Document:

<PAGE>   1

                                                                    Exhibit 10.1

                              BOWATER INCORPORATED
                       2000-2002 LONG-TERM INCENTIVE PLAN

                        (Effective as of January 1, 2000)

<PAGE>   2

                                TABLE OF CONTENTS

                                                                        Page No.
                                                                        --------

Section 1.        Establishment of Plan........................................1

Section 2.        Definitions..................................................1

Section 3.        Administration...............................................5

Section 4.        Eligibility and Participation................................5

Section 5.        Award Determination..........................................6

Section 6.        Termination of Employment....................................7

Section 7.        Change in Control............................................8

Section 8.        Amendment and Modification...................................8

Section 9.        Miscellaneous................................................8

<PAGE>   3

SECTION 1.  ESTABLISHMENT OF PLAN

         Effective January 1, 2000, Bowater Incorporated, a Delaware corporation
(the "Company"), hereby establishes an incentive compensation plan to be known
as the "Bowater Incorporated 2000-2002 Long-Term Incentive Plan" (the "Plan") as
set forth in this document.

SECTION 2.  DEFINITIONS

         Whenever used in the Plan, the following terms shall have the meanings
indicated:

         "Acquiring Person" shall mean the Beneficial Owner, directly or
indirectly, of common stock representing 20% or more of the combined voting
power of the Company's then outstanding securities, not including (except as
provided in clause (i) of the next sentence) securities of such Beneficial Owner
acquired pursuant to an agreement allowing the acquisition of up to and
including 50% of such voting power approved by two-thirds of the members of the
Board who are Board members before the Person becomes Beneficial Owner, directly
or indirectly, of common stock representing 5% or more of the combined voting
power of the Company's then outstanding securities. Notwithstanding the
foregoing, (i) securities acquired pursuant to an agreement described in the
preceding sentence will be included in determining whether a Beneficial Owner is
an Acquiring Person if, subsequent to the approved acquisition, the Beneficial
Owner acquires 5% or more of such voting power other than pursuant to such an
agreement so approved; and (ii) a Person shall not be an Acquiring Person if
such Person is eligible to and files a Schedule 13G under the Exchange Act with
respect to such Person's status as a Beneficial Owner of all common stock of the
Company of which the Person is a Beneficial Owner.

         "Active Employee" means an Employee who is providing services to the
Company or a subsidiary and does not include an individual who is receiving
periodic severance payments. Notwithstanding any provision herein, or in any
policy or plan of the Company, to the contrary, an individual will not be an
Active Employee for any period that such individual is on an authorized or
unauthorized leave of absence from the Company, except to the extent otherwise
required by law.

         "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the Effective Date.

         "Beneficial Owner" of common stock means (i) a Person who beneficially
owns such common stock, directly or indirectly, or (ii) a Person who has the
right to acquire such common stock (whether such right is exercisable
immediately or only with the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, warrants, options or otherwise.

         "Board" means the Board of Directors of the Company.

                                       1

<PAGE>   4

         "Cash" means a check or cash equivalent (such as a deposit directly
into a payee's bank account).

         "Cash from Operations" is defined in Section 5.1.

         "Change in Control" shall be deemed to have occurred upon:

         (i)      the date that any Person is or becomes an Acquiring Person;

         (ii)     the date that the Company's shareholders approve a merger,
                  consolidation or reorganization of the Company with another
                  Company or other Person, unless, immediately following such
                  merger, consolidation or reorganization, (A) at least 50% of
                  the combined voting power of the outstanding securities of the
                  resulting entity would be held in the aggregate by the
                  shareholders of the Company as of the record date for such
                  approval (provided that securities held by any individual or
                  entity that is an Acquiring Person, or who would be an
                  Acquiring Person if 5% were substituted for 20% in the
                  definition of such term, shall not be counted as securities
                  held by the shareholders of the Company, but shall be counted
                  as outstanding securities for purposes of this determination),
                  or (B) at least 50% of the board of directors or similar body
                  of the resulting entity are Continuing Directors;

         (iii)    the date the Company sells or otherwise transfers all or
                  substantially all of its assets to another Company or other
                  Person, unless, immediately after such sale or transfer, (A)
                  at least 50% of the combined voting power of the
                  then-outstanding securities of the resulting entity
                  immediately following such transaction is held in the
                  aggregate by the Company's shareholders as determined
                  immediately prior to such transaction (provided that
                  securities held by any individual or entity that is an
                  Acquiring Person, or who would be an Acquiring Person if 5%
                  were substituted for 20% in the definition of such term, shall
                  not be counted as securities held by the shareholders of the
                  Company, but shall be counted as outstanding securities for
                  purposes of this determination), or (B) at least 50% of the
                  board of directors or similar body of the resulting entity are
                  Continuing Directors; or

         (iv)     the date on which less than 50% of the total membership of the
                  Board consists of Continuing Directors.

         "Committee" means the Human Resources and Compensation Committee of the
Board, or such other committee appointed by the Board to administer the Plan.

         "Company" means Bowater Incorporated, a Delaware corporation, and any
successor thereto.

                                       2

<PAGE>   5

         "Company Rank" is defined in Section 5.2.

         "Continuing Director" means any member of the Board who (i) was a
member of the Board prior to the date of the event that would constitute a
Change in Control, and any successor of a Continuing Director while such
successor is a member of the Board, (ii) is not an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, and (iii) is recommended or
elected to succeed the Continuing Director by a majority of the Continuing
Directors.

         "Disability" shall have the meaning contained in the Company's
long-term disability plan.

         "Discretionary Award" means the amount for each Participant calculated
pursuant to Section 5.3.

         "Effective Date" means January 1, 2000.

         "Employee" means a full-time, salaried employee of the Company or a
subsidiary that, directly or indirectly, is at least 50% owned by the Company.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Net Cash from Operating Activities" is defined in Section 5.1.

         "Normal Retirement Date" means the date defined as the "Normal
Retirement Date" in the qualified (or registered, if a Canadian plan) pension
plan applicable to the particular Participant in question.

         "Participant" means an Active Employee who is eligible to participate
in the Plan.

         "Payout Percentage" is defined in Section 5.2.

         "Peer Companies" means certain companies in the paper and wood products
industry. There will be two sets of Peer Companies:

-    Newsprint Companies - Donohue Inc., Fletcher Challenge Canada Limited
     and Abitibi-Consolidated Inc.

-    Index Companies - those companies listed in the same Standard and
     Poor's index category as the Company (currently the Mid Cap Forest
     Products Index) during the Plan Cycle, excluding the Company.

The Committee shall review the companies included in each category on an annual
basis and revise each category as appropriate to reflect changed circumstances.
If a company is added or

                                       3

<PAGE>   6

deleted, its participation will be counted only on a prorated basis toward the
calculation of the Peer Group Average described below.

         "Peer Group Average" means the arithmetic mean of the Total Shareholder
Return between each set of Peer Companies as of the end of the Plan Cycle. The
Total Shareholder Return for each set of Peer Companies will be computed based
on the Total Shareholder Return for each individual Peer Company, and the
average for each set of Peer Companies will be computed on a market
capitalization weighted basis. If a Peer Company is eliminated either through
acquisition or dissolution, or because of any other reason, then (i) if prior to
July 1, 2000, that Peer Company will be disregarded entirely, or (ii) if after
June 30, 2000, the Total Shareholder Return for the affected Peer Company will
be included in the calculation of Peer Group Average only through the date of
elimination, on a prorated basis. If two or more Peer Companies are combined,
either through merger, consolidation, purchase and sale of assets, or because of
any other reason, then (i) for periods before they are combined, the calculation
of Peer Group Average shall be based on the Total Shareholder Return of the
individual Peer Companies, and (ii) for periods after they are combined, the
calculation of Peer Group Average shall include the Total Shareholder Return of
the combined entity, on a prorated basis.

         "Performance Award" means the amount for each Participant calculated
pursuant to Section 5.2.

         "Person" means any individual, firm, company, partnership, trust or
other entity.

         "Plan" means the Bowater Incorporated 2000-2002 Long-Term Incentive
Plan.

         "Plan Cycle" means the period over which the Company's performance will
be measured for purposes of determining Participants' awards under Sections 5.2
and 5.3. The Plan Cycle will commence on January 1, 2000, and will end December
31, 2002.

         "Plan Year" means each calendar year during the Plan Cycle.

         "Price" on a particular date means the publicly reported closing price
per share for that date.

         "Prorated" under Sections 4.2 and 6.1 shall mean the number of months a
Participant participates in the Plan, rounded to the nearest month, divided by
thirty-six, multiplied by the awards under Sections 5.2 and 5.3, if any, or
Section 7, if applicable.

         "Retirement" means a Participant's termination of employment in a
retirement status entitling him to the immediate payment of benefits under the
qualified (or registered, if a Canadian plan) pension plan of the Participant's
employer in which he is participating.

         "Section" means the indicated provision of the Plan.

                                       4

<PAGE>   7

         "Total Dividends Paid" is defined in Section 5.1.

         "Total Shareholder Return" or "TSR" is equal to (A) the difference in
common stock (or common stock equivalent) price as of January 1, 2000, and the
average common stock (or common stock equivalent) price for the month of
December 2002, plus (B) all dividends paid per share during the Plan Cycle,
divided by (C) the common stock (or common stock equivalent) price as of January
1, 2000. The formula shall be adjusted as appropriate to reflect stock splits or
stock dividends. For a Peer Company that is eliminated after June 30, 2000, or
combines with another Peer Company during the Plan Cycle, the formula shall be
the same except that the average common stock (or common stock equivalent) price
for the thirty-day period preceding the date of the announcement of the
elimination or combination shall be used instead of the month of December 2002.
Dividends shall be counted only through the date of elimination or combination
for the Peer Company that is eliminated or combined.

         Except where otherwise indicated by the context, any masculine term
used herein also shall include the feminine, the plural shall include the
singular, and the singular shall include the plural.

SECTION 3.  ADMINISTRATION

         The Plan shall be administered by the Committee. The Committee has
delegated to the Vice President Human Resources of the Company and other
appropriate officers and employees of the Company responsibility for
administering the Plan.

         The Committee shall: (i) correct any defect or omission or reconcile
any inconsistency in this Plan or in any award granted hereunder, (ii) make all
other necessary determinations, (iii) make any adjustments that are necessary or
desirable in light of previously unforeseen circumstances, and (iv) take all
other actions necessary or advisable for the implementation and administration
of the Plan. The Committee's determinations shall be conclusive and binding upon
all parties.

SECTION 4.  ELIGIBILITY AND PARTICIPATION

         4.1 General. Active Employees who are in United States salary grades 31
(or its equivalent at locations other than the United States) and above at any
time during the Plan Cycle shall be Participants in the Plan, subject to the
limitations of Sections 4.2, 6.1 and 6.2 herein. An Active Employee who is
eligible to participate in the Plan shall be so notified in writing and apprised
of the manner of determining awards.

         4.2 Partial Plan Cycle Participation. In the event that an Active
Employee becomes eligible to participate in the Plan subsequent to the
commencement of the Plan Cycle, such Participant's awards under Sections 5.2 and
5.3, if any, shall be prorated.

                                       5

<PAGE>   8

         4.3 No Right to Participate. Except as specifically provided in
Sections 4.1 and 4.2, no Employee shall at any time have a right to be selected
for participation in the Plan despite having previously participated in an
incentive plan of the Company.

SECTION 5.  AWARD DETERMINATION

         5.1 Threshold Determination. No awards shall be made under the Plan
unless the Company generates sufficient "Cash from Operations" cumulatively over
the Plan Cycle to fund the dividends paid during the Plan Cycle ("Total
Dividends Paid") on the Company's common and exchangeable stock. "Cash from
Operations" is defined as "Net Cash from Operating Activities" as set forth on
the Company's annual audited "Consolidated Statement of Cash Flows". Awards paid
under the Plan shall not exceed the excess of Cash from Operations over Total
Dividends Paid. If the excess of Cash from Operations over Total Dividends Paid
is not sufficient to fund the payout of awards under the Plan, then the awards
shall be limited to such excess amount and reduced proportionately.

         5.2 Performance Awards. Subject to the conditions described in Sections
5.1 and 6.2, at the end of the Plan Cycle, Performance Awards will be determined
for all Participants by multiplying each Participant's annual base salary rate
as of December 31, 2002, by a payout percentage determined based on a ranking of
the Company's TSR as compared with the Peer Group Average. The same payout
percentage will be used for all Participants. No Performance Awards shall be
granted if the Company's TSR is below the Peer Group Average. The payout
percentage shall equal 50% if the Company's TSR is equal to the Peer Group
Average. If the Company's TSR is above the Peer Group Average, then the
calculation of the payout percentage is as follows:

         First, the Company's Rank is determined by the following formula:

                Company Rank = (Company TSR -Peer Group Average)
                                   Divided by
              [(Highest Peer Company TSR - Peer Group Average)/50]
                                     Plus 50

         Then, Company Rank is used to determine the payout percentage according
to the chart below.

            Company Rank                            Payout Percentage
            ------------                            -----------------

         50 through 69.999                  50% + [2.5 X (Company Rank - 50)]%

         70 through 89.999                  100% + [3.75 X (Company Rank - 70)]%

         90 through 100                     175%

                                       6

<PAGE>   9

                                  Company Rank

                              [COMPANY RANK GRAPH]

      -  The Peer Group Average is equal to a Company Rank of 50
      -  The Peer Company with the highest TSR is equal to a Company Rank of 100
      -  A 100% payout percentage is equal to a Company Rank of 70
      -  A 175% payout percentage is equal to a Company Rank of 90

         The Performance Awards shall be paid to Participants in cash as soon as
practicable after the determination of the amount of such awards.

         5.3 Discretionary Awards. In addition to any amounts payable pursuant
to Section 5.2, the Committee may award all Participants an additional
Discretionary Award computed by multiplying such percentage between 0% and 75%
as is determined by the Committee in its discretion, times each Participant's
annual base salary rate as of December 31, 2002. The same percentage shall be
used for all Participants.

         Any Discretionary Awards shall be paid at the same time and in the same
manner as the Performance Awards.

