Document:

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                                                                   Exhibit 10.60

                           ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of the 11th day
of March, 2000 among Shirk, Inc., an Indiana corporation ("Shirk"), IBL, L.L.C.,
an Indiana limited liability company ("IBL") (Shirk and IBL, collectively,
"Seller"), and (only as to Section 11.9) William Shirk Poorman and William G.
Mays, each an individual residing in the State of Indiana, and Radio One, Inc.,
a Delaware corporation ("Buyer").

                                    Recitals
                                    --------

     Seller owns and operates the following broadcast stations (collectively,
the "Stations") pursuant to certain licenses, permits and authorizations (the
"FCC Authorizations") issued by the Federal Communications Commission (the
"FCC"):

     Radio Stations:
       WHHH(FM), Indianapolis, Indiana
       WBKS(FM), Greenwood, Indiana
       WYJZ(FM), Lebanon, Indiana

     Television Station:
       W53AV, Indianapolis, Indiana (Channel 53)
       Construction Permit for W65DW, Indianapolis, Indiana (Channel 65)
       (W53AV and the Construction Permit for W65DW may sometimes be referred to
       collectively herein as "Station W53AV/W65DW")

     Seller desires to sell to Buyer, and Buyer desires to purchase from Seller,
the Station Assets (defined below), subject to the terms and conditions of this
Agreement.

                                   Agreement
                                   ---------

     NOW, THEREFORE, taking the foregoing into account, and in consideration of
the mutual covenants and agreements set forth herein, the parties, intending to
be legally bound, hereby agree as follows:

ARTICLE 1:  SALE AND PURCHASE
            -----------------

     1.1  Station Assets.  Except for Excluded Assets as defined in Section 1.2,
          --------------
and subject to and in reliance upon the representations, warranties and
agreements herein set forth, and to the terms and conditions herein contained,
Seller shall grant, convey, sell, assign, transfer and deliver to Buyer on the
Closing Date (as hereinafter defined) all right, title and interest of Seller in
all properties, assets, privileges, rights, interests and claims, real and
personal, tangible and intangible, of every type and description, wherever
located, including its business and goodwill used or held for use in the
business or operation of the Stations (collectively, the "Station Assets").
Without limiting the foregoing, the Station Assets shall include the following:
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          (a) FCC Authorizations.  All of the FCC Authorizations issued with
              ------------------
respect to the Stations, including without limitation all rights in and to the
Stations' call letters and any variations thereof, and all of those FCC
Authorizations listed and described on Schedule 1.1(a) attached hereto, and all
                                       ---------------
applications therefor, together with any renewals or extensions thereof and
additions thereto.

          (b) Tangible Personal Property.  All interests of Seller as of the
              --------------------------
date of this Agreement in all equipment, electrical devices, antennas, cables,
vehicles, furniture, fixtures, towers, office materials and supplies, hardware,
tools, spare parts, and other tangible personal property of every kind and
description, used or held for use in connection with the business or operation
of the Stations, including without limitation those listed and described on

Schedule 1.1(b) attached hereto, and any additions and improvements thereto
---------------
between the date of this Agreement and the Closing Date (collectively, the
"Tangible Personal Property").

          (c) Real Property.  All interests of Seller as of the date of this
              -------------
Agreement in all land, leaseholds, licenses, rights-of-way and other interests
of every kind and description in and to all of the real property and buildings
and other improvements thereon, used or held for use in the business or
operation of the Stations, including without limitation those listed and
described on Schedule 1.1(c) attached hereto, and any additions and improvements
             ---------------
thereto between the date of this Agreement and the Closing Date (collectively,
the "Real Property").

          (d) Time Sales Agreements.  Those obligations of Seller that exist on
              ---------------------
the Closing Date for the sale of air time on the Stations for cash that are:
(i) listed on Schedule 1.1(d) attached hereto; or (ii) cancelable without
              ---------------
penalty on no more than 15 days notice.

          (e) Station Contracts.  Those contracts and agreements used in
              -----------------
connection with the business or operation of the Stations that are: (i) listed
on Schedule 1.1(e) attached hereto or (ii) entered into after the date hereof in
   ---------------
compliance with Section 4.1(b) (the "Station Contracts").

          (f) Intangible Property.  All interests of Seller as of the date of
              -------------------
this Agreement in all trademarks, trade names, service marks, copyrights,
franchises, patents, jingles, slogans, logotypes and other intangible rights,
used or held for use in connection with the business or operation of the
Stations, including without limitation all right, title and interest in and to
the marks consisting of the Stations' call letters and any variations thereof,
and all of those listed and described on Schedule 1.1(f) attached hereto, and
                                         ---------------
those acquired by Seller between the date hereof and the Closing Date
(collectively and together with the Websites (defined below), the "Intangible
Property").

          (g) Programming and Copyrights.  All interests of Seller as of the
              --------------------------
date of this Agreement in all programs and programming materials and elements of
whatever form or nature used or held for use in the business or operation of the
Stations, whether recorded on tape or any other substance or intended for live
performance, and whether completed or in production, and all related common-law
and statutory copyrights used or held for use in the

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business or operation of the Stations, together with all such programs,
materials, elements and copyrights acquired by Seller in the business or
operation of the Stations between the date hereof and the Closing Date.

          (h) Files and Records.  All FCC logs and other records that relate to
              -----------------
the operation of the Stations, and all files and other records of Seller
relating to the business or operation of the Stations and that do not relate
solely to Seller's internal corporate or limited liability affairs (other than
duplicate copies of such files ("Duplicate Records")), including without
limitation all schematics, blueprints, engineering data, customer lists,
reports, specifications, projections, statistics, promotional graphics, original
art work, mats, plates, negatives and other advertising, marketing or related
materials, and all other technical and financial information concerning the
Stations or the Station Assets.

          (i) Claims.  Any and all claims and rights against third parties if
              ------
and to the extent that they relate to the Station Assets, including, without
limitation, all rights under manufacturers' and vendors' warranties.

          (j) Prepaid Items.  All deposits, reserves and prepaid expenses
              -------------
relating to the Stations and prepaid taxes relating to the Stations or the
Station Assets listed on Schedule 1.1(j).

          (k) Goodwill.  All of Seller's goodwill in, and going concern value
              --------
of, the Stations.

          (l) Accounts Receivable.  All accounts receivable (including any notes
              -------------------
receivable and other receivables) of Seller with respect to the Stations as of
the Closing Date.

          (m) Internet Websites.  Without limiting the foregoing, all interests
              -----------------
of Seller in any internet domain leases and domain names relating to the
Stations, the unrestricted right to the use of HTML content located and publicly
accessible from those domain names, and the "visitor" email data base for those
sites (collectively, the "Websites").

     1.1A  Permitted Encumbrances.  The Station Assets shall be sold and
           ----------------------
conveyed to Buyer free and clear of all mortgages, liens, deeds of trust,
security interests, pledges, restrictions, prior assignments, charges, claims,
defects in title and encumbrances of any kind or type whatsoever (collectively,
"Liens") except: (i) liens for real estate taxes not yet due and payable for
which Buyer receives a Purchase Price adjustment under Section 1.7; (ii) the
post-Closing obligations of Seller which Buyer will assume pursuant to Section
1.3 under the Station Contracts and (iii) solely with respect to Real Property,
the Ordinary Exceptions (defined below) (collectively in the case of (i), (ii)
and (iii) above the "Permitted Encumbrances").  "Ordinary Exceptions" means the
following, but only if and to the extent not at any time adversely affecting the
current and intended use of the properties or requiring the removal or
alteration of the presently existing structures, or appurtenant structures
thereon:  (a) building and use restrictions of record; (b) vehicular or
pedestrian easements of record affecting the properties and being contiguous to
the front, rear or side lot lines; (c) water,

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sewer, gas, electric, cable television, and telephone lines or easements of
record or as presently installed; (d) other imperfections of title which do not
materially detract from the value or impair the use of the property subject
thereto (collectively, the "Ordinary Exceptions").

     1.2  Excluded Assets.  There shall be excluded from the Station Assets and
          ---------------
retained by Seller to the extent in existence on the Closing Date, all (a) cash
and cash equivalents, (b) publicly traded securities, (c) insurance policies
(including all insurance proceeds of settlements and insurance claims made by
Seller on or before the Closing Date, except as provided in Section 10.7 (Risk
of Loss)), (d) any other contracts and agreements not included in the Station
Contracts, (e) all pension, profit sharing and all other employee benefit plans,
(f) all claims, rights, and interest in and to any refunds for federal, state or
local taxes to which Seller is entitled, (g) any Duplicate Records and (h) the
assets listed on Schedule 1.2 hereto (the "Excluded Assets").
                 ------------

     1.3  Liabilities.  Buyer shall assume as of the Closing all liabilities
          -----------
relating to the business and operations of the Stations after the Closing under
the Station Contracts (the "Assumed Obligations").  Except for the Assumed
Obligations, Buyer shall not assume or be liable for any obligation or liability
arising from the pre-Closing operation of the Stations (the "Retained
Liabilities").  The Retained Liabilities include, without limitation:  (i) any
liability or obligation of Seller arising out of or relating to any contract,
lease agreement, or instrument (other than the Assumed Obligations); (ii) any
liability or obligation of Seller arising out of or relating to any employee
benefit plan or otherwise relating to employment (including, but not limited to,
any severance obligations due to employees who are terminated by Seller on or
before the Closing Date and all employment obligations shall be brought current
by Seller as of the Closing Date, including the payment of all accrued benefits
and severance pay and all bonuses, whether or not such benefits or bonuses are
due as of the Closing Date); (iii) any liability or obligation of Seller arising
out of or relating to any litigation, proceeding or claim (whether or not such
litigation, proceeding or claim is pending, threatened or asserted before, on or
after the Closing Date); (iv) any other liabilities, obligations, debts or
commitments of Seller whatsoever whether accrued now or hereafter, whether fixed
or contingent, whether known or unknown (except to the extent Seller is entitled
to indemnification therefor from Buyer pursuant to Section 9.2(b) hereof); or
(v) any claims asserted against the Stations or any of the Station Assets
relating to any event (whether act or omission) prior to the Closing Date,
including without limitation, the payment of all taxes.  Seller retains and
shall hereafter pay, satisfy, discharge, perform and fulfill all Retained
Liabilities as they become due, without any charge or cost to Buyer.

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     1.4  Purchase Price.
          --------------

          (a) Amount.  The purchase price to be paid for the Station Assets
              ------
shall be $40 million, as adjusted pursuant to Section 1.7 hereof (the "Purchase
Price").

          (b) Allocation.  The Purchase Price shall be allocated as follows:
              ----------

                    (i) $10 million, as adjusted pursuant to Section 1.7 (the
          "Shirk Amount") to Shirk for the WHHH(FM) Station Assets; and

                    (ii) $30 million, as adjusted pursuant to Section 1.7 (the
          "IBL Amount") to IBL for the other Station Assets, of which amount $27
          million (as adjusted pursuant to Section 1.7) shall be allocated to
          the WBKS(FM) and WYJZ(FM) Station Assets and $3 million (as adjusted)
          shall be allocated to the Station W53AV/W65DW Station Assets.

          (c) Payment.  Upon Closing, the Purchase Price shall be paid as
              -------
follows:  (i) issuance of the Stock Consideration (defined below) to Shirk; and
(ii) payment of the IBL Amount in cash to IBL.  Payment of cash shall be in
immediately available funds pursuant to written instructions of the Seller to be
delivered by Seller to Buyer at least three (3) business days prior to Closing.

          (d)  Definitions.  As used herein, the following terms have the
               -----------
following meanings:

          "Cash Flow Amount" means the amount of reported earnings before
interest, taxes, depreciation and amortization of radio stations WHHH(FM),
WBKS(FM) and WYJZ(FM) plus the addbacks described on Exhibit A hereto, all for
                                                     ---------
calendar year 1999.

          "Closing Price" means $68 per share of Buyer's Class A common stock
(as appropriately adjusted to reflect any stock splits, stock dividends, or
reclassifications of Buyer's Class A common stock, including a merger,
consolidation or recapitalization).

          "Stock Consideration" means a number of shares of Buyer's Class A
common stock equal to the Shirk Amount divided by the Closing Price.

          "Subscription" means a written subscription delivered by Shirk to
Buyer in form and substance as set forth on Exhibit B attached hereto.
                                            ---------

          (e)  Audit.
               -----

          (i) Seller shall, at its option and expense, have an audit conducted
by an accounting firm of its choice of the Cash Flow Amount (the "Audit"),
provided that the Audit shall be completed by March 17, 2000.  A copy of the
Audit, together with copies of all working papers and other materials used in
and generated by the Audit, and such other items

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relating to the Audit as Buyer shall reasonably request, shall be provided
promptly to Buyer. If the Audit results in a Cash Flow Amount that is at least
$1,700,000 and Buyer disagrees with such result, then Buyer may have an audit of
the Cash Flow Amount conducted by an accounting firm of its choice (the "Buyer
Audit") promptly after the results of the Audit are provided to Buyer, provided
that the Buyer Audit shall be ordered no later than ten business days after the
results of the Audit are provided to Buyer. In the event that the Buyer Audit
results in a Cash Flow Amount that is less than $1,700,000, Seller and Buyer
shall negotiate in good faith to attempt to agree on the Cash Flow Amount. If
such an agreement is not reached within five (5) days of the date of completion
of the Buyer Audit, then Buyer may terminate this Agreement upon written notice
to Seller without further liability hereunder and the Deposit together with
interest thereon shall be returned to Buyer.

          (ii) Without limiting Buyer's other rights under this Agreement,
Seller shall timely make available to Buyer for review and/or audit all books
and records necessary to calculate the Cash Flow Amount.

     1.5  Deposit.  Within one business day of the date of this Agreement, Buyer
          -------
shall deposit Two Million Dollars ($2,000,000) (the "Deposit") into escrow with
Wilmington Trust Company (the "Escrow Agent"), pursuant to the Escrow Agreement
of even date herewith among Buyer, Seller and the Escrow Agent.  At Closing, the
Deposit together with all interest thereon shall be paid to Seller as a partial
payment of the Purchase Price.  If this Agreement is terminated by Seller
pursuant to Section 10.1(h) or 10.1(i), then the Deposit, together with any
interest thereon, shall be disbursed to Seller as liquidated damages and such
disbursement shall be the sole and exclusive remedy of Seller.  Seller hereby
waives all other legal and equitable rights and remedies it may otherwise have
as a result of any breach or default by Buyer under this Agreement.  If this
Agreement is terminated without a Closing for any other reason, then the Deposit
and all interest thereon shall be returned to Buyer.  Seller and Buyer shall
each instruct the Escrow Agent to disburse the Deposit and all interest thereon
to the party entitled thereto and shall not, by any act or omission, delay or
prevent any such disbursement.

     1.6  Allocation and Appraisal.  Concurrent with Closing, or, if later,
          ------------------------
within 90 days thereafter, Buyer and Seller will further allocate the Purchase
Price in accordance with the respective fair market values of the Station Assets
and the goodwill being purchased and sold in a manner consistent with Section
1.4(b) hereof and in accordance with the requirements of Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code").  Buyer may, at its
election and expense prior to Closing, engage a broadcast property appraisal
company to appraise the Station Assets.  In the event Buyer does so, a copy
thereof shall be provided to Seller.

     1.7  Adjustments.
          -----------

          (a) The operation of the Stations and the income and normal operating
expenses attributable thereto through the date preceding the Closing Date (the
"Adjustment Date") shall be for the account of Seller and thereafter for the
account of Buyer, and, if any income or expense is properly allocable or
credited, then it shall be allocated, charged or

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<PAGE>

prorated accordingly. Expenses for goods or services received both before and
after the Adjustment Date, power and utilities charges, frequency discounts, and
rents and similar prepaid and deferred items shall be prorated between Seller
and Buyer as of the Adjustment Date in accordance with generally accepted
accounting principles. All special assessments and similar charges or liens
imposed against the Owned Real Property and Tangible Personal Property in
respect of any period of time through the Adjustment Date, whether payable in
installments or otherwise, shall be the responsibility of Seller, and amounts
payable with respect to such special assessments, charges or liens in respect of
any period of time after the Adjustment Date shall be the responsibility of
Buyer, and such charges shall be adjusted accordingly. One-half of the total
amount owing as of the Adjustment Date pursuant to all leases of equipment or
other personal property included in the Station Contracts (including without
limitation for remaining rental payments due, early termination fees, amounts
owing upon termination for purchase of equipment or other personal property
leased or other costs incurred in connection with purchasing such leased
equipment or other personal property free and clear of Liens) shall be the
responsibility of Seller. To the extent that any of the foregoing prorations and
adjustments cannot be determined as of the Closing Date, Buyer and Seller shall
conduct a final accounting and make any further payments, as required on a date
mutually agreed upon, within ninety (90) days after the Closing.

          (b) With respect to trade, barter or similar agreements for the sale
of time for goods or services ("Barter Agreements") assumed by Buyer pursuant to
Section 1.1(e), if any, if there exists on the date of assumption an aggregate
negative barter balance (i.e., the amount by which the value of air time (based
upon the Stations' then prevailing rates) to be provided exceeds the fair market
value of goods or services to be received therefor), then, to the extent such
excess is greater than $50,000 in the aggregate for all Stations, it will be
treated as prepaid time sales and adjusted for as a proration in Buyer's favor.
If, however, there exists on such date an aggregate positive barter balance
(i.e., the amount by which the value of air time (based upon the Stations' then
prevailing rates) to be provided is less than the fair market value of goods or
services to be received therefor) with respect to Barter Agreements assumed by
Buyer, there shall be no proration in Seller's favor.

          (c) Anything herein to the contrary notwithstanding, all sales
commissions with respect to amounts collected by Seller with respect to the
stations on or prior to the Adjustment Date shall be the responsibility of
Seller and all sales commissions with respect to amounts collected by Buyer
after the Adjustment Date shall be the responsibility of Buyer.

     1.8  Closing.  The consummation of the sale and purchase of the Station
          -------
Assets provided for in this Agreement (the "Closing") shall take place at a date
and time mutually agreed upon by Buyer and Seller after the date of the FCC
Consent pursuant to the FCC's initial order, but in no event later than the
earlier of (a) nine months after the date the FCC gives public notice of the
filing of the FCC Application (defined below) (the "Final Closing Date"), (b)
ten business days after the date the FCC Consent becomes Final, or (c) at
Buyer's election, upon ten days notice after the date the FCC Consent is granted
by initial order, in any case subject to the satisfaction or waiver of the last
of the conditions required to be satisfied or waived pursuant to Articles 6 or 7
below (other than those requiring a delivery of a certificate

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or other document, or the taking of other action, at the Closing).
Alternatively, the Closing may take place at such other place, time or date as
the parties may mutually agree upon in writing. The date on which the Closing is
to occur is referred to herein as the "Closing Date."

