METRO NETWORKS INC, S-1/A, 1996-09-24

METRO NETWORKS INC
S-1/A, 1996-09-24
COMMUNICATIONS SERVICES, NEC

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 24, 1996

REGISTRATION NO. 333-6311
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO.2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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METRO NETWORKS, INC.
(Exact name of Registrant as specified in its charter)

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<S> <C> <C>
DELAWARE 4899 76-0505148
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code Number)
organization)
</TABLE>

2800 POST OAK BOULEVARD
SUITE 4000
HOUSTON, TEXAS 77056
(713) 407-6000

(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)

DAVID I. SAPERSTEIN
CHIEF EXECUTIVE OFFICER
METRO NETWORKS, INC.
2800 Post Oak Boulevard
Suite 4000
Houston, Texas 77056
(713) 407-6000

(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES TO:

<TABLE>
<S> <C>
Neil A. Torpey, Esq. Robert E. Buckholz, Jr.,
Paul, Hastings, Janofsky & Esq.
Walker Sullivan & Cromwell
399 Park Avenue 125 Broad Street
New York, New York 10022 New York, New York 10004
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /

CALCULATION OF REGISTRATION FEE

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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE AGGREGATE OFFERING AMOUNT OF REGISTRATION
REGISTERED PRICE(1) FEE
<S> <C> <C>
Common Stock, $.001 par value.......... $115,920,000 $39,656
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) of the Securities Act of 1933, as amended.

------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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<PAGE>
METRO NETWORKS, INC.
CROSS-REFERENCE SHEET
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF PART I OF FORM S-1

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<CAPTION>
REGISTRATION STATEMENT ITEM LOCATION IN PROSPECTUS
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<C> <S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus....................... Front Cover Page of Registration Statement;
Cross-Reference Sheet; Outside Front Cover Page of
Prospectus

2. Inside Front and Outside Back Cover Pages of
Prospectus........................................... Inside Front and Outside Back Cover Pages of
Prospectus

3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges............................ Prospectus Summary; Risk Factors; The Company;
Selected Consolidated Financial Data

4. Use of Proceeds...................................... Use of Proceeds

5. Determination of Offering Price...................... Underwriting

6. Dilution............................................. Dilution

7. Selling Security Holders............................. Principal and Selling Stockholders

8. Plan of Distribution................................. Underwriting

9. Description of Securities to be Registered........... Description of Capital Stock

10. Interests of Named Experts and Counsel............... *

11. Information with Respect to the Registrant........... Outside Front Cover Page of Prospectus; Prospectus
Summary; Risk Factors; The Company; Capitalization;
Selected Financial and Operating Data; Management's
Discussion and Analysis of Financial Condition and
Results of Operations; Business; Management;
Principal and Selling Stockholders; Certain
Transactions; Description of Capital Stock; Shares
Eligible for Future Sale; Available Information;
Combined Financial Statements

12. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities....................... *
</TABLE>

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* Not applicable.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>

SUBJECT TO COMPLETION, DATED SEPTEMBER 24, 1996

7,200,000 SHARES

METRO NETWORKS, INC.

[LOGO]

COMMON STOCK
(PAR VALUE $.001 PER SHARE)

--------------

Of the 7,200,000 shares of Common Stock offered hereby, 3,600,000 shares are
being sold by the Company and 3,600,000 shares are being sold by the Selling
Stockholder. The Company will not receive any of the proceeds from the sale of
shares by the Selling Stockholder. See "Principal and Selling Stockholders."

Prior to this offering, there has been no public market for the Common Stock
of the Company. It is currently estimated that the initial public offering price
per share will be between $13.00 and $15.00. For factors to be considered in
determining the initial public offering price, see "Underwriting."

SEE "RISK FACTORS" BEGINNING ON PAGE 11 HEREOF FOR CERTAIN CONSIDERATIONS
RELEVANT TO AN INVESTMENT IN THE COMMON STOCK.

Application will be made for quotation of the Common Stock on the Nasdaq
National Market under the symbol "MTNT."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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INITIAL PUBLIC UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) COMPANY(2) STOCKHOLDER(2)
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Per Share........................... $ $ $ $
Total(3)............................ $ $ $ $
</TABLE>

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(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.

(2) Before deducting estimated expenses of $700,000 payable by the Company.

(3) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional 1,080,000 shares of Common Stock at the initial public
offering price per share, less the underwriting discount, solely to cover
over-allotments. If such option is exercised in full, the total initial
public offering price, underwriting discount and proceeds to the Company
will be $ , $ and $ , respectively. See "Underwriting".

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The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in New York, New York on or about
, 1996, against payment therefor in immediately available funds.

GOLDMAN, SACHS & CO.

CS FIRST BOSTON
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

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The date of this Prospectus is , 1996.
<PAGE>
EDGAR DESCRIPTION

[A map of the United States is depicted with circles used to indicate each
of Metro Networks Markets which are Phoenix and Tucson, Arizona; Los Angeles,
Modesto, Oxnard, Sacramento, Riverside/San Bernadino, San Diego, San Francisco,
San Jose and Stockton, California; Denver, Colorado; Danbury, Hartford and New
Haven, Connecticut; Wilmington, Delaware; Daytona Beach, Jacksonville, Miami/Ft.
Lauderdale, Orlando, Tampa/St. Petersburg/Clearwater and West Palm Beach,
Florida; Altanta, Georgia; Chicago, Illinois; Indianapolis, Indiana; Louisville,
Kentucky; Baltimore, Maryland; Boston, Massachusetts; Detroit, Michigan;
Minneapolis/St. Paul, Minnestoa; Kanasas City and St. Louis, Missouri; Omaha,
Nebraska; Las Vegas, Nevada; Monmouth/Ocean counties, New Jersey; Albuquerque,
New Mexico; Buffalo, New York, Rochester and Nassau County, New York;
Charlotte/Gastonia, North Carolina; Cincinnati, Cleveland/Akron/ Columbus, Ohio;
Oklahoma City, Oklahoma; Portland, Oregon; Philadelphia and Pittsburgh,
Pennsylvania; Providence, Rhode Island; Memphis and Nashville, Tennessee;
Austin, Dallas/Ft. Worth, Houston/Galveston, San Antonio, Texas; Salt Lake City,
Utah; Richmond, Norfolk/Virginia Beach, Virginia; Seattle/Tacoma, Washington;
Washington D.C. and Milwaukee, Wisconsin.

Color photographs of the types of news and information services that the
Company's networks may provide to its affiliates will be presented. These
include: a blazing fire, traffic jams, sporting events, weather updates and
information on current events. Certain text from the overview section of the
prospectus will also be repeated here. The logos of the Company's various
information services will also be presented including: Metro Video News, Metro
Network News, Metro Networks, Metro Traffic Control and Metro Information
Services.]

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The Company intends to furnish to its shareholders annual reports containing
audited financial statements and quarterly reports containing unaudited interim
financial information for the first three fiscal quarters of each fiscal year.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES 10B-6,
10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

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PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND COMBINED FINANCIAL STATEMENTS AND NOTES THERETO, APPEARING
ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN
THIS PROSPECTUS ASSUMES THAT THE OVER-ALLOTMENT OPTIONS GRANTED TO THE
UNDERWRITERS ARE NOT EXERCISED. IN ADDITION, UNLESS THE CONTEXT REQUIRES
OTHERWISE, REFERENCES TO THE COMPANY REFER TO METRO NETWORKS, INC., A DELAWARE
CORPORATION, AND ITS SUBSIDIARY AFTER THE REORGANIZATION (AS DEFINED HEREIN). A
GLOSSARY OF CERTAIN TERMS APPEARING HEREIN HAS BEEN INCLUDED IN THIS PROSPECTUS.
SEE "GLOSSARY."

THE COMPANY

OVERVIEW

The Company is the largest provider of traffic reporting services and is a
leading supplier of local news, sports, weather and other information reporting
services to the television and radio broadcast industries. The Company's
information reports, which are customized to meet the specific needs of each of
the Company's individual radio and television station affiliates, are presently
being broadcast by approximately 1,275 radio station affiliates and 110
television station affiliates. The Company provides local broadcast information
reports in 47 of the 50 largest MSA markets in the United States. In exchange
for the Company's information reports, radio and television station affiliates
provide commercial airtime inventory to the Company. The packaging and sale of
this commercial airtime inventory accounts for substantially all of the
Company's revenues. See "-- Advertising Sales and Marketing," "Business" and
"Glossary."

Because the Company has numerous radio station affiliates in each of its
markets (averaging 21 affiliates per market), the Company believes that its
broadcasts of local traffic information enable advertisers to reach more people,
more often, in a higher impact manner than can be achieved using other
advertising media. The Company's information reports are broadcast daily in 60
MSA markets and are heard by more than 100 million people (age 12 and over).
Such reports and the Company's commercial messages are listened to by an average
of 88% of the population (age 12 and over) in its markets. The Company's large
network of affiliates offers advertisers the opportunity to reach a broad-based
local, regional or national audience, through a single purchase of commercial
airtime inventory. See "Business."

The Company offers advertisers three different networks on which to
broadcast their advertisements: the network of radio stations (the "Radio
Traffic Services Network") which broadcasts the Company's traffic information
reports (the "Radio Traffic Services"); the network of radio stations (the
"Expanded Radio Services Network") which broadcasts an array of customized local
news, sports, weather and other programming services (the "Expanded Radio
Services"); and the network of television stations (the "MetroTV Network") which
broadcasts the Company's television traffic services and video news services
(the "Television Traffic Services" and "Video News Services" and collectively,
the "MetroTV Services"). The Company believes that the Expanded Radio Services
Network and the MetroTV Network, both of which are currently being developed,
will become separate broad-based networks through which the Company will be able
to acquire, package and sell additional commercial airtime inventory. See
"Business -- Operating Strategy" and " -- Advertising Sales and Marketing."

Since its founding in 1978, the Company has demonstrated growth in revenues
and EBITDA (I.E., earnings before other expense (income), interest expense,
taxes, depreciation and amortization). For the six months ended June 30, 1996,
the Company had revenues of $50.1 million, EBITDA of $11.5 million and adjusted
EBITDA (I.E., EBITDA plus predecessor shareholder costs) of $12.2 million. For
the year ended December 31, 1995, the Company had pro forma revenues of $78.1
million, pro forma EBITDA of $10.0 million and pro forma adjusted EBITDA of
$12.1 million. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Selected Financial and Operating Data."

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OPERATING STRATEGY

The Company's strategy is to realize operating efficiencies by (i) expanding
geographically; (ii) increasing the number of affiliates using the Radio Traffic
Services within existing markets; (iii) developing the Expanded Radio Services;
(iv) developing the MetroTV Services; and (v) continuing to strengthen
marketing, sales and inventory management operations.

-EXPAND GEOGRAPHICALLY. The Company, which currently operates in 60 MSA
markets in the United States, including 54 of the largest 75 MSA markets,
believes that the economic model for its local information services
business is viable in each of the largest 75 MSA markets. Since July 1994,
the Company has entered 16 new markets and the Company intends to expand
into the remaining 21 of the largest 75 MSA markets over the next three
years through strategic acquisitions and start-ups. The Company has
recently entered into two letters of intent to acquire certain assets of
Airborne Traffic Network, Inc. ("ATN") and Wisconsin Information Systems,
Inc. ("WIS") (collectively, the "Pending Acquisitions"). The Company is
always examining acquisition and expansion opportunities. See "-- Recent
Developments."

-INCREASE THE NUMBER OF AFFILIATES USING THE RADIO TRAFFIC SERVICES WITHIN
EXISTING MARKETS. The Company believes there are substantial opportunities
for continued growth in the Radio Traffic Services Network. As of June 30,
1996, the Company provided its Radio Traffic Services to approximately
1,230 radio station affiliates, an increase from approximately 900 radio
station affiliates as of December 31, 1994. The Company believes that
opportunities are available to increase its market penetration by
establishing affiliate relationships with additional radio stations
nationwide. Its current Radio Traffic Services Network represents 48.7% of
the approximately 2,524 radio stations in the 60 MSA markets in which the
Company operates.

-DEVELOP THE EXPANDED RADIO SERVICES. Having established a substantial
market presence in the Radio Traffic Services, the Company began during
1994 to leverage this business by offering the Expanded Radio Services to
its network of radio station affiliates. As of June 30, 1996, the Company
provided the Expanded Radio Services to more than 200 radio station
affiliates in 28 MSA markets, an increase from 92 radio station affiliates
in 17 MSA markets as of December 31, 1994. The Company intends to expand
these services to all of its markets by the end of 1997.

-DEVELOP THE METROTV SERVICES. The Company has provided Television Traffic
Services to the MetroTV Network for over ten years. As of June 30, 1996,
this network consisted of 110 television stations in 47 DMA markets, an
increase from 71 television stations in 33 DMA markets as of December 31,
1994. In connection with its core Radio Traffic Services business, the
Company developed an extensive array of video surveillance and broadcast
equipment, including jet helicopters, broadcast quality remote and
omni-directional aircraft-mounted camera systems, mobile units,
computer-generated graphic displays and broadcasting technology. In 1995,
the Company began to use this infrastructure to offer the Video News
Services to its network of television station affiliates, and is currently
providing these services to 16 of its television station affiliates in 12
of its 47 DMA markets. The MetroTV Services include full service, 24 hours
per day/7 days per week video coverage from camera crews in the Company's
aircraft and mobile ground units covering breaking news stories. The
Company intends to expand the Video News Services into the 25 largest DMA
markets in the United States over the next three years.

-CONTINUE TO STRENGTHEN MARKETING, SALES AND INVENTORY MANAGEMENT
OPERATIONS. Over the past year, the Company has invested in, and continues
to initiate and implement, new operating strategies and systems to increase
revenues and EBITDA. In order to increase the percentage of the Company's
commercial airtime inventory sold, the Company has (i) increased its sales
force from approximately 70 sales representatives as of December 31, 1994
to approximately 136 sales representatives as of June 30, 1996; (ii)
developed a corporate marketing department to support the efforts of its
sales representatives by providing extensive training, research,
sales/marketing materials and analysis; (iii) hired additional general
managers and sales managers to better manage the activities of its sales
representatives and enhance its affiliate relations; (iv) fully

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automated its commercial airtime inventory management system to improve
inventory control and pricing; and (v) reduced the level of reciprocal
arrangements (the exchange of commercial airtime for goods and services) to
focus sales representatives on cash revenue business.

PROGRAMMING

Every aspect of the Company's information reports (including the length of
report, content of report, specific geographic coverage area, time of broadcast,
number of reports aired per day, broadcaster's style, etc.) is customized to
meet each individual affiliate's requirements. The Company typically works
closely with the program directors, news directors, and general managers of its
affiliates to ensure that the Company's services meet its affiliates' quality
standards. The Company and its affiliates jointly select the on-air broadcasters
to ensure that each broadcaster's style is appropriate for the station's format.
The Company's broadcasters often become integral "personalities" on such
affiliates' stations as a result of their significant on-air presence and
interaction with the stations' on-air personnel. In order to realize operating
efficiencies, the Company endeavors to utilize its professional broadcasters on
multiple affiliate stations within a particular market. Generally, each of the
Company's broadcasters delivers reports to between two and four of the Company's
affiliates.

The Company does not require its affiliates to identify the Company as the
supplier of its information reports. This provides the Company's affiliates with
a high degree of customization and flexibility, as each affiliate has the right
to present the information reports provided by the Company as if the affiliate
had generated such reports with its own resources. For example, multiple
affiliates in a single market may suggest that the Company's infrastructure,
including its airplanes, helicopters and broadcasters, are those of the
affiliate. See "Business -- Programming".

INFRASTRUCTURE

The Company believes that its extensive fleet of aircraft and other
information-gathering technology and broadcast equipment have allowed the
Company to provide high quality programming, enabling it to retain and expand
its affiliate base. In the aggregate, the Company utilizes approximately 69
fixed-wing aircraft, 17 helicopters, 30 mobile units, 7 airborne camera systems,
16 fixed-position camera systems, 50 broadcast studios and 1,177 broadcasters
and producers. The Company also maintains a staff of computer programmers and
graphics experts to supply customized graphics and other visual programming
elements to television stations. In addition, the Company's operating centers
and broadcast studios have sophisticated computer technology, video and
broadcast equipment and cellular and wireless technology which enable the
Company's broadcasters to deliver accurate and timely reports to its affiliates.
The infrastructure and resources dedicated to a specific market by the Company
are determined by the size of the market, the number of affiliates the Company
serves in the market and the type of services being provided. See "Business --
Infrastructure."

ADVERTISING SALES AND MARKETING

The Company's primary source of revenue is the packaging and sale to
advertisers of commercial airtime inventory provided to the Company by its
affiliates in exchange for its information reports. The Company's standard radio
affiliate contract, which is generally for a term of one year or longer,
typically requires that for each report provided by the Company, the radio
station provide the Company with an opening announcement and a ten second
commercial message (or "sponsorship") to be broadcast as part of the report. The
Company packages its radio commercial airtime inventory for sale to advertisers
on a market-wide, regional or national basis and then broadcasts these
sponsorship advertisements among its entire network of affiliates within a
particular market on a fair and equal rotation (i.e., each advertiser receives
its pro rata share of advertisements on each of the Company's affiliates in the
relevant market). The Company believes that its radio sponsorships, which are
typically sold in multiple "sponsorship" packages (generally 125, 250 or 500
sponsorships broadcast over four week periods in each market), provide
advertisers with an effective and efficient medium to reach a high percentage of
the population in its markets. The Company's 500 sponsorship package (which the
Company believes is the most frequently purchased package) reaches an average of
approximately 70% of the population (age 12 and over) in the Company's MSA
markets. The Company's advertisers have the ability to target

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individual markets and customize their commercial messages by station format.
Because most of the sponsorships are read live, advertisers can change their
messages on short notice. The Company believes that its radio advertising
networks have a high degree of impact because the commercial messages are
imbedded in the affiliates' programming and are generally delivered live by the
Company's broadcasters during peak drive periods. The Company provides its
MetroTV Services to television stations in exchange for thirty second commercial
airtime inventory. The amount and day-part placement of the commercial airtime
inventory that the Company receives from television stations varies by market
and by the type of service provided by the Company.

In each of the markets in which it conducts operations, the Company
maintains an advertising sales office as part of its operations center. The
Company's advertising sales force is able to sell available commercial airtime
inventory in any and all of the Company's markets in addition to selling such
inventory in each local market. The Company believes this affords its sales
representatives an advantage over certain of their competitors. The Company's
advertising sales force is comprised of approximately 136 sales representatives.
Although the Company typically has two or three sales representatives in an
individual market, the number of sales representatives ranges from one to eight
depending on the size of the market and the number of potential regional and
national advertising clients headquartered in the market. Specialized programs
and marketing campaigns, which support nationwide sales and other special forms
of advertising, are managed from the Company's headquarters in Houston, Texas.

As the Company's business has developed, the Company has sold increasing
amounts of its commercial airtime inventory to regional/national advertisers.
For the year ended December 31, 1994, approximately 25% of the Company's
advertising revenue was attributable to regional/national advertisers, with the
balance attributable to local advertisers. For the six months ended June 30,
1996, sales to regional/national advertisers accounted for approximately 50% of
total advertising revenues. See "Business -- Advertising and Sales".

