets, Inc.

     “Institutional Accredited Investor” means an institution that is an “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who are not also QIBs.

     “Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in Section 4.07(e) hereof.

     “Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period.

     “Letter of Transmittal” means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer.

     “Leverage Ratio” means, with respect to any specified Person on any date of determination (the “Calculation Date”), the ratio, on a pro forma basis, of (1) the sum of the aggregate outstanding amount of Indebtedness and Disqualified Stock of such Person and its Restricted Subsidiaries as of the Calculation Date determined on a consolidated basis in accordance with GAAP to (2) the Consolidated EBITDA of such Person and its Restricted Subsidiaries attributable to continuing operations and businesses for the Reference Period.

     For purposes of calculating the Leverage Ratio:

     (1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations, or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, during the four-quarter reference period or subsequent to such reference period and

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on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the four-quarter reference period;

     (2) transactions giving rise to the need to calculate the Leverage Ratio shall be assumed to have occurred on the first day of the Reference Period;

     (3) restructuring and other non-operating charges contained in Consolidated EBITDA attributable to discontinued operations as of the Calculation Date (as determined in accordance with GAAP), and Consolidated EBITDA attributable to operations or businesses (and ownership interests therein) disposed of, will be excluded;

     (4) any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four-quarter period; and

     (5) any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period.

     “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof.

     “Marketable Securities” means publicly traded debt or equity securities that are listed for trading on a national securities exchange and that were issued by a corporation with debt securities are rated at least “AAA—” from S&P or “Aaa3” from Moody’s.

     “Moody’s” means Moody’s Investors Service, Inc. and its successors.

     “Net Income” means, with respect to any Person, the net income (loss) of such Person and its Restricted Subsidiaries, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however:

     (1) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with: (a) any Asset Sale (including without limitation dispositions pursuant to sale and leaseback transactions); or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and

     (2) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss.

     “Net Proceeds” means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of:

     (1) the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof;

     (2) taxes paid or payable as a result thereof, in each case after taking into account any available tax credits or deductions and any tax sharing arrangements;

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     (3) amounts required to be applied to the repayment of Indebtedness (other than Indebtedness under a Credit Facility), secured by a Lien on the asset or assets that were the subject of such Asset Sale;

     (4) all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Sale;

     (5) the deduction of appropriate amounts provided by the seller as a reserve in accordance with GAAP against any liabilities associated with the assets disposed of in such Asset Sale and retained by the Company or any Restricted Subsidiary after such Asset Sale; and

     (6) without duplication, any reserves that the Company’s Board of Directors determines in good faith should be make in respect of the sale price of such asset or assets for post closing adjustments;

provided that in the case of any reversal of any reserve referred to in clauses (5) and (6) above in excess of $1.0 million, the amount so reserved shall be deemed to be Net Proceeds from an Asset Sale as of the date of such reversal.

     “Non-U.S. Person” means a Person who is not a U.S. Person.

     “Note Guarantee” means the Guarantee by each Guarantor of the Company’s obligations under this Indenture and the Notes, executed pursuant to the provisions of this Indenture.

     “Notes” has the meaning assigned to it in the preamble to this Indenture. The Initial Notes and the Additional Notes shall be treated as a single class for all purposes under this Indenture, and unless the context otherwise requires, all references to the Notes shall include the Initial Notes and any Additional Notes.

     “Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

     “Offering” means the offering of $375.0 million in aggregate principal amount of Notes pursuant to the Company’s Offering Circular dated April 27, 2004.

     “Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person.

     “Officers’ Certificate” means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer, the secretary, the principal accounting officer or the principal general counsel of the Company, that meets the requirements of Section 13.05 hereof.

     “Opinion of Counsel” means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 13.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee.

     “Parent Guarantor” or “ECC” means Emmis Communications Corporation or any successor thereto.

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     “Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear and Clearstream).

     “Permitted Business” means any business in which the Company or its Restricted Subsidiaries are engaged on the date of this Indenture and any other business related, incidental, complementary or ancillary thereto, and any unrelated business to the extent that it is not material in size as compared with the Company and its Restricted Subsidiaries’ business as a whole.

     “Permitted Investments” means:

     (1) any Investment in the Company or in a Restricted Subsidiary of the Company;

     (2) any Investment in Cash Equivalents;

     (3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment:

     (a) such Person becomes a Restricted Subsidiary of the Company or

     (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company;

     (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof;

     (5) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;

     (6) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (6) since the date of this Indenture, not to exceed $30.0 million in the aggregate;

     (7) Investments in Permitted Joint Ventures, provided that, at the time of and immediately after giving pro forma effect to such Investment (and any related transaction or series of transactions), the Leverage Ratio would be less than or equal to the Leverage Ratio immediately prior to such Investment;

     (8) any purchase, redemption, defeasance or other acquisition of Indebtedness of the Company or any Restricted Subsidiary using the proceeds of Permitted Refinancing Indebtedness incurred under paragraph (5) of the definition of Permitted Debt;

     (9) agreements relating to the Indebtedness incurred under paragraph (7) of the definition of Permitted Debt;

     (10) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers in good faith settlement of delinquent obligations of such trade creditors or customers;

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     (11) guarantees of Indebtedness otherwise permitted to be incurred by this Indenture;

     (12) Investments in the form of Productive Assets received in connection with an Asset Sale;

     (13) commission, travel, payroll, entertainment, relocation and similar advances made to officers and employees of the Company or any Restricted Subsidiary made in the ordinary course of business; and

     (14) any Investment in the form of loans or advances to employees of the Company not to exceed $3.0 million in aggregate principal amount at any one time outstanding.

     “Permitted Joint Ventures” means a corporation, partnership or other entity (other than a Subsidiary) engaged in one or more Permitted Businesses in respect of which the Company or a Restricted Subsidiary (a) beneficially owns at least 20% of the Equity Interests of such entity and (b) either is a party to an agreement empowering one or more parties to such agreement (which may or may not be the Company or a Subsidiary), or is a member of a group that, pursuant to the constituent documents of the applicable corporation, partnership or other entity, has the power, to direct the policies, management and affairs of such entity.

     “Permitted Junior Securities” means: (1) Qualified Equity Interests in the Company; or (2) debt securities of the Company or any Guarantor that are subordinated to all Senior Debt (and any debt securities issued in exchange for Senior Debt), to substantially the same extent as, or to a greater extent than, the Notes and the Subsidiary Guarantees are subordinated to Senior Debt pursuant to this Indenture.

     “Permitted Liens” means:

     (1) Liens on the assets of the Company and any Guarantor securing Senior Debt and Indebtedness and other Obligations under Credit Facilities to the extent such Indebtedness was permitted by the terms of this Indenture to be incurred;

     (2) Liens in favor of the Company or the Guarantors;

     (3) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company or the Restricted Subsidiary;

     (4) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition;

     (5) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business;

     (6) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by Section 4.09(b)(4) hereof covering only the assets acquired with such Indebtedness;

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     (7) Liens existing on the date of this Indenture;

     (8) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings that are diligently pursued, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor;

     (9) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $10.0 million at any one time outstanding;

     (10) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof;

     (11) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course of business in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);

     (12) judgment Liens not giving rise to an Event of Default;

     (13) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

     (14) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;

     (15) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or a Restricted Subsidiary, including rights of offset and set-off;

     (16) Liens securing Hedging Obligations that are otherwise permitted under this Indenture;

     (17) any lease or sublease to a third party;

     (18) Liens on materials, inventory or consumables and the proceeds therefrom securing trade payables relating to such materials, inventory or consumables;

     (19) Liens in favor of customs and revenues authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; and

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     (20) any extension, renewal or replacement, in whole or in part, of any Lien described in the foregoing clauses (1) through (20) provided that the Lien so extended, renewed or replaced does not extend to any additional property or assets.

     “Permitted Payments to Parent” means, without duplication as to amounts:

     (1) payments to the Parent Guarantor to permit the Parent Guarantor to pay reasonable accounting, legal and administrative expenses of the Parent Guarantor when due, in an aggregate amount not to exceed $5.0 million per annum;

     (2) payments to the Parent Guarantor to pay for any expenses incurred in connection with any debt or equity financing or any acquisition or other non-ordinary course transaction whether or not the financing, acquisition or other transaction actually closes; and

     (3) any payments to ECC pursuant to any tax sharing agreement between Emmis or ECC or any other Person with which Emmis is required to, or permitted to, file a consolidated return or with which Emmis is or could be part of a consolidated group for tax purposes; provided however, that the aggregate amount payable by Emmis pursuant thereto shall not exceed the amount of taxes that Emmis and its Affiliated Subsidiaries would have been liable for if they were filing a consolidated return that included only Emmis and its Subsidiaries.

     “Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any of its Restricted Subsidiaries or Disqualified Stock issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness or Disqualified Stock of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:

     (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of expenses, consent fees and prepayment premiums incurred in connection therewith);

     (2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

     (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

     (4) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

     “Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

     “Principal” means Jeffrey H. Smulyan.

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     “Private Placement Legend” means the legend set forth in Section 2.06(g)(1) hereof to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.

     “Productive Assets” means assets (including Equity Interests) that are used or usable by the Company and/or a Restricted Subsidiary in Permitted Businesses; provided that for any Equity Interests to qualify as Productive Assets, they must, after giving pro forma effect to the transaction in which they were acquired, be Equity Interests of a Restricted Subsidiary.

     “QIB” means a “qualified institutional buyer” as defined in Rule 144A.

     “Qualified Equity Interests” means Equity Interests of the Company other than Disqualified Stock; provided that such Equity Interests shall not be deemed Qualified Equity Interests to the extent sold or owed to a Subsidiary of the Company or financed, directly or indirectly, using funds (1) borrowed from the Company or any Subsidiary of the Company until and to the extent such borrowing is repaid or (2) contributed, extended, guaranteed or advanced by the Company or any Subsidiary of the Company (including, without limitation, in respect of any employee stock ownership or benefit plan).

     “Reference Period” means, with regard to any Person, the four full fiscal quarters (or such lesser period during which such Person has been in existence) ended immediately preceding any date upon which any determination or calculation is to be made pursuant to the terms of this Indenture.

     “Registration Rights Agreement” means the Registration Rights Agreement, dated as of May 10, 2004, among the Company, the Guarantors and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time, and, with respect to any Additional Notes, one or more registration rights agreements among the Company, the Guarantors and the other parties thereto, as such agreement(s) may be amended, modified or supplemented from time to time, relating to rights given by the Company to the purchasers of Additional Notes to register such Additional Notes under the Securities Act.

     “Regulation S” means Regulation S promulgated under the Securities Act.

     “Regulation S Global Note” means a Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 903 of Regulation S.

     “Related Party” with respect to the Principal means:

     (1) any controlling stockholder, controlling member, general partner, Subsidiary, or spouse or immediate family member (in the case of an individual) of such Principal;

     (2) any estate, trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a controlling interest of which consist of such Principal and/or such other Persons referred to in the immediately preceding clause (1); or

     (3) any executor, administrator, trustee, manager, director or other similar fiduciary of any Person referred to in the immediately preceding clause (2), acting solely in such capacity.

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     “Representative” means the indenture trustee or other trustee, agent or representative for any Senior Debt.

     “Responsible Officer,” when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

     “Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.

     “Restricted Global Note” means a Global Note bearing the Private Placement Legend.

     “Restricted Investment” means an Investment other than a Permitted Investment.

     “Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

     “Rule 144” means Rule 144 promulgated under the Securities Act.

     “Rule 144A” means Rule 144A promulgated under the Securities Act.

     “Rule 903” means Rule 903 promulgated under the Securities Act.

     “Rule 904” means Rule 904 promulgated under the Securities Act.

     “S&P” means Standard & Poor’s Corporation.

     “SEC” means the Securities and Exchange Commission.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Senior Debt” means:

     (1) all Indebtedness outstanding under the Credit Facilities and all Hedging Obligations and any Guarantees thereof with respect thereto of the Company whether outstanding on the issue date or thereafter incurred;

     (2) any other Indebtedness permitted to be incurred by the Company or any of its Restricted Subsidiaries under the terms of this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes; and

     (3) all Obligations with respect to the items listed in the preceding clauses (1) and (2) (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law).

Notwithstanding anything to the contrary in the preceding, Senior Debt will not include:

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     (1) any liability for federal, state, local or other taxes owed or owing by the Company or the Restricted Subsidiaries;

     (2) any Indebtedness of the Company or the Restricted Subsidiaries to any of its Subsidiaries;

     (3) any trade payables; or

     (4) any Indebtedness that is incurred in violation of this Indenture (but only to the extent so incurred).

     “Shelf Registration Statement” means the Shelf Registration Statement as defined in the Registration Rights Agreement.

     “Significant Subsidiary” means, with respect to any Person, any Restricted Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the date hereof.

     “Special Interest” means all liquidated damages then owing pursuant to the Registration Rights Agreement.

     “Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

     “Subsidiary” means, with respect to any Person:

     (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

     (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof).

     “Subsidiary Guarantors” means all of the Company’s direct and indirect wholly-owned Domestic Restricted Subsidiaries that Guarantee the Credit Agreement, other than any Domestic Restricted Subsidiary which is designated an Unrestricted Subsidiary in accordance with the provisions of Section 4.20 hereof.

     “TIA” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb).

     “Treasury Rate” means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption

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date to May 15, 2008; provided, however, that if the period from the redemption date to May 15, 2008, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

     “Trustee” means The Bank of Nova Scotia Trust Company of New York until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

     “Unrestricted Definitive Note” means a Definitive Note that does not bear and is not required to bear the Private Placement Legend.

     “Unrestricted Global Note” means a Global Note that does not bear and is not required to bear the Private Placement Legend.

     “Unrestricted Subsidiary” means Emmis Enterprises Inc. and Subsidiaries of Emmis International Broadcasting Corporation and any other Subsidiary of the Company that would but for this definition of “Unrestricted Subsidiary” be a Restricted Subsidiary as to which all of the following conditions apply:

     (1) neither the Company nor any of its other Restricted Subsidiaries provides credit support for any Indebtedness of such Subsidiary (including any undertaking, agreement or instrument evidencing such Indebtedness) other than Permitted Investments and Restricted Payments permitted by this Indenture;

     (2) such Subsidiary is not liable, directly or indirectly, with respect to any Indebtedness other than Unrestricted Subsidiary Indebtedness;

     (3) neither the Company nor any of its Restricted Subsidiaries has made an Investment in such Subsidiary unless such Investment was permitted by the provisions of Section 4.07 hereof; and

     (4) the Board of Directors of the Company, as provided below, shall have designated such Subsidiary (including any newly formed or acquired Subsidiary) to be an Unrestricted Subsidiary; provided that after giving effect to such designation, such Unrestricted Subsidiary does not own, directly or indirectly, any Capital Stock of any other Restricted Subsidiary (other than a Subsidiary of such Unrestricted Subsidiary). Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a board resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complies with the foregoing conditions.

The Board of Directors of the Company may designate any Unrestricted Subsidiary as a Restricted Subsidiary; provided that:

     (1) all Indebtedness of such Unrestricted Subsidiary shall be deemed to be incurred on the date such Unrestricted Subsidiary becomes a Restricted Subsidiary; and

     (2) the redesignation would not cause a Default or an Event of Default.

Any Subsidiary of an Unrestricted Subsidiary shall be an Unrestricted Subsidiary for purposes of this Indenture.

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     “Unrestricted Subsidiary Indebtedness” of any Unrestricted Subsidiary means Indebtedness of such Unrestricted Subsidiary:

     (1) as to which neither the Company nor any Restricted Subsidiary is directly or indirectly liable (by virtue of the Company or any such Restricted Subsidiary being the primary obligor on, guarantor of, or otherwise liable in any respect to such Indebtedness) except to the extent of any Permitted Investment and Restricted Payment permitted by this Indenture; and

     (2) which, upon the occurrence of a default with respect thereto (other than as a result of a failure to perform under any Guarantee or other Investment of the Company or any Restricted Subsidiary of the Company in such Unrestricted Subsidiary), does not result in, or permit any Holder of any Indebtedness of the Company or any Restricted Subsidiary to declare, a default on such Indebtedness of the Company or any Restricted Subsidiary or cause the payment thereof to be accelerated or payable prior to its Stated Maturity other than under the terms of any Indebtedness existing on the date of this Indenture.

     “U.S. Person” means a U.S. Person as defined in Rule 902(k) promulgated under the Securities Act.

     “Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

     “Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

     (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

     (2) the then outstanding principal amount of such Indebtedness.

     “Wholly Owned Restricted Subsidiary” of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares) shall at the time be owned by such Person and/or by one or more Wholly Owned Restricted Subsidiaries of such Person.

Section 1.02 Other Definitions.

	Defined in
Term	Section
“Affiliate Transaction”		4.11
“Asset Sale Offer”		3.09
“Authentication Order”		2.02
“Change of Control Offer”		4.14
“Change of Control Payment”		4.14
“Change of Control Payment Date”		4.14
“Covenant Defeasance”		8.03
“DTC”		2.03
“Event of Default”		6.01

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	Defined in
Term	Section
“Excess Proceeds”		4.10
“incur”		4.09
“Legal Defeasance”		8.02
“Offer Amount”		3.09
“Offer Period”		3.09
“Paying Agent”		2.03
“Permitted Debt”		4.09
“Payment Blockage Notice”		10.03
“Payment Default”		6.01
“Purchase Date”		3.09
“Redemption Date”		3.07
“Registrar”		2.03
“Restricted Payments”		4.07

Section 1.03 Incorporation by Reference of Trust Indenture Act.

     Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.

     The following TIA terms used in this Indenture have the following meanings:

     “indenture securities” means the Notes;

     “indenture security Holder” means a Holder of a Note;

     “indenture to be qualified” means this Indenture;

     “indenture trustee” or “institutional trustee” means the Trustee; and

     “obligor” on the Notes and the Note Guarantees means the Company and the Guarantors, respectively, and any successor obligor upon the Notes and the Note Guarantees, respectively.

     All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them.

Section 1.04 Rules of Construction.

     Unless the context otherwise requires:

     (1) a term has the meaning assigned to it;

     (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

     (3) “or” is not exclusive;

     (4) words in the singular include the plural, and in the plural include the singular;

     (5) “will” shall be interpreted to express a command;

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     (6) provisions apply to successive events and transactions; and

     (7) references to sections of or rules under the Securities Act will be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time.

ARTICLE 2.
THE NOTES

Section 2.01 Form and Dating.

     (a) General. The Notes and the Trustee’s certificate of authentication will be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note will be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof.

     The terms and provisions contained in the Notes will constitute, and are hereby expressly made, a part of this Indenture and the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

     (b) Global Notes. Notes issued in global form will be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Notes issued in definitive form will be substantially in the form of Exhibit A hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note will represent such of the outstanding Notes as will be specified therein and each will provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby will be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof.

Section 2.02 Execution and Authentication.

     At least one Officer must sign the Notes for the Company by manual or facsimile signature.

     If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note will nevertheless be valid.

     A Note will not be valid until authenticated by the manual signature of the Trustee. The signature will be conclusive evidence that the Note has been authenticated under this Indenture.

     The Trustee will, upon receipt of a written order of the Company signed by an Officer (an “Authentication Order”), authenticate Notes for original issue that may be validly issued under this Indenture, including any Additional Notes. The aggregate principal amount of Notes outstanding at any time may not exceed the aggregate principal amount of Notes authorized for issuance by the Company pursuant to one or more Authentication Orders, except as provided in Section 2.07 hereof.

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     The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company.

Section 2.03 Registrar and Paying Agent.

     The Company will maintain an office or agency where Notes may be presented for registration of transfer or for exchange (“Registrar”) and an office or agency where Notes may be presented for payment (“Paying Agent”). The Registrar will keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company will notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity or office as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.

     The Company initially appoints The Depository Trust Company (“DTC”) to act as Depositary with respect to the Global Notes.

     The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Notes.

Section 2.04 Paying Agent to Hold Money in Trust.

     The Company will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium or Special Interest, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) will have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceeding relating to the Company, the Trustee will serve as Paying Agent for the Notes.

Section 2.05 Holder Lists.

     The Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, the Company will furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA § 312(a).

Section 2.06 Transfer and Exchange.

     (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a

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successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if:

     (1) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary;

     (2) the Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; or

     (3) there has occurred and is continuing an Event of Default with respect to the Notes and any Holder has requested Definitive Notes.

     Upon the occurrence of either of the preceding events in (1), (2) or (3) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.

     (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes will be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes will be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

     (1) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(1).

     (2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(1) hereof, the transferor of such beneficial interest must deliver to the Registrar either:

     (A) both:

     (i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the

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Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged; and

     (ii) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase; or

     (B) both:

     (i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged; and

     (ii) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above.

Upon consummation of an Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(2) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof.

     (3) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(2) hereof and the Registrar receives the following:

     (A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

     (B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

     (C) if the transferee will take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.

     (4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(2) above and:

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     (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a Person participating in the distribution of the Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Company;

     (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement;

     (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or

     (D) the Registrar receives the following:

     (i) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

     (ii) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required under the Securities Act.

     If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above.

     Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

     (c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

     (1) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation:

     (A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from

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such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

     (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

     (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

     (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

     (E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;

     (F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

     (G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(1) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

     (2) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a Person

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participating in the distribution of the Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Company;

     (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement;

     (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or

     (D) the Registrar receives the following:

     (i) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or

     (ii) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required under the Securities Act.

     (3) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(2) hereof, the Trustee will cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company will execute and the Trustee will authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant. The Trustee will deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will not bear the Private Placement Legend.

     (d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

     (1) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:

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     (A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

     (B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

     (C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

     (D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

     (E) if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;

     (F) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

     (G) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee will cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (C) above, the Regulation S Global Note, and in all other cases, the IAI Global Note.

     (2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a Person participating in the distribution of the Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Company;

     (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement;

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     (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or

     (D) the Registrar receives the following:

     (i) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or

     (ii) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required under the Securities Act.

     Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(2), the Trustee will cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

     (3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee will cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

     If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (2)(B), (2)(D) or (3) above at a time when an Unrestricted Global Note has not yet been issued, the Company will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.

     (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar will register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e).

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     (1) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

     (A) if the transfer will be made pursuant to Rule 144A, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

     (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

     (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.

     (2) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a Person participating in the distribution of the Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Company;

     (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement;

     (C) any such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or

     (D) the Registrar receives the following:

     (i) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

     (ii) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on

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transfer contained herein and in the Private Placement Legend are no longer required under the Securities Act.

     (3) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.

     (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will authenticate:

     (1) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes accepted for exchange in the Exchange Offer by Persons that certify in the applicable Letters of Transmittal that (A) they are not Broker-Dealers, (B) they are not participating in a distribution of the Exchange Notes and (C) they are not affiliates (as defined in Rule 144) of the Company; and

     (2) Unrestricted Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer by Persons that certify in the applicable Letters of Transmittal that (A) they are not Broker-Dealers, (B) they are not participating in a distribution of the Exchange Notes and (C) they are not affiliates (as defined in Rule 144) of the Company.

     Concurrently with the issuance of such Notes, the Trustee will cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and the Company will execute and the Trustee will authenticate and deliver to the Persons designated by the Holders of Definitive Notes so accepted Unrestricted Definitive Notes in the appropriate principal amount.

     (g) Legends. The following legends will appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.

     (1) Private Placement Legend.

     (A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:

“THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE

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REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.”

     (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(4), (c)(2), (c)(3), (d)(2), (d)(3), (e)(2), (e)(3) or (f) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) will not bear the Private Placement Legend.

     (2) Global Note Legend. Each Global Note will bear a legend in substantially the following form (or in such other form as required by the Depositary):

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

     (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note will be reduced accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such

35

other Global Note will be increased accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

     (i) General Provisions Relating to Transfers and Exchanges.

     (1) To permit registrations of transfers and exchanges, the Company will execute and the Trustee will authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 hereof or at the Registrar’s request.

     (2) No service charge will be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.14 and 9.05 hereof).

     (3) The Registrar will not be required to register the transfer of or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.

     (4) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes will be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

     (5) Neither the Registrar nor the Company will be required:

     (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection;

     (B) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or

     (C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date.

     (6) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.

     (7) The Trustee will authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof.

     (8) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.

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Section 2.07 Replacement Notes.

     If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Note in accordance with the provisions of Section 2.02 hereof. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder requesting the replacement Note that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge such Holder for its expenses in replacing a Note.

     Every replacement Note is an obligation of the Company and will be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder (except for the Note being replaced).

Section 2.08 Outstanding Notes.

     The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note; however, Notes held by the Company or a Subsidiary of the Company shall not be deemed to be outstanding for purposes of Section 3.07(a) hereof.

     If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.

     If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

     If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes will be deemed to be no longer outstanding and will cease to accrue interest.

Section 2.09 Treasury Notes.

     In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or any Guarantor, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any Guarantor, will be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned will be so considered.

Section 2.10 Temporary Notes.

     Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, will authenticate temporary Notes. Temporary Notes will be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as may be reasonably acceptable to the Trustee. Without

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unreasonable delay, the Company will prepare and the Trustee will authenticate definitive Notes in exchange for temporary Notes.

     Holders of temporary Notes will be entitled to all of the benefits of this Indenture.

Section 2.11 Cancellation.

     The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent will forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else will cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and will destroy canceled Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all canceled Notes will be delivered to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.

Section 2.12 Defaulted Interest.

     If the Company defaults in a payment of interest on the Notes, it will pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company will notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company will fix or cause to be fixed each such special record date and payment date; provided that no such special record date may be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) will mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid.

ARTICLE 3.
REDEMPTION AND PREPAYMENT

Section 3.01 Notices to Trustee.

     If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it must furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers’ Certificate setting forth:

     (1) the clause of this Indenture pursuant to which the redemption shall occur;

     (2) the redemption date;

     (3) the principal amount of Notes to be redeemed; and

     (4) the redemption price.

Section 3.02 Selection of Notes to Be Redeemed or Purchased.

     If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee will select Notes for redemption or purchase on a pro rata basis unless:

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     (1) the Notes are listed on any national securities exchange, in which case the Trustee will comply with the requirements of the principal national securities exchange on which the Notes are listed; or

     (2) otherwise required by law.

     In the event of partial redemption or purchase by lot, the particular Notes to be redeemed or purchased will be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption or purchase date by the Trustee from the outstanding Notes not previously called for redemption or purchase.

     The Trustee will promptly notify the Company in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased. Notes and portions of Notes selected will be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase.

Section 3.03 Notice of Redemption.

     Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company will mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Articles 8 or 12 hereof.

     The notice will identify the Notes to be redeemed and will state:

     (1) the redemption date;

     (2) the redemption price;

     (3) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note;

     (4) the name and address of the Paying Agent;

     (5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

     (6) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date;

     (7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and

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     (8) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.

     At the Company’s request, the Trustee will give the notice of redemption in the Company’s name and at its expense if the Company has delivered to the Trustee, at least 45 days prior to the redemption date (or such lesser time as the Trustee may agree to), an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.

Section 3.04 Effect of Notice of Redemption.

     Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional.

Section 3.05 Deposit of Redemption or Purchase Price.

     On or prior to the redemption or purchase date, the Company will deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued interest and Special Interest, if any, on all Notes to be redeemed or purchased on that date. The Trustee or the Paying Agent will promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption or purchase price of, and accrued interest and Special Interest, if any, on, all Notes to be redeemed or purchased.

     If the Company complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest will cease to accrue on the Notes or the portions of Notes called for redemption or purchase. If a Note is redeemed or purchased on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.

Section 3.06 Notes Redeemed or Purchased in Part.

     Upon surrender of a Note that is redeemed or purchased in part, the Company will issue and, upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered.

Section 3.07 Optional Redemption.

     (a) At any time prior to May 15, 2007, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes originally issued under this Indenture (including Additional Notes) at a redemption price of 106.875% of the principal amount thereof, plus accrued and unpaid interest and Special Interest, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that:

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     (1) at least 65% of the aggregate principal amount of Notes originally issued under this Indenture (excluding Notes held by the Company and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and

     (2) the redemption occurs within 90 days of the date of the closing of such Equity Offering.

     (b) At any time prior to May 15, 2008, the Company may also redeem all or a part of the Notes upon not less than 30 nor more than 60 days prior notice mailed by first-class mail to each Holder’s registered address, at a redemption price equal to 100% of the principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Special Interest, if any, to the applicable date of redemption (the “Redemption Date”), subject to the rights of Holders on the relevant record date to receive interest due on the relevant interest payment date.

     (c) Except pursuant to the preceding paragraphs, the Notes will not be redeemable at the Company’s option prior to May 15, 2008.

     (d) On or after May 15, 2008, the Company may redeem all or a part of the Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Special Interest, if any, on the Notes redeemed to the applicable redemption date, if redeemed during the twelve-month period beginning on May 15 of the years indicated below:

Year	Percentage
2008		103.438	%
2009		101.719	%
2010 and thereafter		100.000	%

     Unless the Company defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

     (e) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.

Section 3.08 Mandatory Redemption.

     The Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

Section 3.09 Offer to Purchase by Application of Excess Proceeds.

     In the event that, pursuant to Section 4.10 hereof, the Company is required to commence an offer to all Holders to purchase Notes (an “Asset Sale Offer”), it will follow the procedures specified below.

     The Asset Sale Offer shall be made to all Holders and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets. The Asset Sale Offer will remain open for a period of at least 20 Business Days following its commencement and not more than 30 Business Days, except to the extent that a longer period is required by applicable law (the “Offer Period”). No later than three Business Days after the termination of the Offer Period (the “Purchase Date”), the Company will apply all Excess Proceeds (the “Offer Amount") to the purchase of Notes and such other

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pari passu Indebtedness (on a pro rata basis, if applicable) or, if less than the Offer Amount has been tendered, all Notes and other Indebtedness tendered in response to the Asset Sale Offer. Payment for any Notes so purchased will be made in the same manner as interest payments are made.

     If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest and Special Interest, if any, will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender Notes pursuant to the Asset Sale Offer.

     Upon the commencement of an Asset Sale Offer, the Company will send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice will contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The notice, which will govern the terms of the Asset Sale Offer, will state:

     (1) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer will remain open;

     (2) the Offer Amount, the purchase price and the Purchase Date;

     (3) that any Note not tendered or accepted for payment will continue to accrue interest;

     (4) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer will cease to accrue interest after the Purchase Date;

     (5) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in integral multiples of $1,000 only;

     (6) that Holders electing to have Notes purchased pursuant to any Asset Sale Offer will be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the Company, a Depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date;

     (7) that Holders will be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;

     (8) that, if the aggregate principal amount of Notes and other pari passu Indebtedness surrendered by holders thereof exceeds the Offer Amount, the Company will select the Notes and other pari passu Indebtedness to be purchased on a pro rata basis based on the principal amount of Notes and such other pari passu Indebtedness surrendered (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, will be purchased); and

     (9) that Holders whose Notes were purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).

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     On or before the Purchase Date, the Company will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered, and will deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers’ Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, will promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company will promptly issue a new Note, and the Trustee, upon written request from the Company, will authenticate and mail or deliver (or cause to be transferred by book entry) such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company will publicly announce the results of the Asset Sale Offer on the Purchase Date.

     Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.

ARTICLE 4.
COVENANTS

Section 4.01 Payment of Notes.

     The Company will pay or cause to be paid the principal of, premium, if any, and interest and Special Interest, if any, on, the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest and Special Interest, if any will be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company will pay all Special Interest, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement.

     The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Special Interest (without regard to any applicable grace period) at the same rate to the extent lawful.

Section 4.02 Maintenance of Office or Agency.

     The Company will maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

     The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind

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such designations; provided, however, that no such designation or rescission will in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

     The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03 hereof.

Section 4.03 Reports.

     (a) Whether or not required by the SEC, so long as any Notes are outstanding, ECC will furnish to the Holders of Notes or file electronically with the SEC through its electronic data gathering, analysis and retrieval system or any successor system, within the time periods specified in the SEC’s rules and regulations:

     (1) all quarterly and annual reports that would be required to be filed with the SEC on Forms 10-Q and 10-K if ECC were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by ECC’s certified independent accountants; and

     (2) all current reports that would be required to be filed with the SEC on Form 8-K if ECC were required to file such reports.

     If, at any time ECC is no longer subject to the periodic reporting requirements of the Exchange Act for any reason, ECC will nevertheless continue filing the reports specified in subparagraphs (1) and (2) directly above with the SEC within the time periods specified above unless the SEC will not accept such a filing. If, notwithstanding the foregoing, the SEC will not accept ECC’s filings for any reason, ECC will post the reports referred to in subparagraphs (1) and (2) directly above on its website within the time periods that would apply if ECC were required to file those reports with the SEC.

     (b) In addition, ECC, the Company and the Guarantors agree that, for so long as any Notes remain outstanding, if at any time ECC is not required to file with the SEC the reports required by Sections 4.03(a)(1) and (2), ECC will furnish to the Holders of Notes and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Section 4.04 Compliance Certificate.

     (a) The Company shall deliver to the Trustee after the end of each fiscal year, within the time periods specified in the SEC’s rules and regulations for filing annual reports on Form 10-K, an Officers’ Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is

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prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto.

     (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03 above shall be accompanied by a written statement of the Company’s independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation.

     (c) So long as any of the Notes are outstanding, the Company will deliver to the Trustee, within 30 days of any Officer becoming aware of any Default or Event of Default, an Officers’ Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.

Section 4.05 Taxes.

     The Company will pay, and will cause each of its Restricted Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment would not reasonably be expected, individually or in the aggregate, to have a material adverse effect on the general affairs, financial position or results of operations of ECC, the Company and the Subsidiaries taken as a whole.

Section 4.06 Stay, Extension and Usury Laws.

     The Company and each of the Guarantors covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.

Section 4.07 Restricted Payments.

     (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

     (1) declare or pay any dividend or make any other payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary of the Company);

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     (2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company or any Restricted Subsidiary of the Company (other than any such Equity Interests owned by the Company or any Restricted Subsidiary of the Company or any Permitted Investment described pursuant to clause (1) or (3) of the definition of “Permitted Investments”);

     (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated in right of payment to the Notes or the Note Guarantees (other than the Notes or the Note Guarantees), except a payment of interest or principal at the Stated Maturity thereof; or

     (4) make any Restricted Investment (all such payments and other actions set forth in the foregoing clauses (1) through (4) being collectively referred to as “Restricted Payments”),

unless, at the time of and after giving effect to such Restricted Payment:

     (1) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

     (2) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in Section 4.09(a) hereof; and

     (3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of this Indenture (excluding Restricted Payments permitted by Sections 4.07(b)(2), (3), (4) (to the extent that the payment of any dividend by a Restricted Subsidiary of ECC to the holders of its common Equity Interests on a pro rata basis is paid to the Company, ECC or another Restricted Subsidiary), (6), (8), (10), or (11)), is less than the sum, without duplication, of:

     (a) (i) the aggregate Consolidated EBITDA of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after February 12, 1999 to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, in the event aggregate Consolidated EBITDA for such period is a deficit, then minus such deficit) less (ii) 1.4 times the aggregate Cash Interest Expense of the Company for the same period; plus

     (b) the aggregate net cash proceeds and the fair market value, determined in good faith by the Board of Directors, of any non-cash consideration, in each case, received by the Company (or in the case of Equity Interests of ECC issued for the benefit of the Company and/or Restricted Subsidiaries) since February 12, 1999 as a contribution to its common equity capital or from the issue or sale of Equity Interests of ECC or the Company (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of ECC, the Company or any Restricted Subsidiary that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Company); plus

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     (c) to the extent that any Restricted Investment is sold for cash or otherwise liquidated or repaid for cash, the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any); plus

     (d) if any Unrestricted Subsidiary (i) is redesignated as a Restricted Subsidiary, the fair market value of such redesignated Subsidiary (as determined in good faith by the Board of Directors) as of the date of its redesignation or (ii) pays any cash dividends or cash distributions to the Company or any of its Restricted Subsidiaries, 100% of any such cash dividends or cash distributions made after the date of this Indenture; plus

     (e) without, duplication of any of the foregoing, the aggregate amount returned in cash on or with respect to Restricted Investments made subsequent to the Issue Date, whether through interest payments, principal payments, dividends or other distributions or payments.

     (b) The provisions of Section 4.07(a) hereof will not prohibit:

     (1) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture;

     (2) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of the Company or any Guarantor or of any Equity Interests of ECC, the Company or any Restricted Subsidiary in exchange for, or out of the proceeds of the substantially concurrent sale (other than to a Subsidiary of ECC) of, Equity Interests of the Company or ECC (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from Section 4.07(a)(3)(b);

     (3) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of the Company or any Guarantor in exchange for or out of the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;

     (4) the payment of any dividend by a Restricted Subsidiary of ECC to the holders of its common Equity Interests on a pro rata basis;

     (5) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of ECC or any Subsidiary of ECC (or to the extent such payment is required to be made by ECC, a dividend to ECC to fund such payment) held by any current or former member of ECCs’ (or any of its Subsidiaries’) management pursuant to any management equity subscription agreement or stock option agreement in effect as of the date of this Indenture; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $5.0 million in any twelve-month period;

     (6) the repurchase of Equity Interests of the Company or ECC deemed to occur upon the exercise of stock options if such Equity Interests represent a portion of the exercise price of such options;

     (7) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of ECC (other than those described in clause (5) above) (or to the extent such payment is required to be made by ECC, a dividend to ECC to fund such payment) in an amount not to exceed $50.0 million in the aggregate;

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     (8) dividends to ECC in an amount equal to the regularly scheduled dividends on the outstanding ECC Preferred Stock and dividends to ECC to pay regularly scheduled interest or dividends on Indebtedness or preferred stock of ECC issued in exchange for or to refinance such ECC Preferred Stock;

     (9) Permitted Payments to Parent;

     (10) payments and transactions taking place on the closing of the Offering as described in the “Use of Proceeds” section of the Company’s Offering Circular dated April 27, 2004, relating to the initial offering of the Notes, including, without limitation, the repurchase of the 12½% Notes pursuant to the tender offer by ECC for such notes and any payment made to ECC to fund such repurchase and any expenses and premiums incurred in connection therewith;

     (11) payments to ECC to fund the repurchase or redemption of any outstanding 12½% Notes and any expenses and premiums incurred in connection therewith; and

     (12) any other Restricted Payment which, together with all other Restricted Payments made pursuant to this clause (12) since the date of this Indenture, does not exceed $20.0 million.

     (c) In determining whether any payment is permitted by Section 4.07(b) hereof, the Company may allocate or reallocate, among clauses (1) through (12) of Section 4.07(b) hereof or among such clauses and Section 4.07(a) hereof, all or any portion of such payment and all or any portion of any payment previously allocated; provided that, after giving effect to such allocation or reallocation, all such payments (or allocated portions of such payments) would be permitted under the various provisions of Section 4.07(b) hereof.

     (d) The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this Section 4.07 shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee.

     (e) In making the computations required by this Section 4.07:

     (1) the Company may use audited financial statements for the portions of the relevant period for which audited financial statements are available on the date of determination and unaudited financial statements and other current financial data based on the books and records of the Company for the remaining portion of such period; and

     (2) the Company may rely in good faith on the financial statements and other financial data derived from its books and records that are available on the date of determination.

     (f) If the Company makes a Restricted Payment that, at the time of the making of such Restricted Payment, would in the good faith determination of the Company be permitted under the requirements of this Indenture, such Restricted Payment will be deemed to have been made in compliance with this Indenture notwithstanding any subsequent adjustments made in good faith to the Company’s financial statements for any period which adjustments affect any of the financial data used to make the calculations with respect to such Restricted Payment.

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Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries.

     (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to:

     (1) pay dividends or make any other distributions on its Capital Stock to the Company or any of the Company’s Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to the Company or any of the Company’s Restricted Subsidiaries;

     (2) make loans or advances to the Company or any of the Company’s Restricted Subsidiaries; or

     (3) sell, lease or transfer any of its properties or assets to the Company or any of the Company’s Restricted Subsidiaries.

     (b) However, the restrictions in Section 4.08(a) hereof will not apply to encumbrances or restrictions existing under or by reason of:

     (1) agreements governing Existing Indebtedness and Credit Facilities as in effect on the date of this Indenture and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such Existing Indebtedness or in such Credit Facility, in each case, as in effect on the date of this Indenture;

     (2) encumbrances and restrictions applicable to any Unrestricted Subsidiary, as the same are in effect as of the date on which such Subsidiary becomes a Restricted Subsidiary, and as the same may be amended, modified, restated, renewed, increased, supplemented, refunded, replaced or refinanced; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the applicable series of Indebtedness of such Subsidiary as in effect on the date on which such Subsidiary becomes a Restricted Subsidiary;

     (3) any Indebtedness (incurred in compliance with Section 4.09 hereof) or any agreement pursuant to which such Indebtedness is issued if the encumbrance or restriction applies only in the event of a payment default or default with respect to a financial covenant contained in such Indebtedness or agreement and such encumbrance or restriction is not materially more disadvantageous to the Holders of the Notes than is customary in comparable financings (as determined by the Company) or if such encumbrance or restriction is no more restrictive than those in the Credit Agreement or this Indenture;

     (4) this Indenture, the Notes and the Note Guarantees;

     (5) applicable law;

     (6) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except

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     to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred;

     (7) customary non-assignment provisions in leases or licenses entered into in the ordinary course of business;

     (8) purchase money obligations for property acquired in the ordinary course of business that impose restrictions on the property so acquired of the nature described in Section 4.08(a)(3);

     (9) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by such Restricted Subsidiary pending its sale or other disposition;

     (10) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;

     (11) Liens permitted to be incurred pursuant to the provisions of Section 4.12 hereof that limit the right to dispose of the assets subject to such Liens;

     (12) provisions limiting the disposition or distribution of assets or property in joint venture agreements, partnership agreements, limited liability company agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements entered into with the approval of the Company’s Board of Directors, which limitation is applicable only to the assets that are the subject of such agreements;

     (13) restrictions on cash or other deposits or net worth imposed by customers, suppliers or landlords under contracts entered into in the ordinary course of business;

     (14) encumbrances or restrictions on any Indebtedness of Foreign Subsidiaries incurred in compliance with Section 4.09 hereof or any agreement pursuant to which such Indebtedness is issued or is secured; and

     (15) encumbrances or restrictions on security agreements or mortgages that limit the right of the debtor to dispose of the assets securing that Indebtedness.

Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock.

     (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company and any Restricted Subsidiary may incur Indebtedness (including Acquired Debt), and the Company may issue Disqualified Stock, if the Leverage Ratio of the Company for the Reference Period immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would not have been greater than 7.0 to 1 determined on a pro forma basis (after giving pro forma effect to such incurrence or issuance and to the application of the net proceeds therefrom) and in accordance with the definition of Leverage Ratio.

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     (b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt”):

     (1) the incurrence by the Company and any Restricted Subsidiary of Indebtedness under any Credit Facilities; provided that the aggregate principal amount of all Indebtedness of the Company and the Restricted Subsidiaries outstanding under any Credit Facilities after giving effect to such incurrence does not exceed an amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) not to exceed $1.025 billion less the aggregate amount of all Net Proceeds of Asset Sales required to be applied by the Company or any of its Restricted Subsidiaries since the date of this Indenture to repay Indebtedness under the Credit Facilities pursuant to Section 4.10 hereof;

     (2) the incurrence by the Company and its Restricted Subsidiaries of Existing Indebtedness;

     (3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes issued in the Offering and the related Note Guarantees and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;

     (4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount not to exceed $20.0 million at any time outstanding;

     (5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace, Indebtedness of the Company or any of its Restricted Subsidiaries or Disqualified Stock of the Company (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4) or (8) of this Section 4.09(b);

     (6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that: (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be;

     (7) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations; provided that the agreements governing such Hedging Obligations do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in foreign currency exchange rates or interest rates or by reason of fees, indemnities and compensation payable thereunder;

     (8) the guarantee (or co-issuance) by the Company or any of the Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to

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be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed (or co-issued) is subordinated in right of payment to or pari passu in right of payment with the Notes, then the applicable Guarantee (or co-issuance) shall be subordinated in right of payment or pari passu in right of payment, as applicable, to the same extent as the Indebtedness guaranteed (or co-issued); and

     (9) incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, not to exceed $50.0 million.

     For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (9) above, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount of any such accrual, accretion or payment is included in the Cash Interest Expense of the Company to the extent paid in cash. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.

Section 4.10 Asset Sales.

     (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

     (1) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of;

     (2) such fair market value is determined in good faith by the Company’s Board of Directors and evidenced by a resolution of the Board of Directors set forth in an Officers’ Certificate delivered to the Trustee; and

     (3) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash, Cash Equivalents or Marketable Securities. For purposes of this provision, each of the following shall be deemed to be cash:

     (a) any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet), of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Note Guarantee) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability; and

     (b) any securities, notes or other obligations received by the Company or any

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such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash within 90 days after such Asset Sale (to the extent of the cash received in that conversion).

     (b) Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Company and any Restricted Subsidiary may apply such Net Proceeds at its option:

     (1) to repay Senior Debt and any Indebtedness of any Restricted Subsidiary that is not a Guarantor;

     (2) to acquire all or substantially all of the assets of, or a majority of the Voting Stock of, another Permitted Business that is owned by the Company or a Guarantor;

     (3) to make a capital expenditure; or

     (4) to acquire other assets that are used or useful in a Permitted Business that is owned by the Company or a Guarantor.

Pending the final application of any such Net Proceeds, the Company may temporarily reduce revolving credit borrowings or other Indebtedness or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture.

     (c) Notwithstanding Sections 4.10(b) and (c) hereof, the Company and its Restricted Subsidiaries will be permitted to consummate an Asset Sale without complying with such Sections to the extent (i) at least 75% of the consideration for such Asset Sale constitutes Productive Assets, cash, Cash Equivalents and/or Marketable Securities and (ii) such Asset Sale is for fair market value (as determined in good faith by the Board of Directors and certified to in an Officer’s Certificate); provided that any cash consideration not constituting Productive Assets received by the Company or any of its Restricted Subsidiaries in connection with any Asset Sale permitted to be consummated under this Section 4.10(c) shall be subject to the provisions of Section 4.10(b). In addition, the Company and its Restricted Subsidiaries shall not be required to comply with this Section 4.10 if the Company or any of its Restricted Subsidiaries is required to transfer any of its assets into a trust for FCC regulatory purposes, if such trust then sells or disposes of such assets or if either the Company or a Restricted Subsidiary of the Company is ordered by the FCC or a court to transfer any asset, so long as any Net Proceeds received by the Company and its Restricted Subsidiaries are applied in accordance with this Section 4.10.

     (d) Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 4.10(b) hereof will constitute Excess Proceeds. When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will make an Asset Sale Offer to all Holders of Notes and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of principal amount plus accrued and unpaid interest and Special Interest thereon, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

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     (e) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of Section 3.09 hereof or this Section 4.10, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under Section 3.09 hereof or this Section 4.10 by virtue of such compliance.

Section 4.11 Transactions with Affiliates.

     (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each, an “Affiliate Transaction”), unless:

     (1) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person; and

     (2) the Company delivers to the Trustee:

     (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a resolution of the Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with this Section 4.11 and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors; and

     (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $20.0 million, an opinion as to the fairness to the Company of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing.

     (b) The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 4.11(a) hereof:

     (1) any employment, indemnification, severance or other agreement or transactions relating to employee benefits or benefit plans with any employee, consultant or director of the Company or a Restricted Subsidiary that is entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business;

     (2) transactions between or among the Company and/or its Restricted Subsidiaries;

     (3) payment of reasonable directors fees to Persons who are not otherwise Affiliates of the Company;

     (4) Restricted Payments or Permitted Investments that do not violate the provisions of this Indenture described in Section 4.07 hereof;

     (5) Permitted Payments to Parent;

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     (6) transactions and payments contemplated by any agreement in effect on the Issue Date or any amendment thereto in any replacement agreement therefor, so long as any such amendment or replacement agreement, taken as a whole, is not more disadvantageous to the Company or such Restricted Subsidiary as the original agreement as in effect on the Issue Date;

     (7) loans and advances to employees of the Company or any Restricted Subsidiary in the ordinary course of business;

     (8) any tax sharing agreement or administrative services agreement between the Company or any Restricted Subsidiary and any of its Affiliates approved by a majority of the independent Directors;

     (9) entering into an agreement that provides registration rights to any shareholder of the Company or ECC or amending any such agreement with any shareholder of the Company or ECC and the performance of such agreements;

     (10) any transaction with a joint venture or similar entity which would constitute an Affiliate Transaction solely because the Company or a Restricted Subsidiary owns an equity interest in or otherwise controls such joint venture or similar entity; provided that no Affiliate of the Company or any of its Subsidiaries other than the Company or a Restricted Subsidiary shall have a beneficial interest in such joint venture or similar entity;

     (11) any merger, consolidation or reorganization of the Company with an Affiliate, solely for the purposes of (a) reorganizing to facilitate an initial public offering of securities of the Company, ECC or other holding company, (b) forming a holding company or (c) reincorporating the Company in a new jurisdiction;

     (12) any transaction with an Affiliate where the only consideration paid by the Company is Qualified Equity Interests; and

     (13) any agreement entered into in connection with the transfer or other disposition of any business of the Company and that is to be performed after the transfer or other disposition and the performance of such agreement so long as such agreement is approved by a majority of the disinterested directors of the Company.

Section 4.12 Liens.

     The Company will not and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than Permitted Liens) securing Indebtedness other than Senior Debt upon any of their property or assets, now owned or hereafter acquired, unless all payments due under this Indenture and the Notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien.

Section 4.13 INTENTIONALLY OMITTED

Section 4.14 Offer to Repurchase Upon Change of Control.

     (a) Upon the occurrence of a Change of Control, the Company will make an offer (a “Change of Control Offer") to each Holder to repurchase all or any part (equal to $1,000 or an integral multiple of $1,000) of that Holder’s Notes at a purchase price in cash equal to 101% of the aggregate principal

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amount of Notes repurchased plus accrued and unpaid interest and Special Interest, if any, on the Notes repurchased to the date of purchase, subject to the rights of Holders on the relevant record date to receive interest due on the relevant interest payment date (the “Change of Control Payment"). Within 60 days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and stating:

     (1) that the Change of Control Offer is being made pursuant to this Section 4.14 and that all Notes tendered will be accepted for payment;

     (2) the purchase price and the purchase date, which shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “Change of Control Payment Date");

     (3) that any Note not tendered will continue to accrue interest;

     (4) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest after the Change of Control Payment Date;

     (5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

     (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and

     (7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof.

     The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change in Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of Sections 3.09 or 4.14 hereof, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under Section 3.09 hereof or this Section 4.14 by virtue of such compliance.

     (b) On the Change of Control Payment Date, the Company will, to the extent lawful:

     (1) accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer;

     (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and

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     (3) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company.

     The Paying Agent will promptly mail (but in any case not later than five days after the Change of Control Payment Date) to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

     Prior to complying with any of the provisions of this Section 4.14, but in any event within 90 days following a Change of Control, the Company will either repay all outstanding Senior Debt or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt to permit the repurchase of Notes required by this Section 4.14.

     (c) Notwithstanding anything to the contrary in this Section 4.14, the Company will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.14 and Section 3.09 hereof and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to Section 3.07 hereof, unless and until there is a default in payment of the applicable redemption price.

Section 4.15 No Senior Subordinated Debt.

     The Company will not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is contractually subordinate or junior in right of payment to any Senior Debt of the Company and senior in right of payment to the Notes. No Guarantor will incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is contractually subordinate or junior in right of payment to the Senior Debt of such Guarantor and senior in right of payment to such Guarantor’s Note Guarantee. No such Indebtedness will be considered to be senior by virtue of being secured on a first or junior priority basis.

Section 4.16 Sale and Leaseback Transactions.

     The Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction; provided that the Company or any Restricted Subsidiary may enter into a sale and leaseback transaction if:

     (1) the Company or that Restricted Subsidiary, as applicable, could have (a) incurred Indebtedness in an amount equal to the Capital Lease Obligation, if any, relating to such sale and leaseback transaction under Section 4.09 hereof and (b) incurred a Lien to secure such Indebtedness pursuant to Section 4.12 hereof;

     (2) the gross cash proceeds and fair value of property received from that sale and leaseback transaction are at least equal to the fair market value, as determined in good faith by the Board of Directors and set forth in an Officers’ Certificate delivered to the Trustee, of the property that is the subject of such sale and leaseback transaction; and

     (3) the transfer of assets in that sale and leaseback transaction is permitted by, and the Company applies the proceeds of such transaction in compliance with, Section 4.10 hereof.

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Section 4.17 Limitation on Issuances and Sales of Equity Interests in Wholly-Owned Restricted Subsidiaries.

     The Company will not, and will not permit any of its Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Wholly Owned Restricted Subsidiary of the Company to any Person (other than the Company or a Wholly Owned Restricted Subsidiary of the Company) or to issue any of its Equity Interests (other than, if necessary, shares of its Capital Stock constituting directors’ qualifying shares) to any Person other than to the Company or a Wholly Owned Restricted Subsidiary of the Company, unless:

     (1) as a result of such transfer, conveyance, sale, lease or other disposition or issuance such Restricted Subsidiary no longer constitutes a Subsidiary; and

     (2) the Net Proceeds from such transfer, conveyance, sale, lease or other disposition or issuance are applied in accordance with Section 4.10 hereof.

     Notwithstanding the foregoing, this Section 4.17 shall not prohibit the issuance or sale of Equity Interests of any Restricted Subsidiary in connection with (a) the formation or capitalization of a Restricted Subsidiary or (b) a single transaction or a series of substantially contemporaneous transactions whereby such Restricted Subsidiary becomes a Restricted Subsidiary of the Company by reason of acquisition of securities or assets from another Person; provided that following the consummation of any transaction or transactions contemplated by clause (a) or (b), the ownership of the Equity Interests of the relevant Restricted Subsidiary or Restricted Subsidiaries shall be as if this Section 4.17 had been complied with at all times.

Section 4.18 INTENTIONALLY OMITTED

Section 4.19 Additional Subsidiary Guarantees.

     If the Company or any of its Restricted Subsidiaries acquires or creates another Subsidiary after the date of this Indenture, then, unless such Subsidiary either (1) is designated as an “Unrestricted Subsidiary” in accordance with Section 4.20 hereof or (2) is not a wholly-owned Domestic Restricted Subsidiary, that newly acquired or created Restricted Subsidiary will become a Guarantor and execute a supplemental indenture substantially in the form of Exhibit F hereto and deliver an Opinion of Counsel to the Trustee within 10 Business Days of the date on which it was acquired or created; provided, however, that such newly acquired or created Subsidiary shall not be required to become a Guarantor if it is not also required to become a guarantor of Indebtedness under the Credit Agreement of the Company or any Domestic Restricted Subsidiary. The form of such Note Guarantee is attached as Exhibit E hereto.

Section 4.20 Designation of Restricted and Unrestricted Subsidiaries.

     The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an Investment made as of the time of such designation and will reduce the amount available for Restricted Payments under Section 4.07 hereof or Permitted Investments, as applicable. All such outstanding Investments will be valued at their fair market value at the time of such designation. In addition, such designation will only be permitted if such Restricted Payment or Permitted Investment would be permitted at that time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.

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     Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09 hereof, the Company will be in default of Section 4.09 hereof. The Board of Directors may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the Company; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness is permitted under Section 4.09 hereof; and (2) no Default or Event of Default would be in existence following such designation.

ARTICLE 5.

SUCCESSORS

     Section 5.01 Merger, Consolidation, or Sale of Assets.

     The Company will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless:

     (1) either:

     (a) the Company is the surviving corporation; or

     (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a corporation, Person or entity organized or existing under the laws of the United States, any state thereof or the District of Columbia;

     (2) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Notes, this Indenture and the Registration Rights Agreement pursuant to agreements in form reasonably satisfactory to the Trustee;

     (3) immediately after such transaction no Default or Event of Default exists;

     (4) the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition has been made:

     (a) will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in Section 4.09(a) hereof; or

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     (b) the Leverage Ratio test set forth in Section 4.09(a) hereof immediately after such transaction (after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period) would not be higher than the Leverage Ratio of the Company and its Restricted Subsidiaries immediately prior to the transaction; and

(5) the Company shall have delivered to the Trustee an Officers’ Certificate stating that all conditions precedent to such merger, consolidation or sale provided in this Section have been satisfied.

     This Section 5.01 will not apply to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of its Wholly Owned Restricted Subsidiaries.

     Notwithstanding the foregoing, the Company may merge with an Affiliate incorporated for the purpose of reincorporating the Company in another jurisdiction and/or for the purpose of forming a holding company. In addition, for avoidance of doubt, it is understood that under no circumstances shall a sale, assignment, transfer, conveyance or other disposition, in one or a series of related transactions, of assets of the Company and its Restricted Subsidiaries that represent less than 50% of the Consolidated EBITDA of the Company for the Reference Period immediately preceding such transaction or transactions be subject to this Section 5.01.

Section 5.02 Successor Corporation Substituted.

     Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the properties or assets of the Company in a transaction that is subject to, and that complies with the provisions of, Section 5.01 hereof, the successor Person formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, the provisions of this Indenture referring to the “Company” shall refer instead to the successor Person and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale or other transfer of all or substantially all of the Company’s assets in a transaction that is subject to, and that complies with the provisions of, Section 5.01 hereof.

ARTICLE 6.
DEFAULTS AND REMEDIES

Section 6.01 Events of Default.

     Each of the following is an “Event of Default”:

     (1) default for 30 days in the payment when due of interest on, or Special Interest, if any, with respect to, the Notes, whether or not prohibited by the subordination provisions of this Indenture;

     (2) default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Notes, whether or not prohibited by the subordination provisions of this Indenture;

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     (3) failure by the Company or any of its Subsidiaries to comply with the provisions of Sections 4.14 or 5.01 hereof;

     (4) failure by the Company or any of its Restricted Subsidiaries for 30 days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class to comply with any of the other agreements in this Indenture;

     (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the date of this Indenture, if that default:

     (A) is caused by a failure to pay principal of, or interest or premium, if any, on, such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a “Payment Default”); or

     (B) results in the acceleration of such Indebtedness prior to its express maturity,

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $15.0 million or more;

     (6) failure by the Company or any of its Restricted Subsidiaries to pay final judgments entered by a court or courts of competent jurisdiction in excess of $15.0 million, which judgments are not paid, discharged or stayed for a period of 60 days;

     (7) except as permitted by this Indenture, any Note Guarantee ceases for any reason to be in full force and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee; and

     (8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

     (A) is for relief against the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary in an involuntary case;

     (B) appoints a custodian of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary; or

     (C) orders the liquidation of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary;

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     and such order or decree remains unstayed and in effect for 60 consecutive days.

Section 6.02 Acceleration.

     In the case of an Event of Default specified in clause (8) of Section 6.01 hereof, with respect to the Company, any Restricted Subsidiary of the Company that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee by notice to the Company or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes by notice to the Company and the Trustee may declare all the Notes to be due and payable immediately.

Section 6.03 Other Remedies.

     If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium and Special Interest, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

     The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.

Section 6.04 Waiver of Past Defaults.

     Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may, on behalf of all of the Holders, waive any existing Default or Event of Default and its consequences under this Indenture, except a continuing Default or Event of Default in the payment of the principal of, or interest on, the Notes; provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

Section 6.05 Control by Majority.

     Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability.

Section 6.06 Limitation on Suits.

     A Holder may pursue a remedy with respect to this Indenture or the Notes only if:

     (1) such Holder gives to the Trustee written notice that an Event of Default is continuing;

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     (2) Holders of at least 25% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy;

     (3) such Holder or Holders offer and, if requested, provide to the Trustee security or indemnity reasonably satisfactory to the Trustee against any loss, liability or expense;

     (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and

     (5) during such 60-day period, Holders of a majority in aggregate principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with such request.

     A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note.

Section 6.07 Rights of Holders of Notes to Receive Payment.

     Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium and Special Interest, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

Section 6.08 Collection Suit by Trustee.

     If an Event of Default specified in Section 6.01(1) or (2) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium and Special Interest, if any, and interest remaining unpaid on, the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

Section 6.09 Trustee May File Proofs of Claim.

     The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of

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reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.10 Priorities.

     Subject to the provisions of Article 10, if the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order:

     First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

     Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium and Special Interest, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium and Special Interest, if any and interest, respectively; and

     Third: to the Company or to such party as a court of competent jurisdiction shall direct.

     The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10.

Section 6.11 Undertaking for Costs.

     In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes.

ARTICLE 7.
TRUSTEE

Section 7.01 Duties of Trustee.

     (a) If an Event of Default has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

     (b) Except during the continuance of an Event of Default:

     (1) the duties of the Trustee will be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

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     (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee will examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

     (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

     (1) this clause (c) does not limit the effect of clause (b) of this Section 7.01;

     (2) the Trustee will not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

     (3) the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.

     (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to clauses (a), (b), and (c) of this Section 7.01.

     (e) No provision of this Indenture will require the Trustee to expend or risk its own funds or incur any liability. The Trustee will be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holder, unless such Holder has offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

     (f) The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

Section 7.02 Rights of Trustee.

     (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.

     (b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

     (c) The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care.

     (d) The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.

     (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company will be sufficient if signed by an Officer of the Company.

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     (f) The Trustee will be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee security or indemnity satisfactory to it against the losses, liabilities and expenses that might be incurred by it in compliance with such request or direction.

Section 7.03 Individual Rights of Trustee.

     The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee (if this Indenture has been qualified under the TIA) or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.

Section 7.04 Trustee’s Disclaimer.

     The Trustee will not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, it will not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

Section 7.05 Notice of Defaults.

     If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee will mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of or interest on any Note, the Trustee may withhold the notice if it determines that withholding the notice is in the interests of the Holders of the Notes.

Section 7.06 Reports by Trustee to Holders of the Notes.

     (a) Within 60 days after each May 1 beginning with the May 1 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee will mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA § 313(a) (but if no event described in TIA § 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also will comply with TIA § 313(b)(2). The Trustee will also transmit by mail all reports as required by TIA § 313(c).

     (b) A copy of each report at the time of its mailing to the Holders of Notes will be mailed by the Trustee to the Company and filed by the Trustee with the SEC and each stock exchange on which the Notes are listed in accordance with TIA § 313(d). The Company will promptly notify the Trustee when the Notes are listed on any stock exchange.

Section 7.07 Compensation and Indemnity.

     (a) The Company will pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee’s compensation will not be limited by any law on compensation of a trustee of an express trust. The Company will reimburse the Trustee

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promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses will include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

     (b) The Company and the Guarantors will jointly and severally indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company and the Guarantors (including this Section 7.07) and defending itself against any claim (whether asserted by the Company, the Guarantors, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence, willful misconduct or bad faith. The Trustee will notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company will not relieve the Company or any of the Guarantors of their obligations hereunder. The Company or such Guarantor will defend the claim and the Trustee will cooperate in the defense. The Trustee may have separate counsel and the Company will pay the reasonable fees and expenses of such counsel. Neither the Company nor any Guarantor need pay for any settlement made without its consent, which consent will not be unreasonably withheld.

     (c) The obligations of the Company and the Guarantors under this Section 7.07 will survive the satisfaction and discharge of this Indenture.

     (d) To secure the Company’s and the Guarantors’ payment obligations in this Section 7.07, the Trustee will have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien will survive the satisfaction and discharge of this Indenture.

     (e) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(8) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

     (f) The Trustee will comply with the provisions of TIA § 313(b)(2) to the extent applicable.

Section 7.08 Replacement of Trustee.

     (a) A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.08.

     (b) The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if:

     (1) the Trustee fails to comply with Section 7.10 hereof;

     (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

     (3) a custodian or public officer takes charge of the Trustee or its property; or

     (4) the Trustee becomes incapable of acting.

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     (c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company will promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.

     (d) If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

     (e) If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

     (f) A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee will mail a notice of its succession to Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company’s obligations under Section 7.07 hereof will continue for the benefit of the retiring Trustee.

Section 7.09 Successor Trustee by Merger, etc.

     If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act will be the successor Trustee.

Section 7.10 Eligibility; Disqualification.

     There will at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus (together with its parent) of at least $100.0 million as set forth in its most recent published annual report of condition.