     1.9  FCC Application.
          ---------------

          (a) As soon as possible (but in no event later than ten business days
after the date of this Agreement) Seller and Buyer shall file an application
with the FCC (the "FCC Application") requesting the FCC's written consent to the
assignment of the FCC Authorizations from Seller to Buyer or, at Buyer's option,
to Buyer's wholly-owned subsidiary Radio One Licenses, Inc., pursuant to this
Agreement.  Seller and Buyer shall diligently take all steps that are necessary,
proper or desirable to expedite the prosecution of the FCC Application to a
favorable conclusion.  Each party shall promptly provide the other with a copy
of any pleading, order or other document served on it relating to the FCC
Application, shall furnish all information required by the FCC, and shall be
represented at all meetings or hearings scheduled to consider the FCC
Application.

          (b) The FCC's written consent to the FCC Application is referred to
herein as the "FCC Consent."  For purposes of this Agreement, the term "Final"
shall mean that action shall have been taken by the FCC (including action duly
taken by the FCC's staff, pursuant to delegated authority) which shall not have
been reversed, stayed, enjoined, set aside, annulled or suspended; with respect
to which no timely request for stay, petition for rehearing, appeal or
certiorari or sua sponte action of the FCC with comparable effect shall be
              --- ------
pending; and as to which the time for filing any such request, petition, appeal,
certiorari or for the taking of any such sua sponte action by the FCC shall have
                                         --- ------
expired or otherwise terminated.

     1.10  Hart-Scott-Rodino.  As soon as possible (but in no event later than
           -----------------
ten business days after the date of this Agreement), Buyer and Seller shall
prepare and file with the Federal Trade Commission and the United States
Department of Justice any documents that may be necessary to comply with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") (including
a request for early termination of the waiting period thereunder) and shall
thereafter promptly furnish all materials thereafter requested by such agencies.

     1.11  Characterization of Transactions for Tax Purposes.  The transactions
           -------------------------------------------------
contemplated hereby will be reported for tax purposes as (i) a sale of assets,
in the case of the acquisition of assets from IBL, and as (ii) a reorganization
described in Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as
amended, in the case of the acquisition of assets from Shirk.

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ARTICLE 2:  REPRESENTATIONS AND WARRANTIES OF SELLER
            ----------------------------------------

     To induce Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, Seller represents and warrants to Buyer as
follows:

     2.1  Organization.  Seller is duly organized and validly existing under the
          ------------
laws of the jurisdiction of its organization (as first set forth above).  Seller
has the requisite power and authority to own and operate the Stations, to carry
on the Stations' business as now conducted by it, and to execute and deliver
this Agreement and all of the other agreements and instruments to be executed
and delivered Seller pursuant hereto (collectively, the "Seller Ancillary
Agreements"), to consummate the transactions contemplated hereby and thereby and
to comply with the terms, conditions and provisions hereof and thereof.

     2.2  Authority.  The execution, delivery and performance of this Agreement
          ---------
and the Seller Ancillary Agreements by Seller have been duly authorized and
approved by all necessary action of Seller and do not require any further
authorization or consent of Seller.  This Agreement is, and each Seller
Ancillary Agreement when executed and delivered by Seller and the other parties
thereto will be, a legal, valid and binding agreement of Seller enforceable in
accordance with its respective terms, except in each case as such enforceability
may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors' rights
generally and except as such enforceability is subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).

     2.3  No Conflicts.  Except as set forth in Schedule 2.3, neither the
          ------------                          ------------
execution and delivery by Seller of this Agreement and the Seller Ancillary
Agreements or the consummation by Seller of any of the transactions contemplated
hereby or thereby nor compliance by Seller with or fulfillment by Seller of the
terms, conditions and provisions hereof or thereof will:

          (i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights under,
or result in the creation or imposition of any Lien upon any of the Station
Assets under, the charter or other organizational documents of Seller, or, to
the knowledge of Seller, any contract, lease, agreement or instrument, or any
governmental license, permit or authorization, or any judgment, order, award or
decree to which Seller is a party or any of the Station Assets is subject or by
which Seller is bound, or any statute, other law or regulatory provision
affecting Seller or the Station Assets; or

          (ii) require the approval, consent, authorization or act of, or the
making by Seller of any declaration, filing or registration with, any third
party or any foreign, federal, state or local court, governmental or regulatory
authority or body, except for such of the foregoing as are necessary pursuant to
the HSR Act and the Communications Act (defined below).

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<PAGE>

     2.4  Financial Statements.
          --------------------

          (a) Seller has furnished Buyer with audited financial statements used
by Seller in the preparation of its federal and state tax returns and copies of
its filed federal and state tax returns for fiscal years 1996, 1997 and 1998 as
well as unaudited monthly financial statements for the period from January 1,
1999 through December 31, 1999.  Pursuant to Section 4.2, Seller will, each
month, furnish to Buyer unaudited monthly financial statements for the preceding
calendar month as well as financial statements for the year to date period.  In
addition, Seller will deliver financial statements for the comparable month and
year to date period for the previous calendar year.  So, for example, on January
30, Seller would deliver financial statements for the following periods:  (i)
December, 1999; (ii) January 1, 1999 through December 31, 1999; (iii) December,
1998; and (iv) January 1, 1998 through December 31, 1998.  The financial
statements described in the preceding sentences and in Section 4.2 shall be
collectively referred to as "Financial Statements".  Except in the case of
interim and monthly financial statements for normal year end adjustments, the
Financial Statements:  (x) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved and as compared with prior periods; (y) fairly present Seller's
financial position, income, expenses, assets, liabilities, and the results of
operations of the Stations as of the dates and for the periods indicated; and
(z) properly and fairly disclose and allocate all transactions by or between
Seller and any affiliate.  There has been no material adverse change in the
business, assets, properties or condition (financial or otherwise) of the
Stations since the preparation of the most recent annual or monthly Financial
Statement.  To the knowledge of Seller, no event has occurred that would make
any Financial Statement misleading in any material respect.

          (b) To the knowledge of Seller, except as reflected in the balance
sheets included in the Financial Statements dated December 31, 1999, including
the notes thereto or otherwise disclosed in this Agreement or the schedules
hereto, and except for the current liabilities and obligations incurred in the
ordinary course of business of the Stations (not including for this purpose any
tort-like liabilities or breach of contract) since the date of this most recent
balance sheet, there exist no liabilities or obligations of Seller, contingent
or absolute, matured or unmatured, known or unknown.  Since the December 31,
1999 balance sheet:  (i) Seller has not made any contract, agreement or
commitment or incurred any obligation or liability (contingent or otherwise),
except in the ordinary course of business and consistent with past business
practices; (ii) there has not been any discharge or satisfaction of any
obligation or liability owed by Seller, which is not in the ordinary course of
business or which is inconsistent with past business practices; (iii) there has
not occurred any sale of or loss or material injury to the business, or any
material adverse change in the business or in the condition (financial or
otherwise) of the Stations; (iv) Seller has operated the business in the
ordinary course; (v) except as set forth in Schedule 2.4(b), Seller has not
                                            ---------------
increased the salaries or any other compensation of any of its employees or
agreed to the payment of any substantial bonuses except in the ordinary course
of business consistent with past practices; and (vi) Seller has not entered into
any contract, agreement or transaction with any affiliate.  The monthly balance
sheets:  (x) have been prepared on a consistent basis throughout the periods
involved and as compared with prior periods; and (y) fairly present Seller's
financial position, income,

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expenses, assets, liabilities, and the results of operations of the Stations as
of the dates and for the periods indicated, subject to year end adjustments
which do not materially affect the operations of Seller.

     2.5  Taxes.  Seller has, in respect of the Stations' business, filed all
          -----
foreign, federal, state, county and local income, excise, property, sales, use,
franchise and other tax returns and reports which are required to have been
filed by it under applicable law and has paid all taxes which have become due
pursuant to such returns or pursuant to any assessments which have become
payable.  To the knowledge of Seller, all monies required to be withheld by
Seller from employees of the Stations for income taxes, social security and
other payroll taxes have been collected or withheld, and paid to the appropriate
governmental authorities.

     2.6  Station Assets.  The Station Assets constitute all the assets used or
          --------------
held for use in the business or operation of the Stations.  Except as set forth
in Schedule 2.6, Seller has good and marketable title to the Station Assets,
   ------------
free and clear of Liens, except for Permitted Encumbrances.  Upon delivery to
Buyer at Closing of the documents contemplated by Section 8.1(a), Seller will
thereby transfer to Buyer good and marketable title to the Station Assets, free
and clear of Liens, except for Permitted Encumbrances.

     2.7  FCC Authorizations.
          ------------------

          (a) Seller is the holder of the FCC Authorizations listed and
described on Schedule 1.1(a).  Such FCC Authorizations constitute all of the
             ---------------
licenses and authorizations required under the Communications Act of 1934, as
amended (the "Communications Act"), or the rules, regulations and policies of
the FCC for, and used in the operation of, the Stations.  The FCC Authorizations
are in full force and effect and have not been revoked, suspended, canceled,
rescinded or terminated and have not expired.  Except as set forth in Schedule
                                                                      --------
2.7(a), there is not pending or, to the knowledge of Seller, threatened any
------
action by or before the FCC to revoke, suspend, cancel, rescind or modify any of
the FCC Authorizations (other than proceedings to amend FCC rules of general
applicability), and there is not now issued or outstanding or pending or, to the
knowledge of Seller, threatened, by or before the FCC, any order to show cause,
notice of violation, notice of apparent liability, or notice of forfeiture or
complaint against Seller or the Stations.  The Stations are operating in
material compliance with the FCC Authorizations, the Communications Act, and the
rules, regulations and policies of the FCC.

          (b) All reports and filings required to be filed with, and all
regulatory fees required to be paid to, the FCC by Seller with respect to the
Stations have been timely filed and paid.  All such reports and filings are
accurate and complete in all material respects.  Seller maintains public files
for the Stations as required by FCC rules.  With respect to FCC licenses,
permits and authorizations, Seller is operating only those facilities for which
an appropriate FCC Authorization has been obtained and is in effect, and Seller
is meeting the conditions of each such FCC Authorization in all material
respects.

                                      -11-
<PAGE>

          (c) Seller is aware of no facts indicating that Seller is not in
material compliance with all requirements of the FCC, the Communications Act, or
any other applicable federal, state and local statutes, regulations and
ordinances.  To Seller's knowledge, there are no facts, and Seller has received
no notice or communication, formal or informal, indicating that the FCC is
considering revoking, suspending, canceling, rescinding or terminating any FCC
Authorization.

          (d) Except as set forth in Schedule 2.7(d), the operation of the
                                     ---------------
Stations does not cause or result in exposure of workers or the general public
to levels of radio frequency radiation in excess of the "Radio Frequency
Protection Guides" recommended in "American National Standard Safety Levels with
Respect to Human Exposure to Radio Frequency Electromagnetic Fields 3 kHz to 300
GHz" (ANSI/IEEE C95.1-1992) issued by the American National Standards Institute,
adopted by the FCC effective October 15, 1997, and described in OET Bulletin No.
65.  Renewal of the FCC Authorizations would not constitute a "major action"
within the meaning of Section 1.1301, et seq., of the FCC's rules.
                                      -- ---

          (e) Seller has no cable carriage agreements for Station W53AV/W65DW
with cable systems.  To the extent must carry rights are available to Station
W53AV/W65DW, Seller has made valid must carry elections or has valid
retransmission consent agreements with each cable system located in the market
in which such Station operates (and all such elections, agreements and systems
are listed on Schedule 2.7(e)), and complete and correct copies of such
              ---------------
elections and agreements have been provided to Buyer.

          (f) Seller has timely made all filings necessary to obtain, protect
and preserve the rights of Station W53AV/W65DW arising out of the FCC's
transition to digital television ("DTV"), including without limitation any
filings necessary for Station W53AV/W65DW to obtain a Class A television
license.  Except as listed on Schedule 2.7(f), Station W53AV/W65DW is not
                              ---------------
adversely affected by other DTV facilities, and Seller has not filed at the FCC
a displacement application.

          (g) Each communications tower structure used in the operation of the
Stations (whether owned or leased) has been registered under the rules and
regulations of the FCC, and the Federal Aviation Administration has issued a
determination of no hazard to air navigation with respect to each such tower for
which such a determination is required.

     2.8  Real Property.  Schedule 1.1(c) contains a description of all real
          -------------   ---------------
property used, held for use, or anticipated to be used or held for use, in the
business or operation of the Stations.  Seller has, or has the right to acquire,
good and marketable fee simple title to all owned Real Property ("Owned Real
Property"), including all real property described on Schedule 1.1(c) as owned,
                                                     ---------------
and including all buildings and other improvements thereon.  Schedule 1.1(c)
                                                             ---------------
lists each lease or similar agreement under which Seller is lessee or licensee
of, or holds, uses or operates, or anticipates that it will hold, use or
operate, any real property in the business or operation of the Stations (the
"Real Property Leases").  The Owned Real Property includes, and the Real
Property Leases provide, sufficient access to the Stations' facilities without
the need to obtain any other access rights.  Neither the whole nor any part of

                                      -12-
<PAGE>

any Real Property is subject to any pending or, to the knowledge of Seller,
threatened suit for condemnation or other taking by any public authority.  All
buildings and other improvements included in the Real Property are in good
operating condition and repair (ordinary wear and tear excepted), and free from
material defect or damage, and, to Seller's knowledge, comply with applicable
zoning, health and safety laws and codes.  Seller has delivered to Buyer copies
of all title insurance policies, if any, in its possession that are applicable
to the Real Property.  Schedule 1.1(c) contains a description of all Real
                       ---------------
Property anticipated to be used in connection with the Improvement Application
and the WYJZ CP (each defined below), together with a summary of Seller's rights
in and to such Real Property.

     2.9  Personal Property.  Schedule 1.1(b) contains a list of all machinery,
          -----------------   ---------------
equipment, vehicles, furniture and other tangible personal property owned by
Seller and used or held for use in the business or operation of the Stations.
Each material item of Tangible Personal Property is in good operating condition
and repair (ordinary wear and tear excepted), is free from material defect or
damage, is functioning in the manner and purposes for which it was intended, and
has been maintained in accordance with industry standards.

     2.10  Contracts.  Each of the Station Contracts (including without
           ---------
limitation each of the Real Property Leases) constitutes a valid and binding
obligation of Seller and, to the knowledge of Seller, the other parties thereto
(subject to bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting the enforcement of creditors' rights generally) and is
in full force and effect and (except as set forth in Schedule 2.3 and except for
                                                     ------------
those Station Contracts which by their terms will expire prior to the Closing
Date or will be otherwise terminated prior to the Closing Date in accordance
with the provisions hereof) may be transferred to the Buyer pursuant to this
Agreement, in each case without breaching the terms thereof or resulting in the
forfeiture or impairment of any rights thereunder and without the consent,
approval or act of, or the making of any filing with, any other party.  Seller
has performed its obligations under each of the Station Contracts, and Seller is
not in, or alleged to be in, breach or default under any of the Station
Contracts, and, to the knowledge of Seller, no other party to any of the Station
Contracts has breached or defaulted thereunder, and to the knowledge of Seller,
no event has occurred and no condition or state of facts exists which, with the
passage of time or the giving of notice or both, would constitute such a default
or breach by Seller or, to the knowledge of Seller, by any such other party.
Complete and correct copies of each of the Station Contracts, together with all
amendments thereto, have been delivered to Buyer by Seller.  Except as set forth
in Schedule 2.10, none of the Station Contracts (including without limitation
   -------------
the Real Property Leases and Time Sales Agreements) is between Seller and an
affiliate.  Any Real Property Leases for which renewal rights, options or
elections exist have been duly and validly renewed as set forth in such leases
and are currently in effect for the renewal terms set forth therein, and no
notice of termination or non-renewal has been received with respect to such
leases.

     2.11  Intangible Property.  To the knowledge of Seller, Seller has all
           -------------------
right, title and interest in and to all Intangible Property necessary to the
conduct of the business and operations of the Stations as presently operated.

Schedule 1.1(f) contains a description of all material Intangible Property.
---------------
Seller has received no notice of any claim that any Intangible

                                      -13-
<PAGE>

Property or the use thereof conflicts with, or infringes upon, any rights of any
third party (and there is no basis for any such claim of conflict). The Stations
have the sole and exclusive right, or a license, to use the Intangible Property.
To the knowledge of the Seller, no service provided by the Stations or any
programming or other material used, broadcast or disseminated by the Stations
infringes upon any copyright, patent or trademark of any other party.

     2.12  Employees.  Schedule 2.12 contains a list of all Stations' employees
           ---------   -------------
and their position and rate of compensation, and a list of all Seller's employee
benefit plans.  Seller has delivered to Buyer copies of all Seller's handbooks,
policies and procedures relating to Stations' employees, if any.  Seller has
received no notice that it is not in compliance with, and Seller has to its
knowledge complied with, all labor and employment laws, rules and regulations
applicable to the Stations' business, including without limitation those which
relate to prices, wages, hours, discrimination in employment and collective
bargaining.  Seller is not liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing.  There is no (i)
unfair labor practice charge or complaint against Seller in respect of the
Stations' business pending or to the knowledge of Seller, threatened before the
National Labor Relations Board, any state labor relations board or any court or
tribunal, or (ii) strike, dispute, request for representation, slowdown or
stoppage pending, or to the knowledge of Seller, threatened in respect of the
Stations' business.  Buyer shall have the right, but not the obligation, to
offer employment to any of the Stations' employees concurrent with Closing.

     2.13  Compliance with Law.  To the knowledge of Seller, Seller has complied
           -------------------
with all laws, regulations, rules, writs, injunctions, ordinances, franchises,
decrees or orders of any court or of any foreign, federal, state, municipal or
other governmental authority which are applicable to the Station Assets, the
Stations or the Stations' business.  There is no action, suit or proceeding
pending or, to the knowledge of Seller, threatened against Seller in respect of
the Station Assets, the Stations or the Stations' business.  To the knowledge of
Seller, there are no claims or investigations pending or threatened against
Seller in respect of the Station Assets, the Stations or the Stations' business.
There is no action, suit or proceeding pending or, to the knowledge of Seller,
threatened against Seller which questions the legality or propriety of the
transactions contemplated by this Agreement.

     2.14  Insurance.  Seller maintains insurance policies relating to the
           ---------
Stations bearing the policy numbers, for the terms, with the companies, in the
amounts, providing the general coverage set forth on Schedule 2.14 hereto.  All
                                                     -------------
of such policies are in full force and effect and Seller is not in default
thereunder.  Seller has not received notice from any issuer of any such policies
of its intention to cancel, terminate or refuse to renew any policy issued by
it.

     2.15  Environmental.  Seller has not and, to the knowledge of Seller, no
           -------------
other party has, generated, stored, transported or released (each a "Release")
on, in, from or to the assets or properties of the Stations any hazardous or
toxic substance or waste (including without limitation petroleum products) or
other material regulated under any applicable environmental, health or safety
law (each a "Contaminant").  Neither the Stations nor any of the Station Assets
is subject to any order from or agreement with any governmental authority or
private party respecting (i) any environmental, health or safety law, (ii) any
environmental clean-up,

                                      -14-
<PAGE>

removal, prevention or other remedial action or (iii) any obligation or
liability arising from the Release of a Contaminant. Neither the Stations nor
any of the assets or properties of the Stations includes any underground storage
tanks or surface impoundments or any polychlorinated biphenyls. To the knowledge
of Seller, neither the Stations nor any of the assets or properties of the
Stations includes any asbestos containing material. Seller has not received in
respect of the Stations or any assets or properties of the Stations any notice
or claim to the effect that it is or may be liable as a result of the Release of
a Contaminant. To the knowledge of Seller, neither the Stations nor any of their
assets or properties are the subject of any investigation by any governmental
authority with respect to a Release of a Contaminant. Seller has delivered to
Buyer copies of all environmental surveys, analyses and assessments in its
possession relating to any of the Real Property, if any.

