<PAGE>
 
                                                                   EXHIBIT 10(y)



                              SETTLEMENT AGREEMENT

THIS AGREEMENT is made as of December 29, 1995, among SUNMEDIA, INC., a Florida
corporation, whose mailing address is 9102 N. Meridian Street, Suite 545,
Indianapolis, Indiana 46260 ("Borrower"), SUNGROUP, INC., an Indiana
corporation, whose mailing address is 9102 N. Meridian Street, Suite 545,
Indianapolis, Indiana 46260 ("Guarantor" and, collectively with Borrower, the
"Obligors") and FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER OF THE
NATIONAL BANK OF WASHINGTON, with an office at 500 West Monroe Street, Suite
3200, Chicago, Illinois 60661 ("FDIC").

WHEREAS:

Borrower is indebted to FDIC in the amount of Five Million Two Hundred Eighty
Seven Thousand Eight Hundred Ninety two Dollars and 35/100 ($5,287,892.35) as of
December 29, 1995, which is comprised of the following (the "Indebtedness"):
 
      LOAN OR
 
      ASSET NO.           PRINCIPAL  +  INTEREST     =    TOTAL

   4257501291801          3,500,000     1,787,892.35   5,287,892.35
 
                                                               0.00
 
 TOTAL                                                $5,287,892.35

The Indebtedness is evidenced and secured by the documents collectively attached
as Exhibit "A"; and

In order to provide for the settlement of this matter and the payment of a
certain portion of said Indebtedness, FDIC and Obligors have entered into this
Agreement.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, Obligors jointly and severally and FDIC, each for
themselves and their respective successors and assigns, agree as follows:

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<PAGE>
 
1.   Payment.

     (a) Obligors, and each of them, shall resolve the Indebtedness in the
     following manner:

         (i)    Obligors shall execute and deliver this Agreement to the FDIC on
                or before December 29, 1995.

         (ii)   Obligors shall sell all of the assets tangible, real, personal,
                or mixed, used and/or useful in the operation of Radio Station
                WOWW, licensed to Pensacola, Florida, including all land,
                buildings, tower and equipment to a nonaffiliated third party
                (the "Purchaser") for a cash price of not less than $2,300,000
                (the "Sale").

         (iii)  FDIC is to receive all sales proceeds from the Sale less
                customary closing costs of no more than 10% of the sale price of
                the Sale with a minimum settlement amount to be no less than
                $2,070,000.00. If the customary closing costs exceed 10% of the
                sales price of the Sale, then, the Obligors jointly and
                severally shall pay all such excess closing costs, which excess
                closing costs are not to be deducted from the sales proceeds
                from the Sale. If the net sales proceeds from the Sale exceed
                $2,100,000, then, the Guarantor shall be entitled to retain 50%
                of such excess net sales proceeds. The remaining 50% of such
                excess net sales proceeds will be delivered to the FDIC. All
                sales proceeds due the FDIC from the Sale are designated as the
                "Settlement Amount". The Obligors agree to delivery to the FDIC
                a closing statement for the Sale which statement shall be
                approved by the FDIC prior to closing of the Sale.

         (iv)   Concurrently with the execution of this Agreement, Obligors
                shall jointly and severally execute a stipulation for an agreed
                judgment to be entered in favor of the FDIC for all of the
                principal and accrued interest, including incurred attorneys'
                fees and expenses, owed to the FDIC based upon Count III and
                Count IV of the action entitled Federal Deposit Insurance
                Corporation as Receiver of The National Bank of Washington vs.
                SunMedia, Inc., et al. , currently pending in the United States
                District Court for the Northern District of Florida, Pensacola
                Division, Case No. 9530178RV (the "Judgment"). Obligors and FDIC
                agree that after the Judgment is approved by the United States
                District Court Judge, through the issuance of any appropriate
                orders, and entered of record (collectively, the "Judgment
                Documents"), the Judgment Documents shall be held by the FDIC's
                outside counsel, William B. McEachern, Jr., Carlton, Fields,
                Ward, Emmanuel, Smith & Cutler, P.A., Harborview Building, P.O.
                Box 12426, Pensacola, Florida 32582.

         (v)    Concurrently with the execution of this Agreement, Obligors
                shall jointly and severally file an answer with the United
                States District Court of Florida, Pensacola Division, admitting
                the allegations of the FDIC in Count I, Count II and Count V of
                the action described in subparagraph l(a)(iv) (the "Answer").