     This Indenture will always have a Trustee who satisfies the requirements of TIA § 310(a)(1), (2) and (5). The Trustee is subject to TIA § 310(b).

Section 7.11 Preferential Collection of Claims Against Company.

     The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.

ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.

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     The Company may at any time, at the option of its Board of Directors evidenced by a resolution set forth in an Officers’ Certificate, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8.

Section 8.02 Legal Defeasance and Discharge.

     Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes (including the Note Guarantees) on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”). For this purpose, Legal Defeasance means that the Company and the Guarantors will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes (including the Note Guarantees), which will thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all their other obligations under such Notes, the Note Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which will survive until otherwise terminated or discharged hereunder:

     (1) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium and Special Interest, if any, on, such Notes when such payments are due from the trust referred to in Section 8.04 hereof;

     (2) the Company’s obligations with respect to such Notes under Article 2 and Section 4.02 hereof;

     (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company’s and the Guarantors’ obligations in connection therewith; and

     (4) this Article 8.

     Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.

Section 8.03 Covenant Defeasance.

     Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from each of their obligations under the covenants contained in Sections 4.03, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.14, 4.15, 4.16, 4.17, 4.19 and 4.20 hereof and clause (4) of Section 5.01 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are satisfied (hereinafter, “Covenant Defeasance”), and the Notes will thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes will not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and Note Guarantees, the Company and the Guarantors may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section

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6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes and Note Guarantees will be unaffected thereby. In addition, upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(3) through 6.01(8) hereof will not constitute Events of Default.

Section 8.04 Conditions to Legal or Covenant Defeasance.

     In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02 or 8.03 hereof:

     (1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm, firm of independent accountants or other nationally recognized firm of financial experts, to pay the principal of, premium, if any, and interest on, the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to such stated date for payment or to a particular redemption date;

     (2) in the case of an election under Section 8.02 hereof, the Company must deliver to the Trustee an Opinion of Counsel confirming that:

     (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or

     (B) since the date of this Indenture, there has been a change in the applicable federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

     (3) in the case of an election under Section 8.03 hereof, the Company must deliver to the Trustee an Opinion of Counsel confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

     (4) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit);

     (5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound;

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     (6) the Company must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding any creditors of the Company or others; and

     (7) the Company must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent as contemplated by this Article 8 relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.

     Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee”) pursuant to Section 8.04 hereof in respect of the outstanding Notes will be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and Special Interest, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.

     The Company will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.

     Notwithstanding anything in this Article 8 to the contrary, the Trustee will deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(1) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Section 8.06 Repayment to Company.

     Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium or Special Interest, if any, or interest on, any Note and remaining unclaimed for two years (or such shorter period as shall permit the return of such funds to the Company under the applicable escheat laws) after such principal, premium or Special Interest, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) will be discharged from such trust; and the Holder of such Note will thereafter be permitted to look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, will thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.

Section 8.07 Reinstatement.

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     If the Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s and the Guarantors’ obligations under this Indenture and the Notes and the Note Guarantees will be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium or Special Interest, if any, or interest on, any Note following the reinstatement of its obligations, the Company will be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.

ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01 Without Consent of Holders of Notes.

     Notwithstanding Section 9.02 of this Indenture, the Company, the Guarantors and the Trustee may amend or supplement this Indenture or the Notes or the Note Guarantees without the consent of any Holder of Note:

     (1) to cure any ambiguity, defect or inconsistency;

     (2) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided that the uncertificated Notes are issued in registered form for purposes of Section 163 of the Internal Revenue Code of 1986, as amended (the “Code”) or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code;

     (3) to provide for the assumption of the Company’s or a Guarantor’s obligations to the Holders of the Notes and Note Guarantees by a successor to the Company or such Guarantor pursuant to Article 5 or Article 11 hereof;

     (4) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder;

     (5) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA;

     (6) to conform the text of this Indenture, the Note Guarantees or the Notes to any provision of the “Description of Notes” section of the Company’s Offering Circular dated April 27, 2004, relating to the initial offering of the Notes, to the extent that such provision in that “Description of Notes” was intended to be a verbatim recitation of a provision of this Indenture, the Note Guarantees or the Notes;

     (7) to allow any Guarantor to execute a supplemental indenture and/or a Note Guarantee with respect to the Notes; or

     (8) to provide for the issuance of Additional Notes in accordance with the limitations set forth in this Indenture as of the date hereof.

     Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, and upon receipt by the

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Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Company and the Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee will not be obligated to enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise.

Section 9.02 With Consent of Holders of Notes.

     Except as provided below in this Section 9.02 and in Section 10.13, the Company and the Trustee may amend or supplement this Indenture (including, without limitation, Section 3.09, 4.10 and 4.14 hereof) and the Notes and the Note Guarantees with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, Additional Notes, if any) voting as a single class (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium or Special Interest, if any, or interest on, the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes or the Note Guarantees may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, Additional Notes, if any) voting as a single class (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Section 2.08 hereof shall determine which Notes are considered to be “outstanding” for purposes of this Section 9.02.

     Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 9.06 hereof, the Trustee will join with the Company and the Guarantors in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amended or supplemental Indenture.

     It is not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient if such consent approves the substance thereof.

     After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company will mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes or the Note Guarantees. However, without the consent of each Holder affected, an amendment, supplement or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder):

     (1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;

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          (2) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes (except as provided above with respect to Sections 4.10 and 4.14 hereof);

          (3) reduce the rate of or change the time for payment of interest on any Note;

          (4) waive a Default or Event of Default in the payment of principal of, or premium, if any, or interest on, the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration and except as provided above with respect to Sections 4.10 and 4.14 hereof);

          (5) make any Note payable in money other than that stated in the Notes;

          (6) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of, or interest or premium, if any, on, the Notes;

          (7) waive a redemption payment with respect to any Note (other than a payment required by Sections 4.10 and 4.14 hereof); or

          (8) make any change in the preceding amendment and waiver provisions.

Section 9.03 Compliance with Trust Indenture Act.

     Every amendment or supplement to this Indenture or the Notes will be set forth in a amended or supplemental indenture that complies with the TIA as then in effect.

Section 9.04 Revocation and Effect of Consents.

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

     Section 9.05 Notation on or Exchange of Notes.

     The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.

     Failure to make the appropriate notation or issue a new Note will not affect the validity and effect of such amendment, supplement or waiver.

Section 9.06 Trustee to Sign Amendments, etc.

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     The Trustee will sign any amended or supplemental indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amended or supplemental indenture until the Board of Directors of the Company approves it. In executing any amended or supplemental indenture, the Trustee will be entitled to receive and (subject to Section 7.01 hereof) will be fully protected in relying upon, in addition to the documents required by Section 13.04 hereof, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture.

ARTICLE 10.
SUBORDINATION

Section 10.01 Agreement to Subordinate.

     The Company agrees, and each Holder by accepting a Note agrees, that the Indebtedness evidenced by the Notes is subordinated in right of payment, to the extent and in the manner provided in this Article 10, to the prior payment in full in cash of all Senior Debt (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt.

Section 10.02 Liquidation; Dissolution; Bankruptcy.

     Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or any of its Subsidiaries or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company, any of its Subsidiaries or any of their respective property, in an assignment for the benefit of creditors of the Company or any of its Subsidiaries, or in any marshalling of the Company’s or any of its Subsidiaries’ assets and liabilities:

          (1) holders of Senior Debt will be entitled to receive payment in full in cash of all Obligations due in respect of such Senior Debt (including interest after the commencement of any bankruptcy proceeding at the rate specified in the applicable Senior Debt) before the Holders of Notes will be entitled to receive any payment with respect to the Notes (except that Holders of Notes may receive and retain Permitted Junior Securities and payments made from any defeasance trust created pursuant to Article 8 hereof or any trust fund pursuant to Article 12 hereof); and

          (2) until all Obligations with respect to Senior Debt (as provided in clause (1) above) are paid in full, any distribution to which Holders would be entitled but for this Article 10 will be made to holders of Senior Debt (except that Holders of Notes may receive and retain Permitted Junior Securities and payments made from any defeasance trust created pursuant to Article 8 hereof or any trust fund pursuant to Article 12 hereof), as their interests may appear.

Section 10.03 Default on Designated Senior Debt.

     (a) The Company may not make any payment or distribution to the Trustee or any Holder in respect of Indebtedness or other Obligation evidenced by the Notes and may not acquire from the Trustee or any Holder any Notes for cash or property (other than Permitted Junior Securities and payments made from any defeasance trust created pursuant to Article 8 hereof or any trust fund pursuant to Article 12 hereof) until all principal and other Obligations with respect to the Senior Debt have been paid in full if:

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          (1) payment default on Designated Senior Debt occurs and is continuing beyond any applicable grace period in the agreement, indenture or other document governing such Designated Senior Debt; or

          (2) any other default occurs and is continuing on any series of Designated Senior Debt that permits holders of that series of Designated Senior Debt to accelerate its maturity and the Trustee receives a notice of such default (a “Payment Blockage Notice”) from the Company or the holders of any Designated Senior Debt. If the Trustee receives any such Payment Blockage Notice, no subsequent Payment Blockage Notice will be effective for purposes of this Section 10.03 unless and until (A) at least 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice and (B) all scheduled payments of principal, premium, if any, and interest on the Notes that have come due have been paid in full in cash.

     No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee may be, or may be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 120 days.

     (b) The Company may and will resume payments on and distributions in respect of the Notes and may acquire them upon the earlier of:

          (1) in the case of a payment default, upon the date upon which such default is cured or waived in writing by the representatives of the holders of Designated Senior Debt, or

          (2) in the case of a nonpayment default, upon the earlier of the date on which such nonpayment default is cured or waived in writing by the representatives of the holders of Designated Senior Debt or 179 days after the date on which the applicable Payment Blockage Notice is received by the Trustee, unless the maturity of any Designated Senior Debt has been accelerated,

if this Article 10 otherwise permits the payment, distribution or acquisition at the time of such payment or acquisition.

Section 10.04 Acceleration of Notes.

     If payment of the Notes is accelerated because of an Event of Default, the Company will promptly notify holders of Senior Debt of the acceleration.

Section 10.05 When Distribution Must Be Paid Over.

     In the event that the Trustee or any Holder receives any payment of any Indebtedness or other Obligation evidenced by the Notes (other than Permitted Junior Securities and payments made from any defeasance trust created pursuant to Article 8 hereof or any trust fund pursuant to Article 12 hereof) at a time when the Trustee or such Holder, as applicable, has actual knowledge that such payment is prohibited by Section 10.03 hereof, such payment will be held by the Trustee or such Holder, in trust for the benefit of, and will be paid forthwith over and delivered, upon written request, to, the holders of Senior Debt as their interests may appear or their Representative under the agreement, indenture or other document (if any) pursuant to which Senior Debt may have been issued, as their respective interests may appear, for application to the payment of all Obligations with respect to Senior Debt remaining unpaid to the extent necessary to pay such Obligations in full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt.

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     With respect to the holders of Senior Debt, the Trustee undertakes to perform only those obligations on the part of the Trustee as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to the holders of Senior Debt will be read into this Indenture against the Trustee. The Trustee will not be deemed to owe any fiduciary duty to the holders of Senior Debt, and will not be liable to any such holders if the Trustee pays over or distributes to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Debt are then entitled by virtue of this Article 10, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee.

Section 10.06 Notice by Company.

     The Company will promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any Obligations with respect to the Notes to violate this Article 10, but failure to give such notice will not affect the subordination of the Notes to the Senior Debt as provided in this Article 10.

Section 10.07 Subrogation.

     After all Senior Debt is paid in full and until the Notes are paid in full, Holders of Notes will be subrogated (equally and ratably with all other Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt to receive distributions applicable to Senior Debt to the extent that distributions otherwise payable to the Holders of Notes have been applied to the payment of Senior Debt. A distribution made under this Article 10 to holders of Senior Debt that otherwise would have been made to Holders of Notes is not, as between the Company and Holders, a payment by the Company on the Notes.

Section 10.08 Relative Rights.

     This Article 10 defines the relative rights of Holders of Notes and holders of Senior Debt. Nothing in this Indenture will:

          (1) impair, as between the Company and Holders of Notes, the obligation of the Company, which is absolute and unconditional, to pay principal of, premium and interest and Special Interest, if any, on, the Notes in accordance with their terms;

          (2) affect the relative rights of Holders of Notes and creditors of the Company other than their rights in relation to holders of Senior Debt; or

          (3) prevent the Trustee or any Holder of Notes from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of Senior Debt to receive distributions and payments otherwise payable to Holders of Notes.

     If the Company fails because of this Article 10 to pay principal of, premium or interest or Special Interest, if any, on, a Note on the due date, the failure is still a Default or Event of Default.

Section 10.09 Subordination May Not Be Impaired by Company.

     No right of any holder of Senior Debt to enforce the subordination of the Indebtedness evidenced by the Notes may be impaired by any act or failure to act by the Company or any Holder or by the failure of the Company or any Holder to comply with this Indenture.

Section 10.10 Distribution or Notice to Representative.

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     Whenever a distribution is to be made or a notice given to holders of Senior Debt, the distribution may be made and the notice given to their Representative.

     Upon any payment or distribution of assets of the Company referred to in this Article 10, the Trustee and the Holders of Notes will be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders of Notes for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10.

Section 10.11 Rights of Trustee and Paying Agent.

     Notwithstanding the provisions of this Article 10 or any other provision of this Indenture, the Trustee will not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Notes, unless the Trustee has received at its Corporate Trust Office at least five Business Days prior to the date of such payment written notice of facts that would cause the payment of any Indebtedness or other Obligation evidenced by the Notes to violate this Article 10. Only the Company or a Representative may give the notice. Nothing in this Article 10 will impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.

     The Trustee in its individual or any other capacity may hold Senior Debt with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights.

Section 10.12 Authorization to Effect Subordination.

     Each Holder of Notes, by the Holder’s acceptance thereof, authorizes and directs the Trustee on such Holder’s behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 10, and appoints the Trustee to act as such Holder’s attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof at least 30 days before the expiration of the time to file such claim, the Representatives are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Notes.

Section 10.13 Amendments.

     The provisions of this Article 10 (including with respect to any Note Guarantee) may not be amended or modified without the written consent of the holders of all Designated Senior Debt. In addition, any amendment to, or waiver of, the provisions of this Article 10 (including with respect to any Note Guarantee) that adversely affects the rights of the Holders of the Notes will require the consent of the Holders of at least 75% in aggregate principal amount of Notes then outstanding.

ARTICLE 11.
NOTE GUARANTEES

Section 11.01 Guarantee.

     (a) Subject to this Article 11, each of the Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the

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Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that:

          (1) the principal of, premium and Special Interest, if any, and interest on, the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and

          (2) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.

     Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.

     (b) To the extent permitted by law, the Guarantors hereby agree that their obligations hereunder are unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. To the extent permitted by law, each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenant that this Note Guarantee will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture.

     (c) If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, will be reinstated in full force and effect.

     (d) Each Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) will forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. The Guarantors will have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Note Guarantee.

Section 11.02 Subordination of Note Guarantee.

     The Obligations of each Guarantor under its Note Guarantee pursuant to this Article 11 will be junior and subordinated to the Senior Debt of such Guarantor on the same basis as the Notes are junior and subordinated to Senior Debt of the Company. For the purposes of the foregoing sentence, the Trustee

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and the Holders will have the right to receive and/or retain payments by any of the Guarantors only at such times as they may receive and/or retain payments in respect of the Notes pursuant to this Indenture, including Article 10 hereof.

Section 11.03 Limitation on Guarantor Liability.

     Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of such Guarantor will be limited to the maximum amount that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 11, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance.

Section 11.04 Execution and Delivery of Note Guarantee.

     To evidence its Note Guarantee set forth in Section 11 hereof, each Guarantor hereby agrees that a notation of such Note Guarantee substantially in the form attached as Exhibit E hereto will be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture will be executed on behalf of such Guarantor by one of its Officers.

     Each Guarantor hereby agrees that its Note Guarantee set forth in Section 11.01 hereof will remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee.

     If an Officer whose signature is on this Indenture or on the Note Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Note Guarantee is endorsed, the Note Guarantee will be valid nevertheless.

     The delivery of any Note by the Trustee, after the authentication thereof hereunder, will constitute due delivery of the Note Guarantee set forth in this Indenture on behalf of the Guarantors.

     In the event that the Company or any of its Restricted Subsidiaries creates or acquires any Domestic Subsidiary which is wholly-owned by the Company or such Restricted Subsidiary after the date of this Indenture, if required by Section 4.19 hereof, the Company will cause such Domestic Subsidiary to comply with the provisions of Section 4.19 hereof and this Article 11, to the extent applicable.

Section 11.05 Guarantors May Consolidate, etc., on Certain Terms.

     Except as otherwise provided in Section 11.06 hereof, no Guarantor may sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person, other than the Company or another Guarantor, unless:

          (1) immediately after giving effect to such transaction, no Default or Event of Default exists; and

          (2) either:

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               (a) subject to Section 11.06 hereof, the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) assumes all the obligations of that Guarantor under this Indenture, its Note Guarantee and the Registration Rights Agreement pursuant to a supplemental indenture in form reasonably satisfactory to the Trustee; or

               (b) if applicable, the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including without limitation, Section 4.10 hereof.

     In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and reasonably satisfactory in form to the Trustee, of the Note Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor Person will succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor Person thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Note Guarantees so issued will in all respects have the same legal rank and benefit under this Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof.

     Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses 2(a) and (b) above, nothing contained in this Indenture or in any of the Notes will prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or will prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor.

Section 11.06 Releases.

     (a) In the event of any sale or other disposition of all or substantially all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the Capital Stock of any Guarantor, in each case to a Person that is not (either before or after giving effect to such transactions) the Company or a Restricted Subsidiary of the Company, then such Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the Capital Stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including without limitation Section 4.10 hereof. Upon delivery by the Company to the Trustee of an Officers’ Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of this Indenture, including without limitation Section 4.10 hereof, the Trustee will execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Note Guarantee.

     (b) Upon designation of any Guarantor as an Unrestricted Subsidiary in accordance with the terms of this Indenture, such Guarantor will be released and relieved of any obligations under its Note Guarantee without any action on the part of the Trustee.

     (c) Upon Legal or Covenant Defeasance in accordance with Article 8 hereof or satisfaction and discharge of this Indenture in accordance with Article 12 hereof, each Guarantor will be released and relieved of any obligations under its Note Guarantee without any action on the part of the Trustee.

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     (d) In connection with any transaction after which any Guarantor is no longer a Restricted Subsidiary of the Company in accordance with the terms of this Indenture, such Guarantor will be released and relieved of any obligations under its Note Guarantee without any action on the part of the Trustee.

     (e) If any Subsidiary Guarantor shall not guarantee any Indebtedness or other obligations under the Credit Agreement of the Company or any Domestic Restricted Subsidiary, such Guarantor will be released and relieved of any obligations under its Note Guarantee without any action on the part of the Trustee.

     Any Guarantor not released from its obligations under its Note Guarantee as provided in this Section 11.06 will remain liable for the full amount of principal of and interest and premium and Special Interest, if any, on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 11.

ARTICLE 12.
SATISFACTION AND DISCHARGE

Section 12.01 Satisfaction and Discharge.

     This Indenture will be discharged and will cease to be of further effect as to all Notes issued hereunder, when:

          (1) either:

               (a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company, have been delivered to the Trustee for cancellation; or

               (b) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable or may be called for redemption within one year or have been called for redemption pursuant to the provisions of Section 3.07 hereof and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium and Special Interest, if any, and accrued interest to the date of maturity or redemption;

          (2) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) and the deposit will not result in a breach or violation of, or constitute a default under, any other material instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound;

          (3) the Company or any Guarantor has paid or caused to be paid all sums payable by it under this Indenture; and

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          (4) the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case may be.

In addition, the Company must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

     Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section 12.01, the provisions of Sections 12.02 and 8.06 hereof will survive. In addition, nothing in this Section 12.01 will be deemed to discharge those provisions of Section 7.07 hereof, that, by their terms, survive the satisfaction and discharge of this Indenture.

Section 12.02 Application of Trust Money.

     Subject to the provisions of Section 8.06 hereof, all money deposited with the Trustee pursuant to Section 12.01 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium and Special Interest, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.

     If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 12.01 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s and any Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 12.01 hereof; provided that if the Company has made any payment of principal of, premium or Special Interest, if any, or interest on, any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

ARTICLE 13.
MISCELLANEOUS

Section 13.01 Trust Indenture Act Controls.

     If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA §318(c), the imposed duties will control.

Section 13.02 Notices.

     Any notice or communication by the Company, any Guarantor or the Trustee to the others is duly given if in writing and delivered in Person or by first class mail (registered or certified, return receipt requested), facsimile transmission or overnight air courier guaranteeing next day delivery, to the others’ address:

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If to the Company and/or any Guarantor:

Emmis Operating Company
One Emmis Plaza
40 Monument Circle, Suite 700
Indianapolis, Indiana 46204
Facsimile No.: (317) 684-5580
Attention: Scott Enright, Esq.

With a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, New York 10019
Facsimile No.: (212) 492-0025
Attention: John Kennedy, Esq.

If to the Trustee:

The Bank of Nova Scotia Trust Company of New York
One Liberty Plaza, 23rd Floor
New York, NY 10006
Facsimile No.: (212) 225-5436
Attention: Corporate Trust Administration

     The Company, any Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

     All notices and communications (other than those sent to Holders) will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery, provided that notices and communications to the Trustee will not be deemed to have been duly given until actual receipt thereof by the Trustee.

     Any notice or communication to a Holder will be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication will also be so mailed to any Person described in TIA § 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders.

     Except in the case of the Trustee, if a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.

     If the Company mails a notice or communication to Holders, it will mail a copy to the Trustee and each Agent at the same time.

Section 13.03 Communication by Holders of Notes with Other Holders of Notes.

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     Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

Section 13.04 Certificate and Opinion as to Conditions Precedent.

     Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:

          (1) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 13.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and

          (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 13.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.

Section 13.05 Statements Required in Certificate or Opinion.

     Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) must comply with the provisions of TIA § 314(e) and must include:

          (1) a statement that the Person making such certificate or opinion has read such covenant or condition;

          (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

          (3) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and

          (4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.

Section 13.06 Rules by Trustee and Agents.

     The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

Section 13.07 No Personal Liability of Directors, Officers, Employees and Stockholders.

     No past, present or future director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes, this Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

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Section 13.08 Governing Law.

     THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 13.09 No Adverse Interpretation of Other Agreements.

     This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

Section 13.10 Successors.

     All agreements of the Company in this Indenture and the Notes will bind its successors. All agreements of the Trustee in this Indenture will bind its successors. All agreements of each Guarantor in this Indenture will bind its successors, except as otherwise provided in Section 11.06 hereof.

Section 13.11 Severability.

     In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.

Section 13.12 Counterpart Originals.

     The parties may sign any number of copies of this Indenture. Each signed copy will be an original, but all of them together represent the same agreement.

Section 13.13 Table of Contents, Headings, etc.

     The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof.

[Signatures on following page]

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SIGNATURES

Dated as of May 10, 2004	Emmis Operating Company
	By:	/s/ J. Scott Enright
		Name: J. Scott Enright Title: Vice President and Associate General Counsel
	Emmis Communications Corporation
	Emmis Radio Corporation
	Emmis Television Broadcasting, L.P.
	Emmis Publishing, L.P.
	Emmis Indiana Broadcasting, L.P.
	SJL of Kansas Corp.
	Topeka Television Corporation
	Emmis International Broadcasting Corporation
	Emmis Meadowlands Corporation
	Emmis Publishing Corporation
	Emmis License Corporation
	Emmis Television License Corporation
	Emmis Radio License Corporation
	Emmis License Corporation of New York
	Emmis Radio License Corporation of New York
	Emmis Television License Corporation of Wichita
	Emmis Television License Corporation of Topeka
	Mediatex Communications Corporation
	Los Angeles Magazine Holding Company, Inc.
	By:	/s/ J. Scott Enright
		Name: J. Scott Enright
		Title: Vice President and Associate General Counsel
	The Bank of Nova Scotia Trust Company of New York
	By:	/s/ John Neylan
		Name: John F. Neylan
		Title: Trust Officer

EXHIBIT A

[Face of Note]

CUSIP/CINS ____________

6 7/8% Senior Subordinated Notes due 2012

No.      $             

EMMIS OPERATING COMPANY

promises to pay to__________or registered assigns,

the principal sum of______________________________________________________________________________________ DOLLARS on May 15, 2012.

Interest Payment Dates: May 15 and November 15

Record Dates: May 1 and November 1

Dated:

EMMIS OPERATING COMPANY
By:
	Name:
	Title:

This is one of the Notes referred to
in the within-mentioned Indenture:

THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK,
as Trustee

By:
	Authorized Signatory

A-1

[Back of Note]
6 7/8% Senior Subordinated Notes due 2012

[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]

     Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

          (1) Interest. Emmis Operating Company, an Indiana corporation (the “Company”), promises to pay interest on the principal amount of this Note at 6-7/8% per annum from_______________, 20___ until maturity and shall pay the Special Interest, if any, payable pursuant to the Registration Rights Agreement referred to below. The Company will pay interest and Special Interest, if any, semi-annually in arrears on May 15 and November 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be_______________, 20___. The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Special Interest, if any, (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

          (2) Method of Payment. The Company will pay interest on the Notes (except defaulted interest) and Special Interest, if any, to the Persons who are registered Holders of Notes at the close of business on the May 1 or November 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium and Special Interest, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Special Interest, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Special Interest, if any, on, all Global Notes and all other Notes the Holders of which will have provided wire transfer instructions to the Company or the Paying Agent. Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

          (3) Paying Agent and Registrar. Initially, The Bank of Nova Scotia Trust Company of New York, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity.

A-2

          (4) Indenture. The Company issued the Notes under an Indenture dated as of May 10, 2004 (the “Indenture”) among the Company, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are unsecured obligations of the Company.

          (5) Optional Redemption.

     (a) Except as set forth in clauses (b) and (c) of this Paragraph 5, the Company will not have the option to redeem the Notes prior to May 15, 2008. On or after May 15, 2008, the Company will have the option to redeem all or a part of the Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Special Interest, if any, on the Notes redeemed to the applicable redemption date, if redeemed during the twelve-month period beginning on May 15 of the years indicated below, subject to the rights of Holders on the relevant record date to receive interest on the relevant interest payment date:

Year	Percentage
2008		103.438	%
2009		101.719	%
2010 and thereafter		100.000	%

     Unless the Company defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

     (b) Notwithstanding the provisions of clause (a) of this Paragraph 5, at any time prior to May 15, 2007, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture with the net cash proceeds of one or more Equity Offerings at a redemption price equal to 106.875% of the aggregate principal amount thereof, plus accrued and unpaid interest and Special Interest, if any, to the redemption date; provided that at least 65% in aggregate principal amount of the Notes originally issued under the Indenture (excluding Notes held by the Company and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption and that such redemption occurs within 90 days of the date of the closing of such Equity Offering.

     (c) Notwithstanding the provisions of clause (a) of this Paragraph 5, at any time prior to May 15, 2008, the Company may also redeem all or a part of the Notes upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each Holder’s registered address, at a redemption price equal to 100% of the principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Special Interest, if any, to the applicable Redemption Date, subject to the rights of Holders on the relevant record date to receive interest due on the relevant interest payment date.

          (6) Mandatory Redemption.

     The Company is not be required to make mandatory redemption or sinking fund payments with respect to the Notes.

          (7) Repurchase at the Option of Holder.

               (a) If there is a Change of Control, the Company will be required to make an offer (a “Change of Control Offer”) to each Holder to repurchase all or any part (equal to $1,000

A-3

               or an integral multiple thereof) of each Holder’s Notes at a purchase price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Special Interest, if any, thereon to the date of purchase, subject to the rights of Holders on the relevant record date to receive interest due on the relevant interest payment date (the “Change of Control Payment”). Within 10 days following any Change of Control, the Company will mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture.

               (b) If the Company or a Restricted Subsidiary of the Company consummates any Asset Sales and the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will commence an offer to all Holders of Notes and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an “Asset Sale Offer”) pursuant to Section 3.09 of the Indenture to purchase the maximum principal amount of Notes (including any Additional Notes) and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Special Interest, if any, thereon to the date of purchase, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes (including any Additional Notes) and other pari passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Restricted Subsidiary) may use such deficiency for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” attached to the Notes. Upon completion of the Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

          (8) Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction or discharge of the Indenture. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed.

          (9) Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date.

          (10) Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes.

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          (11) Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or the Notes or the Note Guarantees may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes including Additional Notes, if any, voting as a single class, and any existing Default or Event or Default or compliance with any provision of the Indenture or the Notes or the Note Guarantees may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes including Additional Notes, if any, voting as a single class. In addition, any amendment to, or waiver of, the provisions of the Indenture relating to subordination (including with respect to any Note Guarantee) that adversely affects the rights of the Holders of the Notes will require the consent of the Holders of at least 75% in aggregate principal amount of Notes then outstanding. Also, any amendment to such provisions (including with respect to any Note Guarantee) will require the consent of the holders of Designated Senior Debt. Without the consent of any Holder of a Note, the Indenture or the Notes or the Note Guarantees may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company’s or a Guarantor’s obligations to Holders of the Notes and Note Guarantees in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA, to conform the text of the Indenture or the Notes to any provision of the “Description of Notes” section of the Company’s Offering Circular dated April 27, 2004, relating to the initial offering of the Notes, to the extent that such provision in that “Description of Notes” was intended to be a verbatim recitation of a provision of the Indenture, the Note Guarantees or the Notes, to allow any Guarantor to execute a supplemental indenture to the Indenture and/or a Note Guarantee with respect to the Notes or to provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture.

          (12) Defaults and Remedies. Events of Default include: (i) default for 30 days in the payment when due of interest on, or Special Interest, if any, with respect to the Notes, whether or not prohibited by the subordination provisions of the Indenture; (ii) default in the payment when due of the principal of, or premium, if any, on, the Notes when the same becomes due and payable at maturity, upon redemption or otherwise, whether or not prohibited by the subordination provisions of the Indenture, (iii) failure by the Company or any of its Subsidiaries to comply with Sections 4.14 or 5.01 of the Indenture; (iv) failure by the Company or any of its Restricted Subsidiaries for 30 days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class to comply with any of the other agreements in the Indenture; (v) default under certain other agreements relating to Indebtedness of the Company or any of its Restricted Subsidiaries which default is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default or results in the acceleration of such Indebtedness prior to its express maturity; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; (vii) except as permitted by the Indenture, any Note Guarantee ceases for any reason to be in full force and effect or any Guarantor or any Person acting on its behalf denies or disaffirms its obligations under such Guarantor’s Note Guarantee; and (viii) certain events of bankruptcy or insolvency with respect to the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary. If any Event of Default occurs and is continuing, the Trustee by notice to the Company or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes by notice to the Company and the Trustee may declare all the Notes to be due and payable

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          immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable immediately without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may, on behalf of the Holders of all of the Notes, rescind an acceleration or waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes (other than a Default or Event of Default in such payment due to an acceleration of the maturity of the Notes). The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required, within 30 days of becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default.

          (13) Subordination. Payment of principal, interest and premium and Special Interest, if any, on the Notes is subordinated to the prior payment of Senior Debt on the terms provided in the Indenture.

          (14) Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee.

          (15) No Recourse Against Others. A director, officer, employee, incorporator or stockholder of the Company or any of the Guarantors, as such, will not have any liability for any obligations of the Company or the Guarantors under the Notes, the Note Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes.

          (16) Authentication. This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

          (17) Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

          (18) Additional Rights of Holders of Restricted Global Notes and Restricted Definitive Notes. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes will have all the rights set forth in the Registration Rights Agreement dated as of May 10, 2004, among the Company, the Guarantors and the other parties named on the signature pages thereof, or, in the case of Additional Notes, Holders of Restricted Global Notes and Restricted Definitive Notes will have the rights set forth in one or more registration rights agreements, if any, among the Company, the Guarantors and the other parties thereto, relating to rights given by the Company and the

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          Guarantors to the purchasers of any Additional Notes (collectively, the “Registration Rights Agreement”).

          (19) CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption, and reliance may be placed only on the other identification numbers placed thereon.

          (20) GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THIS NOTE AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

     The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to:

Emmis Operating Company
One Emmis Plaza
40 Monument Circle, Suite 700
Indianapolis, Indiana 46204
Attention: Scott Enright, Esq.

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ASSIGNMENT FORM

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: _______________________________________________________________________________

(Insert assignee’s legal name)

(Insert assignee’s soc. sec. or tax I.D. no.)

(Print or type assignee’s name, address and zip code)

and irrevocably appoint____________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Date: _______________________

Your Signature:_____________________________________________
(Sign exactly as your name appears on the face of this Note)

Signature Guarantee*: ___________________________________

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

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OPTION OF HOLDER TO ELECT PURCHASE

     If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the appropriate box below:

—Section 4.10 —Section 4.14

     If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased:

$_______________

Date:_______________

Your Signature:________________________________________________
(Sign exactly as your name appears on the face of this Note)

Tax Identification No.:_____________________________

     Signature Guarantee*:____________________________

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE *

     The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

			Principal Amount
	Amount of decrease in		of this Global Note
	Principal Amount	Amount of increase in	following such	Signature of authorized
	in Principal Amount of	Principal Amount of	decrease	officer of Trustee or
Date of Exchange	this Global Note	this Global Note	(or increase)	Custodian

* This schedule should be included only if the Note is issued in global form.

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EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

Emmis Operating Company
One Emmis Plaza
40 Monument Circle, Suite 700
Indianapolis, Indiana 46204

The Bank of Nova Scotia Trust Company of New York
One Liberty Plaza, 23rd Floor
New York, NY 10006

     Re: 6 7/8% Senior Subordinated Notes due 2012

     Reference is hereby made to the Indenture, dated as of May 10, 2004 (the “Indenture”), among Emmis Operating Company, as issuer (the “Company”), the Guarantors party thereto and The Bank of Nova Scotia Trust Company of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

_____________________________________________, (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $____________ in such Note[s] or interests (the “Transfer”), to ____________________________ (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

     1.   o Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Restricted Definitive Note pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.

     2.  o Check if Transferee will take delivery of a beneficial interest in the Regulation S Global Note or a Restricted Definitive Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of

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the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.

     3.  o Check and complete if Transferee will take delivery of a beneficial interest in the IAI Global Note or a Restricted Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

     (a) o such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;

or

     (b) o such Transfer is being effected to the Company or a subsidiary thereof;

or

     (c) o such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act;

or

     (d) o such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Restricted Definitive Notes and in the Indenture and the Securities Act.

     4.   o Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.

     (a) o Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement

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Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

     (b) o Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

     (c) o Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

     This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

_________________________
[Insert Name of Transferor]     

By:
	Name:
	Title:

Dated:_______________________

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ANNEX A TO CERTIFICATE OF TRANSFER

1. The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

(a) o a beneficial interest in the:

(i)   o 144A Global Note (CUSIP_________________), or

(ii) o Regulation S Global Note (CUSIP_________________), or

(iii)o IAI Global Note (CUSIP_________________); or

(b) o a Restricted Definitive Note.

2. After the Transfer the Transferee will hold:

[CHECK ONE]

(a) o a beneficial interest in the:

(i)   o 144A Global Note (CUSIP_________________), or

(ii)  o Regulation S Global Note (CUSIP_________________), or

(iii) o IAI Global Note (CUSIP_________________); or

(iv) o Unrestricted Global Note (CUSIP_________________); or

(b) o a Restricted Definitive Note; or

(c) o an Unrestricted Definitive Note,

     in accordance with the terms of the Indenture.

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EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

Emmis Operating Company
One Emmis Plaza
40 Monument Circle, Suite 700
Indianapolis, Indiana 46204

The Bank of Nova Scotia Trust Company of New York
One Liberty Plaza, 23rd Floor
New York, NY 10006

     Re: 6 7/8% Senior Subordinated Notes due 2012 (CUSP _______________)

     Reference is hereby made to the Indenture, dated as of May 10, 2004 (the "Indenture”), among Emmis Operating Company, as issuer (the “Company”), the Guarantors party thereto and The Bank of Nova Scotia Trust Company of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

_______________________, (the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $_______________in such Note[s] or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:

     1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note

     (a) o Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

     (b) o Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

     (c) o Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is

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being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

     (d) o Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

     2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes

     (a) o Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

     (b) o Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] 144A Global Note, Regulation S Global Note, IAI Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

_________________________
[Insert Name of Transferor]    

By:
	Name:
	Title:

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Dated:______________________

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EXHIBIT D

FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Emmis Operating Company
One Emmis Plaza
40 Monument Circle, Suite 700
Indianapolis, Indiana 46204

The Bank of Nova Scotia Trust Company of New York
One Liberty Plaza, 23rd Floor
New York, NY 10006

     Re: 6 7/8% Senior Subordinated Notes due 2012

     Reference is hereby made to the Indenture, dated as of May 10, 2004 (the "Indenture”), among Emmis Operating Company, as issuer (the “Company”), the guarantors party thereto and The Bank of Nova Scotia Trust Company of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

     In connection with our proposed purchase of $________________ aggregate principal amount of:

     (a) o a beneficial interest in a Global Note, or

     (b) o a Definitive Note,

     we confirm that:

     1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the “Securities Act”).

     2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C) to an institutional “accredited investor” (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this Paragraph 2 a notice advising such purchaser that resales thereof are restricted as stated herein.

D-1

     3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect.

     4. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment.

     5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion.

     You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

_____________________________________
[Insert Name of Accredited Investor]

By:
	Name:
	Title:

Dated:_______________________

D-2

EXHIBIT E

FORM OF NOTATION OF GUARANTEE

     For value received, each Guarantor (which term includes any successor Person under the Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture dated as of May 10, 2004 (the “Indenture”) among Emmis Operating Company, (the “Company"), the Guarantors party thereto and The Bank of Nova Scotia Trust Company of New York, as trustee (the “Trustee”), (a) the due and punctual payment of the principal of, premium and Special Interest, if any, and interest on, the Notes, whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal of and interest on the Notes, if any, if lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms of the Indenture and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Guarantors to the Holders of Notes and to the Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth in Article 11 of the Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound by such provisions (b) authorizes and directs the Trustee, on behalf of such Holder, to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for such purpose; provided, however, that the Indebtedness evidenced by this Note Guarantee shall cease to be so subordinated and subject in right of payment upon any defeasance of this Note in accordance with the provisions of the Indenture.

     Capitalized terms used but not defined herein have the meanings given to them in the Indenture.

[Name of Guarantor(s)]
By:
	Name:
	Title:

E-1

EXHIBIT F

FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS

     Supplemental Indenture (this “Supplemental Indenture”), dated as of    , 200   , among    (the “Guaranteeing Subsidiary”), a subsidiary of Emmis Operating Company (or its permitted successor), an Indiana corporation (the “Company”), the Company, the other Guarantors (as defined in the Indenture referred to herein) and The Bank of Nova Scotia Trust Company of New York, as trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H

     WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the “Indenture”), dated as of May 10, 2004 providing for the issuance of 6 7/8% Senior Subordinated Notes due 2012 (the “Notes”);

     WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “Note Guarantee”); and

     WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

     1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

     2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture including but not limited to Article 11 thereof.

     4. No Recourse Against Others. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

     5. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

F-1

     6. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

     7. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

     8. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company.

F-2

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.

     Dated:____________________, 20_______

[GUARANTEEING SUBSIDIARY]
By:
	Name:
	Title:

[COMPANY]
By:
	Name:
	Title:

[EXISTING GUARANTORS]
By:
	Name:
	Title:

[TRUSTEE], as Trustee
By:
	Authorized Signatory

F-3

EX-10.1

EXHIBIT 10.1

Published CUSIP Number: __________________

REVOLVING CREDIT AND TERM LOAN AGREEMENT

Dated as of May 10, 2004

among

EMMIS OPERATING COMPANY,
as Borrower

EMMIS COMMUNICATIONS CORPORATION,
as Parent

THE LENDERS LISTED ON SCHEDULE 1 HERETO
and

BANK OF AMERICA, N.A.,
as Administrative Agent,

GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Syndication Agent

WACHOVIA BANK, N.A.,
DEUTSCHE BANK SECURITIES INC., and
CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS CAYMAN ISLANDS BRANCH,
as Co-Documentation Agents, and

BANC OF AMERICA SECURITIES LLC,
GOLDMAN SACHS CREDIT PARTNERS L.P., and
WACHOVIA CAPITAL MARKETS, LLC,
As Joint Lead Arrangers and Joint Book Managers

TABLE OF CONTENTS

						Page
1.	DEFINITIONS AND RULES OF INTERPRETATION						1
		1.1.	Definitions				1
		1.2.	Rules of Interpretation				26
2.	THE REVOLVING CREDIT FACILITY						26
		2.1.	Commitment to Lend				26
		2.2.	Commitment Fee				27
		2.3.	Reduction of Revolving Credit Commitment				27
		2.4.	Evidence of Revolving Credit Loans; Revolving Credit Notes				27
		2.5.	Interest on Revolving Credit Loans				28
		2.6.	Requests for Revolving Credit Loans				28
		2.7.	Conversion Options				28
				2.7.1.	Conversion to Different Type of Revolving Credit Loan		29
				2.7.2.	Continuation of Type of Revolving Credit Loan		29
				2.7.3.	Eurodollar Rate Loans		29
		2.8.	Funds for Revolving Credit Loans				29
				2.8.1.	Funding Procedures		29
				2.8.2.	Advances by Administrative Agent		30
		2.9.	Settlements				30
				2.9.1.	General		30
				2.9.2.	Failure to Make Funds Available		31
				2.9.3.	No Effect on Other Revolving Credit Lenders		31
		2.10.	Repayment Of The Revolving Credit Loans				31
				2.10.1.	Maturity		31
				2.10.2.	Mandatory Repayments of Revolving Credit Loans		31
				2.10.3.	Optional Repayments of Revolving Credit Loans		32
3.	THE TRANCHE B TERM LOAN						32
		3.1.	Commitment to Lend				32
		3.2.	Evidence of Tranche B Term Loan; Tranche B Term Notes				32
		3.3.	Mandatory Prepayment of Tranche B Term Loan; Scheduled Amortization				32
		3.4.	Optional Prepayment of Tranche B Term Loan				33
		3.5.	Interest on Tranche B Term Loan				33
				3.5.1.	Interest Rates		33
				3.5.2.	Notification by Borrower		33
				3.5.3.	Amounts, etc		33
4.	MANDATORY REPAYMENT OF THE LOANS						34
		4.1.	Excess Cash Flow Recapture				34
		4.2.	Proceeds of Asset Sales and Asset Swaps				34
		4.3.	Proceeds of Equity Issuances				34
		4.4.	Proceeds of Subordinated Debt Issuances				35
		4.5.	Application of Payments				35
		4.6.	Delivery of Proceeds				35
5.	LETTERS OF CREDIT						35
		5.1.	Letter of Credit Commitments				35
				5.1.1.	Commitment to Issue Letters of Credit		35
				5.1.2.	Letter of Credit Applications		36
				5.1.3.	Terms of Letters of Credit		36
				5.1.4.	Reimbursement Obligations of Revolving Credit Lenders		36
				5.1.5.	Participations of Revolving Credit Lenders		36
		5.2.	Reimbursement Obligation of the Borrower				36
		5.3.	Letter of Credit Payments				37
		5.4.	Obligations Absolute				38
		5.5.	Reliance by Issuer				38

i

TABLE OF CONTENTS
(continued)

						Page
		5.6.	Letter of Credit Fee				38
6.	CERTAIN GENERAL PROVISIONS						38
		6.1.	Closing Fees. The Borrower agrees to pay all fees on the Funding Date that have been expressly agreed to in writing between the Borrower and certain of the Lenders to be paid on the Funding Date				38
		6.2.	Administrative Agent’s Fee				39
		6.3.	Funds for Payments				39
				6.3.1.	Payments to Administrative Agent		39
				6.3.2.	No Offset, etc		39
				6.3.3.	Non-U.S. Lenders		40
		6.4.	Computations				40
		6.5.	Inability to Determine Eurodollar Rate				40
		6.6.	Illegality				41
		6.7.	Additional Costs, etc				41
		6.8.	Capital Adequacy				42
		6.9.	Certificate				42
		6.10.	Indemnity				42
		6.11.	Interest After Default				43
		6.12.	Mitigation Obligations; Replacement of Lenders				43
7.	COLLATERAL SECURITY AND GUARANTIES						43
		7.1.	Security of Borrower				43
		7.2.	Guaranties and Security of Parent and Subsidiaries				44
		7.3.	Release of Collateral and Guaranties				44
8.	REPRESENTATIONS AND WARRANTIES						44
		8.1.	Corporate Authority				44
				8.1.1.	Incorporation; Good Standing		44
				8.1.2.	Authorization		44
				8.1.3.	Enforceability		45
		8.2.	Governmental Approvals				45
		8.3.	Title to Properties				45
		8.4.	Financial Statements and Projections				45
				8.4.1.	Fiscal Year		45
				8.4.2.	Financial Statements		45
				8.4.3.	Projections		45
		8.5.	No Material Adverse Changes, etc				46
		8.6.	Franchises, Patents, Copyrights, etc				46
		8.7.	Litigation				46
		8.8.	No Materially Adverse Contracts, etc				46
		8.9.	Compliance with Other Instruments, Laws, Status as Senior Debt, etc				46
		8.10.	Tax Status				46
		8.11.	No Event of Default				47
		8.12.	Investment Company Acts and Communications Act				47
		8.13.	Absence of Financing Statements, etc				47
		8.14.	Perfection of Security Interest				47
		8.15.	Certain Transactions				47
		8.16.	Employee Benefit Plans				47
				8.16.1.	In General		47
				8.16.2.	Terminability of Welfare Plans		48
				8.16.3.	Guaranteed Pension Plans		48
				8.16.4.	Multiemployer Plans		48
		8.17.	Use of Proceeds				48
				8.17.1.	General		48
				8.17.2.	Regulation U		49

ii

TABLE OF CONTENTS
(continued)

						Page
				8.17.3.	Ineligible Securities		49
		8.18.	Environmental Compliance				49
		8.19.	Subsidiaries, etc				50
		8.20.	Disclosure				50
		8.21.	Licenses and Approvals				50
		8.22.	Material Agreements				51
		8.23.	Solvency				52
		8.24.	Excluded Subsidiaries				52
9.	AFFIRMATIVE COVENANTS						52
		9.1.	Punctual Payment				52
		9.2.	Maintenance of Office				52
		9.3.	Records and Accounts				52
		9.4.	Financial Statements, Certificates and Information				52
		9.5.	Notices				54
				9.5.1.	Defaults		54
				9.5.2.	Environmental Events		54
				9.5.3.	Notification of Claim against Collateral		54
				9.5.4.	Notice of Litigation and Judgments		54
				9.5.5.	Notice of SEC Filings, etc		54
		9.6.	Legal Existence; Conduct of Business; Maintenance of Properties				55
		9.7.	Insurance				55
		9.8.	Taxes				55
		9.9.	Inspection of Properties and Books, etc				56
				9.9.1.	General		56
				9.9.2.	Appraisals		56
				9.9.3.	Communications with Accountants		56
		9.10.	Compliance with Laws, Contracts, Licenses, and Permits				56
		9.11.	Employee Benefit Plans				57
		9.12.	Use of Proceeds				57
		9.13.	Additional Collateral				57
		9.14.	Interest Rate Protection				57
		9.15.	Additional Subsidiaries				58
		9.16.	Refinancing Note Proceeds				58
		9.17.	Further Assurances				58
10.	CERTAIN NEGATIVE COVENANTS						58
		10.1.	Restrictions on Indebtedness				58
		10.2.	Restrictions on Liens				60
				10.2.1.	Permitted Liens		60
				10.2.2.	Restrictions on Negative Pledges and Upstream Limitations		62
		10.3.	Restrictions on Investments				62
		10.4.	Restricted Payments				63
		10.5.	Merger, Consolidation, Acquisition and Disposition of Assets				64
				10.5.1.	Mergers and Acquisitions		64
				10.5.2.	Disposition of Assets		66
		10.6.	Sale and Leaseback				67
		10.7.	Compliance with Environmental Laws				67
		10.8.	Subordinated Debt				67
		10.9.	Employee Benefit Plans				67
		10.10.	Fiscal Year				68
		10.11.	Transactions with Affiliates				68
		10.12.	Certain Intercompany Matters				68
		10.13.	Activities of the Parent				68
		10.14.	Restrictions on Equity Issuances				69

iii

TABLE OF CONTENTS
(continued)

						Page
11.	FINANCIAL COVENANTS						69
		11.1.	Total Leverage Ratio				69
		11.2.	Senior Leverage Ratio				70
		11.3.	Interest Coverage Ratio				70
		11.4.	Fixed Charge Coverage Ratio				70
12.	CLOSING CONDITIONS						70
		12.1.	Loan Documents				70
		12.2.	Certified Copies of Governing Documents				71
		12.3.	Corporate or Other Action				71
		12.4.	Officer’s Certificates				71
		12.5.	Validity of Liens				71
		12.6.	Perfection Certificates, UCC Search Results and Survey				71
		12.7.	Title Insurance				71
		12.8.	Financial Statements				72
		12.9.	FCC Licenses; Third Party Consents				72
		12.10.	Certificates of Insurance				72
		12.11.	Opinions of Counsel				72
		12.12.	Compliance Certificate				73
		12.13.	Senior Debt Certificate				73
		12.14.	Financial Condition				73
		12.15.	Payment of Fees; Administrative Agent Fee Letter				73
		12.16.	Disbursement Instructions				73
		12.17.	Sources and Uses of Cash				73
		12.18.	Accountant’s Letter				73
		12.19.	Payoff and Termination of Existing Credit Agreement; Refinancing of Loans				73
		12.20.	Minimum Acceptances				73
13.	CONDITIONS TO ALL BORROWINGS						74
		13.1.	Representations True; No Event of Default				74
		13.2.	No Legal Impediment				74
		13.3.	Proceedings and Documents				74
14.	EVENTS OF DEFAULT; ACCELERATION; ETC						74
		14.1.	Events of Default and Acceleration				74
		14.2.	Termination of Commitments				78
		14.3.	Remedies				78
		14.4.	Distribution of Collateral Proceeds				79
15.	ADDITIONAL FINANCING						79
		15.1.	Commitment Amount				79
		15.2.	Evidence of Debt				81
16.	THE ADMINISTRATIVE AGENT						81
		16.1.	Appointment and Authority				81
		16.2.	Rights as a Lender				81
		16.3.	Exculpatory Provisions				81
		16.4.	Reliance by Administrative Agent				82
				16.4.1.	General		82
				16.4.2.	Non-Reliance on Administrative Agent and Other Lenders		82
				16.4.3.	Delegation of Duties		83
		16.5.	Payments				83
				16.5.1.	Payments to Administrative Agent		83
				16.5.2.	Distribution by Administrative Agent		83
				16.5.3.	Delinquent Lenders		83
		16.6.	Reimbursement by Lenders				84
		16.7.	Resignation of Administrative Agent				84
		16.8.	Administrative Agent May File Proofs of Claim				84

iv

TABLE OF CONTENTS
(continued)

						Page
		16.9.	No Other Duties, Etc				85
17.	ASSIGNMENT AND PARTICIPATION						85
		17.1.	Successors and Assigns; Conditions to Assignment				85
		17.2.	Register				86
		17.3.	Participations				86
		17.4.	Assignee or Participant Affiliated with the Borrower				87
		17.5.	Miscellaneous Assignment Provisions				87
18.	PROVISIONS OF GENERAL APPLICATIONS						88
		18.1.	Setoff				88
		18.2.	Expenses				88
		18.3.	Indemnification				89
		18.4.	Treatment of Certain Confidential Information				89
				18.4.1.	Confidentiality		89
				18.4.2.	Prior Notification		90
				18.4.3.	Other		90
		18.5.	Survival of Covenants, Etc				90
		18.6.	Notices				91
		18.7.	Governing Law				91
		18.8.	Headings				91
		18.9.	Counterparts				92
		18.10.	Entire Agreement, Etc				92
		18.11.	WAIVER OF JURY TRIAL				92
		18.12.	Consents, Amendments, Waivers, Etc				92
		18.13.	Severability				94
		18.14.	USA PATRIOT Act Notice				94
19.	FCC APPROVAL						94

v

Exhibits

Exhibit A	Form of Revolving Credit Note
Exhibit B	Form of Loan Request
Exhibit C	Form of Tranche B Term Note
Exhibit D	Projections
Exhibit E	Form of Compliance Certificate
Exhibit F	Form of Officer’s Certificate
Exhibit G	Form of Instrument of Accession
Exhibit H	Form of Assignment and Acceptance
Exhibit I	Form of U.S. Tax Compliance Certificate

Schedules

Schedule 1	Lenders and Commitments
Schedule 7.1	Non-Material Assets
Schedule 8.3(a)	Title to Properties
Schedule 8.3(b)	Stations
Schedule 8.5	Restricted Payments
Schedule 8.7	Litigation
Schedule 8.10	Tax Status
Schedule 8.18	Environmental Compliance
Schedule 8.19	Subsidiaries Etc.
Schedule 8.21	FCC Licenses
Schedule 10.1	Existing Indebtedness
Schedule 10.2	Existing Liens
Schedule 10.3	Existing Investments

EXECUTION COPY

REVOLVING CREDIT AND TERM LOAN AGREEMENT

     This REVOLVING CREDIT AND TERM LOAN AGREEMENT (this “Credit Agreement”) is made as of May 10, 2004 by and among (a) EMMIS OPERATING COMPANY (the “Borrower”), an Indiana corporation having its principal place of business at One Emmis Plaza, 40 Monument Circle, Suite 700, Indianapolis, Indiana 46204, (b) EMMIS COMMUNICATIONS CORPORATION (the “Parent”), an Indiana corporation having its principal place of business at One Emmis Plaza, 40 Monument Circle, Suite 700, Indianapolis, Indiana 46204, (c) the lending institutions listed on Schedule 1 (together with any institution that becomes a lender pursuant to §15 or §17, the “Lenders”), (d) BANK OF AMERICA, N.A. as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), (e) GOLDMAN SACHS CREDIT PARTNERS L.P., as syndication agent for the Lenders (in such capacity, the “Syndication Agent”), and (f) WACHOVIA BANK, N.A., DEUTSCHE BANK SECURITIES INC., and CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS CAYMAN ISLANDS BRANCH, as co-documentation agents for the Lenders (in such capacity, each a “Co-Documentation Agent” and collectively, the “Co-Documentation Agents”).

1. DEFINITIONS AND RULES OF INTERPRETATION.

     1.1. Definitions. The following terms shall have the meanings set forth in this §1.1 or elsewhere in the provisions of this Credit Agreement referred to below:

     Additional Subordinated Debt. As defined in the definition of “Subordinated Debt”.

     Adjustment Date. The second Business Day following the Business Day on which a Compliance Certificate is required to be delivered by the Borrower pursuant to §9.4(c).

     Administrative Agent. Bank of America, N.A., acting as administrative agent for the Lenders, or any other Person which has been appointed as the successor Administrative Agent in accordance with §16.8.

     Administrative Agent Fee Letter. That certain fee letter dated of even date herewith between the Borrower and the Administrative Agent which supercedes that certain fee letter, dated April 14, 2004, by and among the Borrower, the Administrative Agent and Banc of America Securities LLC.

     Administrative Agent’s Fee. See §6.2.

     Administrative Agent’s Office. The Administrative Agent’s head office located at 901 Main Street, 14^th Floor, Dallas, Texas 75202-3714, or at such other location as the Administrative Agent may designate from time to time.

     Administrative Agent’s Special Counsel. Bingham McCutchen LLP or such other counsel as may be approved by the Administrative Agent.

     Affiliate. With respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to vote ten percent (10%) or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.

     Agents. Collectively, the Administrative Agent, the Syndication Agent and the Co-Documentation Agents.

     Applicable Margin. For each period commencing on an Adjustment Date through the date immediately preceding the next Adjustment Date (each a “Rate Adjustment Period”), the Applicable Margin shall be as follows, subject to increases in accordance with §15:

     (a) the Applicable Margin for each Type of Revolving Credit Loan shall be the applicable margin set forth below for such Type with respect to the Total Leverage Ratio, as determined for the Reference Period ending on the fiscal quarter ended immediately prior to the applicable Rate Adjustment Period:

Revolving Credit Loans

	Total
	Leverage	Base Rate			Eurodollar Rate
Level	Ratio	Loans			Loans
I	Greater than or equal to 7.00:1.00		1.25	%		2.25	%
II	Less than 7.00:1.00 but greater than or equal to 6.50:1.00		1.00	%		2.00	%
III	Less than 6.50:1.00 but greater than or equal to 6.00:1.00		0.75	%		1.75	%
IV	Less than 6.00:1.00 but greater than or equal to 5.50:1.00		0.50	%		1.50	%
V	Less than 5.50:1.00 but greater than or equal to 5.00:1.00		0.25	%		1.25	%
VI	Less than 5.00:1.00		0.00	%		1.00	%

provided, that if the Borrower fails to deliver any Compliance Certificate pursuant to §9.4(c), then for the period commencing on the second Business Day following the date on which the Compliance Certificate was to be delivered pursuant to §9.4(c) through the earlier to occur of (i) the date immediately following the date on which such Compliance Certificate is delivered or (ii) the 10th Business Day following such Adjustment Date, the Applicable Margin in respect of Revolving Credit Loans shall be the Applicable Margin then in effect, provided that if upon delivery, such Compliance Certificate shows the Applicable Margin should have increased during such period, the Applicable Margin will be increased retroactively to such Adjustment Date. If the Borrower fails to deliver a Compliance Certificate pursuant to §9.4(c) and such Compliance Certificate has not been delivered on or prior to the 10th Business Day following the day on which such Compliance Certificate was required to be delivered, then commencing on the 11th Business Day following the day on which such Compliance Certificate was required to be delivered, and continuing through the date on which such Compliance Certificate is delivered, then the Applicable Margin shall be the highest Applicable Margin set forth above;

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     (b) the Applicable Margin for all or any portion of the Tranche B Term Loan that bears interest calculated by reference to the Base Rate shall be 0.75% per annum; and

     (c) the Applicable Margin for all or any portion of the Tranche B Term Loan that bears interest calculated by reference to the Eurodollar Rate shall be 1.75% per annum.

     Applicable Pension Legislation. At any time, any pension or retirement benefits legislation (be it national, federal, provincial, territorial or otherwise) then applicable to the Borrower or any of its Subsidiaries.

     Approved Fund. Any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

     Asset Sale. Any one or a series of related transactions (other than an Asset Swap) pursuant to which the Parent, the Borrower or any Subsidiary conveys, sells, leases, licenses or otherwise disposes of, directly or indirectly (including by means of a simultaneous exchange of Stations), any of its properties, businesses or assets (other than to the Borrower or any wholly-owned Subsidiary of the Borrower) (including the sale of the interest held by the Borrower or any of its Subsidiaries in the Austin Partnership or in RAM and the sale or issuance of Capital Stock of any Subsidiary other than to the Borrower or any wholly-owned Subsidiary of the Borrower) whether owned on the date hereof or thereafter acquired.

     Asset Swap. Any transfer of assets of the Borrower or any of its Subsidiaries to any Person other than the Parent, the Borrower or a wholly-owned Subsidiary of the Parent or the Borrower in exchange for assets of such Person if such exchange would qualify, whether in part or in full, as a like-kind exchange pursuant to §1031 of the Code. Nothing in this definition shall require the Parent, the Borrower or any of its Subsidiaries to elect that §1031 of the Code be applicable to any Asset Swap.

     Assignment and Acceptance. See §17.1(b).

     Austin Investment. The acquisition by the Borrower pursuant to the terms of the Sinclair Definitive Agreement of a 50.1% combined economic and controlling interest in the Austin Partnership and RAM, the sole general partner of the Austin Partnership.

     Austin Partnership. That certain Emmis Austin Radio Broadcasting Company, L.P. (formerly known as LBJS Broadcasting Company, L.P.), a Texas limited partnership, and of which RAM is the sole general partner, referred to in the Sinclair Definitive Agreement.

     Balance Sheet Date. February 29, 2004.

     Bank of America. Bank of America, N.A., a national banking association, in its individual capacity.

     Base Rate. The higher of (a) the variable annual rate of interest so designated from time to time by the Administrative Agent in the United States as its “prime rate” for Dollars, such rate being a reference rate and not necessarily representing the lowest or best rate being charged to any customer, and (b) one-half of one percent (0.50%) above the Federal Funds Effective Rate. For the purposes of this definition, “Federal Funds Effective Rate” shall mean for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three funds brokers of recognized standing selected by the Administrative Agent. Changes in the Base Rate resulting from any changes in the Administrative Agent’s “prime rate” shall take place immediately without notice or demand of any kind.

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     Base Rate Loans. All or any portion of the Revolving Credit Loans and Tranche B Term Loan bearing interest calculated by reference to the Base Rate.

     Borrower. Emmis Operating Company, an Indiana corporation.

     Business Day. Any day on which banking institutions in Dallas, Texas and New York, New York, are open for the transaction of banking business and, in the case of Eurodollar Rate Loans, also a day which is a Eurodollar Business Day.

     Capital Assets. Fixed assets, both tangible (such as land, buildings, fixtures, machinery and equipment) and intangible (such as patents, copyrights, trademarks, franchises and good will) to the extent such intangible assets have not been acquired in connection with a Permitted Acquisition; provided that Capital Assets shall not include any item customarily charged directly to expense or depreciated over a useful life of twelve (12) months or less in accordance with GAAP.

     Capital Expenditures. Amounts paid or Indebtedness incurred by the Borrower or any of its Subsidiaries in connection with (i) the purchase or lease by the Borrower or any of its Subsidiaries of Capital Assets that would be required to be capitalized and shown on the balance sheet of such Person in accordance with GAAP or (ii) the lease of any assets by the Borrower or any of its Subsidiaries as lessee under any Synthetic Lease to the extent that such assets would have been Capital Assets had the Synthetic Lease been treated for accounting purposes as a Capitalized Lease.

     Capitalized Leases. Leases under which the Borrower or any of its Subsidiaries is the lessee or obligor, the discounted future rental payment obligations under which are required to be capitalized on the balance sheet of the lessee or obligor in accordance with GAAP.

     Capital Stock. Any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership or equity interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

     CERCLA. See §8.18(a).

     Change of Control. An event or series of events as a consequence of which (a) any “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), excluding any Permitted Holder, shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rule 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 35% or more of the Capital Stock of the Parent unless the Permitted Holders own Capital Stock having a greater percentage of the general voting power of the outstanding voting Capital Stock than that held by such person or group, (b) the board of directors of the Parent or the Borrower shall cease to consist of a majority of Continuing Directors; (c) the Borrower shall at any time (i) cease to own Capital Stock of any Subsidiary representing the same percentage of outstanding Capital Stock of such Subsidiary as held by the Borrower on the date hereof or as of any later date on which any new Subsidiary is created or acquired, unless the diminution of such percentage is attributable to a disposition of Capital Stock which was permitted hereunder or (ii) cease to own Capital Stock of any Subsidiary which enables it at all times to elect a majority of the board of directors of such Subsidiary unless the disposition of such Capital Stock was permitted hereunder; or (d) the Parent shall cease to own one hundred percent (100%) of the issued and outstanding Capital Stock of the Borrower.

     Code. The Internal Revenue Code of 1986.

     Co-Documentation Agents. As defined in the preamble hereto.

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     Collateral. All of the property, rights and interests (other than Excluded Assets) of the Parent, the Borrower and its Subsidiaries that are or are intended to be subject to the Liens created by the Security Documents.

     Collateral Assignments of Contracts. Collectively, each collateral assignment of contracts entered into by the Borrower and/or certain of its Subsidiaries pursuant to §10.5.1.

     Commitment. With respect to each Lender, the amount set forth on Schedule 1 hereto as the amount of such Lender’s commitment to make Loans in respect of a particular Tranche to, and to participate in the issuance, extension and renewal of Letters of Credit for the account of, the Borrower, as the same may be reduced or increased from time to time in accordance with the terms hereof; or if such commitment is terminated pursuant to the provisions hereof, zero.