SECTION 6.  TERMINATION OF EMPLOYMENT

         6.1 Termination of Employment Due to Death, Disability, Retirement or
Sale of Business Unit. In the event a Participant's employment is terminated by
reason of death, Disability, Retirement, or sale by the Company of the
subsidiary or unit employing the Participant (unless such sale is a Change in
Control, in which case Section 7 shall supersede the provisions of this
Section), awards determined in accordance with Sections 5.2 and 5.3 or Section 7
herein shall be (i) prorated based upon the portion of the Plan Cycle occurring
prior to termination during which the Participant was an Active Employee and
(ii) based upon the Participant's annual base salary rate as of the date of
termination.

         Payments under this Section 6.1 shall be made in cash as soon as
practicable after the end of the Plan Cycle.

                                       7

<PAGE>   10

         6.2 Continuation of Employment as Condition for Awards. As a condition
to be entitled to any award under this Plan (except pursuant to Section 7), a
Participant must be an Active Employee as of the end of the Plan Cycle unless
the Participant's employment is terminated by reason of death, Disability,
Retirement, or sale by the Company of the subsidiary or unit employing the
Participant. However, the Committee, in its sole discretion, may pay an award
(or a portion of an award) for the portion of the Plan Cycle that the
Participant was a Participant, computed as determined by the Committee and
payable in cash as soon as practicable after the end of the Plan Cycle, even if
the Participant was not an Active Employee as of the end of the Plan Cycle.

SECTION 7.  CHANGE IN CONTROL

         Notwithstanding any other provision of the Plan, if a Change in Control
of the Company shall have occurred, the Company shall pay each Participant an
award which equals his annual base salary rate as of the date of the Change in
Control times 250%, subject to the applicable proration provisions of Section
6.1 for Participants whose employment terminated before the Change in Control
under the circumstances described in Section 6.1, but not to the proration
provisions of Section 4.2. All awards will be paid in cash within thirty (30)
days of the Change in Control. Once awards under this Section 7 have been paid,
the Plan shall be terminated and the Participants shall have no further rights
under the Plan.

SECTION 8.  AMENDMENT AND MODIFICATION

         The Committee, in its sole discretion, with notice to Participants, at
any time and from time to time, may modify or amend, in whole or in part, any or
all of the provisions of the Plan, or suspend or terminate it entirely;
provided, however, that no such modification, amendment, suspension, or
termination may adversely affect Participants' rights under Section 7 in the
event of any prior or subsequent Change in Control, and in the event of any
modification, amendment, suspension or termination, any Participant (or his
beneficiary, as the case may be) who is an Active Employee on the effective date
thereof shall be entitled to no less a payment or distribution hereunder than
the amount he would have otherwise received as a Performance Award under Section
5.2, computed as if the Plan Cycle ended as of the end of the Plan Year
following or prior to the date of the change or termination, whichever results
in a higher award.

SECTION 9.  MISCELLANEOUS

         9.1 Governing Law. The Plan, and all agreements hereunder, shall be
governed by and construed in accordance with the laws of the State of Delaware.

         9.2 Withholding Taxes. The Company shall have the right to deduct from
all payments under the Plan any federal, state, or local taxes required by law
to be withheld with respect to such payments.

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<PAGE>   11

         9.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

         9.4 Costs of the Plan. All costs of implementing and administering the
Plan shall be borne by the Company.

         9.5 Successors. All obligations of the Company under the Plan shall be
binding upon and inure to the benefit of any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

         9.6 Employment Status. The Plan does not constitute a contract of
employment or continued service, and selection as a Participant will not give
the Participant the right to be retained in the employ of the Company or any
subsidiary.

         9.7 Unsecured General Creditor. Participants and their heirs,
successors and assigns shall have no legal or equitable rights, interest or
claims in any property or assets of the Company by virtue of participation in
the Plan. The Company's obligations under the Plan shall be that of an unfunded
and unsecured promise of the Company to pay money in the future.

         9.8 Nonassignability. No Participant or any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate or convey in advance of actual
receipt, the amounts, if any, payable hereunder, or any part thereof, which are,
and all rights to which are, expressly declared to be unassignable and
non-transferable. No part of the amounts payable shall, prior to actual payment,
be subject to seizure or sequestration for the payment of any debts, judgment,
alimony or separate maintenance owed by a Participant or any other person, nor
be transferable by operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency.

         EXECUTED on behalf of the Company as of January 1, 2000.

                                       BOWATER INCORPORATED

                                       By: /s/James T. Wright
                                           -------------------------------------
                                           James T. Wright
                                           Vice President - Human Resources
                                           Date signed:  June 6, 2000
                                                       ------------------

                                       9<PAGE>   1
                                                                  Exhibit 10.5

                            ASSET EXCHANGE AGREEMENT

                                  by and among

                                COX RADIO, INC.,

                               CXR HOLDINGS, INC.,

                        SALEM COMMUNICATIONS CORPORATION

                                       and

                         SOUTH TEXAS BROADCASTING, INC.

                            Dated as of May 31, 2000

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                 Page
                                                                                                 ----

<S>      <C>                                                                                     <C>
1.       Exchange of Personal Property; Exchange of Real Property; Exchange of
         Contracts and Licenses. ..................................................................2
1.1      Exchange of Tangible Personal Property....................................................2
1.2      Exchange of Real Property.................................................................3
1.3      Exchange of Licenses......................................................................3
1.4      [Intentionally Omitted]...................................................................4
1.5      Excluded Assets...........................................................................4
1.6      Assumption of Liabilities.................................................................5
1.7      Section 1031..............................................................................5
2.       [Intentionally Omitted]...................................................................6
3.       [Intentionally Omitted]...................................................................6
4.       Closing...................................................................................6
4.1      Closing Deliveries........................................................................6
4.2      Prorations................................................................................8
4.3      Further Assurances........................................................................9
5.       Representations and Warranties of Cox.....................................................9
5.1      Organization; Good Standing...............................................................9
5.2      Authority.................................................................................9
5.3      No Breach or Violation...................................................................10
5.4      Approvals................................................................................10
5.5      No Litigation............................................................................10
5.6      Brokerage................................................................................10
5.7      Title to and Condition of Tangible Personal Property.....................................10
5.8      Title to and Condition of Real Property..................................................11
5.9      Licenses.................................................................................11
5.10     FCC Compliance...........................................................................11
5.11     Compliance with Laws.....................................................................12
5.12     Environmental Matters....................................................................12
5.13     Accuracy of Information Furnished........................................................12
5.14     Taxes....................................................................................12
5.15     Definition of Knowledge..................................................................13
6.       Representations and Warranties of Cox for the RRC Station and
         Stock Purchase Agreement.................................................................13
6.1.     Stock Purchase Agreement.................................................................13
6.2      Organization; Good Standing..............................................................13
6.3      Authority................................................................................13
6.4      No Breach or Violation...................................................................14
6.5      Approvals................................................................................14
6.6      No Litigation............................................................................14
6.7      Brokerage................................................................................14
6.8      Accuracy of Information Furnished........................................................14
7.       Representations and Warranties of Salem..................................................15
</TABLE>

<PAGE>   3

<TABLE>
<S>      <C>                                                                                      <C>
7.1      Organization; Good Standing..............................................................15
7.2      Authority................................................................................15
7.3      No Breach or Violation...................................................................15
7.4      Approvals................................................................................15
7.5      No Litigation............................................................................16
7.6      Brokerage................................................................................16
7.7      Title to and Condition of Tangible Personal Property.....................................16
7.8      Title to and Condition of Real Property..................................................16
7.9      Licenses.................................................................................16
7.10     FCC Compliance...........................................................................17
7.11     Compliance with Laws.....................................................................17
7.12     Environmental Matters....................................................................17
7.13     Accuracy of Information Furnished........................................................18
7.14     Taxes....................................................................................18
7.15     Definition of Knowledge..................................................................18
8.       Covenants of the Parties.................................................................18
8.1      FCC Applications.........................................................................18
8.2      Stock Purchase Agreement.................................................................19
8.3      No Solicitation Of Third Parties or Employees............................................19
8.4      Access...................................................................................19
8.5      Inconsistent Actions.....................................................................20
8.6      Cooperation..............................................................................20
8.7      Control of the Stations..................................................................20
8.8      Risk of Loss.............................................................................20
8.9      Third Party Consents.....................................................................20
8.10     Title Insurance and Surveys..............................................................20
8.11     Compliance With HSR Act..................................................................21
8.12     Confidentiality..........................................................................21
8.13     Financial Statements.....................................................................21
9.       Conditions to Salem's Obligations........................................................22
9.1      Representations, Warranties and Covenants.  .............................................22
9.2      Approvals of Governmental Authorities....................................................22
9.3      No Adverse Proceedings  .................................................................22
9.4      Consents.................................................................................22
9.5      Closing Documents.  .....................................................................22
9.6      FCC Consent..............................................................................22
9.7      Resolutions..............................................................................22
9.8      HSR Act..................................................................................23
10.      Conditions to Cox's Obligations..........................................................23
10.1     Representations, Warranties and Covenants................................................23
10.2     Approvals of Governmental Authorities.  .................................................23
10.3     No Adverse Proceedings.  ................................................................23
10.4     Consents.................................................................................23
10.5     Closing Documents........................................................................23
10.6     FCC Consent..............................................................................23
10.7     Resolutions..............................................................................23
10.8     HSR Act..................................................................................23
10.9     Stock Purchase Agreement.................................................................24
</TABLE>

                                      -ii-
<PAGE>   4

<TABLE>
<S>      <C>                                                                                      <C>
11.      Termination..............................................................................24
12.      Survival of Representations and Warranties and Indemnification...........................24
12.1     Survival.................................................................................24
12.2     Indemnification by Cox...................................................................24
12.3     lndemnification by Salem.................................................................25
12.4     Procedure for Indemnification............................................................25
12.5     Specific Performance.....................................................................26
12.6     Opportunity to Cure......................................................................27
12.7     Rights under Stock Purchase Agreement....................................................27
13.      Taxes, Costs and Expenses................................................................27
14.      Benefit of Agreement; Assignment.........................................................27
15.      Notices..................................................................................27
16.      Severability.............................................................................28
17.      Entire Agreement.........................................................................28
18.      Governing Law............................................................................28
19.      Exhibits.................................................................................28
20.      Counterparts.............................................................................28
21.      Intentionally Omitted....................................................................29
22.      Amendment; Waiver........................................................................29
23.      Attorney's Fees..........................................................................29
24.      Defined Terms............................................................................29
</TABLE>

                                      -iii-
<PAGE>   5

                                    SCHEDULES

SCHEDULES TO BE DELIVERED BY COX

<TABLE>
<S>                <C>    <C>
Schedule 1.1A      --     Cox Tangible Personal Property
Schedule 1.1B      --     RRC Tangible Personal Property
Schedule 1.2A      --     Cox Real Property
Schedule 1.2B      --     RRC Real Property
Schedule 1.3A      --     Cox Licenses
Schedule 1.3B      --     RRC Licenses
Schedule 5.3       --     Consents
Schedule 5.4       --     Governmental Approvals
Schedule 5.5       --     Litigation
Schedule 5.7       --     Title to and Condition of Cox Tangible Personal Property
Schedule 5.8       --     Title to and Condition of Cox Real Property
Schedule 5.10      --     FCC Compliance
Schedule 5.12      --     Environmental Matters
Schedule 5.14      --     Taxes
</TABLE>

SCHEDULES TO BE DELIVERED BY SALEM
<TABLE>
<S>                <C>     <C>
Schedule 1.1C      --      Salem Tangible Personal Property
Schedule 1.2C      --      Salem Real Property
Schedule 1.3C      --      Salem Licenses
Schedule 7.3       --      Consents
Schedule 7.4       --      Governmental Approvals
Schedule 7.5       --      Litigation
Schedule 7.7       --      Title to and Condition of Salem Tangible Personal Property
Schedule 7.8       --      Title to and Condition of Salem Real Property
Schedule 7.9       --      Licenses
Schedule 7.10      --      FCC Compliance
Schedule 7.12      --      Environmental Matters
Schedule 7.14      --      Taxes
</TABLE>

                                      -iv-
<PAGE>   6

                                                                       EXECUTION

                            ASSET EXCHANGE AGREEMENT

         THIS ASSET EXCHANGE AGREEMENT ("Agreement") is made and entered into as
of this 31st day of May, 2000, by and among COX RADIO, INC., a Delaware
corporation ("CRI"), CXR HOLDINGS, INC., a Nevada corporation ("CXR" and
together with CRI, collectively referred to herein as "Cox"), SALEM
COMMUNICATIONS CORPORATION, a Delaware corporation ("SCC"), and SOUTH TEXAS
BROADCASTING, INC., a Texas corporation ("STB" and together with SCC,
collectively referred to herein as "Salem").

         WHEREAS, Cox currently owns and operates Radio Stations WSUN(AM), Plant
City, Florida, and KLUP(AM), Terrell Hills, Texas (the "Cox Stations"), pursuant
to certain licenses and authorizations issued by the Federal Communications
Commission (the "FCC"); and

         WHEREAS, CRI has elected to exercise a right of first refusal granted
to CRI under an Agreement for Right of First Refusal dated as of April 3, 1995,
between WSB Radio, Inc., predecessor-in-interest to CRI, and Ring Radio Company,
a Georgia corporation ("RRC"); and

         WHEREAS, in exercising its right of first refusal, CRI will execute on
June 1, 2000 a Stock Purchase Agreement among CRI, Midwestern Broadcasting
Company, Inc., an Ohio corporation ("Midwestern"), and the stockholders of
Midwestern (the "Stockholders") (the "Stock Purchase Agreement"), pursuant to
which CRI will agree to acquire the issued and outstanding capital stock of
Midwestern from the Stockholders; and

         WHEREAS, CRI will deliver the Stock Purchase Agreement to Midwestern
and the Stockholders on June 1, 2000; and

         WHEREAS, Midwestern owns 100% of the issued and outstanding capital
stock of RRC, which owns and operates Radio Station WALR-FM, Athens, Georgia
(the "RRC Station"), pursuant to certain licenses and authorizations issued by
the FCC; and

         WHEREAS, STB owns and operates Radio Station KKHT(FM), Conroe, Texas
(the "Salem Station") pursuant to certain licenses and authorizations issued by
the FCC; and

         WHEREAS, upon the closing of the transactions contemplated by the Stock
Purchase Agreement (the "Stock Purchase Closing"), Cox and Salem intend to
contemporaneously exchange certain property and assets used and useful in the
operations of the Cox Stations and the RRC Station on the one hand and the Salem
Station on the other hand (collectively, sometimes referred to herein as the
"Stations"); and

         WHEREAS, Cox and Salem intend to transfer the Stations in a transaction
that will qualify as a "like-kind exchange" for nonrecognition of taxable income
under Section 1031 of the Internal Revenue Code of 1986, as amended (the
"Code"), and Cox and Salem are willing to take such steps as are necessary on
their respective parts to enable the transactions contemplated hereby to so
qualify; and

<PAGE>   7

         WHEREAS, the prior consent of the FCC to the transfer of the licenses
and authorizations issued by the FCC for the Stations is required, and it is
intended that if such consent is obtained, the transactions contemplated by this
Agreement will be consummated subject to all of the other terms and conditions
of this Agreement.