                                       71
<PAGE>
 
         (vi)   Concurrently with the execution of this Agreement, Obligors and
                FDIC will enter into a covenant not to execute (the "Covenant"),
                attached hereto as Exhibit "B". Pursuant to the Covenant, the
                FDIC will take no actions to record or otherwise execute on the
                Judgment or prosecute the action described in subparagraph
                l(a)(iv) for so long as the Obligors jointly and severally
                comply with the terms of this Agreement.

         (vii)  Concurrently with the execution of this Agreement, Obligors will
                pay to the FDIC Seventy Five Thousand Dollars ($75,000) in
                certified funds. This $75,000 payment is a non-refundable
                Indebtedness payment. In the event the Sale is consummated, this
                Indebtedness payment will be credited against the net sales
                proceeds from the Sale to be received by the FDIC.

         (viii) Obligors shall be allowed 180 days after the execution of this
                Agreement to consummate the Sale and pay the Settlement Amount
                to the FDIC. As part of this Agreement, the FDIC will allow a
                longer period for closing the Sale, if the only cause for delay
                is final Federal Communications Commission ("FCC") approval for
                the renewal of the radio broadcasting license(s) for WOWW or the
                transfer of such license(s), provided, however, that such delay
                is beyond the power or ability of the Obligors or the Purchaser,
                to prevent, in the exercise by each party of good faith to
                consummate the Sale.

         (ix)   Within 20 days after the execution of this Agreement, Obligors
                will pay to the FDIC Twenty Five Thousand Dollars ($25,000) in
                certified funds. This $25,000 payment is a non-refundable
                Indebtedness payment. In the event the Sale is consummated, this
                Indebtedness payment will be credited against the net sales
                proceeds from the Sale to be received by the FDIC.

         (x)    Within 30 days from , Obligors shall deliver to the FDIC a fully
                executed and binding Purchase And Sale Agreement between
                Guarantor and/or Borrower and the Purchaser for the Sale

         (xi)   Obligors warrant that the Purchaser for the Sale, shall,
                concurrently with the execution of the Purchase And Sale
                Agreement for the Sale, place at least 10% of the purchase price
                for the Sale in escrow (the "Down Payment") to insure the
                Purchaser's good faith and performance.

         (xii)  Obligors warrant that the Down Payment is nonrefundable to the
                Purchaser unless Obligors breach the Purchase And Sale Agreement
                for the Sale or the FCC's approval for the Sale is not obtained.
                Obligors agree immediately upon the Purchaser's deposit of the
                Down Payment into escrow, to assign their rights and interests
                in the Down Payment to the FDIC and so notify the escrow agent
                and the Purchaser of such assignment.

         (xiii) Within 10 days after the execution of the Purchase And Sale
                Agreement for the Sale by Obligors and the Purchaser, Obligors
                and the Purchaser will file a request for the transfer of Radio
                Station WOWW's broadcasting license(s) with the FCC (the
                "Request"). Obligors shall provide a copy of the Request,

                                       72
<PAGE>
 
                which copy evidences the Request having been filed with the FCC,
                to the FDIC within 5 days after filing the Request with the FCC.

         (xiv)  Obligors shall execute such additional documents as FDIC may
                require to facilitate and evidence the settlement hereunder.

         (xv)   Obligors jointly and severally acknowledge and agree that once
                the Judgment is entered of record pursuant to sub-paragraph
                l(a)(iv) of this paragraph, 1) the Indebtedness, by operation of
                law, will be merged into the Judgment; and 2) the security for
                the Indebtedness as described in Exhibit "A" will remain as
                security for the Judgment.

     (b) Time is of the essence of all obligations of Obligors hereunder. If for
     any reason Obligors fail to perform all their obligations hereunder by the
     respective dates required for such performance, then this Agreement shall
     be null and void and any payments shall be applied to the Indebtedness

2.   Release of FDIC. Obligors and each of them waive, and release and forever
discharge FDIC, the Federal Deposit Insurance Corporation in its corporate and
other capacities, and their respective officers, directors, employees, agents,
servants, affiliates, representatives and attorneys, their successors and
assigns, (collectively, "Released Parties") from, any and all rights, claims,
suits, debts, covenants, contracts, controversies, agreements, liabilities,
costs, expenses, losses, damages, demands, judgments, levies, executions, and/or
causes of action of whatsoever kind or nature, whether known or unknown
(collectively, "Claims") that any of the Obligors jointly or severally may have
against any of the Released Parties, including without limitation Claims (i)
arising out of any of the Released Parties' actions or inaction with respect to
the Indebtedness or any security interest, lien or collateral in connection
therewith as well as any and all Claims in the nature of rights of set-off,
defenses, counterclaims and causes of action, including without limitation any
defenses of waiver, laches and statutes of limitation or repose; (ii) all
receivership and other Claims filed against FDIC, its predecessors (including
The National Bank of Washington), its successors and assigns; and (iii) arising
out of the litigation entitled Federal Deposit Insurance Corporation as Receiver
of The National Bank of Washington vs. SunMedia Inc.. et al., currently pending
in the United States District Court for the Northern District of Florida,
Pensacola Division, Case No. 95-30178RV (the "Litigation"). Further, Obligors
waive the defensive effect of, and shall not assert or raise as a defense to or
in any action, the substance of any factual circumstances supporting any Claim
waived and released herein. .