     Commitment Fee. See §2.2.

     Commitment Percentage. With respect to each Lender and each Tranche, the respective percentages set forth on Schedule 1 hereto as such Lender’s percentage of such Loans in respect of such Tranche made or to be made by such Lender as such percentage may be adjusted pursuant to §15 or §17.

     Common Stock. The common stock of the Parent, par value $.01 per share.

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

     Compliance Certificate. See §9.4(c).

     Consolidated or consolidated. With reference to any term defined herein, shall mean that term as applied to the accounts of the Borrower and its Subsidiaries, consolidated in accordance with GAAP.

     Consolidated Current Assets. As of any date, all assets of the Borrower and its Subsidiaries on a consolidated basis that, in accordance with GAAP, are properly classified as current assets as of such date, but excluding cash or cash equivalents.

     Consolidated Current Liabilities. As of any date, all liabilities and other Indebtedness of the Borrower and its Subsidiaries on a consolidated basis as may be properly classified as current liabilities in accordance with GAAP.

     Consolidated Excess Cash Flow. With respect to the Borrower and its Subsidiaries and any particular fiscal period, an amount equal to (a) the sum of (i) Consolidated Operating Cash Flow for such fiscal period plus (ii) the change in Consolidated Working Capital between the first day of such fiscal period and the last day of such fiscal period, if negative, minus (b) the sum of (i) Consolidated Total Interest Expense for such fiscal period, (ii) any voluntary and scheduled repayments of principal on any Indebtedness of the Borrower or any of its Subsidiaries (other than Revolving Credit Loans which shall be subject to clause (iii) below) paid or due and payable during such fiscal period, (iii) any voluntary repayments of principal of the Revolving Credit Loans to the extent that such repayments were accompanied by permanent reductions in the Total Revolving Credit Commitment in like amount, (iv) cash payments paid or payable during such fiscal period on account of Capital Expenditures (other than Capital Expenditures financed by the issuance of equity or the incurrence of Indebtedness other than Revolving Credit Loans), (v) cash taxes paid or payable during such fiscal period, (vi) the change in Consolidated Working Capital between the first day of such fiscal period and the last day of such fiscal period, if positive, (vii) cash amounts paid in connection with Permitted Acquisitions and Investments permitted pursuant to §10.3 during such period (in each case to the extent not financed by the issuance of equity or the incurrence of Indebtedness), and (viii) $10,000,000.

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     Consolidated Fixed Charges. With respect to any date of determination, the sum of (a) Consolidated Total Interest Expense required to be paid or accrued by the Borrower or any of its Subsidiaries during the Reference Period most recently ended, plus (b) the sum of all principal scheduled to be paid by the Borrower or any of its Subsidiaries with respect to Consolidated Total Funded Debt during the Reference Period most recently ended, plus (c) all Capital Expenditures made by the Borrower or any of its Subsidiaries during the Reference Period most recently ended (other than Capital Expenditures financed by the issuance of equity or the incurrence of Indebtedness other than Revolving Credit Loans), plus (d) the aggregate amount of cash taxes paid by the Borrower or any of its Subsidiaries in respect of the Reference Period most recently ended, plus (e) the aggregate amount of all Distributions that the Borrower paid with respect to its Capital Stock, and which the Borrower paid to the Parent to enable the Parent to make Distributions in respect of the Parent’s preferred stock, during the Reference Period most recently ended.

     Consolidated Net Income (or Deficit). For any period, the consolidated net income (or deficit) of the Borrower and its Subsidiaries for such period, after deduction of all expenses, taxes, and other proper charges for such period, determined in accordance with GAAP, after eliminating therefrom (a) all extraordinary and/or nonrecurring gains or losses, including, without limitation, any gains (or losses) from any Asset Sale and any premiums associated with a redemption of the Subordinated Notes and the Senior Discount Notes made in accordance with this Credit Agreement, (b) non-cash dividends or non-cash distributions received from Investments and (c) income and expenses arising from or in connection with Trades and other non-cash credits to Consolidated Net Income (or Deficit) other than income attributable to cash payments received in a prior period to the extent that such cash payments were not previously included in the calculation of Consolidated Net Income (or Deficit) in a prior period.

     Consolidated Operating Cash Flow. For any period, an amount equal to (a) the sum of (i) Consolidated Net Income (or Deficit) for such period, plus (ii) depreciation, amortization (including Programming Amortization Expense) and all other non-cash charges for such period deducted from Consolidated Net Income (or Deficit), plus (iii) to the extent deducted in the calculation of Consolidated Net Income (or Deficit), Consolidated Total Interest Expense and cash taxes paid or payable for such period by the Borrower and its Subsidiaries on a consolidated basis (including amounts paid or payable by the Borrower to the Parent in respect of cash taxes paid or payable for such period by the Parent that are attributable to the taxable income of the Borrower and its Subsidiaries), plus (iv) losses actually incurred during such period by the Borrower and its Subsidiaries in connection with Development Properties in an aggregate amount not to exceed $5,000,000, less (b) (i) Corporate Overhead and, to the extent paid or funded by the Borrower either directly or through Distributions, Holdco Corporate Overhead Expenses, in each case, for such period to the extent not deducted in the calculation of Consolidated Net Income (or Deficit), (ii) all Programming Cash Payments and (iii) cash payments made with respect to non-cash charges added back in prior periods and otherwise excluded. For purposes of calculating Consolidated Operating Cash Flow for any period, any Permitted Acquisition, Asset Sale or Asset Swap of the Borrower or any of its Subsidiaries which occurred during such period shall be deemed to have occurred immediately prior to the beginning of such period and the calculation of Consolidated Operating Cash Flow shall be adjusted on a Pro Forma Basis in connection therewith.

     Consolidated Total Funded Debt. At any time of determination, the sum, without duplication, of (a) the outstanding principal amount of (i) the Loans and (ii) other Obligations to the extent such other Obligations are due and payable, plus (b) the outstanding principal amount of any other Indebtedness for borrowed money owed by the Borrower or any of its Subsidiaries on a consolidated basis (including, without limitation, Subordinated Debt), plus (c) to the extent not otherwise included, all obligations (contingent or otherwise) relating to letters of credit issued for the account of the Borrower and/or its Subsidiaries, plus (d) to the extent not otherwise included, all liabilities in respect of Capitalized Leases of the Borrower and/or its Subsidiaries, on a consolidated basis, plus (e) to the extent not otherwise included, all purchase money Indebtedness.

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     Consolidated Total Interest Expense. For any period, the sum, without duplication, of (a) the aggregate amount of interest required to be paid or accrued by the Borrower or any of its Subsidiaries during such period on all Indebtedness of the Borrower or any of its Subsidiaries outstanding during all or any part of such period, whether such interest was or is required to be reflected as an item of expense or capitalized (provided that, if such interest is capitalized, only the portion amortized for such period shall be included as interest for such period), including, without limitation, payments consisting of interest in respect of Capitalized Leases, Letter of Credit Fees, commitment fees payable pursuant to this Credit Agreement and similar fees payable in connection with other Indebtedness, plus (b) all scheduled monthly fees payable in connection with LMA Agreements, plus (c) the aggregate amount of any cash distributions paid or to be paid by the Borrower to the Parent during such period to enable the Parent to pay interest with respect to its Indebtedness including, without limitation, payments of commitment fees or similar fees payable in connection with the Parent’s Indebtedness. For purposes of determining the Consolidated Total Interest Expense for any period, any Permitted Acquisition or Asset Sale of the Borrower or its Subsidiaries which occurred during such period as permitted pursuant to §10.5 shall be deemed to have occurred immediately prior to such period, and Consolidated Total Interest Expense shall be determined as if (i) any Indebtedness incurred by the Borrower or its Subsidiaries in connection with such Permitted Acquisition or repaid in connection with such Asset Sale was incurred or repaid, as the case may be, immediately prior to such period and (ii) the interest rate payable by the Borrower or its Subsidiaries with respect to any increase in Indebtedness in connection with such Permitted Acquisition which was outstanding during all or any part of such period was at all times equal to the rate of interest payable with respect to such Indebtedness on the last day of the period for which Consolidated Total Interest Expense is to be determined or if earlier, the last day on which such Indebtedness was outstanding.

     Consolidated Working Capital. The excess of Consolidated Current Assets over Consolidated Current Liabilities.

     Continuing Directors. The directors of the Parent and the Borrower on the Funding Date, and each other director of the Parent or the Borrower, if (a) in case of the Parent, such other director’s nomination for election to the board of directors of the Parent is recommended by at least 66 2/3% of the then Continuing Directors of the Parent in his or her election by the shareholders of the Parent, and (b) in the case of the Borrower, such other director’s nomination for election to the board of directors of the Borrower is recommended by either 66 2/3% of the then Continuing Directors of the Borrower or by the majority of the shareholders in his or her election by the shareholders of the Borrower.

     Conversion Request. A notice given by the Borrower to the Administrative Agent of the Borrower’s election to convert or continue a Loan in accordance with §2.7 or §3.5.2.

     Copyright Mortgage. The Memorandum of Grant of Security Interest in Copyrights, dated or to be dated as of the date hereof, made by the Borrower and each of the Subsidiaries in favor of the Administrative Agent, for the benefit of the Lenders and the Administrative Agent, in form and substance satisfactory to the Administrative Agent.

     Corporate Overhead. For any period, that portion of the cash overhead expenses of the Borrower and its Subsidiaries on a consolidated basis, for such period which are not directly allocable to the operations of any of the Stations and other operating assets of the Borrower and its Subsidiaries, calculated on a basis consistent with past financial statements of the Borrower, including, without duplication, the amount of salaries and bonuses paid to the management of the Borrower.

     Credit Agreement. This Revolving Credit and Term Loan Agreement, including the Schedules and Exhibits hereto.

     Current Note. See §15.2.

     Default. See §14.1.

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     Delinquent Lender. See §16.5.3.

     Development Property. Any Station or publishing asset which the Borrower designates as a Development Property in a written notice delivered to the Administrative Agent and which either (a) is making or has made within the six (6) months preceding such designation substantial changes in its format or (b) has been acquired within the twelve (12) months preceding such designation; provided, that a Station or publishing asset which has been designated a Development Property shall remain a Development Property until the earlier to occur of (i) the date the Borrower notifies the Administrative Agent in writing that such Station or publishing asset is no longer a Development Property and (ii) the date which is twelve (12) consecutive months following the date of designation; and provided further that no Station or publishing asset may be re-designated as a Development Property unless twelve (12) consecutive months have passed since such Station or publishing asset ceased to be a Development Property.

     Distribution. The declaration or payment of any dividend on or in respect of any shares of any class of Capital Stock of the Borrower or any of its Subsidiaries, other than dividends payable solely in shares of common stock of the Borrower; the purchase, redemption, defeasance, retirement or other acquisition of any shares of any class of Capital Stock of the Borrower or any of its Subsidiaries, directly or indirectly through a Subsidiary or otherwise (including the setting apart of assets for a sinking or other analogous fund to be used for such purpose); the return of capital by the Borrower or its Subsidiaries to its shareholders as such; or any other distribution on or in respect of any shares of any class of Capital Stock of the Borrower or its Subsidiaries.

     Dollars or $. Dollars in lawful currency of the United States of America.

     Domestic Lending Office. Initially, the office of each Lender designated as such in Schedule 1 hereto; thereafter, such other office of such Lender, if any, located within the United States that will be making or maintaining Base Rate Loans.

     Drawdown Date. The date on which any Revolving Credit Loan or any Term Loan is made or is to be made.

     Eligible Assignee. Means (a) any Lender; provided that, assignments involving all or any portion of a Revolving Credit Commitment and/or Revolving Credit Loans to a Tranche B Lender that is not also a Revolving Credit Lender shall be subject to the approvals specified in clause (d)(i) and (d)(ii) below; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent, and (ii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed).

     Employee Benefit Plan. Any employee benefit plan within the meaning of §3(3) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.

     Environmental Laws. See §8.18(a).

     EPA. See §8.18(b).

     Equity Issuance. The sale or issuance (whether by public or private offering) by the Parent, the Borrower or any Subsidiary of any of its Capital Stock or any Equity-Like Instrument, other than sales or issuances to the Parent, the Borrower or any Subsidiary.

     Equity-Like Instrument. Any instrument that is equity-like in nature (including without limitation, preferred stock and any instrument issued pursuant to the conversion of convertible Indebtedness into Capital Stock), whether or not such instrument is considered Capital Stock, which evidences a residual interest in the issuer or its assets after the payment of all indebtedness and other liabilities paid prior to

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equity in accordance with GAAP, and has no put or similar provisions (except for put or similar provisions applicable in the event of an asset sale or change of control), no fixed maturity date and no mandatory redemption date, unless such maturity date or such mandatory redemption date is more than six (6) months after the later of (a) the Revolving Credit Maturity Loan Date, (b) the Tranche B Maturity Date and (c) the maturity date of any new Tranches established pursuant to §15.1. For the avoidance of doubt, nothing contained herein permitting the existence in any Equity-Like Instrument of put or similar provisions applicable in the event of an asset sale or change of control shall be deemed a consent to the making of any payment resulting from the exercise of such provisions.

     ERISA. The Employee Retirement Income Security Act of 1974.

     ERISA Affiliate. Any Person which is treated as a single employer with the Borrower under §414 of the Code.

     ERISA Reportable Event. A reportable event with respect to a Guaranteed Pension Plan within the meaning of §4043 of ERISA and the regulations promulgated thereunder.

     Eurocurrency Reserve Rate. For any day with respect to a Eurodollar Rate Loan, the maximum rate (expressed as a decimal) at which any bank subject thereto would be required to maintain reserves under Regulation D of the Board of Governors of the Federal Reserve System (or any successor or similar regulations relating to such reserve requirements) against “Eurocurrency Liabilities” (as that term is used in Regulation D), if such liabilities were outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on and as of the effective date of any change in the Eurocurrency Reserve Rate.

     Eurodollar Business Day. Any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

     Eurodollar Lending Office. Initially, the office of each Lender designated as such in Schedule 1 hereto; thereafter, such other office of such Lender, if any, that shall be making or maintaining Eurodollar Rate Loans.

     Eurodollar Rate. For any Interest Period with regard to a Eurodollar Rate Loan, the rate of interest equal to (i) the rate determined by the Administrative Agent at which Dollar deposits for such Interest Period are offered based on information presented on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period and in an amount comparable to the amount of the Eurodollar Rate Loan of the Administrative Agent to which such Interest Period applies as of 11:00 a.m. London time on the second Eurodollar Business Day prior to the first day of such Interest Period, divided by (ii) a number equal to 1.00 minus the Eurocurrency Reserve Rate; provided, however, if the rate described above does not appear on the Telerate System on any applicable interest determination date, the Eurodollar Rate shall be the rate (rounded upward, if necessary, to the nearest one hundred-thousandth of a percentage point), determined on the basis of the offered rates for deposits in Dollars in an amount equal to the Eurodollar Rate Loan to be advanced by the Administrative Agent for a period of time comparable to such Interest Period which are offered by four major banks in the London interbank market at approximately 11:00 a.m. London time, on the second Eurodollar Business Day prior to the first day of such Interest Period as selected by the Administrative Agent. The principal London office of each of the four major London banks will be requested to provide a quotation of its Dollar deposit offered rate. If at least two such quotations are provided, the rate for that date will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate for that date will be determined on the basis of the rates quoted for loans in Dollars to leading European banks for a period of time comparable to such Interest Period offered by major banks in New York City at approximately 11:00 a.m. New York City time, on the second Eurodollar Business Day prior to the first day of such Interest Period. In the event that the Administrative Agent is unable to obtain any

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such quotation as provided above, it will be deemed that a Eurodollar Rate pursuant to a Eurodollar Rate Loan cannot be determined.

     Eurodollar Rate Loans. Revolving Credit Loans and all or any portion of the Tranche B Term Loan bearing interest calculated by reference to the Eurodollar Rate.

     Event of Default. See §14.1.

     Excluded Assets. (a) Real Estate other than (i) Real Estate located at One Emmis Plaza, 40 Monument Circle, Indianapolis, Indiana 46204, (ii) Real Estate of KHON-TV and KGMB-TV located at 88 Piikoi Street and 1534 Kapiolani Boulevard, respectively, in Honolulu, Hawaii and (iii) owned Real Estate acquired after the date hereof having a value in excess of $5,000,000 over which the Administrative Agent requests a Lien, (b) LMA Agreements not required to be assigned pursuant to §10.5.1(d)(ii)(B) hereof, (c) property subject to Capitalized Leases and purchase money liens permitted hereunder if such Capitalized Lease or purchase money agreement prohibits assignment or liens in favor of the Administrative Agent and the Lenders to secure the Obligations on the assets subject thereto (but solely to the extent that any such restriction shall be enforceable under applicable law) without the consent of the lessor thereof or other applicable party thereto, and (d) the non-material assets described on Schedule 7.1 hereto or such other non-material assets as may be approved in writing by the Administrative Agent.

     Excluded Subsidiaries. Collectively, (a) Emmis Enterprises, Inc., an Indiana corporation, and each of its subsidiaries, (b) each subsidiary of Emmis International Broadcasting Corporation other than Emmis Latin America Broadcasting Corporation and Emmis South America Broadcasting Corporation and Emmis Dutch Broadcasting Corporation, each a California corporation, (c) any other subsidiary formed or acquired by Emmis International Broadcasting Corporation following the date hereof which is not organized under the laws of the United States or any state or political subdivision of the United States unless included at the election of the Borrower upon prior written notice to the Administrative Agent, provided that no such subsidiary shall be an Excluded Subsidiary if it is a “Guarantor” under and as defined in the Subordinated Note Indenture or the equivalent under any indenture governing Subordinated Debt (including, without limitation, the Refinancing Note Indenture), (d) Country Sampler Stores LLC, an Illinois limited liability company and each of its subsidiaries, (e) the Austin Partnership and RAM, in each case, until such subsidiary becomes wholly-owned by the Borrower and upon prior written notice to the Administrative Agent, and (f) any other subsidiary formed or acquired by the Borrower or any of its subsidiaries following the date hereof and designated as an Excluded Subsidiary by the Borrower upon prior written notice to the Administrative Agent, provided that after giving effect to such designation no Default of Event of Default is then continuing or is projected to occur under §11. Notwithstanding the foregoing, no Person may be an Excluded Subsidiary hereunder if it is a “Guarantor” under and as defined in the Subordinated Note Indenture or the equivalent under any indenture governing Subordinated Debt (including, without limitation, the Refinancing Note Indenture) or has otherwise guaranteed or given assurances of payment or performance under or in respect of any Indebtedness (including Subordinated Debt) of the Parent, the Borrower or any of the Subsidiaries.

     Excluded Taxes. See §6.3.2.

     Existing Credit Agreement. That certain Fourth Amended and Restated Revolving Credit and Term Loan Agreement, dated as of December 29, 2000, as amended and in effect on the Closing Date, by and among the Borrower, the lending institutions party thereto, Toronto Dominion (Texas), Inc., as administrative agent, Fleet National Bank, as documentation agent, Wachovia Bank, National Association, as syndication agent and Credit Suisse First Boston, as co-documentation agent.

     FCC. The Federal Communications Commission (or any successor agency, commission, bureau, department or other political subdivision of the United States of America).

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     FCC License. Any license, permit, certificate of compliance, antenna structure registration, franchise, approval or authorization granted or issued by the FCC.

     Fees. Collectively, the Commitment Fee, the Letter of Credit Fees, the Administrative Agent’s Fee and any other fees that the Borrower may, after the date hereof, agree in writing to pay to the Lenders or the Agents in connection with this Credit Agreement.

     Financial Affiliate. A Subsidiary of the bank holding company controlling any Lender that is engaging in any of the activities permitted by §4(e) of the Bank Holding Company Act of 1956 (12 U.S.C. §1843).

     Fixed Charge Coverage Ratio. At any date of determination, the ratio of (a) Consolidated Operating Cash Flow for the Reference Period most recently ended to (b) Consolidated Fixed Charges for the Reference Period most recently ended.

     Fund. Any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

     Funding Date. The first date on which the conditions set forth in §12 have been satisfied and any Revolving Credit Loans and the Term Loans are to be made or any Letter of Credit is to be issued hereunder.

     GAAP. (a) When used in §11, whether directly or indirectly through reference to a capitalized term used therein, means (i) principles that are consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and (ii) to the extent consistent with such principles, the accounting practice of the Borrower reflected in its financial statements for the year ended on the Balance Sheet Date, and (b) when used in general, other than as provided above, means principles that are (i) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, as in effect from time to time, and (ii) consistently applied with past financial statements of the Borrower adopting the same principles, provided that in each case referred to in this definition of “GAAP” a certified public accountant would, insofar as the use of such accounting principles is pertinent, be in a position to deliver an unqualified opinion (other than a qualification regarding changes in GAAP) as to financial statements in which such principles have been properly applied. Notwithstanding the foregoing, if at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (a) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (b) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Credit Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

     Governing Documents. With respect to any Person, its certificate or articles of incorporation, membership agreement, partnership agreement or similar charter document, any by-laws and all shareholder agreements, voting trusts and similar arrangements applicable to any of its Capital Stock.

     Governmental Authority. Any foreign, federal, state, regional, local, municipal or other government, or any department, commission, board, bureau, agency, public authority or instrumentality thereof, or any court or arbitrator, including, without limitation, the FCC.

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     Guaranteed Pension Plan. Any employee pension benefit plan within the meaning of §3(2) of ERISA maintained or contributed to by the Borrower 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. The Guaranty, dated or to be dated as of the date hereof, made by the Parent and each of the Subsidiaries in favor of the Lenders and the Administrative Agent pursuant to which the Parent and each such Subsidiary guaranties to the Lenders and the Administrative Agent the payment and performance of the Obligations in form and substance satisfactory to the Administrative Agent.

     Hazardous Substances. See §8.18(b).

     HoldCo Corporate Overhead Expenses. Means (i) fees payable to the trustee under the Senior Discount Note Indenture, (ii) accounting and audit costs and expenses incurred by the Parent in the ordinary course of its business in connection with preparing consolidated and consolidating financial reports and tax filings, (iii) SEC filing fees and expenses, (iv) legal fees relating to the corporate maintenance of the Parent, (v) outside director fees, (vi) costs and expenses payable for director and officer insurance, (vii) transfer agent fees payable in connection with Capital Stock of the Parent, (viii) proxy solicitation costs, (ix) franchise taxes and other fees payable to the jurisdictions of incorporation or qualification of the Parent and (x) other similar costs and expenses of the Parent incurred in the ordinary course of conducting its business; provided, that in no event shall HoldCo Corporate Overhead Expenses include (i) management fees, salaries, bonuses, debt service and dividends and other distributions in respect of the Capital Stock of the Parent or (ii) costs and expenses incurred by the Parent in connection with any actual or proposed issuance of indebtedness or equity by the Parent which is permitted hereunder.

     Indebtedness. As to any Person and whether recourse is secured by or is otherwise available against all or only a portion of the assets of such Person and whether or not contingent, but without duplication:

     (a) every obligation of such Person for money borrowed,

     (b) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses,

     (c) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person,

     (d) every obligation of such Person issued or assumed as the deferred purchase price of property or services (including securities repurchase agreements but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business which are not overdue or which are being contested in good faith),

     (e) every obligation of such Person under any Capitalized Lease,

     (f) every obligation of such Person under any Synthetic Lease,

     (g) all sales by such Person of (i) accounts or general intangibles for money due or to become due, (ii) chattel paper, instruments or documents creating or evidencing a right to payment of money or (iii) other receivables (collectively “receivables”), whether pursuant to a purchase facility or otherwise, other than in connection with the disposition of the business operations of such Person relating thereto or a disposition of defaulted receivables for collection and not as a financing arrangement, and together with any obligation of such Person to pay any

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     discount, interest, fees, indemnities, penalties, recourse, expenses or other amounts in connection therewith,

     (h) every obligation of such Person (an “equity related purchase obligation”) to purchase, redeem, retire or otherwise acquire for value any shares of Capital Stock issued by such Person or any rights measured by the value of such Capital Stock,

     (i) every net obligation of such Person under any forward contract, futures contract, swap, option or other financing agreement or arrangement (including, without limitation, caps, floors, collars and similar agreements), the value of which is dependent upon interest rates, currency exchange rates, commodities or other indices (a “derivative contract”),

     (j) every obligation in respect of Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent that such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent that the terms of such Indebtedness provide that such Person is not liable therefor and such terms are enforceable under applicable law,

     (k) every obligation, contingent or otherwise, of such Person guaranteeing, or having the economic effect of guarantying or otherwise acting as surety for, any obligation of a type described in any of clauses (a) through (j) (the “primary obligation”) of another Person (the “primary obligor”), in any manner, whether directly or indirectly, and including, without limitation, any obligation of such Person (i) to purchase or pay (or advance or supply funds for the purchase of) any security for the payment of such primary obligation, (ii) to purchase property, securities or services for the purpose of assuring the payment of such primary obligation, 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 primary obligation.

     The “amount” or “principal amount” of any Indebtedness at any time of determination represented by (u) any Indebtedness, issued at a price that is less than the principal amount at maturity thereof, shall be the amount of the liability in respect thereof determined in accordance with GAAP, (v) any Capitalized Lease shall be the principal component of the aggregate of the rentals obligation under such Capitalized Lease payable over the term thereof that is not subject to termination by the lessee, (w) any sale of receivables shall be the amount of unrecovered capital or principal investment of the purchaser (other than the Borrower or any of its wholly-owned Subsidiaries) thereof, excluding amounts representative of yield or interest earned on such investment, (x) any Synthetic Lease shall be the stipulated loss value, termination value or other equivalent amount, (y) any derivative contract shall be the maximum amount of any termination or loss payment required to be paid by such Person if such derivative contract were, at the time of determination, to be terminated by reason of any event of default or early termination event thereunder, whether or not such event of default or early termination event has in fact occurred and (z) any equity related purchase obligation shall be the maximum fixed redemption or purchase price thereof inclusive of any accrued and unpaid dividends to be comprised in such redemption or purchase price.

     Indemnified Liabilities. See §18.3.

     Indemnified Person. See §18.3.

     Ineligible Securities. Securities which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. §24, Seventh), as amended.

     Instrument of Accession. See §15.1.

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     Interest Coverage Ratio. At any date of determination, the ratio of (a) Consolidated Operating Cash Flow for the Reference Period most recently ended to (b) Consolidated Total Interest Expense for such Reference Period.

     Interest Payment Date. (a) As to any Base Rate Loan, the last day of the calendar quarter with respect to interest accrued during such calendar quarter, including, without limitation, the calendar quarter which includes the Drawdown Date of such Base Rate Loan; and (b) as to any Eurodollar Rate Loan in respect of which the Interest Period is (i) three months or less, the last day of such Interest Period and (ii) more than three (3) months, the respective dates that fall every three months after the beginning of such Interest Period.

     Interest Period. With respect to each Revolving Credit Loan or all or any relevant portion of the Tranche B Term Loan (a) that is a Eurodollar Rate Loan, initially, the period commencing on the Drawdown Date of such Loan and ending on the last day of a period consisting of one (1), two (2), three (3) or six (6) months, and if acceptable to all Lenders within the relevant Tranche, nine (9) or twelve (12) months, as selected by the Borrower in a Loan Request or as otherwise required by the terms of this Credit Agreement, and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Revolving Credit Loan or all or such portion of the Tranche B Term Loan and ending on the last day of one of the periods set forth above, as selected by the Borrower in a Conversion Request; provided that all of the foregoing provisions relating to Interest Periods are subject to the following:

     (A) if any Interest Period with respect to a Eurodollar Rate Loan would otherwise end on a day that is not a Eurodollar Business Day, that Interest Period shall be extended to the next succeeding Eurodollar Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Eurodollar Business Day;

     (B) if the Borrower shall fail to give notice as provided in §2.7 or §3.5.2, the Borrower shall be deemed to have requested a conversion of the affected Eurodollar Rate Loan to a Base Rate Loan and the continuance of all Base Rate Loans as Base Rate Loans on the last day of the then current Interest Period with respect thereto;

     (C) any Interest Period relating to any Eurodollar Rate Loan that begins on the last Eurodollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Eurodollar Business Day of a calendar month; and

     (D) any Interest Period that would otherwise extend beyond the Revolving Credit Loan Maturity Date (if comprising a Revolving Credit Loan) or the Tranche B Maturity Date (if comprising the Tranche B Term Loan or a portion thereof) shall end on the Revolving Credit Loan Maturity Date or the Tranche B Maturity Date, as the case may be.

     Interest Rate Agreement. Any interest rate swap agreement (whether from fixed to floating or from floating to fixed), interest rate cap agreement, interest rate collar agreement, interest rate futures contract, interest rate option agreement or other similar agreement or arrangement to which the Borrower and any Lender or Affiliate of any Lender is a party, designed to manage interest rates or interest rate risk in connection with this Credit Agreement, the Refinancing Notes or any other Indebtedness for borrowed money evidenced by bonds, debentures or other similar instruments owed by the Borrower or any of its Subsidiaries.

     Investments. All expenditures made and all liabilities incurred (contingently or otherwise) for the acquisition of Capital Stock or Indebtedness of, or for loans, advances, capital contributions or transfers of property to, or in respect of any guaranties (or other commitments as described under the definition of

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Indebtedness), or obligations of, any Person, but excluding accrued interest or earnings thereon. In determining the aggregate amount of Investments outstanding at any particular time: (a) the amount of any Investment represented by a guaranty shall be taken at not less than the principal amount of the obligations guaranteed and still outstanding; (b) there shall be deducted in respect of each such Investment any amount received as a return of capital (but only by repurchase, redemption, retirement, repayment, liquidating dividend or liquidating distribution); (c) there shall not be deducted in respect of any Investment any amounts received as earnings on such Investment, whether as dividends, interest or otherwise, and (d) there shall not be deducted from the aggregate amount of Investments any decrease in the value thereof.

     Lead Arrangers. Collectively, Banc of America Securities LLC, Goldman Sachs Credit Partners L.P. and Wachovia Capital Markets, LLC acting as joint lead arrangers and joint book managers.

     Lender Affiliate. (a) With respect to any Lender, (i) an Affiliate of such Lender or (ii) an Approved Fund and (b) with respect to an Approved Fund, any other entity (whether a corporation, partnership, limited liability company, trust or other legal entity) that is a fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Approved Fund or by an Affiliate of such investment advisor.

     Lenders. Collectively, the Revolving Credit Lenders and the Tranche B Lenders and any institution that becomes a Lender pursuant to §15 or §17.

     Letter of Credit. See §5.1.1.

     Letter of Credit Application. See §5.1.1.

     Letter of Credit Fee. See §5.6.

     Letter of Credit Participation. See §5.1.4.

     License Subsidiaries. Collectively, (a) Emmis License Corporation, Emmis License Corporation of New York, Emmis Radio License Corporation, Emmis Radio License Corporation of New York, Emmis Television License Corporation, Emmis Television License Corporation of Wichita, Emmis Television License Corporation of Topeka, and (b) any new Subsidiaries that hold licenses to broadcast or transmit radio or television signals formed or acquired in connection with any Permitted Acquisition, or any internal reorganization permitted pursuant to §10.5.1(a).

     Lien. Any mortgage, deed of trust, security interest, pledge, hypothecation, assignment, attachment, deposit arrangement, encumbrance, lien (statutory, judgment or otherwise), or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any Capitalized Lease, any Synthetic Lease, any financing lease involving substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC or comparable law of any jurisdiction and with respect to stock, a Person’s right to acquire such stock).

     LMA Agreement. Any time brokerage agreement, local marketing agreement or related or similar agreements pursuant to which a Person acquires the right to program substantially all of the time and to sell all of the advertising spots of a Station owned by another non-affiliated person in exchange for cash payment, entered into, directly or indirectly, between the Borrower or any of its Subsidiaries and any Person other than the Parent, the Borrower or any of its Subsidiaries or their respective Affiliates.

     Loan Documents. Collectively, this Credit Agreement, the Notes (if any), the Letter of Credit Applications, the Security Documents and any other documents, agreements or instruments contemplated hereby or thereby or executed by the Parent, the Borrower or a Subsidiary in connection herewith or therewith.

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     Loan Request. See §2.6.

     Loans. Collectively, the Revolving Credit Loans and the Tranche B Term Loan and for purposes of §15 only, any new loan provided to the Borrower in accordance with the terms and conditions set forth in such §15.

     Material Adverse Effect. With respect to any event or occurrence of whatever nature (including any adverse determination in any litigation, arbitration or governmental investigation or proceeding):

     (a) a material adverse effect on the business, properties, condition (financial or otherwise), assets, operations or income of the Parent and its Subsidiaries, taken as a whole;

     (b) a material adverse effect on the ability of the Parent or the Borrower individually or the Parent and its Subsidiaries, taken as a whole, to perform any of their respective Obligations under any of the Loan Documents to which it is a party; or

     (c) any impairment of the validity, binding effect or enforceability of this Credit Agreement or any of the other Loan Documents, any material impairment of the rights, remedies or benefits available to the Administrative Agent or any Lender under any Loan Document or any impairment of the attachment, perfection or priority of any Lien of the Administrative Agent under the Security Documents.

     Maximum Drawing Amount. The maximum aggregate amount that the beneficiaries may at any time draw under outstanding Letters of Credit, as such aggregate amount may be reduced from time to time pursuant to the terms of the Letters of Credit.

     Moody’s. Moody’s Investors Services, Inc.

     Mortgaged Property. Any Real Estate which is subject to any Mortgage.

     Mortgages. The mortgages and deeds of trust from the Borrower and/or its Subsidiaries to the Administrative Agent with respect to the fee and leasehold interests of the Borrower and its Subsidiaries in certain Real Estate and in form and substance satisfactory to the Administrative Agent.

     Multiemployer Plan. Any multiemployer plan within the meaning of §3(37) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate.

     Necessary Authorization. Any license, permit, consent, franchise, order, approval or authorization from, or any filing, recording or registration with, any Governmental Authority (including without limitation the FCC) necessary to the conduct of any business of the Borrower or any of its Subsidiaries or for the ownership, maintenance and operation by such Person of its Stations and other properties or to the performance by such Person of its obligations under any LMA Agreement.

     Net Cash Equity Issuance Proceeds. With respect to any Equity Issuance, the excess of the gross cash proceeds received by the issuer for such Equity Issuance after deduction of all reasonable and customary transaction expenses (including, without limitation, underwriting discounts and commissions) actually incurred in connection with such issuance.

     Net Cash Sale Proceeds. The gross cash proceeds received by the Parent or any of its Subsidiaries in respect of any Asset Sale or Asset Swap, minus the sum of (a) all reasonable out-of-pocket fees, commissions and other reasonable and customary direct expenses actually incurred in connection with such Asset Sale or Asset Swap, including the amount of any transfer or documentary taxes required to be paid by such Person in connection with such Asset Sale or Asset Swap, plus (b) the aggregate amount of cash so received by such Person which is required to be used to retire (in whole or in part) any Indebtedness (other

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than under the Loan Documents) of such Person permitted by this Credit Agreement that was secured by a lien or security interest permitted by this Credit Agreement having priority over the liens and security interests (if any) of the Administrative Agent (for the benefit of the Administrative Agent and the Lenders) with respect to such assets transferred and which is required to be repaid in whole or in part (which repayment, in the case of any other revolving credit arrangement or multiple advance arrangement, reduces any commitment thereunder) in connection with such Asset Sale or Asset Swap, plus (c) any cash reserve in an amount reasonably determined by the Borrower to be necessary in connection with indemnification obligations or potential post-closing purchase price adjustments relating to such Asset Sale or Asset Swap so long as the Administrative Agent holds such cash reserve amount as cash collateral pursuant to §4.6 hereof and the Borrower provides to the Administrative Agent an accounting of such proceeds reasonably satisfactory to the Administrative Agent. If the Parent or any of its Subsidiaries receives any promissory notes or other instruments as part of the consideration for such Asset Sale or Asset Swap or if payment in cash of any portion of the consideration for such Asset Sale or Asset Swap is otherwise deferred or if the amount previously held as a cash reserve for indemnification obligations or purchase price adjustments is reduced, Net Cash Sale Proceeds shall be deemed to include any cash payments in respect of such notes or instruments or otherwise deferred portion of such consideration when and to the extent received by such Person.

     Non-Excluded Taxes. See §6.3.2.

     Notes. Collectively, the Revolving Credit Notes, the Tranche B Term Notes and any promissory notes of the Borrower evidencing a new Loan to the Borrower advanced in accordance with the terms and conditions set forth in §15.

     Obligations. All indebtedness, obligations and liabilities of any of the Parent, the Borrower and its Subsidiaries to any of the Lenders or any of the Agents, individually or collectively, existing on the date of this Credit Agreement or arising thereafter, 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, arising or incurred under or in connection with this Credit Agreement or any of the other Loan Documents or any of the Loans made or Reimbursement Obligations incurred or any of the Notes, Letter of Credit Applications, Letters of Credit or other instruments at any time evidencing any thereof or any Interest Rate Agreement (a) required to be maintained pursuant to the terms of this Credit Agreement (or otherwise maintained in respect of Loans made hereunder) or (b) in respect of the Refinancing Notes or any other Indebtedness for borrowed money evidenced by bonds, debentures or other similar instruments owed by the Borrower or any of its Subsidiaries. This term includes, without limitation, all interest that accrues after the commencement of any case or proceeding by or against any credit party in bankruptcy whether or not allowed in such case or proceeding.

     Operating Subsidiaries. Collectively, (a) Emmis Radio Corporation, Emmis Meadowlands Corporation, Emmis Publishing Corporation, Mediatex Communications Corporation and Los Angeles Magazine Holding Company, Inc., each an Indiana corporation; (b) SJL of Kansas Corporation, a Kansas corporation; (c) Topeka Television Corporation, a Missouri corporation; (d) Emmis International Broadcasting Corporation, Emmis Latin America Broadcasting Corporation, Emmis South America Broadcasting Corporation and Emmis Dutch Broadcasting Corporation, each a California corporation; (e) the Partnership Subsidiaries and their successors; and (f) any new Subsidiaries acquired in connection with any Permitted Acquisition or any internal reorganization permitted pursuant to §10.5.1(a) used to hold assets (other than broadcast licenses) used in connection with, and to conduct operations of, any Station.

     outstanding. With respect to the Loans, the aggregate unpaid principal thereof as of any date of determination.

     Parent. Emmis Communications Corporation, an Indiana corporation.

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     Partnership Subsidiaries. Collectively, Emmis Indiana Broadcasting, L.P., Emmis Publishing, L.P. and Emmis Television Broadcasting, L.P., each an Indiana limited partnership.

     PBGC. The Pension Benefit Guaranty Corporation created by §4002 of ERISA and any successor entity or entities having similar responsibilities.

     Perfection Certificates. The Perfection Certificates as defined in the Security Agreements.

     Permitted Acquisition. Any acquisition permitted under §10.5.1.

     Permitted Holders. Jeffrey Smulyan, his spouse, his children, his grandchildren, his estate and trusts created for the benefit of any of the foregoing.

     Permitted Liens. Liens permitted by §10.2.

     Person. Any individual, corporation, limited liability company, partnership, limited liability partnership, trust, other unincorporated association, business, or other legal entity, and any Governmental Authority.

     Pledge Agreement. The Pledge Agreement, dated or to be dated as of the date hereof, by and among the Parent, the Borrower and each of the Subsidiaries and the Administrative Agent, in form and substance satisfactory to the Administrative Agent.

     Pro Forma Basis. In connection with any proposed Permitted Acquisition, (including acquisitions contemplated in connection with an LMA Agreement), Asset Sale or Asset Swap, the calculation of compliance with the financial covenants set forth in §11 by the Borrower and its Subsidiaries (after including the business, business division or Person to be acquired in connection with any Permitted Acquisition or Asset Swap as if such business, business division or Person were a Subsidiary and after excluding any business, business division or Person to be sold or otherwise disposed of in connection with any Asset Sale or Asset Swap). The calculation of such compliance shall be determined as of the most recently ended Reference Period by reference to the financial results of the Borrower and its Subsidiaries for such Reference Period after adjusting the same to (i) exclude the financial results attributable to any business, business division or Person to be sold or otherwise disposed of as if such transaction occurred on the first day of such Reference Period and (ii) include the audited financial results of any business, business division or Person to be acquired, if available for such Reference Period, or if such audited financial results are not available for such Reference Period, any unaudited financial results or any management reports as are approved by the Administrative Agent in respect of such business, business division or Person, as if such Permitted Acquisition or Asset Swap had occurred on the first day of such Reference Period and including the adjustments described in clauses (a), (b), (c) and (d) below. Following a Permitted Acquisition, Asset Sale or Asset Swap, the calculation of compliance with the covenants set forth in §11 for any Reference Period which contains the fiscal quarter in which such Permitted Acquisition, Asset Sale or Asset Swap occurred shall be calculated in the manner set forth above for any portion of the then applicable Reference Period which occurred prior to the date of such transaction including the adjustments described in clauses (a), (b), (c) and (d) below:

     (a) all Indebtedness (whether under this Credit Agreement or otherwise) and any other balance sheet adjustments incurred, made or assumed in connection with a Permitted Acquisition, Asset Sale or Asset Swap shall be deemed to have been incurred, made or assumed on the first day of the Reference Period, and all Indebtedness of the Person acquired or to be acquired in such Permitted Acquisition, Asset Sale or Asset Swap or which is attributable to the business or business division acquired or to be acquired which was or will have been repaid in connection with the consummation of the Permitted Acquisition, Asset Sale or Asset Swap shall be deemed to have been repaid on the first day of the Reference Period;

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     (b) all Indebtedness assumed to have been incurred pursuant to the preceding clause (a) shall be deemed to have borne interest at (i) the arithmetic mean of (A) the Eurodollar Rate for Eurodollar Rate Loans having an Interest Period of one (1) month in effect on the first day of the Reference Period and (B) the Eurodollar Rate for Eurodollar Rate Loans having an Interest Period of one (1) month in effect on the last day of the Reference Period plus (ii) the Applicable Margin with respect to Revolving Credit Loans which are Eurodollar Rate Loans then in effect (after giving effect to the Permitted Acquisition on a pro forma basis);

     (c) for purposes of calculating Consolidated Operating Cash Flow for the Reference Period, other reasonable cost savings, expenses and other income statement, or operating statement adjustments as may be approved by the Administrative Agent in writing which are attributable to the change in ownership and/or management resulting from such Permitted Acquisition (including the amount of any pre-acquisition management fees paid during such period in connection with the operation of any Station subject to such Permitted Acquisition or Asset Swap to the extent such fees are not payable after such transaction) shall be deemed to have been realized on the first day of the Reference Period, provided that the Administrative Agent shall be under no obligation to approve such cost savings, expenses or other adjustments;

     (d) for purposes of calculating Consolidated Operating Cash Flow for the Reference Period, with respect to any Permitted Acquisition or Asset Swap, Consolidated Net Income (or Deficit) shall be increased by (i) the amount of any bad debt reserve adjustment associated with any accounts receivable on the books of such acquired Station on the date of acquisition thereof to the extent that such accounts receivable are not acquired by the Borrower or any of such Subsidiaries, and (ii) the amount of any bad debt reserve adjustment associated with any accounts receivable on the books of such acquired Station on the date of acquisition thereof and which are acquired by the Borrower or any of such Subsidiaries to the extent such bad debt reserve adjustment exceeds the amount the Borrower would have reserved with respect to such accounts receivable in accordance with its customary reserve practices.

     Program. Any television series or other program produced or distributed for television, or film or video release (including any syndicated series or other program regardless of its medium of initial exploitation), in each case whether recorded on film, videotape, audio tape, cassette, cartridge, disc or by any other means, method, process or device, whether now known or hereafter developed.

     Program Contracts. All contracts for television and film, Programs, music and related audio rights and syndicated series exhibition rights acquired under license agreements.

     Program Rights. Any right whether arising under Program Contracts or otherwise, to sell, distribute, subdistribute, exhibit, lease, sublease, license, sublicense or otherwise exploit Programs.

     Program Rights Costs. The maximum amount which the Borrower and/or any of its Subsidiaries or its or their co-venturers have furnished or have contractually committed to furnish (whether or not such commitments shall be reflected as an asset or liability on the consolidated balance sheet of the Borrower) toward the production or acquisition by the Borrower and/or any of its Subsidiaries or its or their co-venturers in connection with any Program Rights with respect to any Program.

     Programming Amortization Expense. For any period, total amortization expense of the Borrower and its Subsidiaries for such period which is directly attributable to Programs, Program Rights or Program Contracts, determined on a consolidated basis in accordance with GAAP.

     Programming Cash Payments. For any period, the aggregate cash payments actually made by Borrower and its Subsidiaries during such period in respect of Programming Obligations, determined on a consolidated basis in conformity with GAAP.

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     Programming Obligations. For any period, all direct or indirect liabilities (including, but without duplication, any guaranties and other contingent obligations relating to or arising in connection with a Programming Obligation), contingent or otherwise, with respect to Program Contracts, Programs or Program Rights, (including, without limitation, all Program Rights Costs) of the Borrower and/or its Subsidiaries whether or not reflected on the consolidated balance sheet of the Borrower and its subsidiaries prepared in conformity with GAAP.

     Projections. See §8.4.3.

     RAM. Radio Austin Management, L.L.C., the sole general partner of the Austin Partnership, which is and shall remain a single purpose entity whose sole material asset is the general partnership interest in the Austin Partnership.

     Real Estate. All real property at any time owned or leased (as lessee or sublessee) by the Borrower or any of its Subsidiaries.

     Reference Period. As of any date of determination, the period of four (4) consecutive fiscal quarters of the Borrower and its Subsidiaries ending on such date, or if such date is not a fiscal quarter end date, the period of four (4) consecutive fiscal quarters most recently ended (in each case treated as a single accounting period).

     Refinancing Note Documents. Each of the documents, instruments and other agreements entered into or delivered by the Borrower (including, without limitation, the Refinancing Notes and the Refinancing Note Indenture) and/or any Subsidiary of the Borrower relating to the issuance by the Borrower of the Refinancing Notes and any guaranties or other documents related thereto, each in form and substance reasonably satisfactory to the Administrative Agent, as the same may be supplemented, amended or modified from time to time in accordance with the terms hereof (including, without limitation, §10.8) and thereof.

     Refinancing Note Indenture. The indenture between the Borrower and The Bank of Nova Scotia Trust Company of New York which governs the Refinancing Notes and contains materials, terms and conditions which are less restrictive than the terms and conditions of this Credit Agreement and otherwise in form and substance reasonably satisfactory to the Administrative Agent, as the same may be supplemented, amended or modified from time to time in accordance with the terms hereof (including §10.8) and thereof.

     Refinancing Notes. The Borrower’s unsecured 6-7/8% subordinated notes due 2012 issued by the Borrower under the Refinancing Note Indenture, the proceeds of which shall be used in accordance with §9.16.

     Register. See §17.2.

     Reimbursement Obligation. The Borrower’s obligation to reimburse the Administrative Agent and the Revolving Credit Lenders on account of any drawing under any Letter of Credit as provided in §5.2.

     Related Parties. With respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

     Required Lenders. As of any date, the Lenders (other than Delinquent Lenders) holding greater than fifty percent (50%) of the sum of (i) the aggregate outstanding principal amount of the Tranche B Term Loans on such date, and (ii) the Total Revolving Credit Commitment on such date, or, in the event that the Total Revolving Credit Commitment has been terminated or otherwise reduced to zero, the outstanding principal amount of Revolving Credit Loans on such date, and (iii) the aggregate outstanding principal amount on such date of any new Tranche structured as a term tranche pursuant to §15.1.

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     Required Revolver Lenders. As of any date, the Revolving Credit Lenders (other than Delinquent Lenders) holding greater than fifty percent (50%) of the Total Revolving Credit Commitment on such date, or, in the event that the Total Revolving Credit Commitment has been terminated or otherwise reduced to zero, the outstanding principal amount of Revolving Credit Loans on such date.

     Required Term Lenders. As of any date, the Tranche B Lenders and (as applicable) the Lenders of any new Tranche structured as a term tranche pursuant to §15.1 (other than, in each case Delinquent Lenders) holding greater than fifty percent (50%) of the sum of (i) the aggregate outstanding principal amount of the Tranche B Term Loans on such date, and (ii) the aggregate outstanding principal amount on such date of any new Tranche structured as a term tranche pursuant to §15.1.

     Restricted Payment. In relation to the Borrower and its Subsidiaries, any (a) Distribution, (b) payment in respect of Subordinated Debt (including Additional Subordinated Debt), (c) payment of management, consulting or similar fees to Affiliates of the Borrower or such Subsidiary, or (d) derivatives or other transactions with any financial institution, commodities or stock exchange or clearinghouse (a “Derivatives Counterparty”) obligating the Borrower or such Subsidiary to make payments to such Derivatives Counterparty as a result of any change in market value of any Capital Stock of the Borrower or such Subsidiary.

     Revolving Credit Commitment. With respect to each Revolving Credit Lender, the amount set forth on Schedule 1 hereto (as adjusted from time to time pursuant to §§15 and/or 17) as the amount of such Revolving Credit Lender’s commitment to make Revolving Credit Loans to, and to participate in the issuance, extension and renewal of Letters of Credit for the account of, the Borrower, as the same may be reduced or increased from time to time pursuant to §15 or §17 hereof; or if such commitment is terminated pursuant to the provisions hereof, zero.

     Revolving Credit Lenders. Each Lender which has a Revolving Credit Commitment set forth opposite its name on Schedule 1 hereto and any other Person who becomes an assignee of any rights and obligations of a Revolving Credit Lender pursuant to §17 or who agrees to advance additional Revolving Credit Loans pursuant to §15.

     Revolving Credit Loan Maturity Date. November 10, 2011.

     Revolving Credit Loans. Revolving credit loans made or to be made by the Revolving Credit Lenders to the Borrower pursuant to §2.

     Revolving Credit Notes. See §2.4.

     Security Agreement. The Security Agreement, dated or to be dated as of the date hereof, between the Borrower and each of the Subsidiaries and the Administrative Agent, in form and substance satisfactory to the Administrative Agent.

     Security Documents. The Guaranty, the Security Agreement, the Mortgages, the Trademark Agreement, the Copyright Mortgage, the Pledge Agreement, the Collateral Assignments of Contracts and all other instruments and documents, including without limitation UCC financing statements, required to be executed or delivered pursuant to any Security Document.

     Senior Discount Note Indenture. The Indenture, dated as of March 27, 2001, by and between the Parent (as successor by merger to Emmis Escrow Corporation) and United States Trust Company of New York, as trustee thereunder, with respect to the Senior Discount Notes, as in effect on March 27, 2001 and as the same may be supplemented, amended or modified from time to time in accordance with the terms hereof (including, without limitation, §10.8 to the extent applicable) and thereof.

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     Senior Discount Notes. The 12-1/2% Senior Discount Notes Due 2011 issued by the Parent (as successor by merger to Emmis Escrow Corporation) under the Senior Discount Note Indenture, and any refinancings thereof.

     Senior Funded Debt. At any time of determination, Consolidated Total Funded Debt minus Subordinated Debt.

     Senior Leverage Ratio. At any time of determination, the ratio of (a) Senior Funded Debt as at such date to (b) Consolidated Operating Cash Flow for the Reference Period ending on such date.

     Settlement. The making or receiving of payments, in immediately available funds, by the Revolving Credit Lenders, to the extent necessary to cause each Revolving Credit Lender’s actual share of the outstanding amount of Revolving Credit Loans (after giving effect to any Loan Request) to be equal to such Revolving Credit Lender’s Commitment Percentage of the outstanding amount of such Revolving Credit Loans (after giving effect to any Loan Request), in any case where, prior to such event or action, the actual share is not so equal.

     Settlement Amount. See §2.9.1.

     Settlement Date. (a) The Drawdown Date relating to any Loan Request, (b) Friday of each week, or if a Friday is not a Business Day, the Business Day immediately following such Friday, (c) at the option of the Administrative Agent, on any Business Day following a day on which the account officers of the Administrative Agent active upon the Borrower’s account become aware of the existence of an Event of Default, (d) any Business Day on which the amount of Revolving Credit Loans outstanding from Bank of America plus Bank of America’s Commitment Percentage of the sum of the Maximum Drawing Amount and any Unpaid Reimbursement Obligations is equal to or greater than Bank of America’s Commitment Percentage of the Total Revolving Credit Commitment, (e) the Business Day immediately following any Business Day on which the amount of Revolving Credit Loans outstanding increases or decreases by more than $2,000,000 as compared to the previous Settlement Date, (f) any day on which any conversion of a Base Rate Loan to a Eurodollar Rate Loan occurs, or (g) any Business Day on which the amount of outstanding Revolving Credit Loans decreases.

     Settling Lender. See §2.9.1.

     Sinclair Definitive Agreement. That certain Agreement for Purchase of Limited Partner and Member Interests, dated as of March 3, 2003, between Sinclair Telecable, Inc. and the Borrower, together with all other agreements and documents entered into or delivered pursuant to or in connection therewith, relating to the Austin Investment and the governance of, or operation of the business of, the Austin Partnership thereafter.

     Solvent. With respect to any Person as of any date of determination, (a) the fair value of the property of such Person (both at fair valuation and at present fair saleable value) is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liabilities of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature, and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute unreasonably small capital after giving due consideration to current and anticipated future capital requirements and current and anticipated future business conduct and the prevailing practice in the industry in which such Person is engaged. In computing the amount of contingent liabilities at any time, such liabilities shall be computed in an amount which, in light of the facts

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and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

     S&P. Standard & Poor’s Ratings Group.

     Station. All of the properties, assets and operating rights constituting a system for transmitting radio or television signals from a transmitter licensed by the FCC, together with any subsystem which is ancillary to such system and including all the Stations set forth on Schedule 8.3(b) hereto.

     Subordinated Debt. Collectively, (a) the Subordinated Notes, the Refinancing Notes and the Subordinated Guaranties and (b) any other unsecured Indebtedness (including guaranties by Subsidiaries of such unsecured Indebtedness) issued by the Borrower or any Subsidiary after the Funding Date that is expressly subordinated and made junior to the payment and performance in full in cash of the Obligations, and evidenced as such by a written instrument containing subordination provisions in form and substance reasonably satisfactory to the Administrative Agent and approved by the Administrative Agent in writing (“Additional Subordinated Debt”); provided that the material terms and conditions of such Additional Subordinated Debt are less restrictive than the terms and conditions set forth in this Credit Agreement with respect to the Obligations and no more restrictive than the terms and conditions of the Subordinated Notes and the Refinancing Notes (as applicable) as reasonably determined by the Administrative Agent. For the purposes of clarification, if any Additional Subordinated Debt has an interest rate higher than the interest rate applicable to the Subordinated Notes or the Refinancing Notes, such Additional Subordinated Debt shall not be deemed more restrictive than the Subordinated Notes or the Refinancing Notes solely because of such higher interest rate.

     Subordinated Guaranties. The guaranties of certain subsidiaries of the Borrower of the obligations of the Borrower under the Subordinated Notes pursuant to the Subordinated Note Indenture and the Refinancing Notes pursuant to the Refinancing Note Indenture which, in each case, are subordinated to the repayment of the Obligations in accordance with the terms of the Subordinated Note Indenture and the Refinancing Note Indenture, respectively.

     Subordinated Note Documents. Each of the documents, instruments and other agreements entered into or delivered by the Borrower (including, without limitation, the Subordinated Notes and the Subordinated Note Indenture) and/or any Subsidiary of the Borrower relating to the issuance by the Borrower of the Subordinated Notes and any guaranties or other documents related thereto, as in effect on February 12, 1999, and as the same may be supplemented, amended or modified from time to time in accordance with the terms hereof (including, without limitation, §10.8) and thereof.

     Subordinated Note Indenture. The Indenture, dated as of February 12, 1999, by and between the Borrower and Bank of New York (as successor to IBJ Whitehall Bank & Trust Company), as trustee thereunder, with respect to the Subordinated Notes, as in effect on February 12, 1999 and as the same may be supplemented, amended or modified from time to time in accordance with the terms hereof (including, without limitation, §10.8) and thereof.

     Subordinated Notes. The 8.125% Subordinated Notes due 2009 in the aggregate principal amount of $300,000,000 issued by the Borrower under the Subordinated Note Indenture.

     Subsidiary. Any corporation, association, trust, partnership, limited liability company or other business entity of which the designated parent shall at any time own directly or indirectly through a Subsidiary or Subsidiaries at least a majority of the shares of Capital Stock or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency). For purposes of this Credit Agreement, with respect to the Parent, the Borrower or any of their respective Subsidiaries, “Subsidiary” shall include all Subsidiaries of the Parent and the Borrower other than Excluded Subsidiaries, except as otherwise expressly provided.

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     Syndication Agent. As defined in the preamble hereto.

     Synthetic Lease. Any lease of goods or other property, whether real or personal, which is treated as an operating lease under GAAP and as a loan or financing for U.S. income tax purposes.

     Title Insurance Company. With respect to each Mortgaged Property, as applicable, Chicago Title Insurance Company and/or any other title insurance company reasonably acceptable to the Administrative Agent, and collectively if the context requires, all such companies.

     Title Policy. In relation to each Mortgaged Property, an ALTA standard form title insurance policy issued by the Title Insurance Company (with such reinsurance or co-insurance as the Administrative Agent may require, any such reinsurance to be with direct access endorsements) in such amount as may be reasonably determined by the Administrative Agent insuring the priority of the Mortgage of such Mortgaged Property and that the Borrower or one of its Subsidiaries holds marketable fee simple or leasehold title (as applicable) to such Mortgaged Property, subject only to the encumbrances permitted by such Mortgage and which shall not contain exceptions for mechanics liens, persons in occupancy or matters which would be shown by a survey (except as may be permitted by such Mortgage), shall not insure over any matter except to the extent that any such affirmative insurance is acceptable to the Administrative Agent in its sole discretion, and shall contain such endorsements and affirmative insurance as the Administrative Agent in its discretion may require, including but not limited to (a) comprehensive endorsement, (b) variable rate of interest endorsement, (c) usury endorsement, (d) revolving credit endorsement, (e) tie-in endorsement, (f) doing business endorsement and (g) ALTA form 3.1 zoning endorsement.

     Total Commitment. The sum of (a) the Total Revolving Credit Commitment, plus (b) the sum of the Tranche B Commitments of the Tranche B Lenders plus (c) to the extent not otherwise included in the preceding clauses, the sum of the commitments in respect of any new Tranche structured as a term tranche pursuant to §15.1.

     Total Leverage Ratio. As at any date of determination, the ratio of (a) Consolidated Total Funded Debt outstanding on such date to (b) Consolidated Operating Cash Flow for the Reference Period ending on such date.

     Total Percentage. With respect to each Lender without duplication, the sum of (a) the Tranche B Term Loan held by such Lender plus (b) the Revolving Credit Commitment of such Lender (or, if such Revolving Credit Commitment has been terminated, the Revolving Credit Loans, Letter of Credit Participations in Unpaid Reimbursement Obligations, and participating interests in the risk relating to outstanding Letters of Credit held by such Lender) plus (c) to the extent not otherwise included in the foregoing, such Lender’s interest in any new Tranche structured as a term tranche pursuant to §15.1 as a percentage of the sum of (x) the outstanding principal amount of the Tranche B Term Loan plus (y) the greater of (i) the Total Revolving Credit Commitment and (ii) the outstanding principal amount of the Revolving Credit Loans, Unpaid Reimbursement Obligations and the Maximum Drawing Amount of Letters of Credit plus (z) the outstanding principal amount of any new Tranche structured as a term tranche pursuant to §15.1.

     Total Revolving Credit Commitment. The sum of the Revolving Credit Commitments of the Revolving Credit Lenders, as in effect from time to time, which as of the Funding Date shall be equal to the aggregate principal amount of $350,000,000, as such amount may be decreased from time to time pursuant to the terms hereof or increased thereafter pursuant to the terms and conditions set forth in §15.

     Trademark Agreement. The Trademark Collateral Security and Pledge Agreement, dated or to be dated as of the date hereof, by and among the Borrower and each of the Subsidiaries and the Administrative Agent, in form and substance satisfactory to the Administrative Agent.

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     Trades. Those assets and liabilities of the Borrower and any of its Subsidiaries which do not represent the right to receive payment in cash or the obligation to make payment in cash and which arise pursuant to so-called trade or barter transactions.

     Tranche. Collectively, or individually as the context indicates, the Revolving Credit Loans if any are outstanding and/or the Tranche B Term Loan, and for purposes of §15 only, any new Loan provided to the Borrower in accordance with the terms and conditions set forth in such §15.

     Tranche B Commitment. With respect to each Tranche B Lender, the agreement of such Person to make a Tranche B Term Loan on the Funding Date in the amount set forth on Schedule 1 or any additional commitment to make a Tranche B Term Loan as provided in §15 or as such amount may be adjusted pursuant to §17 hereof.

     Tranche B Lenders. Each Lender which has a Tranche B Commitment set forth opposite its name on Schedule 1 and any other Person who becomes an assignee of any rights and obligations of a Tranche B Lender pursuant to §17 or who agrees to advance additional Tranche B Term Loans pursuant to §15.

     Tranche B Maturity Date. November 10, 2011.

     Tranche B Term Loan. The term loan made or to be made by the Tranche B Lenders to the Borrower on the Funding Date in the aggregate principal amount of $675,000,000 pursuant to §3.1, as such amount may be increased thereafter pursuant to the terms and conditions set forth in §15.

     Tranche B Term Notes. See §3.2.

     Type. As to any Revolving Credit Loan or all or any portion of the Tranche B Term Loan or all or any portion of any additional term loan structured as a term tranche pursuant to §15.1, its nature as a Base Rate Loan or a Eurodollar Rate Loan.

     UCC. The Uniform Commercial Code as in effect in the State of New York.

     Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which the Borrower does not reimburse the Administrative Agent and the Revolving Credit Lenders on the date specified in, and in accordance with, §5.2.

     1.2. Rules of Interpretation.

     (a) A reference to any document or agreement shall include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms and the terms of this Credit Agreement.

     (b) The singular includes the plural and the plural includes the singular.

     (c) A reference to any law includes any amendment or modification to such law.

     (d) A reference to any Person includes its permitted successors and permitted assigns.

     (e) Accounting terms not otherwise defined herein have the meanings assigned to them by GAAP applied on a consistent basis by the accounting entity to which they refer.

     (f) The words “include”, “includes” and “including” are not limiting.

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     (g) All terms not specifically defined herein or by GAAP, which terms are defined in the UCC have the meanings assigned to them therein, with the term “instrument” being that defined under Article 9 of the UCC.

     (h) Reference to a particular “§” refers to that section of this Credit Agreement unless otherwise indicated.

     (i) The words “herein”, “hereof”, “hereunder” and words of like import shall refer to this Credit Agreement as a whole and not to any particular section or subdivision of this Credit Agreement.

     (j) Unless otherwise expressly indicated, in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including,” the words “to” and “until” each mean “to but excluding,” and the word “through” means “to and including.”

     (k) This Credit Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are, however, cumulative and are to be performed in accordance with the terms thereof.

     (l) This Credit Agreement and the other Loan Documents are the result of negotiation among, and have been reviewed by counsel to, among others, the Administrative Agent and the Borrower and are the product of discussions and negotiations among all parties. Accordingly, this Credit Agreement and the other Loan Documents are not intended to be construed against the Administrative Agent or any of the Lenders merely on account of the Administrative Agent’s or any Lender’s involvement in the preparation of such documents.

2. THE REVOLVING CREDIT FACILITY.

     2.1. Commitment to Lend. Subject to the terms and conditions set forth in this Credit Agreement, each of the Revolving Credit Lenders severally agrees to lend to the Borrower and the Borrower may borrow, repay, and reborrow from time to time from the Funding Date up to but not including the Revolving Credit Loan Maturity Date upon notice by the Borrower to the Administrative Agent given in accordance with §2.6, such sums as are requested by the Borrower up to a maximum aggregate amount outstanding (after giving effect to all amounts requested) at any one time equal to such Revolving Credit Lender’s Revolving Credit Commitment minus such Revolving Credit Lender’s Commitment Percentage of the sum of the Maximum Drawing Amount and all Unpaid Reimbursement Obligations, provided that the sum of the outstanding aggregate amount of all Revolving Credit Loans (after giving effect to all amounts requested) plus the Maximum Drawing Amount and all Unpaid Reimbursement Obligations shall not at any time exceed the Total Revolving Credit Commitment at such time. The Revolving Credit Loans shall be made pro rata in accordance with each Revolving Credit Lender’s Commitment Percentage of the Total Revolving Credit Commitment. Each request for a Revolving Credit Loan hereunder shall constitute a representation and warranty by the Borrower that the conditions set forth in §12 and §13, in the case of the initial Revolving Credit Loans to be made on the Funding Date, and §13, in the case of all other Revolving Credit Loans, have been satisfied on the date of such request.