         NOW, THEREFORE, in consideration of the mutual promises herein set
forth and subject to the terms and conditions hereof, the parties agree as
follows:

         1.       EXCHANGE OF PERSONAL PROPERTY; EXCHANGE OF REAL PROPERTY;
                  EXCHANGE OF LICENSES.

                  1.1      EXCHANGE OF TANGIBLE PERSONAL PROPERTY. At the
Closing (as defined in SECTION 4),

                  (a)      Cox shall, or cause RRC to, transfer, assign, convey
and deliver to Salem, and Salem shall accept and acquire from Cox or RRC as the
case may be, (i) all of the tangible personal property that is listed on
Schedule 1.1A, together with any replacements thereof or additions thereto made
between the date of this Agreement and the Closing Date (the "Cox Tangible
Personal Property"), and (ii) all records relating to the Cox Assets (as defined
below) including but not limited to, the public inspection files that relate to
the Cox Stations and all proprietary information and data, maps, plans,
diagrams, blueprints, schematics and technical drawings, engineering records,
and FCC applications and filings maintained with respect to the Cox Assets (as
defined below) pursuant to the rules and regulations of the FCC (the "Cox
Records");

                  (b)      Cox shall cause RRC to transfer and assign, convey
and deliver to Salem and Salem shall accept and acquire from RRC (i) all of the
tangible personal property that is listed on Schedule 1.1B, together with any
replacements thereof or additions thereto made between the date of this
Agreement and the Closing Date (the "RRC Tangible Personal Property"), and (ii)
all records relating to the RRC Assets (as defined below) including but not
limited to, the public inspection files that relate to the RRC Station and all
proprietary information and data, maps, plans, diagrams, blueprints, schematics
and technical drawings, engineering records and FCC Applications and filings
maintained with respect to the RRC Assets (as defined below) pursuant to the
rules and regulations of the FCC (the "RRC Records");

                  (c)      Salem shall transfer, assign, convey and deliver to
RRC, and RRC shall accept and acquire from Salem (i) all of the tangible
personal property listed on Schedule 1.1C, together with any replacements
thereof or additions thereto made between the date of this Agreement and the
Closing Date (the "Salem Tangible Personal Property"), and (ii) all records
relating to the Salem Assets (as defined below) including but not limited to,
the public inspection files that relate to the Salem Station and all proprietary
information and data, maps, plans, diagrams, blueprints, schematics and
technical drawings, engineering records, and FCC applications and filings
maintained with respect to the Salem Assets (as defined below) pursuant to the
rules and regulations of the FCC (the "Salem Records"); and

                  (d)      the Cox Tangible Personal Property, the Cox Records,
the RRC Tangible Personal Property, the RRC Records, the Salem Tangible Personal
Property and the Salem Records shall be conveyed free and clear of all liens,
mortgages, pledges, covenants, security

                                      -2-
<PAGE>   8

interests, charges, claims or encumbrances of any kind whatsoever ("Liens")
except for (i) Liens for current taxes not yet due and payable or the validity
of which are being contested in good faith by appropriate proceedings and (ii)
with respect to the Cox Real Property, the RRC Real Property and the Salem Real
Property, easements, covenants, conditions and restrictions of record that do
not individually or in the aggregate materially and adversely affect said real
property (collectively, "Permitted Liens").

                  1.2      EXCHANGE OF REAL PROPERTY. At the Closing,

                  (a)      Cox shall, or cause RRC to, transfer, assign, convey
and deliver to Salem, and Salem shall accept and acquire from Cox or RRC, as the
case may be, all real property and interests in real property, including fee
estates, leaseholds and subleaseholds ("Cox Real Property Leases"), purchase
options, easements, licenses, rights to access, and rights of way, and all
buildings and other improvements thereon, and other real property interests
which are listed on Schedule 1.2A, together with any replacements thereof and
any additions thereto made between the date of this Agreement and the Closing
Date (the "Cox Real Property");

                  (b)      Cox shall cause RRC to transfer, assign, convey and
deliver to Salem, and Salem shall accept and acquire from RRC, all real property
and interests in real property, including fee estates, leaseholds and
subleaseholds ("RRC Real Property Leases"), purchase options, easements,
licenses, rights to access, and rights of way, and all buildings and other
improvements thereon and other real property interests which are listed on
Schedule 1.2B, and any additions thereto made between the date of this Agreement
and the Closing Date (the "RRC Real Property");

                  (c)      Salem shall transfer, assign, convey and deliver to
RRC, and RRC shall accept and acquire from Salem, all real property and
interests in real property, including fee estates, leaseholds and subleaseholds
("Salem Real Property Leases"), purchase options, easements, licenses, rights to
access, and rights of way, and all buildings and other improvements thereon, and
other real property interests which are listed on Schedule 1.2C, together with
any replacements thereof and any additions thereto made between the date of this
Agreement and the Closing Date (the "Salem Real Property"); and

                  (d)      The Cox Real Property, the RRC Property and the Salem
Real Property shall be conveyed free and clear of all Liens (except for
Permitted Liens).

                  1.3      EXCHANGE OF LICENSES. At the Closing,

                  (a)      Cox shall assign, or cause RRC to assign to Salem,
and Salem shall accept from Cox or RRC, as the case may be, all of such party's
right, title and interest in and to the licenses, permits, authorizations and
call letters, qualifications, orders, franchises, certificates, consents and
approvals issued to Cox or RRC, as the case may be, by any governmental or
regulatory agency or authority, whether Federal, state or local, and used in
connection with the operation of the Cox Stations, including the licenses and
authorizations issued by the FCC for the Cox Stations (the "Cox FCC Licenses"),
and all applications for such licenses and authorizations to the extent
assignable, all of which are set forth on Schedule 1.3A (the "Cox Licenses" and
together with the Cox Tangible Personal Property, the Cox Records and the Cox
Real Property, the "Cox Assets");

                                      -3-
<PAGE>   9

                  (b)      Cox shall cause RRC to assign to Salem, and Salem
shall accept from RRC, all of RRC's right, title and interest in and to the
licenses, permits, authorizations and call letters, qualifications, orders,
franchises, certificates, consents and approvals issued to RRC by any
governmental or regulatory agency or authority, whether Federal, state or local,
and used in connection with the operation of the RRC Station, including the
licenses and authorizations issued by the FCC for the RRC Station (the "RRC FCC
Licenses"), and all applications for such licenses and authorizations to the
extent assignable, all of which are set forth on Schedule 1.3B (the "RRC
Licenses" and together with the RRC Tangible Personal Property, the RRC Records
and the RRC Real Property, the "RRC Assets");

                  (c)      Salem shall assign to RRC and RRC shall accept from
Salem, all of Salem's right, title and interest in and to the licenses, permits,
authorizations and call letters, qualifications, orders, franchises,
certificates, consents and approvals issued to Salem by any governmental or
regulatory agency or authority, whether Federal, state or local, and used in
connection with the operation of the Salem Station as now conducted, including
the licenses and authorizations issued by the FCC for the Salem Station (the
"Salem FCC Licenses"), and all applications for such licenses and authorizations
to the extent assignable, all of which are set forth on Schedule 1.3C (the
"Salem Licenses" and together with the Salem Tangible Personal Property, the
Salem Records and the Salem Real Property, the "Salem Assets"); and

                  (d)      The Cox Licenses, the RRC Licenses and the Salem
Licenses shall be assigned free and clear of all Liens (except for Permitted
Liens).

                  1.4      INTENTIONALLY OMITTED.

                  1.5      APPLICABLE ASSETS.

                  (a)      The Cox Assets shall include only those assets set
forth on Schedules 1.1A, 1.2A and 1.3A. The RRC Assets shall include only those
assets set forth on Schedules 1.1B, 1.2B, and 1.3B. The Salem Assets shall
include only those assets set forth on Schedules 1.1C, 1.2C and 1.3C. The Cox
Assets, together with the RRC Assets and the Salem Assets shall be collectively
referred to herein as the "Assets".

                  (b)      Notwithstanding any provision of this Agreement to
the contrary, Cox and RRC shall not transfer, convey or assign to Salem and
Salem shall not transfer, convey or assign to Cox and RRC, but shall retain all
of its right, title and interest in and to, the following assets owned or held
by it on the Closing Date ("Excluded Assets"): (i) any and all cash, cash
equivalents, cash deposits to secure contract obligations (except to the extent
the conveying party receives a credit therefor under SECTION 4.2, in which event
the deposit shall be included as part of the Assets), all inter-company
receivables from any affiliate of such party and all other accounts receivable,
bank deposits and securities held by such party in respect of its Station at the
Closing Date; (ii) any and all claims of the conveying party with respect to
transactions prior to the Closing including, without limitation, claims for tax
refunds and refunds of fees paid to the FCC; (iii) all prepaid expenses (except
to the extent the conveying party receives a credit therefore under SECTION 4.2,
in which event the prepaid expense shall be included as part of the Assets);
(iv) all contracts of insurance and claims against insurers; (v) all employee
benefit plans and the assets thereof and all employment contracts; (vi) all
contracts that are terminated in accordance with the terms and provisions of
this Agreement or have expired prior to the Closing

                                      -4-
<PAGE>   10

Date in the ordinary course of business and all loans and loan agreements; (vii)
all tangible personal property disposed of or consumed between the date hereof
and the Closing Date in accordance with the terms and provisions of this
Agreement; (viii) all tangible personal property associated with the studios and
business offices of the Cox Stations, the RRC Station and the Salem Station;
(ix) each party's corporate records except to the extent such records pertain to
Assets, in which case copies thereof shall be provided; (x) all commitments,
contracts and agreements not specifically assumed by the other party pursuant to
SECTION 1.6; and (xi) the call letters of the Stations.

                  1.6      ASSUMPTION OF LIABILITIES. Except as provided in
SECTION 4.1, Salem shall not assume or become obligated to perform any debt,
liability or obligation of Cox or RRC whatsoever, and Cox and RRC shall not
assume or become obligated to perform any debt, liability or obligation of Salem
whatsoever, including (i) any obligations or liabilities under any contract,
lease or agreement other than the Cox Real Property Leases, the RRC Real
Property Leases or the Salem Real Property Leases, as the case may be; (ii) any
obligations or liabilities under the Cox Real Property Leases, the RRC Real
Property Leases or the Salem Real Property Leases relating to the period prior
to the Closing; (iii) any claims or pending litigation or proceedings relating
to the operation of the Stations prior to the Closing; (iv) any insurance
policies of Salem, Cox, or RRC; (v) any obligations or liabilities arising under
capitalized leases or other financing agreements; (vi) any obligations or
liabilities of Cox, RRC, or Salem under any employee pension, retirement, health
and welfare or other benefit plans and under any employment agreements or
collective bargaining agreements; (vii) any obligation to any employee of the
Stations for severance benefits, vacation time, sick leave or any other
employment-related liability; (viii) any liability for any taxes attributable to
the Cox Assets or the RRC Assets or the operations of the Cox Stations or the
RRC Station on or prior to the Closing Date, except to the extent the amount of
such taxes is included in the Cox Proration Schedule; (ix) any liability for
taxes attributable to the Salem Assets or the operations of the Salem Station on
or prior to the Closing Date, except to the extent that the amount of such taxes
is included in the Salem Proration Schedule; or (x) any obligations or
liabilities caused by, arising out of, or resulting from any action or omission
of Cox, RRC, or Salem prior to the Closing (collectively, the "Excluded
Liabilities"). All such Excluded Liabilities shall remain and be the obligations
and liabilities solely of Cox and RRC or Salem, as the case may be.

                  1.7      SECTION 1031; APPRAISALS; TAX REPORTING

                  (a)      The parties agree to use commercially reasonable best
efforts to agree upon the fair market value of each of the assets (other than
assets which, individually or in the aggregate, are not material in value) which
comprise the Assets, determined on the basis of certain appraisals prepared by
an independent appraiser upon which the parties shall mutually agree (the
"Appraiser"), and whose fees and expenses shall be shared equally between the
parties (to the extent that the parties mutually agree upon the fair market
value of any or all of the Assets, the "Appraisals"). The parties shall direct
the Appraiser to deliver the Appraisals within sixty (60) days of the Closing
Date.

                  (b)      Each party shall use commercially reasonable best
efforts to engage in mutually agreeable sharing of financial and valuation
information in order to obtain consistent financial and tax reporting,
including, but not limited to, the preparation and filing of IRS Forms

                                      -5-
<PAGE>   11

8894 and 8824 in a manner which is consistent with the Appraisals, to the
greatest extent possible.

                  (c)      To the extent authorized by applicable law and
regulation, each party shall report the transaction contemplated hereby as a
"like-kind exchange" under Section 1031 of the Code, consistent with the
Appraisals, and the IRS Forms 8594 and 8824 prepared in accordance with clause
(b) above, and shall not take, and shall not cause their respective
representatives, successors and assigns to take, any position on any federal,
state or local tax return or report, or in any tax examination, tax audit or tax
litigation, inconsistent with such reporting position, the Appraisals, or such
IRS Form 8594 or 8824.

                  (d)      Each party shall cooperate with the other, including,
without limitation, in preparing IRS Forms 8594 and 8824 and executing all
necessary agreements and documents to the extent necessary for each party to
treat the exchange of the Assets hereunder as a "like-kind exchange" to the
extent permissible under Section 1031 of the Code.