     2.16  No Finder.  No broker, finder or other person is entitled to a
           ---------
commission, brokerage fee or other similar payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or action of Seller or any party acting on Seller's behalf.

     2.17  Year 2000 Compliance.  To the knowledge of Seller, all of the Station
           --------------------
Assets (including all systems, machinery, information technology, computer
software and hardware, and other data sensitive technology) are operating
without error or interruption related to date data (meaning data or input that
includes an indication of or reference to a date) and without other problems
commonly referred to as "year 2000 problems."

     2.18  Disclosure.  With respect to Seller, the Stations and the Station
           ----------
Assets, to the knowledge of Seller, this Agreement and the Seller Ancillary
Agreements do not and will not contain any untrue statement of material fact or
omit to state a material fact required to made in order to make the statements
herein and therein not misleading in light of the circumstances in which they
are made.

ARTICLE 3:  REPRESENTATIONS AND WARRANTIES OF BUYER
            ---------------------------------------

     To induce Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, Buyer represents and warrants to Seller as
follows:

     3.1  Organization.  Buyer is duly organized, validly existing and in good
          ------------
standing under the laws of the jurisdiction of its organization (first set forth
above).  Buyer has the requisite power and authority to execute and deliver this
Agreement and all of the other agreements and instruments to be executed and
delivered by Buyer (collectively, the "Buyer Ancillary Agreements"), to
consummate the transactions contemplated hereby and thereby and to comply with
the terms, conditions and provisions hereof and thereof.

                                      -15-
<PAGE>

     3.2  Authority.
          ---------

          (a) The execution, delivery and performance of this Agreement and the
Buyer Ancillary Agreements by Buyer have been duly authorized and approved by
all necessary action of Buyer and do not require any further authorization or
consent of Buyer.  This Agreement is, and each Buyer Ancillary Agreement when
executed and delivered by Buyer and the other parties thereto will be, a legal,
valid and binding agreement of Buyer enforceable in accordance with its
respective terms, except in each case as such enforceability may be limited by
bankruptcy, moratorium, insolvency, reorganization or other similar laws
affecting or limiting the enforcement of creditors' rights generally and except
as such enforceability is subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

          (b) Upon issuance of the Stock Consideration at Closing, the shares
comprising the Stock Consideration will be duly authorized, validly issued and
fully paid and non-assessable.

     3.3  No Conflicts.  Neither the execution and delivery by Buyer of this
          ------------
Agreement and the Buyer Ancillary Agreements or the consummation by Buyer of any
of the transactions contemplated hereby or thereby nor compliance by Buyer with
or fulfillment by Buyer of the terms, conditions and provisions hereof or
thereof will:  (i) conflict with the charter or other organizational documents
of Buyer or any law, regulation, judgment, order or decree to which Buyer is
subject; (ii) require the approval, consent, authorization or act of, or the
making by Buyer of any declaration, filing or registration with, any third party
or any foreign, federal, state or local court, governmental or regulatory
authority or body, except for such of the foregoing as are necessary pursuant to
the HSR Act and the Communications Act; or (iii) cause a breach or default under
any agreement of Buyer that would have a material adverse affect on Buyer's
ability to consummate this Agreement.

     3.4  No Finder.  No broker, finder or other person is entitled to a
          ---------
commission, brokerage fee or other similar payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or action of Buyer or any party acting on Buyer's behalf, except Media Services
Group, whose fee shall be paid by Buyer.

     3.5  Qualification.  Buyer is qualified under the Communications Act and
          -------------
the rules, regulations and policies of the FCC, including those with respect to
multiple ownership/duopoly, to hold the FCC Authorizations and to own and
operate the Stations.  To the knowledge of Buyer, there are no facts which would
disqualify Buyer as an assignee of the FCC Authorizations or as the owner and
operator of the Station Assets.  No waiver of any FCC rule or policy in effect
as of the date hereof is required for the grant of the application for the
assignment of the FCC authorizations to Buyer.

     3.6  Availability of Funds.  Buyer has available as of the date hereof
          ---------------------
sufficient funds to enable it to pay the Deposit as called for herein and it
will have available on the Closing Date sufficient funds to enable it to
consummate the transactions contemplated herein.

                                      -16-
<PAGE>

     3.7  Litigation.  There is no claim, litigation, proceeding or
          ----------
investigation pending or, to the knowledge of Buyer, threatened, that could
reasonably be expected to materially adversely affect Buyer's ability to perform
its obligations pursuant to this Agreement.

ARTICLE 4:  COVENANTS OF SELLER
            -------------------

     Seller covenants and agrees that from the date hereof until the completion
of the Closing:

     4.1  Operation of the Business.
          -------------------------

          (a) Seller shall:  (i) continue to carry on the business of the
Stations and keep their books and accounts, records and files in the usual and
ordinary manner in which the business has been conducted in the past; (ii)
operate the Stations in accordance with the terms of the FCC Authorizations and
in material compliance with the Communications Act, FCC rules, regulations and
policies, and all other applicable laws, rules and regulations, and maintain the
FCC Authorizations in full force and effect and timely file and prosecute any
necessary applications for renewal of the FCC Authorizations; (iii) use
commercially reasonable efforts to (1) preserve the business organization of the
Stations intact, (2) retain substantially as at present the Stations' employees,
consultants and agents, and (3) preserve the goodwill of the Stations'
suppliers, advertisers, customers and others having business relations with it;
(iv) keep all Tangible Personal Property and Real Property in good operating
condition (ordinary wear and tear excepted) and repair and maintain adequate and
usual supplies of inventory, office supplies, spare parts and other materials as
have been customarily maintained in the past; (v) preserve intact the Station
Assets and maintain in effect its current insurance policies with respect to the
Stations and the Station Assets; and (vi) collect the Stations' accounts
receivable only in the ordinary course of business consistent with past
practice.  Nothing contained in this Agreement shall give Buyer any right to
control the programming, operations or any other matter relating to the Stations
prior to the Closing, and Seller shall have complete control of the programming,
operations and all other matters relating to the Station up to the Closing.

          (b) Notwithstanding Section 4.1(a), Seller shall not, without the
prior written consent of Buyer:  (i) sell, lease, transfer, or agree to sell,
lease or transfer, any Station Assets, except for non-material sales or leases
in the ordinary course of business of items which are being replaced by assets
of comparable or superior kind, condition and value; (ii) grant any raises to
employees of the Stations or pay any substantial bonuses, except in the ordinary
course of business and consistent with past practices, or enter into any
contract of employment with any employee or employees of the Stations; (iii)
amend or terminate any existing time sales contracts with respect to the
Stations except in the ordinary course of business; (iv) amend, terminate or, by
any act or omission, breach or default on any of the Station Contracts, or enter
into any contract, lease or agreement with respect to the Stations except those
entered into in the ordinary course of business and with parties other than
affiliates of Seller which have an obligation of no more than $5,000
individually and $50,000 in the aggregate; (v) by any act or omission cause any
representation or warranty set forth in

                                      -17-
<PAGE>

Article 2 to become untrue or inaccurate; or (vi) settle, discount or otherwise
reduce the amount receivable in respect of any of the Stations' accounts
receivable, except in the ordinary course of business and consistent with past
practice.

          (c) Without limiting the foregoing:

          (i) Seller shall continue to diligently prosecute, and at the Closing
shall assign to the Buyer its rights to prosecute, its pending FCC application
to improve the facilities of radio station WBKS(FM) (FCC File No. BPH-980904IE)
(the "Improvement Application"), and shall take no action to dismiss, and shall
vigorously oppose the dismissal of, such application.

          (ii) for all FCC applications with respect to the Stations, including
the Improvement Application, Seller shall timely respond to all FCC inquiries,
timely provide Buyer copies of all documents prepared or received by it that
relate thereto, otherwise keep Buyer informed of the status thereof, and consult
with Buyer in advance regarding Seller's actions in connection therewith.

          (iii)  Seller shall timely make all filings necessary to preserve the
rights of Station W53AV/W65DW arising out of the FCC's transition to DTV,
including without limitation any filings necessary for Station W53AV/W65DW to
obtain a Class A television license.  If Station W53AV/W65DW will be adversely
affected by other DTV facilities, prior to Closing Seller shall file and
prosecute at the FCC a displacement application requesting a new channel at
maximum allowable power.

          (iv) Seller shall cooperate with Buyer with respect to each of the
foregoing matters in this Section 4.1(c), provide Buyer with copies of all
material items of correspondence relating thereto, and provide Buyer with copies
of all documents, reports, analyses or other items relating thereto requested by
Buyer.

     4.2  Reports.  Seller shall furnish to Buyer by the 30th day after the end
          -------
of each calendar month for such calendar month: (a) monthly Financial Statements
for Seller, and (b) such other reports as Buyer may reasonably request relating
to Seller (except that the Financial Statements for January, 2000 shall be
furnished to Buyer by March 17, 2000).  Except for normal year end adjustments,
each of the Financial Statements delivered pursuant to this Section shall have
been prepared in accordance with generally accepted accounting principles
consistently applied during the periods covered (except as disclosed therein).

     4.3  Access.  Between the date hereof and the Closing Date, Seller shall
          ------
give Buyer and the officers, employees, accountants, counsel, agents,
consultants and representatives of Buyer reasonable access to all Station
Assets, employees of Seller and the Stations, accounts, books, records, deeds,
title papers, insurance policies, licenses, agreements, contracts, commitments,
records and files of every character, equipment, machinery, fixtures, furniture,
vehicles, notes and accounts payable and receivable of Seller relating to the
Stations, and any other information concerning the affairs of the Stations as
Buyer may reasonably request.  It is

                                      -18-
<PAGE>

expressly understood that, pursuant to this Section, Buyer, at its expense,
shall be entitled to conduct such inspections and reviews of the Stations, the
Station Assets, and financial records relating to the Stations as Buyer may
desire, so long as the same do not unreasonably interfere with Seller's
operation of the Stations. No inspection or investigation made by or on behalf
of Buyer, or Buyer's failure to make any inspection or investigation, shall
affect Seller's representations, warranties and covenants hereunder or be deemed
to constitute a waiver of any of those representations, warranties and
covenants. Immediately after the date hereof, Seller shall also cooperate, and
shall cause its accountants to cooperate, with Buyer to conduct an audit by
Buyer's independent accountants at Buyer's expense of the Financial Statements
for the Stations for the years 1996, 1997, 1998 and 1999, and Buyer may disclose
such financial statements provided or created hereunder in reports filed by
Buyer with any governmental or regulatory authority, including the Securities
and Exchange Commission. Buyer shall provide copies of any such financial
statements in advance of disclosure and, in the event Seller shall reasonably
object to the contents of such disclosure of its financial statements, Seller
and Buyer shall negotiate in good faith to attempt to agree on the form of such
disclosure, provided that Buyer shall in all events have the right to proceed
with such disclosure in the event an agreement is not reached. Seller
acknowledges that in responding and negotiating as set forth in the previous
sentence, time is of the essence.

     4.4  Consents.  Seller shall use commercially reasonable efforts to obtain
          --------
all of the consents noted on Schedule 2.3 hereto.  If Seller does not obtain a
                             ------------
consent required to assign a Station Contract hereunder, Buyer shall not be
required to assume such Station Contract.  Marked with an asterisk on Schedule
                                                                      --------
2.3 are those consents the receipt of which is a condition precedent to Buyer's
---
obligation to close under this Agreement (the "Required Consents").  Seller
shall obtain the Required Consents prior to Closing.

     4.5  Estoppel Certificates; Title Insurance; Liens.  Seller, at Seller's
          ---------------------------------------------
expense, will obtain and deliver to Buyer:  (i) written estoppel certificates
(the "Estoppel Certificates") duly executed by the lessors under the Real
Property Leases, in form and substance satisfactory to Buyer; (ii) commitments
from a title company acceptable to Buyer to issue to Buyer at standard rates
ALTA extended coverage owner's and leasehold title insurance policies with
respect to the owned Real Property and with respect to those parcels of leased
Real Property marked with a dagger (+) on Schedule 1.1(c) with no exceptions
                                          ---------------
other than the Liens listed on Schedule 2.6 (all of which shall be discharged
and released by Seller at or before Closing) and Permitted Encumbrances (the
"Title Commitments"); and (iii) an ALTA survey of each parcel of Owned Real
Property satisfactory to cause the removal of any standard exceptions or
conditions to the Title Commitments (the "Surveys").  The Estoppel Certificates
and Surveys shall be dated within fifteen days prior to Closing.  The Title
Commitments shall be delivered within thirty days of the date of this Agreement
and shall be updated within fifteen days prior to Closing.

     4.6  Environmental.  Following the execution of this Agreement, at Buyer's
          -------------
expense, Buyer may engage engineering or environmental assessment firms to
perform one or more Phase I, Phase II or other environmental assessments for any
or all of the Real Property (collectively, the "Environmental Assessments").
Seller shall cooperate, and shall use reasonable efforts to ensure that any
lessor or other person in control of any of the Real

                                      -19-
<PAGE>

Property shall also cooperate, with Buyer and such firms in performing the
Environmental Assessments. The Environmental Assessments shall initially be
ordered promptly, but not later than thirty (30) days after the date hereof, it
being understood that, so long as the initial Environmental Assessment for a
piece of property has been ordered within such time, any follow-up Environmental
Assessments need not be ordered within such time. Receipt of the Environmental
Assessments shall not relieve Seller of any obligation with respect to any
representation, warranty or covenant of Seller herein or waive any condition to
Buyer's obligations herein. If any Environmental Assessment, including any
follow-up Environmental Assessment, reveals the existence of Environmental
Noncompliance (defined as any condition that renders Section 2.15 hereof untrue,
misleading or inaccurate in any material respect) that can be remedied by the
expenditure of One Million Dollars or less, Seller shall remedy the
Environmental Noncompliance at its expense prior to the Closing and the Closing
will otherwise take place in the manner and at the time provided for herein. In
the event that the cost of remedying the Environmental Noncompliance will exceed
One Million Dollars, Buyer may elect to: (a) proceed with the Closing with a
Purchase Price reduction in the amount of One Million Dollars, any additional
cost of remedying the Environmental Noncompliance to be contributed by Buyer,
and Seller shall have no further liability or obligation to Buyer with respect
thereto, or (b) terminate this Agreement. Nothing in this Section or otherwise
in this Agreement shall be construed as creating any third-party beneficiaries
or any other rights in parties other than the parties hereto.

ARTICLE 5:  COVENANTS OF BUYER AND SELLER
            -----------------------------

     Buyer and Seller covenant and agree that from the date hereof until the
completion of the Closing:

     5.1  Representations and Warranties.  Each party shall give the other
          ------------------------------
detailed written notice promptly upon learning of the occurrence of any event
that would cause or constitute a breach (or would have caused a breach had such
event occurred or been known to it prior to the date hereof) of any of its
representations and warranties contained in this Agreement.

     5.2  Notice of Proceedings.  Each party shall promptly notify the other in
          ---------------------
writing upon:  (a) becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of this
Agreement or the transactions contemplated hereunder; or (b) receiving any
notice from any governmental department, court, agency or commission of its
intention (i) to institute an investigation into, or institute a suit or
proceeding to restrain or enjoin, the consummation of this Agreement or such
transactions, or (ii) to nullify or render ineffective this Agreement or such
transactions if consummated.

     5.3  WYJZ Tower Construction.  Seller shall proceed diligently with
          -----------------------
construction of the tower site identified in the Construction Permit issued with
respect to WYJZ-FM (FCC File No. BPH-981113IH) (the "WYJZ CP") consistent with
the budget provided by Seller to Buyer.  The cost of such construction shall be
shared equally by Buyer and Seller, provided that Buyer's obligation shall not
exceed $75,000 without its prior written consent.

ARTICLE 6:  CONDITIONS TO THE OBLIGATIONS OF SELLER
            ---------------------------------------

                                      -20-
<PAGE>

     The obligations of Seller under this Agreement are, at its option, subject
to the fulfillment of the following conditions prior to or on the Closing Date:

     6.1  Representations, Warranties and Covenants.  Each of the
          -----------------------------------------
representations and warranties of Buyer contained in this Agreement shall be
deemed to be made again on and as of the Closing Date and shall then be true and
correct in all material respects, except to the extent changes are permitted or
contemplated pursuant to this Agreement.  Buyer shall have performed and
complied in all material respects with each and every covenant and agreement
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.  Buyer shall have furnished Seller with a certificate, dated
the Closing Date and duly executed by an officer of Buyer authorized on behalf
of Buyer to give such a certificate, to the effect that the conditions set forth
in this Section 6.1 have been satisfied.

     6.2  Proceedings.  Neither Seller nor Buyer shall be subject to any
          -----------
restraining order or injunction restraining or prohibiting the consummation of
the transactions contemplated hereby.  In the event such a restraining order or
injunction is in effect, this Agreement may not be abandoned by Seller pursuant
to this Section 6.2 prior to the Final Closing Date, but the Closing shall be
delayed during such period.  This Agreement may be abandoned after the Final
Closing Date if such restraining order or injunction remains in effect.

     6.3  FCC Consent.  The FCC Consent shall have been granted by the FCC by
          -----------
initial order.

     6.4  Hart-Scott-Rodino.  If applicable, the waiting period under the HSR
          -----------------
Act shall have expired or been terminated.

     6.5  Deliveries.  Buyer shall have complied with its obligations set forth
          ----------
in Section 8.2.

ARTICLE 7:  CONDITIONS TO THE OBLIGATIONS OF BUYER
            --------------------------------------

     The obligations of Buyer under this Agreement are, at its option, subject
to the fulfillment of the following conditions prior to or on the Closing Date:

     7.1  Representations, Warranties and Covenants.  Each of the
          -----------------------------------------
representations and warranties of Seller contained in this Agreement shall be
deemed to be made again on and as of the Closing Date and shall then be true and
correct in all material respects except to the extent changes are permitted or
contemplated pursuant to this Agreement.  Seller shall have performed and
complied in all material respects with each and every covenant and agreement
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.  Seller shall have furnished Buyer with a certificate, dated
the Closing Date and duly executed by an officer of Seller authorized on behalf
of Seller to give such a certificate, to the effect that the conditions set
forth in this Section 7.1 have been satisfied.

     7.2  Proceedings.  Neither Seller nor Buyer shall be subject to any
          -----------
restraining order

                                      -21-
<PAGE>

or injunction restraining or prohibiting the consummation of the transactions
contemplated hereby. In the event such a restraining order or injunction is in
effect, this Agreement may not be abandoned by Buyer pursuant to this Section
7.2 prior to the Final Closing Date, but the Closing shall be delayed during
such period. This Agreement may be abandoned after such date if such restraining
order or injunction remains in effect.