     2.2. Commitment Fee. The Borrower agrees to pay to the Administrative Agent for the accounts of the Revolving Credit Lenders in accordance with their respective Commitment Percentages of the Total Revolving Credit Commitment a commitment fee (the “Commitment Fee”) calculated at the rate of (a) at any time when the Total Leverage Ratio, determined as at the last day of the Reference Period most recently ended, equals or exceeds 6.00:1.00, 0.500% per annum, (b) at any time when the Total Leverage Ratio, determined as at the last day of the Reference Period most recently ended, equals or

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exceeds 5.00:1.00, but is less than 6.00:1.00, 0.375% per annum, and (c) at any time when the Total Leverage Ratio, determined as at the last day of the Reference Period most recently ended, is less than 5.00:1.00, 0.250% per annum, in each case, on the actual daily amount during each calendar quarter or portion thereof from the Funding Date to the Revolving Credit Loan Maturity Date by which the Total Revolving Credit Commitment minus the sum of the Maximum Drawing Amount and all Unpaid Reimbursement Obligations exceeds the outstanding amount of Revolving Credit Loans during such calendar quarter. The Commitment Fee shall be calculated by the Administrative Agent by reference to the Compliance Certificate most recently delivered pursuant to §9.4(c) and adjusted as necessary on each Adjustment Date (and in the event the Borrower fails to deliver a Compliance Certificate when so required, the Commitment Fee shall be calculated adopting the Total Leverage Ratio assumed for purposes of the calculation of the Applicable Margin pursuant to the provisos of clause (a) of the definition of Applicable Margin). The Commitment Fee shall be payable quarterly in arrears on each Interest Payment Date with respect to Base Rate Loans, with a final payment on the Revolving Credit Loan Maturity Date or any earlier date on which the Revolving Credit Commitments shall terminate.

     2.3. Reduction of Revolving Credit Commitment. The Borrower shall have the right at any time and from time to time upon five (5) Business Days’ prior written notice to the Administrative Agent to reduce by $2,000,000 or an integral multiple thereof or to terminate entirely the Total Revolving Credit Commitment, whereupon the Revolving Credit Commitments of the Revolving Credit Lenders shall be reduced pro rata in accordance with their respective Commitment Percentages of the Total Revolving Credit Commitment of the amount specified in such notice or, as the case may be, terminated. Promptly after receiving any notice of the Borrower delivered pursuant to this §2.3, the Administrative Agent will notify the Revolving Credit Lenders of the substance thereof. Upon the effective date of any such reduction or termination, the Borrower shall pay to the Administrative Agent for the respective accounts of the Revolving Credit Lenders the full amount of any Commitment Fee then accrued on the amount of the reduction. No reduction or termination of the Revolving Credit Commitments may be reinstated. In addition, the Total Revolving Credit Commitment shall be reduced in accordance with §4.

     2.4. Evidence of Revolving Credit Loans; Revolving Credit Notes. The Revolving Credit Loans made by each Revolving Credit Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Revolving Credit Lender shall be conclusive absent manifest error of the amount of the Revolving Credit Loans made by the Revolving Credit Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Revolving Credit Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. In addition to such accounts or records, upon request of any Revolving Credit Lender, its Revolving Credit Loans shall be evidenced by a separate promissory note of the Borrower in substantially the form of Exhibit A hereto (each a “Revolving Credit Note”), and completed with appropriate insertions. Any such Revolving Credit Note shall be payable to the order of such Revolving Credit Lender in a principal amount equal to such Revolving Credit Lender’s Revolving Credit Commitment or, if less, the outstanding amount of all Revolving Credit Loans made by such Revolving Credit Lender, plus interest accrued thereon, as set forth below. Each Revolving Credit Lender may attach schedules to its Revolving Credit Note and endorse thereon the date, Type (if applicable), amount and maturity of its Revolving Credit Loans and payments with respect thereto.

     2.5. Interest on Revolving Credit Loans. Except as otherwise provided in §6.11,

     (a) Each Revolving Credit Loan which is a Base Rate Loan shall bear interest for each day on which such Base Rate Loan is outstanding at the rate per annum equal to the Base Rate plus the Applicable Margin in effect from time to time with respect to Revolving Credit Loans which are Base Rate Loans.

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     (b) Each Revolving Credit Loan which is a Eurodollar Rate Loan shall bear interest for each Interest Period applicable thereto at the rate per annum equal to the Eurodollar Rate determined for each Interest Period plus the Applicable Margin in effect from time to time with respect to Revolving Credit Loans which are Eurodollar Rate Loans.

The Borrower promises to pay interest on each Revolving Credit Loan in arrears on each Interest Payment Date with respect thereto.

     2.6. Requests for Revolving Credit Loans.

     The Borrower shall give to the Administrative Agent written notice in the form of Exhibit B hereto (or telephonic notice confirmed in a writing in the form of Exhibit B hereto) of each Revolving Credit Loan requested hereunder (a “Loan Request”) no later than (a) 11:00 a.m. (Dallas, Texas time) on the day that is one (1) Business Day prior to the proposed Drawdown Date of any Base Rate Loan and (b) 11:00 a.m. (Dallas, Texas time) on the day that is three (3) Eurodollar Business Days prior to the proposed Drawdown Date of any Eurodollar Rate Loan. Each such notice shall specify (i) the principal amount of the Revolving Credit Loan requested, (ii) the proposed Drawdown Date of such Revolving Credit Loan, (iii) the Type of such Revolving Credit Loan and (iv) in the case of a Eurodollar Rate Loan, the Interest Period for such Revolving Credit Loan. Promptly upon receipt of any such notice, the Administrative Agent shall notify each of the Revolving Credit Lenders thereof. Each Loan Request shall be irrevocable and binding on the Borrower and shall obligate the Borrower to accept the Revolving Credit Loan requested from the Revolving Credit Lenders on the proposed Drawdown Date. Each Loan Request shall be in a minimum aggregate amount of (a) in the case of Base Rate Loans, $500,000 or in integral multiples of $100,000 in excess thereof and (b) in the case of Eurodollar Rate Loans, $1,000,000 or in integral multiples of $100,000 in excess thereof; provided, that no more than twelve (12) Eurodollar Rate Loans having different Interest Periods may be outstanding at any time.

     2.7. Conversion Options.

     2.7.1. Conversion to Different Type of Revolving Credit Loan. The Borrower may elect from time to time to convert any outstanding Revolving Credit Loan to a Revolving Credit Loan of another Type, provided that with respect to any such conversion of a Base Rate Loan to a Eurodollar Rate Loan, the Borrower shall give the Administrative Agent prior written notice of such election no later than 11:00 a.m. (Dallas, Texas time) on the third (3^rd) Eurodollar Business Day prior to the date of such conversion; and no Revolving Credit Loan may be converted into a Eurodollar Rate Loan when any Event of Default has occurred and is continuing. On the date on which such conversion is being made, each Revolving Credit Lender shall take such action as is necessary to transfer its Commitment Percentage of such Revolving Credit Loans to its Domestic Lending Office or its Eurodollar Lending Office, as the case may be. All or any part of outstanding Revolving Credit Loans of any Type may be converted into a Revolving Credit Loan of another Type as provided herein; provided that if a Eurodollar Rate Loan is converted to a Base Rate Loan on a day which is not the last day of the Interest Period relating thereto, the Borrower shall indemnify the Lenders for any additional costs relating thereto pursuant to §6.10. Each Conversion Request relating to the conversion of a Revolving Credit Loan to a Eurodollar Rate Loan shall be irrevocable by the Borrower.

     2.7.2. Continuation of Type of Revolving Credit Loan. Any Revolving Credit Loan of any Type may be continued as a Revolving Credit Loan of the same Type upon the expiration of an Interest Period with respect thereto by compliance by the Borrower with the notice provisions contained in §2.7.1; provided that no Eurodollar Rate Loan may be continued as such when any 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 Event of Default of which officers of the Administrative Agent active upon the

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Borrower’s account have actual knowledge. In the event that the Borrower fails to provide any such notice with respect to the continuation of any Eurodollar Rate Loan as such, then such Eurodollar Rate Loan shall be automatically converted to a Base Rate Loan on the last day of the Interest Period relating thereto. The Administrative Agent shall notify the Revolving Credit Lenders promptly when any such automatic conversion contemplated by this §2.7.2 is scheduled to occur.

     2.7.3. Eurodollar Rate Loans. Any conversion to or from Eurodollar Rate Loans shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of all Eurodollar Rate Loans having the same Interest Period shall not be less than $1,000,000 or an integral multiple of $100,000 in excess thereof. No more than twelve (12) Eurodollar Rate Loans having different Interest Periods may be outstanding at any time.

     2.8. Funds for Revolving Credit Loans.

     2.8.1. Funding Procedures. Not later than 12:00 noon (Dallas, Texas time) on the proposed Drawdown Date of any Revolving Credit Loans, each of the Revolving Credit Lenders will make available to the Administrative Agent, at the Administrative Agent’s Office, in immediately available funds, the amount of such Revolving Credit Lender’s Commitment Percentage of the amount of the requested Revolving Credit Loans. Upon receipt from each Revolving Credit Lender of such amount, and upon receipt of the documents required by §§12 and 13 and the satisfaction of the other conditions set forth therein, to the extent applicable, the Administrative Agent will make available to the Borrower the aggregate amount of such Revolving Credit Loans made available to the Administrative Agent by the Revolving Credit Lenders. The failure or refusal of any Revolving Credit Lender to make available to the Administrative Agent at the aforesaid time and place on any Drawdown Date the amount of its Commitment Percentage of the requested Revolving Credit Loans shall not relieve any other Revolving Credit Lender from its several obligation hereunder to make available to the Administrative Agent the amount of such other Revolving Credit Lender’s Commitment Percentage of any requested Revolving Credit Loans.

     2.8.2. Advances by Administrative Agent. The Administrative Agent may, unless notified to the contrary by any Revolving Credit Lender prior to a Drawdown Date, assume that such Revolving Credit Lender has made available to the Administrative Agent on such Drawdown Date the amount of such Revolving Credit Lender’s Commitment Percentage of the Revolving Credit Loans to be made on such Drawdown Date, and the Administrative Agent may (but it shall not be required to), in reliance upon such assumption, make available to the Borrower a corresponding amount. If any Revolving Credit Lender makes available to the Administrative Agent such amount on a date after such Drawdown Date, such Revolving Credit Lender shall pay to the Administrative Agent on demand an amount equal to the product of (a) the average computed for the period referred to in clause (c) below, of the weighted average interest rate paid by the Administrative Agent for federal funds acquired by the Administrative Agent during each day included in such period, times (b) the amount of such Revolving Credit Lender’s Commitment Percentage of such Revolving Credit Loans, times (c) a fraction, the numerator of which is the number of days that elapse from and including such Drawdown Date to the date on which the amount of such Revolving Credit Lender’s Commitment Percentage of such Revolving Credit Loans shall become immediately available to the Administrative Agent, and the denominator of which is 360. A statement of the Administrative Agent submitted to such Revolving Credit Lender with respect to any amounts owing under this paragraph shall be prima facie evidence of the amount due and owing to the Administrative Agent by such Revolving Credit Lender. If the amount of such Revolving Credit Lender’s Commitment Percentage of such Revolving Credit Loans is not made available to the Administrative Agent by such Revolving Credit Lender within three (3) Business Days following such Drawdown Date, the Administrative Agent shall be

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entitled to recover such amount from the Borrower on demand, with interest thereon at the rate per annum applicable to the Revolving Credit Loans made on such Drawdown Date.

     2.9. Settlements.

     2.9.1. General. On each Settlement Date, the Administrative Agent shall promptly give notice (a) to the Revolving Credit Lenders and the Borrower of the respective outstanding amount of Revolving Credit Loans made by the Administrative Agent on behalf of the Revolving Credit Lenders from the immediately preceding Settlement Date through the close of business on the prior day and the amount of any Eurodollar Rate Loans to be made (following the giving of notice pursuant to §2.6) on such date pursuant to a Loan Request and (b) to the Revolving Credit Lenders of the amount (a “Settlement Amount”) that each Revolving Credit Lender (a “Settling Lender”) shall pay to effect a Settlement of any Revolving Credit Loan. A statement of the Administrative Agent submitted to the Revolving Credit Lenders and the Borrower or to the Revolving Credit Lenders with respect to any amounts owing under this §2.9 shall be prima facie evidence of the amount due and owing. Each Settling Lender shall, not later than 1:00 p.m. (Dallas, Texas time) on such Settlement Date, effect a wire transfer of immediately available funds to the Administrative Agent in the amount of the Settlement Amount for such Settling Lender. All funds advanced by any Revolving Credit Lender as a Settling Lender pursuant to this §2.9 shall for all purposes be treated as a Revolving Credit Loan made by such Settling Lender to the Borrower and all funds received by any Revolving Credit Lender pursuant to this §2.9 shall for all purposes be treated as repayment of amounts owed with respect to Revolving Credit Loans made by such Revolving Credit Lender. In the event that any bankruptcy, reorganization, liquidation, receivership or similar cases or proceedings in which the Borrower is a debtor prevent a Settling Lender from making any Revolving Credit Loan to effect a Settlement as contemplated hereby, such Settling Lender will make such dispositions and arrangements with the other Revolving Credit Lenders with respect to such Revolving Credit Loans, either by way of purchase of participations, distribution, pro tanto assignment of claims, subrogation or otherwise as shall result in each Revolving Credit Lender’s share of the outstanding Revolving Credit Loans being equal, as nearly as may be, to such Revolving Credit Lender’s Commitment Percentage of the outstanding amount of the Revolving Credit Loans.

     2.9.2. Failure to Make Funds Available. The Administrative Agent may, unless notified to the contrary by any Settling Lender prior to a Settlement Date, assume that such Settling Lender has made or will make available to the Administrative Agent on such Settlement Date the amount of such Settling Lender’s Settlement Amount, and the Administrative Agent may (but it shall not be required to), in reliance upon such assumption, make available to the Borrower a corresponding amount. If any Settling Lender makes available to the Administrative Agent such amount on a date after such Settlement Date, such Settling Lender shall pay to the Administrative Agent on demand an amount equal to the product of (a) the average computed for the period referred to in clause (c) below, of the weighted average interest rate paid by the Administrative Agent for federal funds acquired by the Administrative Agent during each day included in such period, times (b) the amount of such Settlement Amount, times (c) a fraction, the numerator of which is the number of days that elapse from and including such Settlement Date to the date on which the amount of such Settlement Amount shall become immediately available to the Administrative Agent, and the denominator of which is 360. A statement of the Administrative Agent submitted to such Settling Lender with respect to any amounts owing under this §2.9.2 shall be prima facie evidence of the amount due and owing to the Administrative Agent by such Settling Lender. If such Settling Lender’s Settlement Amount is not made available to the Administrative Agent by such Settling Lender within three (3) Business Days following such Settlement Date, the Administrative Agent shall be entitled to recover such amount from the Borrower on demand, with interest thereon at the rate per annum applicable to the Revolving Credit Loans as of such Settlement Date.

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     2.9.3. No Effect on Other Revolving Credit Lenders. The failure or refusal of any Settling Lender to make available to the Administrative Agent at the aforesaid time and place on any Settlement Date the amount of such Settling Lender’s Settlement Amount shall not (a) relieve any other Settling Lender from its several obligations hereunder to make available to the Administrative Agent the amount of such other Settling Lender’s Settlement Amount or (b) impose upon any Revolving Credit Lender, other than the Settling Lender so failing or refusing, any liability with respect to such failure or refusal or otherwise increase the Revolving Credit Commitment of such other Revolving Credit Lender.

     2.10. Repayment Of The Revolving Credit Loans.

     2.10.1. Maturity. The Borrower promises to pay on the Revolving Credit Loan Maturity Date, and there shall become absolutely due and payable on the Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans outstanding on such date, together with any and all accrued and unpaid interest thereon.

     2.10.2. Mandatory Repayments of Revolving Credit Loans. If at any time the sum of the outstanding amount of the Revolving Credit Loans, the Maximum Drawing Amount and all Unpaid Reimbursement Obligations exceeds the Total Revolving Credit Commitment at such time, then the Borrower shall immediately pay the amount of such excess to the Administrative Agent for the respective accounts of the Revolving Credit Lenders for application: first, to any Unpaid Reimbursement Obligations; second, to the Revolving Credit Loans; and third, to provide to the Administrative Agent cash collateral for Reimbursement Obligations as contemplated by §5.2(b) and 5.2(c). Each payment of any Unpaid Reimbursement Obligations or prepayment of Revolving Credit Loans shall be allocated among the Revolving Credit Lenders, in proportion, as nearly as practicable, to each Reimbursement Obligation or (as the case may be) the respective unpaid principal amount of each Revolving Credit Lender’s Revolving Credit Note, with adjustments to the extent practicable to equalize any prior payments or repayments not exactly in proportion. In addition, the Borrower shall repay the Revolving Credit Loans in accordance with §4.

     2.10.3. Optional Repayments of Revolving Credit Loans. The Borrower shall have the right, at its election, to repay the outstanding amount of the Revolving Credit Loans, as a whole or in part, at any time without penalty or premium, provided that no Eurodollar Rate Loans may be prepaid pursuant to this §2.10.3 except on the last day of the Interest Period relating thereto unless breakage costs incurred by the Revolving Credit Lenders in connection therewith are paid by the Borrower in accordance with §6.10. The Borrower shall give the Administrative Agent written notice by no later than 11:00 a.m. (Dallas, Texas time) at least one (1) Business Day prior to the proposed date of any prepayment pursuant to this §2.10.3 of Base Rate Loans, and at least three (3) Eurodollar Business Days’ prior to the proposed date of any prepayment pursuant to this §2.10.3 of Eurodollar Rate Loans, in each case specifying the proposed date of prepayment of Revolving Credit Loans and the principal amount to be prepaid. Each such partial prepayment of the Revolving Credit Loans shall be in an integral multiple of $2,000,000, shall be accompanied by the payment of accrued interest on the principal prepaid to the date of prepayment and shall be applied, in the absence of instruction by the Borrower, first to the principal of Base Rate Loans and then to the principal of Eurodollar Rate Loans. Each partial prepayment shall be allocated among the Revolving Credit Lenders, in proportion, as nearly as practicable, to the respective unpaid principal amount of each Revolving Credit Lender’s Revolving Credit Note, with adjustments to the extent practicable to equalize any prior repayments not exactly in proportion.

3. THE TRANCHE B TERM LOAN.

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     3.1. Commitment to Lend. Subject to the terms and conditions set forth in this Credit Agreement, each Tranche B Lender agrees to lend to the Borrower on the Funding Date the amount of its Commitment Percentage of the Tranche B Term Loan.

     3.2. Evidence of Tranche B Term Loan; Tranche B Term Notes. The Tranche B Term Loans made by each Tranche B Lender shall be evidenced by one or more accounts or records maintained by such Tranche B Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Tranche B Lender shall be conclusive absent manifest error of the amount of the Tranche B Term Loan made by the Tranche B Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Tranche B Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. In addition to such accounts or records, upon request of any Tranche B Lender, the Tranche B Term Loan shall be evidenced by separate promissory notes of the Borrower in substantially the form of Exhibit C hereto (each a “Tranche B Term Note”), and completed with appropriate insertions. Any such Tranche B Term Note shall be payable to the order of such Tranche B Lender in a principal amount equal to such Tranche B Lender’s Commitment Percentage of the Tranche B Term Loan and representing the obligation of the Borrower to pay to such Tranche B Lender such principal amount or, if less, the outstanding amount of such Tranche B Lender’s Commitment Percentage of the Tranche B Term Loan, plus interest accrued thereon, as set forth below. Each Tranche B Lender may attach schedules to its Tranche B Term Note and endorse thereon the date, Type (if applicable), amount and maturity of its Tranche B Term Loans and payments with respect thereto.

     3.3. Mandatory Prepayment of Tranche B Term Loan; Scheduled Amortization. On the last day of each fiscal quarter of the Borrower commencing with the fiscal quarter ending February 28, 2005, and ending on the fiscal quarter ending August 31, 2011, the Borrower promises to pay to the Administrative Agent for the pro rata account of the Tranche B Lenders an amount equal to 0.25% of the original principal amount of the Tranche B Term Loan outstanding on the Funding Date, with the entire remaining unpaid principal balance (plus interest and other amounts payable in respect thereof) of the Tranche B Term Loan due and payable on the Tranche B Maturity Date. In addition, the Borrower shall repay the Tranche B Loan in accordance with §4.

     3.4. Optional Prepayment of Tranche B Term Loan. The Borrower shall have the right at any time to prepay the Tranche B Term Notes on or before the Tranche B Maturity Date, as a whole, or in part, upon prior written notice to the Administrative Agent given on or before 11:00 a.m. (Dallas, Texas time) on the third (3rd) Business Days prior to the date of such prepayment, without premium or penalty, provided that (a) each partial prepayment shall be in the principal amount of $2,500,000 or an integral multiple thereof, (b) no portion of the Tranche B Term Loan bearing interest at the Eurodollar Rate may be prepaid pursuant to this §3.4 except on the last day of the Interest Period relating thereto unless breakage costs incurred by the Tranche B Lenders in connection therewith are paid by the Borrower in accordance with §6.10, and (c) each partial prepayment shall be allocated among the Tranche B Lenders, in proportion, as nearly as practicable, to the respective outstanding amount of each Tranche B Lender’s Tranche B Term Note, with adjustments to the extent practicable to equalize any prior prepayments not exactly in proportion. Any prepayment of principal of the Tranche B Term Loan shall include all interest accrued to the date of prepayment and shall be applied to reduce remaining scheduled installments of principal due on the Tranche B Term Loan ratably. No amount repaid with respect to the Tranche B Term Loan may be reborrowed.

     3.5. Interest on Tranche B Term Loan.

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     3.5.1. Interest Rates. Except as otherwise provided in §6.11, the Tranche B Term Loan shall bear interest at the following rates:

     (a) To the extent that all or any portion of the Tranche B Term Loan bears interest at the Base Rate, the Tranche B Term Loan or such portion shall bear interest at the rate per annum equal to the Base Rate plus the Applicable Margin in effect with respect to that portion of the Tranche B Term Loan comprised of Base Rate Loans.

     (b) To the extent that all or any portion of the Tranche B Term Loan bears interest during any Interest Period at the Eurodollar Rate, the Tranche B Term Loan or such portion shall bear interest during such Interest Period at the rate per annum equal to the Eurodollar Rate determined for such Interest Period plus the Applicable Margin in effect with respect to that portion of the Tranche B Term Loans comprised of Eurodollar Rate Loans.

     The Borrower promises to pay interest on the Tranche B Term Loan or any portion thereof outstanding in arrears on each Interest Payment Date.

     3.5.2. Notification by Borrower. The Borrower shall notify the Administrative Agent, such notice to be irrevocable, by 11:00 a.m. on the date that is three (3) Eurodollar Business Days prior to the Drawdown Date of the Tranche B Term Loan if all or any portion of the Tranche B Term Loan is to bear interest at the Eurodollar Rate. After the Tranche B Term Loan has been made, the provisions of §2.7 shall apply mutatis mutandis with respect to all or any portion of the Tranche B Term Loan so that the Borrower may have the same interest rate options with respect to all or any portion of the Tranche B Term Loan as it would be entitled to with respect to the Revolving Credit Loans.

     3.5.3. Amounts, etc. Any portion of the Tranche B Term Loan bearing interest at the Eurodollar Rate relating to any Interest Period shall be in the amount of $1,000,000 or in integral multiples of $100,000 in excess thereof. The number of Eurodollar Rate Loans having different Interest Periods outstanding at any time shall not exceed ten (10). No Interest Period relating to the Tranche B Term Loan or any portion thereof bearing interest at the Eurodollar Rate shall extend beyond the date on which a regularly scheduled installment payment of the principal of the Tranche B Term Loan is to be made unless a portion of the Tranche B Term Loan at least equal to such installment payment has an Interest Period ending on such date or is then bearing interest at the Base Rate.

4. MANDATORY REPAYMENT OF THE LOANS.

     In addition to payments in respect of Revolving Credit Loans pursuant to §2.10 and scheduled amortization payments in respect of the Tranche B Term Loan pursuant to §3.3, the Loans shall be repaid as follows:

     4.1. Excess Cash Flow Recapture. If for each fiscal year ending on or after February 28, 2007, there shall be Consolidated Excess Cash Flow and if the Total Leverage Ratio as at the last day of such fiscal year is equal to or greater than 6.50:1.00, the Borrower shall pay to the Administrative Agent, for the respective accounts of the Lenders as provided in §4.5, an amount equal to fifty percent (50%) of Consolidated Excess Cash Flow for such fiscal year, such prepayment to be due five (5) days after receipt of the audited financial statements delivered pursuant to §9.4(a) but in any event no later than one hundred (100) days after the end of each applicable fiscal year and to be applied to prepay the Loans in the manner set forth in §4.5.

     4.2. Proceeds of Asset Sales and Asset Swaps. If the Parent, the Borrower or any Subsidiary receives Net Cash Sale Proceeds in excess of $25,000,000 from any Asset Sale or Asset Swap

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involving a Station or any publishing asset (whether through a single or a series or related transactions) and, as of the last day of the fiscal quarter ended immediately prior to the date of such Asset Sale or Asset Swap, the Total Leverage Ratio is (a) equal to or greater than 6.50:1.00, or (b) less than 6.50:1.00 but equal to or greater than 6.00:1.00, the Borrower shall pay to the Administrative Agent, for the respective accounts of the Lenders, an amount equal to (i) in the case of a Total Leverage Ratio described in clause (a), one hundred percent (100%) of such Net Cash Sale Proceeds, or (ii) in the case of a Total Leverage Ratio described in clause (b), fifty percent (50%) of such Net Cash Sale Proceeds, in each case, to be applied to prepay the Loans in the manner set forth in §4.5; provided, however, that if (x) within three hundred sixty- five (365) days of receipt of such Net Cash Sale Proceeds, the Borrower identifies to the Administrative Agent in writing an investment or acquisition otherwise permitted under §10.3(j) or §10.5.1, respectively, and (y) within five hundred forty-five (545) days of receipt of such Net Cash Sale Proceeds (or seven hundred thirty (730) days, in the case of an Asset Swap), the Borrower consummates such Permitted Acquisition or investments permitted under §10.3 with all or a portion of such Net Cash Sale Proceeds, the Borrower shall not be required to prepay the Loans under this §4.2 with that portion of the Net Cash Sale Proceeds applied to finance such Permitted Acquisition or permitted investments but shall in any event comply with the terms of §4.6.

     4.3. Proceeds of Equity Issuances. If the Parent, the Borrower or any Subsidiary receives Net Cash Equity Issuance Proceeds from any Equity Issuance and as of the last day of the fiscal quarter ended immediately prior to the date of such Equity Issuance, the Total Leverage Ratio is equal to or greater than 6:00 to 1:00, the Borrower shall pay to the Administrative Agent for the respective accounts of the Lenders as provided in §4.5 an amount equal to the lesser of (a) fifty percent (50%) of such Net Cash Equity Issuance Proceeds or (b) that amount necessary to reduce the Total Leverage Ratio to 6.00:1.00 after giving effect to such prepayment, such amount to be applied to prepay the Loans in the manner set forth in §4.5; provided, however, that the Borrower shall not be required to prepay the Loans under this §4.3 with Net Cash Equity Issuance Proceeds from an Equity Issuance permitted by §10.14(a) or §10.14(b)(i) or §10.14(b)(ii); and provided, further, that the Borrower may apply all or any portion of Net Cash Equity Issuance Proceeds which the Parent, the Borrower or any Subsidiary may receive from Equity Issuances to finance Permitted Acquisitions, so long as (i) within ninety (90) days of receipt by such Person of such Net Cash Equity Issuance Proceeds, the Borrower identifies to the Administrative Agent in writing an acquisition permitted under §10.5.1 which will be financed with such proceeds, and (ii) within three hundred sixty-five (365) days of receipt of such Net Cash Equity Issuance Proceeds, the Borrower consummates such Permitted Acquisition with all or a portion of such Net Cash Equity Issuance Proceeds. The Borrower shall in any event comply with the terms of §4.6.

     4.4. Proceeds of Subordinated Debt Issuances. If the Parent, the Borrower or any Subsidiary receives net cash proceeds from any issuance of Subordinated Debt (other than Subordinated Debt issued to refinance (i) the Subordinated Notes outstanding on the date hereof, (ii) all or any portion of the Senior Discount Notes outstanding on the date hereof and (iii) all or any portion of the Refinancing Notes outstanding on or after the date hereof) and the Senior Leverage Ratio as of the end of the fiscal quarter ended immediately prior to the date of such Subordinated Debt issuance is greater than 5.00:1.00, the Borrower shall pay to the Administrative Agent for the respective accounts of the Lenders an amount equal to the lesser of (a) one hundred percent (100%) of such net cash proceeds or (b) that amount necessary to reduce the Senior Leverage Ratio to 5.00:1.00 after giving effect to such prepayment, such amount to be applied to prepay the Loans in the manner set forth in §4.5.

     4.5. Application of Payments. All payments made pursuant to §§4.1 through 4.4 (other than payments comprised of Net Cash Equity Issuance Proceeds from any Equity Issuance completed on or before the eighteen (18) month anniversary of the Funding Date, which such proceeds shall be applied to repay outstanding Revolving Credit Loans, but shall not permanently reduce the Total Revolving Credit Commitment) shall be applied: first, to repay the Tranche B Term Loan with payments applied ratably against the remaining scheduled installments thereon; and second, if there are no outstanding amounts owing in respect of the Tranche B Term Loan, then to reduce the outstanding amount of the Revolving Credit Loans and to permanently reduce the Total Revolving Credit Commitment by a like amount. Such

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mandatory prepayments shall be allocated among the Lenders in proportion, as nearly as practicable, to the respective outstanding amounts of each Lender’s Tranche B Term Note or Revolving Credit Note, as applicable, with adjustments to the extent practicable to equalize any prior prepayments not exactly in proportion. Except as expressly provided in this §4.5, no amounts repaid with respect to the Loans pursuant to this §4.5 may be reborrowed.

     4.6. Delivery of Proceeds. The Borrower shall deliver to the Administrative Agent, promptly upon receipt thereof, all Net Cash Sale Proceeds or Net Cash Equity Issuance Proceeds that may have to be applied to prepay the Loans if not reinvested as permitted in §§4.2 and 4.3, and any cash reserves in connection with an Asset Swap or Asset Sale that were deducted from Net Cash Sale Proceeds, to be held as Collateral (in an interest bearing account) pending reinvestment in accordance with such §§4.2 and 4.3, or, in the case of such reserves, pending an application or conversion into Net Cash Sale Proceeds. Upon the Borrower’s request, any cash amounts delivered to the Administrative Agent to be held as Collateral under this §4.6 may be applied to repay Revolving Credit Loans, provided that an amount of the Total Revolving Credit Commitment equal to the amount so repaid may not be reborrowed until after final application of such amounts so delivered to the Administrative Agent.

5. LETTERS OF CREDIT.

     5.1. Letter of Credit Commitments.

     5.1.1. Commitment to Issue Letters of Credit. Subject to the terms and conditions hereof and the execution and delivery by the Borrower of a letter of credit application on the Administrative Agent’s customary form (a “Letter of Credit Application”), the Administrative Agent on behalf of the Revolving Credit Lenders and in reliance upon the agreement of the Revolving Credit Lenders set forth in §5.1.4 and upon the representations and warranties of the Borrower contained herein, agrees, in its individual capacity, to issue, extend and renew for the account of the Borrower one or more standby letters of credit (individually, a “Letter of Credit”), in such form as may be requested from time to time by the Borrower and agreed to by the Administrative Agent; provided, however, that, after giving effect to such request, (a) the sum of the aggregate Maximum Drawing Amount and all Unpaid Reimbursement Obligations shall not exceed $100,000,000 at any one time and (b) the sum of (i) the Maximum Drawing Amount on all Letters of Credit, (ii) all Unpaid Reimbursement Obligations, and (iii) the amount of all Revolving Credit Loans outstanding shall not exceed the Total Revolving Credit Commitment at such time. Notwithstanding the foregoing, the Administrative Agent shall have no obligation to issue any Letter of Credit to support or secure any Indebtedness of an Excluded Subsidiary or any Indebtedness of the Borrower or any of its Subsidiaries to the extent that such Indebtedness was incurred prior to the proposed issuance date of such Letter of Credit.

     5.1.2. Letter of Credit Applications. Each Letter of Credit Application shall be completed to the satisfaction of the Administrative Agent. In the event that any provision of any Letter of Credit Application shall be inconsistent with any provision of this Credit Agreement, then the provisions of this Credit Agreement shall, to the extent of any such inconsistency, govern.

     5.1.3. Terms of Letters of Credit. Each Letter of Credit issued, extended or renewed hereunder shall, among other things, (a) provide for the payment of sight drafts for honor thereunder when presented in accordance with the terms thereof and when accompanied by the documents described therein, and (b) provide for a term of no more than one (1) year subject to automatic renewals, but in no event have an expiry date later than the date which is fourteen (14) days (or, if the Letter of Credit is confirmed by a confirmer or otherwise provides for one or more nominated persons, forty-five (45) days) prior to the Revolving Credit Loan Maturity Date. Each Letter of Credit so issued, extended or renewed shall be subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce

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Publication No. 500 or any successor version thereto adopted by the Administrative Agent in the ordinary course of its business as a letter of credit issuer and in effect at the time of issuance of such Letter of Credit (the “Uniform Customs”) or, in the case of a standby Letter of Credit, either the Uniform Customs or the International Standby Practices (ISP98), International Chamber of Commerce Publication No. 590, or any successor code of standby letter of credit practices among banks adopted by the Administrative Agent in the ordinary course of its business as a standby letter of credit issuer and in effect at the time of issuance of such Letter of Credit.

     5.1.4. Reimbursement Obligations of Revolving Credit Lenders. Each Revolving Credit Lender severally agrees that it shall be absolutely liable, without regard to the occurrence of any Default or Event of Default or any other condition precedent whatsoever, to the extent of such Revolving Credit Lender’s Commitment Percentage of the Total Revolving Credit Commitment, to reimburse the Administrative Agent on demand for the amount of each draft paid by the Administrative Agent under each Letter of Credit to the extent that such amount is not reimbursed by the Borrower pursuant to §5.2 (such agreement for a Revolving Credit Lender being called herein the “Letter of Credit Participation” of such Revolving Credit Lender).

     5.1.5. Participations of Revolving Credit Lenders. Each such payment made by a Revolving Credit Lender shall be treated as the purchase by such Revolving Credit Lender of a participating interest in the Borrower’s Reimbursement Obligation under §5.2 in an amount equal to such payment. Each Revolving Credit Lender shall share in accordance with its participating interest in any interest which accrues pursuant to §5.2.

     5.2. Reimbursement Obligation of the Borrower. In order to induce the Administrative Agent to issue, extend and renew each Letter of Credit and the Revolving Credit Lenders to participate therein, the Borrower hereby agrees to reimburse or pay to the Administrative Agent, for the account of the Administrative Agent or (as the case may be) the Revolving Credit Lenders, with respect to each Letter of Credit issued, extended or renewed by the Administrative Agent hereunder,

     (a) except as otherwise expressly provided in §(b) and (c), on each date that any draft presented under such Letter of Credit is honored by the Administrative Agent, or the Administrative Agent otherwise makes a payment with respect thereto, (i) the amount paid by the Administrative Agent under or with respect to such Letter of Credit, and (ii) the amount of any taxes, fees, charges or other costs and expenses whatsoever incurred by the Administrative Agent or any Revolving Credit Lender in connection with any payment made by the Administrative Agent or any Revolving Credit Lender under, or with respect to, such Letter of Credit,

     (b) upon the reduction (but not termination) of the Total Revolving Credit Commitment to an amount less than the Maximum Drawing Amount, an amount equal to such difference, which amount shall be held by the Administrative Agent for the benefit of the Revolving Credit Lenders and the Administrative Agent as cash collateral for all Reimbursement Obligations, and

     (c) upon the termination of the Total Revolving Credit Commitment, or the acceleration of the Reimbursement Obligations with respect to all Letters of Credit in accordance with §14, an amount equal to the then Maximum Drawing Amount on all Letters of Credit, which amount shall be held by the Administrative Agent for the benefit of the Revolving Credit Lenders and the Administrative Agent as cash collateral for all Reimbursement Obligations.

Each such payment shall be made to the Administrative Agent at the Administrative Agent’s Office in immediately available funds. Interest on any and all amounts remaining unpaid by the Borrower under this §5.2 at any time from the date such amounts become due and payable (whether as stated in this §5.2, by acceleration or otherwise) until payment in full (whether before or after judgment) shall be payable to the

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Administrative Agent on demand at the rate calculated in accordance with §6.11 for Revolving Credit Loans.

     5.3. Letter of Credit Payments. If any draft shall be presented or other demand for payment shall be made under any Letter of Credit, the Administrative Agent shall notify the Borrower of the date and amount of the draft presented or demand for payment and of the date and time when it expects to pay such draft or honor such demand for payment. If the Borrower fails to reimburse the Administrative Agent as provided in §5.2 on or before the date that such draft is paid or other payment is made by the Administrative Agent, the Administrative Agent may at any time thereafter notify the Revolving Credit Lenders of the amount of any such Unpaid Reimbursement Obligation. No later than 1:00 p.m. (Dallas, Texas time) on the Business Day next following the receipt of such notice, each Revolving Credit Lender shall make available to the Administrative Agent, at the Administrative Agent’s Office, in immediately available funds, such Revolving Credit Lender’s Commitment Percentage (in respect of the Total Revolving Credit Commitment) of such Unpaid Reimbursement Obligation, together with an amount equal to the product of (a) the average, computed for the period referred to in clause (c) below, of the weighted average interest rate paid by the Administrative Agent for federal funds acquired by the Administrative Agent during each day included in such period, times (b) the amount equal to such Revolving Credit Lender’s Commitment Percentage (in respect of the Total Revolving Credit Commitment) of such Unpaid Reimbursement Obligation, times (c) a fraction, the numerator of which is the number of days that elapse from and including the date the Administrative Agent paid the draft presented for honor or otherwise made payment to the date on which such Revolving Credit Lender’s Commitment Percentage (in respect of the Total Revolving Credit Commitment) of such Unpaid Reimbursement Obligation shall become immediately available to the Administrative Agent, and the denominator of which is 360. The responsibility of the Administrative Agent to the Borrower and the Revolving Credit Lenders shall be only to determine that the documents (including each draft) delivered under each Letter of Credit in connection with such presentment shall be in conformity in all material respects with such Letter of Credit.

     5.4. Obligations Absolute. The Borrower’s obligations under this §5 shall be absolute and unconditional under any and all circumstances and irrespective of the occurrence of any Default or Event of Default or any condition precedent whatsoever or any setoff, counterclaim or defense to payment which the Borrower may have or have had against the Administrative Agent, any Lender or any beneficiary of a Letter of Credit. The Borrower further agrees with the Administrative Agent and the Lenders that the Administrative Agent and the Revolving Credit Lenders shall not be responsible for, and the Borrower’s Reimbursement Obligations under §5.2 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged, or any dispute between or among the Borrower, the beneficiary of any Letter of Credit or any financing institution or other party to which any Letter of Credit may be transferred or any claims or defenses whatsoever of the Borrower against the beneficiary of any Letter of Credit or any such transferee. The Administrative Agent and the Revolving Credit Lenders shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit. The Borrower agrees that any action taken or omitted by the Administrative Agent or any Revolving Credit Lender under or in connection with each Letter of Credit and the related drafts and documents, if done in good faith, shall be binding upon the Borrower and shall not result in any liability on the part of the Administrative Agent or any Revolving Credit Lender to the Borrower.

     5.5. Reliance by Issuer. To the extent not inconsistent with §5.4, the Administrative Agent shall be entitled to rely, and shall be fully protected in relying upon, any Letter of Credit, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel, independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Credit Agreement unless it shall first have received such advice or concurrence of the Required Lenders as it reasonably deems

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appropriate or it shall first be indemnified to its reasonable satisfaction by the Revolving Credit 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. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Credit Agreement in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Revolving Credit Lenders and all future holders of the Revolving Credit Notes or of a Letter of Credit Participation.

     5.6. Letter of Credit Fee. The Borrower shall, on each Interest Payment Date for Base Rate Loans pay a fee (in each case, a “Letter of Credit Fee”) to the Administrative Agent in respect of each Letter of Credit in an amount equal to the sum of (a) the Applicable Margin for Revolving Credit Loans outstanding during the quarter ending on such date which bear interest based on the Eurodollar Rate of the Maximum Drawing Amount of such standby Letter of Credit plus (b) one-eighth of one percent (0.125%) per annum of the face amount of such standby Letter of Credit. The portion of the Letter of Credit Fee referred to in clause (b) above shall be for the account of the Administrative Agent, as a fronting fee, and the balance of such Letter of Credit Fee shall be for the accounts of the Revolving Credit Lenders in accordance with their respective Commitment Percentages in respect of the Total Revolving Credit Commitment. In respect of each Letter of Credit, the Borrower shall also pay to the Administrative Agent for the Administrative Agent’s own account, at such other time or times as such charges are customarily made by the Administrative Agent, the Administrative Agent’s customary issuance, amendment, negotiation or document examination and other administrative fees as in effect from time to time.

6. CERTAIN GENERAL PROVISIONS.

     6.1. Closing Fees. The Borrower agrees to pay all fees on the Funding Date that have been expressly agreed to in writing between the Borrower and certain of the Lenders to be paid on the Funding Date.

     6.2. Administrative Agent’s Fee. The Borrower shall pay to the Administrative Agent annually in advance, for the Administrative Agent’s own account, on the Funding Date and on each anniversary of the Funding Date, an Administrative Agent’s fee (the “Administrative Agent’s Fee”) as set forth in the Administrative Agent Fee Letter.

     6.3. Funds for Payments.

      6.3.1. Payments to Administrative Agent. All payments of principal, interest, Reimbursement Obligations, Fees and any other amounts due hereunder or under any of the other Loan Documents shall be made on the due date thereof to the Administrative Agent in Dollars, for the respective accounts of the applicable Lenders and the Administrative Agent, at the Administrative Agent’s Office or at such other place that the Administrative Agent may from time to time designate, in each case no later than 2:00 p.m. (Dallas, Texas time) and in immediately available funds.

      6.3.2. No Offset, etc. All payments by the Borrower hereunder and under any of the other Loan Documents shall be made without setoff or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein excluding (A) income and franchise taxes imposed on (or measured by) the net income or profits of any Lender or the Administrative Agent by the jurisdictions under the laws of which the Administrative Agent or any Lender is organized or any political subdivision thereof, or by the jurisdictions in which the Administrative Agent or such Lender is located or any political subdivision thereof, or by the jurisdictions in which the Administrative Agent or such Lender is doing business or any political subdivision thereof and (B) any branch profits taxes imposed by the United States of America or

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any similar tax imposed by any other jurisdiction described in clause (A) above unless, in each case, the Borrower is compelled by law to make such deduction or withholding (such non-excluded items referred to as “Non-Excluded Taxes”). If any such Non-Excluded Taxes are imposed upon the Borrower with respect to any amount payable by it hereunder or under any of the other Loan Documents, the Borrower will pay to the Administrative Agent, for the account of the Lenders or (as the case may be) the Administrative Agent, on the date on which such amount is due and payable hereunder or under such other Loan Document, such additional amount in Dollars as shall be necessary to enable the Lenders or the Administrative Agent to receive the same net amount which the Lenders or the Administrative Agent would have received on such due date had no such obligation been imposed upon the Borrower; provided however that the Borrower shall not be required to increase any such amounts payable to any Lender or the Administrative Agent with respect to any such Non-Excluded Taxes that are attributable to (i) such Administrative Agent’s or Lender’s failure to comply with the provisions of §6.3.3 or (ii) that are withholding taxes imposed on the amounts payable to such Administrative Agent or such Lender at the time such Administrative Agent or Lender becomes a party to this Credit Agreement, except to the extent that such Lender’s assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to such obligation pursuant to this §6.3.2; provided, further, that the foregoing shall not relieve the Borrower of its obligation to pay Non-Excluded Taxes in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in interpretation, administration or application thereof, a Non-U.S. Lender that was previously entitled to receive all payments under this Credit Agreement and any Note without deduction or withholding of any United States federal income taxes is no longer properly entitled by law to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding. The Borrower will deliver promptly to the Administrative Agent certificates or other valid vouchers for all taxes or other charges deducted from or paid with respect to payments made by the Borrower hereunder or under such other Loan Document.

      6.3.3. Non-U.S. Lenders. Each Lender and the Administrative Agent (including any assignee) that is not a U.S. Person as defined in Section 7701(a)(30) of the Code for federal income tax purposes (a “Non-U.S. Lender”) hereby agrees that, if and to the extent it is legally able to do so, it shall, prior to the date of the first payment by the Borrower hereunder to be made to such Lender or the Administrative Agent or for such Lender’s or the Administrative Agent’s account, deliver to the Borrower and the Administrative Agent, as applicable, such certificates, documents or other evidence, as and when required by the Code or Treasury Regulations issued pursuant thereto, including (a) in the case of a Non-U.S. Lender that is a “bank” for purposes of Section 881(c)(3)(A) of the Code, two (2) duly completed copies of Internal Revenue Service Form W-8BEN or Form W-8ECI and any other certificate or statement of exemption required by Treasury Regulations, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Lender or the Administrative Agent establishing that with respect to payments of principal, interest or fees hereunder it is (i) not subject to United States federal withholding tax under the Code because such payment is effectively connected with the conduct by such Lender or Administrative Agent of a trade or business in the United States or (ii) totally exempt or partially exempt from United States federal withholding tax under a provision of an applicable tax treaty and (b) in the case of a Non-U.S. Lender that is not a “bank” for purposes of Section 881(c)(3)(A) of the Code, a certificate substantially in the form of Exhibit I hereto, together with a properly completed and executed Internal Revenue Service Form W-8 or W-9, as applicable (or successor forms). Each Lender or the Administrative Agent agrees that it shall, promptly upon a change of its lending office or the selection of any additional lending office, to the extent the forms previously delivered by it pursuant to this section are no longer effective, and promptly upon the Borrower’s or the Administrative Agent’s reasonable request after the occurrence of any other event (including the passage of time) requiring the delivery of a Form W-8BEN, Form W-8ECI, Form W-8 or W-9 in addition to or in replacement of the forms previously delivered, deliver to the Borrower and the Administrative Agent, as applicable, if and to the

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extent it is properly entitled to do so, two (2) properly completed and executed copies of Form W-8BEN, Form W-8ECI, Form W-8 or W-9, as applicable (or any successor forms thereto). Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose).

     6.4. Computations. All computations of interest on the Eurodollar Rate Loans and of Fees shall be based on a 360-day year and paid for the actual number of days elapsed. All computations of interest on Base Rate Loans shall be based on a 365-day or 366-day year, as the case may be, for the actual number of days elapsed. Except as otherwise provided in the definition of the term “Interest Period” with respect to Eurodollar Rate Loans, whenever a payment hereunder or under any of the other Loan Documents becomes due on a day that is not a Business Day, the due date for such payment shall be extended to the next succeeding Business Day, and interest shall accrue during such extension. The outstanding amount of the Loans as reflected from time to time in the accounts or records maintained by the Lenders and by the Administrative Agent in accordance with the provisions of this Credit Agreement shall be considered correct and binding on the Borrower unless within five (5) Business Days after receipt of any notice by the Administrative Agent or any of the Lenders of such outstanding amount, the Administrative Agent or such Lender shall notify the Borrower to the contrary.

     6.5. Inability to Determine Eurodollar Rate. In the event, prior to the commencement of any Interest Period relating to any Eurodollar Rate Loan, the Administrative Agent shall determine or be notified by the Required Lenders that adequate and reasonable methods do not exist for ascertaining the Eurodollar Rate that would otherwise determine the rate of interest to be applicable to any Eurodollar Rate Loan during any Interest Period, the Administrative Agent shall forthwith give notice of such determination (which shall be conclusive and binding on the Borrower and the Lenders) to the Borrower and the Lenders. In such event (a) any Loan Request or Conversion Request with respect to Eurodollar Rate Loans shall be automatically withdrawn and shall be deemed a request for Base Rate Loans, (b) each Eurodollar Rate Loan will automatically, on the last day of the then current Interest Period relating thereto, become a Base Rate Loan, and (c) the obligations of the Lenders to make Eurodollar Rate Loans shall be suspended until the Administrative Agent or the Required Lenders determine that the circumstances giving rise to such suspension no longer exist, whereupon the Administrative Agent or, as the case may be, the Administrative Agent upon the instruction of the Required Lenders, shall so notify the Borrower and the Lenders.

     6.6. Illegality. Notwithstanding any other provisions herein, if any present or future law, regulation, treaty or directive or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain Eurodollar Rate Loans, such Lender shall forthwith give notice of such circumstances to the Borrower and the other Lenders and thereupon (a) the commitment of such Lender to make Eurodollar Rate Loans or convert Base Rate Loans to Eurodollar Rate Loans shall forthwith be suspended and (b) such Lender’s Loans then outstanding as Eurodollar Rate Loans, if any, shall be converted automatically to Base Rate Loans on the last day of each Interest Period applicable to such Eurodollar Rate Loans or within such earlier period as may be required by law. The Borrower hereby agrees promptly to pay the Administrative Agent for the account of such Lender, upon demand by such Lender, any additional amounts necessary to compensate such Lender for any costs incurred by such Lender in making any conversion in accordance with this §6.6, including any interest or fees payable by such Lender to lenders of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder.

     6.7. Additional Costs, etc. If any present or future applicable law, which expression, as used herein, includes statutes, rules and regulations thereunder and interpretations thereof by any competent court or by any governmental or other regulatory body or official charged with the administration or the interpretation thereof and requests, directives, instructions and notices at any time or from time to time hereafter made upon or otherwise issued to any Lender or the Administrative Agent by any central bank or other fiscal, monetary or other authority (whether or not having the force of law), shall:

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      (a) subject any Lender or the Administrative Agent to any tax, levy, impost, duty, charge, fee, deduction or withholding of any nature with respect to this Credit Agreement, the other Loan Documents, any Letters of Credit, such Lender’s Commitment or the Loans (other than taxes based upon or measured by the income or profits of such Lender or the Administrative Agent), or

      (b) materially change the basis of taxation (except for changes in taxes on income or profits) of payments to any Lender of the principal of or the interest on any Loans or any other amounts payable to any Lender or the Administrative Agent under this Credit Agreement or any of the other Loan Documents, or

      (c) impose or increase or render applicable (other than to the extent specifically provided for elsewhere in this Credit Agreement) any special deposit, reserve, assessment, liquidity, capital adequacy or other similar requirements (whether or not having the force of law) against assets held by, or deposits in or for the account of, or loans by, or letters of credit issued by, or commitments of an office of any Lender, or

      (d) impose on any Lender or the Administrative Agent any other conditions or requirements with respect to this Credit Agreement, the other Loan Documents, any Letters of Credit, the Loans, such Lender’s Commitment, or any class of loans, letters of credit or commitments of which any of the Loans or such Lender’s Commitment forms a part;

      and the result of any of the foregoing is:

        (i) to increase the cost to any Lender of making, funding, issuing, renewing, extending or maintaining any of the Eurodollar Rate Loans or such Lender’s Commitment or any Letter of Credit, or

        (ii) to reduce the amount of principal, interest, Reimbursement Obligation or other amount payable to such Lender or the Administrative Agent hereunder on account of such Lender’s Commitment, any Letter of Credit or any of the Loans, or

        (iii) to require such Lender or the Administrative Agent to make any payment or to forego any interest or Reimbursement Obligation or other sum payable hereunder, the amount of which payment or foregone interest or Reimbursement Obligation or other sum is calculated by reference to the gross amount of any sum receivable or deemed received by such Lender or the Administrative Agent from the Borrower hereunder,

then, and in each such case, the Borrower will, upon demand made by such Lender or (as the case may be) the Administrative Agent and as often as the occasion therefor may arise and upon presentation by such Lender or the Administrative Agent of a certificate pursuant to §6.9, pay to such Lender or the Administrative Agent such additional amounts as will be sufficient to compensate such Lender or the Administrative Agent on an after-tax basis for such additional cost, reduction, payment or foregone interest or Reimbursement Obligation or other sum.

     6.8. Capital Adequacy. If after the date hereof any Lender determines that (a) the adoption of or change in any law, governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) regarding capital requirements for Lenders or bank holding companies or any change in the interpretation or application thereof by a Governmental Authority with appropriate jurisdiction, or (b) compliance by such Lender or any corporation controlling such Lender with any law, governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) of any such entity regarding capital adequacy, has the effect of reducing the return on such Lender’s commitment

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with respect to any Loans to a level below that which such Lender could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s then existing policies with respect to capital adequacy and assuming full utilization of such entity’s capital) by any amount deemed by such Lender to be material, then such Lender may notify the Borrower and the Administrative Agent of such fact. To the extent that the amount of such reduction in the return on capital is not reflected in the Base Rate, the Borrower agrees to pay such Lender for the amount of such reduction in the return on capital as and when such reduction is determined upon presentation by such Lender of a certificate in accordance with §6.9. Each Lender shall allocate such cost increases among its customers in good faith and on an equitable basis.

     6.9. Certificate. A certificate setting forth any additional amounts payable pursuant to §6.7 or §6.8 and a brief explanation of such amounts which are due, submitted by any Lender to the Borrower and the Administrative Agent, shall be conclusive, absent manifest error, that such amounts are due and owing, which certificate shall be delivered no later than one hundred and eighty (180) days after the date the Administrative Agent and such Lender shall have determined that any such additional amount is due.

     6.10. Indemnity. The Borrower agrees to indemnify each Lender and to hold each Lender harmless from and against any loss (excluding any loss of anticipated profits), cost or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in payment of the principal amount of or any interest on any Eurodollar Rate Loans as and when due and payable, including any such loss or expense arising from interest or fees payable by such Lender to banks for funds obtained by it in order to maintain its Eurodollar Rate Loans, (b) default by the Borrower in making a borrowing or conversion after the Borrower has given (or is deemed to have given) a Loan Request notice (in the case of all or any portion of the Tranche B Term Loan pursuant to §3.5.2) or a Conversion Request relating thereto in accordance with §2.6, §2.7 or §3.5.2, as the case may be, (c) the making of any payment of a Eurodollar Rate Loan or the making of any conversion of any such Loan to a Base Rate Loan on a day that is not the last day of the applicable Interest Period with respect thereto, including interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain any such Loans.

     6.11. Interest After Default. During the continuance of any Event of Default of the type described in clauses (a) or (b) of §14.1, the Loans and all other amounts payable hereunder or under any of the other Loan Documents shall automatically bear interest, after as well as before judgment, compounded monthly and payable on demand at a rate per annum equal to two percent (2%) above the rate of interest then applicable thereto (or, if no rate of interest is then applicable thereto, the Base Rate).

     6.12. Mitigation Obligations; Replacement of Lenders.

      (a) If any Lender requests compensation under §6.7 or §6.8, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to §6.3.2, or any Lender is subject to §6.6, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches, or Affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to §6.7 or §6.8 or §6.3.2 or eliminate the effect of §6.6, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

      (b) If any Lender requests compensation under §6.7 or §6.8, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to §6.3.2, or if any Lender is subject to §6.6, or if any Lender does not agree to any amendment hereunder requiring the consent of all Lenders and consented to by

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the Required Lenders, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in §17, including, without limitation, as a condition precedent to such assignment, (i) the Administrative Agent’s consent to the assignee unless not otherwise required by §17 and (ii) payment of the registration fee set forth in §17.1(b)), all its interests, rights and obligations under this Credit Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that such Lender shall have received irrevocable payment in full in cash of an amount equal to the outstanding principal of its Loans, accrued interest thereon, and accrued fees and all other Obligations and other amounts payable to it hereunder from the assignee or the Borrower and (ii) such assignment will result in a reduction in such compensation or payments or removal of such illegality or such amendment being approved. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

7. COLLATERAL SECURITY AND GUARANTIES.

     7.1. Security of Borrower. The Obligations shall be secured by a perfected first priority security interest (subject only to Permitted Liens entitled to priority under applicable law) in all of the assets of the Borrower (other than the Excluded Assets and the Capital Stock of any Excluded Subsidiary), whether now owned or hereafter acquired, including, without limitation, an assignment of all of the Borrower’s rights and interests in, to and under each contract and agreement entered into by the Borrower in connection with the transactions contemplated by §10.5.1, pursuant to the terms of the Security Documents to which the Borrower is a party.

     7.2. Guaranties and Security of Parent and Subsidiaries. The Obligations shall also be guaranteed pursuant to the terms of the Guaranty. The obligations of the Parent under the Guaranty shall be secured by a perfected first priority security interest in all of the issued and outstanding Capital Stock of (i) the Borrower, (ii) each domestic Subsidiary of the Parent now existing, or hereafter created or acquired and, (iii) to the extent no adverse tax consequences would result, each foreign Subsidiary of the Parent whether now existing or hereafter created or acquired, in each case, pursuant to the terms of the Pledge Agreement. The obligations of the Borrower’s Subsidiaries under the Guaranty shall be secured by a perfected first priority security interest (subject only to Permitted Liens entitled to priority under applicable law) in all of the assets of each such Person (other than Excluded Assets and the Capital Stock of any Excluded Subsidiary other than the Austin Partnership and RAM) whether now owned or hereafter acquired, including without limitation an assignment of each such Person’s rights and interests in, to and under each contract and agreement entered into by each such Person in connection with the transactions contemplated by §10.5.1, pursuant to the terms of the Security Documents to which such Person is a party.

     7.3. Release of Collateral and Guaranties. The parties hereto acknowledge and agree that, as soon as practicable following a sale or disposition of assets permitted in accordance with the terms of this Credit Agreement, including without limitation, §10.5.2, the Administrative Agent shall release its Liens on the Collateral subject to such sale or disposition and/or any Subsidiary of the Borrower which is the subject of such sale or disposition from its obligations under the Guaranty.

8. REPRESENTATIONS AND WARRANTIES.

     The Parent and the Borrower represent and warrant to the Lenders and the Administrative Agent as follows:

     8.1. Corporate Authority.

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      8.1.1. Incorporation; Good Standing. Each of the Parent, the Borrower and the Subsidiaries (a) is a corporation, partnership or limited liability company (or similar business entity) duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, (b) has all requisite corporate, partnership or limited liability company (or the equivalent company) power to own its property and conduct its business as now conducted and as presently contemplated, and (c) is in good standing as a foreign corporation, partnership or limited liability company (or similar business entity) and is duly authorized to do business in each jurisdiction where such qualification is necessary except where a failure to be so qualified would not have a Material Adverse Effect.

      8.1.2. Authorization. The execution, delivery and performance of this Credit Agreement and the other Loan Documents to which the Parent, the Borrower or any Subsidiary is or is to become a party and the transactions contemplated hereby and thereby (a) are within the corporate, partnership or limited liability company (or the equivalent company) authority of such Person, (b) have been duly authorized by all necessary corporate, partnership or limited liability company (or the equivalent company) proceedings, (c) do not and will not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which such Person is subject or any judgment, order, writ, injunction, license or permit applicable to such Person and (d) do not conflict with any provision of the Governing Documents of, or any agreement or other instrument binding upon, such Person.

      8.1.3. Enforceability. The execution and delivery of this Credit Agreement and the other Loan Documents to which the Parent, the Borrower or any Subsidiary is or is to become a party will result in valid and legally binding obligations of such Person enforceable against it in accordance with the respective terms and provisions hereof and thereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and except to the extent that 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.

     8.2. Governmental Approvals. The execution, delivery and performance by the Parent, the Borrower or any Subsidiary of this Credit Agreement and the other Loan Documents to which such Person is or is to become a party and the transactions contemplated hereby and thereby do not require the approval or consent of, or filing with, any governmental agency or authority other than those already obtained.

     8.3. Title to Properties.

      (a) Except as indicated on Schedule 8.3(a) hereto, the Parent, the Borrower and the Subsidiaries own all of the assets reflected in the consolidated balance sheet of the Parent and its subsidiaries as at the Balance Sheet Date or acquired since that date (except (i) property and assets which are not integral to the operations of the Stations or publishing operations owned by the Borrower or its Subsidiaries as such Stations or publishing operations are operated immediately prior to the Balance Sheet Date, (ii) property and assets which do not consist of a Station or publishing asset which have been sold or otherwise disposed of in the ordinary course of business since that date, (iii) property and assets which have been replaced since that date or (iv) property and assets which have been sold or otherwise disposed of after the Funding Date as permitted hereunder), subject to no rights of others, including any mortgages, leases, conditional sales agreements, title retention agreements, liens or other encumbrances except Permitted Liens.

      (b) Schedule 8.3(b) hereto, as updated from time to time in accordance with §10.5 sets forth all of the Stations of the Borrower and its Subsidiaries at the time of reference thereto.

     8.4. Financial Statements and Projections.

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      8.4.1. Fiscal Year. The Parent, the Borrower and each of the Subsidiaries has a fiscal year which is the twelve (12) months ending on February 28, or in the case of a leap year, February 29, of each calendar year.

      8.4.2. Financial Statements. There has been furnished to the Lenders the consolidated balance sheet of the Parent, the Borrower and its subsidiaries, as at the Balance Sheet Date, and the related, similarly adjusted, consolidated statements of income and cash flow for the fiscal year then ended, each certified by an authorized officer of the Borrower. Such balance sheet and statement of income and cash flow have been prepared in accordance with GAAP and fairly present in all material respects the financial condition of the Parent, the Borrower and its subsidiaries, as at the close of business on the date thereof and the results of operations for the fiscal year then ended. There are no contingent liabilities of the Parent, the Borrower or any of its subsidiaries, as of the Funding Date involving material amounts, known to any officer of the Parent, the Borrower or of any of the Subsidiaries not disclosed in the balance sheet dated the Balance Sheet Date and the related notes thereto other than contingent liabilities disclosed to the Lenders in writing.

      8.4.3. Projections. There has been furnished to the Lenders the projections of the Borrower and its subsidiaries, which include a projection of revenue, earnings before interest, taxes, depreciation and amortization, sources and uses of cash, a funding analysis and capitalization for the fiscal years ended February 28, 2005 through the fiscal year ended February 28, 2013, copies of which are attached hereto as Exhibit D (the “Projections”), which disclose all assumptions made with respect to general economic, financial and market conditions used in formulating the Projections. To the knowledge of the Parent, the Borrower or any of the Subsidiaries as of the Funding Date, no facts exist that (individually or in the aggregate) would result in any material change in any of the Projections. The Projections are based upon reasonable estimates and assumptions at the time made, have been prepared on the basis of the assumptions stated therein and reflect the reasonable estimates of the Parent, the Borrower and the Subsidiaries, of the results of operations and other information projected therein.

     8.5. No Material Adverse Changes, etc. Since the Balance Sheet Date there has been no event or occurrence which has had a Material Adverse Effect. Since the Balance Sheet Date, neither the Borrower nor any Subsidiary has made any Restricted Payment except as set forth on Schedule 8.5 hereto or after the Funding Date as permitted by §10.4.

     8.6. Franchises, Patents, Copyrights, etc. The Borrower and each of its Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade names, licenses and permits, and rights in respect of the foregoing, necessary for the conduct of its business substantially as now conducted without known material conflict with any rights of others.