                  (e)      Neither party shall have any liability or obligation
to the other for the failure of the exchange of the Assets hereunder to qualify
as a like-kind exchange under Section 1031 of the Code.

         2.       [INTENTIONALLY OMITTED].

         3.       [INTENTIONALLY OMITTED].

         4.       CLOSING. The closing of the transactions contemplated hereby
(the "Closing") will take place at 10:00 a.m., local time, at the offices of
Dow, Lohnes & Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Washington, D.C.
20036, on a date designated by Cox that is not later than the tenth (10th) day
following the date upon which the FCC has granted its consent to the assignment
of the Cox FCC Licenses, the RRC FCC Licenses and the Salem FCC Licenses, or at
such other time (in any event, the "Closing Date") as shall be agreed upon in
writing by Cox and Salem.

                  4.1      CLOSING DELIVERIES.  At the Closing:

                  (a)      (i) Cox shall execute and deliver, and shall cause
RRC to execute and deliver to Salem bills of sale in form and substance
reasonably acceptable to Salem, pursuant to which Cox shall convey to Salem good
and marketable title to the Cox Tangible Personal Property and the Cox Records,
and RRC shall convey to Salem good and marketable title to the RRC Tangible
Personal Property and the RRC Records; and (ii) Salem shall execute and deliver
to RRC bills of sale in form and substance reasonably acceptable to RRC,
pursuant to which Salem shall convey to RRC good and marketable title to the
Salem Tangible Personal Property and the Salem Records;

                  (b)      (i) Cox shall execute and deliver and cause RRC to
execute and deliver to Salem a special warranty deed and such other transfer
documents in form and substance reasonably acceptable to Salem pursuant to which
Cox or RRC shall convey to Salem title to the owned Cox Real Property and any
estoppel, assignment and assumption agreements for the Cox Real Property Leases
pursuant to which Cox or RRC shall assign to Salem, and

                                      -6-
<PAGE>   12

Salem shall accept assignment of, all of Cox's or RRC's rights and privileges
and assume all obligations of Cox or RRC under the Cox Real Property Leases,
insofar as they relate to the time on and after the Closing Date and arise out
of events that occur after the Closing Date;

                           (ii) Cox shall cause RRC to execute and deliver to
Salem a special warranty deed and such other transfer documents in form and
substance reasonably acceptable to Salem pursuant to which RRC shall convey to
Salem title to the owned RRC Real Property and any estoppel, assignment and
assumption agreements for the RRC Real Property Leases pursuant to which RRC
shall assign to Salem, and Salem shall accept assignment of, all of RRC's rights
and privileges and assume all obligations of RRC under the RRC Real Property
Leases, insofar as they relate to the time on and after the Closing Date and
arise out of events that occur after the Closing Date; and

                           (iii) Salem shall execute and deliver to RRC a
special warranty deed and such other transfer documents in form and substance
reasonably acceptable to RRC pursuant to which Salem shall convey to RRC title
to the Salem Real Property and any estoppel, assignment and assumption
agreements for the Salem Real Property Leases pursuant to which Salem shall
assign to RRC, and RRC shall accept assignment of, all of Salem's rights and
privileges and assume all obligations of Salem under the Salem Real Property
Leases as they relate to the time on and after the Closing Date and arise out of
events that occur after the Closing Date;

                  (c)      (i) Cox shall execute and deliver, and shall cause
RRC to execute and deliver to Salem such assignments of licenses and permits in
form and substance reasonably acceptable to Salem pursuant to which Cox or RRC
as the case may be shall assign to Salem, and Salem shall accept assignment of,
all of such party's right, title and interest in and to the Cox Licenses;

                           (ii) Cox shall cause RRC to execute and deliver to
Salem such assignments of licenses and permits in form and substance reasonably
acceptable to Salem pursuant to which RRC shall assign to Salem, and Salem shall
accept assignment of, all of RRC's right, title and interest in and to the RRC
Licenses; and

                           (iii) Salem shall execute and deliver to RRC an
Assignment of Licenses and Permits in form and substance reasonably acceptable
to the parties pursuant to which Salem shall assign to RRC, and RRC shall accept
assignment of, all of Salem's right, title and interest in and to the Salem
Licenses;

                  (d)      (i) Cox shall deliver or cause to be delivered
executed releases, in suitable form for filing and otherwise in form and
substance reasonably satisfactory to Salem, of any security interests granted in
the Cox Assets or RRC Assets as security for payment of loans and other
obligations and of any other Liens (other than Permitted Liens); and

                           (ii) Salem shall deliver or cause to be delivered
executed releases, in suitable form for filing and otherwise in form and
substance reasonably satisfactory to Cox, of any security interests granted in
the Salem Assets as security for payment of loans and other obligations and of
any other Liens (other than Permitted Liens); and

                  (e)      Cox shall deliver to Salem an assignment in form and
substance reasonably acceptable to the parties pursuant to which CRI shall
assign to Salem and Salem shall

                                      -7-
<PAGE>   13

accept from CRI, the rights of CRI to indemnification by the Stockholders
(including the right to draw against the Holdback Escrow as defined in the Stock
Purchase Agreement) under the Stock Purchase Agreement as such rights pertain to
the RRC Assets and the representations, warranties and covenants of Midwestern
and the Stockholders with respect thereto.

                  4.2      PRORATIONS.

                  (a)      All income and expenses arising from the conduct of
the business and operations of the Cox Stations and the RRC Station on the one
hand, and the Salem Station, on the other hand, shall be prorated between Cox
and Salem in accordance with generally accepted accounting principles as of
12:01 a.m., on the Closing Date. Such prorations shall include, without
limitation, all ad valorem and applicable property taxes, business and license
fees, annual FCC regulatory fees, power and utility expenses, rents (excluding
amounts paid as capital expenditures in connection with real property, whether
leased or owned), and similar prepaid and deferred items attributable to the
ownership and operation of the Stations. The parties shall use commercially
reasonable efforts to provide each other a list of all known proratable items
and payables for the Stations at least five (5) days before the Closing Date;

                  (b)      The prorations and adjustments contemplated by this
Section, to the extent practicable, shall be made on and as of the Closing Date.
As to those prorations and adjustments not ascertained on the Closing Date,
adjustments and prorations shall be made in accordance with the procedures set
forth in SECTIONS 4.2(C) and 4.2(D);

                  (c)      Within ninety (90) days of the Closing Date, Cox
shall deliver to Salem a schedule of its proposed prorations (which shall set
forth in reasonable detail the basis for those determinations) for the Salem
Station (the "Cox Proration Schedule"). The Cox Proration Schedule shall be
conclusive and binding upon Salem unless Salem provides Cox with written notice
of objection (the "Notice of Disagreement") within one hundred twenty (120) days
after the Closing Date, which notice shall state the prorations of expenses
proposed by Salem ("Salem's Proration Amount"). Cox shall have fifteen (15) days
from receipt of a Notice of Disagreement to accept or reject Salem's Proration
Amount. Payment by Salem or Cox, as the case may be, of the proration amounts
determined pursuant to this SECTION 4.2(C) shall be due fifteen (15) days after
the last to occur of (i) Salem's acceptance of the Cox Proration Schedule or
failure to give Cox a timely Notice of Disagreement and (ii) Cox's acceptance of
Salem's Proration Amount or failure to reject Salem's Proration Amount within
fifteen (15) days of receipt of a Notice of Disagreement;

                  (d)      Within ninety (90) days of the Closing Date, Salem
shall deliver to Cox a schedule of its proposed prorations (which shall set
forth in reasonable detail the basis for those determinations) for the Cox
Stations and the RRC Station (the "Salem Proration Schedule"). The Salem
Proration Schedule shall be conclusive and binding upon Cox unless Cox provides
Salem with a Notice of Disagreement within one hundred twenty (120) days after
the Closing Date, which notice shall state the prorations of expenses proposed
by Cox ("Cox's Proration Amount"). Salem shall have fifteen (15) days from
receipt of a Notice of Disagreement to accept or reject Cox's Proration Amount.
Payment by Cox or Salem, as the case may be, of the proration amounts determined
pursuant to this SECTION 4.2(D) shall be due fifteen (15) days after the last to
occur of (i) Cox's acceptance of the Salem Proration Schedule or failure to give
Salem a timely Notice of Disagreement and (ii) Salem's acceptance of Cox's

                                      -8-
<PAGE>   14

Proration Amount or failure to reject Cox's Proration Amount within fifteen
(15) days of receipt of a Notice of Disagreement; and

                  (e)      In the event of any disputes between the parties as
to the prorations and adjustments described in this Section, the amounts not in
dispute shall nonetheless be paid at the time provided in this Section and such
disputes shall be determined by an independent certified public accountant of
national recognition (other than a firm which then serves as the independent
auditor for Cox or Salem or any of their respective affiliates) mutually
acceptable to the parties with the fees and expenses of such accountant being
paid one half by Cox and one half by Salem. Any payment required by Cox to Salem
or by Salem to Cox, as the case may be, under this Section shall be paid by wire
transfer of immediately available funds to the account of the payee with a
financial institution in the United States as designated by such party in the
Salem Proration Schedule or Cox Proration Schedule, as the case may be. If
either Cox or Salem fails to pay when due any amount under SECTION 4.2(C) or
4.2(D), interest on such amount will accrue from the date payment was due to the
date such payment is made at a per annum rate equal to the Prime Rate plus two
percent (2%), and such interest shall be payable upon demand. Notwithstanding
the provisions of SECTION 4.2(C), (D) and (E) of this Agreement, if the amount
of any taxes to be prorated pursuant to this SECTION 4.2 is not known by ninety
(90) days after the Closing Date, then the amount will be estimated as of such
date, and once the amount of such taxes is known, Salem shall pay to Cox, or Cox
shall pay to Salem, as the case may be, the net amount due as a result of the
actual apportionment of such taxes.

                  4.3      FURTHER ASSURANCES. At the Closing, and from time to
time after the Closing, Cox will execute and deliver, and cause RRC to execute
and deliver, such other instruments of conveyance, assignment, transfer and
delivery and will take, and will cause RRC to take, such other actions as Salem
reasonably may request in order to more effectively transfer, convey, assign,
and deliver to Salem, and to place Salem in possession and control of, any of
the Cox Assets and the RRC Assets, and Salem will execute and deliver such other
instruments of conveyance, assignment, transfer and delivery and will take such
other actions as Cox reasonably may request in order to more effectively
transfer, convey, assign, and deliver to Cox or RRC, and to place Cox or RRC in
possession and control of, any of the Salem Assets.

         5.       REPRESENTATIONS AND WARRANTIES OF COX FOR THE COX STATIONS.
Cox hereby represents and warrants to Salem with respect to the Cox Stations
only as follows:

                  5.1      ORGANIZATION; GOOD STANDING. Each of CRI and CXR (i)
is a corporation duly incorporated, validly existing and in good standing under
the laws of the state of its incorporation and (ii) is qualified to do business
as a foreign corporation and is in good standing under the laws of the states in
which such entity conducts business.

                  5.2      AUTHORITY. The execution, delivery and performance of
this Agreement by Cox and all of the documents and instruments required to be
delivered by Cox hereby, and the consummation by Cox of the transactions
contemplated hereby and thereby are within the corporate power of Cox, and have
been duly authorized by all necessary corporate action by Cox. This Agreement
has been duly executed and delivered by Cox, and at the Closing, such other
documents and other instruments required hereby to be executed and delivered by
Cox will be duly executed and delivered by Cox. This Agreement is, and the other
documents and instruments required hereby will be, when executed and delivered
by Cox, the valid and binding

                                      -9-
<PAGE>   15

obligations of Cox, enforceable against it in accordance with their respective
terms, except as the enforceability of this Agreement or the documents or
instruments contemplated hereby may be limited by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.

                  5.3      NO BREACH OR VIOLATION. Except as set forth on
Schedule 5.3, the execution and delivery by Cox of this Agreement, the
consummation by Cox of the transactions contemplated hereby, and compliance by
Cox with the terms hereof, do not and will not:

                           (i) violate or result in the breach of or contravene
any of the terms, conditions or provisions of, or constitute a default under,
any organizational documents of Cox, or any law, regulation, order, writ,
injunction, decree, determination or award of any court, governmental
department, board, agency or instrumentality, domestic or foreign, or any
arbitrator, applicable to Cox or its assets and properties;

                           (ii) except for those consents listed in Schedule
5.3, result in prohibited action under any term or provision of, the material
breach of any term or provision of, the termination of, or the acceleration or
permitting the acceleration of the performance required by the terms of, or
constitute a default under or require the consent of any party to, any loan
agreement, indenture, mortgage, deed of trust or any other contract to which Cox
is a party or by which it is bound;

                           (iii) result in any Lien upon the Cox Assets, except
for Permitted Liens; or

                           (iv) cause the suspension or revocation of any of the
Cox Licenses.

                  5.4      APPROVALS. Except as set forth on Schedule 5.4 and
except for the consent of the FCC, no authorizations, approvals or consents from
any governmental or regulatory authorities or agencies are necessary to permit
Cox to execute and deliver this Agreement and to permit Cox to perform its
obligations hereunder.

                  5.5      NO LITIGATION. Except as set forth on Schedule 5.5,
there are no actions, suits, investigations or proceedings pending or, to the
best of Cox's knowledge, threatened against or affecting the Cox Assets, in any
court or before any arbitrator, or before or by any governmental department,
commission, bureau, board, agency or instrumentality, domestic or foreign,
which, if adversely determined, would impair the ability of Cox to perform its
obligations hereunder.

                  5.6      BROKERAGE. Except for Media Venture Partners, Cox has
not dealt with any broker or finder in connection with any of the transactions
contemplated by this Agreement, and to the best of Cox's knowledge, no other
person is entitled to any commission or finder's fee in connection with any of
these transactions.

                  5.7      TITLE TO AND CONDITION OF TANGIBLE PERSONAL PROPERTY.
Except as specified on Schedule 5.7, and except for Permitted Liens, Cox has
good title to the Cox Tangible Personal Property free and clear of all Liens.
All of the Cox Tangible Personal Property is in a good working condition and
repair (ordinary wear and tear excepted). All of the Cox Tangible Personal
Property is listed in Schedule 1.1A, and such schedule contains a list of

                                      -10-
<PAGE>   16

all tangible personal property used in the operation of the Cox Stations other
than Excluded Assets.