RECENT DEVELOPMENTS

Since July 1994, through strategic acquisitions and new start-ups, the
Company has expanded into 16 new markets, comprised of 14 new markets as a
result of strategic acquisitions and two new markets as a result of new
start-ups. In this period, the Company has made six strategic acquisitions
(which accounted for new markets including Salt Lake City, Utah; Phoenix and
Tucson, Arizona; Las Vegas, Nevada; St. Louis, Missouri; Milwaukee, Wisconsin;
Nashville and Memphis, Tennessee; Louisville, Kentucky; Charlotte, North
Carolina; Providence, Rhode Island; Hartford, Danbury and New Haven,
Connecticut) and made an additional strategic acquisition to expand its
operations in Atlanta, Georgia. The aggregate purchase price for these
acquisitions was approximately $20 million. On a pro forma basis, the operations
acquired by the Company in this period generated revenues of approximately $15
million and EBITDA of approximately $3 million for the year ended December 31,
1995. See "Business -- Acquisitions".

-SALT LAKE CITY ACQUISITION. On January 3, 1996, the Company acquired
Aeromedia, Inc. ("Aeromedia"). As of June 30, 1996, the Company (through
Aeromedia) provided traffic services to 22 radio station and two television
station affiliates in Salt Lake City, Utah, the thirty-fifth largest MSA
market.

-NEW ENGLAND ACQUISITION. On January 4, 1996, the Company acquired a group
of companies (the "Traffic Net Group"). As of June 30, 1996, the Company
(through the Traffic Net Group) provided local traffic information services
to approximately 70 radio station and three television station affiliates
in and around the Hartford, Connecticut area (the forty-first largest MSA
market), and Providence, Rhode Island (the thirty-first largest MSA
market). In addition, one of the companies in the Traffic Net Group
provides weather reporting services to approximately 46 radio station
affiliates in Boston, Massachusetts (the tenth largest MSA market), and
throughout New England. See "Business -- Acquisitions."

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-KANSAS CITY AND OMAHA LETTER OF INTENT. On June 20, 1996, the Company
entered into a letter of intent to acquire all the assets of ATN for
approximately $1.5 million. As of June 30, 1996 ATN provided traffic
services to 16 radio station affiliates in Kansas City, Missouri and Omaha,
Nebraska.

-OKLAHOMA CITY, ALBUQUERQUE, OMAHA AND MILWAUKEE LETTER OF INTENT. On July
24, 1996, the Company entered into a letter of intent to acquire all the
assets of WIS for approximately $650,000. As of June 30, 1996 WIS provided
traffic services to eight radio station affiliates and one television
station affiliate in Oklahoma City, 12 radio station affiliates and one
television affiliate in Albuquerque, eight radio station affiliates in
Omaha and one television station affiliate in Milwaukee.

REORGANIZATION

From 1978 until the closing of the offering, the business of the Company
will have been operated through Metro Traffic Control, Inc., a Maryland
corporation; Metro Networks, Ltd., a Texas limited partnership, Metro Video
News, Inc., a Texas corporation; Metro Reciprocal, Inc., a Texas corporation and
their subsidiaries (collectively, the "Predecessor Companies"). Until the
closing of this offering, all of the equity interests in the Predecessor
Companies will be owned by David I. Saperstein, the Chairman and Chief Executive
Officer of the Company, and certain trusts (the "Trusts") created for the
benefit of Mr. Saperstein's children (collectively, the "Saperstein Family").

The principal executive offices of Metro Networks, Inc. are located at 2800
Post Oak Boulevard, Suite 4000, Houston, Texas 77056. The telephone number at
that location is (713) 407-6000.

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THE OFFERING

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<S> <C>
Common Stock offered by the Company.......... 3,600,000 shares

Common Stock offered by the Selling
Stockholder................................. 3,600,000 shares

Common Stock outstanding after the
offering.................................... 15,500,357 shares(1)

Proposed Nasdaq National Market Symbol....... MTNT

Use of Proceeds.............................. To reduce bank indebtedness, to fund growth
through pending and potential acquisitions
and entry into new markets and for working
capital purposes. See "Use of Proceeds."

Risk Factors................................. See "Risk Factors" for a discussion of
certain considerations relevant to an
investment in the Common Stock.
</TABLE>

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(1) Does not include 1,000,000 shares of Common Stock reserved for issuance upon
the exercise of stock options to be granted to employees under the Company's
1996 Incentive Stock Option Plan (the "1996 Plan"). See "Management --
Executive Compensation." Does not include 2,549,750 shares of Series A
Convertible Preferred Stock. See "Business -- Reorganization", "Description
of Capital Stock" and "Certain Transactions."

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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OTHER OPERATING DATA

<TABLE>
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YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
--------------------------------------------- JUNE 30,
PRO FORMA ----------------------------
1993 1994 1995 1995(1) 1995 1996
--------- --------- ---------- ----------- ----------- ---------------
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Advertising revenues................. $ 47,905 $ 60,048 $ 72,433 $ 78,102 $ 30,623 $ 50,077
Broadcasting costs................... 27,384 32,239 41,286 43,243 19,816 24,173
Marketing expense.................... 8,848 11,355 14,504 15,980 6,821 10,101
General and administrative expense... 6,994 5,939 7,193 8,869 4,055 4,350
Depreciation and amortization
expense............................. 1,814 1,302 3,981 5,920 1,694 2,936
--------- --------- ---------- ----------- ----------- ---------------
Total operating costs................ 45,040 50,835 66,964 74,012 32,386 41,560
Income (loss) from operations........ 2,865 9,213 5,469 4,090 (1,763) 8,517
Other expense (income)............. 238 (164) (137) (123) (93) (66)
Interest expense................... 145 293 1,260 1,838 421 934
--------- --------- ---------- ----------- ----------- ---------------
Income (loss) before tax provision... 2,482 9,084 4,346 2,375 (2,091) 7,649
Income tax provision............... 1,066 2,179 1,036 808 229 573
Income (loss) from continuing
operations.......................... 1,416 6,905 3,310 1,567 (2,320) 7,076
--------- --------- ---------- ----------- ----------- ---------------
Discontinued operations............ (561) -- -- -- -- --
--------- --------- ---------- ----------- ----------- ---------------
Net income (loss).................... $ 855 $ 6,905 $ 3,310 $ 1,567 $ (2,320) $ 7,076
--------- --------- ---------- ----------- ----------- ---------------
--------- --------- ---------- ----------- ----------- ---------------
Pro forma net income................. $ 2,803 $ 4,933
---------- ---------------
---------- ---------------
Pro forma net income per share(2).... $ .23 $ .41
---------- ---------------
---------- ---------------
Pro forma weighted average shares
outstanding(2)...................... 12,251,997 11,962,153
---------- ---------------
---------- ---------------
CASH FLOWS DATA:
Net cash provided by (used in)
operating activities.............. $ (912) $ 1,253 $ 2,106 $ 3,392 $ 3,298 $ 3,771
Net cash used in investing
activities........................ (1,218) (2,387) (11,908) (12,102) (10,442) (6,353)
Net cash provided by financing
activities........................ $ 1,963 $ 3,625 $ 9,175 $ 9,352 $ 5,824 $ 2,999

AT DECEMBER 31, AT JUNE 30, 1996
-------------------------------- ----------------------------
1993 1994 1995 AS ADJUSTED(3)
--------- --------- ---------- ---------------
ACTUAL
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital...................... $ 1,862 $ 7,414 $ 7,900 $ 6,843 $ 29,049
Total assets......................... 16,492 27,502 42,437 56,750 73,621
Total debt........................... 2,183 6,650 22,624 31,147 1,847
Common stockholder's equity/partners'
capital............................. $ 4,153 $ 9,401 $ 4,478 $ 5,343 $ 51,515
<CAPTION>

YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
--------------------------------------------- JUNE 30,
PRO FORMA ----------------------------
1993 1994 1995 1995(1) 1995 1996
--------- --------- ---------- ----------- ----------- ---------------
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C>
OTHER DATA:
EBITDA (4)........................... $ 4,679 $ 10,515 $ 9,450 $ 10,010 $ (69) $ 11,453
Predecessor shareholder costs (5).... 2,022 1,734 1,392 2,138 625 726
--------- --------- ---------- ----------- ----------- ---------------
Adjusted EBITDA (6).................. 6,701 12,249 10,842 12,148 556 12,179
Capital expenditures................. $ 891 $ 2,712 $ 2,746 $ 2,746 $ 1,236 $ 2,134
Affiliates:
Radio............................ 754 914 1,152 1,244 1,125 1,284
Television....................... 59 71 91 96 82 110
Markets:
Radio............................ 38 46 54 59 52 60
Television....................... 29 33 38 41 38 47
</TABLE>

- ------------------------------

(1) The unaudited pro forma financial data for the year ended December 31, 1995
were prepared assuming that the 1995 Acquisitions (as defined herein), 1996
Acquisitions (as defined herein) and Pending Acquisitions were consummated
as of

9
<PAGE>
January 1, 1995. In addition, such data give effect to the anticipated
Reorganization. The unaudited pro forma financial data give effect to the
1995 Acquisitions, 1996 Acquisitions and Pending Acquisitions under the
purchase method of accounting and certain estimated operational and
financial effects that are direct results of the acquisitions. See
"Business -- Acquisitions, and -- Reorganization" and "Pro Forma Financial
Data."

(2) Pro forma weighted average shares outstanding and pro forma net income per
common share are calculated assuming the shares issued in conjunction with
the Reorganization were outstanding for all periods presented, adjusted for
excess distributions and assuming the Predecessor Companies were taxed at
rates expected to apply subsequent to the Reorganization. Metro Networks,
Inc. has not declared or paid any dividends on its Common Stock. However,
the Predeccesor Companies have made cash distributions to their
shareholders from time to time. See "Business -- Reorganization."

(3) Assumes an initial public offering price of $14.00 per share (the midpoint
of the range of the initial public offering prices set forth on the cover
page of this Prospectus) and estimated net proceeds to the Company from the
offering of $46.2 million. See "Use of Proceeds."

(4) EBITDA is earnings before other expense (income), interest expense, taxes,
depreciation and amortization. EBITDA does not represent cash flows as
defined by generally accepted accounting principles and does not
necessarily indicate that cash flows are sufficient to fund all of the
Company's cash needs. EBITDA should not be considered in isolation or as a
substitute for net income, cash from operating activities or other measures
of liquidity determined in accordance with generally accepted accounting
principles.

(5) Predecessor shareholder costs consist of the expenses incurred by the
Predecessor Companies on behalf of their shareholders, which expenses will
not be incurred by the Company after the closing of this offering. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Certain Transactions."

(6) Adjusted EBITDA is EBITDA plus predecessor shareholder costs. The Company
believes that Adjusted EBITDA is useful to prospective investors as a
measure of the Company's historical financial performance.

10
<PAGE>
RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CAREFULLY CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING
THE COMPANY AND ITS BUSINESS BEFORE PURCHASING THE COMMON STOCK OFFERED HEREBY.

INFORMATION SERVICES COMPETITION

The success of the Company's business is largely dependent on the Company's
ability to maintain and acquire affiliate contracts with radio and television
stations. The Company faces intense competition for such affiliates from other
providers of information reporting services in many of its markets.
Additionally, the Company faces competition from individual radio stations and
groups of radio stations that provide their own information services. As a
result of the passage of the Telecommunications Act of 1996 (the "Telecom Act"),
the Company may face additional competition from consolidated groups of radio
stations that choose to provide their own information services. Certain of the
Company's current and potential competitors may offer alternative types of
information services and may have substantially greater financial, technical,
marketing and other resources than the Company. There can be no assurance that
the Company's business will not be adversely affected by current or increased
competition for the provision of information services in the markets in which it
operates. See "Management's Discussion and Analysis of Financial Conditions and
Results of Operations -- Liquidity and Capital Resources."

DEPENDENCE ON ADVERTISING REVENUES

The success of the Company's business is closely linked to the performance
of the advertising industry. A significant decline in national and regional
advertising would have a material adverse effect on the Company's revenues.
There can be no assurance that such a decline will not occur, or that the
Company's business will not be materially adversely affected thereby. See
"Business."

COMPETITION FOR ADVERTISING SALES

The Company's business is dependent, in part, on its ability to sell the
commercial airtime inventory obtained from its affiliates in exchange for the
Company's provision of information reporting services. The business of selling
broadcast advertising time is highly competitive. The Company positions its
advertising so as not to compete with the advertising of its local radio and
television station affiliates. The Company competes for advertising dollars with
other media such as newspapers and magazines, outdoor advertising, network radio
and network television advertising, transit advertising, direct response
advertising, yellow page directories and point of sale advertising. There can be
no assurance that the Company will not be adversely affected by such competition
in the future. See "Business -- Competition."

LIMITED OPERATING HISTORY IN NEW BUSINESSES

The Company introduced its Expanded Radio Services to radio stations in 1994
and its Video News Services to television stations in 1995. Accordingly,
although the Company has provided its Radio Traffic Services and Television
Traffic Services for many years, the Company has a limited history of providing
its Expanded Radio Services and Video News Services. The success of the
Company's Radio Traffic Services may not be indicative of the results of its
efforts to provide the Expanded Radio Services and Video News Services. The
successful operation of the Expanded Radio Services Network and MetroTV Network
will require a certain level of continued capital expenditures and operating
expenditures which the Company is committed to undertaking. There can be no
assurance that the Company will be able to develop such businesses as
successfully as it has its Radio Traffic Services business. See "Business."

ACQUISITIONS AND NEW MARKETS

The Company's continued growth and expansion is dependent, in part, on its
ability to establish affiliate relations in new markets by acquiring existing
operations or developing new operations. There can be no assurance that the
Company will be able to identify and acquire operations or establish operations
in new markets or that it will be able to finance such acquisitions or expansion
in the future.

11
<PAGE>
There can be no assurance that the Company will be able to integrate
successfully any acquired business or realize any operating efficiencies
therefrom. The Company's past operating history may not be indicative of its
ability to integrate new markets and acquisitions. See "Business --
Acquisitions."

INCREASING CAPITAL REQUIREMENTS

The Company's expansion into new markets and continued growth of its
Expanded Radio Services Network and MetroTV Network will require significant
additional capital expenditures. There can be no assurance that the Company will
be able to secure financing for such expenditures when needed or on terms
acceptable to the Company. Moreover, the Company's day-to-day operations require
the use of sophisticated equipment and technology. The maintenance and
replacement of such equipment requires significant expenditures. There can be no
assurance that the Company will be able to continue to finance the maintenance
and replacement of such equipment.

DEPENDENCE ON KEY PERSONNEL

The Company's continued success is dependent to a significant degree upon
the efforts of its current executive officers. The loss or unavailability of any
such executive officer could have an adverse effect on the Company. The Company
has entered into employment agreements with Messrs. David I. Saperstein, the
Company's Founder, Chairman and Chief Executive Officer, Charles I. Bortnick,
the Company's President, Shane E. Coppola, the Company's Executive Vice
President, Curtis H. Coleman, the Company's Senior Vice President and Chief
Financial Officer and Gary L. Worobow, the Company's Senior Vice President,
General Counsel and Secretary; however, there can be no assurance that these
individuals will continue to provide services to the Company. At present the
Company does not maintain key man life insurance policies for any of these
individuals. Moreover, the continued success and viability of the Company is
dependent to a significant extent upon its ability to attract and retain
qualified personnel in all areas of its business, especially management
positions. In the event the Company is unable to attract and retain qualified
personnel, its business may be adversely affected. See "Management."

FEDERAL REGULATION OF BROADCASTING

The ownership, operation and sale of stations are subject to the
jurisdiction of the Federal Communications Commission (the "FCC"), which acts
under authority granted by the Communications Act of 1934, as amended, (the
"Communications Act"). Among other things, the FCC adopts and implements
regulations and policies that directly or indirectly affect the ownership,
operations and sale of radio and television stations, and has the power to
impose penalties for violations of its rules or the Communications Act. Such
regulation may adversely affect the Company's business. On February 8, 1996,
President Clinton signed the Telecom Act. The Telecom Act, among other measures,
directs the FCC to eliminate national radio ownership limits and increase local
radio ownership limits. Certain of these measures have been adopted by the FCC.
Other provisions of the Telecom Act will be acted upon by the FCC through
rulemaking proceedings, presently scheduled for completion by the end of 1996.
These measures could lead to greater industry consolidation. The effects of the
Telecom Act on the broadcasting industry and thus on the Company's businesses
are uncertain, and there can be no assurance that the Telecom Act will not
negatively impact the Company's operations in the future.

RESTRICTIONS IMPOSED BY LENDERS

The Credit Agreement among NationsBank of Texas, N.A. ("NationsBank") and
the Company's subsidiaries, Metro Traffic Control, Inc. and Metro Networks,
Ltd., dated October 21, 1994, as amended (the "Credit Agreement") prohibits the
Company from, among other things, (i) incurring certain additional indebtedness,
(ii) incurring certain liens, (iii) disposing of the assets of the Company
through merger, consolidation or sale, (iv) making certain acquisitions without
the consent of the lenders, (v) achieving certain leverage ratios and (vi)
paying dividends. Although these restrictions to date have not restricted the
Company's ability to operate or to make strategic acquisitions, there can be no
assurance that such restrictions will not have a material adverse effect on the
Company's operations in the future. The Company has obtained a commitment letter
to enter into an amended and restated credit agreement (the "Amended Line of
Credit") with NationsBank upon completion of this offering. The

12
<PAGE>

Company anticipates that the Amended Line of Credit will be secured by the
granting of a lien by the Company on all of its assets and the pledge of its
equity interest in its subsidiaries in favor of NationsBank. See "Management's
Discussion and Analysis of Financial Conditions and Results of Operations --
Liquidity and Capital Resources."

CONTROL BY EXISTING STOCKHOLDERS

Upon completion of this offering, the Saperstein Family will beneficially
own 53.5% of the Company's outstanding Common Stock (50.1% if the underwriters'
overallotment option is exercised in full). In addition, the Saperstein Family
will own all of the outstanding Series A Convertible Preferred Stock; such
preferred stock will be pledged to the Company pursuant to the Stock Loan and
Pledge Agreement. As a result of the ownership by the Saperstein Family of such
shares, the Saperstein Family will be able to vote 60.1% (56.7% if the
Underwriters' overallotment option is exercised in full) of the issued and
outstanding voting stock of the Company and the Saperstein Family will continue
to have the ability to elect or remove any or all of the Company's Directors and
to control substantially all corporate activities involving the Company,
including tender offers, mergers, proxy contests or other purchases of Common
Stock that could give the stockholders of the Company the opportunity to realize
a premium over the then prevailing market price for their shares of Common
Stock. See "Business -- Reorganization," "Certain Transactions" and "Principal
and Selling Stockholders."

ANTI-TAKEOVER PROVISIONS

The Company's Amended and Restated Certificate of Incorporation and Bylaws
contain provisions that could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from attempting to
acquire, control of the Company. Such provisions could limit the price that
certain investors might be willing to pay in the future for shares of Common
Stock. The Company's Amended and Restated Certificate of Incorporation provides
that up to 10,000,000 shares of Preferred Stock may be issued by the Company
from time to time in one or more series. The Board of Directors may authorize
and issue Preferred Stock with voting or conversion rights that could adversely
affect the voting power or other rights of the holders of Common Stock. See "--
Control by Existing Stockholders" and "Description of Capital Stock -- Preferred
Stock."

DILUTION

Assuming an initial public offering price of $14.00 per share (the midpoint
of the range of the initial public offering prices set forth on the cover page
of this Prospectus), purchasers of Common Stock in this offering will experience
immediate dilution of $11.97 per share in the net tangible book value per share
of Common Stock from the initial public offering price and may incur additional
substantial dilution upon the exercise of outstanding stock options. See
"Dilution."