     8.7. Litigation. Except as set forth in Schedule 8.7 hereto, there are no actions, suits, proceedings or investigations of any kind pending or threatened against the Borrower or any of its Subsidiaries before any Governmental Authority, (a) that, could reasonably be expected to, in each case or in the aggregate, (i) have a Material Adverse Effect or (ii) materially impair the right of the Borrower and its Subsidiaries, considered as a whole, to carry on business substantially as now conducted by them, or result in any substantial liability not adequately covered by insurance, or for which adequate reserves are not maintained on the consolidated balance sheet of the Parent and its subsidiaries, or (b) which question the validity of this Credit Agreement or any of the other Loan Documents, or any action taken or to be taken pursuant hereto or thereto.

     8.8. No Materially Adverse Contracts, etc. None of the Parent, the Borrower or any of the Subsidiaries is subject to any Governing Document or other legal restriction, or any judgment, decree, order, law, statute, rule or regulation that has or is expected in the future to have a Material Adverse Effect.

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None of the Parent, the Borrower or any of the Subsidiaries is a party to any contract or agreement that has or is expected, in the reasonable judgment of the Borrower’s officers, to have any Material Adverse Effect.

     8.9. Compliance with Other Instruments, Laws, Status as Senior Debt, etc. None of the Parent, the Borrower or any of the Subsidiaries is in violation of any provision of its Governing Documents, or any agreement or instrument to which it may be subject or by which it or any of its properties may be bound or any decree, order, judgment, statute, license, rule or regulation, in any of the foregoing cases in a manner that could reasonably be expected to have a Material Adverse Effect. The Obligations of the Parent, the Borrower and the Subsidiaries arising under this Credit Agreement and the other Loan Documents constitute “Senior Debt” under and as defined in the Subordinated Note Indenture and shall constitute the equivalent under the Refinancing Note Indenture; and the incurrence of such Obligations is permitted under §4.09 of the Subordinated Note Indenture and shall be permitted under the Refinancing Note Indenture and will not cause a “Default” or “Event of Default” under and as defined in the Subordinated Note Indenture and the Refinancing Note Indenture, as applicable.

     8.10. Tax Status. The Parent and the Subsidiaries (a) have made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which any of them is subject, except where failure to have done so could not reasonably be expected to result in a Material Adverse Effect and (b) have paid all taxes and other governmental assessments and charges shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and by appropriate proceedings and with respect to which adequate reserves in conformity with GAAP have been provided on the books of the Parent or its Subsidiaries, as the case may be, and except where failure to do so could not reasonably be expected to result in a Material Adverse Effect. Except as set forth on Schedule 8.10, there are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction (except those being contested in good faith by appropriate proceedings subject to the Borrower or the applicable Subsidiary having established adequate reserves in conformity with GAAP for the payment of such disputed taxes and except where the failure to pay such disputed taxes could not reasonably be expected to result in a Material Adverse Effect), and none of the officers of the Borrower know of any reasonable basis for any such claim.

     8.11. No Event of Default. No Default or Event of Default has occurred and is continuing.

     8.12. Investment Company Acts and Communications Act. None of the Parent, the Borrower or any of the Subsidiaries is a “holding company”, or a “subsidiary company” of a “holding company”, or an “affiliate” of a “holding company”, as such terms are defined in the Public Utility Holding Company Act of 1935; nor is it an “investment company”, or an “affiliated company” or a “principal underwriter” of an “investment company”, as such terms are defined in the Investment Company Act of 1940. The Borrower and each of its Subsidiaries is in compliance with the Communications Act with regard to alien control or ownership.

     8.13. Absence of Financing Statements, etc. Except with respect to Permitted Liens, there is no financing statement, security agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any filing records, registry or other public office, that purports to cover, affect or give notice of any present or possible future Lien on any assets or property of the Parent, the Borrower or any of the Subsidiaries or any rights relating thereto.

     8.14. Perfection of Security Interest. All filings, assignments, pledges and deposits of documents or instruments have been made and all other actions have been taken that are necessary or advisable, under applicable law, to establish and perfect the Administrative Agent’s security interest in the Collateral. The Collateral and the Administrative Agent’s rights with respect to the Collateral are not subject to any setoff, claims, withholdings or other defenses. The Borrower or (as the case may be) a Subsidiary party to the Security Agreement is the owner of the Collateral free from any Lien, except for Permitted Liens.

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     8.15. Certain Transactions. Except for arm’s length transactions pursuant to which the Borrower or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than the Borrower or such Subsidiary could obtain from third parties, none of the officers, directors, or employees of the Borrower or any of its Subsidiaries is presently a party to any transaction with the Borrower or any of its Subsidiaries (other than for services as employees, officers and directors and independent contractors in the ordinary course of business), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Borrower, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

     8.16. Employee Benefit Plans.

      8.16.1. In General. Each Employee Benefit Plan and each Guaranteed Pension Plan has been maintained and operated in compliance in all material respects with the provisions of ERISA and all Applicable Pension Legislation and, to the extent applicable, the Code, including but not limited to the provisions thereunder respecting prohibited transactions and the bonding of fiduciaries and other persons handling plan funds as required by §412 of ERISA. The Borrower has heretofore delivered to the Administrative Agent the most recently completed annual report, Form 5500, with all required attachments, and actuarial statement required to be submitted under §103(d) of ERISA, with respect to each Guaranteed Pension Plan.

      8.16.2. Terminability of Welfare Plans. No Employee Benefit Plan, which is an employee welfare benefit plan within the meaning of §3(1) or §3(2)(B) of ERISA, provides benefit coverage subsequent to termination of employment, except as required by Title I, Part 6 of ERISA or the applicable state insurance laws. The Borrower may terminate each such Plan at any time (or at any time subsequent to the expiration of any applicable bargaining agreement) in the discretion of the Borrower without liability to any Person other than for claims arising prior to termination.

      8.16.3. 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 §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, and neither the Borrower nor any ERISA Affiliate is obligated to or has posted security in connection with an amendment to a Guaranteed Pension Plan pursuant to §307 of ERISA or §401(a)(29) of the Code. No liability to the PBGC (other than required insurance premiums, all of which have been paid) has been incurred by the Borrower or any ERISA Affiliate with respect to any Guaranteed Pension Plan and there has not been any ERISA Reportable Event (other than an ERISA Reportable 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 (which in each case occurred within twelve months of the date of this representation), and on the actuarial methods and assumptions employed for that valuation, the aggregate benefit liabilities of all such Guaranteed Pension Plans within the meaning of §4001 of ERISA did not exceed the aggregate value of the assets of all such Guaranteed Pension Plans, disregarding for this purpose the benefit liabilities and assets of any Guaranteed Pension Plan with assets in excess of benefit liabilities.

      8.16.4. Multiemployer Plans. Neither the Borrower nor any ERISA Affiliate has incurred any material liability (including secondary liability) to any Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan under §4201 of ERISA or as a result of a sale of assets described in §4204 of ERISA. Neither the Borrower nor any ERISA

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Affiliate has been notified that any Multiemployer Plan is in reorganization or insolvent under and within the meaning of §4241 or §4245 of ERISA or is at risk of entering reorganization or becoming insolvent, or that any Multiemployer Plan intends to terminate or has been terminated under §4041A of ERISA.

     8.17. Use of Proceeds.

      8.17.1. General. The proceeds of the Loans shall be used for the following purposes: (a) to refinance all outstanding loans under the Existing Credit Agreement, (b) to refinance a portion of the outstanding Subordinated Notes and Senior Discount Notes, so long as at least $375,000,000 of proceeds have been raised from the issuance of Refinancing Notes and the net cash proceeds therefrom have been applied to such refinancing, (c) working capital and general corporate purposes, (d) funding Permitted Acquisitions, and (e) funding Capital Expenditures permitted hereunder. The Borrower will obtain Letters of Credit solely for general corporate purposes.

      8.17.2. Regulation U. No portion of any Loan is to be used, and no portion of any Letter of Credit is to be obtained, for the purpose of purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulation U of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 221.

      8.17.3. Ineligible Securities. No portion of the proceeds of any Loan is to be used, and no portion of any Letter of Credit is to be obtained, for the purpose of knowingly purchasing, or providing credit support for the purchase of, during the underwriting or placement period or within thirty (30) days thereafter, any Ineligible Securities underwritten or privately placed by a Financial Affiliate.

     8.18. Environmental Compliance. The Borrower has taken all necessary steps to investigate the past and present condition and usage of the Real Estate and the operations conducted thereon and, based upon such diligent investigation, has determined that:

      (a) none of the Borrower, its Subsidiaries or any operator of the Real Estate or any operations thereon is in violation, or alleged violation, of 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, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any state, local or foreign law, statute, regulation, ordinance, order or decree relating to health, safety or the environment (hereinafter “Environmental Laws”), which violation could reasonably be expected to have a material adverse effect on the environment or a Material Adverse Effect;

      (b) neither the Borrower nor any of its Subsidiaries has received notice from any third party including, without limitation, any Governmental Authority, (i) that any one of them has been identified by the United States Environmental Protection Agency (“EPA”) as a potentially responsible party under CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B; (ii) that any hazardous waste, as defined by 42 U.S.C. §6903(5), any hazardous substances as defined by 42 U.S.C. §9601(14), any pollutant or contaminant as defined by 42 U.S.C. §9601(33) and any toxic substances, oil or hazardous materials or other chemicals or substances regulated by any Environmental Laws (“Hazardous Substances”) which any one of them has generated, transported or disposed of has been found at any site at which a Governmental Authority has conducted or has ordered that any Borrower or any of its Subsidiaries conduct a remedial investigation, removal or other response action pursuant to any Environmental Law; or

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(iii) that it is or shall be a named party to any claim, action, cause of action, complaint, or legal or administrative proceeding (in each case, contingent or otherwise) arising out of any third party’s incurrence of costs, expenses, losses or damages of any kind whatsoever in connection with the release of Hazardous Substances except where any of the foregoing could not reasonably be expected to have a Material Adverse Effect;

      (c) except as set forth on Schedule 8.18 attached hereto: (i) no portion of the Real Estate has been used for the handling, processing, storage or disposal of Hazardous Substances except in accordance with applicable Environmental Laws; and no underground tank or other underground storage receptacle for Hazardous Substances is located on any portion of the Real Estate; (ii) in the course of any activities conducted by the Borrower, its Subsidiaries or operators of its properties, no Hazardous Substances have been generated or are being used on the Real Estate except in accordance with applicable Environmental Laws, except where any failure to comply could not reasonably be expected to result in a Material Adverse Effect, (iii) there have been no releases (i.e. any past or present releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, disposing or dumping) or threatened releases of Hazardous Substances on, upon, into or from the properties of the Borrower or its Subsidiaries, which releases would have a material adverse effect on the value of any of the Real Estate or adjacent properties or the environment; (iv) to the best of the Borrower’s knowledge, there have been no releases on, upon, from or into any real property in the vicinity of any of the Real Estate which, through soil or groundwater contamination, may have come to be located on, and which would have a material adverse effect on the value of, the Real Estate; and (v) in addition, any Hazardous Substances that have been generated on any of the Real Estate have been transported offsite only by carriers having an identification number issued by the EPA (or the equivalent thereof in any foreign jurisdiction), treated or disposed of only by treatment or disposal facilities maintaining valid permits as required under applicable Environmental Laws, which transporters and facilities have been and are, to the best of the Borrower’s knowledge, operating in compliance with such permits and applicable Environmental Laws; and

      (d) none of the Borrower and its Subsidiaries, any Mortgaged Property or any of the other Real Estate is subject to any applicable Environmental Law requiring the performance of Hazardous Substances site assessments, or the removal or remediation of Hazardous Substances, or the giving of notice to any Governmental Authority or the recording or delivery to other Persons of an environmental disclosure document or statement by virtue of the transactions set forth herein and contemplated hereby, or as a condition to the recording of any Mortgage or to the effectiveness of any other transactions contemplated hereby.

     8.19. Subsidiaries, etc. Schedule 8.19 hereto, as updated from time to time in accordance with §9.15, sets forth all of the Subsidiaries of the Parent. Except as set forth on Schedule 8.19, neither the Parent nor any Subsidiary is engaged in any joint venture or partnership with any other Person. The jurisdiction of incorporation/formation and principal place of business of each Subsidiary is listed on Schedule 8.19 hereto.

     8.20. Disclosure. Neither this Credit Agreement nor any of the other Loan Documents contains any untrue statement of a material fact or omits to state a material fact (known to the Borrower or any of its Subsidiaries in the case of any document or information not furnished by it or any of its Subsidiaries) necessary in order to make the statements herein or therein not misleading. There is no fact known to the Borrower or any of its Subsidiaries which has had a Material Adverse Effect, or which is reasonably likely in the future to have a Material Adverse Effect, exclusive of effects resulting from changes in general economic conditions, legal standards or regulatory conditions or changes affecting the broadcasting or publishing industries generally resulting from new technologies.

     8.21. Licenses and Approvals.

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      (a) Each of the Borrower and its Subsidiaries has all requisite power and authority and Necessary Authorizations to hold the FCC Licenses and to own and operate its Stations and to carry on its businesses as now conducted.

      (b) Set forth in Schedule 8.21 hereto, as updated from time to time in accordance with §10.5, is a complete description of all FCC Licenses of the Borrower and/or its Subsidiaries and the dates on which such FCC Licenses expire. Complete and correct copies of all such FCC licenses have been delivered to the Administrative Agent. Each such FCC License which is necessary to the operation of the business of the Borrower or any of its Subsidiaries is validly issued and in full force and effect. The Borrower and each of its Subsidiaries has fulfilled and performed in all material respects all of its obligations with respect to each such FCC License except in respect of findings of violations, or claims alleging violations, by the Borrower or such Subsidiary of FCC indecency standards (“Indecency Claims”), provided that such Indecency Claims could not, in the aggregate, reasonably be expected to have a Material Adverse Effect and provided further that the Borrower or such Subsidiary is taking all reasonable and appropriate steps to contest or mitigate its potential liabilities in respect of such Indecency Claims and has set aside on its books adequate reserves in conformity with GAAP with respect thereto. No event has occurred which: (i) has resulted in, or after notice or lapse of time or both would result in, revocation or termination of any FCC License, or (ii) materially and adversely affects or in the future could reasonably be expected to materially adversely affect any of the rights of the Borrower or any of its Subsidiaries under any FCC License, except for those the failure to be in full force and effect could not reasonably be expected to cause an Event of Default pursuant to §14.1(t) and so long as the Borrower or the applicable Subsidiary shall have complied with §9.10(b)(iv). No material license or franchise, other than the FCC Licenses described in Schedule 8.21 which have been obtained, is necessary for the operation of the business (including the Stations) of the Borrower or any of its Subsidiaries as now conducted.

      (c) Except as set forth on Schedule 8.21, as updated from time to time pursuant to §10.5, and except in respect of Indecency Claims, provided that such Indecency Claims could not, in the aggregate, reasonably be expected to have a Material Adverse Effect and provided further that the Borrower or such Subsidiary is taking all reasonable and appropriate steps to contest or mitigate its potential liabilities in respect of such Indecency Claims and has set aside on its books adequate reserves in conformity with GAAP with respect thereto, none of the Borrower or any of its Subsidiaries is a party to or has 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 radio or television broadcasting industry generally) which could in any manner threaten or adversely affect the validity or continued effectiveness of the FCC Licenses of the Borrower and its Subsidiaries taken as a whole or the business of the Borrower and its Subsidiaries taken as a whole. None of the Borrower or any of its Subsidiaries has reason to believe that any of the FCC Licenses described in Schedule 8.21, as updated from time to time pursuant to §10.5, will not be renewed, except for those the failure to be in full force and effect after the Funding Date could not reasonably be expected to have a Material Adverse Effect. Each of the Borrower and its Subsidiaries 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 or business of such Person with respect thereto and has timely paid all FCC annual regulatory fees assessed with respect to its FCC Licenses.

      (d) All FCC Licenses and other licenses, permits and approvals relating to the Stations are held by a License Subsidiary. No License Subsidiary (A) owns or holds any assets (including the ownership of stock or any other interest in any Person) other than FCC Licenses and other licenses, permits and approvals relating to the Stations, (B) is engaged in any business other than the holding, acquisition and maintenance of FCC Licenses and other licenses, permits and approvals relating to the Stations, (C) has any Investments in any Person other than the

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Borrower or (D) owes any Indebtedness (other than (x) Indebtedness to the Administrative Agent and the Lenders pursuant to the Guaranty and (y) contingent obligations pursuant to the Subordinated Guaranties or Subordinated Debt consisting of guaranties of Additional Subordinated Debt) to any Person other than the Borrower.

     8.22. Material Agreements. All material radio or television network affiliation, programming, engineering, consulting, management, employment and related agreements, if any, of the Borrower and its Subsidiaries which are presently in effect in connection with, and are material and necessary to, the conduct of the business of the Borrower or any of its Subsidiaries, including without limitation the operation of any Station by the Borrower or any of its Subsidiaries, are valid, subsisting and in full force and effect and none of the Borrower, any of its Subsidiaries or, to the Borrower’s best knowledge, any other Person are in material default thereunder.

     8.23. Solvency. As of the date on which this representation and warranty is made or deemed made, each of the Parent, the Borrower and the Subsidiaries is Solvent, both before and after giving effect to the transactions contemplated hereby consummated on such date and to the incurrence of all Indebtedness and other obligations incurred on such date in connection herewith and therewith.

     8.24. Excluded Subsidiaries. The entities set forth in clause (b) of the definition of “Excluded Subsidiaries” do not own or operate any Station, broadcasting business or publishing business within the United States and either own no assets or own only stock of Persons whose primary businesses are owning or operating broadcasting businesses outside the United States. The entity set forth in clause (d) of the definition of “Excluded Subsidiaries” is a fifty-one percent (51%) owned limited liability company. The primary business of Country Sampler Stores LLC is the retail sale of products like those advertised in “Country Sampler Magazine”. The Austin Partnership is a Texas limited partnership, 49.69443% of which is owned by the Borrower. RAM is a Texas limited liability company, 50.1% of which is owned by the Borrower.

9. AFFIRMATIVE COVENANTS.

     The Borrower covenants and agrees that, so long as any Loan, Unpaid Reimbursement Obligation, Letter of Credit, Note or other Obligation is outstanding or any Lender has any obligation to make any Loans or the Administrative Agent has any obligation to issue, extend or renew any Letters of Credit:

     9.1. Punctual Payment. The Borrower will duly and punctually pay or cause to be paid the principal and interest on the Loans, all Reimbursement Obligations, the Letter of Credit Fees, the Commitment Fees and all other fees and amounts provided for in this Credit Agreement and the other Loan Documents to which the Borrower or any of its Subsidiaries is a party, all in accordance with the terms of this Credit Agreement and such other Loan Documents.

     9.2. Maintenance of Office. (a) The Borrower will, and will cause each of the Operating Subsidiaries to, maintain its chief executive office in Indianapolis, Indiana, and (b) the Borrower will cause each of the License Subsidiaries to maintain its chief executive office in Burbank, California, or, in each case, at such other place in the United States of America as the Borrower shall designate upon written notice to the Administrative Agent, where notices, presentations and demands to or upon the Borrower in respect of the Loan Documents to which the Borrower is a party may be given or made.

     9.3. Records and Accounts. The Borrower will (a) keep, and cause each of its Subsidiaries to keep, true and accurate records and books of account in which full, true and correct entries will be made in accordance with GAAP, (b) maintain adequate accounts and reserves for all taxes (including income taxes), depreciation, depletion, obsolescence and amortization of its properties and the properties of its Subsidiaries, contingencies, and other reserves, and (c) at all times engage Ernst & Young LLP or other independent certified public accountants reasonably satisfactory to the Administrative Agent as the

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independent certified public accountants of the Borrower and its Subsidiaries and will not permit more than thirty (30) days to elapse between the cessation of such firm’s (or any successor firm’s) engagement as the independent certified public accountants of the Borrower and its Subsidiaries and the appointment in such capacity of a successor firm as shall be satisfactory to the Administrative Agent.

     9.4. Financial Statements, Certificates and Information. The Borrower will deliver to each of the Lenders:

      (a) as soon as practicable, but in any event not later than eighty (80) days after the end of each fiscal year of the Parent, other than as set forth in §9.4(f) as it relates to audited financial statements for the fiscal year ended February 29, 2004, the audited consolidated balance sheet of the Parent and its subsidiaries, as at the end of such year, and the related audited consolidated statements of income and audited consolidated statements of cash flow, each setting forth in comparative form the figures for the previous fiscal year and all such consolidated statements to be in reasonable detail, prepared in accordance with GAAP and the requirements of the Securities and Exchange Commission (the “SEC”), and certified without qualification and without an expression of uncertainty as to the ability of the Parent, the Borrower or any of the Subsidiaries to continue as going concerns, by Ernst & Young LLP or by other independent certified public accountants reasonably satisfactory to the Administrative Agent, together with a written statement from such accountants to the effect that, in making the examination necessary to said certification, they have obtained no knowledge of any Default or Event of Default related to or arising from accounting matters, or, if such accountants shall have obtained knowledge of any then existing Default or Event of Default they shall disclose in such statement any such Default or Event of Default; provided that such accountants shall not be liable to the Lenders for failure to obtain knowledge of any Default or Event of Default;

      (b) as soon as practicable, but in any event not later than fifty (50) days after the end of each of the fiscal quarters of the Parent, copies of the unaudited consolidated balance sheets of the Parent and its subsidiaries as at the end of such quarter, and the related consolidated statements of income and cash flows for the fiscal quarter then ended, all in reasonable detail and prepared in accordance with GAAP and SEC requirements, together with a certification by the principal financial or accounting officer of the Borrower that the information contained in such financial statements fairly presents the financial position of the Parent, the Borrower and their respective subsidiaries on the date thereof (subject to year-end adjustments);

      (c) simultaneously with the delivery of the financial statements referred to in subsections (a) and (b) above, (i) a statement certified by the principal financial or accounting officer of the Borrower in substantially the form of Exhibit E hereto (a “Compliance Certificate”) and certifying that no Default or Event of Default is then continuing or describing the nature and duration of any then continuing Default or Event of Default and setting forth in reasonable detail computations evidencing compliance with the covenants contained in §11 and (if applicable) reconciliations to reflect changes in GAAP since the Balance Sheet Date, and (ii) a schedule in form and detail reasonably satisfactory to the Administrative Agent of computations of Consolidated Operating Cash Flow and other financial covenant-related calculations prepared by the principal financial or accounting officer of the Borrower detailing the adjustments made to exclude Excluded Subsidiaries from such computations;

      (d) promptly upon completion thereof and in any event no later than eighty (80) days after the beginning of each fiscal year of the Borrower, the Borrower’s annual operating budget in the form of consolidated financial projections for such fiscal year and prepared on a quarterly basis and setting forth projected operating results for each quarter in such fiscal year and for the fiscal year as a whole, including projections of operating cash flow together with a

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quarterly itemization of estimated taxes and Capital Expenditures for such fiscal year, which are prepared on the basis of reasonable assumptions;

      (e) from time to time such other financial data and information with respect to the condition or operations, financial or otherwise, of the Parent, the Borrower and the subsidiaries, including Excluded Subsidiaries (including accountants’ management letters) as the Administrative Agent or any Lender may reasonably request; and

      (f) within five (5) days from the Funding Date, the audited consolidated balance sheet of the Parent, the Borrower and its subsidiaries, as at the Balance Sheet Date, and the related consolidated statements of income and cash flow for the fiscal year then ended, in each case, certified by both the Parent’s independent certified public accountants and an authorized officer of the Borrower. Such balance sheet and statement of income and cash flow shall not be materially different from the financials delivered to the Lenders on the Funding Date in accordance with §12.8 and shall have been prepared in accordance with GAAP and shall fairly present in all material respects the financial condition of the Parent, the Borrower and its subsidiaries, as at the close of business on the Balance Sheet Date and the results of operations for the fiscal year then ended. There shall be no contingent liabilities of the Parent, the Borrower or any of its subsidiaries, as of the Funding Date involving material amounts, known to any officer of the Parent, the Borrower or of any of the Subsidiaries not disclosed in the balance sheet dated the Balance Sheet Date and the related notes thereto other than contingent liabilities disclosed to the Lenders in writing.

     9.5. Notices.

      9.5.1. Defaults. The Borrower will promptly notify the Administrative Agent and each of the Lenders in writing of the occurrence of any Default or Event of Default, together with a reasonably detailed description thereof, and the actions the Borrower proposes to take with respect thereto. If any Person shall give any notice or take any other action in respect of a claimed default (whether or not constituting an Event of Default) under this Credit Agreement or any other note, evidence of indebtedness, indenture or other obligation in an amount equal to or greater than $5,000,000 to which or with respect to which the Parent, the Borrower or any of the Subsidiaries is a party or obligor, whether as principal, guarantor, surety or otherwise, the Borrower shall forthwith give written notice thereof to the Administrative Agent and each of the Lenders, describing the notice or action and the nature of the claimed default.

      9.5.2. Environmental Events. The Borrower will promptly give notice to the Administrative Agent and each of the Lenders (a) of any violation of any Environmental Law that the Borrower or any of its Subsidiaries reports in writing or is reportable by such Person in writing (or for which any written report supplemental to any oral report is made) to any Governmental Authority and (b) upon becoming aware thereof, of any inquiry, proceeding, investigation, or other action, including a notice from any agency of potential environmental liability, of any Governmental Authority that could have a Material Adverse Effect.

      9.5.3. Notification of Claim against Collateral. The Borrower will, immediately upon becoming aware thereof, notify the Administrative Agent and each of the Lenders in writing of any setoff, claims (including, with respect to the Real Estate, environmental claims), withholdings or other defenses to which any of the Collateral, or the Administrative Agent’s rights with respect to the Collateral, are subject.

      9.5.4. Notice of Litigation and Judgments. The Borrower will, and will cause each of its Subsidiaries to, give notice to the Administrative Agent and each of the Lenders in writing within fifteen (15) days of becoming aware of any litigation or proceedings threatened in writing

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or any pending litigation and proceedings affecting the Parent, the Borrower or any of the Subsidiaries or to which any such Person is or becomes a party involving an uninsured claim against any such Person that could reasonably be expected to have a Material Adverse Effect and stating the nature and status of such litigation or proceedings. The Borrower will, and will cause each of its Subsidiaries to, give notice to the Administrative Agent and each of the Lenders, in writing, in form and detail reasonably satisfactory to the Administrative Agent, within ten (10) days of any judgment not covered by insurance, final or otherwise, against the Parent, the Borrower or any of the Subsidiaries in an amount in excess of $5,000,000.

      9.5.5. Notice of SEC Filings, etc. The Borrower will, and will cause each of its Subsidiaries to, contemporaneously with the filing or mailing thereof, give notice to the Administrative Agent, of such filing or mailing of (i) all material of a financial nature filed with the SEC (including any registration statements) or sent to the stockholders of the Parent or the Borrower, as applicable, and (ii) any periodic or special reports of a material nature filed with the FCC and relating to any Station owned or operated by the Borrower or any of the Subsidiaries.

     9.6. Legal Existence; Conduct of Business; Maintenance of Properties. Except as otherwise permitted under §10.5.1(a), the Borrower will do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence, rights and franchises and those of its Subsidiaries and will not, and will not cause or permit any of its Subsidiaries to, convert to a limited liability company or a limited liability partnership without providing at least thirty (30) days’ prior written notice to the Administrative Agent. Except as otherwise permitted under §10.5, the Borrower (i) will cause all of its properties and those of its Subsidiaries used or useful in the conduct of its business or the business of its Subsidiaries to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment, (ii) will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Borrower may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times, (iii) will, and will cause each of its Subsidiaries (other than the License Subsidiaries) to, continue to engage primarily in the radio and television broadcasting and/or magazine publishing businesses now conducted by each of them and in related businesses, (iv) will cause each of the License Subsidiaries to engage solely in the business of holding the FCC Licenses necessary for the Operating Subsidiaries to operate the Stations operated by each of them, (v) will, and will cause each of its Subsidiaries to, obtain, maintain, preserve, renew, extend and keep in full force and effect all permits, rights, licenses, franchises, authorizations, patents, trademarks, copyrights and privileges to the extent necessary for the proper conduct of its business, including FCC Licenses and (vi) will, and will cause each of its Subsidiaries to, continue to engage primarily in the businesses now conducted by them and in related businesses; provided that nothing in this §9.6 shall prevent the Borrower from discontinuing the operation and maintenance of any of its properties or any of those of its Subsidiaries if such discontinuance is, in the judgment of the Borrower, desirable in the conduct of its or their business and that do not in the aggregate have a Material Adverse Effect.

     9.7. Insurance. The Borrower will, and will cause each of its Subsidiaries to, maintain with financially sound and reputable insurers insurance with respect to its properties and business against such casualties and contingencies as shall be in accordance with the general practices of businesses engaged in similar activities in similar geographic areas and in amounts, containing such terms, in such forms and for such periods as may be reasonable and prudent and in accordance with the terms of the Security Agreement, and to maintain business interruption insurance in form reasonably satisfactory in all respects to the Administrative Agent. In the event of any failure by the Borrower or any of its Subsidiaries to provide and maintain insurance as required herein or in the Security Agreement, the Administrative Agent may after notice to the Borrower to such effect, provide such insurance and charge the amount thereof to the Borrower and the Borrower hereby promises to pay to the Administrative Agent on demand the amount of any disbursements made by the Administrative Agent for such purpose. Within ninety (90) days of the end of each fiscal year of the Borrower, the Borrower shall furnish to the Administrative Agent certificates or other evidence satisfactory to the Administrative Agent of compliance with the foregoing provisions.

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     9.8. Taxes. The Borrower will, and will cause each of its Subsidiaries to, duly pay and discharge, or cause to be paid and discharged, before the same shall become overdue, all taxes, assessments and other governmental charges (other than taxes, assessments and other governmental charges imposed by foreign jurisdictions that in the aggregate are not material to the business or assets of the Borrower on an individual basis or of the Borrower and its Subsidiaries on a consolidated basis) imposed upon it and its Real Estate, sales and activities, or any part thereof, or upon the income or profits therefrom, as well as all claims for labor, materials, or supplies that if unpaid might by law become a Lien or charge upon any of its property unless failure to pay could not reasonably be expected to cause a Material Adverse Effect; provided that any such tax, assessment, charge, levy or claim need not be paid if the validity or amount thereof is then being contested in good faith by appropriate proceedings and if the Borrower or such Subsidiary shall have set aside on its books adequate reserves in conformity with GAAP with respect thereto; and provided further that the Borrower and each Subsidiary of the Borrower will pay all such taxes, assessments, charges, levies or claims forthwith upon the commencement of proceedings to foreclose any Lien that may have attached as security therefor.

     9.9. Inspection of Properties and Books, etc.

      9.9.1. General. The Borrower shall permit the Lenders or any of the Lenders’ other designated representatives to visit and inspect any of the properties of the Borrower or any of its Subsidiaries, to examine the books of account of the Borrower and its Subsidiaries (and to make copies thereof and extracts therefrom), and to discuss the affairs, finances and accounts of the Borrower and its Subsidiaries with, and to be advised as to the same by, its and their officers, all upon reasonable advance notice to the Borrower and at such reasonable times and intervals as the Administrative Agent or any Lender may reasonably request.

      9.9.2. Appraisals. If an Event of Default shall have occurred and be continuing, upon the request of the Administrative Agent, the Borrower will obtain and deliver to the Administrative Agent appraisal reports in form and substance and from appraisers satisfactory to the Administrative Agent, stating (a) the then current fair market, orderly liquidation and forced liquidation values of one or more of the Stations owned by the Borrower or its Subsidiaries, business units that hold the publishing assets and/or the Mortgaged Properties and (b) the then current business value of each of the Borrower and its Subsidiaries. All such appraisals shall be conducted and made at the expense of the Borrower.

      9.9.3. Communications with Accountants. Each of the Parent and the Borrower authorizes the Administrative Agent and, if accompanied by the Administrative Agent, the Lenders to communicate directly with such Person’s independent certified public accountants and authorizes such accountants to disclose to the Administrative Agent and the Lenders any and all financial statements and other supporting financial documents and schedules including copies of any management letter with respect to the business, financial condition and other affairs of the Parent, the Borrower or any of the Subsidiaries. At the request of the Administrative Agent, the Parent and the Borrower shall deliver a letter addressed to such accountants instructing them to comply with the provisions of this §9.9.3.

     9.10. Compliance with Laws, Contracts, Licenses, and Permits.

      (a) The Borrower will, and will cause each of its Subsidiaries to, comply with (i) the applicable laws and regulations wherever its business is conducted, including all Environmental Laws and the Communications Act, (ii) the provisions of its Governing Documents, (iii) all agreements and instruments by which it or any of its properties may be bound and (iv) all applicable decrees, orders, and judgments, unless failure to comply could not reasonably be expected to cause a Material Adverse Effect. If any authorization, consent, approval, permit or license from any officer, agency or instrumentality of any government shall become necessary or

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required in order that the Borrower or any of its Subsidiaries may fulfill any of its obligations hereunder or any of the other Loan Documents to which the Borrower or such Subsidiary is a party, the Borrower will, or (as the case may be) will cause such Subsidiary to, immediately take or cause to be taken all reasonable steps within the power of the Borrower or such Subsidiary to obtain such authorization, consent, approval, permit or license and furnish the Administrative Agent and the Lenders with evidence thereof.

      (b) The Borrower will, and will cause each of its Subsidiaries to, (i) operate its Stations, unless failure to comply could not reasonably be expected to cause a Material Adverse Effect, in accordance with and in compliance with the Communications Act, (ii) file in a timely manner all necessary applications for renewal of all FCC Licenses that are material to the operations of its Stations, (iii) use its reasonable best efforts to defend any proceedings which could result in the termination, forfeiture or non-renewal of any FCC License, and (iv) promptly furnish or cause to be furnished to the Administrative Agent: (A) a copy of any order or notice of the FCC which designates any of the Borrower’s or any of its Subsidiaries’ FCC Licenses for a hearing or which refuses renewal or extension thereof, or reverses or suspends its or any of its Subsidiaries’ authority to operate a Station, (B) a copy of any competing application filed with respect to any of its franchises, licenses (including FCC Licenses), rights, permits, consents or other authorizations pursuant to which the Borrower or any of the Borrower’s Subsidiaries operates any Station, (C) a copy of any citation, notice of violation or order to show cause issued by the FCC in relation to any of the Borrower’s or any of its Subsidiaries’ Stations and (D) a copy of any notice or application by the Borrower or any of its Subsidiaries requesting authority to cease broadcasting on any Station or to cease operating any Station for any period in excess of five (5) days.

     9.11. Employee Benefit Plans. The Borrower will (a) promptly upon filing the same with the Department of Labor or Internal Revenue Service, upon request of the Administrative Agent, furnish to the Administrative Agent a copy of the most recent actuarial statement required to be submitted under §103(d) of ERISA and Annual Report, Form 5500, with all required attachments, in respect of each Guaranteed Pension Plan, (b) promptly upon receipt or dispatch, furnish to the Administrative Agent any notice, report or demand sent or received in respect of a Guaranteed Pension Plan under §§302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan, under §§4041A, 4202, 4219, 4242, or 4245 of ERISA and (c) promptly upon request of the Administrative Agent, furnish to the Administrative Agent a copy of all actuarial statements required to be submitted under all Applicable Pension Legislation.

     9.12. Use of Proceeds. The Borrower will use the proceeds of the Loans and obtain Letters of Credit solely for the purposes set forth in §8.17.1.

     9.13. Additional Collateral. The Borrower will, and will cause each of its Subsidiaries to, 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 Administrative Agent for the benefit of the Lenders and the Administrative Agent perfected security interests (subject only to Permitted Liens) with respect to all inventory, receivables, equipment, accounts, copyrights, patents, trademarks, licenses, other general intangibles, Real Estate and other assets of the Borrower and such Subsidiaries (other than Excluded Assets), whether now owned or hereafter acquired, to the extent the Administrative Agent shall so request. All such security interests will be created under security agreements, mortgages and other instruments and documents in form and substance reasonably satisfactory to the Administrative Agent, and the Borrower shall deliver to the Administrative Agent all such instruments and documents (including, without limitation, legal opinions, title insurance policies and lien searches) as the Administrative Agent shall reasonably request to evidence the satisfaction of the obligations created by this §9.13. The Borrower agrees to provide such evidence as the Administrative Agent shall reasonably request as to the perfection and priority of such security interests (subject only to Permitted Liens). The Borrower shall promptly notify the Administrative Agent in the event the Borrower or any Subsidiary acquires any Collateral not otherwise

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subject to (a) the first priority perfected security interest of the Administrative Agent pursuant to existing Security Documents or (b) an exception or an exclusion expressly permitted hereunder.

     9.14. Interest Rate Protection. No later than three hundred sixty five (365) days from the date hereof, the Borrower will purchase or enter into an interest cap or swap or other interest rate protection agreements having a term of not less than two (2) years as shall be necessary to cap or fix the interest cost to the Borrower with respect to not less than thirty percent (30%) of Consolidated Total Funded Debt outstanding at such time, and from time to time thereafter so long as the Total Leverage Ratio as of the end of the fiscal quarter most recently ended is greater than or equal to 6.00:1.00, the Borrower shall purchase or enter into an additional interest cap or swap or other additional interest rate protection agreements as shall be necessary to cap or fix the interest cost to the Borrower with respect to not less than thirty percent (30%) of Consolidated Total Funded Debt outstanding from time to time during any such period thereafter, in each case at rates and on terms and conditions reasonably satisfactory to the Administrative Agent.

     9.15. Additional Subsidiaries. In the event that, after the date hereof, the Parent, the Borrower or any Subsidiary creates any new Subsidiary or acquires a new Subsidiary in accordance with §10.5.1 or otherwise or in the event that the Borrower exercises its option to purchase the remaining Capital Stock of RAM and the Austin Partnership pursuant to the Sinclair Definitive Agreement, (a) such new Subsidiary or (as the case may be) RAM and the Austin Partnership shall, concurrently with such event or as soon as practicable thereafter, execute and deliver to the Administrative Agent an instrument of joinder and accession, in form and substance reasonably satisfactory to the Administrative Agent, pursuant to which such Person shall join the applicable Security Documents as if such Person was an original signatory thereto, and (b) the Parent, the Borrower, the applicable Subsidiary and/or such new Subsidiary or (as the case may be) RAM and the Austin Partnership shall deliver such other instruments and documents, including without limitation Perfection Certificates, UCC financing statements and stock certificates representing all of the issued and outstanding Capital Stock of such new Subsidiary or (as the case may be) RAM and the Austin Partnership with accompanying stock powers duly executed in blank, in each case required to be executed or delivered pursuant to such Security Documents in order to grant to or maintain the Administrative Agent’s first priority perfected security interest in and to the assets of and the Capital Stock issued by such Person. Further, contemporaneously with the formation or acquisition of such new Subsidiary or the exercise of the option to purchase the remaining Capital Stock of RAM and the Austin Partnership, the Parent, the Borrower, the applicable Subsidiary and/or such new Subsidiary or (as the case may be) RAM and the Austin Partnership shall execute and/or deliver to the Administrative Agent such other documentation as the Administrative Agent may reasonably request in furtherance of the intent of this §9.15, including without limitation an updated Schedule 8.19 hereto and documentation of the type required to be supplied by the Parent, the Borrower and the Subsidiaries as a condition precedent to the initial Loans made hereunder pursuant to §12, as applicable to such new Subsidiary or Permitted Acquisition or (as the case may be) RAM and the Austin Partnership.

     9.16. Refinancing Note Proceeds. The Borrower shall apply the net cash proceeds from the issuance of the Refinancing Notes in combination with proceeds of the Loans to refinance all outstanding Subordinated Notes (and any related premiums) and to refinance all or a portion of the outstanding Senior Discount Notes (and any related premiums).

     9.17. Further Assurances. The Borrower will, and will cause each of its Subsidiaries to, cooperate with the Lenders and the Administrative Agent and execute such further instruments and documents as the Lenders or the Administrative Agent shall reasonably request to carry out to their satisfaction the transactions contemplated by this Credit Agreement and the other Loan Documents.

10. CERTAIN NEGATIVE COVENANTS.

     The Parent and the Borrower covenant and agree that, so long as any Loan, Unpaid Reimbursement Obligation, Letter of Credit, Note or other Obligation is outstanding or any Lender has any

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obligation to make any Loans or the Administrative Agent has any obligations to issue, extend or renew any Letters of Credit:

     10.1. Restrictions on Indebtedness. The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume, guarantee or be or remain liable, contingently or otherwise, with respect to any Indebtedness other than:

      (a) Indebtedness owing to the Lenders and the Agents arising under any of the Loan Documents;

      (b) current liabilities of the Borrower or such Subsidiary (including under any operating leases and studio and tower leases) incurred in the ordinary course of business not incurred through (i) the borrowing of money, or (ii) the obtaining of credit except for credit on an open account basis customarily extended and in fact extended in connection with normal purchases of goods and services;

      (c) endorsements for collection, deposit or negotiation and warranties of products or services, in each case incurred in the ordinary course of business;

      (d) Indebtedness in respect of (i) judgments or awards that have been in force for less than the applicable period for taking an appeal so long as execution is not levied thereunder or in respect of which the Borrower or such Subsidiary (as the case may be) shall at the time in good faith be prosecuting an appeal or proceedings for review and in respect of which a stay of execution shall have been obtained pending such appeal or review, (ii) final judgments against the Borrower or any of its Subsidiaries that in the aggregate at any time do not exceed $5,000,000 and (iii) claims which are currently being contested in good faith by appropriate proceedings if adequate reserves shall have been set aside with respect thereto;

      (e) Subordinated Debt; provided that, in the case of the issuance by the Borrower of the Refinancing Notes, (i) the Borrower applies the net cash proceeds of such issuance in accordance with §9.16, (ii) no Default or Event of Default has occurred and is continuing hereunder at the time of such issuance or would result after giving effect thereto, (iii) in the event the Borrower intends, on or about the Funding Date, to use a portion of the proceeds from such issuance to refinance all or any portion of the Senior Discount Notes (assuming all of the Subordinated Notes have first been refinanced), the Total Leverage Ratio as of the last day of the fiscal quarter ended immediately prior to the Funding Date (calculated on a pro forma basis after giving effect to such issuance) shall be less than 7.25:1.00, (iv) the Obligations shall constitute “Senior Debt” or the equivalent under the Refinancing Note Indenture and the incurrence of the Obligations shall be permitted under the terms of such Refinancing Note Indenture and will not cause a default or event of default thereunder, and (v) all documents, instruments and agreements executed by the Borrower and any of its Subsidiaries in connection with such issuance shall be in form and substance reasonably satisfactory to the Administrative Agent; and provided further that, in the case of the incurrence of Additional Subordinated Debt by the Borrower or any Subsidiary, (x) the net cash proceeds of such Additional Subordinated Debt shall be applied in accordance with §4.4 and (y) no Default or Event of Default has occurred and is continuing at the time of the incurrence of such Additional Subordinated Debt or would result after giving effect thereto;

      (f) Indebtedness (i) incurred in connection with, and within 180 days of, the acquisition after the date hereof of any real or personal property by the Borrower or such Subsidiary or under any Capitalized Lease or (ii) assumed by the Borrower or any of its Subsidiaries in connection with a Permitted Acquisition, provided that (x) the aggregate principal amount of such Indebtedness of the Borrower and its Subsidiaries shall not exceed the aggregate amount of $75,000,000 at any one time; (y) the amount of such Indebtedness does not exceed the

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value of the property so acquired; and (z) with respect to clause (ii) above, the assets securing such Indebtedness are limited to the assets so acquired or which secured the Indebtedness at the time it was assumed so long as such liens were not granted or created in anticipation of such assumption;

      (g) Indebtedness in respect of interest rate agreements (whether from fixed to floating or from floating to fixed), swaps or similar arrangements entered into pursuant to §9.14 or designed to manage interest rates or interest rate risk in connection with this Credit Agreement, the Refinancing Notes or any other Indebtedness for borrowed money evidenced by bonds, debentures or other similar instruments owed by the Borrower or any of its Subsidiaries;

      (h) Indebtedness existing on the date hereof and listed and described on Schedule 10.1 hereto;

      (i) Indebtedness of a Subsidiary of the Borrower owing to the Borrower or of the Borrower or any Subsidiary to any wholly-owned Subsidiary of the Borrower;

      (j) Indebtedness in respect of taxes, assessments, governmental charges or levies and claims for labor, materials and supplies to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of §9.8; and

      (k) other unsecured Indebtedness in an aggregate amount outstanding at any one time not to exceed $150,000,000, provided that no Default or Event of Default has occurred and is continuing at the time of the incurrence of such unsecured Indebtedness or would result after giving effect thereto.

     10.2. Restrictions on Liens.

      10.2.1. Permitted Liens. The Borrower will not, and will not permit any of its Subsidiaries to, (a) create or incur or suffer to be created or incurred or to exist any Lien upon any of its property or assets of any character whether now owned or hereafter acquired, or upon the income or profits therefrom; (b) transfer any of such property or assets or the income or profits therefrom outside the ordinary course of business for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of its general creditors; (c) acquire, or agree or have an option to acquire, any property or assets upon conditional sale or other title retention or purchase money security agreement, device or arrangement; (d) suffer to exist for a period of more than thirty (30) days after the same shall have been incurred any Indebtedness or claim against it that if unpaid might by law or upon bankruptcy or insolvency, or otherwise, be given any priority whatsoever over its general creditors (other than in respect of de minimus amounts); or (e) sell, assign, pledge or otherwise transfer any “receivables” as defined in clause (g) of the definition of the term “Indebtedness,” with or without recourse (other than in connection with the disposition of the business operations of such Person relating thereto or a disposition of defaulted receivables for collection and not as a financing arrangement); provided that the Borrower or any of its Subsidiaries may create or incur or suffer to be created or incurred or to exist:

      (i) Liens in favor of the Borrower on all or part of the assets of Subsidiaries of the Borrower securing Indebtedness owing by Subsidiaries of the Borrower to the Borrower;

      (ii) Liens to secure taxes, assessments and other government charges in respect of obligations not overdue or that are being diligently contested in good faith and in respect of which appropriate reserves have been set aside or Liens on properties to secure claims for labor, material or supplies in respect of obligations not overdue or that are being diligently contested in good faith and in respect of which appropriate reserves have been set aside;

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      (iii) deposits or pledges made in connection with, or to secure payment of, workmen’s compensation, unemployment insurance, old age pensions or other social security obligations which are not overdue;

      (iv) Liens on properties in respect of judgments or awards that have been in force for less than the applicable period for taking an appeal so long as execution is not levied thereunder or in respect of which the Borrower or such Subsidiary (as the case may be) shall at the time in good faith be prosecuting an appeal or proceedings for review and in respect of which a stay of execution shall have been obtained pending such appeal or review, the Indebtedness with respect to which is permitted by §10.1(d);

      (v) Liens of carriers, warehousemen, mechanics and materialmen, and other like Liens on properties, in existence less than one hundred twenty (120) days from the date of creation thereof in respect of obligations not overdue;

      (vi) encumbrances on Real Estate consisting of easements, rights of way, zoning restrictions, restrictions on the use of real property and defects and irregularities in the title thereto, landlord’s or lessor’s liens and other minor Liens, provided that none of such Liens (A) interferes materially with the use of the property affected in the ordinary conduct of the business of the Borrower and its Subsidiaries, and (B) individually or in the aggregate has a Material Adverse Effect;

      (vii) Liens existing on the date hereof and listed on Schedule 10.2 hereto;

      (viii) purchase money security interests in or purchase money mortgages on real or personal property, other than Mortgaged Properties acquired after the date hereof, to secure Capitalized Leases or purchase money Indebtedness, in each case of the type and amount permitted by §10.1(f), which security interests or mortgages cover only the real or personal property so acquired or leased;

      (ix) Liens on each Mortgaged Property as and to the extent permitted by the Mortgage applicable thereto; and

      (x) Liens in favor of the Administrative Agent for the benefit of the Lenders and the Administrative Agent under the Loan Documents and any Interest Rate Agreements with a Lender;

      (xi) Liens on leasehold interests created by the Borrower or any of its Subsidiaries, as lessee, in favor of any mortgagee of the leased premises to the extent not prohibited by the terms of the lease;

      (xii) Liens securing Indebtedness permitted by §10.1(f)(ii);

      (xiii) Liens constituting leasehold or license interests held by a lessee or licensee in respect of leases or licenses made by the Borrower or any of its Subsidiaries as lessor or licensor with respect to intellectual property, space or broadcast towers or sub-channel or broadcast spectrum or similar leases or licenses in each case entered into by the Borrower or such Subsidiary in the ordinary course of its business consistent with past practices;

      (xiv) Liens constituting leasehold or similar interests of sublessees, time share participants or other similar users in respect of any aircraft owned or leased by the Borrower or any Subsidiary; and

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      (xv) Liens constituting options of Persons other than the Borrower or any Subsidiary to purchase Capital Stock of any non-wholly owned Subsidiary.

      10.2.2. Restrictions on Negative Pledges and Upstream Limitations. The Borrower will not, nor will it permit any of its Subsidiaries to, (a) enter into or permit to exist any arrangement or agreement (other than the Credit Agreement and the other Loan Documents) which directly or indirectly prohibits the Borrower or any of its Subsidiaries from creating, assuming or incurring any Lien upon its properties, revenues or assets or those of any of its Subsidiaries whether now owned or hereafter acquired to secure the Obligations (other than restrictions on specific assets, which assets are the subject of purchase money security interests to the extent permitted under §10.2.1(viii)), or (b) enter into any agreement, contract or arrangement (excluding the Credit Agreement and the other Loan Documents) restricting the ability of any Subsidiary of the Borrower to pay or make dividends or distributions in cash or kind to the Borrower, to make loans, advances or other payments of any nature to the Borrower, or to make transfers or distributions of all or any part of its assets to the Borrower; in each case other than (i) restrictions on specific assets which assets are the subject of purchase money security interests to the extent permitted under §10.2.1(viii), and (ii) customary anti-assignment provisions contained in leases and licensing agreements entered into by the Borrower or such Subsidiary in the ordinary course of its business and (iii) property subject to a pending Asset Sale which would be permitted under §10.5.2 if and from which an executed purchase agreement has been delivered to the Administrative Agent.

     10.3. Restrictions on Investments. The Borrower will not, and will not permit any of its Subsidiaries to, make or permit to exist or to remain outstanding any Investment except Investments in:

      (a) marketable direct or guaranteed obligations of the United States of America that mature within one (1) year from the date of purchase by the Borrower;

      (b) demand deposits, certificates of deposit, bank acceptances and time deposits of United States banks having total assets in excess of $1,000,000,000;

      (c) securities commonly known as “commercial paper” issued by a corporation organized and existing under the laws of the United States of America or any state thereof that at the time of purchase have been rated and the ratings for which are not less than “P 1” if rated by Moody’s, and not less than “A 1” if rated by S&P;

      (d) Investments existing on the date hereof and listed on Schedule 10.3 hereto;

      (e) Investments in the Borrower and in Subsidiaries, either in the form of equity Investments or Indebtedness permitted by §10.1(i) so long as such entities remain the Borrower or Subsidiaries of the Borrower;

      (f) Investments consisting of the Guaranty, the Subordinated Guaranties and subordinated guaranties constituting Additional Subordinated Debt made in accordance with the definition of “Subordinated Debt”, provided that such subordinated guarantees otherwise constitute Indebtedness permitted by §10.1(e);

      (g) Investments consisting of promissory notes or other deferred payment arrangements received as proceeds of, or entered into in connection with, asset dispositions permitted by §10.5.2;

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      (h) Investments consisting of loans and advances to employees for moving, entertainment, travel and other similar expenses in the ordinary course of business not to exceed $1,000,000 in the aggregate at any time outstanding;

      (i) Investments by the Borrower or a Subsidiary of the Borrower in Subsidiaries formed for the purpose of consummating Permitted Acquisitions or acquired in connection with Permitted Acquisitions;

      (j) other Investments; provided that (i) at the time such Investment is made, the aggregate amount of all Investments made by the Borrower or any of its Subsidiaries under this clause (j) after the date hereof and after giving effect to such Investment shall not exceed $175,000,000 net of cash returns of capital received after the date hereof with respect to any Investments made under this clause (j), (ii) no Default or Event of Default has occurred and is continuing at the time such Investment is made or would result on a pro forma basis therefrom after taking into account any Loans advanced to finance such Investment, and (iii) the Borrower delivers to the Administrative Agent a duly executed certificate substantially in the form of Exhibit F hereto in connection with such Investment;

provided, however, that, with the exception of Investments referred to in §10.3(a), (b) and (c) and loans and advances referred to in §(h) and Excluded Assets, such Investments will be considered Investments permitted by this §10.3 only if all actions have been taken to the reasonable satisfaction of the Administrative Agent to provide to the Administrative Agent, for the benefit of the Lenders and the Administrative Agent, a first priority perfected security interest in all of such Investments free of all Liens other than Permitted Liens.

     10.4. Restricted Payments. The Borrower will not, and will not permit any of its Subsidiaries to, make any Restricted Payments; provided, however, that:

      (a) wholly-owned direct or indirect Subsidiaries of the Borrower may make Restricted Payments to the Borrower or any wholly-owned Subsidiary of the Borrower, and Subsidiaries which are not wholly-owned Subsidiaries of the Borrower may make Distributions in respect of their Capital Stock so long as the Borrower and/or any of its Subsidiaries (as applicable) receives at least its or their pro rata share of such Distribution in accordance with its or their proportional interests in such Subsidiaries’ Capital Stock;

      (b) so long as the payment is required by the terms thereof, and no Default or Event of Default shall have occurred and be continuing or would result from such payment, the Borrower may make scheduled payments of interest on Subordinated Debt permitted by §10.1(e) or §10.1(k), provided that the Borrower delivers to the Administrative Agent a duly executed certificate substantially in the form of Exhibit F hereto;

      (c) the Borrower may use the proceeds of the Refinancing Notes issued in accordance with §10.1(e) to prepay and redeem all of the Subordinated Notes outstanding on the date of such issuance, subject to and in accordance with §9.16;

      (d) the Borrower may (i) make cash payments to its employees pursuant to one or more of its 401(k), profit sharing, equity incentive or other benefit plans (including payments in respect of terminated employees (as a result of death or otherwise) whose economic interest in such plan does not exceed $5,000), (ii) repurchase fractional shares of common stock issued to or for the benefit of the employees of the Borrower or any of its Subsidiaries, and (iii) make cash payments to the applicable taxing authorities for the benefit of its employees to the extent of the Borrower’s withholding tax liability resulting from the issuances of common stock to its

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employees in connection with any bona fide employee stock option, stock purchase or similar plan of the Borrower;

      (e) the Borrower may make cash Distributions to the Parent to enable it to pay taxes attributable to the operations of the Borrower and its Subsidiaries and Holdco Corporate Overhead Expenses;

      (f) so long as no Default or Event of Default has occurred and is continuing or would result from such payments and the Borrower delivers to the Administrative Agent a duly executed certificate substantially in the form of Exhibit F hereto, the Borrower may make (w) cash Distributions to the Parent to enable it to pay scheduled payments of interest on the Senior Discount Notes, provided that under no circumstances shall the Borrower make any such Distributions prior to September 15, 2006, (x) Distributions to the Parent to enable it to pay scheduled dividends on its preferred stock; provided that in the case of preferred stock issued after the date hereof, contemporaneously with the issuance of such preferred stock (other than preferred stock issued to refinance, replace or redeem outstanding preferred stock), the Borrower received the Net Cash Equity Issuance Proceeds from such Equity Issuance, (y) Distributions to the Parent to satisfy the Parent’s obligations to make payments of the type permitted under clause (e) above, and (z) cash Distributions to the Parent to enable it to repurchase its Common Stock or preferred stock; provided that, in the case of this clause (z), the Total Leverage Ratio as of the last day of the fiscal quarter most recently ended prior to the proposed date of such repurchase (calculated on a pro forma basis after giving effect to such repurchase) does not exceed the lesser of (i) 6.00:1.00 and (ii) 0.50 lower than the then required Total Leverage Ratio;

      (g) the Borrower may make cash Distributions to the Parent (i) on or about the Funding Date, upon receipt by the Borrower of net cash proceeds from the issuance of the Refinancing Notes, subject to and in accordance with §8.17.1 and §9.16 for the sole purpose of funding the whole or partial redemption of the Senior Discount Notes and (ii) from time to time after the Funding Date for the sole purpose of funding the redemption of the balance of the Senior Discount Notes outstanding after the application of net cash proceeds of the Refinancing Notes as set forth in clause (g)(i) above; and

      (h) to the extent not otherwise permitted under clause (e) above, the Borrower may pay, or make cash Distributions to the Parent to enable the Parent to pay, consulting fees payable to the Borrower’s or the Parent’s independent directors; provided that such fees shall be payable in such amounts and on such terms as are no less favorable to the Borrower or the Parent, as applicable, as would have been obtained on an arm’s length basis in the ordinary course of business if such Person were not a director or an Affiliate.

     10.5. Merger, Consolidation, Acquisition and Disposition of Assets.

      10.5.1. Mergers and Acquisitions. The Borrower will not, and will not permit any of its Subsidiaries to, become a party to any merger, amalgamation or consolidation, or agree to or effect any asset acquisition or stock acquisition, or enter into any LMA Agreement, except:

      (a) the merger or consolidation of one (1) or more of the Operating Subsidiaries of the Borrower with and into the Borrower, or the merger or consolidation of two (2) or more wholly-owned (A) Operating Subsidiaries or (B) License Subsidiaries of the Borrower;

      (b) the acquisition (whether pursuant to an Asset Swap or otherwise) of stock, or other securities of, or any assets of, any Person, in each case to the extent such acquisition would involve all or substantially all of a radio broadcasting, television broadcasting or publishing business or business unit thereof, provided that:

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        (i) no Default or Event of Default has occurred and is continuing or would result from such acquisition;

        (ii) not less than five (5) Business Days prior to the consummation of such proposed acquisition, the Borrower shall have delivered to the Administrative Agent a duly executed certificate substantially in the form of Exhibit F hereto, and upon the Administrative Agent’s request, such financial projections as shall be necessary, in the reasonable judgment of the Administrative Agent, to demonstrate that, after giving effect to such acquisition, all covenants contained herein will be satisfied on a Pro Forma Basis and that the Borrower’s ability to satisfy its payment obligations hereunder and under the other Loan Documents will not be impaired in any way;

        (iii) all actions have been taken to the reasonable satisfaction of the Administrative Agent to provide to the Administrative Agent, for the benefit of the Lenders and the Administrative Agent, a first priority perfected security interest in all of the assets so acquired (excluding any Excluded Assets) pursuant to the Security Documents, free of all Liens other than Permitted Liens;

        (iv) in the event of a stock acquisition, the acquired Person shall become a wholly-owned Subsidiary of the Borrower and shall comply with the terms and conditions set forth in §9.15;

        (v) the board of directors and (if required by applicable law) the shareholders, or the equivalent thereof, of the business to be acquired has approved such acquisition;

        (vi) all of the Borrower’s and/or its Subsidiaries’ (as the case may be) rights and interests in, to and under each contract and agreement entered into by such Person in connection with such acquisition to the extent permitted have been assigned to the Administrative Agent as security for the irrevocable payment and performance in full of the Obligations, pursuant to Collateral Assignments of Contracts in form and substance reasonably satisfactory to Administrative Agent;

        (vii) in the case of any acquisition involving domestic radio or television assets, the FCC shall have issued orders approving or consenting to such acquisition;

        (viii) the Borrower shall have delivered to the Administrative Agent evidence reasonably satisfactory to the Administrative Agent that all liens and encumbrances with respect to the properties and assets so acquired, other than Permitted Liens, have been discharged in full;

        (ix) the Borrower shall have delivered to the Administrative Agent (A) evidence satisfactory to the Administrative Agent that the Borrower or such Subsidiary has completed such acquisition in accordance with the terms of the contracts and agreements entered into by such Person in connection with such acquisition, and (B) certified copies of all such documents shall have been delivered to the Administrative Agent;

        (x) all FCC Licenses acquired in connection with such acquisition shall be transferred immediately upon consummation of such acquisition to a License Subsidiary;

        (xi) substantially contemporaneously with such acquisition, the Borrower shall have delivered to the Administrative Agent an updated Schedule 8.3(b) and an updated Schedule 8.21 to this Credit Agreement, as applicable, after giving effect to such acquisition.

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      (c) other media-related acquisitions not included in clause (b) above, provided that (i) so long as the Total Leverage Ratio calculated on a Pro Forma Basis after giving effect to such acquisition is greater than 6.00:1.00, the aggregate purchase price for all such acquisitions, whether payable in cash or otherwise, shall not exceed $150,000,000, and (ii) each of the conditions set forth in clause (b)(i) through (xi) above shall have been satisfied;

      (d) the Borrower or any of its Subsidiaries may enter into LMA Agreements provided that (i) at the time the Borrower or such Subsidiary enters into an LMA Agreement, no Default or Event of Default has occurred and is then continuing or could reasonably be expected to result as a consequence of entering into such LMA Agreement, (ii) if (A) the Borrower or any of its Subsidiaries has acquired an option to acquire a Station or is otherwise obligated to purchase a Station in connection with such LMA Agreement or in a related transaction or (B) such LMA Agreement is material as determined in the reasonable judgment of the Administrative Agent after consultation with the Borrower, then, in each case, all of the Borrower’s and/or its Subsidiaries’ (as the case may be) rights and interests in, to and under each such LMA Agreement shall have been assigned to the Administrative Agent as security for the irrevocable payment and performance in full of the Obligations, pursuant to Collateral Assignments of Contracts in form and substance satisfactory to Administrative Agent, (iii) if such LMA Agreement contemplates a Station acquisition, such Station acquisition must satisfy the provisions of clause (b) above; provided that, if such LMA Agreement grants the Borrower or such Subsidiary an option to purchase a Station, the relevant date for determining whether the provisions of clause (b) above have been satisfied with respect to such acquisition shall be a date not earlier than five (5) Business Days prior to the date on which the Borrower or such Subsidiary proposes to exercise such option, with the intent that this clause (iii) shall not operate to prevent the Borrower or such Subsidiary from entering into such LMA Agreement if all of the other conditions of this clause (d) have been satisfied, save that the provisions of clause (b) cannot be satisfied with respect to such optional acquisition on the date of the Borrower’s or such Subsidiary’s entry into such LMA Agreement, (iv) if such LMA Agreement contemplates an Asset Sale or Asset Swap, such Asset Sale or Asset Swap is otherwise permitted pursuant to §10.5 hereof, and (v) the Borrower shall have delivered to the Administrative Agent a duly executed certificate substantially in the form of Exhibit F hereto; and

      (e) any Investments permitted under §10.3.

      10.5.2. Disposition of Assets. The Borrower will not, and will not permit any of its Subsidiaries to, become a party to or agree to or effect any disposition or swap of assets, including Capital Stock of any Subsidiary (whether by means of a public or private offering or otherwise), other than (i) the sale of inventory, (ii) the licensing of intellectual property, (iii) the disposition of obsolete assets, in each case in the ordinary course of business consistent with past practices, (iv) the sale of receivables in connection with the business operations of such Person relating thereto or disposition of defaulted receivables for collection and not as a financing arrangement, and (v) Asset Sales or Asset Swaps not described in clauses (i) through (iv) above; provided that in the case of each such Asset Sale or Asset Swap, (1) no Default or Event of Default has occurred and is continuing or would result on a Pro Forma Basis from such Asset Sale or Asset Swap, (2) in the case of an Asset Sale, either (x) at least seventy-five percent (75%) of the consideration received by the Borrower or such Subsidiary in connection with any such Asset Sale is in the form of cash and is received upon consummation of such Asset Sale (provided that (A) Investments permitted hereunder and converted to cash within thirty (30) days and (B) any Indebtedness secured by the assets sold and assumed by the buyer shall be treated as cash proceeds for purposes of calculating compliance with the seventy-five percent (75%) requirement set forth in this clause (2) but not for purposes of calculating Net Cash Sale Proceeds), or (y) such disposition constitutes a permitted Investment pursuant to §10.3(j), (3) each such Asset Sale or Asset Swap is consummated on an arm’s length basis for fair consideration, (4) the Borrower applies the Net Cash Sale Proceeds received by the Borrower or any of its Subsidiaries in connection with such Asset Sale or Asset Swap in accordance with §4.2, (5) contemporaneously with such Asset Sale or Asset Swap, the

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Borrower shall have delivered to the Administrative Agent an updated Schedule 8.3(b) and/or Schedule 8.21, as applicable, after giving effect to such Asset Sale or Asset Swap, and (6) in the case of an Asset Swap, the Borrower or such Subsidiary has complied with the provisions of §10.5.1(b)(iii) with respect to the assets acquired in such Asset Swap. Notwithstanding the foregoing, the Borrower or any Subsidiary shall not be required to comply with any of the conditions described in clauses (2) and (3) of this §10.5.2 in connection with any transfer of certain assets used in connection with the Borrower’s Hawaiian operations into a trust for FCC regulatory purposes or the subsequent sale or disposal by such trust of such assets, so long as the Borrower applies the Net Cash Sale Proceeds received by the Borrower or any of its Subsidiaries in connection with any such Asset Sale in accordance with §4.2.