3.   Covenant Not to Sue. Subject to all terms and conditions of this Agreement,
and only so long as Obligors are in full compliance with this Agreement, FDIC
shall not assert, commence or proceed against any Obligor with any claim or
cause of action (i) to enforce or collect any of the Judgment or (ii) arising
from any responsibilities, obligations, claims, demands, causes of action,
costs, expenses, damages and/or liabilities directly related to the Judgment or
the Litigation; provided, however, that the foregoing shall not apply to any
knowing participation by any Obligor in any (i) violation of federal or state
banking regulations, or (ii) breach of fiduciary duty by bank directors or
officers.

4.   Instruments. As soon as practical after receipt by FDIC of a) this
Agreement executed by the Obligors; b) a file stamped copy of the Judgment
Documents evidencing entry of record by the United States District Court; c) a
file stamped copy of the Answer evidencing entry of record by

                                       73
<PAGE>
 
the United States District Court; d) the Covenant executed by the Obligors; e)
the $75,000 payment required by paragraph l(a)(vii); f) the $25,000 payment
required by paragraph l(a)(ix); g) the Purchase And Sale Agreement required by
paragraph l(a)(x); h) the assignment of the Down Payment required by paragraph
l(a)(xii); i) the Request required by paragraph l(a)(xiii); and j) the
Settlement Amount, FDIC shall return to Borrower all instruments in FDIC's
possession evidencing the Indebtedness, which instruments shall be marked as
subject to this Agreement.

5.   Lien Releases. As soon as practical after receipt by FDIC of a) this
Agreement executed by the Obligors; b) a file stamped copy of the Judgment
Documents evidencing entry of record by the United States District Court; c) a
file stamped copy of the Answer evidencing entry of record by the United States
District Court; d) the Covenant executed by the Obligors; e) the $75,000 payment
required by paragraph l(a)(vii); f) the $25,000 payment required by paragraph
l(a)(ix); g) the Purchase And Sale Agreement required by paragraph l(a)(x); h)
the assignment of the Down Payment required by paragraph l(a)(xii); i) the
Request required by paragraph l(a)(xiii); and j) the Settlement Amount, FDIC
shall deliver to Borrower documents prepared in accordance with paragraph 7, to
discharge of record any liens, mortgages, security interests or encumbrances
FDIC holds in or against any property belonging to Obligors or any of them,
securing only the Indebtedness and now the Judgment (and no other obligations to
FDIC).

6.   Dismissal of Litigation. Subject to paragraph 3, FDIC shall, as soon as
practical after receipt by FDIC of a) this Agreement executed by the Obligors;
b) a file stamped copy of the Judgment Documents evidencing entry of record by
the United States District Court; c) a file stamped copy of the Answer
evidencing entry of record by the United States District Court; d) the Covenant
executed by the Obligors; e) the $75,000 payment required by paragraph
l(a)(vii); f) the $25,000 payment required by paragraph l(a)(ix); g) the
Purchase And Sale Agreement required by paragraph l(a)(x); h) the assignment of
the Down Payment required by paragraph l(a)(xii); i) the Request required by
paragraph l (a) (xiii); and (j) the Settlement Amount, cancel the Judgment, and
dismiss (with prejudice) the Litigation.  Upon cancellation of the Judgment and
dismissal (with prejudice) of the Litigation, FDIC shall not assert, commence or
proceed against any Obligor or any director, officer, employee or attorney of
any Obligor, with any claim or cause of action (i) to enforce or collect any of
the Judgment or (ii) arising from any responsibilities, obligations, claims,
demands, causes of action, cost, expenses, damages and/or liabilities directly
related to the Judgment or the Litigation; provided, however, that the forgoing
shall not apply to any knowing participation by any Obligor, or any director,
officer, employee or attorney of any Obligor, in any (i) violation of federal or
state banking regulations, or (ii) breach of fiduciary duty by bank directors or
officers, or (iii) fraudulent conduct.