                  5.8      TITLE TO AND CONDITION OF REAL PROPERTY. Schedule
1.2A lists all of the Cox Real Property and Cox has good title in and to the
owned Cox Real Property, and such schedule contains a list of all real property
used in the operation of the Cox Stations other than the Excluded Assets. All of
the Cox Real Property is owned free and clear of all Liens except for Permitted
Liens. Schedule 1.2A lists all of the Cox Real Property Leases. Except as
disclosed on Schedule 5.8, with respect to each Cox Real Property Lease: (a)
said lease is, and following the Closing to the best of Cox's knowledge, will
continue to be legal, valid, binding, enforceable and in full force and effect;
and (b) Cox has not assigned, transferred, conveyed, mortgaged, deeded in trust
or encumbered any interest in said lease or its rights thereunder. To the best
of Cox's knowledge, no third party is in material default in the performance of
any of its obligations under any of the Cox Real Property Leases, and no event
or circumstance has occurred, which, with the giving of notice or the lapse of
time or both, would constitute a material default by Cox under any Cox Real
Property Lease. All improvements on the owned Cox Real Property are in material
compliance with applicable zoning and land use laws, ordinances and regulations
except for any instances of noncompliance which do not and will not in the
aggregate have a material adverse effect on such owned Cox Real Property. All
such improvements are in good working condition and repair, and comply in all
material respects with FCC rules and regulations and all other applicable
Federal, state and local statutes, ordinances and regulations. To the best of
Cox's knowledge, all of the transmitting towers, ground radials, guy anchors,
transmitter buildings and related improvements located on the owned Cox Real
Property are located entirely on the owned Cox Real Property. Cox has no
knowledge of any pending, threatened or contemplated action to take by eminent
domain or otherwise to condemn any part of the owned Cox Real Property. Cox has
full legal and practical access to the Cox Real Property.

                  5.9      LICENSES. Schedule 1.3A accurately and completely
lists all Cox Licenses, and such schedule contains a list of all licenses,
permits and applications used in the operation of or benefiting the Cox
Stations, other than Excluded Assets. The Cox Licenses are (a) validly issued
and in full force and effect, (b) unimpaired by any acts or omissions of Cox or
Cox's employees or agents, (c) free and clear of any restrictions that might
limit the full operation of the Cox Stations and (d) Cox has full power and
authority to operate the Cox Stations thereunder.

                  5.10     FCC COMPLIANCE. Except as shown on Schedule 5.10, the
Cox Stations have been operated at all times by Cox at full authorized power in
material accordance with the terms of the Cox FCC Licenses, the Communications
Act of 1934, as amended (the "Act"), and all applicable rules, regulations and
policies of the FCC. Cox has timely filed or made all applications, reports, and
other disclosures required by the FCC to be filed or made with respect to the
Cox Stations. The Cox FCC Licenses are valid and in full force and effect.
Except as shown on Schedule 5.10, no application, action or proceeding is
pending for the renewal or modification of any of the Cox FCC Licenses and, to
the best of Cox's knowledge, there is not now issued or outstanding any
investigation or material complaint against Cox at the FCC as of the date of
this Agreement relating to the Cox Stations. Except as disclosed on Schedule
5.10, there is no proceeding pending at the FCC, and there is no outstanding
notice of violation from the FCC as of the date of this Agreement relating to
the Cox Stations. All fees payable to

                                      -11-
<PAGE>   17

governmental authorities pursuant to the Cox FCC Licenses, including FCC annual
regulatory fees, have been paid and no event has occurred which, individually or
in the aggregate, and with or without the giving of notice or the lapse of time
or both, would constitute grounds for nonrenewal in the ordinary course or
revocation thereof.

                  5.11     COMPLIANCE WITH LAWS. Cox has all licenses, permits
or other authorizations of governmental, regulatory or administrative agencies
required to conduct its business with respect to the Cox Stations in all
material respects as currently conducted. No judgment, decree, order or notice
of violation has been issued by any agency or authority which permits, or would
permit, revocation, modification or termination of any governmental permit,
license or authorization or which results or could result in any material
impairment of any rights thereunder. With respect to the Cox Stations, Cox is in
material compliance with all applicable federal, state, local or foreign laws,
regulations, statutes, rules, ordinances, directives and orders and any other
requirements of any governmental, regulatory or administrative agency or
authority or court or other tribunal applicable to it.

                  5.12     ENVIRONMENTAL MATTERS. Without limiting the
generality of SECTION 5.11, except as disclosed on Schedule 5.12, all of the Cox
Real Property is free of (1) waste or debris; (2) "hazardous waste" or any
"hazardous substance" as defined in federal environmental and occupational
safety and health statutes (including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time ("CERCLA"),
and regulations promulgated thereunder; (3) any substance the presence of which
on the Cox Real Property is prohibited by any federal, state or local
environmental law; and (4) any materials which, under federal, state, or local
environmental law, require special handling in collection, storage, treatment or
disposal, each in quantities or in a manner sufficient to give rise to liability
under the federal, state or local government environmental standards or to
warrant the imposition of any penalty, civil or criminal, against Cox. Without
limiting the generality of the foregoing, except as disclosed on Schedule 5.12,
there are no installations on the Cox Real Property which contain PCBs or
asbestos in quantities sufficient to mandate the removal of such PCBs or
asbestos in accordance with federal, state or local government environmental
standards or to warrant the imposition of any penalty, civil or criminal,
against Cox. Cox has delivered to Salem all environmental assessments of the Cox
Real Property owned by Cox.

                  5.13     ACCURACY OF INFORMATION FURNISHED. No statement by
Cox contained in this Agreement or in any Schedule or Exhibit hereto contains
any material untrue statement of a material fact or omits to state any material
fact which is necessary to make the Statements contained herein not materially
misleading.

                  5.14     TAXES. Cox has filed or caused to be filed all
federal, state, county, local, or city tax returns which are required to be
filed, and Cox has paid or caused to be paid all taxes as shown on those returns
or on any tax assessment received by Cox to the extent that such taxes have
become due, or has set aside on its books adequate reserves (segregated to the
extent required by generally accepted accounting principles) with respect
thereto. There are no governmental investigations or other legal,
administrative, or tax proceedings pending, or to the best of Cox's knowledge,
threatened, pursuant to which Cox is or could be made liable for any taxes,
penalties, interest, or other charges, the liability for which could extend to
Salem as transferee of the Cox Assets, and no event has occurred that could
impose on Salem any liability for any taxes, penalties, or interest due or to
become due from Cox. Cox has paid in full or

                                      -12-
<PAGE>   18

discharged, or caused to be paid in full or discharged, all taxes (i) relating
to the Cox Assets that are required to be paid (whether or not such taxes are
shown as due on any tax return) and (ii) the non-payment of which could result
in a Lien on the Cox Assets in the hands of Salem, excepting in each case such
taxes as will not be due until after the Closing Date and which are to be
prorated pursuant to SECTION 4.2 of this Agreement. Any Lien for taxes on the
Cox Assets the validity of which is being contested in good faith by appropriate
proceedings shall be described on Schedule 5.14 of this Agreement.

                  5.15     DEFINITION OF KNOWLEDGE. For the purposes of this
Agreement, "to the best of Cox's knowledge" or any similar formulation thereof
means to the actual knowledge of Robert F. Neil, Chief Executive Officer;
Richard A. Ferguson, Co-Chief Operating Officer; Marc W. Morgan, Co-Chief
Operating Officer; Maritza Pichon, Chief Financial Officer; Sterling Davis,
Director of Engineering; Jarrett O'Connor, Vice President and General Manager,
WSUN(AM); and Caroline Devine, Vice President and General Manager, KLUP(AM).

         6.       REPRESENTATIONS AND WARRANTIES OF COX FOR THE RRC STATION AND
STOCK PURCHASE AGREEMENT. Cox hereby represents and warrants to Salem with
respect to the RRC Station and the Stock Purchase Agreement only as follows:

                  6.1      STOCK PURCHASE AGREEMENT. Cox will deliver to Salem a
true and complete copy of the Stock Purchase Agreement (including all exhibits
and schedules thereto) as executed by CRI on June 1, 2000. The Stock Purchase
Agreement will not have been executed by Midwestern or the Stockholders at that
time. Cox will deliver copies of the signature pages of Midwestern and the
Stockholders immediately after receipt by Cox. Cox represents and warrants that
the execution, delivery and performance of the Stock Purchase Agreement by CRI
and all of the documents required to be delivered by CRI thereby and the
consummation by CRI of the Stock Purchase Agreement in accordance with the terms
thereof are within the corporate power of CRI and have been duly authorized by
all necessary corporate action by CRI. When executed by CRI, the Stock Purchase
Agreement will be a valid and binding offer of CRI subject to acceptance by
Midwestern and the Stockholders and enforceable against CRI in accordance with
its terms, except as the enforceability of the Stock Purchase Agreement or the
documents or instruments contemplated thereby may be limited by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies. Cox has no
independent knowledge of and has not made any investigation to determine the
accuracy or inaccuracy of the representations and warranties of Midwestern or
the Stockholders in the Stock Purchase Agreement.

                  6.2      ORGANIZATION; GOOD STANDING. At the Closing, RRC (i)
will be a corporation duly incorporated, validly existing and in good standing
under the laws of the state of its incorporation and (ii) will be qualified to
do business as a foreign corporation and will be in good standing under the laws
of the states in which it conducts business.

                  6.3      AUTHORITY. At the Closing, the execution, delivery
and performance of all of the documents and instruments required to be delivered
by RRC hereby (the "RRC Documents"), and the consummation by RRC of the
transactions contemplated hereby and thereby will be within the corporate power
of RRC, and will have been duly authorized by all necessary corporate action by
RRC. At the Closing, the RRC Documents will be duly executed and delivered by
RRC and will be, when executed and delivered by RRC, the valid and binding

                                      -13-
<PAGE>   19

obligations of RRC, enforceable against it in accordance with their respective
terms, except as the enforceability of such documents or instruments may be
limited by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by judicial discretion in the enforcement of equitable remedies.

                  6.4      NO BREACH OR VIOLATION. Except for the consent of the
FCC and the HSR Approval, at the Closing, the execution and delivery by RRC of
the RRC Documents and the consummation by RRC of the transactions contemplated
hereby, and compliance by RRC with the terms hereof, will not:

                           (i) violate or result in the breach of or contravene
any of the terms, conditions or provisions of, or constitute a default under,
any organizational documents of RRC, or any law, regulation, order, writ,
injunction, decree, determination or award of any court, governmental
department, board, agency or instrumentality, domestic or foreign, or any
arbitrator, applicable to RRC or its assets and properties;

                           (ii) result in prohibited action under any term or
provision of, the material breach of any term or provision of, the termination
of, or the acceleration or permitting the acceleration of the performance
required by the terms of, or constitute a default under or require the consent
of any party to, any loan agreement, indenture, mortgage, deed of trust or any
other contract to which RRC is a party or by which it is bound;

                           (iii) result in any Lien upon the RRC Assets,
excepted for Permitted Liens; or

                           (iv) cause the suspension or revocation of any of the
RRC Licenses.

                  6.5      APPROVALS. Except for the consent of the FCC and the
HSR Approval, at the Closing, no authorizations, approvals or consents from any
governmental or regulatory authorities or agencies will be necessary to permit
RRC to execute and deliver the RRC Documents and to consummate the transactions
contemplated hereby and thereby.

                  6.6      NO LITIGATION. At the Closing there will be no
actions, suits, investigations or proceedings pending or, to the best of Cox's
knowledge, threatened against or affecting the RRC Assets, in any court or
before any arbitrator, or before or by any governmental department, commission,
bureau, board, agency or instrumentality, domestic or foreign, which , if
adversely determined, would impair the ability of RRC to consummate the
transactions contemplated hereunder.

                  6.7      BROKERAGE. RRC will not have dealt with any broker or
finder in connection with any of the transactions contemplated by this
Agreement, and to the best of Cox's knowledge, no person will be entitled to any
commission or finder's fee in connection with any of these transactions other
than Media Venture Partners whose commission is the responsibility of Cox.

                  6.8      ACCURACY OF INFORMATION FURNISHED. As of the Closing,
no statement by RRC contained in any of the RRC Documents shall contain any
material untrue statement of a material fact or omit to state any material fact
which is necessary to make the statements contained therein not materially
misleading,

                                      -14-
<PAGE>   20

         7.       REPRESENTATIONS AND WARRANTIES OF SALEM. Salem hereby
represents and warrants to Cox as follows:

                  7.1      ORGANIZATION; GOOD STANDING. Each of SCC and STB is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the state of its organization and is qualified to do business as a
foreign corporation and is in good standing under the laws of the states in
which it conducts business.

                  7.2      AUTHORITY. The execution, delivery and performance of
this Agreement and all of the documents and instruments required to be delivered
by Salem hereby, and the consummation by Salem of the transactions contemplated
hereby and thereby are within the corporate power of Salem, and have been duly
authorized by all necessary corporate action by Salem. This Agreement has been
duly executed and delivered by Salem and at the Closing such other documents and
other instruments required hereby to be executed and delivered by Salem will be
duly executed and delivered by Salem. This Agreement is and the other documents
and instruments required hereby will be when executed and delivered by Salem,
the valid and binding obligations of Salem, enforceable against Salem in
accordance with their respective terms, except as the enforceability of this
Agreement or the documents or instruments contemplated hereby may be limited by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.

                  7.3      NO BREACH OR VIOLATION. Except as set forth on
Schedule 7.3, the execution and delivery by Salem of this Agreement, the
consummation by Salem of the transactions contemplated hereby, and compliance by
Salem with the terms hereof, do not and will not:

                           (i) violate or result in the breach of or contravene
any of the terms, conditions or provisions of, or constitute a default under,
Salem's organizational documents, or any law, regulation, order, writ,
injunction, decree, determination or award of any court, governmental
department, board, agency or instrumentality, domestic or foreign, or any
arbitrator, applicable to Salem or its assets and properties;

                           (ii) except for those consents listed in Schedule
7.3, result in prohibited action under any term or provision of, the material
breach of any term or provision of, the termination of, or the acceleration or
permitting the acceleration of the performance required by the terms of, or
constitute a default under or require the consent of any party to, any loan
agreement, indenture, mortgage, deed of trust or any other contract to which
Salem is a party or by which it is bound;

                           (iii) result in any Lien upon the Salem Assets except
for Permitted Liens; or

                           (iv) cause the suspension or revocation of any of the
Salem Licenses.