     10.6. Sale and Leaseback. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any arrangement, directly or indirectly, whereby the Borrower or any Subsidiary of the Borrower shall sell or transfer any property owned by it in order then or thereafter to lease such property or lease other property that the Borrower or any Subsidiary of the Borrower intends to use for substantially the same purpose as the property being sold or transferred, provided, however, the Borrower or any of its Subsidiaries may sell equipment which constitutes Capital Assets which have been acquired by such Person within 180 days prior to such sale and thereafter lease back such equipment provided that (a) the net present value of liabilities under such leaseback arrangements in aggregate with Indebtedness incurred under Capitalized Leases and permitted under §10.1(f) shall not exceed an aggregate amount of $75,000,000 at any one time and (b) the proceeds of such sale shall be treated as Net Cash Sale Proceeds and applied to prepay the Obligations in accordance with §4.2.

     10.7. Compliance with Environmental Laws. The Borrower will not, and will not permit any of its Subsidiaries to, (a) use any of the Real Estate or any portion thereof for the handling, processing, storage or disposal of Hazardous Substances, (b) cause or permit to be located on any of the Real Estate any underground tank or other underground storage receptacle for Hazardous Substances, (c) generate any Hazardous Substances on any of the Real Estate, (d) conduct any activity at any Real Estate or use any Real Estate in any manner so as to cause a release (i.e. releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping) or threatened release of Hazardous Substances on, upon or into the Real Estate or (e) otherwise conduct any activity at any Real Estate or use any Real Estate in any manner that in any of clauses (a) through (e) would violate any Environmental Law or bring such Real Estate in violation of any Environmental Law, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect.

     10.8. Subordinated Debt. The Borrower will not, and will not permit any of its Subsidiaries to, amend, supplement or otherwise modify the terms of any of the Subordinated Note Documents or the Refinancing Note Documents, as applicable, or any other agreement relating to Subordinated Debt or (except as otherwise expressly permitted under §10.4) prepay, redeem, repurchase, defease, or issue any notice of redemption or defeasance with respect to, any of the Subordinated Debt, provided, however, this §10.8 shall not restrict the right of the Borrower to amend the Subordinated Notes or the Refinancing Notes, as applicable, or any other document evidencing Subordinated Debt to extend the maturity thereof or amend any covenants therein so as to make such covenants less restrictive for the Borrower and its subsidiaries.

     10.9. Employee Benefit Plans. Neither the Borrower nor any ERISA Affiliate will:

      (a) engage in any “prohibited transaction” within the meaning of §406 of ERISA or §4975 of the Code which could result in a material liability for the Borrower or any of its Subsidiaries; or

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      (b) permit any Guaranteed Pension Plan to incur an “accumulated funding deficiency”, as such term is defined in §302 of ERISA, whether or not such deficiency is or may be waived; or

      (c) fail to contribute to any Guaranteed Pension Plan to an extent which, or terminate any Guaranteed Pension Plan in a manner which, could result in the imposition of a lien or encumbrance on the assets of the Borrower or any of its Subsidiaries pursuant to §302(f) or §4068 of ERISA; or

      (d) amend any Guaranteed Pension Plan in circumstances requiring the posting of security pursuant to §307 of ERISA or §401(a)(29) of the Code; or

      (e) permit or take any action which would result in the aggregate benefit liabilities (with the meaning of §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; or

      (f) permit or take any action which would contravene any Applicable Pension Legislation in any way which could reasonably be expected to have a Material Adverse Effect.

     10.10. Fiscal Year. The Borrower will not, and will not permit any of it Subsidiaries to, change the date of the end of its fiscal year from that set forth in §8.4.1.

     10.11. Transactions with Affiliates. The Borrower will not, and will not permit any of its Subsidiaries to, engage in any transaction with any Affiliate (other than (a) for services as employees, officers and directors, and (b) tax sharing arrangements pursuant to tax sharing agreements between the Parent and the Borrower in form and substance reasonably acceptable to the Administrative Agent), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such Affiliate or, to the knowledge of the Borrower, any corporation, partnership, trust or other entity in which any such Affiliate has a substantial interest or is an officer, director, trustee or partner, on terms more favorable to such Person than would have been obtainable on an arm’s-length basis in the ordinary course of business.

     10.12. Certain Intercompany Matters. The Borrower will not permit any of its Excluded Subsidiaries to (a) fail to satisfy customary formalities with respect to organization separateness, including (i) the maintenance of separate books and records and (ii) the maintenance of separate bank accounts in its own name, (b) fail to act solely in its own name and through its authorized officers and agents, (c) commingle any money or other assets of any Excluded Subsidiary with any money or other assets of the Borrower or any other Subsidiary of the Borrower, or (d) take any action, or conduct its affairs in a manner, which could reasonably be expected to result in the separate organizational existence of the Excluded Subsidiaries being ignored under any circumstance.

     10.13. Activities of the Parent. The Parent shall not engage in any trade or business, own any assets, conduct any activity which is inconsistent with activities which are normal and customary for a publicly held holding company or directly or indirectly, beneficially or otherwise, hold or own (whether pursuant to an Asset Swap or otherwise) any Capital Stock or other securities of any Person, issue or incur any Indebtedness or effect any Equity Issuances, except that the Parent may (a) hold and own the Capital Stock of the Borrower and, indirectly, any other Person that is either a Subsidiary of the Borrower or an Excluded Subsidiary which is a subsidiary of the Borrower, (b) make Investments permitted under §10.3 hereof which are held by the Borrower or any of its Subsidiaries, (c) incur Indebtedness in respect of the Obligations and the Indebtedness evidenced by the Senior Discount Notes, (d) incur Indebtedness on or after the Funding Date, provided that (i) the material terms of such Indebtedness shall be substantially

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similar or less restrictive than the terms of the Senior Discount Notes and the maturity date of such new Indebtedness shall be at least six (6) months after the later of (x) the Tranche B Maturity Date and (y) the maturity date of any new Tranches established prior to the issuance of such new Indebtedness pursuant to §15.1, in each case as reasonably determined by the Administrative Agent (it being understood that such new Indebtedness shall not be deemed more restrictive than the Senior Discount Notes solely because it might bear interest at a higher rate than the rate applicable to the Senior Discount Notes), and (ii) contemporaneously with the receipt by the Parent of cash proceeds from the issuance of any such new Indebtedness, the Parent shall either (I) apply the net cash proceeds received by the Parent from such issuance (net of costs and expenses incurred in connection with such issuance and net of any amounts applied to refinance the Senior Discount Notes) in accordance with §4.4, or (II) make an equity contribution to the Borrower in an amount equal to such net cash proceeds, the amount of such equity contribution to be applied by the Borrower in accordance with §4.3, and (e) issue any Capital Stock or other Equity-Like Instrument if issued in accordance with §10.14(ii).

     10.14. Restrictions on Equity Issuances. None of the Parent, the Borrower or any Subsidiary shall effect any Equity Issuance on or after the Funding Date, except that (a) the Borrower may issue common stock to its employees in connection with any bona fide employee stock option, stock purchase or similar plan of the Borrower, and (b) the Parent may (i) issue Common Stock to employees of the Borrower or any Subsidiary in connection with any bona fide employee stock option, stock purchase or similar plan of the Parent, (ii) issue Capital Stock and/or Equity-Like Instruments solely for the purpose of redeeming all or any portion of its preferred stock outstanding on the Funding Date, provided that the terms of any new Capital Stock or Equity-Like Instrument so issued shall not be materially less favorable or more restrictive than the terms of the preferred stock being redeemed, and (iii) issue additional Capital Stock for any purpose not inconsistent with activities which are normal and customary for a publicly-held holding company, provided that contemporaneously with the receipt by the Parent of Net Cash Equity Issuance Proceeds from the issuance of such additional Capital Stock, the Parent shall make an equity contribution to the Borrower in an amount equal to the Net Cash Equity Issuance Proceeds and the amount of such equity contribution shall be applied by the Borrower in accordance with §4.3.

11. FINANCIAL COVENANTS.

     The Borrower covenants and agrees that, so long as any Loan, Unpaid Reimbursement Obligation, Letter of Credit or Note is outstanding or any Lender has any obligation to make any Loans or the Administrative Agent has any obligation to issue, extend or renew any Letters of Credit, the Borrower will comply with the following financial covenants as set forth below and which shall be calculated on a Pro Forma Basis with respect to any Permitted Acquisitions which occurred during the relevant Reference Period:

     11.1. Total Leverage Ratio. The Borrower will not permit the Total Leverage Ratio as of the last day of each fiscal quarter of the Borrower ending during any period described in the table set forth below to exceed the ratio set forth opposite such period in such table:

Period (inclusive of dates)	Ratio
Funding Date - 11/29/04	7.50:1.00
11/30/04 - 2/27/06	7.25:1.00
2/28/06 - 2/27/07	7.00:1.00
2/28/07 - 2/28/08	6.50:1.00
2/29/08 - 2/27/09	6.25:1.00
2/28/09 - 2/27/10	6.00:1.00
2/28/10 - 2/27/11	5.75:1.00
Thereafter	5.50:1.00

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     11.2. Senior Leverage Ratio. The Borrower will not permit the Senior Leverage Ratio as of the last day of each fiscal quarter of the Borrower ending during any period described in the table set forth below to exceed the ratio set forth opposite such period in such table:

Period (inclusive of dates)	Ratio
Funding Date - 11/29/04	5.50:1.00
11/30/04 - 2/27/06	5.25:1.00
2/28/06 - 2/27/07	5.00:1.00
2/28/07 - 2/28/08	4.50:1.00
2/29/08 - 2/27/09	4.25:1.00
2/28/09 - 2/27/10	4.00:1.00
2/28/10 - 2/27/11	3.75:1.00
Thereafter	3.50:1.00

     11.3. Interest Coverage Ratio. The Borrower will not permit the Interest Coverage Ratio as of the last day of each fiscal quarter of the Borrower ending during any period described in the table set forth below to be less than the ratio set forth opposite such period in such table:

Period (inclusive of dates)	Ratio
Funding Date - 2/27/07	2.25:1.00
2/28/07 - 2/27/10	2.50:1.00
Thereafter	2.75:1.00

     11.4. Fixed Charge Coverage Ratio. The Borrower will not permit the Fixed Charge Coverage Ratio as of the last day of each fiscal quarter of the Borrower ending during any period described in the table set forth below to be less than the ratio set forth opposite such period in such table:

Period (inclusive of dates)	Ratio
Funding Date - 2/27/07	1.25:1.00
2/28/07 - 2/27/09	1.35:1.00
Thereafter	1.50:1.00

12. CLOSING CONDITIONS.

     The obligations of the Lenders to make the initial Revolving Credit Loans and the Tranche B Term Loan and of the Administrative Agent to issue any initial Letters of Credit shall be subject to the satisfaction as of the date on which such initial Loans and any such initial Letters of Credit are to be advanced of the following conditions precedent:

     12.1. Loan Documents. Each of the Loan Documents shall have been duly executed and delivered by the respective parties thereto, shall be in full force and effect and shall be in form and substance satisfactory to each of the Lenders.

     12.2. Certified Copies of Governing Documents. The Administrative Agent shall have received from the Parent, the Borrower and each of the Subsidiaries a copy, certified by a duly authorized officer of such Person to be true and complete on the Funding Date, of each of its Governing Documents as in effect on such date of certification.

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     12.3. Corporate or Other Action. All corporate (or other) action necessary for the valid execution, delivery and performance by the Parent, the Borrower and each of the Subsidiaries of this Credit Agreement and the other Loan Documents to which it is or is to become a party shall have been duly and effectively taken, and evidence thereof satisfactory to the Lenders shall have been provided to each of the Lenders.

     12.4. Officer’s Certificates.

      (a) The Administrative Agent shall have received from the Parent, the Borrower and each of the Subsidiaries an incumbency certificate, dated as of the Funding Date, signed by a duly authorized officer of such Person, and giving the name and bearing a specimen signature of each individual who shall be authorized: (i) to sign, in the name and on behalf of each of such Person, each of the Loan Documents to which such Person is or is to become a party; (ii) in the case of the Borrower, to make Loan Requests and Conversion Requests and to apply for Letters of Credit; and (iii) to give notices and to take other action on its behalf under the Loan Documents.

      (b) The Administrative Agent shall have received from each of the Parent and the Borrower a certificate, dated as of the Funding Date, certifying that (i) each of the representations and warranties made by such Person under this Credit Agreement and the other Loan Documents are true and correct on the Funding Date as though made on such date, and (ii) each of the conditions set forth in this §12 have been satisfied.

     12.5. Validity of Liens. The Security Documents shall be effective to create in favor of the Administrative Agent, for the benefit of the Lenders and the Administrative Agent, a legal, valid and enforceable first priority (except for Permitted Liens entitled to priority under applicable law) security interest in and Lien upon the Collateral. All filings, recordings, deliveries of instruments and other actions necessary or desirable in the opinion of the Administrative Agent to protect and preserve such security interests shall have been duly effected or provided for. The Administrative Agent shall have received evidence thereof in form and substance satisfactory to the Administrative Agent.

     12.6. Perfection Certificates, UCC Search Results and Survey.

      (a) The Administrative Agent shall have received from each of the Parent, the Borrower and the Subsidiaries a completed and fully executed Perfection Certificate and shall have received the results of UCC searches with respect to the Collateral, indicating no Liens other than Permitted Liens and otherwise in form and substance satisfactory to the Administrative Agent.

      (b) The Administrative Agent shall have received the most recent survey of each Mortgaged Property, properly signed, sealed and certified, coupled with an owner’s affidavit and indemnity acceptable to the title company certifying no change to such property from the date of the survey through the Funding Date (so as to allow title company to delete the survey exception) together with such related documents as the Administrative Agent may reasonably request.

     12.7. Title Insurance. The Administrative Agent shall have received a Title Policy covering each Mortgaged Property (or commitments to issue such policies, with all conditions to issuance of the Title Policy deleted by an authorized agent of the Title Insurance Company) together with proof of payment of all fees and premiums for such policies, from the Title Insurance Company and in amounts reasonably satisfactory to the Administrative Agent, insuring the interest of the Administrative Agent and each of the Lenders as mortgagee under the Mortgages.

     12.8. Financial Statements. The Administrative Agent shall have received copies of the consolidated financial statements of the Parent and its subsidiaries as at February 29, 2004, prepared in

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accordance with GAAP and SEC requirements, together with a certification by the principal financial or accounting officer of the Borrower that the information contained in such financial statements fairly represents the financial position of the Parent and its subsidiaries on the date thereof.

     12.9. FCC Licenses; Third Party Consents.

      (a) The Borrower shall have furnished to the Administrative Agent certified copies of all FCC Licenses necessary for the operation of the business of each of the Borrower and its Subsidiaries, or necessary for the operation of any Station owned by the Borrower or any of the Subsidiaries.

      (b) The Borrower shall have furnished to the Administrative Agent certified copies of all agreements pursuant to which the Operating Subsidiaries shall have acquired the rights to use the FCC Licenses held by the License Subsidiaries.

      (c) All other necessary governmental and third party consents to and notices of the transactions contemplated by the Loan Documents shall have been obtained and given, and evidence thereof satisfactory to the Administrative Agent shall have been provided to the Administrative Agent.

      (d) The Borrower shall have furnished to the Administrative Agent evidence reasonably satisfactory to the Administrative Agent of the Borrower’s compliance with Regulation U of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 221.

     12.10. Certificates of Insurance. The Administrative Agent shall have received a certificate of insurance from an independent insurance broker dated as of the Funding Date, identifying insurers, types of insurance, insurance limits, and policy terms, and otherwise describing the insurance obtained in accordance with the provisions of the Security Agreement and naming the Administrative Agent as additional insured and, on all casualty insurance, loss payee.

     12.11. Opinions of Counsel. Each of the Lenders and the Administrative Agent shall have received a favorable legal opinion addressed to the Lenders and the Administrative Agent, dated as of the Funding Date, in form and substance satisfactory to the Lenders and the Administrative Agent, from:

      (a) Paul, Weiss, Rifkind, Wharton & Garrison LLP, counsel to the Borrower and its Subsidiaries;

      (b) counsel to the Borrower and its Subsidiaries in Indiana and California as applicable;

      (c) FCC counsel to the Borrower and its Subsidiaries; and

      (d) counsel to the Borrower and its Subsidiaries in Hawaii regarding Real Estate matters related to the Mortgaged Properties located in the State of Hawaii.

     12.12. Compliance Certificate. The Administrative Agent shall have received from the Borrower a Compliance Certificate demonstrating compliance with the covenants set forth in §11 as of the Funding Date (provided that, for purposes of this §12.12, the Borrower shall use Consolidated Operating Cash Flow for the Reference Period ended February 29, 2004), together with a certificate from the principal financial or accounting officer of the Borrower certifying that no Default or Event of Default has occurred and is continuing as of the Funding Date.

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     12.13. Senior Debt Certificate. The Administrative Agent shall have received from the Borrower a certificate from the principal financial or accounting officer of the Borrower or the Parent, as applicable, certifying that the Obligations of the Borrower and its Subsidiaries arising under this Credit Agreement and the other Loan Documents constitute “Senior Debt” under and as defined in the Subordinated Note Indenture, and the incurrence of such Obligations is permitted under the Senior Discount Note Indenture and under §4.09 of the Subordinated Note Indenture and will not cause a “Default” or “Event of Default” under and as defined in the Senior Discount Note Indenture and the Subordinated Note Indenture, including equivalent certifications of the principal financial or accounting officer of the Borrower with respect to the Refinancing Notes.

     12.14. Financial Condition. The Administrative Agent shall be reasonably satisfied and shall have received an officer’s certificate certifying that there has been no event or occurrence which has had a Material Adverse Effect since the Balance Sheet Date.

     12.15. Payment of Fees; Administrative Agent Fee Letter. The Borrower shall have paid to the Lenders or the Administrative Agent, as appropriate, the Fees pursuant to §§6.1 and 6.2 and all fees and expenses of the Administrative Agent’s Special Counsel and the expenses of the Administrative Agent; the Administrative Agent Fee Letter shall have been duly executed and delivered by the respective parties thereto, shall be in full force and effect and shall be in form and substance satisfactory to the Administrative Agent and the Administrative Agent shall have received a fully executed copy of such document.

     12.16. Disbursement Instructions. The Administrative Agent shall have received Loan Requests and disbursement instructions from the Borrower with respect to the proceeds of the Loans to be made on the Funding Date.

     12.17. Sources and Uses of Cash. The Administrative Agent shall have received a statement of the sources and uses of proceeds of the Loans advanced hereunder as of the date hereof.

     12.18. Accountant’s Letter. The Administrative Agent shall have received a copy of the letter to the Borrower’s accountants pursuant to §9.9.3.

     12.19. Payoff and Termination of Existing Credit Agreement; Refinancing of Loans. The Administrative Agent shall have received a copy of the payoff and termination letter duly executed by the Borrower and the other parties thereto and in form and substance satisfactory to the Administrative Agent, indicating the amount of the loan obligations of the Borrower under the Existing Credit Agreement to be discharged on the Funding Date and all outstanding loans or other obligations (other than with respect to certain letters of credit to be cash collateralized) under the Existing Credit Agreement shall have been paid in full and all commitments thereunder shall have been terminated on the Funding Date and all interest accrued under such loans paid in full as of the Funding Date.

     12.20. Minimum Acceptances. The Borrower shall have accepted the consents and letters of transmittal of not less than ninety-five (95%) of the record holders of (a) Subordinated Notes and (b) Senior Discount Notes, in each case, in accordance with the Offer to Purchase and Consent Solicitation Statement of the Parent and the Borrower dated April 14, 2004.

13. CONDITIONS TO ALL BORROWINGS.

     The obligations of the Lenders to make any Loan, and of the Administrative Agent to issue, extend or renew any Letter of Credit, in each case whether on or after the Funding Date, shall also be subject to the satisfaction of the following conditions precedent:

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     13.1. Representations True; No Event of Default. Each of the representations and warranties of the Parent, the Borrower and the Subsidiaries contained in this Credit Agreement, the other Loan Documents or in any document or instrument delivered pursuant to or in connection with this Credit Agreement shall be true in all material respects as of the date as of which they were made and shall also be true in all material respects at and as of the time of the making of such Loan or the issuance, extension or renewal of such Letter of Credit, with the same effect as if made at and as of that time (except to the extent of changes resulting from transactions contemplated or permitted by this Credit Agreement and the other Loan Documents and changes occurring in the ordinary course of business that singly or in the aggregate are not materially adverse, and to the extent that such representations and warranties relate expressly to an earlier date) and no Default or Event of Default shall have occurred and be continuing or, in the case of any Letter of Credit to be issued with a face amount in excess of $25,000,000, would have occurred as of the last day of the last Reference Period if such Letter of Credit had been included in Consolidated Total Funded Debt on such date.

     13.2. No Legal Impediment. No change shall have occurred in any law or regulations thereunder or interpretations thereof that in the reasonable opinion of any Lender would make it illegal for such Lender to make such Loan or to participate in the issuance, extension or renewal of such Letter of Credit or in the reasonable opinion of the Administrative Agent would make it illegal for the Administrative Agent to issue, extend or renew such Letter of Credit.

     13.3. Proceedings and Documents. All proceedings in connection with the transactions contemplated by this Credit Agreement, the other Loan Documents and all other documents incident thereto shall be satisfactory in substance and in form to the Lenders and to the Administrative Agent and the Administrative Agent’s Special Counsel, and the Lenders, the Administrative Agent and such counsel shall have received all information and such counterpart originals or certified or other copies of such documents as the Administrative Agent may reasonably request.

14. EVENTS OF DEFAULT; ACCELERATION; ETC.

     14.1. Events of Default and Acceleration. If any of the following events (“Events of Default” or, if the giving of notice or the lapse of time or both is required, then, prior to such notice or lapse of time, “Defaults”) shall occur:

      (a) the Borrower shall fail to pay any principal of the Loans or any Reimbursement Obligation when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment;

      (b) the Borrower or any of its Subsidiaries shall fail to pay any interest on the Loans, any Fees, or other sums due hereunder or under any of the other Loan Documents, within three (3) Business Days of when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment;

      (c) the Parent or the Borrower, as applicable, shall fail to comply with any of its covenants contained in §9.2, §9.4, §9.5 (other than §9.5.5), §9.6(iii) through (vi), §9.9, §9.12, §9.15, §9.16, §10 or §11 after the expiration of any applicable period;

      (d) the Borrower or any of its Subsidiaries shall fail to perform any term, covenant or agreement contained herein or in any of the other Loan Documents (other than those specified elsewhere in this §14.1) for thirty (30) days after written notice of such failure has been given to the Borrower by the Administrative Agent;

      (e) any representation or warranty of the Parent, the Borrower or any of the Subsidiaries in this Credit Agreement or any of the other Loan Documents or in any Subordinated

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Note Document, Refinancing Note Document, or in any other document or instrument delivered pursuant to or in connection with this Credit Agreement shall prove to have been false in any material respect upon the date when made or deemed to have been made or repeated;

      (f) the Borrower or any of its Subsidiaries shall fail to pay at maturity, or within any applicable period of grace, any obligation for borrowed money or credit received or in respect of any Capitalized Leases in each case in an amount greater than $5,000,000, or fail to observe or perform any material term, covenant or agreement contained in any agreement by which it is bound, evidencing or securing borrowed money or credit received or in respect of any Capitalized Leases in each case in an amount greater than $5,000,000 for such period of time as would permit (assuming the giving of appropriate notice if required) the holder or holders thereof or of any obligations issued thereunder to accelerate the maturity thereof, or any such holder or holders shall rescind or shall have a right to rescind the purchase of any such obligations;

      (g) the Parent, the Borrower or any of their respective Subsidiaries shall make an assignment for the benefit of creditors, or admit in writing its inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver of the Parent, the Borrower or any of their respective Subsidiaries or of any substantial part of the assets of such Person or shall commence any case or other proceeding relating to such Person under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or shall take any action to authorize or in furtherance of any of the foregoing, or if any such petition or application shall be filed or any such case or other proceeding shall be commenced against the Parent, the Borrower or any of their respective Subsidiaries and such Person shall indicate its approval thereof, consent thereto or acquiescence therein or such petition or application shall not have been dismissed within sixty (60) days following the filing thereof;

      (h) a decree or order is entered appointing any such trustee, custodian, liquidator or receiver or adjudicating the Parent, the Borrower or any of their respective Subsidiaries bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief is entered in respect of any such Person in an involuntary case under federal bankruptcy laws as now or hereafter constituted;

      (i) there shall remain in force, undischarged, unsatisfied and unstayed, for more than thirty (30) days, whether or not consecutive, any final judgment against the Parent, the Borrower or any of their respective Subsidiaries that, with other outstanding final judgments, undischarged, against the Parent or any of its Subsidiaries exceeds in the aggregate $5,000,000;

      (j) any default shall occur with respect to all or any part of the Subordinated Debt or the holders of all or any part of the Subordinated Debt shall accelerate the maturity of all or any part of the Subordinated Debt; the Subordinated Debt shall be prepaid, redeemed or repurchased in whole or in part (other than pursuant to §10.4(c)) or an offer to prepay, redeem or repurchase the Subordinated Debt in whole or in part shall have been made (other than pursuant to §10.4(c)) or the subordination provisions of such Subordinated Debt are found by any court, or asserted by the trustee in respect of, or any holder of, Subordinated Debt in a judicial proceeding to be, invalid or unenforceable;

      (k) any of the Loan Documents shall be cancelled, terminated, revoked or rescinded or the Administrative Agent’s security interests, mortgages or liens in a material portion of the Collateral shall cease to be perfected, or shall cease to have the priority contemplated by the Security Documents otherwise than in accordance with the terms thereof with respect to the release of any Collateral or in each case with the express prior written agreement, consent or

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approval of the Lenders, or any action or suit at law or in equity or other legal proceeding to cancel, revoke or rescind any of the Loan Documents shall be commenced by or on behalf of the Parent, the Borrower or any of the Subsidiaries party thereto or any of their respective stockholders, or any court or any other governmental or regulatory authority or agency of competent jurisdiction shall make a determination that, or issue a judgment, order, decree or ruling to the effect that, any one or more of the Loan Documents is illegal, invalid or unenforceable in accordance with the terms thereof;

      (l) the Borrower 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 exceeding $5,000,000, or the Borrower or any ERISA Affiliate is assessed withdrawal liability pursuant to Title IV of ERISA by a Multiemployer Plan requiring aggregate annual payments exceeding $5,000,000, or any of the following occurs with respect to a Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to make a required installment or other payment (within the meaning of §302(f)(1) of ERISA), provided that the Administrative Agent determines in its reasonable discretion that such event (A) could be expected to result in liability of the Borrower or any of its Subsidiaries to the PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding $5,000,000 and (B) is reasonably likely to constitute grounds for the termination of such Guaranteed Pension Plan by the PBGC, for the appointment by the appropriate United States District Court of a trustee to administer such Guaranteed Pension Plan or for the imposition of a lien in favor of such Guaranteed Pension Plan; or (ii) the appointment by a United States District Court of a trustee to administer such Guaranteed Pension Plan; or (iii) the institution by the PBGC of proceedings to terminate such Guaranteed Pension Plan;

      (m) the Borrower or any of its Subsidiaries shall be enjoined, restrained or in any way prevented by the order of any Governmental Authority from conducting any material part of its business and such order shall continue in effect for more than thirty (30) days, provided that with respect to any such order relating to the renewal or availability of any Necessary Authorization, if the issuance of such order would not otherwise constitute an Event of Default under §14.1(t), it shall not cause an Event of Default solely by virtue of meeting the criteria of this clause (m);

      (n) there shall occur any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty, which in any such case causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of the Borrower or any of its Subsidiaries if such event or circumstance is not covered by business interruption insurance and would have a Material Adverse Effect;

      (o) there shall occur the loss, suspension or revocation of, or failure to renew, any license or permit now held or hereafter acquired by the Borrower or any of its Subsidiaries if such loss, suspension, revocation or failure to renew would have a Material Adverse Effect;

      (p) a Change of Control shall occur;

      (q) any default or event of default shall occur under any documents entered into in connection with any Permitted Acquisition, which such default or event of default could reasonably be expected to have a Material Adverse Effect;

      (r) at any time, (i) any of the Subsidiaries or Excluded Subsidiaries shall provide a guaranty of the Parent’s obligations under the Senior Discount Notes, or (ii) any of the Subsidiaries shall provide a guaranty of the Borrower’s obligations under the Subordinated Notes or the Refinancing Notes, as applicable, or any other Subordinated Debt if such Subsidiary is not

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at such time guarantying the Obligations pursuant to the Guaranty or if such guaranty of the Borrower’s obligations under the Subordinated Notes, the Refinancing Notes or such other Subordinated Debt, as applicable, is not subordinated to such Subsidiary’s Obligations under the Guaranty;

      (s) the commencement of proceedings to suspend, revoke, terminate or substantially and adversely modify any material FCC License or other material license of the Borrower, any of its Subsidiaries or of any Stations thereof if such proceeding shall continue uncontested for forty-five (45) days;

      (t) appropriate proceedings for the renewal of any material Necessary Authorization shall not be commenced prior to the expiration thereof or if such Necessary Authorization is not renewed or otherwise made available for the use of the Borrower or any of its Subsidiaries; provided that no Event of Default shall be deemed to occur under this clause (t) if (A) no Material Adverse Effect shall have occurred as a result of such event and (B) the Borrower shall have demonstrated compliance with §11 on a Pro Forma Basis (both before and after giving effect to such event) as though the affected Station had been sold in an Asset Sale as of the first day of the Reference Period most recently ended and the Borrower or the applicable Subsidiary received no consideration for such sale;

      (u) any contractual obligation which is necessary to the broadcasting operations of the Borrower and its Subsidiaries shall be revoked or terminated and not replaced by a substitute, without a Material Adverse Effect, within ninety (90) days after such revocation or termination;

      (v) any order of the FCC relating to any Permitted Acquisition granting or consenting to a transfer of an FCC License in connection with any Permitted Acquisition which has been completed shall not have become final and any Governmental Authority shall have entered an order reversing such order (whether or not such order shall be subject to further appeal);

      (w) any “Default” or “Event of Default” under the Senior Discount Notes shall have occurred;

      (x) the Parent shall fail to make any equity contribution to the Borrower in the amount or at the time required pursuant to §10.13 or §10.14;

      (y) (i) the Austin Partnership shall incur any Indebtedness in an aggregate amount at any one time outstanding in excess of $20,000,000 or (ii) the partnership agreement or any other governing documents relating to the Austin Partnership shall permit, after giving effect to any amendment, modification or waiver of the terms thereof, or there shall occur, any cash or other distribution (including any redemption, purchase, retirement or other acquisition of any partnership interests or return of capital attributable to any partnership interests) by the Austin Partnership to all or any of its partners which is not made simultaneously to all of its partners on a pro rata basis, in terms of both value and kind, in accordance with such partners’ proportional equity interests in the Austin Partnership; provided that it shall not be an Event of Default hereunder if the Borrower or any of its Subsidiaries receives any distribution in excess of their pro rata share as so determined or if the Borrower or any of its Subsidiaries receives any repayment of Indebtedness advanced by the Borrower or any of its Subsidiaries to the Austin Partnership;

then, and in any such event, so long as the same may be continuing, the Administrative Agent may, and upon the request of the Required Lenders shall, by notice in writing to the Borrower declare all amounts owing with respect to this Credit Agreement, the Notes and the other Loan Documents and all Reimbursement Obligations to be, and they shall thereupon forthwith become, immediately due and

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payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; provided that in the event of any Event of Default specified in §14.1(g) or §14.1(h), all such amounts shall become immediately due and payable automatically and without any requirement of notice from the Administrative Agent or any Lender. In addition, the Administrative Agent may direct the Borrower by notice in writing to pay (and the Borrower hereby agrees upon notice to pay) to the Administrative Agent such additional amounts of cash, to be held as security for all Reimbursement Obligations, equal to the Maximum Drawing Amount of Letters of Credit then outstanding.

     14.2. Termination of Commitments. If any one or more of the Events of Default specified in §14.1(g) or §14.1(h) shall occur, any unused portion of the credit hereunder shall forthwith terminate and each of the Lenders shall be relieved of all further obligations to make Loans to the Borrower and the Administrative Agent shall be relieved of all further obligations to issue, extend or renew Letters of Credit. If any other Event of Default shall have occurred and be continuing the Administrative Agent may and, upon the request of the Required Lenders, shall, by notice to the Borrower, terminate the unused portion of the credit hereunder, and upon such notice being given such unused portion of the credit hereunder shall terminate immediately and each of the Lenders shall be relieved of all further obligations to make Loans and the Administrative Agent shall be relieved of all further obligations to issue, extend or renew Letters of Credit. No termination of the credit hereunder shall relieve the Borrower or any of its Subsidiaries of any of the Obligations.

     14.3. Remedies. Subject to §18.1, in case any one or more of the Events of Default shall have occurred and be continuing, and whether or not the Lenders shall have accelerated the maturity of the Loans pursuant to §14.1, each Lender, if owed any amount with respect to the Loans or the Reimbursement Obligations, may, with the consent of the Required Lenders but not otherwise, proceed to protect and enforce its rights by suit in equity, action at law or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Credit Agreement and the other Loan Documents or any instrument pursuant to which the Obligations to such Lender are evidenced, including as permitted by applicable law the obtaining of the ex parte appointment of a receiver, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of such Lender. No remedy herein conferred upon any Lender or the Administrative Agent or the holder of any Note or purchaser of any Letter of Credit Participation is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of law.

     14.4. Distribution of Collateral Proceeds. In the event that, following the occurrence or during the continuance of any Default or Event of Default, the Administrative Agent or any Lender, as the case may be, receives any monies in connection with the enforcement of any of the Security Documents, or otherwise with respect to the realization upon any of the Collateral, such monies shall be distributed for application as follows:

      (a) First, to the payment of, or (as the case may be) the reimbursement of the Administrative Agent for or in respect of all reasonable costs, expenses, disbursements and losses which shall have been incurred or sustained by the Administrative Agent in connection with the collection of such monies by the Administrative Agent, for the exercise, protection or enforcement by the Administrative Agent of all or any of the rights, remedies, powers and privileges of the Administrative Agent under this Credit Agreement or any of the other Loan Documents or in respect of the Collateral or in support of any provision of adequate indemnity to the Administrative Agent against any taxes or liens which by law shall have, or may have, priority over the rights of the Administrative Agent to such monies;

      (b) Second, to all other Obligations in such order or preference as the Required Lenders may determine; provided, however, that (i) distributions shall be made (A) pari passu

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among Obligations with respect to the Administrative Agent’s Fee and all other Obligations and (B) with respect to each type of Obligation owing to the Lenders, such as interest, principal, fees and expenses, among the Lenders pro rata across all Tranches and (ii) the Administrative Agent may in its discretion make proper allowance to take into account any Obligations not then due and payable;

      (c) Third, upon payment and satisfaction in full or other provisions for payment in full satisfactory to the Lenders and the Administrative Agent of all of the Obligations, to the payment of any obligations required to be paid pursuant to §9-615 of the UCC of the State of New York; and

      (d) Fourth, the excess, if any, shall be returned to the Borrower or to such other Persons as are entitled thereto.

15. ADDITIONAL FINANCING.

     15.1. Commitment Amount. At any time, and from time to time, the Borrower may solicit the Lenders and any other lending institution to provide the Borrower with additional commitments to make Loans under this Credit Agreement in an aggregate amount not to exceed six hundred and seventy five million dollars ($675,000,000) subject to the limitations set forth below. Neither the Administrative Agent nor any Lender shall have any obligation to provide the Borrower with all or any part of such additional commitment; provided that by execution of this Credit Agreement, the Administrative Agent and the Lenders shall be deemed to have consented, without the need for further or subsequent consent, (a) to such additional commitments which any other Lender or lending institution may agree to provide for the Loans which may be advanced in respect thereof and any resulting changes in any Commitment Percentage of any Tranche, and (b) any amendments which may be made to the Loan Documents in order to evidence and document such commitments and Loans to the extent that any such amendment (i) does not amend any of the provisions specified in §18.12(a) as requiring the consent of each Lender affected thereby, (ii) does not modify the relative priority of the Loans (including any such new Loans) and commitments (including any such new commitments) with respect to the payment, guarantees, collateral or other collateral support, and (iii) is consistent with all other requirements of this §15. The Borrower may elect to allocate all or any portion of such additional commitment among the existing Tranches or may allocate all or a portion of such additional commitment to one or more new Tranches; provided that (x) the Total Revolving Credit Commitment may not be increased by more than three hundred and fifty million dollars ($350,000,000) as a result of such allocations, (y) any additional Revolving Credit Loans and Revolving Credit Commitments shall mature or terminate, as the case may be, on or after the Revolving Credit Loan Maturity Date and (z) any amounts not allocated to increase the Total Revolving Credit Commitment shall be advanced in the form of term loans under a bank term tranche or fund term tranche and any such additional term loans shall either (A) with respect to any additional term loans structured as a bank term tranche, amortize on the same or slower schedule as the Tranche B Term Loan as in effect at such time until the Tranche B Maturity Date and shall have a final maturity date on or after the Tranche B Maturity Date, and (B) with respect to any additional term loans structured as a fund term tranche, amortize either on the same schedule as the Tranche B Term Loan or have a weighted average term to maturity which is longer than the Tranche B Term Loan. Moreover, if the interest rate in respect of any additional Revolving Credit Loans, or the commitment fees payable in respect of any additional Revolving Credit Commitments, made available pursuant to this §15 exceeds the interest rate or the Commitment Fee payable in respect of the Revolving Credit Loans and the Revolving Credit Commitments as provided in §2.5 and §2.2, respectively, then the interest rate calculated in accordance with §2.5 or such Commitment Fee (as applicable) shall automatically be increased to the interest rate or the commitment fee, as the case may be, payable in respect of the additional Revolving Credit Loans and Revolving Credit Commitments made available pursuant to this §15 without the requirement of any further action or consent on the part of the Administrative Agent, any Lender or the Borrower. In addition, if the interest rate payable in respect of any additional term loans made available pursuant to this §15 at any time exceeds the interest rate payable in respect of the Tranche B Term Loan as provided in §3.5 plus 0.25%, then the interest rate payable in respect of the Tranche B Term

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Loan shall automatically be increased to a rate that is at all times equal to the rate payable with respect to such additional term loans less 0.25% without the requirement of any further action or consent on the part of the Administrative Agent, any Lender or the Borrower. Notwithstanding anything to the contrary set forth herein, no additional commitments shall be permitted hereunder and no additional loans may be advanced in respect thereof unless (1) no Default or Event of Default shall have occurred and be then continuing or would result after giving effect to such additional commitments and the loans to be advanced in respect thereof, assuming that such loans were fully advanced on the effective date of such additional commitments, (2) the Borrower shall have delivered to the Administrative Agent a Compliance Certificate demonstrating compliance with the terms of the Credit Agreement after giving pro forma effect to such loans to be advanced in respect of the additional commitment and the application of the proceeds thereof, such compliance to be calculated based on the Borrower’s Consolidated Operating Cash Flow reported in connection with the preparation of the Borrower’s Compliance Certificate most recently delivered to the Administrative Agent, (3) with respect to each lending institution not yet a party hereto providing additional commitments, such lending institution shall have become a party to this Credit Agreement (and become subject to all the rights and obligations of a Lender hereunder) by executing the delivering to the Administrative Agent an original, executed Instrument of Accession in the form of Exhibit G hereto (an “Instrument of Accession”), (4) the Borrower shall have delivered to the Administrative Agent and the Lenders notice that such solicitation has been made and, prior to the effectiveness of such additional commitment, copies of all documents and instruments related thereto, (5) the Borrower shall have delivered to the Administrative Agent copies of updated financial projections through the final maturity date of any additional commitments provided hereunder and (6) the additional commitments and additional loans pursuant to this §15.1 (A) are permitted indebtedness under the Subordinated Note Documents or the Refinancing Note Documents, as applicable, (B) constitute for purposes of the Subordinated Note Indenture or the Refinancing Note Indenture, as applicable, “Senior Debt” to the same degree as the Obligations in existence prior to the making of such additional loans or such additional commitments, and (C) any Revolving Credit Loans made hereunder shall constitute permitted indebtedness under each of the Subordinated Note Indenture, the Senior Discount Note Indenture and the Refinancing Note Indenture, as applicable, without requiring the Borrower to demonstrate compliance with any leverage ratio incurrence covenants contained in the Subordinated Note Indenture, the Senior Discount Note Indenture and the Refinancing Note Indenture, as applicable. Neither the Administrative Agent nor any Lender shall have any obligation to provide the Borrower with any such additional commitments.

     15.2. Evidence of Debt. The Loans made pursuant to this §15 shall be evidenced by one or more accounts or records maintained by the applicable Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each such Lender shall be conclusive absent manifest error of the amount of the Loans made pursuant to this §15 by the applicable Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any applicable Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. In addition to such accounts or records, upon request of any applicable Lender, the Borrower shall execute and deliver to such Lender , in the case of any new Tranche, a new Note for such Tranche and, in the case of an increase to an existing Tranche, an amended Note as applicable for the corresponding Tranche in the form of the appropriate Note then held by such Lender (the “Current Note”), in a principal amount equal to such Lender’s Commitment Percentage of the applicable Tranche as increased pursuant to this §15 or, if less, the outstanding amount of all Loans made by such Person in respect of such Tranche, plus interest accrued thereon at the applicable rate. Within five (5) days of the receipt of the amended Note, such Lender shall deliver to the Borrower the Current Note marked “substituted.”

16. THE ADMINISTRATIVE AGENT.

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     16.1. Appointment and Authority. Each Lender hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this §16 are solely for the benefit of the Administrative Agent and the Lenders and neither the Parent nor the Borrower shall have rights as a third party beneficiary of any such provisions.

     16.2. Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Parent, the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

     16.3. Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent:

      (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

      (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and

      (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Parent, the Borrower or the Subsidiaries or any of their respective Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

     The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in §18.2 and §14.3) or (ii) in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Parent, the Borrower or a Lender.

     The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Credit Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any

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Default, (iv) the validity, enforceability, effectiveness or genuineness of this Credit Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in §12 and §13 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

     16.4. Reliance by Administrative Agent.

      16.4.1. General. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Parent, the Borrower or its Subsidiaries), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

      16.4.2. Non-Reliance on Administrative Agent and Other Lenders. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Credit Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Credit Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

      16.4.3. Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this §16 shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

     16.5. Payments.

      16.5.1. Payments to Administrative Agent. A payment by the Parent or the Borrower to the Administrative Agent hereunder or any of the other Loan Documents for the account of any Lender shall constitute a payment to such Lender. The Administrative Agent agrees promptly to distribute to each Lender such Lender’s pro rata share of payments received by the Administrative Agent for the account of the Lenders except as otherwise expressly provided herein or in any of the other Loan Documents.

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      16.5.2. Distribution by Administrative Agent. If in the opinion of the Administrative Agent the distribution of any amount received by it in such capacity hereunder, under the Notes or under any of the other Loan Documents might involve it in liability, it may refrain from making such distribution until its right to make such distribution shall have been adjudicated by a court of competent jurisdiction. If a court of competent jurisdiction shall adjudge that any amount received and distributed by the Administrative Agent is to be repaid, each Person to whom any such distribution shall have been made shall either repay to the Administrative Agent its proportionate share of the amount so adjudged to be repaid or shall pay over the same in such manner and to such Persons as shall be determined by such court.

      16.5.3. Delinquent Lenders. Notwithstanding anything to the contrary contained in this Credit Agreement or any of the other Loan Documents, any Lender that fails (a) to make available to the Administrative Agent its pro rata share of any Loan or to purchase any Letter of Credit Participation or (b) to comply with the provisions of §16.1 with respect to making dispositions and arrangements with the other Lenders, where such Lender’s share of any payment received, whether by setoff or otherwise, is in excess of its pro rata share of such payments due and payable to all of the Lenders, in each case as, when and to the full extent required by the provisions of this Credit Agreement, shall be deemed delinquent (a “Delinquent Lender”) and shall be deemed a Delinquent Lender until such time as such delinquency is satisfied. The Administrative Agent may, in its discretion, apply any and all payments otherwise due to a Delinquent Lender from the Borrower, whether on account of outstanding Loans, Unpaid Reimbursement Obligations, interest, fees or otherwise, to the remaining nondelinquent Lenders for application to, and reduction of, their respective pro rata shares of all outstanding Loans and Unpaid Reimbursement Obligations. The Delinquent Lender hereby authorizes the Administrative Agent to distribute and apply such payments to the nondelinquent Lenders in proportion to their respective pro rata             shares of all outstanding Loans and Unpaid Reimbursement Obligations. A Delinquent Lender shall be deemed to have satisfied in full a delinquency when and if, as a result of application of the assigned payments to all outstanding Loans and Unpaid Reimbursement Obligations of the nondelinquent Lenders, the Lenders’ respective pro rata shares of all outstanding Loans and Unpaid Reimbursement Obligations have returned to those in effect immediately prior to such delinquency and without giving effect to the nonpayment causing such delinquency.

     16.6. Reimbursement by Lenders. To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under §18.2 or §18.3 to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s Total Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) in its capacity as such, or against any Related Party acting for the Administrative Agent (or any such sub-agent) in connection with such capacity. The obligations of the Lenders under this §16.6 are several and the failure or refusal of any Lender to reimburse the Administrative Agent for its portion of such unpaid amount shall not relieve any other Lender from its several obligation hereunder. The undertaking in this §16.6 shall survive termination of the Total Commitment, the payment of all other Obligations and the resignation of the Administrative Agent.

     16.7. Resignation of Administrative Agent. The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders, appoint a successor

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Administrative Agent meeting the qualifications set forth above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Administrative Agent and the term “Administrative Agent” shall mean such successor administrative agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents. The Borrower agrees to pay the fees of the successor Administrative Agent as may be agreed between the Borrower and such successor Administrative Agent. After any retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this §16 and §§18.2 and 18.3 shall continue in effect for the benefit of the retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

Any resignation by Bank of America as Administrative Agent pursuant to this §16 shall also constitute its resignation as issuer of Letters of Credit. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring issuer of Letters of Credit, (b) the retiring issuer of Letters of Credit shall be discharged from all of its respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor issuer of Letters of Credit shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangement satisfactory to the retiring issuer of Letters of Credit to effectively assume the obligations of the retiring issuer of Letters of Credit with respect to such Letters of Credit.

     16.8. Administrative Agent May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Parent, the Borrower or any Subsidiary, the Administrative Agent (irrespective of whether the principal of any Loan or Reimbursement Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower or any other Person primarily or secondarily liable) shall be entitled and empowered, by intervention in such proceeding or otherwise

      (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, Reimbursement Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under §5.6, §6 and §18.2) allowed in such judicial proceeding; and

      (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under §6 and §18.2.

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

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     16.9. No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the book managers, arrangers listed on the cover page hereof shall have any powers, duties or responsibilities under this Credit Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.

17. ASSIGNMENT AND PARTICIPATION.

     17.1. Successors and Assigns; Conditions to Assignment.

      (a) The provisions of this Credit Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of clause (b) of this §17.1, (ii) by way of participation in accordance with the provisions of §17.3, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of §17.5 (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Credit Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in §17.3 and, to the extent expressly contemplated hereby, an Indemnified Person) any legal or equitable right, remedy or claim under or by reason of this Credit Agreement.

      (b) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Credit Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this clause (b), participations in Reimbursement Obligations) at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) subject to each such assignment, determined as of the date the Assignment and Acceptance (as defined below) with respect to such assignment is delivered to the Administrative Agent or, if “Effective Date” is specified in the Assignment and Acceptance, as of the Effective Date, shall not be less than $2,000,000, in respect of assignments of Revolving Credit Commitments and/or Revolving Credit Loans and $1,000,000, in respect of assignments of Tranche B Loans or loans made in connection with any new Tranche structured as a term tranche pursuant to §15.1 unless, in each case, each of the Administrative Agent and the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Credit Agreement with respect to the Loans or the Commitment assigned; (iii) any assignment of a Commitment must be approved by the Administrative Agent unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance substantially in the form of Exhibit H hereto (an “Assignment and Acceptance”), together with a processing and recordation fee of $3,500 and the Eligible Assignee, if not a Lender, shall deliver to the Administrative Agent an administrative questionnaire in the form supplied by the Administrative Agent. Subject to acceptance and recording thereof by the Administrative Agent pursuant to §17.2, from and after the effective date specified in each Assignment and Acceptance, the Eligible Assignee thereunder shall be a party to this Credit Agreement and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Credit Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Credit Agreement (and, in the case of an Assignment and

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Acceptance covering all of the assigning Lender’s rights and obligations under this Credit Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of §§6.3, 6.7, 6.8, 6.10, 18.2 and 18.3 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, the Borrower (at its expense) shall execute and deliver a Note(s) to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Credit Agreement that does not comply with this clause (b) shall be treated for purposes of this Credit Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with §17.3.

     17.2. Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and Reimbursement Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Credit Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower at any reasonable time and from time to time upon reasonable prior notice. In addition, at any time that a request for a consent for a material or other substantive change to the Loan Documents is pending, any Lender wishing to consult with other Lenders in connection therewith may request and receive from the Administrative Agent a copy of the Register.

     17.3. Participations.

      (a) Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Credit Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s Letter of Credit Participations) owing to it); provided that (i) such Lender’s obligations under this Credit Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Credit Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Credit Agreement and to approve any amendment, modification or waiver of any provision of this Credit Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in clauses (a) and (b) of §18.12 that directly affects such Participant. Subject to clause (b) of this §17.3, the Borrower agrees that each Participant shall be entitled to the benefits of §§6.3, 6.7, 6.8 and 6.10 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to §17.1. To the extent permitted by law, each Participant also shall be entitled to the benefits of §18.1 as though it were a Lender, provided such Participant agrees to be subject to §18.1 as though it were a Lender.

      (b) A Participant shall not be entitled to receive any greater payment under §6.3 §6.7, or §6.8 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Non-U.S. Lender if it were a Lender shall not be entitled to the benefits of §6.3 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with §6.3.3 as though it were a Lender.

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     17.4. Assignee or Participant Affiliated with the Borrower. If any Eligible Assignee is an Affiliate of the Parent, the Borrower or any of the Subsidiaries, then any such assignee Lender shall have no right to (a) attend meetings of the Lenders or (b) vote as a Lender hereunder or under any of the other Loan Documents for purposes of granting consents or waivers or for purposes of agreeing to amendments or other modifications to any of the Loan Documents or for purposes of making requests to the Administrative Agent pursuant to §14.1 or §14.2, and the determination of the Required Lenders shall for all purposes of this Credit Agreement and the other Loan Documents be made without regard to such Eligible Assignee’s interest in any of the Loans or Reimbursement Obligations. If any Lender sells a participating interest in any of the Loans or Reimbursement Obligations to the Parent, the Borrower or an Affiliate of the Parent or the Borrower, then such transferor Lender shall promptly notify the Administrative Agent of the sale of such participation and such transferor Lender shall have no right to vote as a Lender hereunder or under any of the other Loan Documents for purposes of granting consents or waivers or for purposes of agreeing to amendments or modifications to any of the Loan Documents or for purposes of making requests to the Administrative Agent pursuant to §14.1 or §14.2 to the extent that such participation is beneficially owned by the Parent, the Borrower or any Affiliate of the Parent or the Borrower, and the determination of the Required Lenders shall for all purposes of this Credit Agreement and the other Loan Documents be made without regard to the interest of such transferor Lender in the Loans or Reimbursement Obligations to the extent of such participation.

     17.5. Miscellaneous Assignment Provisions. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Credit Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

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18. PROVISIONS OF GENERAL APPLICATIONS.

     18.1. Setoff. The Borrower hereby grants to the Administrative Agent and each of the Lenders a continuing lien, security interest and right of setoff as security for all liabilities and obligations to the Administrative Agent and each Lender, whether now existing or hereafter arising, upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of the Administrative Agent or such Lender or any Lender Affiliate and their successors and assigns or in transit to any of them. Regardless of the adequacy of any collateral, if any of the Obligations are due and payable and have not been paid, any deposits or other sums credited by or due from any of the Lenders to the Borrower and any securities or other property of the Borrower in the possession of such Lender may be applied to or set off by such Lender against the payment of Obligations and any and all other liabilities, direct, or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of the Borrower to such Lender. ANY AND ALL RIGHTS TO REQUIRE ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. Each of the Lenders agrees with each other Lender that (a) if an amount to be set off is to be applied to Indebtedness of the Borrower to such Lender, other than Indebtedness owed to such Lender evidenced by this Credit Agreement or any Notes held by such Lender or constituting Reimbursement Obligations owed to such Lender, such amount shall be applied ratably to such other Indebtedness and to the Indebtedness evidenced by this Credit Agreement and such Notes or such Reimbursement Obligations, and (b) if such Lender shall receive from the Borrower, whether by voluntary payment, exercise of the right of setoff, counterclaim, cross action, enforcement of the claim evidenced by this Credit Agreement, the Notes (if any) held by, or constituting Reimbursement Obligations owed to, such Lender by proceedings against the Borrower at law or in equity or by proof thereof in bankruptcy, reorganization, liquidation, receivership or similar proceedings, or otherwise, and shall retain and apply to the payment of the Obligations owed to, the Note or Notes (if any) held by, or Reimbursement Obligations owed to, such Lender any amount in excess of its ratable portion of the payments received by all of the Lenders with respect to the Obligations owed to, the Notes (if any) held by, and Reimbursement Obligations owed to, all of the Lenders, such Lender will make such disposition and arrangements with the other Lenders with respect to such excess, either by way of distribution, pro tanto assignment of claims, subrogation or otherwise as shall result in each Lender receiving in respect of the Obligations and Reimbursement Obligations owed to it, its proportionate payment as contemplated by this Credit Agreement; provided that if all or any part of such excess payment is thereafter recovered from such Lender, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest.

     18.2. Expenses. The Borrower agrees to pay (a) the reasonable costs of the Administrative Agent in producing and reproducing this Credit Agreement, the other Loan Documents and the other agreements and instruments mentioned herein, (b) any taxes (including any interest and penalties in respect thereto), other than Excluded Taxes (as defined in §6.3.2), payable by the Administrative Agent or any of the Lenders (other than taxes based upon the Administrative Agent’s or any Lender’s net income or profits) on or with respect to the transactions contemplated by this Credit Agreement (the Borrower hereby agreeing to indemnify the Administrative Agent and each Lender with respect thereto), (c) the reasonable fees, expenses and disbursements of the Administrative Agent’s Special Counsel (and only one such Administrative Agent’s Special Counsel at any one time) and any local or FCC counsel to the Administrative Agent incurred in connection with the preparation, syndication, administration or interpretation of the Loan Documents and other instruments mentioned herein, each closing hereunder, any amendments, modifications, approvals, consents or waivers hereto or hereunder, or the cancellation of any Loan Document upon payment in full in cash of all of the Obligations or pursuant to any terms of such Loan Document providing for such cancellation, (d) the fees, expenses and disbursements (other than reimbursements of legal fees and expenses) of the Administrative Agent, Syndication Agent or any of their respective affiliates incurred by such Person or such affiliate in connection with the preparation,

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syndication, administration or interpretation of the Loan Documents and other instruments mentioned herein, including all title insurance premiums and surveyor, engineering, appraisal and examination charges, (e) all reasonable out-of-pocket expenses (including without limitation reasonable attorneys’ fees and costs, which attorneys may be employees of any Lender or the Administrative Agent, and reasonable consulting, accounting, appraisal, investment bankruptcy and similar professional fees and charges) incurred by any Lender or the Administrative Agent in connection with (i) the enforcement of or preservation of rights under any of the Loan Documents against the Parent, the Borrower or any of the Subsidiaries or the administration thereof after the occurrence of a Default or Event of Default and (ii) any litigation, proceeding or dispute whether arising hereunder or otherwise, in any way related to any Lender’s or the Administrative Agent’s relationship with the Borrower or any of its Subsidiaries, and (f) all reasonable fees, expenses and disbursements of the Administrative Agent incurred in connection with UCC searches, UCC filings, intellectual property searches, intellectual property filings or mortgage recordings. The covenants contained in this §18.2 shall survive payment or satisfaction in full of all other obligations.

     18.3. Indemnification. The Borrower agrees to indemnify and hold harmless each of the Administrative Agent, the Syndication Agent and the Lenders and their respective affiliates, officers, directors, employees, agents and advisors (each such Person an “Indemnified Person”) from and against any and all claims, actions and suits whether groundless or otherwise, and from and against any and all liabilities, losses, damages and expenses of every nature and character arising out of this Credit Agreement or any of the other Loan Documents or the transactions contemplated hereby including, without limitation, (a) any actual or proposed use by the Borrower or any of its Subsidiaries of the proceeds of any of the Loans or Letters of Credit, (b) the reversal or withdrawal of any provisional credits granted by the Administrative Agent upon the transfer of funds from lock box, bank agency, concentration accounts or otherwise under any cash management arrangements with the Borrower or any Subsidiary or in connection with the provisional honoring of funds transfers, checks or other items, (c) any actual or alleged infringement of any patent, copyright, trademark, service mark or similar right of the Borrower or any of its Subsidiaries comprised in the Collateral, (d) the Parent, the Borrower or any of the Subsidiaries entering into or performing this Credit Agreement or any of the other Loan Documents or (e) with respect to the Borrower and its Subsidiaries and their respective properties and assets, the violation of any Environmental Law, the presence, disposal, escape, seepage, leakage, spillage, discharge, emission, release or threatened release of any Hazardous Substances or any action, suit, proceeding or investigation brought or threatened with respect to any Hazardous Substances (including, but not limited to, claims with respect to wrongful death, personal injury or damage to property), in each case including, without limitation, the reasonable fees and disbursements of counsel and allocated costs of internal counsel incurred in connection with any such investigation, litigation or other proceeding (all the foregoing, collectively, the “Indemnified Liabilities”), except to the extent any of the foregoing Indemnified Liabilities result solely from the gross negligence or willful misconduct of any such Indemnified Person. In litigation, or the preparation therefor, such Indemnified Person shall be entitled to select its own counsel and, in addition to the foregoing indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses of such counsel. If, and to the extent that the obligations of the Borrower under this §18.3 are unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment in satisfaction of such obligations which is permissible under applicable law. The covenants contained in this §18.3 shall survive payment or satisfaction in full of all other Obligations.

     18.4. Treatment of Certain Confidential Information.

      18.4.1. Confidentiality. Each of the Lenders and the Agents agrees, on behalf of itself and each of its affiliates, directors, officers, employees and any Person which manages such Lender, to use reasonable precautions to keep confidential, in accordance with their customary procedures for handling confidential information of the same nature and in accordance with safe and sound financial industry practices, any non-public information supplied to it by the Borrower or any of its Subsidiaries pursuant to this Credit Agreement, provided that nothing herein shall limit the disclosure of any such information (a) after such information shall have become public other than through a violation of this §18, or becomes available to any of the Lenders or the

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Agents on a nonconfidential basis from a source other than the Borrower, (b) to the extent required by statute, law, rule, regulation or judicial process, (c) to counsel or financial advisers for any of the Lenders or Agents, (d) to bank examiners or any other regulatory or self-regulatory authority having or reasonably claiming to have jurisdiction over any Lender or Agent, or to auditors or accountants, (e) to the Administrative Agent, any Lender or any Financial Affiliate, (f) in connection with any litigation to which any one or more of the Lenders, the Agents or any Financial Affiliate is a party, or in connection with the enforcement of rights or remedies hereunder or under any other Loan Document, (g) to a Lender Affiliate or a Subsidiary or affiliate of the Administrative Agent, (h) to any actual or prospective assignee, pledgee or participant or any actual or prospective direct or indirect counterparty (or its advisors) to any swap or derivative transactions relating to credit or other risks or events arising under this Credit Agreement or any other Loan Document so long as such assignee, participant or direct or indirect counterparty (or its advisors), as the case may be, agrees to be bound by the provisions of §18.4 or (i) with the consent of the Borrower. Moreover, each of the Agents, the Lenders and any Financial Affiliate is hereby expressly permitted by the Parent and the Borrower to refer to any of the Parent, the Borrower and their respective Subsidiaries in connection with any advertising, promotion or marketing undertaken by any such Agent, such Lender or such Financial Affiliate and, for such purpose, any such Agent, such Lender or such Financial Affiliate may utilize any trade name, trademark, logo or other distinctive symbol associated with the Parent, the Borrower or any of their respective Subsidiaries or any of their businesses.

      18.4.2. Prior Notification. Unless specifically prohibited by applicable law or court order, each of the Lenders and the Administrative Agent shall, prior to disclosure thereof, notify the Borrower of any request for disclosure of any such non-public information by any governmental agency or representative thereof (other than any such request in connection with an examination of the financial condition of such Lender by such governmental agency) or pursuant to legal process.

      18.4.3. Other. In no event shall any Lender or Agent be obligated or required to return any materials furnished to it or any Financial Affiliate by the Parent, the Borrower or any of their respective Subsidiaries. The obligations of each Lender under this §18 shall supersede and replace the obligations of such Lender under any confidentiality letter in respect of this financing signed and delivered by such Lender to the Borrower prior to the date hereof and shall be binding upon any assignee of, or purchaser of any participation in, any interest in any of the Loans or Reimbursement Obligations from any Lender.

     18.5. Survival of Covenants, Etc. All covenants, agreements, representations and warranties made herein and in any of the other Loan Documents or in any documents or other papers delivered by or on behalf of the Borrower or any of its Subsidiaries pursuant hereto shall be deemed to have been relied upon by the Lenders and the Administrative Agent, notwithstanding any investigation heretofore or hereafter made by any of them, and shall survive the making by the Lenders of any of the Loans and the issuance, extension or renewal of any Letters of Credit, as herein contemplated, and shall continue in full force and effect so long as any Letter of Credit or any amount due under this Credit Agreement or the Notes or any of the other Loan Documents remains outstanding or any Lender has any obligation to make any Loans or the Administrative Agent has any obligation to issue, extend or renew any Letter of Credit, and for such further time as may be otherwise expressly specified in this Credit Agreement. All statements contained in any certificate or other paper delivered to any Lender or the Administrative Agent at any time by or on behalf of the Borrower or any of its Subsidiaries pursuant hereto or in connection with the transactions contemplated hereby shall constitute representations and warranties by the Borrower or such Subsidiary hereunder.

     18.6. Notices. Except as otherwise expressly provided in this Credit Agreement, all notices and other communications made or required to be given pursuant to this Credit Agreement or any Note or any Letter of Credit Applications shall be in writing and shall be delivered in hand, mailed by United States

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registered or certified first class mail, postage prepaid, sent by overnight courier, or sent by telegraph, telecopy, facsimile or telex and confirmed by delivery via courier or postal service, addressed as follows:

      (a) if to the Parent, the Borrower or any of the Subsidiaries, at One Emmis Plaza, 40 Monument Circle, Suite 700, Indianapolis, Indiana 46204, Attention: Jeffrey H. Smulyan, Chairman, with a copy to J. Scott Enright, Esq., Emmis Operating Company, 40 Monument Circle, Suite 700, Indianapolis, Indiana 46204 and Eric Goodison, Esq., Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, New York 10019, or at such other address for notice as the Borrower shall last have furnished in writing to the Person giving the notice; and

      (b) if to any Lender or the Administrative Agent, at such Lender’s or Administrative Agent’s address set forth on Schedule 1 hereto, with a copy to Sula R. Fiszman, Esq., Bingham McCutchen LLP, 150 Federal Street, Boston, Massachusetts 02110, or such other address for notice as such party shall have last furnished in writing to the Person giving the notice.