7.   Preparation of Documents. Obligors shall prepare and submit to FDIC all
documents, filings and pleadings necessary to accomplish the releases and
dismissals of record described in paragraphs 5 and 6. FDIC shall approve those
documents that are in form and substance satisfactory to FDIC, in its sole
discretion. FDIC shall be obligated to execute no such documents, filings or
pleadings that may create any potential liability of FDIC. Obligors shall be
responsible for any filing or recordation of any such documents, filings and
pleadings, and for all related filing and recording taxes, fees and expenses.

8.   Obligors' Representations and Warranties. Obligors jointly and severally
represent and warrant to FDIC that:

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<PAGE>
 
     (a) None of Obligors nor any of their associates, affiliates or relatives
(i) is or was an employee of FDIC, the Federal Deposit Insurance Corporation in
its corporate or any other capacity ("Corporation"), the Federal Savings and
Loan Insurance Corporation in its corporate or any other capacity ("FSLIC") or
Resolution Trust Corporation in its corporate or any other capacity ("RTC") or a
family member of any employee of FDIC, the Corporation, FSLIC or RTC; (ii) is or
was an obligor under the terms of any indebtedness to FDIC. the Corporation,
FSLIC or RTC (other than the Indebtedness), or a family member or agent of any
such obligor; (iii) is or was an officer, director, employee of, or otherwise
affiliated with or interested in The National Bank of Washington; (iv) is now an
obligor in default on any obligation (other than the Indebtedness) to FDIC, the
Corporation, FSLIC or RTC or a family member or agent of any such defaulting
obligor; or (v) is involved in any litigation with FDIC, the Corporation, FSLIC
or RTC other then the subject Litigation.

     (b) None of Obligors nor any of their affiliates (i) has been convicted of
     a felony; (ii) is under investigation by a grand jury or similar body;
     (iii) has been removed from or prohibited from participating in the affairs
     of any insured depository institution; (iv) has demonstrated a pattern or
     practice of defalcation; or (v) has caused a substantial loss to federal
     deposit insurance funds (other than in connection with the Indebtedness).

     (c) Obligors have obtained their own independent tax advice regarding this
     Agreement and FDIC has made no representation regarding the tax or other
     consequences of this transaction. Obligors warrant that the numbers shown
     on the signature page hereof are the correct taxpayer identification
     numbers of the respective Obligors. Obligors acknowledge that FDIC may rely
     upon tax identification numbers to satisfy credit verification and legal
     reporting obligations.

     (d) Obligors acknowledge that persons who induce FDIC, RTC or the
     Corporation to enter into agreements based upon statements, documents or
     things known by such persons to be false, forged or counterfeit are subject
     under federal law to criminal penalties including fines and/or
     imprisonment.

     (e) All written financial information, including but not limited to that
     described in Exhibit C, provided to FDIC by any Obligor or any of their
     agents was, as of the stated date of such information, accurate and not
     materially misleading, and Obligors acknowledge that FDIC has specifically
     relied upon such information in reaching its decision to execute this
     Agreement.

     (f)  Obligors have not, within five (5) years prior to the date hereof,
     transferred or disposed of any assets to avoid, elude, delay, hinder or
     frustrate the claims of FDIC. Further, during the 24 months before the date
     hereof, Obligors have not gratuitously nor for less than fair market value
     transferred or conveyed property (other than gifts having an aggregate
     value not in excess of One Thousand Dollars ($1,000), to family members).
     Obligors have disclosed to FDIC fully and accurately in writing any
     transaction during the last 24 months in which any Obligor has gratuitously
     or otherwise transferred or conveyed property with an aggregate appraised
     or book value of One Thousand Dollars ($1,000) or more at less than such
     appraised or book value.

9.   Breach by Obligors. All covenants, restrictions and releases of record in
favor of Obligors

                                       75
<PAGE>
 
contemplated by this Agreement were induced by and are subject to the foregoing
representations and warranties. In the event of any breach by any Obligor of any
such representations and warranties or any other covenants herein (including
payment obligations), then all restrictions upon enforcement of, and releases
and dismissals in connection with, the Judgment, the Litigation and related
liens otherwise herein set forth shall be void as if never granted, and FDIC is
free to exercise any and all of its remedies in relation to the Judgment, the
Litigation and its liens.

10.  Power of Attorney. Obligors hereby grant an irrevocable power of attorney
(acknowledged to be coupled with an interest) to FDIC to refile in the name and
on behalf of any Obligor all lien filings, judgments and pleadings to the extent
not expressly prohibited by this Agreement, granting to FDIC full authority to
do every act whatsoever necessary or desirable to be done in order to effectuate
this Agreement, as fully as Obligors could do, with full power of substitution
and revocation, hereby ratifying and confirming all that FDIC shall lawfully do,
or cause to be done, by virtue hereof.