INTANGIBLE ASSETS

Of the Company's total assets at June 30, 1996, approximately $16.4 million,
or 29.0%, represented purchased broadcast contracts and other intangibles
associated with recent acquisitions. It is possible that no cash would be
recoverable from the voluntary or involuntary sale of the intangible assets of
the Company, including its goodwill. However, the Company believes that its
affiliation contracts and operating systems constitute assets having substantial
value, although there can be no assurance that such value or any substantial
part thereof would actually be realized upon a voluntary or involuntary sale.
See "Business -- Affiliates."

SHARES ELIGIBLE FOR FUTURE SALE; NO PRIOR TRADING MARKET

Sales of a substantial number of shares of the Company's Common Stock could
have the effect of depressing the prevailing market price of its Common Stock.
Upon completion of this offering, the Company will have 15,500,357 outstanding
shares of Common Stock. Of these shares, the 7,200,000 shares sold in this
offering, (8,280,000 if the over-allotment option is exercised in full) will be
freely transferable without restriction or further registration under the
Securities Act of 1993 (the "Securities Act") unless purchased by "affiliates"
of the Company as that term is defined in Rule 144 of the

13
<PAGE>

Securities Act (an "Affiliate"), which Shares purchased by Affiliates will be
subject to the resale limitations of Rule 144 adopted under the Securities Act.
The remaining 8,300,357 shares outstanding upon completion of this offering and
held by existing shareholders will be "Restricted Securities" as that term is
defined under Rule 144 (the "Restricted Shares"). The Company intends to file
one or more registration statements on Form S-8 under the Securities Act to
register shares of Common Stock subject to stock options which will permit
resale of such shares, subject to the Rule 144 volume limitations applicable to
affiliates, vesting restrictions with the Company and lock-up agreements between
the option holders and the Company and the Underwriters. See "Shares Eligible
for Future Sale" and "Description of Capital Stock."

ABSENCE OF PUBLIC MARKET

There is currently no public market for the Common Stock. Although
application will be made to approve the Common Stock for quotation and trading
on the Nasdaq National Market, there can be no assurance that an active public
market in the Common Stock will develop or that the initial public offering
price thereof will correspond to the price at which the Common Stock will trade
in the public market subsequent to this offering. The initial public offering
price for the Common Stock will be determined by negotiations among the Company
and the representatives of the Underwriters based on the factors described under
"Underwriting."

14
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the offering are estimated to be
approximately $46.2 million ($60.2 million if the Underwriters' over-allotment
option is exercised in full), based on an assumed offering price of $14.00 per
share (the midpoint of the range of the initial public offering prices set forth
on the cover page of this Prospectus) and after deductions for the underwriting
discount and the estimated offering expenses. The Company will not receive any
proceeds from the sale of shares of Common Stock by the Selling Stockholder.

The Company intends to use approximately $30 million of the proceeds to
repay existing indebtedness under the Credit Agreement and the balance of the
proceeds, including any proceeds from the Underwriters' exercise of the
over-allotment option, to fund its growth, including additional strategic
acquisitions or development of businesses complementary to the operations of the
Company including broadcast traffic reporting services and news, sports, weather
and other programming and information services. In addition, the Company will
use the proceeds to fund the continued expansion of its networks, its
development of new products and services, including capital expenditures for the
expansion of its networks and for working capital purposes. The Company has
entered into letters of intent to acquire the assets of ATN and WIS and intends
to finance these acquisitions with available cash, including the proceeds to the
Company from this offering. The Company continually reviews potential
acquisitions and has engaged in discussions concerning certain acquisitions
(some of which are currently on-going); however, the Company currently has no
other commitments, arrangements, or understandings with respect to any such
acquisition. The Company does not intend to distribute any portion of its
proceeds from this offering to former shareholders of the Predecessor Companies.
See "Certain Transactions."

The Company's indebtedness outstanding under the Credit Agreement has a
final maturity of June 30, 2000 and bears interest at a variable rate
(approximately 6.94% at June 30, 1996). In fiscal 1995, interest on borrowings
under the Credit Agreement ranged from 6.80% to 7.55%. The Company has obtained
a commitment letter to enter into the Amended Line of Credit upon completion of
this offering. See "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources." Following the repayment of outstanding indebtedness under the Credit
Agreement, approximately $30 million principal amount will be available
thereunder for borrowing.

Pending the application of the net proceeds for the purposes described
above, the Company will invest the net proceeds from the sale of the Common
Stock offered hereby in short-term interest-bearing marketable securities. See
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

DIVIDEND POLICY

The Company intends to retain all of its earnings to finance the development
and expansion of its business and therefore does not intend to pay any cash
dividends on the Common Stock for the foreseeable future. The Credit Agreement
prohibits the payment of cash dividends and the Company anticipates that the
Amended Line of Credit will restrict the payment of dividends in certain
situations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."

15
<PAGE>
CAPITALIZATION

The following table sets forth the combined capitalization of the Company at
June 30, 1996 and as adjusted to reflect the sale of shares of Common Stock
offered hereby (assuming an initial public offering price of $14.00 per share
(the midpoint of the range of the initial public offering prices set forth on
the cover page of this Prospectus)) after deducting the estimated underwriting
discount and estimated offering expenses payable by the Company and the
application of the net proceeds as described under "Use of Proceeds" and the
Reorganization. This table should be read in conjunction with the Company's
Combined Financial Statements and the Notes thereto included elsewhere in this
Prospectus. See "Use of Proceeds" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Certain Transactions."

<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
-----------------------
ACTUAL AS ADJUSTED
--------- ------------
(IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C>
Cash and cash equivalents............................................................... $ 3,466 $ 20,337
--------- ------------
--------- ------------
SHORT-TERM DEBT:
Current portion of long-term debt..................................................... $ 6,475 $ 1,140
Notes payable......................................................................... 707 707
--------- ------------
Total short-term debt............................................................... 7,182 1,847
--------- ------------
--------- ------------
LONG-TERM DEBT:
Bank debt............................................................................. 23,966 --

STOCKHOLDERS' EQUITY:
Preferred Stock, par value $.001 per share, 10,000,000 shares authorized; 2,549,750
shares of Series A Convertible Preferred Stock issued and outstanding as adjusted.... -- 3
Common Stock, par value $.001 per share, 25,000,000 shares authorized; 15,500,357
shares issued and outstanding as adjusted............................................ 3 16
Additional paid-in capital............................................................ 4,024 50,755
Partners' capital..................................................................... 575 --
Retained earnings..................................................................... 741 741
--------- ------------
Total stockholder's equity/partners' equity........................................... 5,343 51,515
--------- ------------
Total capitalization................................................................ $ 29,309 $ 51,515
--------- ------------
--------- ------------
</TABLE>

16
<PAGE>
DILUTION

The net tangible book value of the Company available to common stockholders
at June 30, 1996 was $(14.7) million, or $(1.57) per share of Common Stock. Net
tangible book value per share available to common stockholders is equal to the
Company's total tangible assets less total liabilities and the amount of the
preferred stockholder's liquidation preference, divided by the total number of
outstanding shares of Common Stock after giving effect to the Reorganization.
After giving effect to the sale of 3,600,000 shares of Common Stock offered by
the Company hereby (after deduction of the underwriting discount and estimated
expenses of this offering), and the application of the estimated proceeds to be
received by the Company therefrom, the pro forma net tangible book value
available to common stockholders at June 30, 1996 would have been $31.5 million,
or $2.03 per share. This represents an immediate increase in net tangible book
value of $3.60 per share to existing stockholders and an immediate dilution of
$11.97 per share to new investors. The following table illustrates this per
share dilution with respect to a new investor's purchase of a share of Common
Stock at June 30, 1996:

<TABLE>
<S> <C> <C>
Assumed initial public offering price............................ $ 14.00
Net tangible book value per share before this offering........... $ (1.57)
Increase in net tangible book value per share attributable to new
investors....................................................... $ 3.60
Pro forma net tangible book value per share after this
offering........................................................ $ 2.03
Dilution in net tangible book value per share to new investors... $ 11.97
</TABLE>

The following table summarizes, on a pro forma basis as of June 30, 1996,
the number of shares of Common Stock (and shares of Series A Convertible
Preferred Stock which is convertible into shares of Common Stock) outstanding,
the total consideration paid, and the average price per share paid by current
stockholders and by new investors who purchase Common Stock pursuant to this
offering, assuming an initial public offering price of $14.00 per share (the
midpoint of the range of the initial public offering prices set forth on the
cover page of this Prospectus):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------------- ------------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
------------- ----------- -------------- --------- -----------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1).......................... 11,900,357 77.0% $ 5,343,374 10.0% $ .45
New investors..................................... 3,600,000 23.0 50,400,000 90.0 $ 14.00
------------- ----- -------------- ---------
Total......................................... 15,500,357 100.0% $ 55,743,374 100.0%
------------- ----- -------------- ---------
------------- ----- -------------- ---------
</TABLE>

- ------------------------

(1) Sales by the Selling Stockholder in this offering will reduce the number of
shares of Common Stock held by the current stockholders to 8,300,357 shares,
or 53.5% of the total number of shares of Common Stock to be outstanding
after this offering, and will increase the number of shares held by new
investors after this offering to 7,200,000 shares, or 46.5% of the total
number of shares of Common Stock outstanding after this offering.

The foregoing table and calculations should be read in conjunction with
"Business -- Reorganization" and "Certain Transactions".

The foregoing tables do not assume exercise of any outstanding options. Upon
the effective date of this offering, there will be outstanding options to
purchase approximately 500,000 shares of Common Stock under the 1996 Plan. The
exercise price of such options will be the price at which Common Stock is
offered to the public pursuant hereto. To the extent that any options are
exercised in the future, there may be further dilution to new investors. See
"Business," "Management -- 1996 Incentive Stock Option Plan and -- Board of
Directors."

17
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA

The following selected financial and operating data should be read in
conjunction with the Predecessor Companies' historical combined financial
statements and related notes thereto and with Management's Discussion and
Analysis of Financial Condition and Results of Operations included elsewhere
herein. The statement of operations data set forth below with respect to the
years ended December 31, 1993, 1994 and 1995 are derived from the audited
financial statements included elsewhere in the Prospectus. The selected
financial data for the years ended December 31, 1991 and 1992 and the six months
ended June 30, 1995 and 1996 are unaudited and reflect all normal recurring
adjustments that in the opinion of management of the Company are necessary for a
fair presentation of the results of such periods. The unaudited results of
operations for the six months ended June 30, 1996 are not necessarily
indications of results expected for the year ended December 31, 1996. The
unaudited pro forma financial information for 1995 presents the results of
operations of the Company as if the 1995 Acquisitions, 1996 Acquisitions,
Pending Acquisitions and the Reorganization had been completed at the beginning
of 1995. The unaudited pro forma financial data presented are not necessarily
indicative of the Company's financial results of operations that might have
occurred had such transactions and the Reorganization been completed at the
beginning of the period and do not purport to indicate the Company's results of
operations for any future periods.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
------------------------------------------------------------------- JUNE 30,
PRO FORMA ---------------------
1991 1992 1993 1994 1995 1995(1) 1995 1996
--------- --------- --------- --------- ---------- ----------- --------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Advertising revenues........ $ 39,092 $ 41,957 $ 47,905 $ 60,048 $ 72,433 $ 78,102 $ 30,623 $ 50,077
Broadcasting costs.......... 20,672 26,760 27,384 32,239 41,286 43,243 19,816 24,173
Marketing expense........... 8,278 8,393 8,848 11,355 14,504 15,980 6,821 10,101
General and administrative
expense.................... 3,845 4,522 6,994 5,939 7,193 8,869 4,055 4,350
Depreciation and
amortization expense....... 1,564 1,841 1,814 1,302 3,981 5,920 1,694 2,936
--------- --------- --------- --------- ---------- ----------- --------- ----------
Total operating costs....... 34,359 41,516 45,040 50,835 66,964 74,012 32,386 41,560
Income (loss) from
operations................. 4,733 441 2,865 9,213 5,469 4,090 (1,763) 8,517
Other expense (income).... 63 (60) 238 (164) (137) (123) (93) (66)
Interest expense.......... 43 97 145 293 1,260 1,838 421 934
--------- --------- --------- --------- ---------- ----------- --------- ----------
Income before tax
provision.................. 4,627 404 2,482 9,084 4,346 2,375 (2,091) 7,649
Income tax provision...... 1,241 2,649 1,066 2,179 1,036 808 229 573
--------- --------- --------- --------- ---------- ----------- --------- ----------
Income (loss) from
continuing operations...... 3,386 (2,245) 1,416 6,905 3,310 1,567 (2,320) 7,076
--------- --------- --------- --------- ---------- ----------- --------- ----------
Discontinued operations... -- (563) (561) -- -- -- -- --
--------- --------- --------- --------- ---------- ----------- --------- ----------
Net income (loss)........... $ 3,386 $ (2,808) $ 855 $ 6,905 $ 3,310 $ 1,567 $ (2,320) $ 7,076
--------- --------- --------- --------- ---------- ----------- --------- ----------
--------- --------- --------- --------- ---------- ----------- --------- ----------
Pro forma net income........ $ 2,803 $ 4,933
---------- ----------
---------- ----------
Pro forma income per common
share (2).................. $ .23 $ .41
---------- ----------
---------- ----------
Pro forma weighted average
shares outstanding (2)..... 12,251,997 11,962,153
---------- ----------
---------- ----------
CASH FLOWS DATA:
Net Cash Provided by (used
in) Operating
Activities............... $ 5,006 $ (33) $ (912) $ 1,253 $ 2,106 $ 3,392 $ 3,298 $ 3,771
Net Cash Used in Investing
Activities............... (4,880) (5) (1,218) (2,387) (11,908) (12,102) (10,442) (6,353)
Net Cash Provided by (used
in) Financing
Activities............... $ 1,480 $ (907) $ 1,963 $ 3,625 $ 9,175 $ 9,352 $ 5,824 $ 2,999
</TABLE>

18
<PAGE>

<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30,
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................. $ 1,468 $ (254) $ 1,862 $ 7,414 $ 7,900 $ (1,137) $ 6,843
Total assets................................ 21,458 22,426 16,492 27,502 42,437 35,796 56,750
Total debt.................................. 274 597 2,183 6,650 22,624 18,746 31,147
Common stockholder's equity/partners'
capital.................................... $ 6,798 $ 5,168 $ 4,153 $ 9,401 $ 4,478 $ (346) $ 5,343
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------ JUNE 30,
PRO FORMA --------------------
1991 1992 1993 1994 1995 1995(1) 1995 1996
--------- --------- --------- --------- --------- ----------- --------- ---------
(IN THOUSANDS)

<S> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
EBITDA (3)..................... $ 6,297 $ 2,282 $ 4,679 $ 10,515 $ 9,450 $ 10,010 $ (69) $ 11,453
Predecessor shareholder
costs (4)..................... 597 1,091 2,022 1,734 1,392 2,138 625 726
--------- --------- --------- --------- --------- ----------- --------- ---------
Adjusted EBITDA (5)............ 6,894 3,373 6,701 12,249 10,842 12,148 556 12,179
Capital expenditures........... $ 1,299 $ 1,063 $ 891 $ 2,712 $ 2,746 $ 2,746 $ 1,236 $ 2,134
</TABLE>

- ------------------------
* See discussions of acquisitions in "Business -- Acquisitions" and
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations."

(1) The unaudited pro forma financial data for the year ended December 31, 1995
were prepared assuming that the 1995 Acquisitions, 1996 Acquisitions and
Pending Acquisitions were consummated as of January 1, 1995. In addition
such data give effect to the anticipated Reorganization. The unaudited pro
forma financial data give effect to the Pending Acquisitions under the
purchase method of accounting and certain estimated operational and
financial effects that are direct results of the acquisitions. See
"Business -- Acquisitions" and " -- Reorganization" and "Pro Forma
Financial Data."

(2) Pro forma weighted average shares outstanding and pro forma net income per
common share are calculated assuming the shares issued in conjunction with
the Reorganization were outstanding for all periods presented, adjusted for
excess distributions and assuming the Predecessor Companies were taxed at
rates expected to apply subsequent to the Reorganization. Metro Networks,
Inc. has not declared or paid any dividends on its Common Stock. However,
the Predecessor Companies have made cash distributions to their
shareholders from time to time. See "Business -- Reorganization."

(3) EBITDA is earnings before other expense (income), interest expense, taxes,
depreciation and amortization. EBITDA does not represent cash flows as
defined by generally accepted accounting principles and does not
necessarily indicate that cash flows are sufficient to fund all of the
Company's cash needs. EBITDA should not be considered in isolation or as a
substitute for net income, cash from operating activities or other measures
of liquidity determined in accordance with generally accepted accounting
principles.

(4) Predecessor shareholder costs consist of the expenses incurred by the
Predecessor Companies on behalf of their shareholders, which expenses will
not be incurred by the Company after the closing of this offering. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

(5) Adjusted EBITDA consists of EBITDA plus predecessor shareholder costs. The
Company believes that adjusted EBITDA is useful to prospective investors as
a measure of the Company's historical financial performance.

19
<PAGE>
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company, which was founded in 1978, is the largest provider of traffic
reporting services and a leading supplier of local news, sports, weather and
other information reporting services to the television and radio broadcast
industries in the United States. The Company provides customized information
reports to affiliated radio and television stations in exchange for commercial
airtime inventory. The Company generates revenues by packaging such commercial
airtime inventory and selling it on a local, regional or national basis. While
the majority of the Company's revenues are currently generated from sales of
advertising on its Radio Traffic Services Network, the Company is experiencing
increased revenues from its Expanded Radio Services Network and its MetroTV
Network. The Company's expenses are primarily comprised of three categories: (i)
operations, which includes all the expenses related to gathering, producing, and
broadcasting information reports; (ii) marketing, which includes sales
commissions, salaries and benefits for sales personnel; and (iii) general and
administrative expenses, which includes corporate overhead. Most of the
Company's expenses are associated with its Radio Traffic Services. However,
during 1994, 1995 and the six months ended June 30, 1996, the Company incurred
additional expenses attributable to the development and operation of its
Expanded Radio Services (including operating expenses incurred prior to the
generation of significant revenue from the Expanded Radio Services), and during
1995 and the six months ended June 30, 1996, the Company incurred similar
additional expenses associated with the development of its MetroTV Services.

Metro Networks, Inc. was incorporated in May 1996, as a holding company.
Subsequent to the Reorganization, Metro Networks, Inc. expects to conduct
substantially all of its operations through Metro Traffic Control, Inc., its
wholly owned subsidiary. To date, there have been no financial transactions or
operations carried out by Metro Networks, Inc.

The Company has experienced 18 years of growth in revenues. The Company has
also experienced increases in EBITDA, which has grown in each of the last 18
years with the exception of 1992 and 1995. In 1995, EBITDA and adjusted EBITDA
results reflect the impact of approximately $3.1 million of expenses (with
minimal incremental revenues) associated with the development and operation of
the Company's Expanded Radio Services and MetroTV Services, which the Company
introduced in 1994 and 1995, respectively. The Company has grown through
acquisitions, new market expansion, internally generated growth, and by offering
new products and services to its affiliate stations and advertising clients.
EBITDA consists of earnings before other expense (income), interest expense,
taxes, depreciation and amortization. EBITDA does not represent cash flows as
defined by generally accepted accounting principles and does not necessarily
indicate that cash flows are sufficient to fund all of the Company's cash needs.
EBITDA should not be considered in isolation or as a substitute for net income,
cash from operating activities or other measures of liquidity determined in
accordance with generally accepted accounting principles.