     Any such notice or demand shall be deemed to have been duly given or made and to have become effective (i) if delivered by hand, overnight courier or facsimile to a responsible officer of the party to which it is directed, at the time of the receipt thereof by such officer or the sending of such facsimile and (ii) if sent by registered or certified first-class mail, postage prepaid, on the third Business Day following the mailing thereof. Any notice or other communication to be made hereunder or under any Note or any Letter of Credit Applications, even if otherwise required to be in writing under other provisions of this Credit Agreement, any Note or any Letter of Credit Applications, may alternatively be made in an electronic record transmitted electronically under such authentication and other procedures as the parties hereto may from time to time agree in writing (but not an electronic record), and such electronic transmission shall be effective at the time set forth in such procedures. Unless otherwise expressly provided in such procedures, such an electronic record shall be equivalent to a writing under the other provisions of this Credit Agreement, any Note or any Letter of Credit Applications, and such authentication, if made in compliance with the procedures so agreed by the parties hereto in writing (but not an electronic record), shall be equivalent to a signature under the other provisions of this Credit Agreement, any Note or any Letter of Credit Applications.

     18.7. Governing Law. THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID STATE OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE PARENT AND THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON SUCH PERSON BY MAIL AT THE ADDRESS SPECIFIED IN §18.6. EACH OF THE PARENT AND THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.

     18.8. Headings. The captions in this Credit Agreement are for convenience of reference only and shall not define or limit the provisions hereof.

     18.9. Counterparts. This Credit Agreement and any amendment hereof may be executed in several counterparts and by each party on a separate counterpart, each of which when executed and delivered shall be an original, and all of which together shall constitute one instrument. In proving this

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Credit Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought. Delivery by facsimile by any of the parties hereto of an executed counterpart hereof or of any amendment or waiver hereto shall be as effective as an original executed counterpart hereof or of such amendment or waiver and shall be considered a representation that an original executed counterpart hereof or such amendment or waiver, as the case may be, will be delivered.

     18.10. Entire Agreement, Etc. The Loan Documents and any other documents executed in connection herewith or therewith express the entire understanding of the parties with respect to the transactions contemplated hereby. Neither this Credit Agreement nor any term hereof may be changed, waived, discharged or terminated, except as provided in §18.12.

     18.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS CREDIT AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY LENDER RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT OF THE LOAN DOCUMENTS AND AGREES THAT IT WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. Except as prohibited by law, each of the Parent and the Borrower hereby waives any right it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. Each of the Parent and the Borrower (a) certifies that no representative, agent or attorney of any Lender or any Agent has represented, expressly or otherwise, that such Lender or such Agent would not, in the event of litigation, seek to enforce the foregoing waivers and (b) acknowledges that the Agents and the Lenders have been induced to enter into this Credit Agreement, the other Loan Documents to which it is a party by, among other things, the waivers and certifications contained herein.

     18.12. Consents, Amendments, Waivers, Etc. Any consent or approval required or permitted by this Credit Agreement to be given by the Lenders may be given, and any term of this Credit Agreement, the other Loan Documents or any other instrument related hereto or mentioned herein may be amended, and the performance or observance by the Parent, the Borrower or any of the Subsidiaries of any terms of this Credit Agreement, the other Loan Documents or such other instrument or the continuance of any Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Parent, the Borrower and the written consent of the Required Lenders; provided, however, that any amendment or waiver of any condition described in §13 shall require the written consent of the Parent, the Borrower, the Required Revolver Lenders and the Required Term Lenders. Notwithstanding the foregoing, no amendment, modification or waiver shall:

      (a) without the written consent of the Parent, the Borrower and each Lender directly affected thereby:

        (i) reduce or forgive the principal amount of any Loans or Reimbursement Obligations, or reduce the rate of interest on the Loans or the amount of the Commitment Fee or Letter of Credit Fees, amend the definition of Total Leverage Ratio or any of the components thereof or the method of calculation thereof solely for purposes of calculating the Applicable Margin;

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        (ii) (A) increase the aggregate amount of such Lender’s Revolving Credit Commitment or Tranche B Commitment, as the case may be, other than in accordance with §15; (B) extend the expiration date of such Lender’s Revolving Credit Commitment or Tranche B Commitment; or (C) change the requirement that any scheduled payments of principal of the Loans or voluntary or mandatory prepayments of the Loans or reductions in the Revolving Credit Commitments be applied pro rata to all Loans outstanding within the applicable Tranche or outstanding Revolving Credit Commitments, as applicable; and

        (iii) postpone or extend the Revolving Credit Loan Maturity Date or the Tranche B Maturity Date or any other regularly scheduled dates for payments of principal of, or interest on, the Loans or Reimbursement Obligations or any Fees or other amounts payable to such Lender (it being understood that (A) any vote to rescind any acceleration made pursuant to §14.1 of amounts owing with respect to the Loans and other Obligations and (B) any modifications of the provisions relating to amounts, timing or application of prepayments of Loans and other Obligations shall require only the approval of the Required Lenders); and

        (iv) amend the definition of “Interest Period” so as to permit Eurodollar Rate Loan intervals in excess of six months without regard to a Lender’s capacity to lend in any such greater intervals; and

      (b) without the written consent of all of the Lenders, amend or waive (i) this §18.12, (ii) the definition of Required Lenders, (iii) the distribution of collateral proceeds after an Event of Default pursuant to §14.4, (iv) other than pursuant to a transaction permitted by the terms of this Credit Agreement, release any material portion of the Collateral, release any material guarantor from its guaranty obligations under the Guaranty (excluding, if the Parent, the Borrower or any Subsidiary becomes a debtor under the federal Bankruptcy Code, the release of “cash collateral”, as defined in Section 363(a) of the federal Bankruptcy Code pursuant to a cash collateral stipulation with the debtor approved by the Required Lenders), or change the seniority of any Loans or the priority of any Loans with respect to any Collateral or guarantor; or

      (c) without the written consent of the Administrative Agent, (i) amend or waive §16, or amend or waive the amount or time of payment of the Administrative Agent’s Fee or any Letter of Credit Fees payable for the Administrative Agent’s account or any other provision applicable to the Administrative Agent or (ii) change the definition of “Required Revolver Lenders” without the consent of the Required Revolver Lenders or (iii) change the definition of “Required Term Lenders” without the consent of the Required Term Lenders.

     Notwithstanding the foregoing, the parties hereto acknowledge and agree that the Administrative Agent may, without the consent of any Lender, (x) release liens on Excluded Assets, (y) release its liens on the Collateral and/or any Subsidiary from its obligations under the Guaranty solely to the extent that such Collateral and/or Subsidiary is sold or otherwise disposed of in accordance with the terms of this Credit Agreement, including without limitation, §10.5.2 or (z) take any and all action necessary, including, without limitation, entering into joinder and accession agreements with additional Subsidiaries (or RAM or the Austin Partnership, as the case may be) and amendments to any of the Security Documents, all in furtherance of the provisions of §9.13 and §9.15. Any termination or other modification of any Interest Rate Agreement with a Lender as a counterparty shall not require the consent of any other Lender hereunder.

     No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing or delay or omission on the part of the Administrative Agent or any Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. No

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notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances.

     18.13. Severability. The provisions of this Credit Agreement are severable and if any one 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 of this Credit Agreement in any jurisdiction.

     18.14. USA PATRIOT Act Notice. Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act.

19. FCC APPROVAL.

     Notwithstanding anything to the contrary contained in this Credit Agreement or in the other Loan Documents, neither the Administrative Agent nor any Lender will take any action pursuant to this Credit Agreement or any of the other Loan Documents, which would constitute or result in a change in control of the Borrower or any of its Subsidiaries requiring the prior approval of the FCC without first obtaining such prior approval of the FCC. After the occurrence of an Event of Default, the Borrower shall take or cause to be taken any action which the Administrative Agent may reasonably request in order to obtain from the FCC such approval as may be necessary to enable the Administrative Agent to exercise and enjoy the full rights and benefits granted to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders by this Credit Agreement or any of the other Loan Documents, including, at the Borrower’s cost and expense, the use of the Borrower’s best efforts to assist in obtaining such approval for any action or transaction contemplated by this Credit 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 Credit Agreement or any of the other Loan Documents.

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     IN WITNESS WHEREOF, each of the undersigned parties has caused this Credit Agreement to be duly executed by its authorized officer as of the date first set forth above.

EMMIS OPERATING COMPANY, as Borrower
By:
	Name:	Walter Z. Berger
	Title:	Chief Financial Officer

EMMIS COMMUNICATIONS CORPORATION, as Parent
By:
	Name:	Walter Z. Berger
	Title:	Chief Financial Officer

BANK OF AMERICA, N.A., individually and as Administrative Agent
By:
	Name:	Derrick Bell
	Title:	Vice President

GOLDMAN SACHS CREDIT PARTNERS L.P., individually and as Syndication Agent
By:
	Name:

WACHOVIA BANK, N.A., individually and as Co- Documentation Agent
By:
	Name:

DEUTSCHE BANK SECURITIES INC., as Co-Documentation Agent
By:
	Name:

DEUTSCHE BANK TRUST COMPANY AMERICAS
By:
	Name:

CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS CAYMAN ISLANDS BRANCH, individually and as Co-Documentation Agent
By:
	Name:

EX-10.30

Exhibit 10.30
EXECUTION COPY

Emmis Operating Company

6 7/8% Senior Subordinated Notes due 2012

guaranteed as to the
payment of principal, premium,
if any, and interest by the
Guarantors on Schedule I hereto

Exchange and Registration Rights Agreement

May 10, 2004

Goldman, Sachs & Co.,
   As representative of the several Purchasers
   named in Schedule I to the Purchase Agreement
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004

Ladies and Gentlemen:

     Emmis Operating Company, an Indiana corporation (the “Company”), proposes to issue and sell to the Purchasers (as defined herein) upon the terms set forth in the Purchase Agreement (as defined herein) an aggregate of $375,000,000 principal amount of its 6?% Senior Subordinated Notes due 2012, which are guaranteed by the Guarantors named on Schedule I hereto. As an inducement to the Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Purchasers thereunder, the Company and the Guarantors agree with the Purchasers for the benefit of holders (as defined herein) from time to time of the Registrable Securities (as defined herein) as follows:

     1. Certain Definitions. For purposes of this Exchange and Registration Rights Agreement, the following terms shall have the following respective meanings:

     “Base Interest” shall mean the interest that would otherwise accrue on the Securities under the terms thereof and the Indenture, without giving effect to the provisions of this Agreement.

     The term “broker-dealer” shall mean any broker or dealer registered with the Commission under the Exchange Act.

     “Closing Date” shall mean the date on which the Securities are initially issued.

     “Commission” shall mean the United States Securities and Exchange Commission, or any other federal agency at the time administering the Exchange Act or the Securities Act, whichever is the relevant statute for the particular purpose.

     “Effective Time,” in the case of (i) an Exchange Registration, shall mean the time and date as of which the Commission declares the Exchange Offer Registration Statement

effective or as of which the Exchange Offer Registration Statement otherwise becomes effective and (ii) a Shelf Registration, shall mean the time and date as of which the Commission declares the Shelf Registration Statement effective or as of which the Shelf Registration Statement otherwise becomes effective.

     ”Electing Holder” shall mean any holder of Registrable Securities that has returned a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.

     “Exchange Act” shall mean the Securities Exchange Act of 1934, or any successor thereto, as the same shall be amended from time to time.

     “Exchange Offer” shall have the meaning assigned thereto in Section 2(a) hereof.

     “Exchange Offer Registration Statement” shall have the meaning assigned thereto in Section 2(a) hereof.

     “Exchange Registration” shall have the meaning assigned thereto in Section 3(c) hereof.

     “Exchange Securities” shall have the meaning assigned thereto in Section 2(a) hereof.

     “Guarantors” shall have the meaning assigned thereto in the Indenture.

     The term “holder” shall mean each of the Purchasers and other persons who acquire Registrable Securities from time to time (including any successors or assigns), in each case for so long as such person owns any Registrable Securities.

     “Indenture” shall mean the Indenture, dated as of May 10, 2004, among the Company, the Guarantors and The Bank of Nova Scotia Trust Company of New York, as Trustee, as the same shall be amended from time to time.

     ”Notice and Questionnaire” means a Notice of Registration Statement and Selling Securityholder Questionnaire substantially in the form of Exhibit A hereto.

     The term “person” shall mean a corporation, association, partnership, organization, business, individual, government or political subdivision thereof or governmental agency.

     “Purchase Agreement” shall mean the Purchase Agreement, dated as of April 27, 2004, among the Purchasers, the Guarantors and the Company relating to the Securities.

     “Purchasers” shall mean the Purchasers named in Schedule I to the Purchase Agreement.

     “Registrable Securities” shall mean the Securities; provided, however, that a Security shall cease to be a Registrable Security when (i) in the circumstances contemplated by Section 2(a) hereof, the Security has been exchanged for an Exchange Security in an Exchange Offer as contemplated in Section 2(a) hereof (provided that any Exchange Security that, pursuant to the last two sentences of Section 2(a), is included in a prospectus for use in connection with resales by broker-dealers shall be deemed to be a Registrable Security with respect to Sections 5, 6 and 8 until resale of such Registrable Security has been effected within the 180-day period referred to in Section 2(a)); (ii) in the circumstances contemplated by Section 2(b) hereof, a Shelf Registration Statement registering such Security under the Securities Act has been declared or becomes effective and such Security

2

has been sold or otherwise transferred by the holder thereof pursuant to and in a manner contemplated by such effective Shelf Registration Statement; (iii) such Security is sold pursuant to Rule 144 under circumstances in which any legend borne by such Security relating to restrictions on transferability thereof, under the Securities Act or otherwise, is removed by the Company or pursuant to the Indenture; (iv) such Security is eligible to be sold pursuant to paragraph (k) of Rule 144; or (v) such Security shall cease to be outstanding.

     “Registration Default” shall have the meaning assigned thereto in Section 2(c) hereof.

     “Registration Expenses” shall have the meaning assigned thereto in Section 4 hereof.

     “Resale Period” shall have the meaning assigned thereto in Section 2(a) hereof.

     “Restricted Holder” shall mean (i) a holder that is an affiliate of the Company within the meaning of Rule 405, (ii) a holder who acquires Exchange Securities outside the ordinary course of such holder’s business, (iii) a holder who has arrangements or understandings with any person to participate in the Exchange Offer for the purpose of distributing Exchange Securities and (iv) a holder that is a broker-dealer, but only with respect to Exchange Securities received by such broker-dealer pursuant to an Exchange Offer in exchange for Registrable Securities acquired by the broker-dealer directly from the Company.

     “Rule 144,” “Rule 405” and “Rule 415” shall mean, in each case, such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time.

     “Securities” shall mean, collectively, the 6?% Senior Subordinated Notes due 2012 of the Company to be issued and sold to the Purchasers, and securities issued in exchange therefor or in lieu thereof pursuant to the Indenture. Each Security is entitled to the benefit of the guarantees provided for in the Indenture (the “Guarantees”) and, unless the context otherwise requires, any reference herein to a “Security,” an “Exchange Security” or a “Registrable Security” shall include a reference to the related Guarantees.

     “Securities Act” shall mean the Securities Act of 1933, or any successor thereto, as the same shall be amended from time to time.

     “Shelf Registration” shall have the meaning assigned thereto in Section 2(b) hereof.

     “Shelf Registration Statement” shall have the meaning assigned thereto in Section 2(b) hereof.

     “Special Interest” shall have the meaning assigned thereto in Section 2(c) hereof.

     “Trust Indenture Act” shall mean the Trust Indenture Act of 1939, or any successor thereto, and the rules, regulations and forms promulgated thereunder, all as the same shall be amended from time to time.

     Unless the context otherwise requires, any reference herein to a “Section” or “clause” refers to a Section or clause, as the case may be, of this Exchange and Registration Rights Agreement, and the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Exchange and Registration Rights Agreement as a whole and not to any particular Section or other subdivision.

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                    2. Registration Under the Securities Act.

     (a) Except as set forth in Section 2(b) below, the Company and the Guarantors agree to file under the Securities Act no later than 90 days after the Closing Date, a registration statement relating to an offer to exchange (such registration statement, the “Exchange Offer Registration Statement”, and such offer, the “Exchange Offer”) any and all of the Securities for a like aggregate principal amount of debt securities issued by the Company and guaranteed by the Guarantors, which debt securities and guarantees are substantially identical to the Securities and the related Guarantees, respectively (and are entitled to the benefits of a trust indenture which is substantially identical to the Indenture or is the Indenture and which has been qualified under the Trust Indenture Act), except that they have been registered pursuant to an effective registration statement under the Securities Act and do not contain provisions for the Special Interest contemplated in Section 2(c) below (such new debt securities hereinafter called “Exchange Securities”). The Company and the Guarantors agree to use all commercially reasonable efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act no later than 180 days after the Closing Date. The Exchange Offer will be registered under the Securities Act on the appropriate form and will comply with all applicable tender offer rules and regulations under the Exchange Act. The Company and the Guarantors further agree to use all commercially reasonable efforts to consummate the Exchange Offer on or prior to 30 business days, or longer, if required by the federal securities laws, after such registration statement has become effective, and exchange Exchange Securities for all Registrable Securities that have been properly tendered and not withdrawn on or prior to the expiration of the Exchange Offer. The Exchange Offer will be deemed to have been “completed” only if the debt securities and related guarantees received by holders other than Restricted Holders in the Exchange Offer for Registrable Securities are, upon receipt, transferable by each such holder without restriction under the Securities Act and the Exchange Act and without material restrictions under the blue sky or securities laws of a substantial majority of the States of the United States of America. The Exchange Offer shall be deemed to have been completed upon the Company having exchanged, pursuant to the Exchange Offer, Exchange Securities for all Registrable Securities that have been properly tendered and not withdrawn before the expiration of the Exchange Offer. The Company agrees (x) to include in the Exchange Offer Registration Statement a prospectus for use in any resales by any holder of Exchange Securities that is a broker-dealer and (y) to keep such Exchange Offer Registration Statement effective for a period (the “Resale Period”) beginning when Exchange Securities are first issued in the Exchange Offer and ending upon the earlier of the expiration of the 180th day after the Exchange Offer has been completed or such time as such broker-dealers no longer own any Registrable Securities. With respect to such Exchange Offer Registration Statement, such holders shall have the benefit of the rights of indemnification and contribution set forth in Sections 6(a), (c), (d) and (e) hereof.

     (b) If (i) the Company and the Guarantors are not (A) required to file the Exchange Offer Registration Statement or (B) permitted to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy; or (ii) any holder of Registrable Securities notifies the Company prior to the 20th business day following consummation of the Exchange Offer that (a) such holder was prohibited by law or Commission policy from participating in the Exchange Offer, (B) such holder may not resell the Exchange Securities acquired by it in the Exchange Offer to the public without delivering a prospectus and the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such holder or (C) such holder is a broker-dealer and holds Registrable Securities acquired directly from the Company or an affiliate of the Company, then the Company and the Guarantors shall, in lieu of (or, in the case of

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clause (ii), in addition to) conducting the Exchange Offer contemplated by Section 2(a), use all commercially reasonable efforts to file under the Securities Act on or prior to the later of (x) 30 days after the time such obligation to file arises, or (y) 90 days after the Closing Date, a “shelf” registration statement providing for the registration of, and the sale on a continuous or delayed basis by the holders of, all of the Registrable Securities, pursuant to Rule 415 or any similar rule that may be adopted by the Commission (such filing, the “Shelf Registration” and such registration statement, the “Shelf Registration Statement”). The Company and the Guarantors agree to use all commercially reasonable efforts (x) to cause the Shelf Registration Statement to become or be declared effective by the Commission on or prior to 90 days after such filing obligation arises (but no earlier than 180 days following the Closing Date) and to keep such Shelf Registration Statement continuously effective for a period ending on the earlier of the second anniversary of the Closing Date or such time as there are no longer any Registrable Securities outstanding, provided, however, that no holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement or to use the prospectus forming a part thereof for resales of Registrable Securities unless such holder is an Electing Holder, and (y) after the Effective Time of the Shelf Registration Statement, promptly upon the request of any holder of Registrable Securities that is not then an Electing Holder, to take any action reasonably necessary to enable such holder to use the prospectus forming a part thereof for resales of Registrable Securities, including, without limitation, any action necessary to identify such holder as a selling securityholder in the Shelf Registration Statement, provided, however, that nothing in this Clause (y) shall relieve any such holder of the obligation to return a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(d)(iii) hereof. The Company and the Guarantors further agree to supplement or make amendments to the Shelf Registration Statement, as and when required by the rules, regulations or instructions applicable to the registration form used by the Company and the Guarantors for such Shelf Registration Statement or by the Securities Act or rules and regulations thereunder for shelf registration, and the Company agrees to furnish to each Electing Holder copies of any such supplement or amendment prior to its being used or promptly following its filing with the Commission.

     (c) In the event that (i) the Company and the Guarantors has not filed the Exchange Offer Registration Statement or Shelf Registration Statement on or before the date on which such registration statement is required to be filed pursuant to Section 2(a) or 2(b), respectively, or (ii) such Exchange Offer Registration Statement or Shelf Registration Statement has not become effective or been declared effective by the Commission on or before the date on which such registration statement is required to become or be declared effective pursuant to Section 2(a) or 2(b), respectively, or (iii) the Exchange Offer has not been consummated within 30 days after the initial effective date of the Exchange Offer Registration Statement relating to the Exchange Offer (if the Exchange Offer is then required to be made) or (iv) any Exchange Offer Registration Statement or Shelf Registration Statement required by Section 2(a) or 2(b) hereof is filed and declared effective but shall thereafter either be withdrawn by the Company or shall become subject to an effective stop order issued pursuant to Section 8(d) of the Securities Act suspending the effectiveness of such registration statement during the time period in which such registration statement is required to be continuously effective (except as specifically permitted herein) without being succeeded, within two days, by an additional registration statement filed and declared effective (each such event referred to in clauses (i) through (iv), a “Registration Default” and each period during which a Registration Default has occurred and is continuing, a “Registration Default Period”), then, as liquidated damages for such Registration Default, subject to the provisions of Section 9(b), special interest (“Special Interest”), in addition to the Base Interest, shall accrue in an amount equal to $.05 per week per $1,000 principal

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amount of Registrable Securities for the first 90 days of the Registration Default Period. The amount of Special Interest shall increase by an additional $.05 per week per $1,000 principal amount of Registrable Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Special Interest for all Registration Defaults of $.50 per week per $1,000 principal amount of Registrable Securities; provided, however, that the Company shall in no event be required to pay Special Interest for more that one Registration Default at any given time. Notwithstanding anything to the contrary set forth herein, (1) upon the filing of the Exchange Offer Registration Statement (and/or, if applicable the Shelf Registration Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable the Shelf Registration Statement), in the case of (ii) above, (3) upon the consummation of the Exchange Offer in the case of (iii) above or (4) upon the filing of a post effective amendment to the Registration Statement that causes the Exchange Offer Registration Statement (and/or if applicable, the Shelf Registration Statement) to again be declared effective or made usable in the case of (iv) above, the Special Interest payable with respect to the Registrable Securities shall cease.

     (d) Any reference herein to a registration statement as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time and any reference herein to any post-effective amendment to a registration statement as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time.

     3. Registration Procedures.

     If the Company and the Guarantors file a registration statement pursuant to Section 2(a) or Section 2(b), the following provisions shall apply:

     (a) At or before the Effective Time of the Exchange Registration or the Shelf Registration, as the case may be, the Company shall qualify the Indenture under the Trust Indenture Act of 1939.

     (b) In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.

     (c) In connection with the Company’s and the Guarantors’ obligations with respect to the registration of Exchange Securities as contemplated by Section 2(a) (the “Exchange Registration”), if applicable, the Company and the Guarantors shall, as soon as practicable (or as otherwise specified):

     (i) prepare and file with the Commission no later than 90 days after the Closing Date, an Exchange Offer Registration Statement on any form which may be utilized by the Company and which shall permit the Exchange Offer and resales of Exchange Securities by broker-dealers during the Resale Period to be effected as contemplated by Section 2(a), and use all commercially reasonable efforts to have the Exchange Offer Registration Statement declared effective no later than 180 days after the Closing Date;

     (ii) as soon as practicable prepare and file with the Commission such amendments and supplements to such Exchange Offer Registration Statement and the prospectus included therein as may be necessary to effect and maintain the

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effectiveness of such Exchange Offer Registration Statement for the periods and purposes contemplated in Section 2(a) hereof and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Exchange Offer Registration Statement, and promptly provide each broker-dealer holding Exchange Securities with such number of copies of the prospectus included therein (as then amended or supplemented), in conformity in all material respects with the requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder, as such broker-dealer reasonably may request prior to the expiration of the Resale Period, for use in connection with resales of Exchange Securities;

     (iii) promptly notify each broker-dealer that has requested or received copies of the prospectus included in such registration statement, and confirm such advice in writing, (A) when such Exchange Offer Registration Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such Exchange Offer Registration Statement or any post-effective amendment, when the same has become effective, (B) of any comments by the Commission and by the blue sky or securities commissioner or regulator of any state with respect thereto or any request by the Commission for amendments or supplements to such Exchange Offer Registration Statement or prospectus or for additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Exchange Offer Registration Statement or the initiation or threatening of any proceedings for that purpose, (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Exchange Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, or (E) at any time during the Resale Period when a prospectus is required to be delivered under the Securities Act, that such Exchange Offer Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder or contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

     (iv) in the event that the Company and the Guarantors would be required, pursuant to Section 3(c)(iii)(E) above, to notify any broker-dealers holding Exchange Securities, as soon as practicable prepare and furnish to each such holder a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of such Exchange Securities during the Resale Period, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

     (v) use all commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of such Exchange Offer Registration Statement or any post-effective amendment thereto at the earliest practicable date;

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     (vi) use all commercially reasonable efforts to (A) register or qualify the Exchange Securities under the securities laws or blue sky laws of such jurisdictions as are contemplated by Section 2(a) no later than the commencement of the Exchange Offer, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions until the expiration of the Resale Period and (C) take any and all other actions as may be reasonably necessary to enable each broker-dealer holding Exchange Securities to consummate the disposition thereof in such jurisdictions; provided, however, that neither the Company nor any of the Guarantors shall be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 3(c)(vi), (2) consent to general service of process or taxation in any such jurisdiction or (3) make any changes to its certificate of incorporation or by-laws or any agreement between it and its stockholders;

     (vii) use all commercially reasonable efforts to obtain the consent or approval of each governmental agency or authority, whether federal, state or local, which may be required to effect the Exchange Registration, the Exchange Offer and the offering and sale of Exchange Securities by broker-dealers during the Resale Period;

     (viii) provide a CUSIP number for all Exchange Securities, not later than the applicable Effective Time; and

     (ix) comply with all applicable rules and regulations of the Commission, and make generally available to its securityholders as soon as practicable but no later than eighteen months after the effective date of such Exchange Offer Registration Statement, an earning statement of the Company and its subsidiaries complying with Section 11(a) of the Securities Act (including, at the option of the Company, Rule 158 thereunder).

     (d) In connection with the Company’s and the Guarantors’ obligations with respect to the Shelf Registration, if applicable, the Company and the Guarantors shall, as soon as practicable (or as otherwise specified):

     (i) prepare and file with the Commission, as soon as practicable but in any case within the time periods specified in Section 2(b), a Shelf Registration Statement on any form which may be utilized by the Company and which shall register all of the Registrable Securities for resale by the holders thereof in accordance with such method or methods of disposition as may be specified by such of the holders as, from time to time, may be Electing Holders and use all commercially reasonable efforts to cause such Shelf Registration Statement to become effective as soon as practicable but in any case within the time periods specified in Section 2(b);

     (ii) not less than 30 calendar days prior to the Effective Time of the Shelf Registration Statement, mail the Notice and Questionnaire to the holders of Registrable Securities; no holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement as of the Effective Time, and no holder shall be entitled to use the prospectus forming a part thereof for resales of Registrable Securities at any time, unless such holder has returned a completed and signed Notice and Questionnaire to the Company by the deadline for response set forth therein; provided, however, holders of Registrable Securities shall have at least 10 calendar days from the date on which the Notice and Questionnaire is first mailed

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to such holders to return a completed and signed Notice and Questionnaire to the Company;

     (iii) after the Effective Time of the Shelf Registration Statement, upon the request of any holder of Registrable Securities that is not then an Electing Holder, promptly send a Notice and Questionnaire to such holder; provided that the Company shall not be required to take any action to name such holder as a selling securityholder in the Shelf Registration Statement or to enable such holder to use the prospectus forming a part thereof for resales of Registrable Securities until such holder has returned a completed and signed Notice and Questionnaire to the Company;

     (iv) as soon as practicable prepare and file with the Commission such amendments and supplements to such Shelf Registration Statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such Shelf Registration Statement for the period specified in Section 2(b) hereof and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Shelf Registration Statement, and furnish to the Electing Holders copies of any such supplement or amendment simultaneously with or prior to its being used or filed with the Commission;

     (v) comply with the provisions of the Securities Act with respect to the disposition of all of the Registrable Securities covered by such Shelf Registration Statement in accordance with the intended methods of disposition by the Electing Holders provided for in such Shelf Registration Statement;

     (vi) provide (A) the Electing Holders, (B) the underwriters (which term, for purposes of this Exchange and Registration Rights Agreement, shall include a person deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act), if any, thereof, (C) any sales or placement agent therefor, (D) counsel for any such underwriter or agent and (E) not more than one counsel for all the Electing Holders the opportunity to review and comment on such Shelf Registration Statement, for a period of at least 5 business days, each prospectus included therein or filed with the Commission and each amendment or supplement thereto;

     (vii) for a reasonable period prior to the filing of such Shelf Registration Statement, and throughout the period specified in Section 2(b), make available at reasonable times at the Company’s principal place of business or such other reasonable place for inspection by the persons referred to in Section 3(d)(vi) who shall certify to the Company that they have a current intention to sell the Registrable Securities pursuant to the Shelf Registration such financial and other information and books and records of the Company, and cause the officers, employees, counsel and independent certified public accountants of the Company to respond to such inquiries, as shall be reasonably necessary, in the judgment of the respective counsel referred to in such Section, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that each such party shall be required to enter into a customary confidentiality agreement with the Company whereby such party agrees to maintain in confidence and not to disclose to any other person any information or records reasonably designated by the Company as being confidential, until such time as (A) such information becomes a matter of public record (whether by virtue of its inclusion in such registration statement or

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otherwise), or (B) such person shall be required so to disclose such information pursuant to a subpoena or order of any court or other governmental agency or body having jurisdiction over the matter (subject to the requirements of such order, and only after such person shall have given the Company prompt prior written notice of such requirement), or (C) such information is required to be set forth in such Shelf Registration Statement or the prospectus included therein or in an amendment to such Shelf Registration Statement or an amendment or supplement to such prospectus in order that such Shelf Registration Statement, prospectus, amendment or supplement, as the case may be, complies with applicable requirements of the federal securities laws and the rules and regulations of the Commission and does not contain an untrue statement of a material fact or omit to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

     (viii) promptly notify each of the Electing Holders, any sales or placement agent therefor and any underwriter thereof (which notification may be made through any managing underwriter that is a representative of such underwriter for such purpose) and confirm such advice in writing, (A) when such Shelf Registration Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such Shelf Registration Statement or any post-effective amendment, when the same has become effective, (B) of any comments by the Commission and by the blue sky or securities commissioner or regulator of any state with respect thereto or any request by the Commission for amendments or supplements to such Shelf Registration Statement or prospectus or for additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Shelf Registration Statement or the initiation or threatening of any proceedings for that purpose, (D) if at any time the representations and warranties of the Company contemplated by Section 3(d)(xvii) or Section 5 cease to be true and correct in all material respects, (E) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, or (F) if at any time when a prospectus is required to be delivered under the Securities Act, that such Shelf Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder or contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

     (ix) use all commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of such registration statement or any post-effective amendment thereto at the earliest practicable date;

     (x) if requested by any managing underwriter or underwriters, any placement or sales agent or any Electing Holder, promptly incorporate in a prospectus supplement or post-effective amendment such information as is required by the applicable rules and regulations of the Commission and as such managing underwriter or underwriters, such agent or such Electing Holder reasonably requests be included therein relating to the terms of the sale of such Registrable Securities, including information with respect to the principal amount of Registrable Securities being sold

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by such Electing Holder or agent or to any underwriters, the name and description of such Electing Holder, agent or underwriter, the offering price of such Registrable Securities and any discount, commission or other compensation payable in respect thereof, the purchase price being paid therefor by such underwriters and with respect to any other terms of the offering of the Registrable Securities to be sold by such Electing Holder or agent or to such underwriters; and make all required filings of such prospectus supplement or post-effective amendment promptly after notification of the matters to be incorporated in such prospectus supplement or post-effective amendment;

     (xi) furnish to each Electing Holder, each placement or sales agent, if any, therefor, each underwriter, if any, thereof and the respective counsel referred to in Section 3(d)(vi) a copy of such Shelf Registration Statement, each such amendment and supplement thereto (in each case including all exhibits thereto (in the case of an Electing Holder of Registrable Securities, upon request) and documents incorporated by reference therein) and such number of copies of such Shelf Registration Statement (excluding exhibits thereto and documents incorporated by reference therein unless specifically so requested by such Electing Holder, agent or underwriter, as the case may be) and of the prospectus included in such Shelf Registration Statement (including each preliminary prospectus and any summary prospectus), in conformity in all material respects with the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder, and such other documents, as such Electing Holder, agent, if any, and underwriter, if any, may reasonably request in order to facilitate the offering and disposition of the Registrable Securities owned by such Electing Holder, offered or sold by such agent or underwritten by such underwriter and to permit such Electing Holder, agent and underwriter to satisfy the prospectus delivery requirements of the Securities Act; and the Company hereby consents to the use of such prospectus (including such preliminary and summary prospectus) and any amendment or supplement thereto by each such Electing Holder and by any such agent and underwriter, in each case in the form most recently provided to such person by the Company, in connection with the offering and sale of the Registrable Securities covered by the prospectus (including such preliminary and summary prospectus) or any supplement or amendment thereto;

     (xii) use all commercially reasonable efforts to (A) register or qualify the Registrable Securities to be included in such Shelf Registration Statement under such securities laws or blue sky laws of such jurisdictions as any Electing Holder and each placement or sales agent, if any, therefor and underwriter, if any, thereof shall reasonably request, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions during the period the Shelf Registration is required to remain effective under Section 2(b) above and for so long as may be necessary to enable any such Electing Holder, agent or underwriter to complete its distribution of Securities pursuant to such Shelf Registration Statement and (C) take any and all other actions as may be reasonably necessary to enable each such Electing Holder, agent, if any, and underwriter, if any, to consummate the disposition in such jurisdictions of such Registrable Securities; provided, however, that neither the Company nor any of the Guarantors shall be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 3(d)(xii), (2) consent to general service of process or taxation in any such jurisdiction or (3) make any

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changes to its certificate of incorporation or by-laws or any agreement between it and its stockholders;

     (xiii) use all commercially reasonable efforts to obtain the consent or approval of each governmental agency or authority, whether federal, state or local, which may be required to effect the Shelf Registration or the offering or sale in connection therewith or to enable the selling holder or holders to offer, or to consummate the disposition of, their Registrable Securities;

     (xiv) unless any Registrable Securities shall be in book-entry only form, cooperate with the Electing Holders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates, if so required by any securities exchange upon which any Registrable Securities are listed, shall be penned, lithographed or engraved, or produced by any combination of such methods, on steel engraved borders, and which certificates shall not bear any restrictive legends; and, in the case of an underwritten offering, enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may reasonably request at least two business days prior to any sale of the Registrable Securities;

     (xv) provide a CUSIP number for all Registrable Securities, not later than the applicable Effective Time;

     (xvi) enter into one or more underwriting agreements, engagement letters, agency agreements, “best efforts” underwriting agreements or similar agreements, as appropriate, including customary provisions relating to indemnification and contribution;

     (xvii) whether or not an agreement of the type referred to in Section 3(d)(xvi) hereof is entered into and whether or not any portion of the offering contemplated by the Shelf Registration is an underwritten offering or is made through a placement or sales agent or any other entity, (A) make such representations and warranties to the Electing Holders and the placement or sales agent, if any, therefor and the underwriters, if any, thereof in form, substance and scope as are customarily made in connection with an offering of debt securities pursuant to any appropriate agreement or to a registration statement filed on the form applicable to the Shelf Registration; (B) obtain an opinion of counsel to the Company in customary form and covering such matters, of the type customarily covered by such an opinion, as the managing underwriters, if any, or as any Electing Holders of a majority in aggregate principal amount of the Registrable Securities at the time outstanding may reasonably request, addressed to such Electing Holder or Electing Holders and the placement or sales agent, if any, therefor and the underwriters, if any, thereof and dated the effective date of such Shelf Registration Statement (and if such Shelf Registration Statement contemplates an underwritten offering of a part or all of the Registrable Securities, dated the date of the closing under the underwriting agreement relating thereto) (it being agreed that the matters to be covered by such opinion shall be similar, in all material respects, to those matters covered pursuant to Section 7 of the Purchase Agreement); (C) if permitted under applicable accounting standards, obtain a “cold comfort” letter or letters from the independent certified public accountants of the Company addressed to the selling Electing Holders, the placement or sales agent, if any, therefor or the underwriters, if any, thereof, dated (i) the effective date

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of such Shelf Registration Statement and (ii) the effective date of any prospectus supplement to the prospectus included in such Shelf Registration Statement or post-effective amendment to such Shelf Registration Statement which includes unaudited or audited financial statements as of a date or for a period subsequent to that of the latest such statements included in such prospectus (and, if such Shelf Registration Statement contemplates an underwritten offering pursuant to any prospectus supplement to the prospectus included in such Shelf Registration Statement or post-effective amendment to such Shelf Registration Statement which includes unaudited or audited financial statements as of a date or for a period subsequent to that of the latest such statements included in such prospectus, dated the date of the closing under the underwriting agreement relating thereto), such letter or letters to be in customary form and covering such matters of the type customarily covered by letters of such type; (D) deliver such documents and certificates, including officers’ certificates, as may be reasonably requested by any Electing Holders of a majority in aggregate principal amount of the Registrable Securities at the time outstanding or the placement or sales agent, if any, therefor and the managing underwriters, if any, thereof to evidence the accuracy of the representations and warranties made pursuant to clause (A) above or those contained in Section 5(a) hereof and the compliance with or satisfaction of any customary agreements or conditions contained in the underwriting agreement or other agreement entered into by the Company or the Guarantors; and (E) undertake such obligations relating to expense reimbursement, indemnification and contribution as are provided in Section 6 hereof;

     (xviii) notify in writing each holder of Registrable Securities of any proposal by the Company to amend or waive any provision of this Exchange and Registration Rights Agreement pursuant to Section 9(h) hereof and of any amendment or waiver effected pursuant thereto, each of which notices shall contain the text of the amendment or waiver proposed or effected, as the case may be;

     (xix) in the event that any broker-dealer registered under the Exchange Act shall underwrite any Registrable Securities or participate as a member of an underwriting syndicate or selling group or “assist in the distribution” (within the meaning of the Conduct Rules (the “Conduct Rules) of the National Association of Securities Dealers, Inc. (“NASD”) or any successor thereto, as amended from time to time) thereof, whether as a holder of such Registrable Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, assist such broker-dealer in complying with the requirements of such Conduct Rules, including by (A) if such Conduct Rules shall so require, engaging a “qualified independent underwriter” (as defined in such Conduct Rules) to participate in the preparation of the Shelf Registration Statement relating to such Registrable Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Shelf Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Registrable Securities, (B) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 6 hereof (or to such other customary extent as may be requested by such underwriter), and (C) providing, subject to customary confidentiality provisions, such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Conduct Rules; and

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     (xx) comply with all applicable rules and regulations of the Commission, and make generally available to its securityholders as soon as practicable but in any event not later than eighteen months after the effective date of such Shelf Registration Statement, an earning statement of the Company and its subsidiaries complying with Section 11(a) of the Securities Act (including, at the option of the Company, Rule 158 thereunder).

     (e) In the event that the Company would be required, pursuant to Section 3(d)(viii)(F) above, to notify the Electing Holders, the placement or sales agent, if any, therefor and the managing underwriters, if any, thereof, the Company shall as soon as practicable and furnish to each of the Electing Holders, to each placement or sales agent, if any, and to each such underwriter, if any, a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of Registrable Securities, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Each Electing Holder agrees that upon receipt of any notice from the Company pursuant to Section 3(d)(viii)(F) hereof, such Electing Holder shall forthwith discontinue the disposition of Registrable Securities pursuant to the Shelf Registration Statement applicable to such Registrable Securities until such Electing Holder shall have received copies of such amended or supplemented prospectus, and if so directed by the Company, such Electing Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, then in such Electing Holder’s possession of the prospectus covering such Registrable Securities at the time of receipt of such notice.

     (f) In the event of a Shelf Registration, in addition to the information required to be provided by each Electing Holder in its Notice and Questionnaire, the Company may require such Electing Holder to furnish to the Company such additional information regarding such Electing Holder and such Electing Holder’s intended method of distribution of Registrable Securities as may be required in order to comply with the Securities Act and such other matters as the Company may reasonably request. Each such Electing Holder agrees to notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by such Electing Holder to the Company or of the occurrence of any event in either case as a result of which any prospectus relating to such Shelf Registration contains or would contain an untrue statement of a material fact regarding such Electing Holder or such Electing Holder’s intended method of disposition of such Registrable Securities or omits or would omit to state any material fact regarding such Electing Holder or such Electing Holder’s intended method of disposition of such Registrable Securities required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and promptly to furnish to the Company any additional information required to correct and update any previously furnished information or required so that such prospectus shall not contain, with respect to such Electing Holder or the disposition of such Registrable Securities, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

     (g) Until the expiration of two years after the Closing Date, the Company will not, and will not permit any of its “affiliates” (as defined in Rule 144) to, resell any of the Securities

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that have been reacquired by any of them except pursuant to an effective registration statement under the Securities Act.

     4. Registration Expenses.

          The Company agrees to bear and to pay or cause to be paid promptly all expenses incident to the Company’s performance of or compliance with this Exchange and Registration Rights Agreement, including (a) all Commission and any NASD registration, filing and review fees and expenses, (b) all fees and expenses in connection with the qualification of the Securities for offering and sale under the State securities and blue sky laws referred to in Section 3(d)(xii) hereof and determination of their eligibility for investment under the laws of such jurisdictions as any managing underwriters or the Electing Holders may designate, including any reasonable fees and disbursements of counsel for the Electing Holders or underwriters in connection with such qualification and determination, (c) all expenses relating to the preparation, printing, production, distribution and reproduction of each registration statement required to be filed hereunder, each prospectus included therein or prepared for distribution pursuant hereto, each amendment or supplement to the foregoing, the expenses of preparing the Securities for delivery and the expenses of printing or reproducing any underwriting agreements, agreements among underwriters, selling agreements and blue sky or legal investment memoranda and all other documents in connection with the offering, sale or delivery of Securities to be disposed of (including certificates representing the Securities), (d) messenger, telephone and delivery expenses relating to the offering, sale or delivery of Securities and the preparation of documents referred in clause (c) above, (e) fees and expenses of the Trustee under the Indenture, any agent of the Trustee and any counsel for the Trustee and of any collateral agent or custodian, (f) internal expenses (including all salaries and expenses of the Company’s officers and employees performing legal or accounting duties), (g) fees, disbursements and expenses of counsel and independent certified public accountants of the Company (including the expenses of any opinions or “cold comfort” letters required by or incident to such performance and compliance), (h) reasonable fees, disbursements and expenses of any “qualified independent underwriter” engaged pursuant to Section 3(d)(xix) hereof, (i) reasonable fees, disbursements and expenses of one counsel for the Electing Holders retained in connection with a Shelf Registration, as selected by the Electing Holders of at least a majority in aggregate principal amount of the Registrable Securities held by Electing Holders (which counsel shall be reasonably satisfactory to the Company), (j) any fees charged by securities rating services for rating the Securities, and (k) fees, expenses and disbursements of any other persons, including special experts, retained by the Company in connection with such registration (collectively, the “Registration Expenses”). To the extent that any Registration Expenses are incurred, assumed or paid by any holder of Registrable Securities or any placement or sales agent therefor or underwriter thereof in accordance with the terms of this agreement (including the Company’s approval), the Company shall reimburse such person for the full amount of the Registration Expenses so incurred, assumed or paid promptly after receipt of a request therefor. Notwithstanding the foregoing, the holders of the Registrable Securities being registered shall pay all agency fees and commissions and underwriting discounts and commissions attributable to the sale of such Registrable Securities and the fees and disbursements of any counsel or other advisors or experts retained by such holders (severally or jointly), other than the counsel and experts specifically referred to above.

     5. Representations and Warranties.

          Each of the Company and the Guarantors, jointly and severally, represents and warrants to, and agrees with, each Purchaser and each of the holders from time to time of Registrable Securities that:

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     (a) Each registration statement covering Registrable Securities and each prospectus (including any preliminary or summary prospectus) contained therein or furnished pursuant to Section 3(d) hereof and any further amendments or supplements to any such registration statement or prospectus, when it becomes effective or is filed with the Commission, as the case may be, and, in the case of an underwritten offering of Registrable Securities, at the time of the closing under the underwriting agreement relating thereto, will conform in all material respects to the requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and at all times subsequent to the Effective Time when a prospectus would be required to be delivered under the Securities Act, other than from (i) such time as a notice has been given to holders of Registrable Securities pursuant to Section 3(d)(viii)(F) hereof until (ii) such time as the Company furnishes an amended or supplemented prospectus pursuant to Section 3(e) hereof, each such registration statement, and each prospectus (including any summary prospectus) contained therein or furnished pursuant to Section 3(d) hereof, as then amended or supplemented, will conform in all material respects to the requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by a holder of Registrable Securities expressly for use therein.

     (b) Any documents incorporated by reference in any prospectus referred to in Section 5(a) hereof, when they become or became effective or are or were filed with the Commission, as the case may be, will conform or conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and none of such documents will contain or contained an untrue statement of a material fact or will omit or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by a holder of Registrable Securities expressly for use therein.

     6. Indemnification.

     (a) Indemnification by the Company and the Guarantors. The Company and the Guarantors, jointly and severally, will indemnify and hold harmless each of the holders of Registrable Securities included in an Exchange Offer Registration Statement, each of the Electing Holders of Registrable Securities included in a Shelf Registration Statement and each person who participates as a placement or sales agent or as an underwriter in any offering or sale of such Registrable Securities against any losses, claims, damages or liabilities, joint or several, to which such holder, agent or underwriter may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Exchange Offer Registration Statement or Shelf Registration Statement, as the case may be, under which such Registrable Securities were registered under the Securities Act, or any preliminary, final or summary prospectus contained therein or furnished by the Company to any such holder, Electing Holder, agent or underwriter, or any amendment or supplement thereto, or arise out of or are

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based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse such holder, such Electing Holder, such agent and such underwriter for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that neither the Company nor any of the Guarantors shall be liable to any such person in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, or preliminary, final or summary prospectus, or amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by such person expressly for use therein; provided, further, however, that with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Purchaser, broker-dealer, Electing Holder of Registrable Securities included in a Shelf Registration Statement, placement or sales agent or underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, to the extent that a prospectus relating to such Securities was required to be delivered by such Purchaser, broker-dealer, Electing Holder of Registrable Securities included in a Shelf Registration Statement, placement or sales agent or underwriter under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Purchaser, broker-dealer, Electing Holder of Registrable Securities included in a Shelf Registration Statement, placement or sales agent or underwriter results from the fact that there was not sent or given to such person, at or prior to the written confirmation of the sale of such Securities to such person, a copy of the final prospectus if the Company had previously furnished copies thereof to such Purchaser, broker-dealer, Electing Holder of Registrable Securities included in a Shelf Registration Statement, placement or sales agent or underwriter.

     (b) Indemnification by the Holders and any Agents and Underwriters. The Company may require, as a condition to including any Registrable Securities in any registration statement filed pursuant to Section 2(b) hereof and to entering into any underwriting, placement or sales agreement with respect thereto, that the Company shall have received an undertaking reasonably satisfactory to it from the Electing Holder of such Registrable Securities and from each underwriter, placement agent or sales agent named in any such underwriting, placement or sales agreement, severally and not jointly, to (i) indemnify and hold harmless the Company, the Guarantors, and all other holders of Registrable Securities, against any losses, claims, damages or liabilities to which the Company, the Guarantors or such other holders of Registrable Securities may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such registration statement, or any preliminary, final or summary prospectus contained therein or furnished by the Company to any such Electing Holder, agent or underwriter, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Electing Holder or underwriter expressly for use therein, and (ii) reimburse the Company and the Guarantors for any legal or other expenses reasonably incurred by the Company and the Guarantors in connection with investigating or defending any such action or claim as such expenses are incurred;

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provided, however, that no such Electing Holder shall be required to undertake liability to any person under this Section 6(b) for any amounts in excess of the dollar amount of the proceeds to be received by such Electing Holder from the sale of such Electing Holder’s Registrable Securities pursuant to such registration.

     (c) Notices of Claims, Etc. Promptly after receipt by an indemnified party under subsection (a) or (b) above of written notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of or contemplated by this Section 6, notify such indemnifying party in writing of the commencement of such action; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under the indemnification provisions of or contemplated by Section 6(a) or 6(b) hereof. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the indemnifying party shall not be liable for legal expenses incurred by such indemnified party prior to such notice of more than one separate firm of attorneys (in addition to any local counsel). No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

     (d) Contribution. If for any reason the indemnification provisions contemplated by Section 6(a) or Section 6(b) are unavailable to or insufficient to hold harmless an indemnified party, or if the indemnified party failed to give the notice required under Section 6(c), in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 6(d) were determined by pro rata allocation (even if the holders or any agents or underwriters or all of them were treated as one entity for such purpose) or by any other

18

method of allocation which does not take account of the equitable considerations referred to in this Section 6(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6(d), no holder shall be required to contribute any amount in excess of the amount by which the dollar amount of the proceeds received by such holder from the sale of any Registrable Securities (after deducting any fees, discounts and commissions applicable thereto) exceeds the amount of any damages which such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The holders’ and any underwriters’ obligations in this Section 6(d) to contribute shall be several in proportion to the principal amount of Registrable Securities registered or underwritten, as the case may be, by them and not joint.

     (e) The obligations of the Company and the Guarantors under this Section 6 shall be in addition to any liability which the Company or the Guarantors may otherwise have and shall extend, upon the same terms and conditions, to each officer, director and partner of each holder, agent and underwriter and each person, if any, who controls any holder, agent or underwriter within the meaning of the Securities Act; and the obligations of the holders and any agents or underwriters contemplated by this Section 6 shall be in addition to any liability which the respective holder, agent or underwriter may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company or the Guarantors (including any person who, with his consent, is named in any registration statement as about to become a director of the Company or the Guarantors) and to each person, if any, who controls the Company within the meaning of the Securities Act.

     7. Underwritten Offerings.

     (a) Selection of Underwriters. If any of the Registrable Securities covered by the Shelf Registration are to be sold pursuant to an underwritten offering, the managing underwriter or underwriters thereof shall be designated by Electing Holders holding at least a majority in aggregate principal amount of the Registrable Securities to be included in such offering, provided that such designated managing underwriter or underwriters is or are reasonably acceptable to the Company.

     (b) Participation by Holders. Each holder of Registrable Securities hereby agrees with each other such holder that no such holder may participate in any underwritten offering hereunder unless such holder (i) agrees to sell such holder’s Registrable Securities on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

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     8. Rule 144.

               The Company covenants to the holders of Registrable Securities for so long as any Registrable Securities remain outstanding that to the extent it shall be required to do so under the Exchange Act, the Company (or the Parent) shall timely file the reports required to be filed by it (or the Parent) under the Exchange Act or the Securities Act (including the reports under Section 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the Commission under the Securities Act) and the rules and regulations adopted by the Commission thereunder, and shall take such further action as any holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar or successor rule or regulation hereafter adopted by the Commission.

     9. Miscellaneous.

     (a) No Inconsistent Agreements. The Company represents, warrants, covenants and agrees that it has not granted, and shall not grant, registration rights with respect to Registrable Securities or any other securities which would be inconsistent with the terms contained in this Exchange and Registration Rights Agreement.

     (b) Specific Performance. The parties hereto acknowledge that there would be no adequate remedy at law if the Company fails to perform any of its obligations hereunder and that the Purchasers and the holders from time to time of the Registrable Securities may be irreparably harmed by any such failure, and accordingly agree that the Purchasers and such holders, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of the obligations of the Company under this Exchange and Registration Rights Agreement in accordance with the terms and conditions of this Exchange and Registration Rights Agreement, in any court of the United States or any State thereof having jurisdiction.

     (c) Notices. All notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, if delivered personally or by courier, or three days after being deposited in the mail (registered or certified mail, postage prepaid, return receipt requested) as follows: If to the Company, to it at One Emmis Plaza, 7th Floor, 40 Monument Circle, Indianapolis, Indiana 46204, Attention: Scott Enright, Esq., and if to a holder, to the address of such holder set forth in the security register or other records of the Company, or to such other address as the Company or any such holder may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

     (d) Parties in Interest. All the terms and provisions of this Exchange and Registration Rights Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and the holders from time to time of the Registrable Securities and the respective successors and assigns of the parties hereto and such holders. In the event that any transferee of any holder of Registrable Securities shall acquire Registrable Securities, in any manner, whether by gift, bequest, purchase, operation of law or otherwise, such transferee shall, without any further writing or action of any kind, be deemed a beneficiary hereof for all purposes and such Registrable Securities shall be held subject to all of the terms of this Exchange and Registration Rights Agreement, and by taking and holding such Registrable Securities such transferee shall be entitled to receive

20

the benefits of, and be conclusively deemed to have agreed to be bound by all of the applicable terms and provisions of this Exchange and Registration Rights Agreement. If the Company shall so request, any such successor, assign or transferee shall agree in writing to acquire and hold the Registrable Securities subject to all of the applicable terms hereof.

     (e) Survival. The respective indemnities, agreements, representations, warranties and each other provision set forth in this Exchange and Registration Rights Agreement or made pursuant hereto shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf of any holder of Registrable Securities, any director, officer or partner of such holder, any agent or underwriter or any director, officer or partner thereof, or any controlling person of any of the foregoing, and shall survive delivery of and payment for the Registrable Securities pursuant to the Purchase Agreement and the transfer and registration of Registrable Securities by such holder and the consummation of an Exchange Offer.

     (f) Governing Law. This Exchange and Registration Rights Agreement shall be governed by and construed in accordance with the laws of the State of New York.

     (g) Headings. The descriptive headings of the several Sections and paragraphs of this Exchange and Registration Rights Agreement are inserted for convenience only, do not constitute a part of this Exchange and Registration Rights Agreement and shall not affect in any way the meaning or interpretation of this Exchange and Registration Rights Agreement.

     (h) Entire Agreement; Amendments. This Exchange and Registration Rights Agreement and the other writings referred to herein (including the Indenture and the form of Securities) or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. This Exchange and Registration Rights Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. This Exchange and Registration Rights Agreement may be amended and the observance of any term of this Exchange and Registration Rights Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument duly executed by the Company and the holders of at least a majority in aggregate principal amount of the Registrable Securities at the time outstanding. Each holder of any Registrable Securities at the time or thereafter outstanding shall be bound by any amendment or waiver effected pursuant to this Section 9(h), whether or not any notice, writing or marking indicating such amendment or waiver appears on such Registrable Securities or is delivered to such holder.

     (i) Inspection. For so long as this Exchange and Registration Rights Agreement shall be in effect, this Exchange and Registration Rights Agreement and a list of the names and addresses of all the holders of Registrable Securities of which the Company has knowledge shall be made available for inspection and copying on any business day by any holder of Registrable Securities for proper purposes only (which shall include any purpose related to the rights of the holders of Registrable Securities under the Securities, the Indenture and this Agreement) at the offices of the Company at the address thereof set forth in Section 9(c) above and at the office of the Trustee under the Indenture.

     (j) Counterparts. This agreement may be executed by the parties in counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument.

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     If the foregoing is in accordance with your understanding, please sign and return to us eight counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Purchasers, this letter and such acceptance hereof shall constitute a binding agreement between each of the Purchasers, the Guarantors and the Company. It is understood that your acceptance of this letter on behalf of each of the Purchasers is pursuant to the authority set forth in a form of Agreement among Purchasers, the form of which shall be submitted to the Company for examination upon request, but without warranty on your part as to the authority of the signers thereof.

Very truly yours,

Emmis Operating Company

By:	/s/ J. Scott Enright
	Name:	J. Scott Enright
	Title:	Vice President and Associate General Counsel

Emmis Communications Corporation
Emmis Radio Corporation
Emmis Television Broadcasting, L.P.
Emmis Publishing, L.P.
Emmis Indiana Broadcasting, L.P.
SJL of Kansas Corp.
Topeka Television Corporation
Emmis International Broadcasting Corporation
Emmis Meadowlands Corporation
Emmis Publishing Corporation
Emmis License Corporation
Emmis Television License Corporation
Emmis Radio License Corporation
Emmis License Corporation of New York
Emmis Radio License Corporation of New York
Emmis Television License Corporation of Wichita
Emmis Television License Corporation of Topeka
Mediatex Communications Corporation
Los Angeles Magazine Holding Company, Inc.

By:	/s/ J. Scott Enright
	Name:	J. Scott Enright
	Title:	Vice President and Associate General Counsel

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Accepted as of the date hereof:
Goldman, Sachs & Co.

By: /s/ Goldman, Sachs & Co. (Goldman, Sachs & Co.)

On behalf of each of the Purchasers

23

Schedule I

Emmis Communications Corporation

Emmis Radio Corporation

Emmis Television Broadcasting, L.P.

Emmis Publishing, L.P.

Emmis Indiana Broadcasting, L.P.

SJL of Kansas Corp.

Topeka Television Corporation

Emmis International Broadcasting Corporation

Emmis Meadowlands Corporation

Emmis Publishing Corporation

Emmis License Corporation

Emmis Television License Corporation

Emmis Radio License Corporation

Emmis License Corporation of New York

Emmis Radio License Corporation of New York

Emmis Television License Corporation of Wichita

Emmis Television License Corporation of Topeka

Mediatex Communications Corporation

Los Angeles Magazine Holding Company, Inc.

24

Exhibit A

Emmis Operating Company

INSTRUCTION TO DTC PARTICIPANTS

(Date of Mailing)

URGENT — IMMEDIATE ATTENTION REQUESTED

DEADLINE FOR RESPONSE: [DATE] *

The Depository Trust Company (“DTC”) has identified you as a DTC Participant through which beneficial interests in the Emmis Operating Company (the “Company”) 6?% Senior Subordinated Notes due 2012 (the “Securities”) are held.

The Company is in the process of registering the Securities under the Securities Act of 1933 for resale by the beneficial owners thereof. In order to have their Securities included in the registration statement, beneficial owners must complete and return the enclosed Notice of Registration Statement and Selling Securityholder Questionnaire.

It is important that beneficial owners of the Securities receive a copy of the enclosed materials as soon as possible as their rights to have the Securities included in the registration statement depend upon their returning the Notice and Questionnaire by [Deadline For Response]. Please forward a copy of the enclosed documents to each beneficial owner that holds interests in the Securities through you. If you require more copies of the enclosed materials or have any questions pertaining to this matter, please contact Emmis Operating Company, One Emmis Plaza, 7th Floor, 40 Monument Circle, Indianapolis, Indiana 46204, Attention: Scott Enright, Esq., (317) 684-6535.

*Not less than 10 calendar days from date of mailing.

A-1

Emmis Operating Company

Notice of Registration Statement
and
Selling Securityholder Questionnaire

(Date)

Reference is hereby made to the Exchange and Registration Rights Agreement (the “Exchange and Registration Rights Agreement”) among Emmis Operating Company (the “Company”), the Guarantors party thereto and the Purchasers named therein. Pursuant to the Exchange and Registration Rights Agreement, the Company has filed with the United States Securities and Exchange Commission (the “Commission”) a registration statement on Form [   ] (the “Shelf Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Company’s 6?% Senior Subordinated Notes due 2012 (the “Securities”). A copy of the Exchange and Registration Rights Agreement is attached hereto. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Exchange and Registration Rights Agreement.

Each beneficial owner of Registrable Securities (as defined below) is entitled to have the Registrable Securities beneficially owned by it included in the Shelf Registration Statement. In order to have Registrable Securities included in the Shelf Registration Statement, this Notice of Registration Statement and Selling Securityholder Questionnaire (“Notice and Questionnaire”) must be completed, executed and delivered to the Company’s counsel at the address set forth herein for receipt ON OR BEFORE [Deadline for Response]. Beneficial owners of Registrable Securities who do not complete, execute and return this Notice and Questionnaire by such date (i) will not be named as selling securityholders in the Shelf Registration Statement and (ii) may not use the Prospectus forming a part thereof for resales of Registrable Securities.

Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and related Prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and related Prospectus.

The term “Registrable Securities” is defined in the Exchange and Registration Rights Agreement.

A-2

ELECTION

The undersigned holder (the “Selling Securityholder”) of Registrable Securities hereby elects to include in the Shelf Registration Statement the Registrable Securities beneficially owned by it and listed below in Item (3). The undersigned, by signing and returning this Notice and Questionnaire, agrees to be bound with respect to such Registrable Securities by the terms and conditions of this Notice and Questionnaire and the Exchange and Registration Rights Agreement, including, without limitation, Section 6 of the Exchange and Registration Rights Agreement, as if the undersigned Selling Securityholder were an original party thereto.

Upon any sale of Registrable Securities pursuant to the Shelf Registration Statement, the Selling Securityholder will be required to deliver to the Company and Trustee the Notice of Transfer set forth in Appendix A to the Prospectus and as Exhibit B to the Exchange and Registration Rights Agreement.

The Selling Securityholder hereby provides the following information to the Company and represents and warrants that such information is accurate and complete:

A-3

QUESTIONNAIRE

(1)	(a)	Full Legal Name of Selling Securityholder:
	(b)	Full Legal Name of Registered Holder (if not the same as in (a) above) of Registrable Securities Listed in Item (3) below:
	(c)	Full Legal Name of DTC Participant (if applicable and if not the same as (b) above) Through Which Registrable Securities Listed in Item (3) below are Held:
(2)		Address for Notices to Selling Securityholder:

Telephone:

Fax:

Contact Person:

(3)		Beneficial Ownership of Securities:
		Except as set forth below in this Item (3), the undersigned does not beneficially own any Securities.
	(a)	Principal amount of Registrable Securities beneficially owned:
		CUSIP No(s). of such Registrable Securities:
	(b)	Principal amount of Securities other than Registrable Securities beneficially owned:
		CUSIP No(s). of such other Securities:
	(c)	Principal amount of Registrable Securities which the undersigned wishes to be included in the Shelf Registration Statement:
		CUSIP No(s). of such Registrable Securities to be included in the Shelf Registration Statement:
(4)		Beneficial Ownership of Other Securities of the Company:
		Except as set forth below in this Item (4), the undersigned Selling Securityholder is not the beneficial or registered owner of any other securities of the Company, other than the Securities listed above in Item (3).
		State any exceptions here:

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(5)	Relationships with the Company:
	Except as set forth below, neither the Selling Securityholder nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
	State any exceptions here:
(6)	Plan of Distribution:
	Except as set forth below, the undersigned Selling Securityholder intends to distribute the Registrable Securities listed above in Item (3) only as follows (if at all): Such Registrable Securities may be sold from time to time directly by the undersigned Selling Securityholder or, alternatively, through underwriters, broker-dealers or agents. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block transactions) (i) on any national securities exchange or quotation service on which the Registered Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market, or (iv) through the writing of options. In connection with sales of the Registrable Securities or otherwise, the Selling Securityholder may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities in the course of hedging the positions they assume. The Selling Securityholder may also sell Registrable Securities short and deliver Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities.
	State any exceptions here:

By signing below, the Selling Securityholder acknowledges that it understands its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act and the rules and regulations thereunder, particularly Regulation M.