11.  Condition. If:

     (a)  (reserved)

     (b) any portion or the Settlement Amount is required (i) by law, (ii) by
     court order, or (iii) by any settlement agreement executed by FDIC in
     connection with any litigation or asserted claims, to be repaid by FDIC to
     any Obligor, or any successor or trustee representing any Obligor or its
     property, or

     (c) FDIC for any reason (whether due to hereafter-arising legal proceedings
     or restraints or otherwise) is unable to retain and enjoy the full benefit
     of the Settlement Amount and every other covenant, agreement,
     representation and warranty set forth herein. then

     all restrictions upon enforcement, releases and dismissals of the
     Indebtedness, the Judgment, the Litigation and liens otherwise set forth
     herein shall be void as if never granted (other than crediting Settlement
     Amount payments retained).

12.  Limitations. Obligors release and waive any statutes of limitation or
similar defenses (and periods of accrual not yet ripened into a defense) with
respect to the Indebtedness, the Judgment and the Litigation. To the extent
permitted by law, Obligors hereby agree to waive and not to assert any hereafter
arising statute of limitations or similar defense. If the foregoing waiver and
agreement not to assert is unenforceable, and if any prohibition upon FDIC, or
release or discharge of Obligors from any of the Indebtedness or the Judgment or
the Litigation lapses or is void pursuant to any provision of this Agreement,
then any statutes of limitation in respect of such Indebtedness or Judgment or
Litigation shall be tolled for the period commencing on the date hereof through
the date on which the lapsed or void status of the prohibition, release or
discharge is discovered by FDIC.

13.  Indemnification. Obligors shall jointly and severally defend, indemnify,
and hold the Released Parties harmless from and against any and all claims and
damages, fines, costs, forfeitures, amounts paid in settlement, judgments,
expenses, charges, liabilities, penalties and losses of any nature whatsoever,
now existing or hereafter arising, including attorneys' fees and

                                       76
<PAGE>
 
expenses, in any way arising out of or connected with (i) any breach of
Obligors' representations, warranties, covenants and agreements set forth
herein; (ii) the Indebtedness or any collateral or other property securing the
Indebtedness and now the Judgment or released to any Obligor hereunder; (iii)
the Judgment; and (iv) the Litigation.

14.  Guaranties. Guarantor acknowledges the effectiveness of its guaranty of the
Indebtedness.

15.  Full Accord. Obligors acknowledge that the restrictions on enforcement of
the Indebtedness and the Judgment and the Litigation (including interest and
other amounts hereafter accruing upon or in respect thereof) contained herein
are conditioned upon FDIC's timely receipt of a) this Agreement executed by the
Obligors; b) a file stamped copy of the Judgment Documents evidencing entry of
record by the United States District Court; c) a file stamped copy of the Answer
evidencing entry of record by the United States District Court; d) the Covenant
executed by the Obligors; e) the $75,000 payment required by paragraph
l(a)(vii); f) the $25,000 payment required by paragraph l(a)(ix); g) the
Purchase And Sale Agreement required by paragraph l(a)(x); h) the assignment of
the Down Payment required by paragraph l(a)(xii); i) the Request required by
paragraph l(a)(xiii); j) the full Settlement Amount; and all other
considerations and accords contemplated hereby. If any Obligor applies for or
becomes subject to any legal action (including but not limited to voluntary or
involuntary filing for relief under any chapter of Title 11, United States Code
(Bankruptcy) on or before the ninetieth (9Oth) day after receipt by FDIC of the
full Settlement Amount) that would tend to reduce, impair or delay FDIC's
receipt or enjoyment of the full accord contemplated herein, then (i) this
Agreement shall become null and void as of one day prior to such legal action or
filing, (ii) Obligors and FDIC shall each revert to their respective positions
(except that payments received by FDIC will be credited against Indebtedness)
prior to the execution of this Agreement, and (iii) FDIC shall maintain its
mortgages, deeds of trust, security agreement(s), UCC-1 filing(s) and/or other
evidence of the secured nature of the Indebtedness.

1.   Miscellaneous.

     (a) Entire Agreement. This Agreement sets forth the entire understanding of
     the parties and is the final expression of the agreement among Obligors and
     FDIC. This Agreement may not be contradicted by evidence of any prior or
     contemporaneous oral statements. This Settlement Agreement may be modified
     only by a written amendment.

     (b) Recitals. The whereas clauses at the beginning of this Agreement are
     joint and several covenants, representations and warranties of Obligors to
     FDIC, and not mere recitals.

     (c) Governing Law. This Agreement shall be governed by and construed in
     accordance with the laws of the United States of America to the maximum
     extent possible and otherwise by the internal laws of the State of Florida.
     Obligors shall not assert, commence or remove any claim or action relating
     to this Agreement other than before or to the United States District Court
     for the Northern District of Florida, Pensacola Division. Obligors consent
     to the jurisdiction of such court.