In the analysis set forth below, the Company discusses its adjusted EBITDA.
"Adjusted EBITDA" consists of EBITDA plus predecessor shareholder costs.
"Predecessor shareholder costs" consist of expenses incurred by the Predecessor
Companies on behalf of their shareholders which will not be incurred by the
Company after its initial public offering. Such predecessor shareholder costs
include the portion of David I. Saperstein's current salary which exceeds that
which Mr. Saperstein will receive after the offering, certain costs incurred by
the Company in connection with the lease of certain real property, costs related
to reciprocal transactions entered into by the Company for the sole benefit of
Mr. Saperstein, certain costs related to the operation of Pro Journey Travel,
Inc., (a company owned by Mr. Saperstein) and certain costs related to the
personal use of the services of certain of the Company's employees by Mr.
Saperstein, which costs are not expected to be incurred after the completion of
this

20
<PAGE>
offering. See "Certain Transactions." The Company believes that EBITDA is a
measure of financial performance widely used in the media and broadcast
industries and that adjusted EBITDA is useful to prospective investors as a
measure of the Company's historical financial performance.

In certain circumstances, the Company engages in reciprocal arrangements
with advertisers whereby the Company exchanges a portion of its unsold
commercial airtime inventory for goods and services. The Company believes that
reciprocal arrangements are common in the broadcasting industry. The Company's
reciprocal arrangements are recorded based on their estimated fair market value
and generally have had a net neutral effect on EBITDA; the net impact of
reciprocal arrangements in 1994 and 1995 on EBITDA was $0.6 million and ($0.1)
million, respectively. In recent years, however, the Company has reduced the
number of reciprocal arrangements in which it engages in order to better focus
its efforts on cash revenue generation and reduce the administrative costs
associated with reciprocal arrangements. In 1993, revenues from reciprocal
arrangements accounted for 16.8% of total revenues and declined to 13.3% in 1994
and 11.6% in 1995. During the six months ended June 30, 1996, revenues from
reciprocal arrangements decreased to 9.5% of total revenues. The Company expects
revenues from reciprocal arrangements to be approximately 10% or less of total
revenues in 1996.

The Company's advertising revenues vary moderately over the calendar year
with the first quarter generally reflecting the lowest revenues and the fourth
quarter the highest revenues for the year. Expenses, other than broadcasting
costs, are generally spread evenly over the year, resulting in some seasonality
in the Company's EBITDA.

INCOME TAXES

The combined financial statements are derived from the combined financial
statements of Metro Traffic Control, Inc., Metro Reciprocal, Inc., Metro
Networks, Ltd. and Metro Video News, Inc. and their subsidiaries. Metro
Reciprocal, Inc., Metro Video News, Inc. and Metro Traffic Control, Inc. have
elected to be taxed under the S Corporation provisions of the Internal Revenue
Code. Metro Networks, Ltd. is a partnership for federal income tax purposes.
These entities are, therefore, not subject to federal income taxes on their
taxable income and accordingly no provision for federal income taxes in respect
of these entities is made in the combined financial statements. Metro Networks,
Ltd., however, owns one hundred percent (100%) of the outstanding stock of one
subsidiary corporation, which in turn owns one hundred percent (100%) of the
outstanding stock of six (6) subsidiaries which collectively file a consolidated
federal income tax return and are subject to United States federal, state and
local income tax. The income taxes payable by these corporations have been
reflected in the combined financial statements. The income tax expense included
in the combined Predecessor Companies' financial statements presently reflects
the varying levels of income of the taxable and nontaxable entities included in
the combined financial statements rather than the aggregate levels of income of
the combined companies. After consummation of the Reorganization, Metro Traffic
Control, Inc., a wholly-owned subsidiary of the Company will be subject to
United States federal, state and local income taxes. In addition, any
differential between the book and tax basis in the underlying net assets which
is not presently reflected as a deferred tax asset or liability will be recorded
with a corresponding increase or decrease in income tax expense. As of June 30,
1996, the recognition of this differential would have resulted in an estimated
tax expense of approximately $352,000 had the Reorganization been effective on
that date.

21
<PAGE>
RESULTS OF OPERATIONS

The following table provides a summary of the Company's statement of
operations on an actual and percentage of revenues basis for the periods
indicated:

SUMMARY COMBINED FINANCIAL DATA

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
-------------------------------------------------------------------------------------- JUNE 30,
PRO FORMA --------------------
1993 1994 1995 1995(1) 1995
-------------------- -------------------- -------------------- -------------------- --------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advertising
revenues........... $ 47,905 100.0% $ 60,048 100.0% $ 72,433 100.0% $ 78,102 100.0% $ 30,623 100.0%
Broadcasting
costs.............. 27,384 57.2 32,239 53.7 41,286 57.0 43,243 55.4 19,816 64.7
Marketing expense... 8,848 18.5 11,355 18.9 14,504 20.0 15,980 20.5 6,821 22.3
General and
administrative
expense............ 6,994 14.6 5,939 9.9 7,193 9.9 8,869 11.4 4,055 13.2
Depreciation and
amortization
expense............ 1,814 3.8 1,302 2.2 3,981 5.5 5,920 7.6 1,694 5.5
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total operating
costs............ 45,040 94.0 50,835 84.7 66,964 92.5 74,012 94.8 32,386 105.8
Income (loss) from
operations......... 2,865 6.0 9,213 15.3 5,469 7.6 4,090 5.2 (1,763) (5.8)
Other expenses
(income) (2)..... 238 0.5 (164) (0.3) (137) (0.2) (123) (0.2) (93) (0.4)
Interest
expense.......... 145 0.3 293 0.5 1,260 1.7 1,838 2.4 421 1.4
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Income before income
tax provision...... 2,482 5.2 9,084 15.1 4,346 6.0 2,375 3.0 (2,091) (6.8)
Income tax
provision........ 1,066 2.2 2,179 3.6 1,036 1.4 808 1.0 229 0.7
Discontinued
operations....... (561) (1.2) -- * -- * -- * -- *
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss)... $ 855 1.8% $ 6,905 11.5% $ 3,310 4.6% $ 1,567 2.0% $ (2,320) (7.6)%
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------

1996
--------------------

<S> <C> <C>
Advertising
revenues........... $ 50,077 100.0%
Broadcasting
costs.............. 24,173 48.3
Marketing expense... 10,101 20.2
General and
administrative
expense............ 4,350 8.7
Depreciation and
amortization
expense............ 2,936 5.9
--------- ---------
Total operating
costs............ 41,560 83.0
Income (loss) from
operations......... 8,517 17.0
Other expenses
(income) (2)..... (66) (0.1)
Interest
expense.......... 934 1.9
--------- ---------
Income before income
tax provision...... 7,649 15.3
Income tax
provision........ 573 1.1
Discontinued
operations....... -- *
--------- ---------
Net income (loss)... $ 7,076 14.1%
--------- ---------
--------- ---------
</TABLE>

- ------------------------------
(1) The unaudited pro forma financial data for the year ended December 31, 1995
were prepared assuming that the 1995 Acquisitions, 1996 Acquisitions and
Pending Acquisitions were consummated as of January 1, 1995. The unaudited
pro forma financial data give effect to the Pending Acquisitions under the
purchase method of accounting and certain estimated operational and
financial effects that are direct results of the acquisitions. See
"Business -- Acquisitions."

(2) Includes loss (gain) on disposition of property, loss (gain) on investment
in partnership and interest income.

SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995

REVENUES. Revenues increased by $19.5 million, or approximately 63.5%, to
$50.1 million for the six months ended June 30, 1996 (the "June 1996 Period")
from $30.6 million for the six months ended June 30, 1995 (the "June 1995
Period"), primarily due to increased sales of commercial air time inventory. The
1995 Acquisitions and 1996 Acquisitions contributed $8.1 million of revenue to
the June 1996 Period as compared to $2.4 million to the June 1995 Period, as a
result of the timing of the acquisitions. "Same market" (i.e., excluding markets
that the Company did not own and operate during the June 1995 Period) revenues
increased by $14.9 million, or 48.7%, to $45.5 million in the June 1996 Period
from $30.6 million in the June 1995 Period. The increase in "same market"
revenues was primarily attributable to an increase in the portion of commercial
airtime inventory sold ("sell-through rate"), which increased from approximately
64% in the June 1995 Period to approximately 71% in the June 1996 Period. The
increase in the sell-through rate resulted from the Company's continued efforts
to strengthen its sales, marketing, and inventory management operations. The
increased sell-through rate

22
<PAGE>

created opportunities for the Company to increase prices on its sales of
commercial airtime inventory, which increased by approximately 8.0% from the
June 1995 Period to the June 1996 Period. Revenues from reciprocal arrangements
were $4.8 million in the June 1996 Period, an increase of $2.3 million from $2.5
million in the June 1995 Period. As a percentage of total revenues, revenues
from reciprocal arrangements increased marginally to 9.5% in the June 1996
Period from 8.0% in the June 1995 Period but were consistent with the Company's
expectation that such revenues will comprise 10% or less of the Company's total
revenues for the full year 1996.

BROADCASTING COSTS. Broadcasting costs increased by $4.4 million, or
approximately 22.0%, to $24.2 million in the June 1996 Period from $19.8 million
in the June 1995 Period. This increase was primarily attributable to increased
operating costs associated with new market operations acquired in the 1995
Acquisitions and 1996 Acquisitions, which accounted for approximately $1.5
million of the increase. Additionally, the Company's continued development of
its Expanded Radio Services, development of its MetroTV Services, and
commencement of its operations in Cincinnati, Ohio accounted for approximately
$0.6 million, $0.6 million, and $0.1 million, respectively, of the increase.
Excluding the increases discussed above, the Company's broadcasting costs
increased by approximately $1.5 million, or 7.6%, to $21.3 million in the June
1996 Period from $19.8 million in the June 1995 Period. As a percentage of
revenues, broadcasting costs declined to 48.3% for the June 1996 Period from
64.7% for the June 1995 Period due to the relatively fixed nature of certain of
the Company's broadcasting costs. Broadcasting costs attributable to reciprocal
arrangements decreased from approximately $2.9 million in the June 1995 Period
to $2.7 million in the June 1996 Period.

MARKETING EXPENSE. Marketing expense increased by $3.3 million to $10.1
million in the June 1996 Period from $6.8 million in the June 1995 Period. This
increase resulted from increased sales commissions associated with the increased
revenues generated in the June 1996 Period. The 1995 Acquisitions and 1996
Acquisitions accounted for $0.9 million of this increase. Because a portion of
the Company's marketing expense is relatively fixed, marketing expense as a
percentage of revenues decreased to 20.2% in the June 1996 Period as compared to
22.3% in the June 1995 Period. On a same market basis, marketing expense
increased by $2.4 million to $9.2 million in the June 1996 Period from $6.8
million in the June 1995 Period. As a percentage of revenues, on a same market
basis, marketing expense decreased to 20.2% in the June 1996 Period from 22.3%
in the June 1995 Period. Marketing expense related to reciprocal arrangements
decreased by approximately $0.6 million from $1.2 million in the June 1995
Period to $0.6 million in the June 1996 Period.

GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
increased by $0.3 million, or approximately 7.3%, to $4.4 million in the June
1996 Period from $4.1 million in the June 1995 Period. This increase was
primarily due to increased salaries and related overhead costs attributable to
the Company's continued growth. General and administrative expense related to
reciprocal arrangements decreased by approximately $0.9 million from $1.1
million in the June 1995 Period to $0.2 million in the June 1996 Period.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased by $1.2 million to $2.9 million in the June 1996 Period from $1.7
million in the June 1995 Period, primarily as a result of the Company's
increased asset base following the 1995 Acquisitions and 1996 Acquisitions.
These acquisitions accounted for $0.8 million of this increase. Depreciation and
amortization expense attributable to reciprocal arrangements decreased by
approximately $0.1 million from $0.5 million in the June 1995 Period to $0.4
million in the June 1996 Period.

OTHER EXPENSES (INCOME). Other expenses (income) were $(0.1) million in
both the June 1996 Period and the June 1995 Period.

INTEREST EXPENSE. Interest expense increased by $0.5 million to $0.9
million in the June 1996 Period from $0.4 million in the June 1995 Period. The
increase was attributable to the incurrence of indebtedness in connection with
the 1995 Acquisitions and 1996 Acquisitions.

23
<PAGE>
NET INCOME. As a result of the factors discussed above, net income
increased to $7.1 million in the June 1996 Period from a loss of $2.3 million in
the June 1995 Period.

EBITDA AND ADJUSTED EBITDA. EBITDA increased by approximately $11.6 million
to $11.5 million in the June 1996 Period from a $0.1 million loss in the June
1995 Period. In addition, EBITDA as a percentage of revenues ("operating
margin") improved to 22.9% in the June 1996 Period. The increases in EBITDA and
operating margin were primarily attributable to the relatively fixed nature of
certain of the Company's broadcasting costs. Because broadcasting costs and
general and administrative expense, which typically account for approximately
69-76% of the Company's operating expenses, tend not to increase proportionately
with revenues, increases in the Company's revenues typically result in increases
in operating margin and EBITDA. On a same market basis, EBITDA increased by
approximately $10.0 million to $10.5 million in the June 1996 Period. Adjusted
EBITDA (I.E., EBITDA plus predecessor shareholder costs) increased by
approximately $11.6 million to $12.2 million in the June 1996 Period. Adjusted
EBITDA as a percentage of revenues increased to 24.3% in the June 1996 Period
from 1.8% in the June 1995 Period.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994.

REVENUES. Revenues increased by $12.4 million, or approximately 20.6%, to
$72.4 million in 1995 from $60.0 million in 1994. This increase was primarily
due to revenues generated by the operations acquired in connection with the 1995
Acquisitions and increased sales of commercial airtime inventory on the Radio
Traffic Services Network. The 1995 Acquisitions generated revenues of
approximately $7.1 million in 1995. Excluding these revenues, same market
revenues increased $5.3 million in 1995, or 8.8%. The Company's sell-through
rate increased to 72.0% in 1995 from 69.0% in 1994. The Company's average
commercial airtime inventory prices increased by approximately 1.0% in 1995 over
1994 prices. Including the 1995 Acquisitions, 1996 Acquisitions and Pending
Acquisitions, pro forma revenues increased 30.1% to $78.1 million in 1995 from
$60.0 million in 1994. Revenues from reciprocal arrangements as a percentage of
total revenues declined to 11.6% in 1995 from 13.3% in 1994.

BROADCASTING COSTS. Broadcasting costs increased by $9.0 million, or 28.1%,
to $41.3 million in 1995 from $32.2 million in 1994. This increase was
attributable to the addition of 16 markets to the Company's operations
(including personnel costs and costs related to the facilities required to
support the Company's operations in its new markets), continued development of
the Expanded Radio Services and the development and operation of the MetroTV
Services. The 1995 Acquisitions accounted for $2.8 million, or 4.2%, of the
total cost of operations in 1995. Primarily as a result of an increase in
operating costs associated with the development and operation of the Expanded
Radio Services and the Video News Services from $1.4 million in 1994 to $3.1
million in 1995, broadcasting costs as a percentage of revenues increased from
53.7% in 1994 to 57.0% in 1995. Broadcasting costs associated with reciprocal
arrangements increased by $0.6 million to $5.0 million in 1995, from $4.4
million in 1994.

MARKETING EXPENSE. Marketing expense increased by $3.1 million, or
approximately 27.7%, to $14.5 million in 1995 from $11.4 million in 1994. This
increase resulted from increased sales commissions associated with the increased
revenues generated in 1995. As a percentage of revenues, marketing expense was
20.0% in 1995 and 18.9% in 1994. This increase in percentage terms resulted
primarily from the addition of sales representatives, sales managers and
managerial staff in connection with the Company's efforts to improve the
sell-through rate and higher marketing costs associated with the 1995
Acquisitions. Specifically, the 1995 Acquisitions accounted for $1.5 million of
total marketing expense in 1995. Marketing expense associated with reciprocal
arrangements increased by $0.8 million to $2.6 million in 1995, from $1.8
million in 1994.

GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
increased by $1.3 million, or approximately 21.1%, to $7.2 million in 1995 from
$5.9 million in 1994. This increase was primarily attributable to costs
associated with the acquisition and operation of the 1995 Acquisitions and the
development and expansion of the Expanded Radio Services and the MetroTV
Services. General and administrative expense associated with reciprocal
arrangements decreased by $0.3 million to $0.9 million in 1995, from $1.2
million in 1994.

24
<PAGE>
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased to $4.0 million in 1995 from $1.3 million in 1994. This increase
resulted primarily from the increases in the Company's asset base resulting from
the 1995 Acquisitions and the 1994 Acquisitions (as defined herein). The 1995
Acquisitions accounted for $1.9 million of the total depreciation and
amortization costs in 1995. Depreciation and amortization expense associated
with reciprocal arrangements increased to $1.0 million in 1995 from $0.4 million
in 1994.

OTHER EXPENSES (INCOME). Other expenses (income) increased to $(0.1)
million in 1995 from $(0.2) million in 1994.

INTEREST EXPENSE. Interest expense increased to $1.3 million in 1995 from
$0.3 million in 1994. This increase resulted primarily from increases in
indebtedness incurred in connection with the 1995 Acquisitions.

NET INCOME. As a result of the factors discussed above, net income
decreased by $3.6 million to $3.3 million in 1995 from $6.9 million in 1994.

EBITDA AND ADJUSTED EBITDA. EBITDA decreased by $1.0 million, or
approximately 9.5%, to $9.5 million in 1995 from approximately $10.5 million in
1994. This decrease was attributable to increases in broadcasting costs,
marketing expense and general and administrative expense as discussed above.
EBITDA as a percentage of revenues decreased to 13.0% in 1995 from 17.5% in
1994. Adjusted EBITDA decreased by $1.4 million to $10.8 million in 1995 from
$12.2 million in 1994. Adjusted EBITDA as a percentage of revenues decreased to
15.0% in 1995 from 20.4% in 1994. If the 1995 Acquisitions, 1996 Acquisitions
and Pending Acquisitions had occurred as of January 1, 1995, pro forma adjusted
EBITDA would have been $12.1 million in 1995.

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993

REVENUES. Revenues increased by $12.1 million, or approximately 25.3%, to
$60.0 million in 1994 from $47.9 million in 1993, primarily due to increased
sales of commercial airtime inventory in existing markets. The sell-through rate
increased to approximately 69.0% in 1994 from approximately 65.0% in 1993. In
addition, the Company's average commercial airtime inventory prices increased by
approximately 6.0% in 1994 over 1993 prices. In 1994, the operations acquired in
the 1994 Acquisitions generated revenues of approximately $0.6 million. Revenues
from reciprocal arrangements as a percentage of total revenues declined to 13.3%
in 1994 from 16.8% in 1993.

BROADCASTING COSTS. Broadcasting costs increased by $4.9 million, or
approximately 17.7%, to $32.2 million in 1994 from $27.4 million in 1993. Such
increase was attributable to the 1994 Acquisitions, start-ups in new markets and
costs of $1.4 million related to the development of the Expanded Radio Services.
Broadcasting costs as a percentage of revenues decreased to 53.7% in 1994 from
57.2% in 1993, primarily as a result of strong revenue growth. Such costs
generally do not increase proportionately with revenues. Broadcasting costs
associated with reciprocal arrangements increased by $0.8 million to $4.4
million in 1994, from $3.6 million in 1993.

MARKETING EXPENSE. Marketing expense increased by $2.5 million, or
approximately 28.3%, to $11.4 million in 1994 from $8.8 million in 1993. This
increase was attributable to increased sales commissions associated with revenue
increases in 1994. Marketing expense as a percentage of revenues remained
relatively constant at 18.9% in 1994 and 18.5% in 1993. Marketing expense
associated with reciprocal arrangements increased by $0.1 million to $1.8
million in 1994, from $1.7 million in 1993.

GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
decreased $1.1 million, or approximately 15.1%, to $5.9 million in 1994 from
$7.0 million in 1993. This decrease was primarily due to a decrease in
predecessor shareholder costs, specifically a decrease in the salary paid to Mr.
Saperstein. General and administrative expense associated with reciprocal
arrangements decreased by $0.9 million to $1.2 million in 1994, from $2.1
million in 1993.

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DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
decreased by $0.5 million, or 28.2%, to $1.3 million in 1994 from $1.8 million
in 1993, as a result of certain intangible assets associated with prior
acquisitions becoming fully amortized. Depreciation and amortization expense
associated with reciprocal arrangements decreased by $0.4 million in 1994 from
$1.1 million in 1993.

OTHER EXPENSES (INCOME). Other expenses (income) decreased to $(0.2)
million in 1994 from $0.2 million in 1993. This decreases was primarily
attributable to a $0.3 million loss on disposition of property in 1993.

INTEREST EXPENSE. Interest expense increased by $0.2 million, to $0.3
million in 1994 from $0.1 million in 1993. This increase was primarily due to an
increase in indebtedness related to the 1994 Acquisitions.

NET INCOME. As a result of the factors discussed above, net income
increased by $6.0 million to $6.9 million in 1994 from $0.9 million in 1993.

DISCONTINUED OPERATIONS. In 1992 the Company acquired Houston Metropolitan,
Ltd., a magazine concern in Houston, Texas, for notes payable and reciprocal
merchandise totaling $0.4 million. In 1993 the Company incurred a loss from
operations of $0.3 million (net of tax benefit of $0.2 million) and a loss on
disposal of $0.2 million (net of tax benefit of $0.1 million).

EBITDA AND ADJUSTED EBITDA. EBITDA increased by $5.8 million, or 124.7%, to
$10.5 million in 1994 from $4.7 million in 1993. This increase was due to an
increase in revenues and was partially offset by increases in broadcasting
costs, marketing expense and general and administrative expense. EBITDA as a
percentage of revenues increased to 17.5% in 1994 from 9.8% in 1993. Adjusted
EBITDA increased by $5.5 million to $12.2 million in 1994 from $6.7 million in
1993. Adjusted EBITDA as a percentage of revenues increased to 20.4% in 1994
from 14.0% in 1993.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company has financed its operations with cash generated by
operations and funds provided pursuant to the Credit Agreement. The Company has
used cash provided by operating activities to fund capital expenditures,
operations and distributions to its stockholders.

Net cash provided by operating activities increased by approximately $0.5
million, to $3.8 million in the June 1996 Period from $3.3 million in the June
1995 Period as a result of increases in net earnings before depreciation and
amortization and an increase in accrued liabilities. This increase was partially
offset by an increase in accounts receivable, an increase in cash used by net
reciprocal arrangements, and a decrease in deferred revenues. Net cash used in
investing activities decreased by $4.1 million, to $6.3 million in the June 1996
Period from $10.4 million in the June 1995 Period, due to a decrease in
acquisition costs. This decrease was partially offset by an increase in the
acquisition costs of property and equipment. Net cash provided by financing
activities decreased by $2.8 million, to $3.0 million in the June 1996 Period
from $5.8 million in the June 1995 Period as a result of (i) the reduction in
the rate of growth of long term debt and (ii) an increase in shareholder's
distributions. Such decrease in net cash provided by financing activities was
partially offset by an increase in disbursement float.

Net cash provided by operating activities increased by $0.8 million to $2.1
million in 1995 from $1.3 million in 1994. This increase was primarily
attributable to an increase in income taxes payable and a decrease in cash used
by reciprocal arrangements. These factors were partially offset by a decrease in
net earnings before depreciation and amortization and deferred revenue and a
decrease in the rate of growth of accounts receivable. Net cash used in
investing activities was $2.4 million in 1994 and $11.9 million in 1995. Cash
used in investing activities related primarily to (i) in 1994, the 1994
Acquisitions and advances to a stockholder of the Company (primarily for the
payment of income taxes payable by the shareholders in respect of S Corporation
income) and (ii) in 1995, the 1995 Acquisitions and acquisitions of information
gathering and broadcasting equipment. Net cash provided by financing activities
in 1994 and 1995 was $3.6 million and $9.2 million, respectively. Cash provided
by financing activities was comprised primarily of proceeds from funds provided
pursuant to the Credit Agreement. As of June 30,

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1996, the Company had short-term debt of $7.2 million and long-term debt of
$24.0 million. Short-term debt consisted of current maturities of borrowings
under the Credit Agreement, current portions of long-term debt and current
portions of capitalized lease obligations. Long-term debt consisted of the long-
term portion of the Credit Agreement and the long-term portion of the notes
relating to certain acquisitions.

Net cash provided by operating activities increased to $1.3 million in 1994
from $(0.9) million in 1993 due to the increases in net earnings and deferred
revenues. The increase in net earnings and deferred revenues was partially
offset by an increase in accounts receivable and cash used by net reciprocal
arrangements and a decrease in income taxes payable. Net cash used in investing
activities increased to $2.4 million in 1994 from $1.2 million in 1993 as a
result of an increase in advances on receivables from stockholders. This
increase was partially offset by an increase in proceeds from the sale of
property and equipment. Net cash provided by financing activities increased to
$3.6 million in 1994 from $2.0 million in 1993 due to an increase in long term
debt. This increase was partially offset by distributions to shareholders.

Accounts receivable increased $4.0 million in 1995 primarily as a result of
an increase in sales to $72.4 million in 1995 from $60.0 million in 1994. Income
taxes payable decreased $1.8 million in 1994 primarily due to the fact that the
largest of the Predecessor Companies elected to be treated as an S corporation
for tax purposes effective July 1, 1994. A major customer's declaration of
bankruptcy caused 1994 bad debt expense to be significantly higher than in 1995.
Since 1994, the Company's bad debt expense has been relatively constant. Net
reciprocal activities decreased by $1.8 million in 1995 primarily due to the
Company's decision to decrease its reciprocal arrangements and concentrate on
generation of cash revenues.

THE CREDIT AGREEMENT AND NOTES PAYABLE

The maximum aggregate permitted borrowings (the "Line of Credit") under the
Credit Agreement is $30.0 million. The Line of Credit bears interest at a
variable rate determined by the lender's prime rate or LIBOR and the Company's
total leverage; the interest rate ranges from 50 to 100 basis points over the
prime rate or 100 to 200 basis points over LIBOR. The Line of Credit has a
commitment fee of 0.375% per annum on the daily average unborrowed balance of
the Line of Credit. The Line of Credit currently is secured by a pledge of the
equity interests in each of the Predecessor Companies. The Credit Agreement
provides for various restrictions on the Company which preclude the Company,
without first obtaining the lender's consent, from taking certain actions,
including incurring additional indebtedness, purchasing the assets of any entity
other than in the ordinary course of business, merging or consolidating with any
other entity, altering its existing capital structure and paying certain
dividends. As of June 30, 1996, the Company had $29.3 million outstanding under
the Line of Credit. The Company intends to repay the balance outstanding under
the Line of Credit with a portion of the net proceeds of this offering.

The Company has obtained a commitment letter to enter into an amended and
restated credit agreement with its lender upon the closing of this offering.
Such Amended Line of Credit is expected to provide for maximum aggregate
permitted borrowings of $30.0 million. The Amended Line of Credit is expected to
expire September 30, 2003, and to begin amortizing in September 1998. The
Amended Line of Credit is expected to bear interest at a variable rate indexed
to the lender's prime rate or LIBOR and the Company's total leverage. The
Amended Line of Credit is expected to have a commitment fee based on the daily
average unborrowed balance of the Amended Line of Credit. Upon the closing, the
Company anticipates that the Amended Line of Credit will be secured by the
granting of a lien by the Company on all of its assets and a pledge of its
equity interests in each of the Predecessor Companies in favor of its lender.
The Amended Line of Credit is expected to provide for various restrictions on
the Company which would preclude the Company, without first obtaining the
lender's consent, from taking certain actions, including incurring additional
indebtedness, purchasing the assets of any entity other than in the ordinary
course of business, merging or consolidating with any other entity, altering its
existing capital structure and paying certain dividends.

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The Company issued non-interest bearing notes in connection with the
acquisitions in 1995 of the stock of Skyview Broadcasting Networks, Inc. and
Airborne Broadcast Consultants and the acquisition in 1995 of the assets of
Airborne Broadcasting Systems, Inc. and the 1994 acquisition of Charlotte
Traffic Patrol, Inc. which had principal amounts of $0.2 million, $0.1 million,
$0.1 million and $0.7 million, respectively, outstanding as of June 30, 1996.
The Company has guaranteed a $0.7 million letter of credit related to the
Charlotte acquisition as of June 30, 1996. See "Business -- Acquisitions."

CAPITAL EXPENDITURES

Capital expenditures were $2.7 million in both 1994 and 1995. Historically,
the Company's capital expenditures have related principally to increasing the
Company's information gathering capabilities, broadcasting capacity and
technology base. The Company anticipates that capital expenditures in 1996 will
be approximately $7.0 million. This $7.0 million is expected to include between
$4.0 million and $5.0 million for expenditures associated with expanding the
Company's information gathering and broadcasting capabilities, including
significant expenditures on video broadcasting and surveillance.

The Company believes its existing sources of liquidity, cash provided by
operations, the Credit Agreement and the proceeds of this offering will satisfy
the Company's anticipated working capital and capital expenditure requirements
for the foreseeable future.

EFFECTS OF INFLATION

The Company believes that the relatively moderate rate of inflation over the
past few years has not had a significant impact on the Company's results of
operations.

RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board issued SFAS No. 123, "Accounting
for Stock Based Compensation" in October 1995, which establishes financial
accounting and reporting standards for stock based on employee compensation
plans including, stock purchase plans, stock options, restricted stock and stock
appreciation rights. The Company has elected to continue accounting for stock
based on compensation under Accounting Principles Board Opinion No. 25. The
disclosure requirements of SFAS No. 123 will be effective for the Company's
financial statements beginning in 1996. Management does not believe that the
implementation of SFAS 123 will have a material effect on its financial
statements.

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BUSINESS

OVERVIEW

The Company is the largest provider of traffic reporting services and is a
leading supplier of local news, sports, weather and other information reporting
services to the television and radio broadcast industries. The Company's
information reports, which are customized to meet the specific needs of each of
the Company's individual radio and television station affiliates, are presently
being broadcast by approximately 1,275 radio stations affiliates and 110
television station affiliates. The Company provides local broadcast information
reports in 47 of the 50 largest MSA markets in the United States. In exchange
for the Company's information reports, radio and television station affiliates
provide commercial airtime inventory to the Company. The packaging and sale of
this commercial airtime inventory accounts for substantially all of the
Company's revenues.

The Company offers advertisers three different networks on which to
broadcast their advertisements: the Radio Traffic Services Network which
broadcasts the Radio Traffic Services, the Expanded Radio Services Network which
broadcasts the Expanded Radio Services and the MetroTV Network which broadcasts
the MetroTV Services. The Company believes that the Expanded Radio Services
Network and the MetroTV Network, both of which are currently being developed,
will become separate broad-based networks through which the Company will be able
to acquire, package and sell additional commercial airtime inventory. See
"--Operating Strategy" and "-- Advertising Sales and Marketing."

Since its founding in 1978, the Company has demonstrated growth in net
revenues and EBITDA. For the six months ended June 30, 1996, the Company had
revenues of $50.1 million, EBITDA of $11.5 million and adjusted EBITDA of $12.2
million. For the year ended December 31, 1995, the Company had pro forma
revenues of $78.1 million, pro forma EBITDA of $10.0 million and pro forma
adjusted EBITDA of $12.1 million.

OPERATING STRATEGY

The Company's strategy is to realize operating efficiencies by (i) expanding
geographically; (ii) increasing the number of affiliates using the Radio Traffic
Services within existing markets; (iii) developing the Expanded Radio Services;
(iv) developing the MetroTV Services; and (v) continuing to strengthen its
marketing, sales and inventory management operations.

EXPAND GEOGRAPHICALLY. The Company, which currently operates in 60 MSA
markets in the United States, including 54 of the largest 75 MSA markets in the
United States, believes that the economic model for its local information
services business is viable in each of the largest 75 markets. Since July 1994,
the Company has entered 16 new markets, including six strategic acquisitions
accounting for an additional 14 markets and start-ups in two new markets
throughout the United States. Additionally, the Company intends to expand into
the remaining 21 markets over the next three years through strategic
acquisitions and start-ups. Strategic acquisitions afford the Company the
opportunity to realize economies of scale and cost savings as existing
operations are acquired and duplicative functions eliminated.

INCREASE THE NUMBER OF AFFILIATES USING THE RADIO TRAFFIC SERVICES WITHIN
EXISTING MARKETS. The Company believes that there are substantial opportunities
for continued growth in its Radio Traffic

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Services Network. As of June 30, 1996, the Company provided the Radio Traffic
Services to approximately 1,230 radio station affiliates, an increase from
approximately 900 radio station affiliates as of December 31, 1994. The Company
believes that opportunities are available to increase its market penetration by
establishing affiliate relationships with additional radio stations. Its current
Radio Traffic Services Network represents 48.7% of the approximately 2,524 radio
stations in the 60 MSA markets in which the Company operates. Once the Company
establishes a presence in a market by providing its services to at least one
affiliate, it can leverage its investment in information gathering technology,
such as aircraft and fixed-position cameras, by providing traffic services to
multiple affiliates, at minimal additional costs.

DEVELOP THE EXPANDED RADIO SERVICES. Having established a substantial
market presence in the Radio Traffic Services, the Company began during 1994 to
leverage this business by offering the Expanded Radio Services to its network of
radio station affiliates. As of June 30, 1996, the Company provided the Expanded
Radio Services to more than 200 radio station affiliates in 28 MSA markets, an
increase from 92 radio station affiliates in 17 MSA markets as of December 31,
1994. The Company believes it can provide customized information reports of a
superior quality, at a lower cost than an individual station can provide on its
own. Moreover, the Company believes that consolidation in the radio industry may
increase the demand for the Expanded Radio Services Network because radio
station owners are likely to continue to increase their out-sourcing of various
programming elements in order to minimize operating costs. The Company plans to
focus on increasing the number of radio stations broadcasting the Expanded Radio
Services within its current markets, and to expand these services to all of its
markets by the end of 1997.

DEVELOP THE METROTV SERVICES. The Company has provided its Television
Traffic Services to the MetroTV Network for over ten years. As of June 30, 1996,
this network consisted of 110 television stations in 47 DMA markets, an increase
from 71 television stations in 33 DMA markets as of December 31, 1994. In
connection with its core Radio Traffic Services business, the Company developed
an extensive infrastructure of video surveillance and broadcast equipment,
including jet helicopters, broadcast quality remote and omni-directional
aircraft-mounted camera systems, mobile units, computer generated graphic
displays and broadcasting technology. In 1995, the Company began to use this
infrastructure to offer the Video News Services to its network of television
station affiliates; the Company currently provides this service to 16 of its
television station affiliates in 12 of its 47 DMA markets. The Company's MetroTV
Services include full service, 24 hours per day/7 days per week video coverage
from camera crews in the Company's aircraft and in the Company's mobile ground
units covering news stories. In addition, the Company's strategically located
fixed-position ground-based camera systems offer affiliates coverage of crucial
traffic arteries and news stories, and are capable of providing panoramic views
of the cities in which such cameras are located. The Company intends to expand
the Video News Services into the 25 largest DMA markets in the United States
over the next three years.

CONTINUE TO STRENGTHEN MARKETING, SALES AND INVENTORY MANAGEMENT
OPERATIONS. Over the past year, the Company has invested in, and continues to
initiate and implement, new operating strategies and systems to increase
revenues and EBITDA in its operations. In order to increase the percentage of
the Company's commercial airtime inventory sold, the Company has (i) increased
its sales force from approximately 70 sales representatives as of December 31,
1994 to approximately 136 sales representatives as of June 30, 1996; (ii)
developed a corporate marketing department to support the efforts of its sales
representatives by providing extensive training, research, sales/marketing
materials and analysis; (iii) hired additional general managers and sales
managers to better manage the activities of its sales representatives and
enhance its affiliate relations; (iv) fully automated its commercial airtime
inventory management system to improve inventory control and pricing; and (v)
reduced the level of reciprocal arrangements to focus sales representatives on
cash revenue business. These enhancements have allowed the Company to increase
advertising rates in each of 1994 and 1995. In addition, the Company estimates
that it sold approximately 69% in 1994 and 72% in 1995, respectively, of its
Radio Traffic

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Services Network and Expanded Radio Services Network commercial airtime
inventory. For the six months ended June 30, 1996, the Company estimates that it
sold approximately 71% of its existing radio network commercial airtime
inventory.

PROGRAMMING

RADIO PROGRAMMING SERVICES

The Company has been supplying radio stations with customized Radio Traffic
Services since its inception in 1978. The Company is now the largest supplier of
the Radio Traffic Services in the United States. The Company has offered its
Expanded Radio Services since 1994 and is now a leading supplier of such
services, with over 200 affiliates in 28 markets. The Company intends to have a
general news reporting presence in all of its 60 markets by the end of 1997.

The Company gathers traffic and other data utilizing the Company's
information-gathering infrastructure, which includes aircraft (jet helicopters
and airplanes), broadcast quality remote camera systems positioned both at
strategically located ground positions and on aircraft, mobile units and
cellular systems, and by accessing various government based traffic tracking
systems. The Company also gathers information through various services including
Reuters America Inc., Turner Program Services, Inc., WeatherBank, Inc., Weather
Services Corporation, City News Service of Los Angeles, Sports Final Radio Net,
Inc. and Bay City News, Inc. The information is then processed, written into
broadcast copy and entered into the Company's computer systems by the Company's
local writers and producers. The Company's professional broadcasters then read
the customized reports on the air.

The Company's information-gathering infrastructure and the flexibility
created by its ability to provide services 24 hours per day/7 days per week to
its affiliates enable the Company to respond to changing conditions and enable
the Company's affiliates to provide their listeners with accurate up-to-
the-minute information. For example, responding to numerous radio station
requests during the Long Island fires in 1995, the Company's New York operations
center substantially increased the number of reports regarding this subject
provided to affiliates. Rapid response in similar circumstances, such as in
connection with the 1994 Los Angeles earthquake, is routinely achieved by the
Company whenever weather or other events impact either traffic or other
conditions of interest to the listeners or viewers of the Company's affiliates.
See "-- Infrastructure."

As a result of its extensive network of operations and broadcasters, the
Company often reports important news stories and provides its affiliates with
live coverage of these stories. The Company is able to customize and personalize
its reports of breaking stories using its individual affiliates' call letters
from the scene of news events. For example, during the TWA Flight 800 crisis,
the Company provided live

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customized reports from New York to its affiliates all over the country. The
Company believes that it is the only radio network news organization that has
local studio operations that cover 60 markets and that is able to provide such
customized reports to these markets.

In addition, the Company is currently test marketing a regional news wire
service (non-customized text and audio) in five markets. If the test is
successful, the Company plans to launch its news wire service in various regions
beginning in 1997. The Company could eventually offer this service in small and
medium-sized markets without opening any local operations centers as this would
be a non-customized service and distributed via satellite, thereby generating
additional commercial airtime inventory for the Expanded Radio Services.

TELEVISION PROGRAMMING SERVICES

The Company has been supplying its Television Traffic Services to television
stations for over ten years and is currently providing such services to 110
television stations in 47 markets. Originally, the Company provided television
stations with audio reports of traffic information and simple graphics; as the
Company developed its Television Traffic Services, it provided more
sophisticated graphics displays to the MetroTV Network. In 1995, the Company
began to expand and enhance the information services that it provides to
television stations. The Company is now providing its Video News Services to
approximately 16 television stations in 12 markets. As with its radio
programming services, with its MetroTV services the Company supplies customized
information reports which are delivered on air by its professional broadcasters
to its television station affiliates. In addition, the Company supplies
customized graphics and other visual programming elements to its television
station affiliates.