In the event that the Selling Securityholder transfers all or any portion of the Registrable Securities listed in Item (3) above after the date on which such information is provided to the Company, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Notice and Questionnaire and the Exchange and Registration Rights Agreement.

By signing below, the Selling Securityholder consents to the disclosure of the information contained herein in its answers to Items (1) through (6) above and the inclusion of such information in the Shelf Registration Statement and related Prospectus. The Selling Securityholder understands that such information will be relied upon by the Company in connection with the preparation of the Shelf Registration Statement and related Prospectus.

In accordance with the Selling Securityholder’s obligation under Section 3(d) of the Exchange and Registration Rights Agreement to provide such information as may be required by law for

A-5

inclusion in the Shelf Registration Statement, the Selling Securityholder agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein which may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains in effect. All notices hereunder and pursuant to the Exchange and Registration Rights Agreement shall be made in writing, by hand-delivery, first-class mail, or air courier guaranteeing overnight delivery as follows:

(i) To the Company:

Emmis Operating Company
One Emmis Plaza, 7th Floor
40 Monument Circle
Indianapolis, Indiana 46204
Attention: Scott Enright, Esq.

(ii) With a copy to:

Paul, Weiss, Rifkind, Wharton &
Garrison LLP
1285 Avenue of the Americas
New York, New York
Attention: John C. Kennedy, Esq.

Once this Notice and Questionnaire is executed by the Selling Securityholder and received by the Company’s counsel, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and assigns of the Company and the Selling Securityholder (with respect to the Registrable Securities beneficially owned by such Selling Securityholder and listed in Item (3) above). This Agreement shall be governed in all respects by the laws of the State of New York.

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IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

     Dated:                                      

Selling Securityholder

(Print/type full legal name of beneficial owner of Registrable Securities)

By:

Name:

Title:

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY’S COUNSEL AT:

Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, New York
Attention: John C. Kennedy, Esq.

A-7

Exhibit B

NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT

The Bank of Nova Scotia Trust Company of New York
Emmis Operating Company
c/o The Bank of Nova Scotia Trust Company of New York
[Address of Trustee]

Attention: Trust Officer

Re:	Emmis Operating Company (the “Company”)
	6 7/8% Senior Subordinated Notes due 2012

Dear Sirs:

Please be advised that                                        has transferred $                                       aggregate principal amount of the above-referenced Notes pursuant to an effective Registration Statement on Form [                   ] (File No. 333-                   ) filed by the Company.

We hereby certify that the prospectus delivery requirements, if any, of the Securities Act of 1933, as amended, have been satisfied and that the above-named beneficial owner of the Notes is named as a “Selling Holder” in the Prospectus dated [date] or in supplements thereto, and that the aggregate principal amount of the Notes transferred are the Notes listed in such Prospectus opposite such owner’s name.

Dated:

Very truly yours,
	(Name)
By:
	(Authorized Signature)

B-1

EX-10.31

Exhibit 10.31

AIRCRAFT TIME SHARING AGREEMENT

Dated as of the 22nd day of January, 2003.
between
Emmis Operating Company
as Operator,
and
Jeffrey H. Smulyan,
as Time Share Lessee,

Concerning one Gulfstream Aerospace G-IV aircraft bearing
U.S. registration number N971EC,
and
Manufacturer’s serial number 1000.

* * *

INSTRUCTIONS FOR COMPLIANCE WITH
“TRUTH IN LEASING” REQUIREMENTS UNDER FAR § 91.23

Within 24 hours after execution of this Agreement:
mail a copy of the executed document, without Exhibits A and B, to the
following address via certified mail, return receipt requested:

Federal Aviation Administration
Aircraft Registration Branch
ATTN: Technical Section
P.O. Box 25724
Oklahoma City, Oklahoma 73125

At least 48 hours prior to the first flight to be conducted under this Agreement:
provide notice of the departure airport and proposed time of departure
of said first flight, by telephone or facsimile, to the Flight Standards
District Office located nearest the departure airport.

Carry a copy of this Agreement in the aircraft at all times.

* * *

Exhibits A and B are intentionally omitted for FAA submission purposes.

     This AIRCRAFT TIME SHARING AGREEMENT (the “Agreement”) is made and effective as of the 22^nd day of January, 2003, (the “Effective Date”), by and between Emmis Operating Company, an Indiana corporation (“Operator”), and Jeffrey H. Smulyan, an Indiana resident (“Time Share Lessee”).

W I T N E S S E T H :

     WHEREAS, Operator controls and operates in the legal capacity of lessee the Aircraft described and referred to herein;

     WHEREAS, Operator contracts for the services of a fully qualified flight crew to operate the Aircraft;

     WHEREAS, Time Share Lessee desires to sublease the Aircraft, with a flight crew, on a non-exclusive basis, from Operator on a time sharing basis as defined in Section 91.501(c)(1) of the FAR;

     WHEREAS, Operator is willing to sublease the Aircraft, with flight crew, on a non-exclusive basis, to Time Share Lessee on a time sharing basis; and

     WHEREAS, during the Term of this Agreement, the Aircraft will be subject to use by Operator and/or other one or more subleases to third-parties.

     NOW, THEREFORE, in consideration of the mutual promises herein contained and other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.	Definitions. The following terms shall have the following meanings for all purposes of this Agreement:
	“Aircraft” means the Airframe, the Engines, and the Aircraft Documents. Such Engines shall be deemed part of the “Aircraft” whether or not from time to time attached to the Airframe or on the ground.
	“Aircraft Documents” means all flight records, maintenance records, historical records, modification records, overhaul records, manuals, logbooks, authorizations, drawings and data relating to the Airframe, any Engine, or any Part, that have been provided to Time Share Lessee by Operator, or are required by Applicable Law to be created or maintained with respect to the maintenance and/or operation of the Aircraft.
	“Airframe” means the Gulfstream Aerospace G-IV airframe bearing manufacturer’s serial number 1000 and United States registration number N971EC, together with any and all Parts (including, but not limited to, landing gear and auxiliary power units but excluding Engines or engines) so long as such Parts shall be either incorporated or installed in or attached to the Airframe.
	“Applicable Law” means, without limitation, all applicable laws, treaties, international agreements, decisions and orders of any court, arbitration or governmental agency or authority and rules, regulations, orders, directives, licenses and permits of any governmental body, instrumentality, agency or authority, including, without limitation, the FAR and 49 U.S.C. § 41101, et seq., as amended.
	“Business Day” means any day of the year in which banks are not authorized or required to close in the State of Indiana.
	“Consent to Sublease” means that certain Consent to Sublease of even date herewith by and among Owner, Operator, and Time Share Lessee, a copy of which is attached hereto as Exhibit B, the terms and conditions of which are incorporated into this Agreement by reference
	“Engines” means two (2) Rolls Royce TAY MK611-8 model engines, serial numbers 16001 and 16002, together with any and all Parts so long as the same shall be either incorporated or installed in or attached to such Engine. An Engine shall remain subleased hereunder whether or not from time to time attached to the Airframe or on the ground.

	“FAA” means the Federal Aviation Administration or any successor agency.
	“FAR” means collectively the Aeronautics Regulations of the Federal Aviation Administration and the Department of Transportation, as codified at Title 14, Parts 1 to 399 of the United States Code of Federal Regulations.
	“Flight Hour” means each flight hour of use of the Aircraft by Time Share Lessee, as recorded on the Aircraft hour meter.
	“Headlease” means that certain Aircraft Lease Agreement dated as of September 27, 2002 between Owner and Operator, a copy of which is attached hereto as Exhibit A, the terms and conditions of which are incorporated into this Agreement by reference.
	“Operating Base” means Indianapolis International Airport, Indianapolis, Indiana.
	“Operational Control” has the same meaning given the term in Section 1.1 of the FAR.
	“Owner” means AVN Air, LLC.
	“Parts” means all appliances, components, parts, instruments, appurtenances, accessories, furnishings or other equipment of whatever nature (other than complete Engines or engines) which may from time to time be incorporated or installed in or attached to the Airframe or any Engine and includes replacement parts.
	“Pilot in Command” has the same meaning given the term in Section 1.1 of the FAR.
	“Taxes” means all sales taxes, use taxes, retailer taxes, duties, fees, excise taxes (including, without limitation, federal transportation excise taxes), or other taxes of any kind which may be assessed or levied by any Taxing Jurisdiction as a result of the sublease of the Aircraft to Time Share Lessee, or the use of the Aircraft by Time Share Lessee, or the provision of a taxable transportation service to Time Share Lessee using the Aircraft.
	“Taxing Jurisdictions” means any federal, state, county, local, airport, district, foreign, or other governmental authority that imposes Taxes.
	“Term” means the term of this Agreement set forth in Section 3.
2.	Agreement to Sublease. Operator agrees to sublease the Aircraft to Time Share Lessee on as “as needed and as available” basis, and to provide a fully qualified flight crew for all Time Share Lessee’s flight operations, in accordance with the terms and conditions of this Agreement.
3.	Term. The term of this Agreement shall commence on the Effective Date and continue for a period of one (1) year. At the end of the initial one (1) year Term or any subsequent one (1) year Term, this Agreement shall automatically be renewed for an additional one (1) year Term. The foregoing notwithstanding, each party shall have the right to terminate this Agreement with or without cause on thirty (30) days written notice to the other party.
4.	Intent and Interpretation. The parties hereto intend that this Agreement shall constitute, and this Agreement shall be interpreted as, a Time Sharing Agreement as defined in Section 91.501(c)(1) of the FAR.
5.	Non-Exclusivity. Time Share Lessee acknowledges that the Aircraft is subleased to Time Share Lessee hereunder on a non-exclusive basis, and that the Aircraft will also be subject use by Operator, and may also be subject to non-exclusive sublease to others during the Term.
6.	Flight Charges. Time Share Lessee shall pay Operator for each flight conducted under this Agreement an

2

amount equal to the lesser of the following:

6.1	an amount equal to the product of the number of Flight Hours of the duration of the flight, rounded to the nearest 1/10th of a Flight Hour, multiplied by the Gulfstream IV Total Direct Costs Per Flight Hour as published by Conklin & de Decker Aviation Information, as updated from time to time; and
6.2	an amount equal to the maximum amount of expense reimbursement permitted in accordance with Section 91.501(d) of the FAR, which expenses include and are limited to:

6.2.1	fuel, oil, lubricants, and other additives;
6.2.2	travel expenses of the crew, including food, lodging and ground transportation;
6.2.3	hangar and tie down costs away from the Aircraft’s base of operation;
6.2.4	insurance obtained for the specific flight;
6.2.5	landing fees, airport taxes and similar assessments;
6.2.6	customs, foreign permit, and similar fees directly related to the flight;
6.2.7	in-flight food and beverages;
6.2.8	passenger ground transportation;
6.2.9	flight planning and weather contract services; and
6.2.10	an additional charge equal to 100% of the expenses listed in Section 6.2.1.

7.	Invoices and Payment. Operator will initially pay all expenses related to the operation of the Aircraft when and as such expenses are incurred, provided that within fifteen (15) days after the last day of any calendar month during which any flight for the account of Time Share Lessee has been conducted, Operator shall provide an invoice to Time Share Lessee for an amount determined in accordance with Section 6 above. Time Share Lessee shall remit the full amount of any such invoice, together with any applicable Taxes under Section 8, to Operator promptly within fifteen (15) days of the invoice date.
8.	Taxes. No payments to be made by Time Share Lessee under Sections 6 and 7 of this Agreement includes, and Time Share Lessee shall be responsible for, shall indemnify and hold harmless Operator against, any Taxes which may be assessed or levied by any Taxing Jurisdiction as a result of the sublease of the Aircraft to Time Share Lessee, or the use of the Aircraft by Time Share Lessee, or the provision of a taxable transportation service to Time Share Lessee using the Aircraft. Without limiting the generality of the foregoing, Time Share Lessee and Operator specifically acknowledge that all Time Share Lessee’s flights will be subject to commercial air transportation excise taxes pursuant to Section 4261 of the Internal Revenue Code, regardless of whether any such flight is considered “noncommercial” under the FAR. Time Share Lessee shall remit to Operator all such Taxes together with each payment made pursuant to Section 7.
9.	Scheduling Flights.

9.1

Submitting Flight Requests. Time Share Lessee shall submit requests for flight time and proposed flight schedules to Operator as far in advance of any given flight as possible, and in any case, at least 24 hours in advance of Time Share Lessee’s planned departure. Time Share Lessee shall provide at least the following information for each proposed flight at least 24 hours prior to scheduled departure: departure airport; destination airport; date and time of departure; the number of anticipated passengers; the nature and extent of luggage and/or cargo to be carried; the date and time of return flight, if any; and any other information concerning the proposed flight that may be pertinent or required by Operator or Operator’s flight crew.

9.2

Approval of Flight Requests. Each use of the Aircraft by Time Share Lessee shall be subject to Operator’s prior approval in writing. Operator may approve or deny any flight scheduling request in Operator’s sole discretion. Scheduling requests not approved in writing by 5:00 p.m. Indianapolis local time on the 2nd Business Day after the request is received by Operator shall be deemed denied. Operator shall be under no obligation to approve any flight request submitted by Time Share Lessee, and shall have final authority over the scheduling of the Aircraft, provided,

3

	however, that Operator will use reasonable efforts to accommodate Time Share Lessee’s needs and avoid conflicts in scheduling.
9.3	Subordinated Use of Aircraft. Time Share Lessee’s rights to schedule use of the Aircraft during the Term of this Agreement shall at all times be subordinate to the Aircraft use requirements of Operator, and any parent corporation, subsidiary or affiliate of Operator to which Operator has subleased or hereafter subleases the Aircraft (each an “Operator Related Sublessee”), and Operator and each Operator Related Sublessee shall at all times be entitled to preempt any scheduled, unscheduled, and anticipated use of the Aircraft by Time Share Lessee, notwithstanding any prior approval by Operator of a request by Time Share Lessee to schedule a flight.
9.4	Priority Use of Aircraft. Time Share Lessee’s rights to schedule use of the Aircraft during the Term of this Agreement shall, subject to Section 9.2, at all times be superior to the Aircraft use requirements of any person to whom, or entity to which, Operator has subleased or hereafter subleases the Aircraft other than an Operator Related Sublessee (any such person or entity an “Unrelated Sublessee”), and Time Share Lessee shall at all times be entitled to preempt any scheduled, unscheduled, and anticipated use of the Aircraft by any Unrelated Subessee.

10.	Title and Registration; Subordination. Owner has exclusive and equitable title to the Aircraft, and Operator has exclusive leasehold possessory rights to the Aircraft pursuant to the Headlease. Time Share Lessee acknowledges that title to the Aircraft shall remain vested in Owner, and Time Share Lessee undertakes, to the extent permitted by Applicable Law, to do all such further acts, deeds, assurances or things as may, (i) in the reasonable opinion of the Owner, be necessary or desirable in order to protect or preserve Operator’s title to the Aircraft, and (ii) in the reasonable opinion of the Operator, be necessary or desirable in order to protect or preserve Operator’s rights under the Headlease. Time Share Lessee acknowledges that it has executed the Consent to Sublease, the terms and conditions of which are incorporated in this Agreement by reference, and agrees to abide by the terms of the Consent to Sublease. Notwithstanding anything in this Agreement to the contrary, any rights Time Share Lessee may have in or to the Aircraft by virtue of this Agreement, including Time Share Lessee’s rights to possession and use of the Aircraft, are in all respects subordinate, junior, and subject to Owner’s rights and interests under the Headlease, including, without limitation, the right of Owner to take possession of the Aircraft and Engines upon Operator’s default under the Headlease. To the extent requested by Owner, its successors or assigns, Time Share Lessee shall take all action necessary to continue all right, title and interest of Owner, its successors or assigns in the Aircraft under Applicable Law.
11.	Aircraft Maintenance and Flight Crew. Operator shall be solely responsible for maintenance, preventive maintenance and required or otherwise necessary inspections of the Aircraft, and shall take such requirements into account in scheduling the Aircraft. No period of maintenance, preventative maintenance, or inspection shall be delayed or postponed for the purpose of scheduling the Aircraft, unless said maintenance or inspection can be safely conducted at a later time in compliance with all applicable laws and regulations, and with the sound discretion of the pilot in command.
12.	Flight Crews. Operator shall provide to Time Share Lessee a qualified flight crew for each flight conducted in accordance with this Agreement. Operator chooses not to hire its own pilots but to contract for pilot services from a third party vendor. Although the flight crew is supplied by a third party vendor, the flight crew is under the exclusive command and control of Operator in all phases of all flights conducted hereunder.
13.	OPERATIONAL CONTROL. THE PARTIES EXPRESSLY AGREE THAT OPERATOR SHALL HAVE AND MAINTAIN OPERATIONAL CONTROL OF THE AIRCRAFT FOR ALL FLIGHTS OPERATED UNDER THIS AGREEMENT, AND THAT THE INTENT OF THE PARTIES IS THAT THIS AGREEMENT CONSTITUTE A “TIME SHARING AGREEMENT” AS SUCH TERM IS DEFINED IN SECTION 91.501(C)(1) OF THE FAR. OPERATOR SHALL EXERCISE EXCLUSIVE AUTHORITY OVER INITIATING, CONDUCTING, OR TERMINATING ANY FLIGHT CONDUCTED ON BEHALF OF TIME SHARE LESSEE PURSUANT TO THIS AGREEMENT.

4

14.	Authority of Pilot In Command. Notwithstanding that Operator shall have Operational Control of the Aircraft during any flight conducted pursuant to this Agreement, Operator and Time Share Lessee expressly agree that the Pilot in Command, in his or her sole discretion, may terminate any flight, refuse to commence any flight, or take any other flight-related action which in the judgment of the Pilot in Command is necessitated by considerations of safety. The Pilot in Command shall have final and complete authority to postpone or cancel any flight for any reason or condition which in his or her judgment would compromise the safety of the flight. No such action of the Pilot in Command shall create or support any liability of Operator to Time Share Lessee for loss, injury, damage or delay.
15.	Force Majeure. Operator shall not be liable for delay or failure to furnish the Aircraft and flight crew pursuant to this Agreement when such failure is caused by government regulation or authority, mechanical difficulty, war, civil commotion, strikes or labor disputes, weather conditions, acts of God or other unforeseen or unanticipated circumstances.
16.	Insurance.

16.1	Liability. Operator shall maintain, or cause to be maintained, bodily injury and property damage, liability insurance in an amount no less than One Hundred Million United States Dollars (US$ 100,000,000.00) Combined Single Limit for the benefit of itself, Time Share Lessee, and Owner, in connection with the use of the Aircraft. Said policy shall be an occurrence policy naming Owner, Operator and Time Share Lessee as Named Insured.
16.2	Hull. Operator shall maintain, or cause to be maintained, all risks aircraft hull insurance in an amount equal to the fair market value of the Aircraft, which the parties agree is not less than Seventeen Million United States Dollars (US$ 17,000,000.00), and such insurance shall name Owner and Operator as loss payees as their interests may appear.
16.3	Insurance Certificates. Operator will provide Time Share Lessee with a Certificate of Insurance upon execution of this Agreement.

17. Representations and Warranties. Time Share Lessee represents and warrants that:

17.1	Time Share Lessee will use the Aircraft solely for and on account of his own personal or business use, and will not use the Aircraft for the purpose of providing transportation of passengers or cargo for compensation or hire;
17.2	Time Share Lessee shall refrain from incurring any mechanic’s or other lien in connection with inspection, preventative maintenance, maintenance or storage of the Aircraft, whether permissible or impermissible under this Agreement, nor shall there be any attempt by Time Share Lessee to convey, mortgage, assign, lease, sublease, or any way alienate the Aircraft or create any kind of lien or security interest involving the Aircraft or do anything or take any action that might mature into such a lien; and
17.3	during the Term of this Agreement, Time Share Lessee will abide by and conform to all Applicable Laws, governmental and airport orders, rules and regulations, as shall from time to time be in effect relating in any way to the operation and use of the Aircraft by a time sharing Time Share Lessee.

18.	No Assignments Neither this Agreement nor any party’s interest herein shall be assignable to any other party whatsoever; provided, however, that the rights and obligations of the Operator may be assigned without the consent of the Time Share Lessee to the any assignee of Operator’s rights and obligations under the Headlease.
19.	Governing Law. This Agreement has been negotiated and delivered in the state of Indiana and shall in all respects be governed by, and construed in accordance with, the laws of the State of Indiana, including all

5

	matters of construction, validity and performance, without giving effect to its conflict of laws provisions.
20.	Entire Agreement. This Agreement constitutes the entire agreement of the parties as of the Effective Date and supersedes all prior or independent, oral or written agreements, understandings, statements, representations, commitments, promises, and warranties made with respect to the subject matter of this Agreement.
21.	Prohibited or Unenforceable Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibitions or unenforceability in any jurisdiction. To the extent permitted by applicable law, each of Operator and Time Share Lessee hereby waives any provision of applicable law which renders any provision hereof prohibited or unenforceable in any respect.
22.	Binding Effect. This Agreement, including all agreements, covenants, representations and warranties, shall be binding upon and inure to the benefit of, and may be enforced by Operator, Time Share Lessee, and each of their respective agents, servants, heirs, representatives and successors.
23.	Headings. The section headings in this Agreement are for convenience of reference only and shall not modify, define, expand, or limit any of the terms or provisions hereof.
24.	Amendments. No term or provision of this Agreement may be changed, waived, discharged, or terminated orally, but only by an instrument in writing signed by both parties.
25.	No Waiver. No delay or omission in the exercise or enforcement or any right or remedy hereunder by either party shall be construed as a waiver of such right or remedy. All remedies, rights, undertakings, obligations, and agreements contained herein shall be cumulative and not mutually exclusive, and in addition to all other rights and remedies which either party possesses at law or in equity.
26.	Notices. All communications, declarations, demands, consents, directions, approvals, instructions, requests and notices required or permitted by this Agreement shall be in writing and shall be deemed to have been duly given or made when delivered personally or transmitted electronically by e-mail or facsimile, receipt acknowledged, or in the case of documented overnight delivery service or registered or certified mail, return receipt requested, delivery charge or postage prepaid, on the date shown on the receipt therefor, in each case at the address set forth below:

If to Operator:	Emmis Operating Company 40 Monument Circle, Suite 700	Tel: Fax:	317-684-6565 317-684-558
	Indianapolis, Indiana 46204	E-Mail:	scotte@emmis.com
	Attn: Legal Department
With a copy to:	Galland, Kharasch, Greenberg,	Tel:	202-342-5251
	Fellman & Swirsky, P.C.	Fax:	202-342-5219
	1054 31st Street, N.W., Suite 200	E-Mail:	kswirsky@gkglaw.com
	Washington, D.C. 20007
	Attn: Keith G. Swirsky
If to Sublessee:	Jeffrey H. Smulyan	Tel:	317-684-6530
	40 Monument Circle, Suite 700	Fax:	317-684-558
	Indianapolis, Indiana 46204	E-Mail:	jeff@emmis.com

27. Both Parties Equally Responsible for Agreement. It is herein agreed that both Operator and Time Share Lessee have equally collaborated in the drafting of this Agreement and both have had the opportunity to confer with legal counsel prior to signing. Due to this fact, both parties take equal responsibility with regard to the drafting of this Agreement and any ambiguities contained herein.

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28. DISCLAIMER. THE AIRCRAFT IS BEING SUBLEASED BY THE OPERATOR TO THE TIME SHARE LESSEE HEREUNDER ON A COMPLETELY “AS IS, WHERE IS,” BASIS, WHICH IS ACKNOWLEDGED AND AGREED TO BY THE TIME SHARE LESSEE. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, AND OPERATOR HAS NOT MADE AND SHALL NOT BE CONSIDERED OR DEEMED TO HAVE MADE (WHETHER BY VIRTUE OF HAVING SUBLEASED THE AIRCRAFT UNDER THIS AGREEMENT, OR HAVING ACQUIRED THE AIRCRAFT, OR HAVING DONE OR FAILED TO DO ANY ACT, OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS AGREEMENT OR OTHERWISE) ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR TO ANY PART THEREOF, AND SPECIFICALLY, WITHOUT LIMITATION, IN THIS RESPECT DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES CONCERNING THE TITLE, AIRWORTHINESS, VALUE, CONDITION, DESIGN, MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION AND CONDITION OF THE AIRCRAFT, OR FITNESS FOR A PARTICULAR USE OF THE AIRCRAFT AND AS TO THE ABSENCE OF LATENT AND OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AND AS TO THE ABSENCE OF ANY INFRINGEMENT OR THE LIKE, HEREUNDER OF ANY PATENT, TRADEMARK OR COPYRIGHT, AND AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT OR ANY PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY ARISING FROM A COURSE OF PERFORMANCE OR DEALING OR USAGE OF TRADE), WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF. TIME SHARE LESSEE HEREBY WAIVES, RELEASES, DISCLAIMS AND RENOUNCES ALL EXPECTATION OF OR RELIANCE UPON ANY SUCH AND OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF OPERATOR AND RIGHTS, CLAIMS AND REMEDIES OF TIME SHARE LESSEE AGAINST OPERATOR, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, INCLUDING BUT NOT LIMITED TO (I) ANY IMPLIED WARRANTY OF MERCHANTABILITY OF FITNESS FOR ANY PARTICULAR USE, (II) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, (III) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF OPERATOR, ACTUAL OR IMPUTED, AND (IV) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO THE AIRCRAFT, FOR LOSS OF USE, REVENUE OR PROFIT WITH RESPECT TO THE AIRCRAFT, OR FOR ANY OTHER DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.

[REST OF PAGE INTENTIONALLY LEFT BLANK]

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29. TRUTH IN LEASING STATEMENT UNDER 14 C.F.R. SECTION 91.23.

WITHIN THE TWELVE (12) MONTH PERIOD PRECEDING THE DATE OF THIS AGREEMENT, EXCEPT TO THE EXTENT THE AIRCRAFT IS LESS THAN TWELVE (12) MONTHS OLD, THE AIRCRAFT HAS BEEN INSPECTED AND MAINTAINED AND IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF TITLE 14 OF THE CODE OF FEDERAL REGULATIONS (SAID TITLE 14 HEREINAFTER REFERRED TO AS THE “FEDERAL AVIATION REGULATIONS” OR THE “FAR”):

CHECK ONE:

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91.409(f) (1): A continuous airworthiness inspection program that is part of a continuous airworthiness maintenance program currently in use by a person holding an air carrier operating certificate or an operating certificate issued under FAR Part 121, 127, or 135 and operating that make and model aircraft under FAR Part 121 or operating that make and model under FAR Part 135 and maintaining it under FAR 135.411(a)(2).

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91.409 (f) (2): An approved aircraft inspection program approved under FAR 135.419 and currently in use by a person holding an operating certificate issued under FAR Part 135.

[Checked] 91.409 (f) (3): A current inspection program recommended by the manufacturer.

9 91.409 (f) (4): Any other inspection program established by the registered owner or operator of the Aircraft and approved by the Administrator of the Federal Aviation Administration in accordance with FAR 91.409 (g).

THE PARTIES HERETO CERTIFY THAT DURING THE TERM OF THIS AGREEMENT AND FOR OPERATIONS CONDUCTED HEREUNDER, THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED IN ACCORDANCE WITH THE PROVISIONS OF FAR:

CHECK ONE:

9 91.409 (f) (1) 9 91.409 (f) (2) [Checked] 91.409 (f) (3) 9 91.409 (f) (4)

OPERATOR SHALL HAVE AND RETAIN OPERATIONAL CONTROL OF THE AIRCRAFT DURING ALL OPERATIONS CONDUCTED PURSUANT TO THIS LEASE. EACH PARTY HERETO CERTIFIES THAT IT UNDERSTANDS THE EXTENT OF ITS RESPONSIBILITIES, SET FORTH HEREIN, FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.

AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FEDERAL AVIATION ADMINISTRATION FLIGHT STANDARDS DISTRICT OFFICE.

THE PARTIES HERETO CERTIFY THAT A TRUE COPY OF THIS AGREEMENT SHALL BE CARRIED ON THE AIRCRAFT AT ALL TIMES, AND SHALL BE MADE AVAILABLE FOR INSPECTION UPON REQUEST BY AN APPROPRIATELY CONSTITUTED IDENTIFIED REPRESENTATIVE OF THE ADMINISTRATOR OF THE FAA.

* * *

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     IN WITNESS WHEREOF, the parties have executed this Aircraft Time Sharing Agreement as of the date and year first written above.

OPERATOR: TIME SHARE LESSEE:

Emmis Operating Company

By:	/s/ J. Scott Enright	/s/ Jeffrey H. Smulyan
Print:	J. Scott Enright	Jeffrey H. Smulyan
Title:	Vice President

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AIRCRAFT TIME SHARING AGREEMENT

Exhibit A

(Attach Headlease)

10

AIRCRAFT TIME SHARING AGREEMENT

Exhibit B

(Atach Consent to Sublease)

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EX-10.32

Exhibit 10.32

TAX SHARING AGREEMENT

     THIS TAX SHARING AGREEMENT (the “Agreement”), dated as of May 10, 2004, is entered into between Emmis Communications Corporation, an Indiana corporation (“Parent”), and Emmis Operating Company, an Indiana corporation (“Subsidiary”).

     Parent is the common parent corporation of an affiliated group of corporations within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as amended (the “Code”), that has elected to file consolidated federal income tax returns, and Subsidiary is a member of such group.

     Parent and Subsidiary desire to set forth in this Agreement their agreement as to certain matters relating to the inclusion of the Subsidiary Consolidated Group (as defined below) in the Parent Consolidated Group (as defined below), including the allocation of tax liabilities for years in which Subsidiary is so included, and certain other matters relating to taxes.

     The parties agree as follows:

     1. DEFINITIONS.

     “Adjustment” shall have the meaning set forth in Section 8.

     “Agreement Year” shall mean any taxable year beginning on or after February 29, 2004 during which the Subsidiary Consolidated Group is included in the Parent Consolidated Group.

     “Balance Payment” shall have the meaning set forth in Section 4.

     “Code” shall have the meaning set forth above.

     “Estimated Tax Payments” shall have the meaning set forth in Section 4.

     “Final Determination” shall mean the final resolution of any tax matter, including, but not limited to, a closing agreement with the IRS or the relevant state, local or foreign taxing authority, a claim for refund which has been allowed, a deficiency notice with respect to which the period for filing a petition with the Tax Court or the relevant state, local or foreign tribunal has expired, or a decision of competent jurisdiction that is not subject to appeal or as to which the time for appeal has expired.

     “IRS” shall mean the Internal Revenue Service.

     “Parent” shall have the meaning set forth above.

     “Parent Consolidated Group” shall mean the affiliated group of corporations (including any predecessors and successors thereto) within the meaning of Section 1504(a) of the Code electing to file consolidated federal income tax returns and of which Parent is the common parent.

     “Parent Consolidated Return” shall have the meaning set forth in Section 2.

     “Post-Consolidation Year” shall have the meaning set forth in Section 6 of this Agreement.

     “Pro-Forma Subsidiary Attribute” shall have the meaning set forth in Section 5.

     “Pro Forma Subsidiary Return” shall have the meaning set forth in Section 3.

     “Records” shall have the meaning set forth in Section 8.

     “Regulations” shall mean the Treasury regulations promulgated under the Code.

     “Total Periodic Payments” shall have the meaning set forth in Section 4.

     “Subsidiary” shall have the meaning set forth above.

     “Subsidiary Consolidated Group” shall mean the affiliated group of corporations (including any predecessors and successors thereto) within the meaning of Section 1504(a) of the Code, of which Subsidiary would be the common parent if it were not included in the Parent Consolidated Group.

     “Subsidiary Return Items” shall have the meaning set forth in Section 8.

     “Subsidiary Tax Package” shall have the meaning set forth in Section 7.

     2. FILING OF CONSOLIDATED RETURNS AND PAYMENT OF CONSOLIDATED TAX LIABILITY.

     For all taxable years in which Parent files consolidated federal income tax returns (any such return of the Parent Consolidated Group for any taxable year, a “Parent Consolidated Return”) and is entitled to include the Subsidiary Consolidated Group in such returns, Parent shall include the Subsidiary Consolidated Group in the consolidated federal income tax returns that it files as the common parent corporation of the Parent Consolidated Group. Parent, Subsidiary and the other members of the Parent Consolidated Group shall file any and all consents, elections or other documents and take any other actions necessary or appropriate to

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effect the filing of such federal income tax returns. For all taxable years in which the Subsidiary Consolidated Group is included in the Parent Consolidated Group, Parent shall pay the entire federal income tax liability of the Parent Consolidated Group and shall indemnify and hold harmless Subsidiary and each member of the Subsidiary Consolidated Group against any such liability; provided, however, that Subsidiary shall make payments to Parent or receive payments from Parent as provided in this Agreement for any Agreement Year.

     3. PRO FORMA SUBSIDIARY RETURN.

     For each Agreement Year, Parent shall prepare a pro forma federal income tax return for the Subsidiary Consolidated Group (a “Pro Forma Subsidiary Return”). Except as otherwise provided in this Agreement, the Pro Forma Subsidiary Return for each Agreement Year shall be prepared as if Subsidiary filed a consolidated federal income tax return on behalf of the Subsidiary Consolidated Group for such taxable period. The Pro Forma Subsidiary Return shall reflect any carryovers of net operating losses, net capital losses, excess tax credits, or other tax attributes from prior Pro Forma Subsidiary Returns (excluding those attributes that are carried back pursuant to Section 5) that could have been utilized by the Subsidiary Consolidated Group if the Subsidiary Consolidated Group had never been included in the Parent Consolidated Group and all Pro Forma Subsidiary Returns had been filed as actual returns. The Pro Forma Subsidiary Return shall be prepared in a manner that reflects all elections, positions and methods used in the Parent Consolidated Return that must be applied on a consolidated basis and otherwise shall be prepared in a manner consistent with the Parent Consolidated Return. The provisions of the Code that require consolidated computations, such as Sections 861, 1201-1212 and 1231, shall be applied separately to the Subsidiary Consolidated Group as if the Subsidiary Consolidated Group and the Parent Consolidated Group (excluding the members of the Subsidiary Consolidated Group) were separate affiliated groups, except that the Pro Forma Subsidiary Return prepared for the last taxable year, or portion thereof, during which the Subsidiary Consolidated Group is included in the Parent Consolidated Return shall also include any gains or losses of the members of the Subsidiary Consolidated Group on transactions within the Subsidiary Consolidated Group that must be taken into account pursuant to Section 1.1502-13 of the Regulations and reflected on the Parent Consolidated Return when the Subsidiary Consolidated Group ceases to be included in the Parent Consolidated Return. For each Agreement Year, Section 1.1502-13 of the Regulations shall be applied as if the Subsidiary Consolidated Group were not a member of the Parent Consolidated Group. For purposes of the Agreement, all determinations made as if the Subsidiary Consolidated Group had never been included in the Parent Consolidated Group and as if all Pro Forma Subsidiary Returns were actual returns shall reflect any actual short taxable years resulting from the Subsidiary Consolidated Group joining or leaving the Parent Consolidated Group.

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     4. TAX PAYMENTS.

     (a) Estimated Income Tax Payments. For each Agreement Year, Subsidiary shall make periodic payments (“Estimated Income Tax Payments”) to Parent in such amounts as shall be equal to the estimated tax payments that would be payable by the Subsidiary Consolidated Group if it were not included in the Parent Consolidated Group, no later than the dates on which such estimated tax payments would be due from the Subsidiary Consolidated Group if it were not included in the Parent Consolidated Group.

     (b) Balance Payment. For each Agreement Year, Subsidiary shall pay to Parent an amount equal to the tax payment that would be payable by the Subsidiary Consolidated Group if it were not included in the Parent Consolidated Group, no later than March 15 of the following year (the “Balance Payment”).

     (c) Payments based on Pro Forma Subsidiary Return. For each Agreement Year, Subsidiary shall pay to Parent, no later than the date on which a Parent Consolidated Return is filed for such Agreement Year, an amount equal to the sum of (i) the federal income tax liability shown on the corresponding Pro Forma Subsidiary Return prepared for such Agreement Year and (ii) the additions to tax, if any, under Section 6655 of the Code that would have been imposed on the Subsidiary Consolidated Group (treating the amount due to Parent under (i) above as its federal income tax liability and treating any Estimated Tax Payments to Parent pursuant to clause (a) as estimated payments under Section 6655 of the Code) and which result from the inaccuracy of any information provided by Subsidiary to Parent pursuant to Section 7 hereof or from the failure of Subsidiary to provide any requested information, reduced by (iii) the sum for such Agreement Year of the amount of the Estimated Tax Payments and the Balance Payment (collectively, the “Total Periodic Payments”), plus (iv) any interest and additions to tax (other than under Section 6655 of the Code) that would be due under the Code if the Total Periodic Payments were actual payments of tax. If the Total Periodic Payments to Parent for any Agreement Year exceed the amount of Subsidiary’s liability for such Agreement Year under the preceding sentence, Parent shall pay to Subsidiary an amount equal to such excess within 10 days after filing the Parent Consolidated Return for such Agreement Year. For purposes of this Agreement, the term “federal income tax liability” includes the tax imposed by Sections 11, 55 and 59A of the Code, or any successor provisions to such Sections. Parent shall notify Subsidiary of any amounts due from Subsidiary to Parent pursuant to this Section 4 at least 5 business days prior to the date such payments are due, and such payments shall not be considered due until the later of the due date described above or the fifth day after Parent gives such notice.

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     5. LOSSES; REFUNDS.

     If a Pro Forma Subsidiary Return for any Agreement Year reflects a net operating loss, net capital loss, excess tax credit or other tax attribute (a “Pro Forma Subsidiary Attribute”),which attribute is actually utilized in a Parent Consolidated Return (including any amendments thereto), then, within 30 days after the later of (i) the due date for the relevant Parent Consolidated Return for such Agreement Year (taking into account any extensions) or (ii) the date such Pro Forma Subsidiary Attribute is actually realized in cash (whether directly or by offset), Parent shall pay to Subsidiary an amount equal to the lesser of (x) the refund that the Subsidiary Consolidated Group would have received as a result of the carryback of such Pro Forma Subsidiary Attribute to a Pro Forma Subsidiary Return for any prior Agreement Year or Years, assuming that all Pro Forma Subsidiary Returns had been filed as actual returns and that the Subsidiary Consolidated Group had filed returns as a separate affiliated group for all prior taxable years or (y) the tax savings or tax benefit actually realized by Parent with respect to the use of such Pro Forma Subsidiary Attribute in a Parent Consolidated Return. For purposes of Section 3, the portion of any such attribute that is treated as carried back pursuant to this Section 5 shall be appropriately adjusted to reflect the extent to which payment under this Section 5 is limited by clause (y) of the preceding sentence. All calculations of deemed refunds pursuant to this Section 5 shall include interest computed as if the Subsidiary Consolidated Group had filed a claim for refund or an application for a tentative carryback adjustment pursuant to Section 6411(a) of the Code on the date on which the relevant Parent Consolidated Return is filed.

     6. PAYMENTS FOR TAXABLE YEARS IN THE EVENT OF DECONSOLIDATION.

     (a) Payments By Subsidiary To Parent. If for any taxable year after the Subsidiary Consolidated Group ceases to be included in the Parent Consolidated Group (a “Post-Consolidation Year”), (i) the federal income tax liability of the Subsidiary Consolidated Group is less than the federal income tax liability that would have been imposed with respect to the same period if the Subsidiary Consolidated Group had not been included in the Parent Consolidated Group for any Agreement Year and all Pro Forma Subsidiary Returns had been actual returns for such years, or (ii) the federal income tax liability of the Parent Consolidated Group is greater than the federal income tax liability that would have been imposed with respect to the same period if the Subsidiary Consolidated Group had not been included in the Parent Consolidated Group for any Agreement Year and all Pro Forma Subsidiary Returns had been actual returns for such years, then, to the extent that Subsidiary has not already made a payment to Parent for utilization of the tax attributes that gave rise to the decrease or increase described in (i) or (ii), Subsidiary shall pay to Parent an amount equal to such decrease or increase within 10 days of the filing of Subsidiary Post-Consolidation Year return. In the event that there is both a decrease and an increase described in (i) and (ii), respectively, of the previous sentence for any

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Post-Consolidation Year, then Subsidiary shall make a payment to Parent in an amount equal to the sum of such decrease and increase, unless such decrease and increase (or any portion thereof) result from utilization of the same tax attribute(s), in which case the amount of the payment will be reduced accordingly.

     (b) Payments By Parent To Subsidiary. If for any Post-Consolidation Year (i) the federal income tax liability of the Subsidiary Consolidated Group is greater than the federal income tax liability that would have been imposed with respect to the same period if the Subsidiary Consolidated Group had not been included in the Parent Consolidated Group for any Agreement Year and all Pro Forma Subsidiary Returns had been actual returns for such years, or (ii) the federal income tax liability of the Parent Consolidated Group is less than the federal income tax liability that would have been imposed with respect to the same period if the Subsidiary Consolidated Group had not been included in the Parent Consolidated Group for any Agreement Year and all Pro Forma Subsidiary Returns had been actual returns for such years, then, to the extent that Parent has not already made a payment to Subsidiary for utilization of the tax attributes that gave rise to the increase or decrease described in (i) or (ii), Parent shall pay to Subsidiary an amount equal to such increase or decrease within 10 days of notification by Subsidiary to Parent of the filing of Subsidiary Post-Consolidation Year return. In the event that there is both an increase and a decrease described in (i) and (ii), respectively, of the previous sentence for any Post-Consolidation Year, then Parent shall make a payment to Subsidiary in an amount equal to the sum of such increase and decrease, unless such increase and decrease (or any portion thereof) result from utilization of the same tax attribute(s), in which case the amount of the payment will be reduced accordingly.

     (c) Documentation. Prior to the payment of any amounts due pursuant to this Section 6, the parties shall exchange such information and documentation as is reasonably satisfactory to each of them in order to substantiate the amounts due pursuant to this Section 6. Any disputes as to such amounts and documentation that cannot be resolved prior to the date on which a payment is due shall be referred to an independent accounting firm whose fees shall paid one-half by Subsidiary and one-half by Parent.

          (d) Post-Consolidation Year Carrybacks.

     (i) If a Subsidiary Consolidated Group federal income tax return for any Post-Consolidation Year reflects a net operating loss, net capital loss, excess tax credits, or any other tax attribute, whether or not Subsidiary waives the right to carryback any such attribute to a Parent Consolidated Return, no payment with respect to such carrybacks shall be due from Parent.

     (ii) If a Parent Consolidated Return for any Post-Consolidation Year reflects a net operating loss, net capital loss, excess tax credits, or any other

6

tax attribute, such attribute may be carried back to Parent Consolidated Return for an Agreement Year, and Parent shall be entitled to retain (without any obligation to reimburse Subsidiary) the full amount of any refund received in connection therewith. In the event that Subsidiary (or any other member of the Subsidiary Consolidated Group) receives any refund with respect to an Agreement Year issued in connection with a carryback of a Parent Consolidated Group tax attribute from a Post-Consolidation Year to a Parent Consolidated Return for an Agreement Year, Subsidiary shall promptly pay the full amount of such refund to Parent.

     (e) No Duplication of Payment. Notwithstanding anything to the contrary herein, neither Section 5(a) nor Section 5(b) shall require Subsidiary or Parent, as the case may be, to make any payment pursuant to such section to the extent that the payment is attributable to a tax attribute for which payment has previously been made pursuant to Section 4.

     7. PREPARATION OF TAX PACKAGE AND OTHER FINANCIAL REPORTING INFORMATION.

     Subsidiary shall provide to Parent, in a format determined by Parent, all information requested by Parent as reasonably necessary to prepare the Parent Consolidated Return and the Pro Forma Subsidiary Return (the “Subsidiary Tax Package”). The Subsidiary Tax Package with respect to any taxable year shall be provided to Parent on a basis consistent with practices of the Parent Consolidated Group. Subsidiary shall also provide to Parent information required to determine the Total Periodic Payments, current federal taxable income, current and deferred tax liabilities, tax reserve items and any additional current or prior information required by Parent on a timely basis consistent with practices of the Parent Consolidated Group.

     8. RETURNS, AUDITS, REFUNDS, AMENDED RETURNS, LITIGATION, ADJUSTMENTS AND RULINGS.

     (a) Returns. Parent shall have exclusive and sole responsibility for the preparation and filing of the Parent Consolidated Returns (including requests for extensions) and any other returns, amended returns and other documents or statements required to be filed with the IRS in connection with the determination of the federal income tax liability of the Parent Consolidated Group.

     (b) Audits; Refund Claims. Parent will have exclusive and sole responsibility and control with respect to the conduct of IRS examinations of the returns filed by the Parent Consolidated Group and any refund claims with respect to such returns, including without limitation the right to select counsel, the right to determine the court or other body in

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which any contest shall be brought, the right to determine whether to contest a proposed deficiency or to pay a tax and sue for a refund and the right to determine whether and how to appeal any adverse determination . Subsidiary shall assist and cooperate with Parent during the course of any such proceeding. Parent shall give Subsidiary notice of and consult with Subsidiary with respect to any issues relating to items of income, gain, loss, deduction or credit of Subsidiary (any such items, “Subsidiary Return Items”). Parent shall not settle or otherwise compromise any Subsidiary Return Item that would result in additional liability for Subsidiary under this Agreement without the written consent of Subsidiary, which consent shall not be unreasonably withheld. If Subsidiary does not respond to Parent’s request for consent within 30 days, Subsidiary shall be deemed to have consented.

     (c) Litigation. If the federal income tax liability of the Parent Consolidated Group becomes the subject of litigation in any court, the conduct of the litigation shall be controlled exclusively by Parent. Subsidiary shall assist and cooperate with Parent during the course of litigation, and Parent shall consult with Subsidiary regarding any issues relating to Subsidiary Return Items.

     (d) Expenses. Subsidiary shall reimburse Parent for all reasonable out-of-pocket expenses (including, without limitation, legal, consulting and accounting fees) in the course of proceedings described in paragraphs (b) and (c) of this Section 8, to the extent such expenses are reasonably attributable to Subsidiary Return Items for any Agreement Year.

     (e) Recalculation Of Payments To Reflect Adjustments. To the extent that there is a Final Determination with respect to a Parent Consolidated Return that results in a change in an item relating to such return (an “Adjustment”) that affects the treatment of a Subsidiary Return Item for an Agreement Year, a corresponding adjustment shall be made to the corresponding Pro Forma Subsidiary Return. All calculations of payments made pursuant to Sections 4, 5 and 6 of this Agreement shall be recomputed to reflect the effect of any Adjustments on the relevant Pro Forma Subsidiary Return. Within 5 days after any such Adjustment, Subsidiary or Parent, as appropriate, shall make a payment to the other party reflecting such Adjustment, plus interest pursuant to Section 9 of the Agreement, calculated as if payments by and to Subsidiary pursuant to Sections 4, 5 and 6 of this Agreement and this Section 8 were payments and refunds of federal income taxes. Subsidiary shall further pay to Parent the amount of any penalties or additions to tax incurred by the Parent Consolidated Group as a result of an adjustment to any Subsidiary Return Item for an Agreement Year.

     (f) Rulings. Subsidiary shall assist and cooperate with Parent and take all actions requested by Parent in connection with any ruling requests submitted by Parent to the IRS.

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     (g) Applicability With Respect To All Consolidated Returns. The provisions of Sections 8(a), (b) and (c) above shall apply to Parent Consolidated Returns and Subsidiary Return Items for all taxable years in which Subsidiary is includable in the Parent Consolidated Group.

     (h) Document Retention, Access To Records and Use Of Personnel. Until the expiration of the relevant statute of limitations (including extensions), Subsidiary shall (i) retain records, documents, accounting data, computer data and other information (collectively, the “Records”) necessary for the preparation, filing, review, audit or defense of all tax returns relevant to an obligation, right or liability of either party under the Agreement; and (ii) give Parent reasonable access to such Records and to its personnel (insuring their cooperation) and premises to the extent relevant to an obligation, right or liability of either party under the Agreement. Prior to disposing of any such Records, Subsidiary shall notify Parent in writing of such intention and afford Parent the opportunity to take possession or make copies of such Records at its discretion.

     9. INTEREST.

     Interest required to be paid by or to Subsidiary pursuant to the Agreement shall, unless otherwise specified, be computed at the rate and in the manner provided in the Code for interest on underpayments and overpayments, respectively, of federal income tax for the relevant period. Any payments required pursuant to the Agreement which are not made within the time period specified in the Agreement shall bear interest at a rate equal to the rate provided in the Code for interest on underpayments of tax.

     10. FOREIGN, STATE AND LOCAL INCOME TAXES.

     (a) In the case of foreign, state or local taxes based on or measured by the net income of the Parent Consolidated Group, or any members of the Parent Consolidated Group (other than solely with respect to the Subsidiary Consolidated Group or solely with respect to members of the Parent Consolidated Group other than members of the Subsidiary Consolidated Group) on a combined, consolidated or unitary basis, the provisions of this Agreement shall apply with equal force to such foreign, state or local tax for each Agreement Year, whether or not the Subsidiary Consolidated Group is included in the Parent Consolidated Group for federal income tax purposes; provided, however, that interest pursuant to the first sentence of Section 9 of this Agreement shall be computed at the rate and in the manner provided under such foreign, state or local law for interest on underpayments and overpayments of such tax for the relevant period, and references to provisions of the Code throughout the Agreement shall be deemed to be references to analogous provisions of foreign, state and local law.

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     (b) For any taxable year, Parent shall have the sole and exclusive control of (a) the determination of whether a combined, consolidated or unitary tax return should be filed for any foreign, state or local tax purpose and (b) all foreign, state or local income tax audits and litigation with respect to the Subsidiary Consolidated Group to the same extent as provided in this Agreement for federal income tax matters (including the right in its sole discretion to have Subsidiary pay any disputed taxes and sue for a refund in the forum of Parent’s choice). Subsidiary shall reimburse Parent for all reasonable out-of-pocket expenses (including, without limitation, legal, consulting and accounting fees) in the course of proceedings described in the preceding sentence, to the extent such expenses are reasonably attributable to the Subsidiary Consolidated Group.

     (c) Subsidiary shall be responsible for filing tax returns relating to payroll, sales and use, property, withholding, capital stock, net worth and similar taxes attributable to members of the Subsidiary Consolidated Group and shall be responsible for the payment of such taxes.

     (d) For all taxable years that Subsidiary is a member of the Parent Consolidated Group, Subsidiary shall have the sole and exclusive responsibility for all taxes based on or measured by net income that are determined solely by the income of the Subsidiary Consolidated Group (or any combination of the members thereof, including the predecessors and successors of such members) on a combined, consolidated, unitary or separate company basis.

     (e) Parent will provide notice of and consult with Subsidiary with respect to any issue relating to such audits and litigation, and Subsidiary will provide to Parent any information necessary to conduct such audits and litigation. Parent shall not settle or otherwise compromise any audits or litigation that would result in additional liability for Subsidiary under this Section 10 without the written consent of Subsidiary, which consent shall not be unreasonably withheld. If Subsidiary does not respond to Parent’s request for consent within 30 days, Subsidiary shall be deemed to have consented.

     11. SUCCESSORS AND ACCESS TO INFORMATION.

     The Agreement shall be binding upon and inure to the benefit of any successor to any of the parties, by merger, acquisition of assets or otherwise, to the same extent as if the successor had been an original party to the Agreement, and in such event, all references in this Agreement to a party shall refer instead to the successor of such party. If for any taxable year Subsidiary is no longer included in the Parent Consolidated Group, Parent and Subsidiary agree to provide to the other party any information reasonably required to complete tax returns for taxable periods beginning after Subsidiary is no longer included in a Parent Consolidated Return,

10

and each of Parent and Subsidiary will cooperate with respect to any audits or litigation relating to any Parent Consolidated Return.

     12. CONFIDENTIALITY.

     Each of Parent and Subsidiary agrees that any information furnished pursuant to the Agreement is confidential and, except as and to the extent required by law or otherwise during the course of an audit or litigation or other administrative or legal proceeding, shall not be disclosed to other persons. In addition, each of Parent and Subsidiary shall cause its employees, agents and advisors to comply with the terms of this Section 12.

     13. GOVERNING LAW.

     The Agreement shall be governed by and construed in accordance with the laws of the State of Indiana applicable to contracts entered into and to be fully performed within the State of Indiana.

     14. HEADINGS.

     The headings in the Agreement are for convenience only and shall not be deemed for any purpose to constitute a part or to affect the interpretation of the Agreement.

     15. SECTION REFERENCES.

     References to Sections shall, unless otherwise specified, be references to Sections of this Agreement.

     16. COUNTERPARTS.

     The Agreement may be executed simultaneously in two or more counterparts, each of which will be deemed an original, and it shall not be necessary in making proof of the Agreement to produce or account for more than one counterpart.

     17. SEVERABILITY.

     If any provision of the Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the maximum extent practicable. In any event, all other provisions of the Agreement shall be deemed valid, binding, and enforceable to their full extent.

11

     18. TERMINATION.

     The Agreement shall remain in force and be binding so long as the applicable period of assessments (including extensions) remains unexpired for any taxes contemplated by the Agreement; provided, however, that neither Parent nor Subsidiary shall have any liability to the other party with respect to tax liabilities for any taxable year in which Subsidiary is not included in the Parent Consolidated Return for such year, except as provided in Sections 5 and 10.

     19. SUCCESSOR PROVISIONS.

     Any reference herein to any provisions of the Code or Treasury Regulations shall be deemed to include any amendments or successor provisions thereto, as appropriate.

     20. COMPLIANCE BY SUBSIDIARIES.

     Parent and Subsidiary each agrees to cause all members of the Parent Consolidated Group and the Subsidiary Consolidated Group (including predecessors and successors to such members) to comply with the terms of this Agreement.

12

     IN WITNESS WHEREOF, each of the parties to this Agreement has caused this Agreement to be executed by its duly authorized officer on this May 10, 2004.

EMMIS COMMUNICATIONS CORPORATION
By:	/s/ J. Scott Enright
	Name:	J. Scott Enright
	Title:	Vice President, Secretary and   Associate General Counsel

EMMIS OPERATING COMPANY
By:	/s/ J. Scott Enright
	Name:	J. Scott Enright
	Title:	Vice President, Secretary and   Associate General Counsel

13

EX-21

EXHIBIT 21

Emmis Communications Corporation

		NAME UNDER WHICH
LEGAL NAME	ORGANIZATION	ENTITY DOES BUSINESS
Emmis Communications Corporation	IN	Emmis Communications Corporation
Emmis Operating Company	IN	Emmis Operating Company
Emmis Radio Corporation	IN	WKQX-FM, KPWR-FM, KZLA-FM, WQCD-FM, WQHT-FM, WRKS-FM, KKFR-FM, KTAR-AM, KMVP-AM, KKLT-FM, KIHT-FM, WRDA-FM, KSHE-FM, KPNT-FM, KFTK-FM
Emmis Television Broadcasting, L.P.	IN	KRQE-TV, WFTX-TV, WLUK-TV, KHON-TV, KGMB-TV, WSAZ-TV, WALA-TV, WVUE-TV, KMTV-TV, WKCF-TV, KOIN-TV, WBPG-TV, KGUN-TV
Emmis Publishing, L.P.	IN	Atlanta Magazine, Texas Monthly, Country Sampler, Cincinnati Magazine, Indianapolis Monthly, Los Angeles Magazine
Emmis Indiana Broadcasting, L.P.	IN	WENS-FM, WIBC-AM, WNOU-FM, WWVR-FM, WTHI-FM, WTHI-TV, WYXB-FM
SJL of Kansas Corp.	KS	KSNW-TV
Topeka Television Corporation	MO	KSNT-TV
Emmis International Broadcasting Corporation	CA	Emmis International Broadcasting Corporation
Slager Radio Rt. (59.5%)	Hungary	Slager Radio Rt.
Emmis Hungarian Holding Co (Magyar Kommunikacios Befektetesi Kft.)	Hungary	Emmis Hungarian Holding Co (Magyar Kommunikacios Befektetesi Kft.)
Emmis Latin America Broadcasting Corporation	CA	Emmis Latin America Broadcasting Corporation
Emmis South America Broadcasting Corporation	CA	Emmis South America Broadcasting Corporation
Emmis Dutch Broadcasting Corporation	CA	Emmis Dutch Broadcasting Corporation
Emmis Belgium Broadcasting NV	Belgium	Emmis Belgium Broadcasting NV
Emmis Argentina Broadcasting, S.A.	Argentina	Emmis Argentina Broadcasting, S.A.
Emmis Buenos Aires Broadcasting, S.A.	Argentina	Emmis Buenos Aires Broadcasting, S.A.
Votionis, S.A. (75%)	Argentina	Votionis, S.A.
Emmis Meadowlands Corporation	IN	Emmis Meadowlands Corporation
Emmis Publishing Corporation	IN	Emmis Publishing Corporation
Emmis License Corporation	CA	Emmis License Corporation
Emmis Television License Corporation	CA	Emmis Television License Corporation
Emmis Radio License Corporation	CA	Emmis Radio License Corporation
Emmis License Corporation of New York	CA	Emmis License Corporation of New York
Emmis Radio License Corporation of New York	CA	Emmis Radio License Corporation of New York
Emmis Television License Corporation of Wichita	CA	Emmis Television License Corporation of Wichita
Emmis Television License Corporation of Topeka	CA	Emmis Television License Corporation of Topeka
Emmis Enterprises, Inc.	IN	Emmis Enterprises, Inc.
Mediatex Communications Corporation	IN	Mediatex Communications Corporation
Los Angeles Magazine Holding Company, Inc.	IN	Los Angeles Magazine Holding Company, Inc.
Radio Austin Management, L.L.C.	TX	Radio Austin Management, L.L.C.
Emmis Austin Radio Broadcasting Company, L.P.	TX	KLBJ-AM, KLBJ-FM, KDHT-FM, KGSR-FM, KROX-FM, KEYI-FM

Footnotes

*	Emmis Communications Corporation directly or indirectly owns 100% of all entities except as otherwise noted.
1	Emmis Radio Corporation operates all our radio stations except for the stations held by Emmis Indiana Broadcasting, L.P.
2	Emmis Television Broadcasting, L.P. operates all our television stations except for KSNW-TV which is operated by SJL of Kansas Corp., KSNT-TV which is operated by Topeka Television Corporation, and WTHI-TV which is operated by Emmis Indiana Broadcasting, L.P.
3	Emmis Publishing, L.P. publishes Indianapolis Monthly, Atlanta Magazine, Cincinnati Magazine, Country Sampler, Texas Monthly and Los Angeles Magazine.
4	Emmis Indiana Broadcasting, L.P. operates all our Indiana radio stations WIBC-AM, WENS-FM, WNOU-FM, WYXB-FM, WTHI-FM, WWVR-FM, Network Indiana and AgriAmerica, and our Indiana television station, WTHI-TV.
5	Emmis Television License Corporation holds all our television FCC licenses except for the KSNT-TV licenses which are held by Emmis Television License Corporation of Topeka and the KSNW-TV licenses which are held by Emmis Television License Corporation of Wichita.
6	Emmis Radio License Corporation holds all our radio FCC licenses except for the WRKS-FM licenses which are held by Emmis Radio License Corporation of New York and the WQHT-FM licenses which are held by Emmis License Corporation of New York.

EX-23.1

Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS — ERNST & YOUNG LLP

We consent to the incorporation by reference in the combined shelf Registration Statement (Form S-3, No. 333-62172) of Emmis Communications Corporation and Emmis Operating Company of our report dated April 14, 2004 (except Note 15, as to which the date is May 10, 2004), with respect to the consolidated financial statements of Emmis Communications Corporation and to the consolidated financial statements of Emmis Operating Company included in this Annual Report (Form 10-K) for the year ended February 29, 2004.

We also consent to the incorporation by reference in the Registration Statements (Form S-8), pertaining to the Emmis Communications Corporation 1994 Equity Incentive Plan (No. 33-83890); the Emmis Communications Corporation 1995 Equity Incentive Plan and the Non-Employee Director Stock Option Plan (No. 333-14657); the Emmis Communications Corporation 1997 Equity Incentive Plan, the 1999 Equity Incentive Plan and the Employee Stock Purchase Agreement (No. 333-42878); the Emmis Communications Corporation 2001 Equity Incentive Plan (No. 333-71904); the Emmis Communications Corporation 2002 Equity Compensation Plan (No. 333-92318); and the Emmis Operating Company 401(k) Plan and Emmis Operating Company 401(k) Plan Two (No. 333-105724) of our report dated April 14, 2004 (except Note 15, as to which the date is May 10, 2004), with respect to the consolidated financial statements of Emmis Communications Corporation and to the consolidated financial statements of Emmis Operating Company included in this Annual Report (Form 10-K) for the year ended February 29, 2004.

/s/ ERNST & YOUNG LLP

Indianapolis, Indiana
May 14, 2004

EX-24

EXHIBIT 24

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 29, 2004, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 7, 2004  /s/ Susan B. Bayh  

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 29, 2004, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 7, 2004  /s/ Lawrence B. Sorrel  

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 29, 2004, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 7, 2004  /s/ Richard A. Leventhal  

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 29, 2004, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 7, 2004  /s/ Peter A. Lund  

POWER OF ATTORNEY

     KNOW BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his or her attorneys-in-fact and agents, with full power of substitution and resubstitution for him or her in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 29, 2004, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his or her substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 7, 2004  /s/ Greg A. Nathanson  

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 29, 2004, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 7, 2004  /s/ Gary L. Kaseff  

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below, hereby constitutes and appoints Jeffrey H. Smulyan, Walter Z. Berger and J. Scott Enright, or any of them, his attorneys-in-fact and agents, with full power of substitution and resubstitution for him in any and all capacities, to sign the annual report of Emmis Communications Corporation and Emmis Operating Company on Form 10-K under the Securities Exchange Act of 1934 for the fiscal year ended February 29, 2004, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereto.

Dated: May 7, 2004  /s/ Frank V. Sica  

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Jeffrey H. Smulyan, certify that:

1.	I have reviewed this annual report on Form 10-K of Emmis Communications Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2004

/s/ JEFFREY H. SMULYAN

Jeffrey H. Smulyan

Chairman of the Board, President and

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Walter Z. Berger, certify that:

1.	I have reviewed this annual report on Form 10-K of Emmis Communications Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2004

/s/ WALTER Z. BERGER

Walter Z. Berger

Executive Vice President, Treasurer

and Chief Financial Officer

EX-31.3

Exhibit 31.3

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Jeffrey H. Smulyan, certify that:

1.	I have reviewed this annual report on Form 10-K of Emmis Operating Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2004

/s/ JEFFREY H. SMULYAN

Jeffrey H. Smulyan

Chairman of the Board, President and

Chief Executive Officer

EX-31.4

Exhibit 31.4

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Walter Z. Berger, certify that:

1.	I have reviewed this annual report on Form 10-K of Emmis Operating Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2004

/s/ WALTER Z. BERGER

Walter Z. Berger

Executive Vice President, Treasurer

and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Emmis Communications Corporation (the “Company”), that, to his knowledge:

(1) the Annual Report of the Company on Form 10-K for the period ended February 29, 2004, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 14, 2004

/s/ JEFFREY H. SMULYAN

Jeffrey H. Smulyan

Chairman of the Board, President and

Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Emmis Communications Corporation (the “Company”), that, to his knowledge:

(1) the Annual Report of the Company on Form 10-K for the period ended February 29, 2004, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 14, 2004

/s/ WALTER Z. BERGER

Walter Z. Berger

Executive Vice President, Treasurer

and Chief Financial Officer

EX-32.3

Exhibit 32.3

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Emmis Operating Company (the “Company”), that, to his knowledge:

(1) the Annual Report of the Company on Form 10-K for the period ended February 29, 2004, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 14, 2004

/s/ JEFFREY H. SMULYAN

Jeffrey H. Smulyan

Chairman of the Board, President and

Chief Executive Officer

EX-32.4

Exhibit 32.4

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Emmis Operating Company (the “Company”), that, to his knowledge:

(1) the Annual Report of the Company on Form 10-K for the period ended February 29, 2004, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 14, 2004

/s/ WALTER Z. BERGER

Walter Z. Berger

Executive Vice President, Treasurer

and Chief Financial Officer