     (d) Jury Trial. Obligors and each of them waive any right to trial by jury
     with respect to any matter arising under this Agreement or under any
     document delivered in connection with this Agreement. This waiver is given
     separately by each Obligor and covers each

                                       77
<PAGE>
 
     instance and each issue as to which the right to jury trial would otherwise
     accrue. Obligors acknowledge that no representative or agent of FDIC has
     represented, expressly or otherwise, that FDIC will not enforce the
     foregoing waiver. FDIC may submit this Agreement to any court as conclusive
     evidence of this waiver and acknowledgment.

     (e)  Interpretation. Obligors and their counsel have participated in the
     preparation of this Agreement, and therefore waive the benefit of any rule
     requiring resolution of ambiguities strictly against FDIC by reason of
     FDIC's preparation of the Agreement.

     (f)  Attorney Fees. Obligors shall pay all fees and disbursements of any
     attorney engaged by FDIC by reason of any breach or threatened or
     reasonably anticipated breach of this Agreement by any Obligor.

     (g) Binding Effect. This Agreement shall bind and benefit Obligors and FDIC
     and their respective successors and assigns. References herein to
     "Obligors," "Guarantor" and "Borrower" mean both any of such parties and
     all of them. All obligations and agreements of Obligors, Guarantor and
     Borrower are joint and several.

     (h) Severability. Wherever possible, each provision of this Agreement shall
     be interpreted as valid under applicable law. If any provision in this
     Agreement or in any instrument or document delivered pursuant to this
     Agreement is invalid, illegal or unenforceable, the validity, legality and
     enforceability of the remaining provisions herein and therein shall not be
     affected or impaired.

     (i) Survival. All representations, warranties, covenants, and indemnities
     made by Obligors herein shall survive any performance, termination and
     expiration of this Agreement.

     (j) Counterparts. This Agreement may be executed in any number of
     counterparts, all of which together constitute one and the same i
     instrument.

     (k) No Third Party Beneficiaries. Except as provided in paragraph 2, no
     person or entity who is not a party to this Agreement shall have or enjoy
     any rights hereunder, and FDIC shall have no obligation hereunder to any
     third parties.

     (a)  Criminal Restitution. Nothing in this Agreement waives or affects any
     rights FDIC may have to restitution, including any rights under the Victim
     Witness Protection Act

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<PAGE>
 
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

BORROWER:                                 FDIC:



SUNMEDIA, INC.,                           FEDERAL DEPOSIT INSURANCE
A FLORIDA CORPORATION                     CORPORATION AS RECEIVER OF
                                          THE NATIONAL BANK OF
                                          WASHINGTON

By: /s/ John W. Biddinger
    -------------------------------          

                                          By:
                                             --------------------------
Title:  President
      -----------------------------                  

                                         Title:
                                               ------------------------
 508-185-0233
-----------------------------------                   

Obligor Social Security Number or Employer
Identification Number

GUARANTOR:

SUNGROUP, INC.,
AN INDIANA CORPORATION



By: /s/ John W. Biddinger
    -------------------------------        

Title:  President
      -----------------------------                

  62-079-0469
-----------------------------------                 

Obligor Social Security Number or Employer
Identification Number

                                       79
<PAGE>
 
                                ACKNOWLEDGEMENT
                                ---------------



STATE OF TENNESSEE             )
                               )  SS
COUNTY OF                      )



     I, the undersigned, a Notary Public in and for the State of Tennessee, DO
HEREBY CERTIFY THAT __________________, personally known to me to be the same
person whose name is subscribed to the forgoing instrument, appeared before me
this day in person and -acknowledged that as an authorized representative of
SUNGROUP, INC., a Tennessee corporation ("SUNGROUP"), he/she signed and
delivered the said instrument as his/her free and voluntary act and the free and
voluntary act of SUNGROUP for the uses and purposes therein set forth.

     GIVEN UNDER my hand and official seal this ___________day of __________,
1995.

                                            _____________________________
                                            NOTARY PUBLIC

My commission expires:_________________

                                       80
<PAGE>
 
                                ACKNOWLEDGEMENT
                                ---------------

STATE OF FLORIDA               )
                               )   SS
COUNTY OF _________            )



     I, the undersigned, a Notary Public in and for the State of Florida, DO
HEREBY CERTIFY THAT ___________________, personally known to me to be the same
person whose name is subscribed to the forgoing instrument, appeared before me
this day in person and acknowledged that as an authorized representative of
SUNMEDIA, INC., a Florida corporation ("SUNMEDIA"), he/she signed and delivered
the said instrument as his/her free and voluntary act and the free and voluntary
act of SUNMEDIA for the uses and purposes therein set forth.