The Company began utilizing live studio cameras in order to enable its
traffic reporters to provide its Video News Services on television from the
Company's local broadcast studios. In addition, the Company began in 1995 to
provide its Video News Services from its aircraft and ground based camera
systems. The Company provides its Television Traffic Services and Video News
Services to television stations owned by some of the largest television groups
in the nation, including A.H. Belo Corporation, Cox Communications, Inc., ABC
Inc., a subsidiary of The Walt Disney Company, Ellis Communications, Inc., Fox
Television Stations, Inc., a subsidiary of The News Corporation Limited,
National Broadcasting Company, Inc., a subsidiary of General Electric Company,
The Washington Post Co. and CBS, Inc., a subsidiary of Westinghouse Electric
Company.

The Video News Services include: (i) full-service, 24 hours per day/7 days
per week video coverage from the Company's camera crews, using broadcast quality
camera equipment and news vehicles; (ii) live video news feeds from the
Company's aircraft; and (iii) live video coverage from strategically located
ground based camera systems. Currently, the Company is providing all of such
Video News Services to four affiliates in Houston, Texas, where the Company has
tested the product for the past fifteen months, and plans to expand it into the
25 largest DMA markets in the country over the next three years. The capital and
operating expenditures needed to expand the Company's Video News Services have
been and will continue to be significant relative to the capital expenditures
required by the Company to operate its radio information services business.

METRO INFORMATION SERVICES

The Company initiated its Metro Information Services ("MIS") division to
develop non-broadcast traffic information business. MIS develops innovative
techniques of gathering local traffic and transportation information as well as
new methods of distributing such information to the public. The Company believes
that in order to remain competitive and to continue to provide an information
product of the highest quality to its affiliates, it is necessary to invest in
and participate in the development of new technology. The Company is currently
working with numerous public and private entities across the United States to
improve dissemination of traffic and transportation information. The Company is
a large supplier of information to the wireless telephone industry, providing
customized traffic information, direction services, and other local information
to cellular subscribers via the Company's STAR JAM (TM) and STAR FIND (TM)
services. Also, the Company plans to offer traffic information services via the

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Internet, other wireless communications, in-vehicle systems and other potential
delivery mechanisms. The Company believes that it is well-positioned, as a
leading supplier of local traffic and other information, to benefit from the
evolution of future distribution systems.

The Company has participated in several United States Department of
Transportation ("USDOT") funded "Intelligent Transportation Systems" projects
including: (i) The Atlanta Showcase, a federally funded technology demonstration
project which took place during the Summer Olympics in 1996 and involved the
delivery of traffic and mobility information and (ii) TravInfo Traveler
Information Center, a field operational test being conducted in the San
Francisco Bay Area to implement a region-wide, open-access, multi-model advanced
traveler information service.

INFRASTRUCTURE

The Company's geographically dispersed operations have historically been
organized into several regions. Formerly, a regional General Manager would
typically have overall management responsibility for sales and operations in
such General Manager's region, which would be comprised of four to six markets,
depending on the size of the markets. However, the Company believes that as it
continues to grow its Expanded Radio Services and Video News Services, a General
Manager focused exclusively on one market or a smaller number of markets will be
able to more effectively implement and maintain affiliate relationships and
maximize the percentage of available advertising inventory sold. Accordingly,
the Company presently intends to reorganize its management to place a single
General Manager in each of its 10 largest markets and to assign a General
Manager in its remaining markets to a small number of markets, generally one to
three.

In each of its markets, the Company employs a Director of Operations who is
responsible for all aspects of the Company's day-to-day operations. Each
Director of Operations is responsible for supervising all of the broadcasters,
airborne reporters, producers, editors, and writers in such Director's operation
center. Moreover, the Director of Operations is responsible for maintaining
day-to-day relations with affiliates and pursuing relationships with
unaffiliated stations. In addition, the Company employs eight Regional Directors
of Operations who supervise the Directors of Operation and who report to the
Company's General Managers.

The Company believes that its extensive fleet of aircraft and other
information-gathering technology and broadcast equipment have allowed the
Company to provide high quality programming, enabling it to retain and expand
its affiliate base. In the aggregate, the Company utilizes approximately 69
fixed-wing aircraft, 17 helicopters, 30 mobile units, 7 airborne camera systems,
16 fixed-position camera systems, 50 broadcast studios and 1,177 broadcasters
and producers. The Company also maintains a staff of computer programmers and
graphics experts to supply customized graphics and other visual programming
elements to television stations. In addition, the Company's operating centers
and broadcast stations has sophisticated computer technology, video and
broadcast equipment and cellular and wireless technology which enables the
Company's broadcasters to deliver accurate reports to its affiliates. The
infrastructure and resources dedicated to a specific market by the Company are
determined by the size of the market, the number of affiliates the Company
serves in the market and the type of services being provided.

For example, in the New York City metropolitan area, the Company currently
utilizes two jet helicopters with mounted omni-directional cameras, four
airplanes, and fixed-position cameras positioned strategically to deliver
up-to-the-minute live reports. Traffic conditions are relayed via two way radio
to the producers in the Company's New York broadcast studio who transcribe the
report, enter it into the computer system and produce the broadcast copy which
is then delivered on-air to the Company's New York radio and television
affiliates by its broadcasters. The Company recently installed cameras on its
helicopters and on certain buildings, including the Empire State Building,
enabling the Company to provide its television station affiliates with live
video of breaking news and traffic conditions. The Company believes that its
investment in its New York City-area infrastructure has been a significant
factor in the increase in its number of radio station and television station
affiliates in its New York City, Nassau/

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Suffolk Counties (Long Island) and Monmouth/Ocean Counties, NJ markets from 24
as of December 31, 1994 to 31 as of June 30, 1996. The following diagram depicts
the infrastructure supporting the Company's New York City metropolitan area
operation:

[ART]

In 1995, the Company established an electronic communications network in its
headquarters in Houston, Texas. The Company began expanding this network to
include its marketing and operations offices throughout the country in 1996. The
Company has created this Intranet for internal management as well as Internet
access. The Company believes that by networking each of its regional offices to
the corporate office, access to certain sales, marketing, scheduling and
accounting information will be more effectively updated, maintained and
disseminated to the Company's employees. The Company believes this will result
in an improvement in sales and marketing efficiency, and will also be beneficial
to general managers in tracking and maintaining commercial airtime inventory and
rate controls and affiliate information for their respective markets. The
Company has invested in this infrastructure, with ten markets currently on the
network, and plans to add its remaining markets to this network by 1997.

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ADVERTISING SALES AND MARKETING

The Company packages its radio commercial airtime inventory on a network
basis, covering all affiliates in relevant markets. This packaged inventory
typically appeals to advertisers seeking a broader demographic reach than that
delivered by individual radio stations, which generally deliver an audience with
narrow, specific demographic characteristics. Because the Company sells its
commercial airtime inventory on a network basis rather than station by station,
the Company does not compete for advertising dollars with its local radio
station affiliates. The Company believes that this corporate policy is a key
factor in maintaining its affiliate relationships.

Currently, the Company's television commercial airtime inventory is sold by
members of its general advertising sales force. The Company is developing a
separate sales force to sell its television commercial airtime inventory.
Currently, the Company packages its television commercial airtime inventory on a
local, regional and national network basis. However, advertisers on the MetroTV
Network have the ability to select specific markets and television stations for
their advertisements. This enables advertisers to customize advertising packages
to their individual requirements.

In each of the markets in which it conducts operations, the Company
maintains an advertising sales office as part of its operations center. The
Company's advertising sales force is able to sell available commercial airtime
inventory in any and all of the Company's markets in addition to selling such
inventory in each local market, which the Company believes affords its sales
representatives an advantage over certain of their competitors. For example, an
airline advertiser can purchase airtime inventory in multiple markets from the
Company's local sales representative in the city in which the airline is
headquartered. The Company's advertising sales force is comprised of
approximately 136 sales representatives. Although the Company typically has two
or three sales representatives in an individual market, the number of sales
representatives in an individual market ranges from one to eight depending on
the size of the market and the number of potential national and regional
advertising clients headquartered in the market. Specialized programs and
marketing campaigns, which support nationwide sales and other special forms of
advertising, are managed from the Company's headquarters in Houston, Texas.

Due to the number of the Company's markets, its reach within its markets and
the range of services it provides, the Company has a large number of advertising
clients in a diverse group of industries. For the year ended December 31, 1995,
no single advertiser represented more than 6% of the Company's total revenues
and the Company's top ten advertisers, as a group, represented only 21% of the
Company's total revenues.

As the following table indicates, for the year ended December 31, 1995,
advertising sales to the ten largest industry groups which are purchasers of the
Company's commercial airtime inventory accounted for approximately 58% of the
Company's total sales and no single industry group accounted for more than 8% of
the Company's total sales.

<TABLE>
<CAPTION>
% OF TOTAL SALES FOR
TWELVE MONTHS
ADVERTISER INDUSTRY ENDED 12/31/95
- --------------------------------------------------------------------- ---------------------
<S> <C>
Consumer Goods....................................................... 8%
Retail (Home Improvement)............................................ 7%
Supermarkets......................................................... 6%
Automotive (Retail).................................................. 6%
Automotive........................................................... 6%
Other Retail......................................................... 6%
Cellular............................................................. 5%
Newspapers........................................................... 5%
Oil & Gasoline....................................................... 5%
Lotteries............................................................ 4%
---
Total.............................................................. 58%
---
---
</TABLE>

35
<PAGE>
Due to the relatively long lead-time required to educate advertising
agencies on the merits of the Company's advertising packages, the Company has
historically targeted its advertising sales efforts directly to advertisers.
Many advertisers, however, have directed their advertising agencies to place
advertising with the Company and, as a result, such agencies have themselves
begun to direct more advertisers to the Company. Due to the growing strength of
the Company's advertising agency relationships, advertising sales booked through
advertising agencies grew to approximately 75% of the Company's total revenues
in 1995, an increase from 63% in 1992. The Company does not have significant
sales concentration among its agency-placed advertising, with advertising
inventory sold through an estimated 400 agencies during 1995.

THE RADIO TRAFFIC SERVICES NETWORK AND THE EXPANDED RADIO SERVICES NETWORK

The Company's typical radio advertisement on the Radio Traffic Services
Network and the Expanded Radio Services Network consists of an opening
announcement and a ten second commercial message presented immediately prior to,
in the middle of, or immediately following a regularly scheduled information
report. Because the Company has numerous radio station affiliates in each of its
markets (averaging 21 affiliates per market), the Company believes that its
traffic broadcasts reach more people, more often, in a higher impact manner than
can be achieved using any other advertising medium. The Company combines its
commercial airtime inventory into multiple "sponsorship" packages (generally
125, 250 or 500 sponsorships broadcast over a four week period in each market)
which it then sells as an information sponsorship package to radio advertisers.
These Company sponsorship packages are run on a fair and equal rotation (i.e.,
each advertiser receives its pro rata share of advertisements sold by the
Company for broadcast on each of the Company's affiliates in the relevant market
or markets) throughout the Traffic Services Network on a local, regional or
national basis, primarily during prime morning and afternoon drive periods. The
Company does not allow an advertiser to select individual stations from the
Radio Traffic Services Network or Expanded Radio Services Network on which to
run its advertising campaign. The Company's 500 sponsorship package (which the
Company believes is its most frequently purchased package), reaches an average
of approximately 70% of the population (age 12 and over) in the Company's MSA
markets. In addition, the Company's large network of affiliates allows the
Company to offer advertisers the opportunity to purchase advertising in multiple
markets nationwide through a single purchase from the Company.

As the Company has developed and expanded the Expanded Radio Services
Network, it has primarily packaged and sold its commercial sponsorships of the
Expanded Radio Services in conjunction with its existing traffic report
sponsorships. Because the Expanded Radio Services Network is not fully mature,
the Company has not yet maximized the marketing of commercial airtime inventory
on the Expanded Radio Services Network as a separate product line. Accordingly,
the Company has only generated minimal revenues from the sale of advertisements
on the Expanded Radio Services Network. As the Company develops the Expanded
Radio Services Network in individual markets, it intends to package and sell
advertisements as a separate product. During the first quarter of 1996, the
Company began to package and sell separate Expanded Radio Services Network
sponsorship packages in five markets (Boston, Washington, Houston, Phoenix, and
Los Angeles). The Company intends to introduce the Expanded Radio Services
Network sponsorships in additional markets as it further develops the Expanded
Radio Services Network throughout 1996 and 1997.

As the Company's business has developed, it has sold increasing amounts of
its advertising to regional/national advertisers. For the year ended December
31, 1994, approximately 25% of the Company's radio advertising revenue was
attributable to regional/national advertisers, with the balance attributable to
local advertisers, and for the six months ended June 30, 1996, sales to
regional/national advertisers accounted for approximately 50% of sales of total
commercial airtime inventory.

The Company believes that the positioning of advertisements within or
adjacent to its information reports appeals to advertisers because the
advertisers' messages are broadcast along with regularly scheduled programming
during peak morning and afternoon drive times when a majority of the radio
audience is listening. Radio advertisements broadcast during these times
typically generate premium

36
<PAGE>
rates. Moreover, surveys commissioned by the Company demonstrate that because
the Company's customized information reports are related to topics of
significant interest to listeners, listeners often seek out the Company's
information reports. Since advertisers' messages are imbedded in the Company's
information reports, such messages have a high degree of impact on listeners and
generally will not be "pre-empted" (i.e., moved by the radio station to another
time slot). Most of the Company's advertisements are read live by the Company's
on-air broadcasters, providing the Company's advertisers with the added benefit
of an implied endorsement for their product.

THE METROTV SERVICES

The Company provides its MetroTV Services to television stations in exchange
for thirty-second commercial airtime inventory. The amount and day-part
placement of the commercial airtime inventory that the Company receives from
television stations varies by market and by the type of service provided by the
Company. As the Company has provided more enhanced MetroTV Services, it has been
able to acquire more commercial airtime inventory with better day-part
placement. The Company, in turn, packages this commercial airtime inventory and
sells it to advertisers on a local, regional and national basis. The Company
believes that it offers advertisers significant benefits because, unlike
traditional television networks, the MetroTV Network often delivers more than
one station in a market and advertisers have the ability to select specific
television stations and markets. Therefore, the Company can customize
advertising packages for individual advertisers based on each advertiser's
requirements.

Historically, revenues from sales of television commercial airtime inventory
have been an insignificant part of the Company's total revenues. In order to
significantly increase the Company's revenues from sales of television
commercial airtime inventory, in early 1996 the Company: (i) formed a separate
television advertising sales staff; (ii) began seeking an increased amount of
higher value fixed position commercial airtime inventory from television
stations in exchange for providing enhanced Video News Services; and (iii)
pre-sold a significant amount of commercial airtime inventory to a large
national advertiser. As the Company continues to expand all aspects of its
Television Traffic Services and Video News Services, the Company believes that
revenues from television advertising sales will continue to increase.

AFFILIATES

The Company's large network of affiliates allows the Company to offer
advertisers the opportunity to reach a broad-based, local, regional or national
audience through a single purchase of commercial airtime from the Company. The
Company has demonstrated consistent affiliate growth; for example, the number of
radio station affiliates has grown 40.5% from 914 as of December 31, 1994 to
1,284 as of June 30, 1996, and the number of the Company's television station
affiliates has increased 54.9% from 71 to 110 over the same period. In addition,
the Company's relationships with numerous radio station and television station
affiliates within a certain market create economies of scale which allow the
Company to utilize a wide array of professional broadcasters,
information-gathering equipment and technology and extended hour operations less
expensively than if it had an affiliate relationship with only one individual
station or group in a particular market.

The number of the Company's radio station affiliates in an individual market
varies from 55 in the Los Angeles, California market to two in the Cincinnati,
Ohio market (which was a 1996 start-up) and currently averages 21 affiliates per
market. The Company's primary goal when entering a market is to enter into
affiliate relationships with every radio station and television station in the
market, thereby maximizing the percentage of listeners (i.e., the number of
people in the radio audience who have heard a report in a particular market) of
the Company's networks within each of its markets; such maximization is an
integral part of the Company's sales and marketing strategy. With the exception
of Cincinnati, Ohio, the Company's reports and sponsorships are heard by a low
of 43.7% in Nashville, Tennessee to a high of 100% of the radio listening
audience in six markets. On average the Company's reports and sponsorships are
heard by over 88% of the population (age 12 and over) in its markets.

37
<PAGE>
The following chart presents, in order of MSA population (age 12 and over),
the Company's current number of radio station affiliates in each of its MSAs,
the MSA's population and the Company's audience reached in the relevant MSA.

<TABLE>
<CAPTION>
# OF RADIO
STATION MSA
MSA(1) AFFILIATES POPULATION(1) % LISTENERS(2)
- -------------------- ----------- ------------- ---------------
<S> <C> <C> <C>
New York, NY 28 14,114,700 83.5
Monmouth/Ocean, NJ 884,300 48.9
Los Angeles, CA 55 9,687,300 80.6
Riverside/San
Bernardino, CA 1,343,200 89.3
Oxnard, CA 362,000 68.9
Chicago, IL 33 6,895,700 81.8
San Francisco/ 28 5,367,400 78.6
Oakland, CA
Philadelphia, PA 35 4,067,000 95.3
Detroit, MI 26 3,652,100 91.3
Dallas/Ft. Worth, TX 30 3,570,000 84.0
Washington, DC 34 3,512,500 98.6
Houston/Galveston, 35 3,348,800 99.7
TX
Boston, MA 32 3,236,600 84.4
Miami/Ft. 32 2,936,100 96.9
Lauderdale/
Hollywood, FL
Atlanta, GA 41 2,843,500 80.3
Seattle/Tacoma, WA 24 2,698,900 100.0
Nassau/Suffolk (Long 3 2,253,200 64.5
Island), NY
San Diego, CA 21 2,212,900 75.3
Minneapolis/St. 30 2,202,400 98.4
Paul, MN
St. Louis, MO 27 2,083,800 95.6
Baltimore, MD 23 2,056,700 81.9
Pittsburgh, PA 25 2,036,900 84.1
Phoenix, AZ 38 1,997,400 99.8
Tampa/St. 30 1,885,200 100.0
Petersburg/
Clearwater, FL
Cleveland, OH 25 1,759,300 100.0
Denver/Boulder, CO 37 1,733,500 98.2
Portland, OR 21 1,598,900 83.0
Cincinnati, OH 2 1,556,300 6.0
Kansas City, MO 20 1,349,300 60.3
Milwaukee/Racine, WI 23 1,339,700 98.3

<CAPTION>
# OF RADIO
STATION MSA
MSA(1) AFFILIATES POPULATION(1) % LISTENERS(2)
- -------------------- ----------- ------------- ---------------
<S> <C> <C> <C>

Sacramento, CA 38 1,337,200 99.2
Stockton, CA 420,400 67.4
Modesto, CA 330,400 67.2
San Jose, CA 9 1,317,700 47.3
Providence/Warwick/ 24 1,263,700 96.9
Pawtucket, RI
Columbus, OH 13 1,223,900 60.4
Norfolk/Virginia 29 1,210,900 100.0
Beach/Newport News,
VA
San Antonio, TX 24 1,183,200 96.0
Salt Lake City/ 24 1,158,600 99.6
Ogden/Provo, UT
Indianapolis, IN 19 1,108,500 91.6
Charlotte/Gastonia/ 21 1,077,400 87.9
Rock Hill, NC
Orlando, FL 27 1,017,100 100.0
Buffalo/Niagara 15 991,600 98.5
Falls, NY
Hartford, CT 40 962,700 91.2
New Haven, CT 389,300 57.3
Danbury, CT 164,300 83.6
Memphis, TN 12 931,800 69.4
Nashville, TN 25 911,900 43.7
Rochester, NY 15 900,700 85.2
West Palm Beach/ 20 850,200 79.0
Boca Raton, FL
Las Vegas, NV 23 847,700 99.8
Louisville, KY 24 845,900 88.9
Oklahoma City, OK(3) 8 836,200 70.5
Jacksonville, FL(4) 21 823,900 98.7
Austin, TX 18 821,600 95.9
Richmond, VA 22 775,000 100.0
Tucson, AZ 12 628,100 94.1
Albuquerque, NM(3) 12 537,700 78.1
Wilmington, DE 2 506,900 67.4
Daytona Beach, FL 5 390,300 46.5

TOTAL (5) 1,260 117,606,500(6) 88.0%
</TABLE>

- ------------------------
(1) Listed in The Arbitron Radio Metro and Television Market Population
Estimates in 1995-1996.*

(2) Percentage of the MSA population which hears the Company's information
reports, calculated using Arbitron Winter 1996 Radio Market Reports* and
Strata Marketing, Inc. Statistical Analysis.