     7.3  FCC Consent. The FCC Consent shall have been granted by the FCC by
          -----------
Final order, without any conditions materially adverse to Buyer.

     7.4  Hart-Scott-Rodino.  If applicable, the waiting period under the HSR
          -----------------
Act shall have expired or been terminated.

     7.5  Deliveries.  Seller shall have complied with its obligations set forth
          ----------
in Section 8.1.

     7.6  Required Consents.  Seller shall have obtained all of the Required
          -----------------
Consents.

     7.7  Material Adverse Change.  No Station nor any material portion of the
          -----------------------
Station Assets shall have suffered a material adverse change since the date
hereof, and there shall have been no changes since the date hereof in the
business, operations, condition (financial or otherwise), properties, assets or
liabilities of Seller, the Stations or any of the Station Assets, except changes
contemplated by this Agreement and changes which are not (either individually or
in the aggregate) materially adverse to the Stations.

     7.8  Cash Flow Amount.  The Cash Flow Amount determined pursuant to Section
          ----------------
1.4(e) shall be at least $1,700,000 and the Buyer Audit, if any, shall have been
completed.

ARTICLE 8:  ITEMS TO BE DELIVERED AT THE CLOSING
            ------------------------------------

     8.1  Deliveries by Seller.  At the Closing, Seller shall deliver to Buyer
          --------------------
duly executed by Seller or such other signatory as may be required by the nature
of the document:

          (a) bills of sale, certificates of title, endorsements, assignments,
general warranty deeds and other good and reasonably sufficient instruments of
sale, conveyance, transfer and assignment, in form and substance reasonably
satisfactory to Buyer, sufficient to sell, convey, transfer and assign the
Station Assets to Buyer free and clear of Liens (other than Permitted
Encumbrances) and to quiet Buyer's title thereto;

          (b) the Required Consents and any other consents obtained by Seller
under Section 4.4;

          (c) certified copies of Seller's articles of incorporation, bylaws and
resolutions authorizing the execution, delivery and performance by Seller of
this Agreement, which shall be in full force and effect;

          (d) the certificate referred to in Section 7.1;

                                      -22-
<PAGE>

          (e) the Estoppel Certificates, Title Commitments and Surveys;

          (f) the Subscription in the form of Exhibit B hereto; and
                                              ---------

          (g) a tower site lease in form and substance reasonably satisfactory
to Buyer for the antenna, STL and related transmission equipment at the tower
site identified in the Construction Permit issued with respect to Station
W53AV/W65DW (FCC File No. BPTTL-19981014JB).

     8.2  Deliveries by Buyer.  At the Closing, Buyer shall deliver to Seller:
          -------------------

          (a) the Purchase Price, which shall be paid in the manner specified in
Section 1.4;

          (b) an instrument or instruments of assumption of the Assumed
Obligations in form and substance reasonably satisfactory to Buyer;

          (c) certified copies of Buyer's articles of incorporation, bylaws and
resolutions authorizing the execution, delivery and performance by Buyer of this
Agreement, including without limitation, the due authorization and issuance of
the Stock Consideration, which shall be in full force and effect at the time of
the Closing;

          (d) the certificate referred to in Section 6.1; and

          (e) the Registration Rights Agreement in the form of Exhibit C hereto.
                                                               ---------

ARTICLE 9:  SURVIVAL; INDEMNIFICATION
            -------------------------

     9.1  Survival.  All representations, warranties, covenants and agreements
          --------
contained in this Agreement, or in any certificate, agreement, or other document
or instrument, delivered pursuant hereto, shall survive (and not be affected in
any respect by) the Closing, any investigation conducted by any party hereto and
any information which any party may receive, for a period of twelve (12) months
from the Closing Date and neither party shall have the right to assert a claim
against the other with respect thereto after the expiration of such twelve month
period, provided that:  (a) any claim for which written notice has been given
during such twelve month period shall survive until resolved, (b) the following
provisions, and any indemnification obligations relating thereto, shall survive
until the expiration of the applicable statute of limitations:  Sections 1.3
(Assumed Obligations and Retained Liabilities), 1.6 (Allocation), 1.7
(Adjustments), 2.1 (Organization), 2.2 (Authority), 2.4 (Financial Statements),
2.8 (Real Property, but only with respect to Seller's title to owned Real
Property and rights in leased Real Property), 3.1 (Organization), 3.2
(Authority), 10.3 (Expenses), and any obligation or liability arising from the
post-Closing operation of the Stations by Buyer (collectively, the "Fundamental
Provisions"), and (c) the Guaranty shall survive as provided in Section 11.9
hereof.

                                      -23-
<PAGE>

     9.2  Indemnification.
          ---------------

          (a) From and after Closing, Seller (an "Indemnifying Party") hereby
agrees to indemnify and hold harmless Buyer, the shareholders, directors,
officers and employees of Buyer and all persons which directly or indirectly,
through one or more intermediaries, control, are controlled by, or are under
common control with Buyer, and their respective successors and assigns
(collectively, the "Buyer Indemnitees") from, against and in respect of, and to
reimburse the Buyer Indemnitees for, the amount of any and all Deficiencies (as
defined in Section 9.3(a)); provided that, (i) except for the Fundamental
Provisions (which shall not be subject to such limitation), Seller shall have no
liability to Buyer hereunder until Buyer's aggregate Deficiencies exceed
$250,000, provided that, once such amount is exceeded, all such Deficiencies
shall be paid, (ii) the maximum liability of Seller to Buyer for breaches of the
representations and warranties set forth in Section 2.15 shall be $1,000,000,
and (iii) the maximum aggregate liability of Seller hereunder for Deficiencies
shall be $3,000,000.

          (b) From and after Closing, Buyer (an "Indemnifying Party") hereby
agrees to indemnify and hold harmless Seller, the shareholders, directors,
officers and employees of Seller and all persons which directly or indirectly,
through one or more intermediaries, control, are controlled by, or are under
common control with Seller, and their respective successors and assigns
(collectively, the "Seller Indemnitees") from, against and in respect of, and to
reimburse the Seller Indemnitees for, the amount of any and all Deficiencies (as
defined in Section 9.3(b)); provided that, (i) except for the Fundamental
Provisions (which shall not be subject to such limitation), Buyer shall have no
liability to Seller hereunder until Seller's aggregate Deficiencies exceed
$250,000, provided that, once such amount is exceeded, all such Deficiencies
shall be paid, and (ii) the maximum aggregate liability of Buyer hereunder for
Deficiencies shall be $3,000,000 (provided that such aggregate liability
limitation shall be increased to $10,000,000 for Deficiencies arising solely
from a breach of Section 3.2(b) hereof).

     9.3  Deficiencies.
          ------------

          (a) As used in this Article 9, the term "Deficiencies" when asserted
by Buyer Indemnitees or arising out of a third party claim against Buyer
Indemnitees shall mean any and all losses, damages, liabilities and claims
sustained by the Buyer Indemnitees and arising out of, based upon or resulting
from:  (i) any misrepresentation, breach of warranty, or any failure to comply
with any covenant, obligation or agreement on the part of Seller contained in or
made pursuant to this Agreement, including without limitation the Seller
Ancillary Agreements; (ii) any failure by Seller to pay or perform any of the
Retained Liabilities or any other liability or obligation relating to the
operation of the Stations by Seller prior to Closing; or (iii) any litigation,
proceeding or claim by any third party relating to the business or operation of
the Stations prior to Closing.  Such Deficiencies include without limitation any
and all acts, suits, proceedings, demands, assessments and judgments, and all
fees, costs and expenses of any kind, related or incident to any of the
foregoing (including, without limitation, any and all Legal Expenses (as defined
in Section 9.6 below)).

                                      -24-
<PAGE>

          (b) As used in this Article 9, the term "Deficiencies" when asserted
by Seller Indemnitees or arising out of a third party claim against Seller
Indemnitees shall mean any and all losses, damages, liabilities and claims
sustained by the Seller Indemnitees and arising out of, based upon or resulting
from: (i) any misrepresentation, breach of warranty, or any failure to comply
with any covenant, obligation or agreement on the part of Buyer contained in or
made pursuant to this Agreement, including without limitation the Buyer
Ancillary Agreements; (ii) any failure by Buyer to pay or perform any of the
Assumed Obligations or any other liability or obligation relating to the
operation of the Stations by Buyer after Closing; or (iii) any litigation,
proceeding, or claim by any third party relating to the business or operation of
the Stations after Closing.  Such Deficiencies include without limitation any
and all acts, suits, proceedings, demands, assessments and judgments, and all
fees, costs and expenses of any kind, related or incident to any of the
foregoing (including, without limitation, any and all Legal Expenses (as defined
in Section 9.6 below)).

     9.4  Procedures.
          ----------

          (a) In the event that any claim shall be asserted by any third party
against the Buyer Indemnitees or Seller Indemnitees (Buyer Indemnitees or Seller
Indemnitees, as the case may be, hereinafter, the "Indemnitees"), which, if
sustained, would result in a Deficiency, then the Indemnitees, as promptly as
practicable after learning of such claim, shall notify the Indemnifying Party of
such claim, and shall extend to the Indemnifying Party a reasonable opportunity
to defend against such claim, at the Indemnifying Party's sole expense and
through legal counsel reasonably acceptable to the Indemnitees, provided that
the Indemnifying Party proceeds in good faith, expeditiously and diligently.
The Indemnitees shall, at their option and expense, have the right to
participate in any defense undertaken by the Indemnifying Party with legal
counsel of their own selection at the expense of the Indemnitees.  No settlement
or compromise of any claim which may result in a Deficiency may be made by the
Indemnifying Party, without the prior written consent of the Indemnitees,
unless: (A) prior to such settlement or compromise the Indemnifying Party
acknowledges in writing its obligation to pay in full the amount of the
settlement or compromise and all associated expenses; (B) the Indemnitees are
furnished with a full release from the party or parties asserting the claim; and
(C) the Indemnifying Party has the ability (financial or otherwise) to pay or
perform such settlement or compromise.  Unless the Indemnifying Party has
elected not to defend against a claim, no settlement or compromise of any claim
which may result in a Deficiency may be made by the Indemnitees without the
prior written consent of the Indemnifying Party, which shall not be unreasonably
withheld, conditioned or delayed.  If the Indemnifying Party has elected to
defend against a claim, but the Indemnitee determines in good faith that there
is a reasonable probability that such claim may adversely affect it or its
affiliates other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the Indemnitee may, by notice
to the Indemnifying Party, assume the exclusive right to defend, compromise, or
settle such claim, but the Indemnifying Party will not be bound by any
determination of a claim so defended or any compromise or settlement effected
without its consent, which shall not be unreasonably withheld, conditioned or
delayed.

                                      -25-
<PAGE>

          (b) In the event that the Indemnitees assert the existence of any
claim for Deficiency against the Indemnifying Party, they shall give written
notice to the Indemnifying Party of the nature and amount of the Deficiency
asserted.  The parties agree that all such claims not disputed by the
Indemnifying Party shall be paid in cash by the Indemnifying Party within thirty
(30) days after receiving notice of the claim.  "Disputed Claims" shall mean
claims by an Indemnitee which the Indemnifying Party objects to in good faith in
writing within twenty (20) days after receiving notice of the claim.  At the
option of the Indemnitees, the Indemnitees may offset any established Deficiency
or any portion thereof that has not been paid by the Indemnifying Party to the
Indemnitees against any obligation the Indemnitees, or any of them, may have to
the Indemnifying Party.

          (c) In the event there is a Disputed Claim, the parties shall attempt
for a period of at least 20 days to negotiate in good faith a resolution of such
Disputed Claim, including at least one meeting in person among an executive
officer of Buyer and each Seller.  In connection with resolution of such
Disputed Claim, each party shall provide to the other such information,
documents, records, engineering, schematics, compilations, analyses and reports
relating to the Disputed Claim as shall be reasonably requested.

     9.5  Legal Expenses.  As used in this Article 9, the term "Legal Expenses"
          --------------
shall mean any and all fees (whether of attorneys, accountants or other
professionals), costs and expenses of any kind reasonably incurred by any person
identified herein and its counsel in investigating, preparing for, defending
against, or providing evidence, producing documents or taking other action with
respect to any threatened or asserted claim.

ARTICLE 10:  MISCELLANEOUS

     10.1  Termination.  This Agreement may be terminated at any time prior to
           -----------
Closing: (a) by the mutual consent of Seller and Buyer; (b) by any party hereto
if the FCC has denied the approvals contemplated by this Agreement in an order
which has become Final; (c) by Buyer as provided in Section 1.4(e) (Audit) or
Section 4.6 (Environmental) or Section 10.6 (Broadcast Transmission
Interruption); (d) by Buyer as provided in Section 10.7 (Risk of Loss); (e) by
Buyer or Seller if the Closing has not taken place by the Final Closing Date;
(f) by Buyer, if on the Closing Date Seller has failed to satisfy any of the
conditions set forth in Section 7.1, 7.5, 7.6, 7.7 or 7.8; (g) by Buyer if
Seller has failed to cure a material breach of any of its representations,
warranties or covenants under this Agreement within thirty (30) calendar days
after it receives notice from Buyer of such breach; (h) by Seller, if on the
Closing Date Buyer has failed to satisfy either of the conditions set forth in
Section 6.1 or 6.5; or (i) by Seller if Buyer has failed to cure a material
breach of any of its representations, warranties or covenants under this
Agreement within thirty (30) calendar days after it receives notice from Seller
of such breach.  A termination pursuant to this Section 10.1 shall not relieve
any party of any liability it would otherwise have for a breach of this
Agreement.

     10.2  Specific Performance.  In the event of a breach or threatened breach
           --------------------
by Seller of

                                      -26-
<PAGE>

any representation, warranty, covenant or agreement under this Agreement, at
Buyer's election, in addition to any other remedy available to it, Buyer shall
be entitled to an injunction restraining any such breach or threatened breach
and, subject to obtaining any requisite approval of the FCC, to enforcement of
this Agreement by a decree of specific performance requiring Seller to fulfill
its obligations under this Agreement, in each case without the necessity of
showing economic loss or other actual damage and without any bond or other
security being required. The remedies provided Buyer in this Agreement shall be
cumulative and shall not preclude the assertion by Buyer of any other rights or
the seeking of any other remedies against Seller.

     10.3  Expenses.  Each party hereto shall bear all of its expenses incurred
           --------
in connection with the transactions contemplated by this Agreement, including
without limitation, accounting and legal fees incurred in connection herewith;
provided, however, that:  (i) Seller and Buyer shall each pay one-half of the
FCC filing fees required to be paid in connection with the FCC Application; (ii)
Seller shall be exclusively responsible for, and Buyer shall not have any
liability or responsibility for, any sales or transfer taxes (including without
limitation any real estate transfer taxes), arising from the transfer of the
Station Assets to Buyer; and (iii) the HSR Act filing fee will be paid for by
Buyer.

     10.4  Further Assurances.  From time to time prior to and after Closing,
           ------------------
each party hereto will execute all such instruments and take all such actions as
any other party shall reasonably request, without payment of further
consideration, in connection with carrying out and effectuating the intent and
purpose hereof and all transactions contemplated by this Agreement, including
without limitation the execution and delivery of any and all confirmatory and
other instruments in addition to those to be delivered at Closing, and any and
all actions which may reasonably be necessary to complete the transactions
contemplated hereby.  The parties shall cooperate fully with each other and with
their respective counsel and accountants in connection with any steps required
to be taken as part of their respective obligations under this Agreement.

     10.5  Public Announcements.  Prior to Closing, neither party shall, without
           --------------------
the approval of the other party hereto, make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as is customary for a public company or as and to the extent that such party
shall be so obligated by law, in which case such party shall give advance notice
to the other party.  Notwithstanding the foregoing, the parties acknowledge that
the rules and regulations of the FCC require that public notice of the
transactions contemplated by this Agreement be made after the FCC Application
has been filed with the FCC, and that such notice may be broadcast on the
Stations without the advance consent of Buyer.

     10.6  Broadcast Transmission Interruption.  If before Closing the regular
           -----------------------------------
broadcast transmission of any of the Stations in the normal and usual manner is
interrupted for a period of eight consecutive hours or more, Seller shall give
the prompt written notice thereof to Buyer.  Buyer shall then have the right, by
giving written notice to Seller, to postpone (and if necessary re-postpone) the
Closing to a date that is fifteen (15) days after the end of any such

                                      -27-
<PAGE>

interruption.  If regular broadcast transmission in the normal and usual manner
is interrupted for a continuous period of eighteen (18) hours or more at any
time prior to Closing (other than interruptions resulting from the loss of
electrical power due to an act of God including, but not limited to, storms and
lightning which do not exceed an aggregate of 48 hours), then (a) Seller
immediately shall give written notice thereof to Buyer and (b) Buyer shall have
the right, by giving written notice to Seller, to (i) terminate this Agreement,
or (ii) postpone the Closing as provided above.

     10.7  Risk of Loss.  The risk of loss, damage or destruction to any of the
           ------------
Station Assets shall be borne by Seller at all times up to 12:01 a.m. local time
on the Closing Date, and it shall be the responsibility of Seller to repair or
cause to be repaired and to restore the property to substantially the
operational and functional condition of such property prior to any such loss,
damage, or destruction.  In the event of any such loss, damage, or destruction,
the proceeds of any claim for any loss, payable under any insurance policy with
respect thereto, shall be used to repair, replace, or restore any such property
to its former condition, subject to the conditions stated below.  In the event
of any loss or damage to any of the Station Assets, Seller shall notify Buyer
thereof in writing immediately.  Such notice shall specify with particularity
the loss or damage incurred, the cause thereof (if known or reasonably
ascertainable), and the insurance coverage.  In the event that the property is
not completely repaired, replaced or restored on or before the thirtieth day
after the occurrence of the loss or damage, Buyer at its option:  (a) may elect
to postpone Closing (including as needed beyond the Final Closing Date and this
Agreement may not be terminated by Seller pursuant to Section 10.1(e) prior to
the Final Closing Date, but the Closing shall be delayed during such period)
until such time as the property has been completely repaired, replaced or
restored (and, if necessary, Seller shall join Buyer in requesting from the FCC
any extensions of time in which to consummate the Closing that may be required
in order to complete such repairs); or (b) may elect to consummate the Closing
and accept the property in its then condition, in which event Seller shall pay
to Buyer all proceeds of insurance and assign to Buyer the right to any unpaid
proceeds; or (c) terminate this Agreement.

     10.8  Cooperation.  From the date of Closing and for a period of three (3)
           -----------
years thereafter, Seller shall preserve its books and records not included in
the Station Assets and provide Buyer with such cooperation and access thereto as
Buyer shall reasonably request in connection with Buyer's:  (i) analysis and
review of Financial Statements or information provided or created hereunder, or
(ii) preparation of any reports or analyses prepared by Buyer.  Seller shall
also make its accountants available (at Buyer's expense), including any opinions
and financial statements relating to the Seller, to provide explanations of any
documents or information provided hereunder and to permit disclosure of such
information by Buyer, including disclosure to any governmental authority,
including the Securities and Exchange Commission.  In the event the Improvement
Application has not been granted as of the Closing Date, Seller agrees to
cooperate with and assist Buyer at Buyer's expense as reasonably requested in
the prosecution thereof.