                  7.4      APPROVALS. Except as set forth on Schedule 7.4, and
except for the consent of the FCC, DOJ and any approval required by the HSR Act,
no authorizations, approvals or consents from any governmental or regulatory
authorities or agencies are necessary to permit Salem to execute and deliver
this Agreement and to perform its obligations hereunder.

                                      -15-
<PAGE>   21

                  7.5      NO LITIGATION. Except as set forth on Schedule 7.5,
there are no actions, suits, investigations or proceedings pending or, to the
best of Salem's knowledge, threatened against or affecting the Salem Assets, in
any court or before any arbitrator, or before or by any governmental department,
commission, bureau, board, agency or instrumentality, domestic or foreign,
which, if adversely determined, would impair the ability of Salem to perform its
obligations hereunder.

                  7.6      BROKERAGE. Salem has not dealt with any broker or
finder in connection with any of the transactions contemplated by this
Agreement, and, to the best of Salem's knowledge, except for Media Venture
Partners, no other person is entitled to any commission or finder's fee in
connection with any of these transactions.

                  7.7      TITLE TO AND CONDITION OF TANGIBLE PERSONAL PROPERTY.
Except as specified on Schedule 7.7, and except for Permitted Liens, Salem has
good title to the Salem Tangible Personal Property free and clear of all Liens.
All of the Salem Tangible Personal Property is in a good working condition
(ordinary wear and tear excepted). All of the Salem Tangible Personal Property
is listed on Schedule 1.1C and such schedule contains a list of all tangible
personal property used in the operation of the Salem Station other than Excluded
Assets.

                  7.8      TITLE TO AND CONDITION OF REAL PROPERTY. Schedule
1.2C lists all of the owned Salem Real Property and Salem has good title in and
to the owned Salem Real Property, and such schedule contains a list of all real
property used in the operation of the Salem Station other than Excluded Assets.
All of the Salem Real Property is owned free and clear of all Liens except for
Permitted Liens. Schedule 1.2C lists all of the Salem Real Property Leases.
Except as disclosed on Schedule 7.8, with respect to each of the Salem Real
Property Leases: (a) said lease is and following the Closing, to the best of
Salem's knowledge, will continue to be, legal, valid, binding, enforceable and
in full force and effect; and (b) Salem has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in said lease or its
rights thereunder. To the best of Salem's knowledge, no third party is in
material default in the performance of any of its obligations under any of the
Salem Real Property Leases, and no event or circumstance has occurred which,
with the giving of notice or the lapse of time or both, would constitute a
material default by Salem under any Salem Real Property Lease. All improvements
on the owned Salem Real Property are in material compliance with applicable
zoning and land use laws, ordinances and regulations except for any instances of
noncompliance which do not and will not in the aggregate have a material adverse
effect on such owned Salem Real Property. All such improvements are in good
working condition and repair, comply in all material respects with FCC rules and
regulations and all other applicable Federal, state and local statutes,
ordinances and regulations. To the best of Salem's knowledge, all of the
transmitting towers, ground radials, guy anchors, transmitter buildings and
related improvements located on the owned Salem Real Property are located
entirely on the owned Salem Real Property. Salem has no knowledge of any
pending, threatened or contemplated action to take by eminent domain or
otherwise to condemn any part of the Salem Real Property. Salem has full legal
and practical access to the Salem Real Property.

                  7.9      LICENSES. Except as set forth on Schedule 7.9,
Schedule 1.3C accurately and completely lists all of the Salem Licenses, and
such schedule contains a list of all licenses, permits and applications used in
the operation of or benefiting the Salem Station, other than Excluded Assets.
All of the Salem Licenses are (a) validly issued and in full force and effect,
(b)

                                      -16-
<PAGE>   22

unimpaired by any acts or omissions of Salem or Salem's employees or agents, (c)
free and clear of any restrictions that might limit the full operation of the
Salem Station and (d) Salem has full power and authority to operate the Salem
Station thereunder.

                  7.10     FCC COMPLIANCE. Except as shown on Schedule 7.10, the
Salem Station has been operated at all times by Salem at full authorized power
in material accordance with the terms of the Salem FCC Licenses, the Act, and
all applicable rules, regulations and policies of the FCC. Salem has timely
filed or made all applications, reports, and other disclosures required by the
FCC to be filed or made with respect to the Salem Station. The Salem FCC
Licenses are valid and in full force and effect. Except as shown on Schedule
7.10, no application, action or proceeding is pending for the renewal or
modification of any of the Salem FCC Licenses and, to the best of Salem's
knowledge, there is not now issued or outstanding any investigation or material
complaint against Salem at the FCC as of the date of this Agreement relating to
the Salem Station. Except as disclosed in Schedule 7.10, there is no proceeding
pending at the FCC, and there is no outstanding notice of violation from the FCC
as of the date of this Agreement relating to the Salem Station. All fees payable
to governmental authorities, including FCC annual regulatory fees, pursuant to
the Salem FCC Licenses have been paid and no event has occurred which,
individually or in the aggregate, and with or without the giving of notice or
the lapse of time or both, would constitute grounds for nonrenewal in the
ordinary course or revocation thereof.

                  7.11     COMPLIANCE WITH LAWS. Salem has all licenses, permits
or other authorizations of governmental, regulatory or administrative agencies
required to conduct its business with respect to the Salem Station in all
material respects as currently conducted. No judgment, decree, order or notice
of violation has been issued by any such agency or authority which permits, or
would permit, revocation, modification or termination of any such governmental
permit, license or authorization or which results or could result in any
material impairment of any rights thereunder. With respect to the Salem Station,
Salem is in material compliance with all applicable federal, state, local or
foreign laws, regulations, statutes, rules, ordinances, directives and orders
and any other requirements of any governmental, regulatory or administrative
agency or authority or court or other tribunal applicable to it.

                  7.12     ENVIRONMENTAL MATTERS. Without limiting the
generality of SECTION 7.11, except as disclosed on Schedule 7.12, all of the
Salem Real Property is free of (1) waste or debris; (2) "hazardous waste" or any
"hazardous substance" as defined in federal environmental and occupational
safety and health statutes including CERCLA, as amended from time to time, and
regulations promulgated thereunder, or as defined by CERCLA, and regulations
promulgated thereunder; (3) any substance the presence of which on the Salem
Real Property is prohibited by any federal, state or local environmental law;
and (4) any materials which, under federal, state, or local environmental law,
require special handling in collection, storage, treatment or disposal, each in
quantities or in a manner sufficient to give rise to liability under federal,
state or local government environmental standards or to warrant the imposition
of any penalty, civil or criminal, against Salem. Without limiting the
generality of the foregoing, except as disclosed on Schedule 7.12, there are no
installations on the Salem Real Property which contain PCBs or asbestos in
quantities sufficient to mandate the removal of such PCBs or asbestos in
accordance with federal, state or local government environmental standards or to
warrant the imposition of any penalty, civil or criminal, against Salem. Salem
has delivered to Cox all environmental assessments of the Salem Real Property
owned by Salem.

                                      -17-
<PAGE>   23

                  7.13     ACCURACY OF INFORMATION FURNISHED. No statement by
Salem contained in this Agreement or in any Schedule or Exhibit hereto contains
any material untrue statement of a material fact or omits to state any material
fact which is necessary to make the statements contained herein not materially
misleading.

                  7.14     TAXES. Salem has filed or caused to be filed all
federal income tax returns and all other federal, state, county, local, or city
tax returns which are required to be filed, and Salem has paid or caused to be
paid all taxes as shown on those returns or on any tax assessment received by
Salem to the extent that such taxes have become due, or has set aside on its
books adequate reserves (segregated to the extent required by generally accepted
accounting principles) with respect thereto. Except as disclosed on Schedule
7.14, there are no governmental investigations or other legal, administrative,
or tax proceedings pending, or to the best of Salem's knowledge, threatened,
pursuant to which Salem is or could be made liable for any taxes, penalties,
interest, or other charges, the liability for which could extend to Cox as
transferee of the Salem Assets, and no event has occurred that could impose on
Cox any liability for any taxes, penalties, or interest due or to become due
from Salem. Salem has paid in full or discharged, or caused to be paid in full
or discharged, all taxes (i) relating to the Salem Assets that are required to
be paid (whether or not such taxes are shown as due on any tax return) and (ii)
the non-payment of which could result in a Lien on the Salem Assets in the hands
of Cox, excepting in each case such taxes as will not be due until after the
Closing Date and which are to be prorated pursuant to SECTION 4.2 of this
Agreement. Any Lien for taxes on the Salem Assets the validity of which is being
contested in good faith by appropriate proceedings shall be described on
Schedule 7.14 of this Agreement.

                  7.15     DEFINITION OF KNOWLEDGE. For the purposes of this
Agreement, "to the best of Salem's knowledge" or any similar formulation thereof
means to the actual knowledge of Edward G. Atsinger, III, President and Chief
Executive Officer; John Ehde, Vice President of Engineering; and Gordon Marcy,
General Manager of the Salem Station.

         8.       COVENANTS OF THE PARTIES. The parties hereby covenant to each
other as follows.

                  8.1      FCC APPLICATIONS. Following the date of this
Agreement, the parties shall proceed as expeditiously as practicable to file or
cause to be filed applications with the FCC requesting consent to the assignment
of the Cox FCC Licenses to Salem (the "Cox FCC Application"), an application
with the FCC requesting consent to the assignment of the RRC FCC Licenses to
Salem (the "RRC Application") and an application with the FCC requesting consent
to the assignment of the Salem FCC Licenses to Cox (the "Salem FCC
Application"), such applications to be duly filed with the FCC by the parties
contemporaneously as contingent applications. The parties agree that the Cox FCC
Application, the RRC FCC Application and the Salem FCC Application (together,
the "FCC Applications") shall be filed not later than ten (10) business days
after the date of this Agreement, and that the FCC Applications shall be
prosecuted by each party in good faith and with due diligence. Cox and Salem
shall cooperate with each other in the preparation, filing and prosecution of
the FCC Applications. Should Cox or Salem become aware of facts which could
reasonably be expected to affect or delay in a material and adverse manner, the
FCC's grant of its consent to the FCC Applications, such party shall promptly
notify the other party in writing and in accordance with the notices provisions
set forth in SECTION 15. If the Closing shall not have occurred for any reason
within the original effective period of the consent of the FCC to the FCC
Applications, and neither party shall have

                                      -18-
<PAGE>   24

terminated this Agreement under SECTION 11, the parties shall jointly request
extensions of the effective period of the FCC consents.

                  8.2      STOCK PURCHASE AGREEMENT. CRI shall exercise its
rights and fulfill all of its obligations under the Stock Purchase Agreement at
all times in a timely manner and in good faith and CRI shall take no action that
is materially inconsistent with the terms of this Agreement. CRI agrees to
provide to Salem within two (2) business days of CRI's receipt thereof, copies
of all notices, correspondence and other written communication from the
Stockholders or RRC or from any governmental authority in connection with the
transactions contemplated by the Stock Purchase Agreement. CRI shall provide
Salem five (5) business days' written notice before it exercises any right to
terminate the Stock Purchase Agreement. Prior to the end of such five (5) day
notice period, Salem may request that CRI take and CRI shall take all
commercially reasonable actions necessary to transfer to Salem any and all
rights of CRI under the Stock Purchase Agreement. Salem and Cox hereby agree
that, with respect to the RRC Assets, Salem shall have the full benefit of the
representations and warranties made by Midwestern and the Stockholders in the
Stock Purchase Agreement, including the right to draw against the Holdback
Escrow as defined in the Stock Purchase Agreement. At the Closing and to the
extent CRI is permitted to do so under the terms of the Stock Purchase
Agreement, CRI shall assign to Salem, and Salem shall accept from CRI, the
rights of CRI to indemnification by the Stockholders under the Stock Purchase
Agreement insofar as such rights to indemnification relate to the RRC Assets and
the representations, warranties and covenants of Midwestern and the Stockholders
with respect thereto. To the extent that CRI is not permitted to assign such
indemnification rights to Salem, CRI will cooperate with Salem to provide Salem
with the benefit of such rights and to assist Salem in enforcing such rights
against the Stockholders. CRI further agrees that it will not consent to or
authorize any release of any funds held by the Escrow Agent pursuant to the
Holdback Escrow Agreement (as each such term is defined in the Stock Purchase
Agreement) without first consulting with Salem.

                  8.3      NO SOLICITATION OF THIRD PARTIES . Neither party nor
any of its subsidiaries, nor any of its directors, officers, employees,
representatives or agents shall, directly or indirectly, solicit or initiate
inquiries or proposals from, or enter into any agreement with respect to, or
provide any confidential information to or participate in any discussions or
negotiations with, any corporation, partnership, person or other entity or group
concerning any sale to such party of all or substantially all of the assets of
the Stations owned by it (whether directly or through a merger or sale of stock
of Cox or Salem). The parties will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any third parties
conducted heretofore with respect to any of the foregoing.

                  8.4      ACCESS. Prior to the Closing, each party shall give
to the other party and its representatives full and reasonable access during
normal business hours to all of the party's properties, books, contracts,
reports and records including financial information, in each case relating to
Assets, in order that the parties may have full opportunity to make such
investigation as they desire of such Stations, and each party shall furnish the
other party with such information as such other party may reasonably request in
connection therewith; provided that access to the properties, books, contracts
and records of the RRC Station and RRC shall be subject to the terms of the
Stock Purchase Agreement. The rights of the parties under this Section shall not
be exercised in such a manner as to interfere unreasonably with the business of
either party's Stations.

                                      -19-
<PAGE>   25

                  8.5      INCONSISTENT ACTIONS. Prior to the Closing, neither
Cox nor Salem shall take any action which is materially inconsistent with its
obligations under this Agreement, or that could hinder or delay the consummation
of the transactions contemplated by this Agreement.