(3) The Company has a license agreement with WIS to provide national sales,
marketing and operational support in exchange for certain amounts of
commercial airtime inventory in Oklahoma City, OK, and Albuquerque, NM. The
Company packages and sells such commercial airtime on a regional and
national basis to its advertisers. The Company has entered into a letter of
intent with WIS to acquire the assets of WIS in Oklahoma City and
Albuquerque.

(4) Pursuant to a Joint Marketing Agreement, the Company receives advertising
inventory in Jacksonville, Florida. The Company packages and sells such
commercial airtime on a regional and national basis to its advertisers.

(5) Does not include 24 affiliates of the Company's New England Weather Bureau,
which are located in various MSA markets throughout New England. The
Company has a total of approximately 1,284 radio station affiliates,
including the New England Weather Bureau.

(6) Arbitron includes the population of Nassau/Suffolk (2,253,200) and Monmouth
(490,700) counties in the New York MSA. Therefore, these populations are
not duplicated in the total population figure.

38
<PAGE>
The following chart presents, in order of market population (age 12 and
over), the Company's current number of television affiliates in each market and
the DMA's population.
<TABLE>
<CAPTION>
# OF TELEVISION
STATION DMA
DMA(1) AFFILIATES POPULATION(1)
- --------------------------- --------------- -------------
<S> <C> <C>
New York, NY 2 15,922,200
Los Angeles, CA 2 12,447,700
Chicago, IL 2 7,153,300
Philadelphia, PA 2 6,046,200
San Francisco/Oakland/ San 4 5,304,500
Jose CA
Boston, MA 3 4,850,800
Washington, DC 4 4,323,100
Dallas/Ft. Worth, TX 2 4,033,000
Detroit, MI 2 3,899,200
Houston, TX 7 3,610,800
Atlanta, GA 4 3,557,400
Seattle/Tacoma, WA 2 3,199,100
Cleveland/Akron, OH 4 3,193,200
Minneapolis/St. Paul, MN 2 3,100,200
Miami/Ft. Lauderdale, FL 3 3,009,000
Tampa/St. Petersburg/ 3 2,901,800
Sarasota, FL
Phoenix, AZ 4 2,584,000
Sacramento/Stockton/ 4 2,561,700
Modesto, CA
Pittsburgh, PA 1 2,498,400
Denver, CO 1 2,437,800
St. Louis, MO 4 2,433,600
Baltimore, MD 2 2,214,500
Orlando/Daytona Beach/ 2 2,176,500
Melbourne, FL
Portland, OR 1 2,053,500
Hartford/New Haven, CT 3 2,050,700

<CAPTION>
# OF TELEVISION
STATION DMA
DMA(1) AFFILIATES POPULATION(1)
- --------------------------- --------------- -------------
<S> <C> <C>
Indianapolis, IN 2 2,033,200
Charlotte, NC 1 1,780,700
Nashville, TN 1 1,695,100
Kansas City, MO 3 1,682,200
Columbus, OH 1 1,609,200
Salt Lake City, UT 2 1,602,600
San Antonio, TX 2 1,514,400
Norfolk/Portsmouth/ Newport 3 1,411,000
News, VA
Buffalo, NY 2 1,400,800
Memphis, TN 2 1,366,800
Oklahoma City, OK(2) 1 1,271,500
Albuquerque/Santa Fe, NM(2) 1 1,266,300
Providence/New Bedford, RI 1 1,263,700
West Palm Beach/Ft. Pierce, 2 1,206,900
FL
Louisville, KY 2 1,199,600
Richmond/Petersburg, VA 2 1,109,700
Austin, TX 1 894,200
Las Vegas, NV 2 869,800
Rochester, NY 2 812,500
Tucson, AZ 1 747,300
Springfield/Holyoke, MA 1 554,100
Monterey/Salinas, CA 1 511,900
Total Affiliates 106
Cable News Channels(3) 4

TOTAL 110 135,365,700
</TABLE>

- ------------------------
(1) Listed in The Arbitron Radio Metro and Television Market Population
Estimates in 1995-1996.*

(2) The Company has a license agreement with WIS to provide national sales,
marketing and operational support in exchange for certain amounts of
commercial airtime inventory in Oklahoma City, OK, and Albuquerque, NM. The
Company packages and sells such commercial airtime on a regional and
national basis to its advertisers. The Company has entered into a letter of
intent with WIS to acquire the assets of WIS in Oklahoma City and
Albuquerque.

(3) Cable news channel affiliates in New York, NY(2), Washington, DC(1), and
Rochester, NY(1).

The Company provides its Television Traffic Services to four cable
television affiliates. The Company believes that opportunities exist to increase
the number of cable news channel affiliates receiving the Television Traffic
Services and Video News Services, and it intends to continue to market its
services to those stations.

ACQUISITIONS

Since July 1994, the Company has expanded into 14 markets through six
strategic acquisitions, and made an additional acquisition to expand its
operations in Atlanta, Georgia, for a total consideration of approximately $20
million.

The Company is in various stages of pursuing additional strategic
acquisitions. The Company has entered into a letter of intent to acquire the
assets of ATN, a provider of traffic services to 16 radio station affiliates in
Kansas City, Missouri and Omaha, Nebraska. Additionally, the Company has entered
into a letter of intent to acquire the assets of the WIS, a provider of traffic
services to eight radio station affiliates and one television station affiliate
in Oklahoma City, Oklahoma, 12 radio station affiliates and one television
station affiliate in Alberquerque, New Mexico, eight radio station affiliates in
Omaha, Nebraska and one television station affiliate in Milwaukee, Wisconsin.
The Company is currently in discussions with several other entities that, if
acquired, would result in new or expanded coverage of approximately eight to ten
markets by the Company. The Company, however, does not have any commitments,

39
<PAGE>
arrangements, or understandings with respect to any such acquisitions. Further,
there can be no assurance that the Company will be able to effect any such
transaction or that any such transactions, if consummated, will prove to be
beneficial to the Company.

The Company generally consolidates the operations of acquired companies or
assets into its existing operations so that duplicative costs can be eliminated,
resulting in margin improvements for the consolidated operations. In addition,
as a result of the Company's significant sales force and existing advertising
relationships, the Company is generally able to increase revenues by selling
advertising in the acquired market to the Company's existing regional and
national sponsors. Moreover, as the Company continues to add new markets and to
increase its presence in existing markets, it has been able to offer advertisers
increased market penetration and to generate incremental revenues from existing
advertising clients.

The following acquisitions have been completed in 1996 (the "1996
Acquisitions"):

SALT LAKE CITY ACQUISITION. On January 3, 1996, the Company acquired (the
"Salt Lake City Acquisition") all of the tangible and intangible assets of
Aeromedia, Inc. ("Aeromedia"). As of June 30, 1996, the Company, (through
Aeromedia), provided Radio Traffic Services to a network of 22 radio stations
and two television stations in Salt Lake City, Utah, which is the thirty-fifth
largest MSA market.

NEW ENGLAND ACQUISITION. On January 4, 1996, the Company acquired (the "New
England Acquisition") all of the stock of Traffic Net Inc., a Rhode Island
corporation, Traffic Net of Connecticut, Inc., a Connecticut corporation, and
The Weather Bureau, Inc., a Massachusetts corporation (collectively, the
"Traffic Net Group"). As of June 30, 1996, the Company (through the Traffic Net
Group) provided local traffic information services to approximately 60 radio
station and four television station affiliates in and around the Hartford,
Connecticut area (the forty-first largest MSA market), and Providence, Rhode
Island (the thirty-first largest MSA market). In addition, The Weather Bureau,
Inc. (d/b/a The New England Weather Bureau) provides weather reporting services
to approximately 46 radio station affiliates in Boston, Massachusetts (the tenth
largest MSA market), and throughout New England.

The following acquisitions were completed in 1995 (the "1995 Acquisitions"):

THE ARIZONA ACQUISITION. On March 9, 1995, the Company acquired (the
"Arizona Acquisition") all of the stock of Skyview Broadcasting Networks, Inc.,
an Arizona corporation ("SBN"). As of June 30, 1996, the Company (through SBN)
provided services to 50 radio and five television stations in Phoenix and
Tucson, Arizona, the twentieth and sixty-second largest MSAs, respectively.

THE LAS VEGAS ACQUISITION. On March 9, 1995, the Company acquired (the "Las
Vegas Acquisition") all of the stock of Airborne Broadcast Consultants, a Nevada
corporation ("Airborne"), which was under common ownership with SBN. As of June
30, 1996, the Company (through Airborne) provided traffic programming services
to 23 radio and two television stations in Las Vegas, Nevada, the forty-eighth
largest MSA market.

THE TENNESSEE/KENTUCKY ACQUISITION. On March 9, 1995, the Company acquired
(the "Tennessee/ Kentucky Acquisition") substantially all of the tangible and
intangible assets and certain liabilities of Airborne Broadcasting Systems,
Inc., a Tennessee corporation ("ABS", which was also under common ownership with
SBN (ABS, SBN and Airborne are collectively referred to as the "Skyview
Group")). As of June 30, 1996, the Company provided traffic information reports
to a network of 61 radio station affiliates serving the greater Nashville and
Memphis, Tennessee markets and the Louisville, Kentucky market. The MSA market
rank of these MSA markets is forty-fourth, forty-third and forty-ninth,
respectively.

THE ATLANTA ACQUISITION. On March 24, 1995, the Company acquired (the
"Atlanta Acquisition") all of the stock of TrafficScan, Incorporated, a Georgia
corporation ("TSI"). As of June 30, 1996, the Company (through TSI) provided
traffic information services to 23 radio station affiliates and one television
station affiliate in the greater Atlanta region. Atlanta is the twelfth largest
MSA market.

The following acquisitions were completed in 1994 (the "1994 Acquisitions"):

40
<PAGE>
THE WISCONSIN ACQUISITION. On July 1, 1994, the Company acquired (the
"Wisconsin Acquisition") certain of the tangible and intangible assets of
Wisconsin Information Systems, Inc. d/b/a The Milwaukee Traffic Network, an Ohio
corporation ("Wisconsin"). As of June 30, 1996, the Company provided traffic
information reports to 23 radio station affiliates in Milwaukee, Wisconsin, the
twenty-eighth largest MSA market.

THE ST. LOUIS ACQUISITION. On July 19, 1994, the Company acquired (the "St.
Louis Acquisition") substantially all of the tangible and intangible assets of
Hildebrand Communications, Inc. ("Hildebrand"). As of June 30, 1996, the Company
provided traffic information reports to 27 radio station affiliates and four
television station affiliates in St. Louis, Missouri, the seventeenth largest
MSA market.

THE CHARLOTTE ACQUISITION. On October 24, 1994, the Company acquired (the
"Charlotte Acquisition") substantially all of the tangible and intangible assets
of Charlotte Traffic Patrol, Inc., a North Carolina corporation ("CTP"). As of
June 30, 1996, the Company provided traffic reports to 21 radio station
affiliates and one television station affiliate in the metropolitan area of
Charlotte, North Carolina, the thirty-seventh largest MSA market.

RADIO AND TELEVISION INDUSTRY

Total radio and television advertising revenues increased 4.2% to $39.4
billion during 1995, according to industry sources. Total radio advertising
revenues were $11.5 billion while television advertising revenues were
approximately $27.9 billion in 1995, the highest levels in each respective
industry's history.

The growth in total radio and television advertising revenues tends to be
fairly stable and has generally grown at a faster rate than the Gross National
Product ("GNP"). With the exception of 1991, when total radio and television
advertising revenues fell by approximately 3.4% compared to the prior year,
advertising revenues have risen in each of the past 15 years more rapidly than
either inflation or the GNP.

The United States radio market is comprised of approximately 11,528
commercially licensed stations which primarily serve local markets. The United
States television market is comprised of approximately 1,103 commercially
licensed stations which also serve primarily local markets.

According to the Radio Advertising Bureau's Radio Marketing Guide and Fact
Book for Advertisers (1993-1994), each week, radio reaches approximately 96% of
all Americans over the age of 12. More than one-half of all radio listening is
done outside the home, in contrast to other advertising mediums, and three out
of four adults are reached by car radio each week. The average listener spends
approximately three hours and 12 minutes per day listening to radio. The highest
portion of radio listenership occurs during the morning, particularly between
the time a listener wakes up and the time the listener reaches work. This
"morning drive time" period reaches more than 85% of people over 12 years of
age. According to the Television Advertising Bureau, television reaches
approximately 98% of all American households each week. The average household
spends approximately seven hours and sixteen minutes per day watching
television.

INTERNATIONAL

The Company's international presence has been limited to its participation
in licensing agreements in the United Kingdom and France. Pursuant to these
license agreements, the Company provides its licensees the right to use its
name, computer technology, training and sales expertise in exchange for
commercial airtime inventory. Revenues from such licensing agreements are not
material and the Company has no immediate intention to pursue opportunities
internationally, although it may choose to do so in the future if resources and
opportunities are available.

COMPETITION

The Company faces various sources of competition in the provision of its
information reporting services. Single market operators and groups of radio
stations providing their own information reports comprise the Company's primary
competition. Although the Company is significantly larger than the

41
<PAGE>
next largest provider of traffic and local information services, there are
several multi-market operators providing local radio and television programming
services in various markets. The Company believes that the next largest provider
of traffic and local information services (which operates under the names
"Shadow Traffic" and "Express Traffic") currently has a presence in
approximately 14 of the 50 largest MSA markets in the United States, as compared
to the Company's operations in 47 of the 50 largest MSA markets.

The Company also faces competition in the sale of its commercial airtime
inventory. The Company positions its advertising so as not to compete with the
advertising of its local radio and television affiliates. However, the Company
competes for advertising dollars with other media such as newspapers and
magazines, outdoor advertising, network radio and network television
advertising, transit advertising, direct response advertising, yellow page
directories and point-of-sale advertising.

EMPLOYEES

The Company employed approximately 924 full-time and 499 part-time persons
as of June 30, 1996, none of whom was covered by a collective bargaining
arrangement. Of these employees, approximately 1,177 were engaged in
broadcasting and operations; 136 in sales and marketing; and 110 in general and
administrative activities. Approximately 16% of the Company's employees are
located in the Company's Houston, Texas headquarters. The Company considers its
relationship with its employees to be satisfactory.

PROPERTIES

The Company's headquarters facility, which includes its principal
administrative, sales, marketing, management information systems and product
development offices and its local operations center, is located in approximately
30,844 square feet of subleased space in Houston, Texas. The sublease on this
facility terminates in March 2004.

The Company leases additional operation centers/broadcast studios and
marketing and administrative offices across the United States consisting of
approximately 97,654 square feet in the aggregate, pursuant to the terms of
various lease agreements. In addition, the Company leases approximately 25,031
square feet of space in Houston, Texas, which formerly was used as the Company's
headquarters and Houston operations center; the Company is attempting to
sublease this space. The Company believes that its existing facilities are
adequate to meet current requirements and that suitable additional space in
close proximity to its existing headquarters will be available as needed to
accommodate growth of its operations and additional sales and support offices
through the foreseeable future.

For the year ended December 31, 1995, the Company incurred $2.7 million in
facilities rental expense.

TRADEMARKS

The Company has registered "Metro Traffic Control", "Metro Networks" and
certain other marks which are relevant to its business. The Company does not
believe that its operations are materially dependent on these trademarks.

LEGAL PROCEEDINGS

The Company is subject to certain litigation arising in the ordinary course
of business. Management believes that the resolution of such matters will not
have a material adverse effect on the Company's financial position or results of
operations.

REORGANIZATION

From 1978 through the closing of this offering, the business of the Company
will have been operated through the Predecessor Companies. Until the closing of
this offering, all of the equity interests in the Predecessor Companies will be
owned by the Saperstein Family. Immediately prior to the closing of this
offering, the Saperstein Family will establish the Company as a holding company
and consolidate

42
<PAGE>

the issued and outstanding equity interests in the Predecessor Companies, by
exchanging such interests for 9,350,607 shares of Metro Networks Inc.'s Common
Stock and 2,549,750 shares of Metro Networks Inc.'s Series A Convertible
Preferred Stock.

Prior to the Reorganization, the Company intends to enter into an agreement
with Mr. Saperstein pursuant to which Mr. Saperstein will be distributed certain
goods and the rights to certain services which the Company holds for his
benefit. See "Certain Transactions." As of the date of the closing of this
offering, Metro Networks, Ltd. will distribute certain of its assets, other than
MTC GP stock, to Metro Traffic Control, Inc. in partial redemption of Metro
Traffic Control, Inc.'s interest in Metro Networks, Ltd.; thereafter Metro
Networks, Ltd. will be liquidated. In addition, as of the date of the closing of
this offering Metro Video News, Inc., Metro Reciprocal, Inc., MTC GP, Inc.,
Skyview Broadcasting Networks, Inc., Airborne Broadcast Consultants,
TrafficScan, Incorporated, Traffic Net Inc., The Weather Bureau, Inc. and
Traffic Net of Connecticut, Inc. will be merged into Metro Traffic Control, Inc.
pursuant to a transaction in which the shareholders of each corporation will
receive shares of Metro Traffic Control, Inc. stock. Metro Traffic Control, Inc.
will become a wholly-owned subsidiary of the Company as a result of a reverse
subsidiary merger of Metro Networks Acquisition, Inc. and Metro Traffic Control,
Inc., with Metro Traffic Control, Inc. being the surviving entity. The reverse
subsidiary merger will qualify as a tax-free reorganization under Section
368(a)(2) of the Internal Revenue Code of 1986, as amended.

43
<PAGE>
MANAGEMENT

The following table sets forth certain information regarding the directors
and executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE TITLE
- --------------------------------- ----------- --------------------------------------------------------------------
<S> <C> <C>
David I. Saperstein 55 Chairman of the Board of Directors and Chief Executive Officer
Charles I. Bortnick 42 President and Director
Shane E. Coppola 30 Executive Vice President and Director
Curtis H. Coleman 46 Senior Vice President, Chief Financial Officer and Director
Gary L. Worobow 31 Senior Vice President, General Counsel, Secretary and Director
James A. Arcara 61 Director
</TABLE>

DAVID I. SAPERSTEIN founded the Company in 1978. Since 1978, Mr. Saperstein
has been the Chief Executive Officer and a Director of the Company. Mr.
Saperstein served as President of the Company from 1978 through June 1996. Mr.
Saperstein serves on the Boards of Directors for the Business Arts Fund, the
Houston Symphony and the Toxoplasmosis Research Institute of the Michael Reese
Hospital in Chicago. Mr. Saperstein serves on the Board of Trustees for the
local chapter of the United Way and is a member of the Dean's Advisory Council
for Touro College of Law in New York. Prior to 1978, Mr. Saperstein owned and
operated several Ford automobile dealerships in Baltimore, Maryland.