ARTICLE 11:  GENERAL PROVISIONS
             ------------------

                                      -28-
<PAGE>

     11.1  Successors and Assigns.  This Agreement shall be binding upon and
           ----------------------
inure to the benefit of the parties hereto, and their respective
representatives, successors and assigns.  Seller may not assign any of its
rights or delegate any of its duties hereunder without the prior written consent
of Buyer, and any such attempted assignment or delegation without such consent
shall be void.  Buyer may not assign any of its rights or delegate any of its
duties hereunder in whole or in part without Seller's prior written consent and
any such attempted assignment or delegation without Seller's consent will be
null and void; provided, however, that Buyer may assign its rights or delegate
its duties hereunder in whole or in part to any wholly owned subsidiary of
Buyer, including by filing the FCC Application in the name of Radio One
Licenses, Inc. as assignee of the FCC Authorizations, provided, however, that
any such assignment or delegation shall not relieve Buyer of any of its
liabilities or obligations hereunder.

     11.2  Amendments; Waivers.  The terms, covenants, representations,
           -------------------
warranties and conditions of this Agreement may be changed, amended, modified,
waived, or terminated only by a written instrument executed by the party waiving
compliance.  The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right of such party at a later date to enforce the same.  No waiver by any party
of any condition or the breach of any provision, term, covenant, representation
or warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances shall be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation or warranty of this Agreement.

     11.3  Notices.  All notices, requests, demands and other communications
           -------
required or permitted under this Agreement shall be in writing (which shall
include notice by telex or facsimile transmission) and shall be deemed to have
been duly made and received when personally served, or when delivered by Federal
Express or a similar overnight courier service, expenses prepaid, or, if sent by
telex, graphic scanning or other facsimile communications equipment, delivered
by such equipment, addressed as follows:

if to Seller:    Shirk, Inc.
                 IBL, L.L.C.
                 6264 Lapas Trail
                 Indianapolis, IN  46268
                 Attn:  Bill Shirk Poorman
                 Facsimile No.:  317-328-3870

and              Mays Chemical Company, Inc.
                 P.O. Box 50915
                 Indianapolis, IN  46250-0915
                 Attn:  William G. Mays
                 Facsimile No.:  317-845-8410
with a copy (which shall not constitute notice) to:

                                      -29-
<PAGE>

                 Barnes & Thornburg
                 1313 Merchants Bank Building
                 11 South Meridian Street
                 Indianapolis, IN  46204
                 Attn:  Catherine L. Bridge
                 Facsimile No.:  (317) 231-7344

                 Richard Hayes, Esq.
                 8404 Lee's Ridge Road
                 Warrenton, VA 20186
                 Facsimile:  202-478-0048

                 Richard Carr, Esq.
                 5528 Trent Street
                 Chevy Chase, MD 20815
                 Facsimile:  301-718-8407

if to Buyer:     Radio One, Inc.
                 5900 Princess Garden Parkway, Suite 800
                 Lanham, MD  20706
                 Attn:  Alfred C. Liggins, President
                 Facsimile No.:  (301) 306-9638

with a copy (which shall not constitute notice) to:

                 Radio One, Inc.
                 5900 Princess Garden Parkway, Suite 800
                 Lanham, MD  20706
                 Attn:  Linda J. Eckard, General Counsel
                 Facsimile No.:  (301) 306-9638

and              Wiley, Rein & Fielding
                 1776 K Street, N.W.
                 Washington, D.C.  20006
                 Attn:  Dominic T. Bodensteiner
                 Facsimile No.:  (202) 719-7049

     Any party may alter the address to which communications are to be sent by
giving notice of such change of address in conformity with the provisions of
this Section providing for the giving of notice.

     11.4  Captions.  The captions of Articles and Sections of this Agreement
           --------
are for convenience only and shall not control or affect the meaning or
construction of any of the

                                      -30-
<PAGE>

provisions of this Agreement.

     11.5  Governing Law.  This Agreement and all questions relating to its
           -------------
validity, interpretation, performance and enforcement shall be governed by and
construed in accordance with the laws of the State of Indiana, without giving
effect to principles of conflicts of laws.

     11.6  Entire Agreement.  This Agreement constitutes the full and entire
           ----------------
understanding and agreement between the parties with regard to the subject
matter hereof, and supersedes all prior agreements, understandings, inducements
or conditions, express or implied, oral or written, relating to the subject
matter hereof.  The express terms hereof control and supersede any course of
performance and/or usage of trade inconsistent with any of the terms hereof.
This Agreement has been prepared by all of the parties hereto, and no inference
of ambiguity against the drafter of a document therefore applies against any
party hereto.

     11.7  Counterparts.  This Agreement may be executed in any number of
           ------------
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument.

     11.8  Interpretation.  References herein to Seller shall be construed case
           --------------
by case to mean Shirk or IBL or either or both as the context requires to enable
Buyer to obtain the fullest benefit of this Agreement, and Shirk and IBL shall
be jointly and severally liable for all representations, warranties, agreements,
covenants and other obligations arising hereunder.

     11.9  Guaranty.  William G. Mays and William Shirk Poorman, both
           --------
individuals residing in the State of Indiana (collectively the "Guarantors")
hereby jointly and severally guarantee to Buyer the timely payment and
performance in full of Seller's post-Closing indemnification obligations under
this Agreement (the "Guaranteed Obligations"); provided, however that the
aggregate liability of Guarantors under this Section shall not exceed
$3,000,000, the Guaranteed Obligations shall not be subject to an additional
$250,000 minimum as in Section 9.2(a)(i), and the Guarantors' liability under
this Section shall expire on the first anniversary of the Closing Date, provided
that Guarantors' liability with respect to any Guaranteed Obligations for which
notice has been given during such one-year period shall survive until resolved.
Guarantors' obligations hereunder are primary and direct and not conditioned or
contingent upon pursuit of any remedies against Seller, and shall not be limited
or affected by any circumstance that might otherwise limit or affect the
obligations of a surety or guarantor, all of which are waived to the fullest
extent permitted by law.  The Guarantors each represent and warrant that they
have and will maintain sufficient personal net worth to pay and perform the
Guaranteed Obligations hereunder.

                            [SIGNATURE PAGE FOLLOWS]
857808

                                      -31-
<PAGE>

                   SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
                   ------------------------------------------

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

  BUYER:                 RADIO ONE, INC.

                         By:  ________________________________
                              Name:
                              Title:

  SELLER:                SHIRK, INC.

                         By:  ________________________________
                              Name:
                              Title:

                         IBL, L.L.C.

                         By:  ________________________________
                              Name:
                              Title:

GUARANTORS (as to Section 11.9 only):

                         ______________________________________
                         William G. Mays, an individual

                         ______________________________________
                         William Shirk Poorman, an individual
<PAGE>

Schedules:
---------

     1.1(a)                FCC Authorizations
     1.1(b)                Tangible Personal Property
     1.1(c)                Real Property
     1.1(d)                Time Sale Contracts
     1.1(e)                Station Contracts
     1.1(f)                Intangible Property
     1.1(j)                Prepaid Items
     1.2                   Excluded Assets
     2.3                   Consents
     2.4                   Financial Statements
     2.6                   Exceptions to Title
     2.7(a),(d),(e) & (f)  FCC Matters
     2.10                  Station Contracts with Affiliates
     2.12                  Employees
     2.14                  Insurance Policies

Exhibits:
--------

     Exhibit A             Cash Flow Addbacks
     Exhibit B             Subscription
     Exhibit C             Registration Rights Agreement<PAGE>

                                                                   Exhibit 10.21

                              AMENDED AND RESTATED
                        SPLITROCK FULL SERVICE AGREEMENT

                                 BY AND BETWEEN

                       PRODIGY COMMUNICATIONS CORPORATION

                                      AND

                            SPLITROCK SERVICES, INC.

                         DATED AS OF FEBRUARY 16, 2000
<PAGE>

<TABLE>
<CAPTION>

                               TABLE OF CONTENTS
                               -----------------

<S>                                                                         <C>
PART 1 -- GENERAL

     1.1     Definitions...................................................

     1.2     Agreement Structure...........................................

     1.3     Electronic Communications.....................................

     1.4     Prices........................................................

     1.5     Payment and Taxes.............................................

     1.6     Patents and Copyrights........................................

     1.7     Limitation of Liability.......................................

     1.8     Your Additional Rights........................................

     1.9     Changes to and Termination of Services........................

     1.10    Geographic Scope..............................................

     1.11    Governing Law.................................................

     1.12    Notice........................................................

     1.13    Term..........................................................

     1.14    Financial Covenants...........................................

     1.15    Headings......................................................

PART 2 -- RESPONSIBILITIES OF THE PARTIES..................................

     2.1     Mutual Responsibilities.......................................

     2.2     Our Other Responsibilities....................................

     2.3     Your Other Responsibilities...................................

PART 3 -- WARRANTIES.......................................................

     3.1     Warranty for Service..........................................

     3.2     Items Not Covered by Warranty.................................

PART 4 -- EQUIPMENT PROVIDED BY SPLITROCK..................................

PART 5 -- CONFIDENTIALITY..................................................

PART 6 -- SPLITROCK SERVICES...............................................

     6.1     Description...................................................

             6.1.1   Dial Access Network...................................

             6.1.2   ATM Backbone Network..................................

             6.1.3   Regional Servers......................................
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                       <C>
             6.1.4     Network Management and Proxy Servers..............................

     6.2     Service Level Objectives....................................................

             6.2.1     Site Dial Grade of Service (SDGS) Objective.......................

             6.2.2     Availability Objectives...........................................

             6.2.3     Transit Delay.....................................................

     6.3     Our Other Responsibilities..................................................

     6.4     Your Other Responsibilities.................................................

     6.5     Charges.....................................................................

             6.5.1     Monthly Usage Charges (SDGS) Objective............................

             6.5.2     Other Monthly Charges.............................................

             6.5.3     Payment Terms.....................................................

             6.5.4     Global Service Provider...........................................

     6.6     Forecasts...................................................................

     6.7     Changes and Default.........................................................

             6.7.1     Undesirable Conditions............................................

             6.7.2     System Wide Failure...............................................

             6.7.3     Financial Related Defaults........................................

             6.7.4     Default (other than for Sections 6.7.1, 6.7.2 or 6.7.3)...........

     6.8     Other Terms.................................................................

     6.9     Auditing Procedures.........................................................

     6.10     Primary Provider...........................................................

     6.11     Additional Services and Products...........................................

     6.12     Alternative Dispute Resolution.............................................

PART 7 -- MISCELLANEOUS..................................................................

     7.1     Publicity...................................................................

     7.2     Amendment...................................................................

     7.3     Counterparts................................................................

     7.4     Entire Agreement............................................................

APPENDIX A-1.............................................................................
</TABLE>

                                      ii

<PAGE>

                                                                   EXHIBIT 10.21

NOTE: Redacted portions have been marked with (***). The redacted portions are
subject to a request for confidential treatment that has been filed with the
Securities and Exchange Commission.

                              AMENDED AND RESTATED
                        SPLITROCK FULL SERVICE AGREEMENT

                                    Preamble

     THIS AMENDED AND RESTATED SPLITROCK FULL SERVICE AGREEMENT, dated as of
February 16, 2000 (the "Agreement") is made by and between Prodigy
Communications Corporation ("Prodigy") and Splitrock Services,
Inc.("Splitrock"), a Delaware corporation, and shall become effective as of
January 1, 2000.

     WHEREAS, pursuant to that certain Full Service Agreement, dated June 24,
1997, and thereafter amended May 18, 1999, by and between Prodigy and Splitrock,
as amended, the "Full Service Agreement", Splitrock acts as the primary provider
of network services to Prodigy on the terms and conditions set forth therein;

     WHEREAS, Prodigy and Splitrock desire to amend and restate the Full Service
Agreement as set forth herein;

References throughout this Agreement to "you" and "your" mean Prodigy; and
references to "we", "us" and "our" mean Splitrock and its assignees.  References
throughout this Agreement to "party" or "parties" mean either Prodigy or
Splitrock, as the context requires and unless otherwise defined except that
"third party" means anyone other than a "party".  Reference is made to that
certain Definitive Agreement, dated as of June 24, 1997, and that certain
Transition Services Agreement between the parties dated June 24, 1997
("Transition Services Agreement") and that certain Sublease Agreement dated as
of June 24, 1997 ("Sublease Agreement") each by and between Prodigy and
Splitrock.

                                   Agreement

The parties hereto agree that the following provisions of this Agreement shall
be effective at 12:0l am (New York time) July 1, 1997:  Part 1, Part 2, Part 5,
and Sections 6.5, 6.10, 6.11 and 6.12 and all other rights and obligations of
the Company and Provider herein shall only become effective as of the end of the
Transition Period (as hereinafter defined).

Part 1 - General
================================================================================

1.1  Definitions
     -----------

                                       1
<PAGE>

     "Equipment" is a machine, including its features, conversions, upgrades,
     elements, or accessories, or any combination of them.  The term "Equipment"
     includes Splitrock Equipment and any non-Splitrock Equipment we provide to
     you, but excludes Programs.

     "Materials" are work products (such as programs, program listings,
     programming tools, documentation, reports, and drawings) that we may
     deliver to you during a project.  The term "Materials" does not include
     Programs.

     "Product" is a Program or Equipment.
     "Program" is the following, including features and any whole or partial
     copies:

           1 machine-readable instructions;
           2 a collection of machine-readable data, such as a data base; and
           3 related licensed materials, including documentation and listings,
             in any form.

          The term "Program" includes a Splitrock Program and any non-Splitrock
          Program that we may provide to you.  The term does not include
          licensed internal code or Materials.

     "Services" as used herein describes the network services (not to include
     satellite) we will provide, as more particularly described in Section 6.1.
     In addition, any new service you request or additional service you request,
     not already contemplated by this Agreement, and that we agree to provide is
     not the subject of this Agreement until the terms, conditions and prices of
     such service shall be confirmed in Transaction Documents.  In addition,
     Services provided to you hereunder shall include reports, surveys and
     analysis reasonably required to fulfill the purposes of this Agreement, and
     shall not be subject to any additional charge.

     "Subscriber" is any user authorized to access basic Prodigy Classic or
     basic Prodigy Internet (as they currently exist), regardless of whether
     such user actually uses your services in any month or regardless of whether
     or not you receive payment from that user.

     "Subscriber Count" shall mean the total number of Subscribers, subject to
     the limitations in this definitional paragraph.  For Prodigy Classic,
     multiple User Identifications associated with one Subscriber will count as
     one Subscriber in the Subscriber Count.  For Prodigy Internet, multiple
     User Identifications associated with one Subscriber will count as one
     Subscriber in the Subscriber Count, provided only one such User
     Identification per Subscriber can access the Service at any one time.  A
     Subscriber to both Prodigy Classic and Prodigy Internet under the "Prodigy
     Combo Plan" will count as one Subscriber in the Subscriber Count.  Any
     Subscriber who is not capable of accessing the Service shall not be counted
     in the Subscriber Count.

     "System" is the Services and Products we provide together under this
     Agreement that we identify to you as a System, which identification is in
     writing.

                                       2
<PAGE>

     "Transition Period" is the period from July 1, 1997 until the earlier of
     (i) December 31, 1997 or (ii) on the effective date of a notice from
     Provider stating that it intends to terminate the Transition Services
     Agreement which effective date may only be the last day of a calendar
     month.

     "User Identification" is a code or codes which enable authorization or
     access to programs, data or equipment through a Service.

1.2  Agreement Structure
     -------------------

     Attachments
     -----------

     Some Services and Products have terms in addition to those we specify in
     this Agreement.  We will provide the additional terms in documents called
     "Attachments," which are also part of this Agreement.

     Transaction Documents
     ---------------------

     For each business transaction, we will provide to you the appropriate
     "Transaction Documents" before the transaction occurs that confirm the
     details of the transaction, which Transaction Documents shall not be
     effective against or in favor of either party, unless and until each party
     agrees to each appropriate set of Transition Documents in writing.

     Conflicting Terms
     -----------------

     If there is a conflict among the terms in the various documents, those of
     an Attachment prevail over those of this Agreement.  The terms of a
     Transaction Document prevail over those of both the Attachments and this
     Agreement.

     Your Order
     ----------

     You may order a Service or Product in writing, including a request written
     on paper and delivered to us and a request sent via facsimile to us.

     Our Acceptance of Your Order
     ----------------------------

     A Service or Product becomes subject to this Agreement when we accept your
     order by sending you a Transaction Document which accepts expressly and
     precisely the terms of the order.

     Your Acceptance of Additional Terms
     -----------------------------------

     You accept the additional terms in an Attachment or Transaction Document by
     signing it.

                                       3
<PAGE>

1.3  Electronic Communications
     -------------------------

     You and we may communicate with the other by electronic means for
     information purposes only, such as through electronic or Prodigy Mail. Any
     electronic communication must be followed by written confirmation or
     telecopied in order to be binding on either party. Documents which include
     handwritten signatures may be transmitted by telecopier, and shall be
     deemed binding without the need for original signatures. Nevertheless,
     original signature copies are preferred.

1.4  Prices
     ------

     The following are the bases on which we may require the amount payable for
     a Service or Product to be paid, with an example of each:

     1.   one-time (Service installation charges);

     2.   recurring (a periodic charge for Services);

     3.   a combination of both (an initial charge and a monthly license charge
          for a Program); or

     4.   usage (network traffic charges).

     We will specify the amount and basis for the particular Service or Product.
     If additional Products or Services are added, the prices will be set forth
     in a Transaction Document.  Except as herein provided specifically, no
     additional charges shall be imposed or incurred for Services which we are
     obligated to provide under this Agreement.

1.5  Payment and Taxes
     -----------------

     You shall pay:

     1.    usage and recurring charges according to Section 6.5.

     2.    all other charges when or after you incur them.

     Amounts due are payable as we specify in the invoice which invoice shall be
     consistent with the conflict hierarchy set forth in Section 1.2,
     Conflicting Terms, or, with respect to dial up network services, as
     provided in Section 6.5.  You agree to pay accordingly.  You agree to pay
     any tax on the Services we provide to you.  You are responsible for
     personal property taxes for each Product that you purchase and each Program
     that you license from the date we ship it to you or otherwise make it
     available to you.  "Taxes" as used in this

                                       4
<PAGE>

     Agreement shall not include any FCC charges or other charges payable to any
     government organization other than a taxing authority, all of which we
     shall pay.

1.6  Patents and Copyrights
     ----------------------

     For purposes of this Section only, the term "Product" includes Materials
     alone or in combination with Products we provide to you as a System.