     GIVEN UNDER my hand and official seal this ________ day of ___________,
1995.

                                         ____________________________
                                         NOTARY PUBLIC

My commission expires:___________________

                                       81
<PAGE>
 
                                ACKNOWLEDGEMENT

STATE OF ILLINOIS  )
                   )   SS
COUNTY OF COOK     )



     I, the undersigned, a Notary Public in and for the State of Florida,
DO HEREBY CERTIFY THAT ____________________, personally known to me to be the
same person whose name is subscribed to the forgoing instrument, appeared before
me this day in person and acknowledged that as an authorized representative of
THE FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER OF THE NATIONAL BANK OF
WASHINGTON ("FDIC"), he/she signed and delivered the said instrument as his/her
free and voluntary act and the free and voluntary act of FDIC for the uses and
purposes therein set forth.

     GIVEN UNDER my hand and official seal this __________ day of
__________, 1995.

                                            ________________________
                                            NOTARY PUBLIC

My commission expires:____________________

                                       82
<PAGE>
 
                                   EXHIBIT A

                                 Loan Documents
                                 --------------

1.   Secured Term Loan Note, dated December 29, 1989, executed by SunMedia,
Inc., a Florida corporation ("Borrower"), in the principal amount of $3,500,000
and made payable to The National Bank of Washington, Washington, D.C. ("NBW").

2.   Mortgage and Security Agreement, dated December 22, 1989, and recorded in
Official Records Book 2803, Page 119, of the Public Records of Escambia,
Florida.

3.   Loan Agreement, dated December 22, 1989, executed by Borrower in favor of
NBW

4.   Security Agreement, dated December 22, 1989, executed by Borrower in favor
of NBW.

1.   Unlimited Guaranty, dated December 29, 1989, SunGroup, Inc., a Tennessee
     corporation ("Guarantor") NBW.

Executed by in favor of

6.   Pledge and Security Agreement, dated December 29, 1989, executed by
Guarantor in favor of NBW.

7.   Subordination Agreement, dated December 29, 1989, executed by

Guarantor in favor of NBW.

8.   UCC-1 Financing Statement, filed with the Florida Secretary of State.
document number 950000077804.

9.   UCC-3 Continuation Statement, filed with the Comptroller of Escambia County
Florida, document number 00179750 in Official Records Book 3702, Page 583.

10.  UCC-3 Continuation Statement, filed with the Comptroller of Escambia County
Florida, document number 00179752, in Official Records Book 3702, Page 590.

                                       83
<PAGE>
 
                                   EXHIBIT B



                            Covenant Not To Execute
                            -----------------------

     This Covenant Not To Execute ("Covenant") is made and entered into this
29th day of December, 1995, between the FEDERAL DEPOSIT INSURANCE CORPORATION,
AS RECEIVER OF THE NATIONAL BANK OF WASHINGTON, with an office at 500 West
Monroe Street, Suite 3200, Chicago, Illinois 60661 ("FDIC") and SUNGROUP, INC.,
a Tennessee corporation, whose mailing address is 9102 N. Meridian Street, Suite
545, Indianapolis, Indiana 46260 ("SUNGROUP") and SUNMEDIA, INC., a Florida
corporation, whose mailing address is 9102 N. Meridian Street, Suite 545,
Indianapolis, Indiana 46260 ("SUNMEDIA").

     WHEREAS, on the 29th day of December, 1995, an agreed judgment for the sum
of Five Million Two Hundred Eighty Seven Thousand Eight Hundred Ninety Two
Dollars and 35/100 ($5,287,892.35) has or will be recovered by the FDIC jointly
and severally against SunGroup and SunMedia in the action entitled Federal
Deposit Insurance Corporation as Receiver of The National Bank of Washington vs.
Sun Media, Inc.. et al., in the United States District Court for the Northern
District of Florida, Pensacola Division, Case No. 95-30178RV (the "Judgment");
and

     WHEREAS, the Judgment remains unpaid and the FDIC has agreed to stay
execution on the Judgment and to not record the Judgment; and

     WHEREAS, as a condition precedent to the FDIC's agreement to stay execution
on the Judgment, SunGroup and SunMedia have concurrently with the execution of
this Covenant, entered into a Settlement Agreement (the "Agreement") with the
FDIC

     NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is agreed as follows:

1.   Subject to all of the terms and conditions of the Agreement, and only so
long as SunGroup and SunMedia are both in full compliance with the Agreement,
FDIC covenants to take no action to execute on, or to satisfy, the Judgment or
prosecute the Litigation, as that term is defined in the Agreement, provided,
however, that the foregoing shall not apply to any knowing participation by
SunGroup or SunMedia in any (i) violation of federal or state banking
regulations or (ii) breach of fiduciary duty by bank directors or officers.