                  8.6      COOPERATION. Each party shall use commercially
reasonable efforts to cooperate fully with each other and their respective
counsel and accountants in connection with any actions required to be taken as
part of their obligations under this Agreement, and each party will use
commercially reasonable efforts to consummate the transactions contemplated
hereby and to fulfill its obligations hereunder including without limitation,
each party's obligation to ensure that the transactions contemplated hereby are
accomplished in a manner enabling the transfer of the Cox Assets, the RRC Assets
and the Salem Assets to qualify as part of a Section 1031 Exchange.

                  8.7      CONTROL OF THE STATIONS. Prior to Closing, neither
party shall, directly or indirectly, control, supervise, or direct, or attempt
to control, supervise or direct the operations of the other party's Stations;
those operations, including complete control and supervision of all Station
programs, employees, and policies, shall be the sole responsibility of the
Station's licensee.

                  8.8      RISK OF LOSS. The risk of any loss, damage,
impairment, confiscation, or condemnation of any of the Cox Assets from any
cause whatsoever shall be borne by Cox at all times prior to the Closing. The
risk of any loss, damage, impairment, confiscation, or condemnation of any of
the RRC Assets from any cause whatsoever shall be borne by RRC at all times
prior to the Closing. The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the Salem Assets from any cause whatsoever shall be borne
by Salem at all times prior to the Closing.

                  8.9      THIRD PARTY CONSENTS. Between the date of this
Agreement and the Closing, Cox and Salem shall use their respective commercially
reasonable efforts to obtain the consent of any third party necessary for the
assignment of any contract or agreement to be assigned hereunder. In the event a
consent or waiver required with respect to the assignment of a contract has not
been obtained before the Closing, Cox or Salem (as the case may be) shall use
its commercially reasonable best efforts to provide the other party with the
benefits of any such contract, including without limitation, permitting such
other party to enforce any rights of Cox or RRC or Salem under such contract.

                  8.10     TITLE INSURANCE AND SURVEYS.

                  (a)      With respect to each parcel of Cox Real Property and
with respect to each parcel of RRC Real Property, Salem will obtain at or prior
to Closing, an ALTA Owner's Policy of Title Insurance Form B-1992 (or equivalent
policy acceptable to Salem), issued by a title insurer satisfactory to Salem, in
an amount equal to the fair market value of the property and any improvements
thereon (as reasonably determined by Salem), insuring title to such parcel in
the name of Salem as of the Closing, subject only to liens or encumbrances
expressly permitted by this Agreement; and with respect to each parcel of Salem
Real Property that Salem owns, Cox will obtain at or prior to Closing, an ALTA
Owner's Policy of Title Insurance Form B-1992 (or equivalent policy acceptable
to Cox), issued by a title insurer satisfactory to Cox, in an amount equal to
the fair market value of the property and any improvements thereon (as
reasonably

                                      -20-
<PAGE>   26

determined by Cox), insuring title to such parcel in the name of Cox as of the
Closing, subject only to liens or encumbrances expressly permitted by this
Agreement.

                  (b)      General Requirements as to Title Insurance Policies.
Each title insurance policy obtained by Cox or Salem, as the case may be,
pursuant to this Agreement shall (1) insure title to the Cox Real Property, the
RRC Real Property or the Salem Real Property described in the policy and all
recorded easements benefiting the Cox Real Property, the RRC Real Property or
the Salem Real Property, (2) contain an "extended coverage endorsement" insuring
over the general exceptions customarily contained in title policies, (3) contain
an endorsement insuring that the Cox Real Property, the RRC Real Property or the
Salem Real Property described in the policy is the same real estate shown in the
survey delivered with respect to such property, and (4) contain a "contiguity"
endorsement with respect to any of the Cox Real Property, the RRC Real Property
or the Salem Real Property consisting of more than one record parcel.

                  (c)      Surveys. With respect to each parcel of Cox Real
Property, RRC Real Property or Salem Real Property, as to which a title
insurance policy is to be procured pursuant to this Agreement, Salem will
procure a current survey of the parcel of Cox Real Property and RRC Real
Property, and Cox will procure a current survey of the parcel of Salem Real
Property, prepared by a licensed surveyor and conforming to current ALTA Minimum
Detail Requirements for Land Title Surveys, disclosing the location of all
improvements, easements, party walls, sidewalks, roadways, utility lines, and
other matters customarily shown on such surveys, and showing access
affirmatively to public streets and roads.

                  8.11     COMPLIANCE WITH HSR ACT. If the transactions
contemplated by this Agreement are subject to the filing requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), or the approval by the U.S. Federal Trade Commission (the "FTC") and the
Antitrust Division of the U.S. Department of Justice (the "DOJ"), Cox and Salem
will (i) each make such filings as are required under Title II of the HSR Act as
soon as practicable but in any event within ten (10) days of the date of the
acceptance by Midwestern and the Stockholders of Cox's offer set forth in the
Stock Purchase Agreement, (ii) otherwise promptly comply with the applicable
requirements under the HSR Act, including furnishing all information and filing
all documents required thereunder, (iii) furnish to each other copies of those
portions of the documents filed which are not confidential, and (iv) cooperate
fully and use their respective commercially reasonable efforts to expedite
compliance with the HSR Act.

                  8.12     CONFIDENTIALITY. Each of the parties hereto agrees to
keep the terms and conditions of this Agreement confidential until the filing of
the FCC Applications except (a) for any disclosures to Midwestern and the
Stockholders that may be necessary under the Stock Purchase Agreement, and (b)
as and to the extent required by law, including disclosure requirements of
federal and state securities laws and rules and regulations of securities
markets or as necessary to fulfill its obligations under this Agreement.

                  8.13     FINANCIAL STATEMENTS. To the extent any party
acquiring a Station hereunder is required to provide audited financial
statements regarding such Station pursuant to applicable law including, without
limitation, Rule 3-05 of Regulation S-X of the rules and regulations of the
Securities and Exchange Commission, and to the extent such financial statements
exist and are available to the conveying party, the conveying party (as soon as
is

                                      -21-
<PAGE>   27

reasonably practicable following Closing, but in any event within sufficient
time for the acquiring party to comply with applicable law) shall provide to the
acquiring party a true, correct and complete copy of the audited financial
statements for such Station for the three (3) fiscal years prior to Closing, or,
to the extent the audited financial statements are not within the conveying
party's custody, possession or control, the conveying party (as soon as is
reasonably practicable following Closing, but in any event within sufficient
time for the acquiring party to comply with applicable law) shall provide to the
acquiring party true, correct and complete copies of the financial records for
such Station for the three (3) fiscal years prior to Closing and, provided
management are available, requisite access to management sufficient for the
acquiring party and/or its representatives to create audited financial
statements for the Station.

         9.       CONDITIONS TO SALEM'S OBLIGATIONS. Unless waived by Salem in
writing, all obligations of Salem under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions.

                  9.1      REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of Cox in this Agreement shall be true and
correct in all material respects at and as of the Closing Date, as if made at
and as of such date; Cox shall have performed all obligations and complied with
all covenants in all material respects required by this Agreement to be
performed or complied with by it at or prior to the Closing; and Salem shall
have received from Cox a certificate or certificates in such reasonable detail
as Salem may reasonably request, signed by an officer of Cox and dated the
Closing Date, to the foregoing effect.

                  9.2      APPROVALS OF GOVERNMENTAL AUTHORITIES. Any and all
governmental approvals necessary to consummate the transactions contemplated by
this Agreement shall have been received.

                  9.3      NO ADVERSE PROCEEDINGS. No order shall have been
issued by, and no suit, action or other proceeding against Cox shall be pending
before, any court or governmental agency of competent jurisdiction in which it
is sought to restrain or prohibit any of the transactions contemplated by this
Agreement or to obtain damages or other relief in connection with this Agreement
or the transactions contemplated hereby; provided, however, that if Cox and
Salem mutually determine that any pending suit, action or proceeding seeking to
restrain or prohibit the transactions contemplated hereby is unlikely to succeed
on the merits, then the pendency of such proceeding shall not prevent the
Closing.

                  9.4      CONSENTS. The consents designated as required
consents on Schedule 5.3 shall have been obtained.

                  9.5      CLOSING DOCUMENTS. Cox and RRC shall have executed
and delivered to Salem the documents required to be executed and delivered by it
pursuant to SECTION 4.

                  9.6      FCC CONSENT. The FCC shall have given its consent to
the FCC Applications and to the transactions contemplated hereby.

                  9.7      RESOLUTIONS. Cox shall have delivered to Salem
resolutions adopted by the Board of Directors of Cox and RRC authorizing and
approving the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, certified by the Secretary of such
companies as being true and complete as of the Closing Date.

                                      -22-
<PAGE>   28

                  9.8      HSR ACT. If legally required, all filings with the
FTC and the DOJ pursuant to the HSR Act shall have been made and all applicable
waiting periods with respect to such filings (including any extensions thereof)
shall have expired or been terminated and no actions shall have been instituted
which are pending on the Closing Date by the FTC or DOJ challenging or seeking
to enjoin the consummation of this transaction.

         10.      CONDITIONS TO COX'S OBLIGATIONS. Unless waived by Cox in
writing in its sole discretion, all obligations of Cox under this Agreement are
subject to the fulfillment, prior to or at the Closing, of each of the following
conditions.

                  10.1     REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of Salem in this Agreement shall be true and
correct in all material respects at and as of the Closing Date, as if made at
and as of such date; Salem shall have performed all obligations and complied
with all covenants in all material respects required by this Agreement to be
performed or complied with by it at or prior to the Closing; and Cox shall have
received from Salem a certificate or certificates in such reasonable detail as
Cox may reasonably request, signed by an officer of Salem and dated the Closing
Date, to the foregoing effect.

                  10.2     APPROVALS OF GOVERNMENTAL AUTHORITIES. Any and all
governmental approvals necessary to consummate the transactions contemplated by
this Agreement shall have been received.

                  10.3     NO ADVERSE PROCEEDINGS. No order shall have been
issued, and no suit, action or other proceeding against Salem shall be pending
before, any court or governmental agency of competent jurisdiction in which it
is sought to restrain or prohibit any of the transactions contemplated by this
Agreement or to obtain damages or other relief in connection with this Agreement
or the transactions contemplated hereby; provided, however, that if Salem and
Cox mutually determine that any pending suit, action or proceeding seeking to
restrain or prohibit the transactions contemplated hereby is unlikely to succeed
on the merits, then the pendency of such proceeding shall not prevent the
Closing.

                  10.4     CONSENTS. The consents designated as required
consents on Schedule 7.3 shall have been obtained.

                  10.5     CLOSING DOCUMENTS. Salem shall have executed and
delivered to Cox the documents required to be executed and delivered by it
pursuant to SECTION 4.

                  10.6     FCC CONSENT. The FCC shall have given its consent to
the FCC Applications and the transactions contemplated hereby.

                  10.7     RESOLUTIONS. Salem shall have delivered to
Cox resolutions adopted by the Board of Directors of Salem authorizing and
approving the execution and delivery of the transactions contemplated hereby,
certified by the Secretary of Salem as being true and complete as of the Closing
Date.

                  10.8     HSR ACT. If legally required, all filings with the
FTC and the DOJ pursuant to the HSR Act shall have been made and all applicable
waiting periods with respect to such filings (including any extensions thereof)
shall have expired or been terminated and no

                                      -23-
<PAGE>   29

actions shall have been instituted which are pending on the Closing Date by the
FTC or DOJ challenging or seeking to enjoin the consummation of this
transaction.

                  10.9     STOCK PURCHASE AGREEMENT. The Stock Purchase Closing
shall have occurred.

         11.      TERMINATION. This Agreement may be terminated by either Cox or
Salem, if the terminating party is not then in material default, upon written
notice to the other party, upon the occurrence of any of the following:

                  (a)      Conditions. If on the Closing Date any of the
conditions precedent to the obligations of the terminating party set forth in
this Agreement have not been satisfied in all material respects or waived in
writing by the terminating party.

                  (b)      Judgments. If there shall be in effect on the Closing
Date any final judgment, decree, or order that would prevent or make unlawful
the Closing of this Agreement.

                  (c)      Upset Date. If the Closing shall not have occurred on
or before the date that is twelve (12) months after the date of the Stock
Purchase Agreement.

                  (d)      Breach. If the other party is in material breach of
this Agreement and the breach remains uncured notwithstanding the opportunity to
cure provisions of SECTION 12.7 hereof.

                  (e)      Stock Purchase Agreement. If the Stock Purchase
Agreement has been terminated other than by closing of the transactions
contemplated thereby.

         12.      SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION.

                  12.1     SURVIVAL. All representations and warranties
contained in this Agreement shall survive the Closing for a period of twelve
(12) months. Any investigations by or on behalf of any party hereto shall not
constitute waiver as to enforcement of any representation, warranty, or covenant
contained in this Agreement. No notice or information delivered by either party
shall affect the other party's right to rely on any representation or warranty
made by the party providing such notice or information or relieve such party of
any obligations under this Agreement as the result of a breach of any of its
representations and warranties.

                  12.2     INDEMNIFICATION BY COX. Notwithstanding the Closing,
Cox hereby agrees, subject to SECTION 12.4(E), to indemnify and hold Salem
harmless against and with respect to, and shall reimburse Salem for:

                  (a)      Breach. Any and all losses, liabilities, or damages
resulting from any untrue representation or breach of warranty, to the extent
such representation or warranty survives the Closing, or nonfulfillment of any
covenant by Cox contained herein or in any certificate, document, or instrument
delivered to Salem hereunder.

                  (b)      Obligations. Any and all Excluded Liabilities
relating to the Cox Stations or the RRC Station.

                                      -24-
<PAGE>   30

                  (c)      Ownership. Any and all losses, liabilities (other
than liabilities that are prorated pursuant to SECTION 4.2) or damages resulting
from (i) the operation or ownership of the Cox Stations and the RRC Station
prior to the Closing Date, including any and all liabilities arising under the
Cox Licenses, the RRC Licenses, or the Cox Real Property Leases or the RRC Real
Property Leases which relate to events occurring prior to the Closing Date, or
(ii) the operation or ownership of the Salem Station on and after the Closing
Date, including any and all liabilities arising under the Salem Licenses or the
Salem Real Property Leases which relate to events occurring after the Closing
Date.

                  (d)      Legal Matters. Any and all actions, suits,
proceedings, claims, demands, assessments, judgments, costs, and expenses,
including reasonable legal fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.