     If a third party claims that a Product we provide to you infringes that
     party's patent or copyright, we will defend you against that claim at our
     expense and pay all costs, damages, and attorney's fees that a court
     finally awards, provided that you:

     1.  promptly notify us in writing of the claim; and

     2.   allow us to control, and cooperate with us in, the defense and any
          related settlement negotiations.  At your option and at your cost, you
          may retain counsel to advise you as you work with us.

     If such a claim is made or appears likely to be made, we will take
     reasonable steps, and you agree to permit us to do so, to enable you to
     continue to use the Product, or to modify it, or replace it with one that
     is at least functionally equivalent.  If we determine that none of these
     alternatives is reasonably available, you agree to return the Product to us
     on our written request and we may terminate the affected Service at no
     further charge to you, in which case we will refund to you the unused
     prorata portion of any advance payments for the Service and/or the Product.

     YOU AGREE THAT YOUR RIGHTS, AS PROVIDED BY THIS SECTION 1.6, REGARDING ANY
     CLAIM OF INFRINGEMENT ARE LIMITED AND THE REMEDIES IN THIS SECTION WILL BE
     YOUR SOLE AND EXCLUSIVE REMEDY FOR ANY SUCH CLAIM.

     Notice of Infringement
     ----------------------

     All notices of patent or copyright infringement permitted or required by
     this Agreement will be in writing and will take effect upon receipt.

     Claims for Which We are Not Responsible
     ---------------------------------------

     We have no obligation regarding any claim to the extent it is based on any
     of the following:

     1.   your modification of a Product, or a Program's use with equipment and
          programs other than the Equipment and Programs with which the Program
          is designed to operate:

                                       5
<PAGE>

     2.   the combination, operation, or use of a Product with any product,
          data, or apparatus that we did not provide unless we had written
          notice and acknowledged in writing receipt of notice that the intended
          use of the Product was for a use with a product, data, or apparatus we
          did not provide; or

     3.   infringement by a non-Splitrock Product alone, as opposed to its
          combination with Products we provide to you as a System.

1.7  Limitation of Liability
     -----------------------

     Circumstances may arise where, because of a default on our part or other
     liability, you are entitled to recover damages from us.  In each such
     instance, regardless of the basis on which such party is entitled to claim
     damages, we are liable only for:

     1.  payments referred to in our patent and copyright terms described above;

     2.   bodily injury (including death), and damage to real property and
          tangible personal property; and

     3.   the amount of any other actual loss or damage, in excess of $100,000
          or the charges (if recurring or usage, 12 months' charges apply) for
          the Service or Product that is the subject of the claim.

          This limit also applies to any of our subcontractors, agents and
          Program developers.  It is the maximum for which we, our
          subcontractors, agents and program developers are collectively
          responsible.

     Items for Which Neither Party is Liable
     ---------------------------------------

     Under no circumstances are either party or its subcontractors, agents or
     Program developers liable for any of the following:

     1.   third-party claims against the other party for losses or damages
          (other than those under the first two items listed in 1.7 above)
          except for willful acts or acts of gross negligence;

     2.   loss of, or damage to, records or data except for any actual loss or
          damage willfully and intentionally caused by the other party or caused
          by gross negligence, subject to the limitation contained in Section
          1.7(3) above; or

     3.   economic consequential damages (including lost profits or savings) or
          incidental damages, even if either party is informed of their
          possibility.

                                       6
<PAGE>

     EACH PARTY AGREES THAT ITS RIGHTS ARE LIMITED BY THIS SECTION 1.7, THAT THE
     LIMITATIONS PROVIDED HEREIN ARE FAIR AND EQUITABLE, AND EACH PARTY HEREBY
     WAIVES ANY RIGHT OR REMEDY IT MAY HAVE FOR THE RECOVERY OF ANY OTHER
     DAMAGES.

1.8  Your Additional Rights
     ----------------------

     You may have additional rights under certain laws (such as consumer laws)
     which do not allow the exclusion of implied warranties, or the exclusion or
     limitation of certain damages.  If these laws apply, our exclusions or
     limitations may not apply to you.

1.9  Changes to and Termination of Services
     --------------------------------------

     If a third party claims that a Product we provide as part of a Service
     infringes a patent or copyright, we reserve the right to first substitute a
     different Product, or alternatively to terminate the Service effective
     immediately.

1.10 Geographic Scope
     ----------------

     All of your rights, all our obligations, and all licenses are valid only in
     the United States, including Hawaii and Alaska.

1.11 Governing Law
     -------------

     This Agreement shall be governed by and interpreted under the laws of, any
     action shall be brought in the state or federal courts located in, and any
     arbitration proceeding shall be located in, the domicile of the party who
     is an initial defendant or the party upon whom an initial demand for
     arbitration is served.

1.12 Notice
     ------

     All notices permitted or required by this Agreement will be sent to the
     following address and will take effect upon receipt:

          Prodigy Communications Corporation
          44 S. Broadway
          White Plains, New York  10601
          Attention:  President

          Splitrock Services, Inc.
          9012 New Trails Drive

                                       7
<PAGE>

          The Woodlands, Texas  77381
          Attention:  President

1.13 Term
     ----

     The initial term of this Agreement shall be for a period of 54 months
     ("Initial Term") commencing on July 1, 1997 and continuing through December
     31, 2001; provided, however, that the term of this Agreement shall be
     automatically extended for one year on December 31, 2001 and on each
     December 31 thereafter unless either party shall have given written notice
     to the other at least one year prior thereto that the term of this
     Agreement shall not be so extended.

1.14 Financial Covenants
     -------------------

     From the date hereof until June 30, 1999, we covenant and agree that we
     will:

     1.  Financial and Other Information

         (a) Annual Financial Reports.  Furnish you not later than 90 days after
     the close of each 1997 and 1998 calendar year a balance sheet as of
     December 31, 1997 and December 31, 1998, statements of operations and
     statements of cash flows for the period from inception through each
     applicable period, and such other comments and financial details as are
     usually included in similar financial statements.  Such financial
     statements shall be prepared in accordance with generally accepted
     accounting principles and shall be audited by independent certified public
     accountants of recognized standing selected by us and shall contain
     unqualified opinions as to the fairness of the statements therein
     contained, shall be unqualified in all other respects, and shall not
     contain any explanatory language which makes reference to uncertainties
     such as: (i) going concern, (ii) litigation or (iii) any other potential
     liabilities or impairment of our assets.

     (b) Quarterly Financial Statements.  Furnish you not later than 45 days
     after the close of each calendar quarter through June 30, 1999, beginning
     with the quarter commencing July 1, 1997, financial statements containing
     our balance sheet as of the end of such period and statements of operations
     and cash flows up to the end of such period.  These statements shall be
     prepared on a basis consistent with our normal accounting practices and the
     accuracy of the statements shall be certified as true by our chief
     executive or financial officer.

     (c) Payables.  Furnish you not later than 45 days after the close of each
     calendar quarter through June 30, 1999, beginning with the quarter
     commencing July 1, 1997, a total of amounts which are due and payable and
     have not been paid by their contractual due date, and a list of each
     creditor to which payments over $25,000 are due.

                                       8
<PAGE>

     (d) Taxes.  Pay promptly and within the time that they can be paid without
     interest or penalty, all taxes, assessments and similar imposts and charges
     of every kind and nature lawfully levied, assessed or imposed upon us,
     except to the extent being contested in good faith and furnish you evidence
     of such payment on a quarterly basis within 45 days after the close of each
     calendar quarter through June 30, 1999.

     (e) Liens and Litigation.  Through June 30, 1999, furnish you within ten
     days of receipt of notice of any lien or lawsuit which is threatened or
     pending against us and which involves a claim in excess of $100,000.

     (f) Projections.  Thirty days after we have received your forecasts
     referenced in Section 6.6 hereof for each applicable quarter, we will
     provide you with plans and projections for income, expenses, capital
     receipt and expenditure, for the immediately succeeding fifteen (15) month
     period.  Included with the statements to be provided quarterly pursuant to
     Section 1.14 (a)-(e) hereof, we shall also provide you with evidence of our
     results as compared to past projections, which shall also be certified as
     true by our chief executive or financial officer.

     2.  Insurance.  Maintain valid and effective insurance policies that cover
     our properties and risks of the business in such types and amounts as are
     consistent with customary practices and standards of companies engaged in
     businesses and operations similar to ours and furnish you not later than 45
     days after the close of each calendar quarter through June 30, 1999,
     beginning with the quarter commencing July 1, 1997, certificates evidencing
     such insurance.  After you receive such certificate, you may request that
     we obtain additional coverage, consistent with reasonable business
     practices, which we shall obtain,.

     3.  [INTENTIONALLY DELETED]

     4.  Continuing Annual and Quarterly Reporting.  The financial reporting
     requirements of subsection 1.(a) and (b) hereof shall continue after June
     30, 1999 if, at that time, our cash plus past due accounts receivable from
     you less past due accounts payable less debt other than capital leases is
     an amount less than $5,000,000.

1.15 Headings The headings contained herein are inserted for convenience of
     --------
     reference only and are not intended to be part of or to affect the meaning
     or interpretation of this Agreement.

Part 2 - Responsibilities of the Parties
================================================================================

2.1  Mutual Responsibilities
     -----------------------

                                       9
<PAGE>

     You and we agree that under this Agreement:

     1.   neither party grants the other the right to use its trademarks, trade
          names, or other designation in any promotion or publication;

     2.   all information exchanged by both parties is nonconfidential unless
          such information is conspicuously marked as confidential.  Part 5 of
          this Agreement describes confidentiality and our responsibilities for
          handling data and information you transmit using the Services;

     3.   each party grants the other only the licenses specified.  No other
          licenses (including licenses under patents) are granted;

     4.   each party will promptly notify the other if it becomes aware of any
          unsafe conditions or hazardous materials to which the other's
          personnel would be exposed at any of its facilities;

     5.   NEITHER PARTY WILL BRING A LEGAL ACTION MORE THAN TWO YEARS AFTER THE
          CAUSE OF ACTION AROSE UNLESS SUCH CLAIM IS AS A RESULT OF A THIRD
          PARTY CLAIM, IN WHICH EVENT THE TWO YEAR PROVISION SHALL NOT APPLY;
          and

     6.   neither party is responsible for failure to fulfill its obligations
          (other than payment obligations) due to causes beyond its reasonable
          control, including without limitation, acts of God, war, riots,
          blockades, insurrections, labor disputes, lockouts, earthquakes,
          fires, storms, lightning, power failures, floods, natural disasters,
          accidents, new or changed governmental regulations or laws, or other
          similar events beyond the reasonable control of the party relying on
          this provision of the Agreement ("Force Majeure").

2.2  Our Other Responsibilities
     --------------------------

     We will:

     1.   comply with all applicable laws regulations or conventions including
          those related to data privacy, international communications, and
          exportation of technical or personal data.  You are responsible for
          obtaining all necessary governmental regulatory or statutory approvals
          for the offering of your services;

     2.   not assign, or otherwise transfer, this Agreement, or our rights or
          obligations under it, or delegate our rights or your obligations,
          other than to an affiliate, without your prior written consent which
          consent will not be unreasonably withheld, provided, however, that we
          will be able, without your consent, to assign any rights and delegate
          any duties contained in this Agreement to any entity into which we may
          be merged or consolidate or which purchases all or substantially all
          of our assets.

                                       10
<PAGE>

  3.      obtain install and maintain suitable equipment as necessary to provide
                 the Services to you;

  4.      fulfill all regular activity and performance reporting and analysis,
                 including service disruption analysis, periodic audits, and
                 attend and participate actively in monthly status meetings
                 which shall be held no less frequently than monthly between the
                 parties; and

  5.      be responsible for data, programs or other material that we provide
                 for use with the Service.

2.3  Your Other Responsibilities
     ---------------------------

 You agree:

1.        not to resell any Service, without our prior written consent, and any
                 attempt to do so is void. We expressly consent to your selling
                 other versions of your service at the retail level, but you may
                 not wholesale or resell our Service.

2.        not to assign, or otherwise transfer, this Agreement or your rights
                 under it, or delegate your rights without our prior written
                 consent, which consent will not be unreasonably withheld,
                 provided however, that you will be able, without our consent,
                 to assign this Agreement or to assign any rights or delegate
                 any duties contained in this Agreement to Prodigy
                 Communications Limited Partnership (an operating limited
                 partnership of Prodigy Communication Corporation and SBC
                 Communications, Inc.) an affiliate of yours.

3.        to allow us to install mandatory engineering changes (such as those
                 required for safety) on Equipment.

4.        that you are responsible for the results obtained from the use of the
                 Services and Products.

5.        to provide us with sufficient, and safe access to your facilities for
                 us to fulfill our obligations during reasonable hours and under
                 such conditions as you may reasonably impose.

6.        to control and be responsible for issuance of User Identifications and
                 their distribution to Subscribers.

7.        to comply with all applicable laws, regulations or conventions
                 including those related to data privacy, international
                 communications, and exportation of technical or personal data.
                 You are responsible for obtaining all necessary governmental,
                 regulatory, or statutory approvals for your use of the
                 Services.

                                       11
<PAGE>

8.        to provide us terminal access to your network management system so
                 that we can determine the operating status of each modem and
                 component.

9.        to be responsible for data, programs, or other material that you
                 provide for use with a Service.

10.  that we have no liability to those whom you authorize to access a Service.

11.       that we are not responsible for any data, or text, including the
                 content, and including its accuracy, which is received, routed
                 or sent as a result of the Services we provide hereunder.

12.       that we are free to enter into any agreements with third parties that
               are similar or dissimilar to this Agreement without your consent
               or approval.

13.       to take reasonably necessary actions to reduce network demand,
                 including without limitation, ensuring that all timed-out
                 features are fully effective and operating, performing routine
                 and aggressive audits of network services to eliminate "fraud",
                 and encouraging Subscribers to read and compose e-mail offline.

14.       to terminate all Services related to Prodigy Classic no later than
                 December 31, 1998. Upon the termination of all such Services,
                 any and all provisions contained herein relating specifically
                 to Prodigy Classic, including but not limited to the definition
                 of a Prodigy Classic Subscriber and the operation and
                 maintenance of Prodigy Classic related equipment, shall
                 terminate.

Part 3 - Warranties
================================================================================

3.1  Warranty for Services
     ---------------------

     For each Service, we warrant that we will perform it:

1.   in a workmanlike manner consistent with industry standards,

2.   according to its current description contained in this Agreement, an
                 Attachment, or a Transaction Document, and
3.   in a manner so that the Service and the network shall be compatible with
                 your equipment.

     OTHER THAN AS EXPRESSLY PROVIDED HEREIN, WE DISCLAIM ALL WARRANTIES,
     INCLUDING THE IMPLIED WARRANTY OF

                                       12
<PAGE>

     MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT.

3.2  Items Not Covered by Warranty
     -----------------------------

     We do not warrant uninterrupted or error-free operation of a Service or
     Product.

     We will specifically identify our Services and Products that have a
     warranty, other than as described in this Part 3, and the terms of that
     warranty.

     Unless we specify otherwise, as set forth in this Agreement, including
     Section 3.1, we provide Materials, non-Splitrock Services and non-Splitrock
     Products on an "AS IS" basis without any warranty from us.  However, non-
     Splitrock manufacturers, suppliers, or publishers may provide their own
     warranties to you.

Part 4 - Equipment Provided by Splitrock
================================================================================

     We may provide Equipment to be installed on your premises for the purpose
     of providing a Service.  The Equipment is and will remain our asset or that
     of our lessor, and will not become a fixture or realty.

     Certain Equipment may contain licensed internal code.  We will identify
     this Equipment to you.

     No right, title, or interest in or to the Equipment, or licensed internal
     code associated with it, or any related planning information, is conveyed
     to you.  However, we will use such Equipment to provide Services to you.

Part 5 - Confidentiality
================================================================================

     We agree not to disclose your confidential information, including programs
     and data transmitted using the Services and usage forecasts as described in
     section 6.6, nor shall we disclose your customer's private information,
     such as name, address, credit card or other information which may be
     transmitted using the Service.  However, we have no obligation of
     confidentiality relating to your information which is not confidential or
     which you do not conspicuously mark as confidential.  We acknowledge that
     all of your customer information, and information about your individual
     customers is confidential.  Information that is not confidential includes
     information which is:

                                       13
<PAGE>

     1.   either currently publicly available or becomes publicly available in
          the future without our breach of any obligation or responsibility
          described in this Agreement;

     2.   rightfully received by either you or us from a third party, where the
          information was received without any obligation of confidentiality
          associated with it;

     3.   already in our possession without an obligation of confidentiality;

     4.   independently developed by us;

     5.   approved for disclosure by you; or

     6.   treated by you as nonconfidential.

     We also have no liability for any disclosure of information that occurs as
     the result of our delivery of your information, at your direction and to a
     recipient you designate, when the delivery is made in the normal course of
     Service provision (for example, to an incorrect delivery address provided
     by you to us).  We may disclose information to the extent required by law,
     but will give you as much advance notice of such potential disclosure as
     reasonably possible.

     Handling of your information
     ----------------------------

     We will handle your information marked confidential in a confidential
     manner, and you will not permit our confidentially marked information to be
     disclosed.

     You are responsible to develop and maintain procedures (apart from the
     Services) to protect your information.

     We will allow you to audit our security procedures to ensure that they are
     reasonable and customary, and will notify you of any material security
     breach that affects the Services.  You agree that any information regarding
     our security systems will be our confidential information.

     For the purposes of operation and maintenance, we may use, copy, store, and
     distribute internally your information but only to the extent necessary for
     such operation and maintenance.  We shall have no such rights with respect
     to your customer information, or with respect to information about your
     customers.  We agree not to reverse assemble or reverse compile your
     information.  We will use reasonable procedures, but we do not guarantee
     that these procedures will prevent the loss of, alteration of, or improper
     access to, your information.  You agree that access to your information
     will not prohibit or prevent us from developing or marketing any Service or
     Product.

     For transmission carried over interexchange carriers' and local exchange
     carriers' facilities, we are not responsible for transmission errors, or
     corruption or security of data.

                                       14
<PAGE>

Part 6 - Splitrock Services
================================================================================

6.1  Description
     -----------

     We will provide you network services consisting of the following
     components:

     1  Dial access network as described in Section 6.1.1
     2  ATM backbone network as described in Section 6.1.2
     3  Regional Servers connectivity as described in 6.1.3
     4  Network Management and Proxy Servers as described in Section 6.1.4

     6.1.1  Dial Access Network
            -------------------

     We will provide to you dial access for data transport for your Subscribers
     as described in this Agreement as a "Service".  We will provide this
     Service to you in all locations in which, on the effective date of this
     Agreement, such dial access service already exists.  You agree to provide
     to us a list of current dial access locations, which list shall be Appendix
     "A" to this Agreement. Effective March 15, 2000 or at such time within 60
     days thereof as may be agreed upon, the Service provided at dial access
     locations identified on Appendix "A-1" will be discontinued.