2.   No provision of this Covenant can be amended or waived, except by a
statement in writing signed by the party against which enforcement of the
amendment or waiver is sought.

3.   The parties hereto warrant and agree that the recitals set forth at the
beginning of this Covenant are true.

4.   This Covenant, in conjunction with the Agreement, sets forth the entire
understanding of the parties concerning the Indebtedness, as that term is
defined in the Agreement. This Covenant may not be contradicted by evidence of
any prior or contemporaneous oral statements.

5.   This Covenant shall be governed by and construed in accordance with the
laws of the

                                       84
<PAGE>
 
United States of America to the maximum extent possible and otherwise by the
internal laws of the State of Florida.

6.   The parties and their counsel have participated in the preparation of this
Covenant, and therefore waive the benefit of any rule requiring resolution of
ambiguities strictly against the FDIC by reason of the FDIC's preparation of the
Covenant.

7.   Whenever possible, each provision of this Covenant shall be interpreted as
valid under applicable law. If any provision in this Covenant is invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions herein and therein shall not be affected or impaired.

8.   This Covenant may be executed in any number of counterparts, all of which
together constitute one and the same instrument.

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

SUNGROUP, INC., A TENNESSEE               FEDERAL DEPOSIT INSURANCE
CORPORATION                               CORPORATION AS RECEIVER OF THE
                                          NATIONAL BANK OF WASHINGTON

By: /s/ John W. Biddinger
    -----------------------------        

                                          By:
                                             ---------------------------
Title:  President
      ---------------------------               

                                          Title:
                                                ------------------------


SUNMEDIA, INC., A FLORIDA
CORPORATION



By: /s/ John W. Biddinger
    -----------------------------        

Title:  President
      ---------------------------               

                                       85
<PAGE>
 
                                ACKNOWLEDGEMENT

STATE OF FLORIDA      )
                      ) SS
COUNTY OF __________  )

     I, the undersigned, a Notary Public in and for the State of Florida,
DO HEREBY CERTIFY THAT __________________________, personally known to me to be
the same person whose name is subscribed to the forgoing instrument, appeared
before me this day in person and acknowledged that as an authorized
representative of SUNMEDIA, INC., a Florida corporation ("SUNMEDIA"), he/she
signed and delivered the said instrument as his/her free and voluntary act and
the free and voluntary act of SUNMEDIA for the uses and purposes therein set
forth.

      GIVEN UNDER my hand and official seal this _____ day of ____________,
1995.

                                            _____________________________
                                            NOTARY PUBLIC

My commission expires:______________

                                       86
<PAGE>
 
                                ACKNOWLEDGEMENT

STATE OF TENNESSEE    )
                      ) SS
COUNTY OF __________  )



     I, the undersigned, a Notary Public in and for the State of Tennessee,
DO HEREBY CERTIFY THAT ______________________________, personally known to me to
be the same person whose name is subscribed to the forgoing instrument, appeared
before me this day in person and acknowledged that as an authorized
representative of SUNGROUP, INC., a Tennessee corporation ("SUNGROUP"), he/she
signed and delivered the said instrument as his/her free and voluntary act and
the free and voluntary act of SUNGROUP for the uses and purposes therein set
forth.

     GIVEN UNDER my hand and official seal this _____ day of ____________,
1995.

_____________________________
NOTARY PUBLIC

My commission expires: ___________________

                                       87
<PAGE>
 
                                ACKNOWLEDGEMENT

STATE OF ILLINOIS  )
                   ) SS
COUNTY OF COOK     )



     I, the undersigned, a Notary Public in and for the State of Florida,
DO HEREBY CERTIFY THAT __________________________, personally known to me to be
the same person whose name is subscribed to the forgoing instrument, appeared
before me this day in person and acknowledged that as an authorized
representative of THE FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER OF THE
NATIONAL BANK OF WASHINGTON ("FDIC"), he/she signed and delivered the said
instrument as his/her free and voluntary act and the free and voluntary act of
FDIC for the uses and purposes therein set forth.

     GIVEN UNDER my hand and official seal this _____ day of ____________,
1995.



                                            ____________________________
                                            NOTARY PUBLIC

My commission expires: ______________

                                       88
<PAGE>
 
                                   EXHIBIT C

                         OBLIGOR FINANCIAL INFORMATION
                         -----------------------------

                                       89