                  12.3     LNDEMNIFICATION BY SALEM. Notwithstanding the
Closing, subject to SECTION 12.4(E), Salem hereby agrees to indemnify and hold
Cox harmless against and with respect to, and shall reimburse Cox for:

                  (a)      Breach. Any and all losses, liabilities, or damages
resulting from any untrue representation or breach of warranty, to the extent
such representation or warranty survives the Closing, or nonfulfillment of any
covenant by Salem contained herein or in any certificate, document, or
instrument delivered to Cox hereunder.

                  (b)      Obligations. Any and all Excluded Liabilities
relating to the Salem Station.

                  (c)      Ownership. Any and all losses, liabilities (other
than liabilities that are prorated pursuant to SECTION 4.2), or damages
resulting from (i) the operation or ownership of the Salem Station prior to the
Closing Date, including any and all liabilities arising under the Salem Licenses
or the Salem Real Property Leases which relate to events occurring prior to the
Closing Date, or (ii) the operation or ownership of the Cox Stations and the RRC
Station on and after the Closing Date, including any and all liabilities arising
under the Cox Licenses, the RRC Licenses, or the Cox Real Property Leases or the
RRC Real Property Leases which relate to events occurring after the Closing
Date.

                  (d)      Legal Matters. Any and all actions, suits,
proceedings, claims, demands, assessments, judgments, costs and expenses,
including reasonable legal fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.

                  12.4     PROCEDURE FOR INDEMNIFICATION. The procedure for
indemnification shall be as follows:

                  (a)      Notice. The party seeking indemnification (the
"Claimant") shall promptly give notice to the indemnifying party (the
"Indemnitor") of any claim, whether solely between the parties or brought by a
third party, specifying (i) the factual basis for the claim, and (ii) the amount
of the claim.

                                      -25-
<PAGE>   31

                  (b)      Investigation. With respect to claims between the
parties, following receipt of notice from the Claimant of a claim, the
Indemnitor shall have thirty (30) business days to make any investigation of the
claim that the Indemnitor deems necessary or desirable. For the purposes of this
investigation, the Claimant agrees to make available to the Indemnitor and/or
its authorized representatives the information relied upon by the Claimant to
substantiate the claim. If the Claimant and the Indemnitor cannot agree as to
the validity and amount of the claim within said 30-day period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate legal remedy.

                  (c)      Control. With respect to any claim by a third party
as to which the Claimant is entitled to indemnification hereunder, the
Indemnitor shall have the right at its own expense to participate in or assume
control of the defense of the Claim, and the Claimant shall cooperate fully with
the Indemnitor, subject to reimbursement for actual out-of-pocket expenses
incurred by the Claimant as the result of a request by the Indemnitor. If the
Indemnitor elects to assume control of the defense of any third-party claim, the
Claimant shall have the right to participate in the defense of the claim at its
own expense. If the Indemnitor does not elect to assume control or otherwise
participate in the defense of any third party claim, it shall be bound by the
results obtained by the Claimant with respect to the claim.

                  (d)      Immediate Action. If a claim, whether between the
parties or by a third party, requires immediate action, the parties will make
every effort to reach a decision with respect thereto as expeditiously as
possible.

                  (e)      Limitations on Indemnification.

                           (i) Any indemnity payment hereunder shall be limited
to the extent of the actual loss or damage suffered by the Claimant and shall be
reduced by the amount of any recovery by the Claimant from any third party,
including any insurer, and by the amount of any tax benefits received.

                           (ii) No party shall be entitled to indemnification
hereunder unless and until the amount for which indemnification is owing exceeds
Fifty Thousand Dollars ($50,000) (the "Minimum Loss") in the aggregate for all
such matters; provided, however, that if such amount exceeds the Minimum Loss,
the Indemnitor shall be liable to the Claimant for an amount equal to fifty
percent (50%) of the Minimum Loss and one hundred percent (100%) of any excess
over the Minimum Loss, and provided further, that the aggregate amount for which
a party shall be entitled to indemnification hereunder for a breach by the other
party of its representations, warranties and covenants shall not exceed Twenty
Million Dollars ($20,000,000). No party shall be entitled to indemnification
hereunder for any claim arising from the breach by the other party of its
representations and warranties which is not asserted against the Indemnitor
within twelve (12) months after the Closing Date.

                           (iii) The limitations in SECTION 12.4(E)(II) shall
not apply to the adjustments and prorations to be made pursuant to SECTION 4.2.

                  12.5     SPECIFIC PERFORMANCE. The parties recognize that if
either party refuses to perform its obligations under this Agreement, monetary
damages will not be adequate to compensate the other party for its injury. Each
party shall therefore be entitled to elect, in lieu of

                                      -26-
<PAGE>   32

money damages, to obtain specific performance of the terms of this Agreement. If
any action is brought by either Salem or Cox to enforce this Agreement, Cox or
Salem, as the case may be, shall waive the defense that there is an adequate
remedy at law. Either party shall have the right to obtain specific performance
of the terms of this Agreement without being required to prove actual damages,
post bond or furnish other security.

                  12.6     OPPORTUNITY TO CURE. Neither party shall have the
right to terminate this Agreement as a result of the other party's default
unless the terminating party shall have given the defaulting party written
notice specifying in reasonable detail the nature of the default and shall have
afforded the defaulting party thirty (30) days (the "Cure Period") to cure the
default or to undertake to cure the default in a commercially reasonable manner
during the Cure Period (if it cannot be reasonably cured during the Cure Period)
and such party pursues said cure with reasonable diligence after the Cure
Period.

                  12.7     RIGHTS UNDER STOCK PURCHASE AGREEMENT. Nothing in
this SECTION 12 shall be deemed to limit or restrict the exercise by Salem of
any rights to indemnification it may enjoy under the terms of the Stock Purchase
Agreement, as contemplated by SECTIONS 4.1(E) and 8.2 hereof, in accordance with
and subject to the terms of the Stock Purchase Agreement.

         13.      TAXES, COSTS AND EXPENSES. Each party shall bear its own
legal, accounting and other professional expenses in connection with the
negotiation, preparation and consummation of this Agreement and the transactions
contemplated hereby. All other expenses and costs including but not limited to
the HSR Act filing fee, FCC application filing fees, title insurance and survey
expenses, transfer and use taxes, sales taxes, documentary stamps and recording
fees shall be aggregated and paid one-half by Cox and one-half by Salem as part
of the adjustments and prorations to be made pursuant to SECTION 4.2.

         14.      BENEFIT OF AGREEMENT; ASSIGNMENT. No party shall assign its
interest under this Agreement, by operation of law or otherwise, without the
written consent of the other party, such consent not to be unreasonably
withheld, provided, however, that either party without obtaining the other
party's consent may assign all or a portion of its rights and/or obligations to
a corporation, partnership or other business entity that controls, is controlled
by, or is under common control with such party, and further provided that Cox,
RRC, or Salem may assign all or a portion of its rights but not its obligations
to a qualified intermediary as defined in Treasury Regulation Section 1.1031(k)
- 1(g)(4). Subject to the foregoing, this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by the parties hereto and their respective
heirs, successors and assigns.

         15.      NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement, shall be
in writing and shall be deemed to have been duly given upon the hand delivery
thereof during business hours, or upon the earlier of receipt or three (3) days
after posting by registered mail or certified mail, return receipt requested, or
on the next business day following delivery to a reliable or recognized air
freight delivery service, in each case addressed as follows.

                                      -27-
<PAGE>   33

If to Cox or CBI:                   Robert F. Neil
                                    President
                                    Cox Radio, Inc.
                                    1400 Lake Hearn Drive, N.E.
                                    Atlanta, Georgia 30319

with a copy to:                     Kevin F. Reed, Esq.
                                    Dow, Lohnes & Albertson, PLLC
                                    1200 New Hampshire Avenue, N.W.
                                    Suite 800
                                    Washington, D.C. 20036-6802

If to Salem:                        Jonathan Block, Esq.
                                    General Counsel
                                    Salem Communications Corp.
                                    4880 Santa Rosa Road
                                    Suite 300
                                    Camarillo, California 93012

with a copy to:                     James P. Riley, Esq.
                                    Fletcher, Heald & Hildreth, P.L.C.
                                    1300 North 17th Street
                                    11th Floor
                                    Arlington, VA 22209

Any party may, with written notice to the other, change the place for which all
further notices to such party shall be sent. All costs and expenses for the
delivery of notices hereunder shall be borne and paid for by the delivering
party.

         16.      SEVERABILITY. All agreements and covenants herein are
severable. In the event that any provision of this Agreement should be held to
be unenforceable, the validity and enforceability of the remaining provisions
hereof shall not be affected thereby.

         17.      ENTIRE AGREEMENT. Except as herein expressly provided, this
Agreement embodies the entire agreement and understanding among Salem and Cox
and supersedes all prior agreements and understandings, whether oral or in
writing, with respect to the purchase and sale of the Assets.

         18.      GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of Georgia, without reference to the
conflict of law principles thereof.

         19.      EXHIBITS. All Exhibits, Schedules, collateral documents or
instruments attached to this Agreement or to be provided at the Closing in the
form of an exhibit attached to this Agreement, shall be deemed a part of this
Agreement and incorporated herein, where applicable, as if fully set forth
herein.

         20.      COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which when taken together, shall have the same effect as
if the signature on each counterpart were upon the same instrument.

                                      -28-
<PAGE>   34

         21.      INTENTIONALLY OMITTED.

         22.      AMENDMENT; WAIVER. This Agreement (including the Schedules and
Exhibits hereto) may not be amended, supplemented or otherwise modified, nor may
any party hereto be relieved of any of its liabilities or obligations hereunder,
except by a written instrument duly executed by the parties hereto. Any such
written instrument entered into in accordance with the provisions of the
preceding sentence shall be valid and enforceable notwithstanding the lack of
separate legal consideration therefor. No waiver by any party of any of the
provisions hereof shall be effective unless explicitly set forth in writing and
executed by the party so waiving. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.

         23.      ATTORNEY'S FEES. In the event of a dispute between or among
the parties hereto arising out of or related to this Agreement or the
interpretation or enforcement of this Agreement, the prevailing party shall be
entitled to recover reasonable attorney's fees, costs and expenses from the
other party.

         24.      DEFINED TERMS.
<TABLE>
<S>                                                      <C>
"Act"                                                    ss. 5.10
"Agreement"                                              Preamble
"Appraisals"                                             ss. 1.7(a)
"Appraiser"                                              ss. 1.7(a)
"Assets"                                                 ss. 1.5(a)
"CERCLA"                                                 ss. 5.12
"Claimant"                                               ss. 12.4(a)
"Closing Date"                                           ss. 4
"Closing"                                                ss. 4
"Code"                                                   Recitals
"Cox"                                                    Preamble
"Cox Assets"                                             ss. 1.3
"Cox FCC Application"                                    ss. 8.1
"Cox FCC Licenses"                                       ss. 1.3
"Cox Licenses"                                           ss. 1.3
"Cox Proration Schedule"                                 ss. 4.2(c)
"Cox Real Property"                                      ss. 1.2
"Cox Real Property Leases"                               ss. 1.2
"Cox Records"                                            ss. 1.1
"Cox Stations"                                           Recitals
"Cox Tangible Personal Property"                         ss. 1.1
"Cox's Proration Amount"                                 ss. 4.2(d)
"CRI"                                                    Preamble
"Cure Period"                                            ss. 12.6
"CXR"                                                    Preamble
"DOJ"                                                    ss. 8.11
"Excluded Assets"                                        ss. 1.5(b)
"Excluded Liabilities"                                   ss. 1.6
"FCC"                                                    Recitals
</TABLE>

                                      -29-
<PAGE>   35

<TABLE>
<S>                                                      <C>
"FCC Applications"                                       ss. 8.1
"FTC"                                                    ss. 8.11
"HSR Act"                                                ss. 8.11
"Indemnitor"                                             ss. 12.4(a)
"Liens"                                                  ss. 1.1
"Midwestern"                                             Recitals
"Minimum Loss"                                           ss. 12.4(e)(ii)
"Notice of Disagreement"                                 ss. 4.2(c)
"Permitted Liens"                                        ss. 1.1
"RRC"                                                    Recitals
"RRC Assets"                                             ss. 1.3
"RRC Documents"                                          ss. 6.3
"RRC FCC Application                                     ss. 8.1
"RRC FCC Licenses"                                       ss. 1.3
"RRC Licenses"                                           ss. 1.3
"RRC Real Property"                                      ss. 1.2
"RRC Real Property Leases"                               ss. 1.2
"RRC Records"                                            ss. 1.1
"RRC Station"                                            Recitals
"RRC Tangible Personal Property"                         ss. 1.1
"Salem"                                                  Preamble
"Salem Assets"                                           ss. 1.5
"Salem FCC Application"                                  ss. 8.1
"Salem FCC Licenses"                                     ss. 1.4
"Salem Licenses"                                         ss. 1.4
"Salem Proration Schedule"                               ss. 4.2(d)
"Salem Real Property"                                    ss. 1.2
"Salem Real Property Leases"                             ss. 1.2
"Salem Records"                                          ss. 1.1
"Salem Tangible Personal Property"                       ss. 1.1
"Salem's Proration Amount"                               ss. 4.2(c)
"SCC"                                                    Preamble
"Stations"                                               Preamble
"STB"                                                    Recitals
"Stock Purchase Agreement"                               Recitals
"Stock Purchase Closing"                                 Recitals
"Stockholders"                                           Recitals
"To the best of Salem's knowledge"                       ss. 7.15
"To the best of Cox's knowledge"                         ss. 5.15
</TABLE>

                [Remainder of this page intentionally left blank]

                                      -30-
<PAGE>   36

         IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first above written.

                                     COX RADIO, INC.

                                     By:
                                         --------------------------------------
                                         Name:
                                         Title:

                                     CXR HOLDINGS, INC.

                                     By:
                                         --------------------------------------
                                         Name:
                                         Title:

                                     SALEM COMMUNICATIONS CORPORATION

                                     By:
                                         --------------------------------------
                                         Name:
                                         Title:

                                     SOUTH TEXAS BROADCASTING, INC.

                                     By:
                                         --------------------------------------
                                         Name:
                                         Title:

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