     We may substitute a new site for an existing location upon 30 days prior
     notice of change, with 60 days simultaneous usage.  You may request new
     sites to exceed an 80% coverage, by population, for local dial access; but
     we will not be obligated to provide dial access Service in any new dial
     access location with usage in any month of less than 5,000 dial hours
     unless we review the location for the new site and approve the creation of
     a new site at such location, in our sole discretion.  We can modify the
     site coverage only with your permission, unless the modification is for a
     substitution of existing coverage, in which case we do not need your
     permission.  Any new sites added by us for Services will be available to
     you if you choose to use them.

     The data traffic dial access Service shall include the receipt of inbound
     data dial traffic from your Subscribers and the muting of such traffic to
     another Subscriber, to a proxy server, to a regional server, to your data
     center at Yorktown or to the selected Internet Network Access Points
     ("NAP").  We will not support initiating a call to another Subscriber's
     telephone.

     We shall, in our sole discretion, decide the number of dial ports we
     provide to serve each site, as well as the method we use to provide Service
     to each site provided the grades and standards of service as set forth in
     this Agreement are met.  Examples of methods we may use to provide this
     Service include:

                                       15
<PAGE>

     1  a physical site presence with modem ports; or

     2  a virtual presence using call forwarding or a foreign exchange.

     All new access equipment provided by us will have speed capacity with
     respect to backbone access, and with respect to Subscriber access,
     consistent with the service that can and will be provided from that site.
     For example, we will not install equipment with a speed higher than the
     existing line infrastructure can support, except we acknowledge that we
     shall install 56K capable bps modems, although current FCC regulations
     prohibit transmission at speeds in excess of 53K bps, and, other conditions
     beyond our control may decrease the actual connection speed.

     Specifically identified protocols to be supported include Serial Line
     Internet protocol (SLIP), Prodigy Link Level Protocol (PLLP), and Point-to-
     Point Protocol (PPP).

     We shall be responsible for.

     1  inbound communication facilities (such as hunt groups, measured business
        lines or DID trunks);
     2  modem hardware including ports and chassis; and
     3  network equipment and communications facilities to transport traffic
        from our dial site to other sites, to your data center at Yorktown and
        the seven NAPS.

     We shall transport the dial data traffic to you via TCP/IP over ATM.  We
     will not change the terms or conditions of a Service without your approval,
     which you agree will not be unreasonably withheld.

     6.1.2  ATM Backbone Network
            --------------------

     The Splitrock ATM backbone network will be operational on or before
     December 31, 1997 and will be based on the Yurie LDR200/50 ATM switches or
     similar ATM switches.  This network is based on ATM switches, supporting
     TCP/IP protocol for Prodigy Classic and Prodigy Internet services.  Prodigy
     Classic transmission which requires SNA will be encapsulated as TCP/IP.
     Each dial access site will be upgraded with a LDR200, LDR50 or similar ATM
     switch.  A backbone transmission facility based on ATM protocol will
     interconnect the dial access sites to Yorktown, New York.  Since the Yurie
     ATM switches use standard ATM protocol, the interconnections can be a
     mixture of FT1, T1, T3 and OC-3 or publicly available switched ATM
     services.

     Effective July 1, 1997 but subject to the Transition Services Agreement, we
     shall also provide, maintain and manage sufficient bandwith connections to
     Yorktown, New York to support the Service Level Objectives in Section 6.2.
     The transmission facilities may be DS-3, OC-3 or other appropriate
     transmission services available at the time. The transmission facilities
     will be terminated by a LDR200 and Centillion C100 combination or
     equivalent provided by us at your Yorktown facility.  The transmission
     facilities will be diversely routed and fully separated and connect to you
     via selected routers.  The two

                                       16
<PAGE>

     Splitrock C100s will connect to existing Prodigy 6611 or equivalent
     routers, which support the Prodigy internal LAN at Yorktown.

     The Equipment we provide at Yorktown will be installed on your premises
     solely for our use in providing our Services.  This Equipment is provided
     under the terms specified in the Section "Equipment We Provide."

     In addition, at locations selected by us agreed, we will provide
     interconnection of the network to the Internet via DS3 to suitable NAPS.
     This will provide bandwith between the NAP and Yorktown as well as between
     the NAP and the dial up user.  We will have the sole right to select the
     choice of the NAP provider at each location.  You will be responsible for
     complying with all protocol requirements for layer 3 and above as set forth
     by the NAP providers that we select.

     6.1.3  Regional Servers
            ----------------

     You may provide, maintain and manage regional servers at sites determined
     by you which are to be geographically dispersed and co-located at our
     network hub sites; such equipment is limited to that which may only be
     installed in one standard 19" rack per site ("Regional Servers").  You
     shall provide, maintain and manage diagnostic equipment, connection
     equipment that you may use to connect to us and associated analog phone
     lines which you may use to manage your Regional Servers.  In addition, you
     shall provide the electric power cables and the equipment connection cables
     for the equipment you provide, including those cables, required to connect
     your equipment to our network equipment. You also agree to comply with all
     safety requirements at each site.  Each Regional Server will be EtherNet
     connected to our network.  Neither we nor any other customer of ours shall
     use your Regional Servers for any purpose except to support Prodigy Classic
     and Prodigy Internet.  We shall provide you with access to our sites for
     purposes of maintaining, upgrading and servicing these Regional Servers at
     no additional cost to you.

     You are responsible for separately procuring from us the upstream
     connection from the Regional Server.  The upstream connection is defined as
     the network facilities used to transport traffic from the Regional Server
     to locations other than the source dial node

     (such as Yorktown or the Internet).  Cost for such services will be as
     provided in Section 6.5.2 section 2 of this Agreement

     The Regional Servers will not be included in the service level objectives,
     as provided in Section 6.2.

     6.1.4   Network Management and Proxy Servers
             ------------------------------------

     Network Management
     ------------------

     We will maintain TINA until we replace it with a new network management
     system which encompasses all TINA functions.  You will make available to us
     the mainframe

                                       17
<PAGE>

     computer resources necessary to run TINA for the purpose of managing the
     network at no cost to us. We will provide you read only terminal access to
     TINA and any other network management system used by us so that you can
     determine the operational status of any modem or network component.

     Proxy Servers
     -------------

     We will assume your existing Unix servers and all hardware and software
     maintenance costs as they directly relate to proxy functions.  These
     servers will be placed at our hub and peering sites.  We will also provide
     for a fee additional new Unix based servers at hub sites when needed and
     requested by you.  Unix based servers will not be supported at all POP
     sites.

     We intend to use Windows NT based servers for the POP sites and for future
     hub sites for the proxy server functions.

6.2  Service Level Objectives
     ------------------------

     We will have four service level objectives for both Prodigy Internet and
     Prodigy Classic:

     1.  Site Dial Grade of Service (SDGS) objective of P.01 during the peak or
         busiest hours of the day (We will use your algorithms in effect as of
         June 23, 1997 for purposes of measuring the SDGS and Grade of Service);

     2.  Site System Availability (SSA) objective of 99.5%;

     3.  Overall System Availability (OSA) objective of 99.5%; and

     4.  Transit Delay (TD) objective average of 100 milliseconds or less 95% of
         the time and 150 milliseconds or less 99% of the time, however, TD
         objective average for Alaska and Hawaii is 300 milliseconds. (We will
         use your algorithms in effect as of June 23, 1997 for purposes of
         measuring the TD and Grade of Service)

     NOTE:  A P.01 Grade of Service means that no more than 1% of calls are
     denied access during the peak busy hour of the weekly measured period.  A
     P.03 Grade of Service means that no more than 3% of calls are denied access
     during the peak busy hour of the weekly measured period.

     We shall measure each of the objectives, other than SDGS, on a monthly
     basis and shall provide you with a report of such measured objectives by
     the 10th business day of the following month, unless otherwise agreed
     between the parties.

     6.2.1  Site Dial Grade of Service (SDGS) Objective
            -------------------------------------------

     We shall measure and report the weekly Site Dial Grade of Service for each
     site.  If the SDGS, measured weekly, falls below P.03 for a site in two
     consecutive weeks, we shall

                                       18
<PAGE>

     have four additional weeks to improve the performance. If, during this four
     week period, the measured SDGS is not improved above P.03 with the intent
     to meet the P.01 objective, then we shall provide you a credit of $1,500.00
     for each four week period thereafter for that site until such time as the
     measured SDGS is improved above P.03. Except for your right of termination
     as provided for in Section 6.7.1, this is your sole remedy for our failure
     to meet the SDGS objective.

     Grade of Service reductions which are caused by, related to or extended as
     a result of your actions, or Force Majeure shall not be considered in the
     estimation of the monthly SDGS.

     Should you supply an invalid forecast (see Section "Forecasts"), then the
     SDGS objective will not be applicable for that period.

     6.2.2  Availability Objectives
            -----------------------

     The components of the availability objective calculations shall include the
     components provided by us.  The OSA rate and the SSA rate shall be
     represented as a percentage of the time the components are actually
     available, as compared to the scheduled time of availability.

     The SSA shall be defined as the monthly availability of the Service
     components for a single site including the modem and server components at
     the site, and network connections from the site to Yorktown.  We shall
     measure and report the monthly site availability, and deliver such report
     to you no later than the 10th business day after the month of testing.

     We will measure and report site availability by sending a 56 byte message,
     called a sample ping, to the modem chassis and to the servers from a
     Splitrock network monitor in Yorktown on a periodic basis, but no less than
     every 10 minutes.  The ping sampling interval is subject to change over
     time but in no event shall it be more than 30 minute intervals.  If a
     positive response is received to the ping, then the site is considered
     available for that ping period.  We will issue one retry (or effectively do
     the retry using another function) if an initial negative response is
     received.  If a positive response is received on the retry then the site is
     considered available for that ping period.  If a negative response is
     received from the initial ping and the retry, then the site is considered
     unavailable for that ping period.

     The SSA rate calculation shall be:

     1  the Total Scheduled Minutes of Availability for the site;
     2  minus the Total Unscheduled Outage Minutes for the site;
     3  divided by the Total Scheduled Minutes of Availability for the site.

     (Total Scheduled Minutes of Availability) - (Total Unscheduled Outage
     ---------------------------------------------------------------------
     Minutes)
     --------

                                       19
<PAGE>

     (Total Scheduled Minutes of Availability)

          The Total Scheduled Minutes of Availability for a site is defined as
     the total minutes in the measurement time period minus the total minutes of
     outages which are not due to unscheduled outages during the measurement
     time period.

          Total Unscheduled Outage Minutes include outages due to
     telecommunication facilities (carrier outages), loss of electrical power,
     hardware, operations, software and design problems except for:

          1.  scheduled network maintenance and scheduled outages;

          2.  outages caused by, related to, or extended as a result of your
              actions; and

          3.  outages due a Force Majeure event.

          If the SSA rate for a specific site, measured monthly, falls below
     98.5%, we shall take immediate and necessary action to improve the
     performance.  If the measured SSA rate for the site is not improved above
     98.5% with the intent to meet the 99.5% objective within the next two
     months, we shall provide you a credit of $1,500.00 for each month
     thereafter for that site until such time as the measured SSA rate is
     improved above 99.5%.

          Except for your right of termination provided for in Section 6.7.1,
     this is your sole remedy for our failure to meet the SSA objective.

          The OSA objective is defined as the combined availability of the
     Service components, including the modem and server components, and network
     connections to Yorktown.  The OSA rate shall be an average of all the SSA
     rates.  We shall measure and report the monthly OSA.

          If the OSA rate, measured monthly, falls below 98.7%, we shall take
     immediate and necessary action to improve the performance.  If the measured
     OSA rate is not improved above 98.7% with the intent to meet the 99.5%
     objective within the next two months, we shall provide you a credit of
     $25,000.00 for each month thereafter until such time as the measured OSA
     rate is improved above 98.7%.  Except for your right of termination
     provided for in Section 6.7.1, this is your sole remedy for our failure to
     meet the OSA objective.

          We shall be allowed a system-wide weekly maintenance window.  The
     weekly maintenance window shall occur initially Sunday mornings from 3:15
     to 4:45 Eastern time.  This initial period may be changed upon your prior
     written consent.  Additionally, there shall be an allowance for scheduled
     outages at each site for us to perform maintenance/upgrade work:  allowing
     each site two outages annually each up to three hours in duration.  We
     shall provide you with advance notice of sites scheduled for
     upgrade/maintenance activity, and we shall use reasonable efforts to
     schedule such upgrade/maintenance activity for a time other than 5 pm to
     midnight, local site time.

                                       20
<PAGE>

            We shall review anticipated changes in the network maintenance
     window with you. You and we shall cooperate to accommodate a necessary
     change in the network maintenance window and the business impact on you.

            We shall not be precluded from performing unscheduled maintenance as
     we may deem necessary.  In such instances we will use reasonable efforts to
     notify you at least 48 hours in advance.  For purposes of the SSA and OSA
     rate calculations, these will be considered unscheduled outages.

     6.2.3  Transit Delay
            -------------

            The TD is represented as the actual time for a 56 byte message,
     called a sample ping, to travel round trip between two specific routers in
     the network under normal prime time conditions.

            Using the sample ping referred to in Section 6.2.2, we will measure
     the TD on a periodic basis, but no less than every 10 minutes.  The ping
     sampling interval is subject to change over time but in no event shall
     exceed 30 minutes.  We will average all the samples in a given month to
     determine the overall average TD, and will report that to you.

            If we fail to meet the monthly TD objectives, you will notify us in
     writing.  If we continue to fail to meet the TD objectives for two months,
     then we shall provide you a credit of $25,000.00 for each month thereafter
     until such time as the measured TD meets the objectives.  Except for your
     right of termination provided for in Section 6.7.1, this is your sole
     remedy for our failure to meet the TD objectives.

            In an instance where the monthly forecast for 20% of the sites is
     invalid, then the TD objective shall not be applicable for that period.

6.3  Our Other Responsibilities
     --------------------------

     We will:

     1.   provide you with a number for your operations group or customer
          service group to contact our help desk support, which shall be
          available 24 hours a day, 7 days a week, and staffed adequately to
          handle all inquiries within 60 seconds of receipt;

     2.   provide you with standard monthly, or in the case of SDGS weekly,
          reports that we produce that are related to the Services provided
          under this Agreement, including reports describing the results of the
          tests for each of SDGS, SSA, OSA and TD, and reports relative to
          availability and traffic statistics within ten days of the end of the
          immediately preceding month, which reports will show by site, the
          total connect hours, time of peak busy hour per site, average peak
          busy hour percentage and distribution of traffic by hour of day;

                                       21
<PAGE>

     3.   provide you with a monthly report detailing the status of network
          upgrades and expansions within ten days of the end of the immediately
          preceding month;

     4.   maintain the components, programs, equipment and materials we provide
          under this Agreement; and

     5.   provide you with read only terminal access to our network management
          system so you can verify operational status of all network modems and
          components.

6.4  Your Other Responsibilities
     ---------------------------

You agree:

     1.   to be responsible for supporting your Subscribers directly through
          your help desk.  Your operations group or customer service group will
          contact our help desk in regard to any reported problems with the
          Service being provided by us;

     2.   to be responsible for ensuring that your software can and will log-off
          each Subscriber after no activity by each Subscriber for 30 minutes
          ("Time Out Function");

     3.   to be responsible for ensuring that for Prodigy Internet Services your
          software will not allow multiple User Identifications associated with
          any Prodigy Internet Subscriber to gain simultaneous access to the
          Services ("Simultaneous Prohibition Function"); and

     4.   upon written request by us audit each of the Time Out Function and
          Simultaneous Prohibition Function up to five audits per each 12 month
          period.  Within 15 days of receiving a written audit request you will
          delivery a written audit report to us.  If the audit shows
          noncompliance with the Time Out Function or Simultaneous Prohibition
          Function, as the case may be, the Maximum Monthly Usage Charge (as
          provided in Section 6.5.1) shall not be applicable to any time period
          from the date of the last audit showing compliance until the date you
          cure such noncompliance.

6.5  Charges
     -------

     6.5.1  Monthly Usage Charges
            ---------------------

     With respect to usage, you agree to pay us for the Services based on the
     total number of monthly connect hours of your Subscribers using the
     Services times the applicable rate per hour in the following schedule (the
     "Hourly Usage Charge"), subject to the Minimum Monthly Usage Charge (lower
     limit) described below

     Hourly Usage Charge Rate Schedule:
<PAGE>

NOTE: Redacted portions have been marked with (***). The redacted portions are
subject to a request for confidential treatment that has been filed with the
Securities and Exchange Commission.

     January 1, 2000 through December 31, 2001     (***) per hour

     You will pay us the greater of the applicable Hourly Usage Charge or the
     Minimum Monthly Usage Charge.

     Minimum Monthly Usage Charge:

     $4,000,000 per calendar month for the period from July 1, 1999 through June
     30, 2000

     $4,500,000 per calendar month for the period from July 1, 2000 through
     December 31, 2001

     In any month, if the Hourly Usage Charge is not equal to or greater than
     the applicable Minimum Monthly Usage Charge, you agree to pay us the
     applicable Minimum Monthly Usage Charge as set forth above.

     For example (assumption:  no other amounts were due)

     Hourly Usage Charge:

     (***) times total number of Hours
     If in January 2000 your actual total connect hours were 15,000,000, the
     Hourly Usage Charge for July would be (***) times 15,000,000 = (***)

     Minimum Monthly Usage Charge:
                       The Minimum Monthly Usage Charge you will be required to
                       pay for Subscriber connect services is set forth in the
                       paragraph above. January 2000: $4,000,000.

     For purposes of determining connect hours, the sequence of a call is as
     follows: The dial port goes off hook, modem synchronization, protocol
     management, call routed, Prodigy authentication, session live while user
     performing tasks, user initiates end of session or the session otherwise
     ends, eventually resulting in modem off-line and session termination
     (carrier dropped).  We will aggregate the total time of all calls, rounded
     up by city to the nearest hour.  The length of each individual call will be
     calculated from the time the port goes off hook to session end (modem off-
     line), rounded up to the nearest second.

     6.5.2  Other Monthly Charges
            ---------------------

     In addition to the charges provided in Section 6.5.1 above, you agree to
     pay us each month for the following, which is dedicated for your exclusive
     use and provided you approve of such use in writing:

     1.   for each NAP connection at a rate of (***) per month for each DS3
          connection, at our choice of location, as are necessary for supporting
          your Subscribers,
<PAGE>

NOTE: Redacted portions have been marked with (***). The redacted portions are
subject to a request for confidential treatment that has been filed with the
Securities and Exchange Commission.

     2.   for all remote and proxy server connections at a rate of (***) per
          month for each EtherNet connection at each remote and proxy server
          location,

     3.   for servers which you require in addition to those installed as of the
          date hereof, an amount for the acquisition, installation, operation
          and maintenance of hardware and software for such server, at our total
          cost plus 10% (including applicable sales tax).

     4.   If you ask us or no later than August 31, 1997 to assume or provide
          any network related service obligations, not specifically disclosed in
          this Agreement, including its Exhibit and Schedules ("Supplemental
          Obligations"), we will assume such Supplemental Obligations in
          consideration for payment to us of our total cost plus 10% (including
          applicable sale tax); provided that, such cost plus 10% pricing shall
          not, be applicable to any increase or variations in Supplemental
          Obligations, and the parties shall mutually agree on pricing for any
          such increase or variation.

     6.5.3  Payment Terms
            -------------

     Except as provided in the Transition Services Agreement while it is in
     effect, you agree to pay us the applicable Minimum Monthly Usage Charge
     (plus any other fixed charges) by the end of the calendar month that we
     provide the Service, whether or not you receive an invoice for such
     charges, and to make payments to us by wire funds transfer or other
     mutually agreed to electronic means to an account specified by us.  For all
     other charges, we shall make reasonable efforts to provide invoices on or
     before the tenth day of the month following the monthly period being
     invoiced and you agree to pay such invoices within 30 days of the invoice
     date.  If you do not make payments to us by their applicable due dates, you
     agree to pay us a service charge equal to the lesser of 1.5% per month or
     the maximum allowable rate under applicable law on each unpaid amount.  You
     agree to pay charges for all Service usage you or Subscribers incur by any
     means, including providing a User Identification to access a Service.  You
     are responsible for charges and damages resulting from misuse of User
     Identifications.

     Applicable taxes, such as sales, use or excise taxes are not included in
     the above charges, and you will be invoiced for taxes payable by you but
     required by law to be collected by us, but taxes shall not include line
     access or similar telecommunications based charges.  We shall be
     responsible for payment of sales, use, property and other taxes on
     machines, software, or goods and services used or furnished by us for our
     own use in providing the Services to you.  All taxes incurred in connection
     with our upgrading of the network to ATM switching, or any other upgrade,
     whether mandatory or voluntary, shall be our sole responsibility.`

     You shall be responsible for sales, use, property and other taxes on
     machines, software, or goods and services provided by you.

     All pricing for dial access covers speeds up to 56K bps.  All pricing of
     higher speed Service is subject to negotiation and agreement between the
     parties.
<PAGE>

     6.5.4  Global Service Provider
            -----------------------

     1.     Sixty days after receiving a written request from Prodigy that it
            provide separated billing to satisfy regulatory requirements
            implicated by Prodigy's merger with or acquisition by a company that
            owns Bell Operating Companies, Splitrock will begin showing separate
            line items on the bills that it conveys to Prodigy. The first line
            item will be for inter-LATA information services and any underlying
            inter-LATA telecommunications that Splitrock may be providing. The
            second line item will be for all other services rendered to Prodigy
            by Splitrock.

     2.     Splitrock will determine what proportion of its services are
            attributable to inter-LATA information services and any underlying
            telecommunications, and will communicate to Prodigy the formula that
            Splitrock uses in making that determination so that Prodigy can
            reflect that allocation on bills that Prodigy renders to Prodigy's
            end user customers.

     3.     Prodigy may direct Splitrock to offer its inter-LATA information and
            underlying telecommunications for resale by a third-party global
            service provider, with the understanding that this third-party
            global service provider will then bill Prodigy's end users for its
            global service provision through Prodigy's billing mechanism. Under
            this billing method, the bills that Splitrock renders to the third-
            party global service provider will be payable by the global service
            provider within three days, and Splitrock may require Prodigy to
            purchase such accounts receivables at full face value within four
            days after Splitrock renders such bills to the third-party global
            service provider.

     4.     Alternatively, if Prodigy and Splitrock mutually agree, Splitrock
            may bill Prodigy's end users for inter-LATA information services and
            any underlying telecommunications, using Prodigy as a billing agent
            who will direct-bill its end users for such services and remit the
            amounts billed to Splitrock. When using this billing method,
            Splitrock may in its sole discretion direct Prodigy to purchase at
            face value all accounts receivables that will be owed to Splitrock
            by Prodigy's customers at the end of each current monthly billing
            cycle. Splitrock may require Prodigy to purchase such accounts
            receivables within three days after Splitrock renders its bill to
            Prodigy for such services. Prodigy may list Splitrock's inter-LATA
            charges as a separate line item on a combined monthly bill that
            Prodigy sends to end user customers, and may identify Splitrock as a
            global service provider providing inter-LATA information services
            and underlying telecommunications.

     5.     Splitrock will independently determine the price for its provision
            of inter-LATA information services and underlying
            telecommunications; however, the overall amounts that Prodigy pays
            Splitrock every month will be the greater of the following two
            amounts:
<PAGE>

NOTE: Redacted portions have been marked with (***). The redacted portions are
subject to a request for confidential treatment that has been filed with the
Securities and Exchange Commission.

          a.   (***) multiplied by the number of hours of Splitrock's service
               used by all Prodigy end user subscribers or Prodigy personnel or
               agents of Prodigy, or

          b.   Four million dollars ($4,000,000.00) for each month ending after
               the execution date of this agreement through the month ending on
               June 30, 2000, and four and one-half million dollars
               ($4,500,000.00) for each month thereafter through the month
               ending on December 31, 2001.

     5.   The effects of these provisions are illustrated by the following
          example:

          18,695,652  Number of hours in hypothetical month

                 (***)       Overall amount that Prodigy must pay to Splitrock
                             (***) times 18,695,652.

                 (***)       Amount ascribed by Splitrock to inter-LATA
                             information services and underlying
                             telecommunications and billed as such to end users,
                             as a separate line item on bills rendered to end
                             users by Prodigy or a third-party global service
                             provider (allocation may vary in Splitrock's sole
                             discretion)

                 (***)       Amount collected by Prodigy or a third-party global
                             service provider from end users for inter-LATA
                             information services and underlying
                             telecommunications (assumes that (***) of
                             (***) is non-collectible)

                 (***)       Amount that Prodigy pays Splitrock for its accounts
                             receivable from end users or a third party global
                             service provider (i.e., Prodigy absorbs cost of
                             non-collectibles)

                 (***)       Amount that Prodigy pays Splitrock for all services
                             other than inter-LATA informations services and
                             underlying telecommunications  ((***) minus (***))

                 (***)       Total amount that Prodigy pays Splitrock for this
                             hypothetical month's usage ((***) for inter-LATA
                             information services and underlying
                             telecommunications plus (***) for other services)

6.6  Forecasts
     ---------

     At the beginning of each quarter, you shall supply us with a rolling 15-
     month forecast consistent with your business model:
<PAGE>

     1.  hours of traffic for each site for each month of the forecast,

     2.  time of peak busy hour for each site,

     3.  average peak busy hour percentage for each site for each month of the
         forecast,

     4.  distribution of traffic by hour of day across all sites, and

     5.  average session length across all sites.

     We shall use this information to perform capacity planning for the Services
     provided under this Agreement.

     For purposes of determining if a forecast is valid or invalid, the fourth,
     fifth and sixth month of a forecast shall be recorded and saved and then
     compared against the actual.  The forecast for the specified month compared
     against the actual is valid if the actual peak hours are no more than 15%
     greater than the forecasted peak hours.  If the actual peak hours are more
     than 15% greater than the forecasted peak hours, then the forecast for the
     month is invalid and the SDGS objective does not apply for that month.  For
     any month in which a forecast is invalid, we shall not be responsible for
     SDGS or TD objectives for the subject forecast period.

6.7  Changes and Default
     -------------------

     6.7.1  Undesirable Conditions
            ----------------------

     If any of the following undesirable events occurs for two consecutive
     months or four months out of a twelve-month period, you may terminate this
     Agreement upon 45 days written notice to us ("Notice of Termination"):

            SDGS below P.05 for 30% or more of the sites
            SSA below 95% for 30% or more of the sites
            OSA below 95%
            TD above 250 millisecond monthly average, and 500 milliseconds
            monthly average for Alaska and Hawaii.

            For SDGS and SSA undesirable condition calculations, a site is
     deemed to be meeting its service level objective during any period of time
     when the corresponding service level objective is not applicable. For OSA
     and TD, an undesirable condition shall not apply during any period of time
     when the corresponding service level objective is not applicable.

            If you desire to terminate this Agreement because of any of the
     foregoing undesirable conditions, you must give us a Notice of Termination
     within 30 days of
<PAGE>

     receiving the monthly report that gives rise to your right of termination.
     If you do not exercise your right of termination within such 30 day period
     and in the next month the applicable undesirable condition no longer
     exists, then you waive any right of termination for the applicable time
     period and this Agreement shall remain in full force and effect.

          Upon Notification of Termination, we shall provide reasonable
     transition assistance to you, for a period of up to six months, and no
     termination adjustment charge or service level credits shall apply, nor
     shall any Minimum Monthly Usage Charges apply after the effective date of
     termination.

     6.7.2  System Wide Failure
            -------------------

     If 50% of the point of presence sites are failing to provide access or
     Services for forty eight consecutive hours, then you have the right to
     enter our premises to operate our network assets and direct our employees,
     as is necessary to cure such failure, and we shall reimburse you for any
     reasonable expense you incur in doing so.  We will cooperate with your
     efforts in restoring service to the network.  You shall also have the right
     to terminate in accordance with the termination provisions within Section
     6.7.1.

     6.7.3  Financial Related Defaults
            --------------------------

     The occurrence of any of the following events shall constitute an Event of
     Default (herein so called) hereunder:

     1.     If we shall fail to perform any of our obligations and covenants
            under Section 1.14; or

     2.     If you, in good faith, after reviewing any document or report
            required to be delivered under Section 1.14, believe that there has
            been a material and adverse change in our business operations and
            conditions, financial or otherwise, which in your reasonable opinion
            will have a materially adverse effect upon the operations, business,
            property, assets, financial condition or credit of us or you.

     Remedies
     --------

     Upon the occurrence of an Event of Default in this Section 6.7.3, you shall
     have the right, at your option, to initiate an alternative dispute
     resolution by the procedures set forth in Section 6.12.  If the dispute is
     not resolved by mediation, the arbitrators will be instructed to determine
     whether or not we, in their judgement, are capable of performing our
     obligations under this Agreement. A decision shall be rendered within three
     days of the conclusion of mediation or arbitration, as appropriate.

     We will respond within three business days to any reasonable request for
     information made by the arbitrators.
<PAGE>

     If the arbitrators' judgment is that we are not capable of performing our
     obligations under this Agreement for the twelve month period after the
     arbitrators render their decision, then you shall have the right, in your
     sole discretion, to elect either (i) to terminate this Agreement, without
     penalty, and to be relieved of the Minimum Monthly Usage Charges, or (ii)
     to enter our premises to operate our network assets and direct our
     employees to the extent necessary to operate the network until the end of
     the Initial Term of this Agreement, and we shall reimburse you for any
     reasonable expenses you incur in doing so.

     6.7.4  Default (other than for Sections 6.7.1, 6.7.2 or 6.7.3)
            -------------------------------------------------------

     This Section 6.7.4 applies to defaults, other than for the events described
     in Sections 6.7.1, 6.7.2 and 6.7.3.

     In the event that either party materially defaults in the performance of
     any of its duties or obligations under this Agreement (other than your
     failure to make timely payments due to us) and does not substantially cure
     such default within 60 days after being given written notice specifying the
     default, then the party not in default may, by giving written notice to the
     defaulting party, terminate this Agreement (herein termination "for
     cause").

     In the event you do not make any payment of the Minimum Monthly Usage
     Charge or Hourly Usage Charge due to us on the due date, then we may
     terminate this Agreement 45 days after we give you written notice of such
     default and provided that we did not receive good funds for such overdue
     payment within the 45 day time period.  In the event that you do not make
     any other payment due to us within 30 days of your receipt of an invoice,
     and such failure is not remedied within 60 days after we give you written
     notice of nonpayment (the "Cure Period") then we may terminate this
     Agreement upon the expiration of the Cure Period.

     In the event that you are in default (for reasons other than failure to
     make timely payments due to us) and we elect to terminate this Agreement,
     then you may request an extension of this Agreement of up to six months as
     a transition period, provided that we, in our discretion, agree to provide
     such an extension.

     In the event that you terminate this Agreement because we are in material
     default for reasons other than as described in Section 6.7.1 then we will
     provide reasonable transition assistance to you, for a period of up to six
     months and no termination adjustment charges or service level credits shall
     apply.

     If you terminate this Agreement (except for cause), or if we terminate this
     Agreement for cause, you shall pay us a termination adjustment charge of
     $3,000,000 (in addition to the monthly charges through December 31, 2001 as
     provided in Section 6.5.1) if terminated during the Initial Term of the
     Agreement.  Payment is due and payable upon the date termination notice is
     given and all other terms and conditions of this Agreement shall
<PAGE>

     remain in full force and effect until the end of the Initial Term,
     including without limitation, section 6.5.1

6.8  Other Terms
     -----------

     You will not be allowed to test or repair our dial network, except as
     provided in Section 6.7.2., and except to send your own sample pings
     similar to that described in Section 6.2.3.

6.9  Auditing Procedures
     -------------------

          We shall maintain true and accurate accounting records, in accordance
     with sound accounting practices, to support the dial connect charges
     payable to us by you. We shall, upon 30 days' prior written request, during
     normal business hours, but not more frequently than once each calendar
     quarter, provide access to the connect hour accounting records associated
     only with the provision of the Service for the immediately preceding one-
     year period to an independent accounting firm chosen and compensated by you
     for the purposes of auditing the accuracy of the calculation of the dial
     connect charges. The accounting firm selected shall: be required to sign an
     agreement with us protecting our confidential information, perform such
     audit on our premises, and such other locations reasonably necessary to
     conduct a proper audit, comply with our security procedures, and be
     authorized by us to report only the results of such audit and provide us
     with a copy of the report.

          In the event that the audit shows you owe an amount to us, we will
     invoice you for such amount within the next two monthly billing cycles.

          In the event that the audit shows a credit due to you, we will process
     such credit including the cost of the audit (but such costs shall not
     exceed the credit), excluding travel and per diem charges, plus interest at
     the prime rate on the entire amount until paid in full within the next two
     monthly billing cycles, provided that we do not disagree with the audit
     report.  If we disagree with the audit report, we may select an independent
     accounting firm, compensated by us, to perform an audit on the same
     information provided to the firm selected by you.  We shall provide you a
     copy of the report commissioned by us.  In the event that the audit reports
     disagree on the credit due to you, the credit due to you will be determined
     by averaging the results of the two audit reports.

6.10 Primary Provider
     ----------------

          We shall be your Primary Provider of Services.  You shall be free to
     make agreements with third parties for Services, provided you shall not
     seek or accept any bids for Services to replace our Services in their
     totality.
<PAGE>

          You shall negotiate with us in good faith for any new service which we
     have the ability, capacity and interest to provide.  You shall be free to
     offer new, experimental and other access including without limitation,
     ADSL, cable access, modified cable access including dial up, satellite
     access, roaming (e.g. Aimquest), Web TV, access bundled with content of
     other applications, agreements with regional bell operating companies or
     long distance companies as marketing partners ("Other Business); provided
                                                                      --------
     that, at least thirty days prior to your entering into any agreement or
     ----
     arrangement for Other Business, you will use good faith efforts to deliver
     to us on a confidential basis any business plan changes, projections, draft
     agreements and other documents describing such Other Business, to the
     extent available, and meet with us to discuss such Other Business.

          You shall not offer Other Business that would result in a material
     increase in our costs unless we both agree on the amount of increased
     revenues which will bear a reasonable relationship to such increase in our
     costs; provided that, if we cannot agree on the amount of such increased
     revenues, we shall have no obligation to provide our Services required for
     such Other Business.

6.11 Additional Services and Products
     --------------------------------

          You may request us to provide you services, products or enhancements
     which are not the subject of this Agreement, which include services,
     products or enhancements which we provide to other customers.  If we
     provide such services, products or enhancements, we agree that we will
     offer you a price for such services or products which is no higher than the
     price we charge any other party for the same services, products or
     enhancements; provided, however, that you will not be entitled to receive
     this price treatment with respect to any product, service or enhancement
     which we have developed for another party, or which we consider to be
     proprietary.

          If you request us to develop a new product, service or enhancement for
     your use and we agree to develop such product or service, then we will
     charge you a price which will include a profit to us.

6.12 Alternative Dispute Resolution
     ------------------------------

          In the event of a dispute between you and us arising out of or
     relating to this Agreement, or the breach thereof, you and we shall submit
     the dispute to nonbinding mediation and shall make a good-faith effort to
     resolve the dispute through the mediation process.  In the event the
     dispute is not resolved through mediation within 30 days following written
     notice by one party that it desires to enter into mediation, then such
     dispute shall be resolved exclusively and finally by binding arbitration by
     three arbitrators who will be appointed and will act as follows:

          The party requesting arbitration shall, simultaneously with such
     request, appoint one arbitrator and shall notify the other of such
     appointment together with such
<PAGE>

     arbitrator's acceptance. Within 30 days from the receipt of such notice,
     the other party shall appoint another arbitrator and shall notify the
     requesting party of such appointment together with the second arbitrators
     acceptance. The third arbitrator, who shall act as chairman of the
     arbitration panel, shall be appointed by the other two arbitrators within
     the following 30 days. In the event either party fails to appoint an
     arbitrator or in the event no agreement is reached between the two
     arbitrators as to the appointment of the chairman of the arbitration panel
     in accordance with the foregoing provisions, such arbitrator or arbitrators
     shall be appointed, upon application by the interested party, by the
     American Arbitration Association (AAA).

          The arbitrators shall apply the arbitration rules of the AAA.

          The award of the arbitrators shall be final and shall not be subject
     to any appeal or challenge whatsoever.  The arbitrators will not be
     required to file their award with any body or authority whatsoever.  In the
     event arbitration proceedings are initiated under this section, pending
     such proceedings and until a final award is rendered pursuant thereto, any
     subsequent controversy arising between the parties shall be exclusively
     submitted for final decision by the arbitrators in the arbitration
     proceedings already pending.  The arbitrators shall be instructed by the
     parties to include an award for reasonable attorneys' fees, arbitrators'
     fees, expert witnesses, travel and other costs incurred.

          If a dispute arises out of an alleged breach of this Agreement (other
     than your failure to make timely payments due to us), then you and we agree
     to continue to perform our respective obligations under this Agreement
     until an agreement is reached through mediation or the arbitrators render a
     decision, whichever is applicable.

Part 7 - Miscellaneous
================================================================================

7.1  Publicity
     ---------

     Each party will (i) consult with the other party before issuing any public
     statement with respect to this Amendment and (ii) give the other party a
     reasonable opportunity to review and comment upon any such proposed public
     statement before it is released.

7.2  Amendment
     ---------

     No provision of this Agreement may be modified, waived or discharged unless
     such waiver, modification or discharge is agreed to in writing and signed
     by Prodigy and Splitrock.

7.3  Counterparts
     ------------
<PAGE>

     This Agreement may be executed in two or more counterparts, each of which
     shall be deemed to be an original, but all such counterparts shall together
     constitute one and the same Second Amendment.

7.4  Entire Agreement
     ----------------

     This Restated and Amended Agreement constitutes the entire agreement and
     understanding between the parties except for that certain Indemnity
     Agreement dated February 13, 2000, which is incorporated herein by
     reference. Any amendments to this Agreement must be in writing and executed
     by both parties.

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

PRODIGY COMMUNICATION                    SPLITROCK SERVICES, INC.
CORPORATION

By:_________________________             By:_______________________
Name:                                    Name:
Title:                                   Title:

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