CHARLES I. BORTNICK has been President and a Director of the Company since
June 1996. From April 1994 to May 1996, Mr. Bortnick served as Executive Vice
President/General Manager of the Company. Mr. Bortnick joined the Company in
March 1993 as Vice President/General Manager-Midwest Region based in Chicago.
Prior to joining the Company, Mr. Bortnick had 17 years of experience in the
radio broadcasting industry. From November 1987 through March 1993, Mr. Bortnick
served as Vice President/General Manager for Malrite Communications at its
WMMS-FM/WHK-AM radio station in Cleveland, Ohio and its KKHT-FM radio station in
Houston, Texas. From September 1984 to October 1987, Mr. Bortnick served as Vice
President/General Manager for TK Communications at its WSHE-FM/WSRF-AM radio
stations in Miami/Ft. Lauderdale.

SHANE E. COPPOLA has served as Executive Vice President and a Director of
the Company since June 1996. From April 1992 through May 1996, Mr. Coppola was
Vice President -- Corporate Development of the Company. From August 1989 through
March 1992, Mr. Coppola was a member of the Communications Finance Group at The
Toronto-Dominion Bank. Mr. Coppola earned a Masters of Business Administration
from the William E. Simon School of Business Administration in 1989 and a
Bachelor of Arts from the University of Rochester in 1988. Mr. Coppola is the
son-in-law of Mr. Saperstein.

CURTIS H. COLEMAN has served as Chief Financial Officer of the Company since
September 1995, as a Senior Vice President and a Director of the Company since
June 1996. Mr. Coleman served as Vice President-Treasurer and Vice
President-Controller of the Company from March 1990 through September 1995.
Prior to joining the Company, Mr. Coleman served in various financial and
accounting positions with Energy Service Company, Inc., Crutcher Resources
Corporation and Arthur Young & Company. Mr. Coleman is a certified public
accountant.

GARY L. WOROBOW has served as General Counsel and Secretary of the Company
since May 1995, as a Senior Vice President and a Director of the Company since
June 1996. From August 1991 until joining the Company, Mr. Worobow was an
attorney with the New York law firm of Stursberg & Veith. Mr. Worobow earned a
Juris Doctorate from Fordham Law School in 1991, a Masters of Business
Administration from the William E. Simon School of Business Administration in
1989 and a Bachelor of Arts from the University of Rochester in 1987.

JAMES A. ARCARA will become a Director of the Company upon consummation of
the offering. Mr. Arcara is Chairman of Radio Enterprises Incorporated, a
company that he founded in 1996 to acquire

44
<PAGE>
and operate radio stations. Mr. Arcara served as President of Capital Cities/ABC
Radio, a division of Capital Cities/ABC, Inc., from 1986 until April 1996. From
1980 until 1986, prior to the merger of Capital Cities Communications, Inc. with
ABC, Inc., Mr. Arcara served as Executive Vice President for Capital Cities
Radio. Mr. Arcara is a past President of the Radio Advertising Bureau and a past
Director of the National Association of Broadcasters. From 1970 until 1980, Mr.
Arcara served as Vice President/ General Manager for WPAT-AM/FM radio in
Clifton, New Jersey. From 1967 until 1970, Mr. Arcara served as Vice
President/General Manager for WPRO-AM radio in Providence, Rhode Island. From
1961 until 1967, Mr. Arcara served as General Sales Manager for WKBW-AM radio in
Buffalo, New York.

BOARD OF DIRECTORS

The Company intends to name an additional outside director to the Board of
Directors upon consummation of the offering.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Arcara and Coppola and the additional outside director will comprise
the Company's Compensation Committee. Prior to the offering, the Company did not
have a Compensation Committee and compensation decisions were made primarily by
Mr. Saperstein.

AUDIT COMMITTEE

The outside directors will serve as the Company's Audit Committee. The
committee will meet periodically with management, the Company's internal audit
staff, and representatives of the Company's independent auditors to assure that
appropriate audits of the Company's affairs are being conducted. In carrying out
these responsibilities, the committee will review the scope of internal and
external audit activities and the results of the annual audit. The committee is
also responsible for recommending a public accounting firm to serve as
independent auditors each year. Both the independent auditors and the internal
auditors will have direct access to the Audit Committee to discuss the results
of their examinations, the adequacy of internal accounting controls, and the
integrity of financial reporting.

NON-EMPLOYEE DIRECTOR COMPENSATION

Each member of the Board of Directors who is not an officer or an owner, or
the representative of an owner, of more than 5% of the outstanding Common Stock
of the Company receives compensation of $1,000 per meeting for serving on the
Board of Directors. The Company also reimburses Directors for any expenses
incurred in attending meetings of the Board of Directors and the committees
thereof. Upon their election to the Board of Directors or the closing of this
offering (whichever is later), each non-employee Board member will be granted
options to purchase 10,000 shares of the Company's Common Stock. Such options
will be exercisable at the fair market value of the common stock at the date of
grant. These options will become vested and exercisable for up to 33% of the
total optioned shares upon the first anniversary of the grant of the options and
for an additional 33% of the total optioned shares upon each succeeding
anniversary until the option is fully exercisable at the end of the third year.

EXECUTIVE COMPENSATION

The following table sets forth certain information for the fiscal years
indicated concerning the cash and non-cash compensation earned by or awarded to
the Chief Executive Officer of the Company and each of the other three most
highly compensated executive officers of the Company whose combined salary and
bonus exceeded $100,000 in such periods (the "Named Executive Officers").

45
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------
NAME AND OTHER ANNUAL STOCK
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) ALL OTHER
- --------------------------------------- --------- ----------- ----------- ------------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
David I. Saperstein.................... 1995 960,000 -- 58,982(1)
23,081(2) -- --
Charles I. Bortnick.................... 1995 256,290(3) 58,303 -- -- --
Shane E. Coppola....................... 1995 247,917 -- -- -- --
Curtis H. Coleman...................... 1995 131,042(3) -- -- -- --
</TABLE>

- ------------------------------
(1) Expenses related to automobiles.

(2) Non-taxable shareholder distribution.

(3) Includes the Company's contributions under the 401(k) Plan.

1996 INCENTIVE STOCK OPTION PLAN

The Company's Board of Directors has adopted the 1996 Incentive Stock Option
Plan (the "1996 Plan") for the Company's officers and employees. The Board of
Directors has discretionary authority, subject to certain restrictions, to
administer the 1996 Plan, including but not limited to determining the
individuals to whom, the times at which, and the exercise price for which
options will be granted. The total number of shares reserved for issuance under
the 1996 Plan is 1,000,000, of which approximately 500,000 will be issued upon
the effective date of this offering. The exercise price of options granted under
the 1996 Plan may not be less than 100% of the fair market value (or not less
than 110% of the fair market value as to any individual who, at the time the
option is granted, owned more than 10% of the total combined voting power of all
classes of stock of the Company) of the Common Stock on the date such option was
granted. Options granted under the 1996 Plan are not transferable by the
optionholders except by will or by the laws of descent and distribution. Options
granted under the 1996 Plan typically become vested and exercisable for up to
33 1/3% of the total optioned shares upon the first anniversary of the grant of
the option and for an additional 33 1/3% of the total optioned shares upon each
succeeding anniversary until the option is fully exercisable at the end of the
third year. Generally, the unexercised portion of any option automatically
terminates upon the earlier of (i) termination of the optionee's employment with
the Company, (ii) the expiration of 90 days from the date his employment with
the Company terminates for any reason other than cause, death, or disability
(iii) the expiration of one year after the optionee's death or (iv) the
expiration of the option. Upon the sale, merger or liquidation of the Company,
outstanding options may be exercised immediately prior to the consummation of
such a transaction, whether or not vested as of such date of consummation.

EMPLOYEE STOCK PURCHASE PLAN

A total of 1,500,000 shares of the Company's Common Stock have been reserved
for issuance under the Company's 1996 Employee Stock Purchase Plan (the
"Purchase Plan"). None of such shares have been issued. The Purchase Plan
permits an eligible employee of the Company to purchase common stock at a
discount through payroll deductions not to exceed 10% of the compensation
received by such employee during such pay period ("Employee Purchases").
Employee Purchases cannot exceed $25,000 in any plan year. The price at which
the Common Stock is purchased under the Purchase Plan is set by the Board of
Directors but may not be less than 95% of the fair market value of the Common
Stock on the date of purchase.

DEFINED BENEFIT AND DEFINED CONTRIBUTION PLAN

Effective in April 1995, the Company established a profit sharing plan under
Section 401(k) of the Internal Revenue Code (the "401(k) Plan") for all eligible
employees. Under the 401(k) Plan, all eligible employees are permitted to defer
compensation up to a maximum of 10% of their income. The 401(k) Plan provides
for a matching contribution by the Company equal to 25% of the amount
contributed by the employee, up to 6% of the employee's total compensation.
These contributions amounted to

46
<PAGE>
$195,000 in 1995. The employee's contribution is immediately vested and 20% of
the Company's matching contribution vests every year after the second year of
the employee's participation in the plan. Accordingly, the matching contribution
is fully vested six years after such contribution.

EMPLOYMENT AGREEMENTS

As discussed more particularly below, the Company intends to enter into
employment agreements with each of the Named Executive Officers and with Gary L.
Worobow, the Company's Senior Vice President, Secretary and General Counsel
("Mr. Worobow", and collectively with the Named Executive Officers, the
"Executive Officers"). Such employment agreements prohibit each of the Executive
Officers from competing with the Company for a period of one year after
termination of employment.

Mr. Saperstein will be a party to an employment agreement with the Company
pursuant to which he will serve as Chief Executive Officer of the Company. Under
the terms of Mr. Saperstein's employment agreement, he will be entitled to
receive an annual base salary of $350,000. Such base salary will increase by 5%
during each year term of the employment agreement. The employment agreement will
provide that Mr. Saperstein may receive a bonus of up to $150,000 per annum at
the discretion of the Board of Directors or the Compensation Committee. The
bonus potential will increase by 5% during each year of the term of the
employment agreement. Pursuant to the employment agreement, Mr. Saperstein will
be granted stock options under the 1996 Plan to purchase up to 100,000 shares of
the Company's Common Stock at an exercise price equal to 110% of the initial
public offering price. Subsequent grants of options to Mr. Saperstein during the
term of the employment agreement will be at the discretion of the Board of
Directors or the Compensation Committee. Mr. Saperstein's employment agreement
will be effective as of the closing of this offering, and will have a two year
term subject to automatic renewal at the end of the second year for an
additional period of one year, unless the Company gives written notice at least
90 days prior to the end of such second year of its election to terminate such
employment agreement at the end of such second year (hereinafter, a
"Non-Renewal"). Mr. Saperstein currently receives a base salary of $960,000.

Mr. Bortnick is a party to an employment agreement with the Company pursuant
to which he serves as President of the Company. Under the terms of Mr.
Bortnick's employment agreement he is entitled to receive an annual base salary
of $275,000. Such base salary will increase by 5% upon each anniversary of the
closing during the term of the employment agreement. The agreement provides that
Mr. Bortnick may receive a bonus of up to $100,000 per annum at the discretion
of the Board of Directors or the Compensation Committee. The bonus potential
increases by 5% during each year of the term of the employment agreement.
Pursuant to the employment agreement, Mr. Bortnick will be granted stock options
under the 1996 Plan to purchase up to 75,000 shares of the Company's Common
Stock at an exercise price equal to the initial public offering price.
Subsequent grants during the term of the employment agreement will be at the
discretion of the Board of Directors or the Compensation Committee. Mr.
Bortnick's employment agreement has a two year term from the closing date of the
offering with an automatic renewal provision of one year, subject to
Non-Renewal. Mr. Bortnick currently receives a base salary of $275,000. Mr.
Bortnick's agreement also provides that upon the termination of such agreement
by the Company or Mr. Bortnick under certain circumstances, Mr. Bortnick will
continue to receive the salary provided for under his employment agreement for
three months following termination of employment. Additionally, upon a change of
control (as defined in the employment agreement) of the Company, if Mr.
Bortnick's employment does not continue for a minimum of one year, he would be
entitled to receive two (2) times his then current base salary.

Mr. Coppola will be a party to an employment agreement with the Company
pursuant to which he will serve as Executive Vice President of the Company.
Under the terms of Mr. Coppola's employment agreement he will be entitled to
receive an annual base salary of $200,000. Such base salary will be increased by
5% during each year of the term of the employment agreement. The employment
agreement provides that Mr. Coppola may receive a bonus of up to $100,000 per
annum at the discretion of the Board of Directors or the Compensation Committee.
The bonus potential will increase by 5% during each year of the term of the
employment agreement. Pursuant to the employment agreement,

47
<PAGE>
Mr. Coppola will be granted stock options under the 1996 Plan to purchase up to
75,000 shares of the Company's Common Stock at an exercise price equal to the
initial public offering price. Subsequent grants during the term of the
employment agreement will be at the discretion of the Board of Directors or the
Compensation Committee. Mr. Coppola's employment agreement will be effective as
of the closing of this offering, and will have a two year term with an automatic
renewal provision of one year, subject to Non-Renewal. Mr. Coppola currently
receives a base salary of $410,000.

Mr. Coleman will be a party to an employment agreement with the Company
pursuant to which he will serve as Senior Vice President and Chief Financial
Officer of the Company. Under the terms of Mr. Coleman's employment agreement he
will be entitled to receive an annual base salary of $150,000. Such base salary
will increase by 5% during each year of the term of the employment agreement.
The employment agreement provides that Mr. Coleman may receive a bonus of up to
$50,000 per annum at the discretion of the Board of Directors or the
Compensation Committee. The bonus potential will increase by 5% during each year
of the term of the employment agreement. Pursuant to the employment agreement,
Mr. Coleman will be granted stock options under the 1996 Plan to purchase up to
55,000 shares of the Company's Common Stock at an exercise price equal to the
initial public offering price. Subsequent grants during the term of the
employment agreement will be at the discretion of the Board of Directors or the
Compensation Committee. Mr. Coleman's employment agreement will be effective as
of the closing of this offering, and will have a two year term with an automatic
renewal provision of one year, subject to Non-Renewal. Mr. Coleman currently
receives a base salary of $150,000.

Mr. Worobow will be a party to an employment agreement with the Company
pursuant to which he will serve as Senior Vice President, General Counsel and
Secretary of the Company. Under the terms of Mr. Worobow's employment agreement
he will be entitled to receive an annual base salary of $117,500. Such base
salary will increase by 5% during each year of the term of the employment
agreement. The employment agreement provides that Mr. Worobow may receive a
bonus of up to $37,500 per annum at the discretion of the Board of Directors or
the Compensation Committee. The bonus potential will increase by 5% during each
year of the term of the employment agreement. Pursuant to the employment
agreement, Mr. Worobow will be granted stock options under the 1996 Plan to
purchase up to 45,000 shares of the Company's Common Stock at an exercise price
equal to the initial public offering price. Subsequent grants during the term of
the employment agreement will be at the discretion of the Board of Directors or
the Compensation Committee. Mr. Worobow's employment agreement will be effective
as of the closing of this offering, and will have a two year term with an
automatic renewal provision of one year, subject to Non-Renewal. Mr. Worobow
currently receives a base salary of $105,000.

INDEMNIFICATION MATTERS

The Company's Amended and Restated Certificate of Incorporation and Bylaws
require the Company to indemnify each officer, director or employee in respect
of claims made by reason of his or her status with the Company, including
stockholder derivative suits, provided he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interest of the Company and, with respect to any criminal act or proceeding, had
no reasonable cause to believe his or her conduct was unlawful. Expenses
incurred in the defense of any such action may be paid by the Company in advance
of final disposition upon receipt of an undertaking from the officer, director
or employee to repay the advances if there is an ultimate determination that he
or she is not entitled to be indemnified.

CERTAIN TRANSACTIONS

The Company has entered into several arrangements with or on behalf of
parties related to the Company. Upon the closing of this offering these
arrangements will terminate, except as indicated below, and the Company will
enter into transactions with related parties only on an arm's-length basis.

The Company has leased certain real property in Vail, Colorado and in
Malibu, California from Five S Properties, Ltd., a limited partnership of which
a company owned by Mr. Saperstein is the general partner ("Five S"). Such
properties were used for affiliate relations and for other Company business-

48
<PAGE>
related purposes. The annual lease payments on these properties are $60,000 and
$240,000, respectively. The amounts of such lease payments were determined by
the Company based on its estimate of the value of the leased properties but
without reference to outside sources of valuation. Because the Company has not
made full-time use of these properties, such leases will be terminated as of the
closing of this offering, and the Company has no intention to enter into similar
leases.

The Company has entered into certain reciprocal arrangements with unrelated
third parties as a result of which the Company will receive goods and services
for the benefit of Mr. Saperstein. The reciprocal arrangements obligate the
Company to provide commercial airtime, provide other goods and services, and
make cash disbursements to such third parties in exchange for the goods and
services received by the Company. The dollar values of such arrangements have
typically been calculated based upon the Company's estimate of the fair market
value of the commercial airtime inventory involved and the Company believes that
its estimates have been made on a basis similar to the basis on which estimates
are made by others in the broadcast industry. As of June 30, 1996, the Company
was obligated to provide approximately $3.5 million of commercial airtime, goods
and services and cash under these reciprocal arrangements. Immediately prior to
the offering, the Company intends to enter into an agreement with Mr. Saperstein
pursuant to which Mr. Saperstein will be distributed the goods and services the
Company holds for Mr. Saperstein's benefit. The Company also will distribute to
Mr. Saperstein all of its rights to the goods and rights to services that are
the subject of existing reciprocal arrangements but which have not yet been
delivered to the Company. The value of such goods and services is expected to be
approximately $3.0 million. Following the offering, the Company does not intend
to enter into reciprocal arrangements for the benefit of Mr. Saperstein.

The Company has entered into certain transactions with Pro Journey Travel,
Inc., a company owned by Mr. Saperstein ("Pro Journey"). The Company has
guaranteed annual lease payments for Pro Journey, in the amount of $60,000 per
annum; such obligation shall continue through December 31, 1996. Additionally,
the Company has (i) posted a bond of $20,000 with the Airline Reservations
Clearinghouse on behalf of Pro Journey and (ii) provided coverage for Pro
Journey under the Company's liability insurance policies. The premiums which
would have been paid by Pro Journey to obtain such coverage had a value in 1995
equal to approximately $2,548. In addition, the employees of Pro Journey
participate in the Company's insurance plans; the premiums which would have been
paid by Pro Journey to obtain coverage under similar insurance plans had a value
in 1995 equal to approximately $6,539. The Company purchases the majority of its
travel tickets through Pro Journey, on terms which the Company believes are no
less favorable than those available from third parties. As of June 30, 1996, Pro
Journey owed the Company approximately $52,000. Upon the closing of this
offering and the Reorganization, the Company will forgive this receivable. After
December 31, 1996, the Company will cease all transactions and arrangements with
Pro Journey.

Mr. Saperstein has personally utilized the services of several of the
Company's employees. The total compensation paid to such employees was $180,995
in 1995. Except for two individuals who will provide security and transportation
services to Mr. Saperstein, these persons will cease to be employees of the
Company as of the closing of this offering. The individuals who will remain in
the Company's employ will be paid combined annual compensation of approximately
$75,000.

Through a separate company, Mr. Saperstein holds an equity interest in Posh
International, Inc. ("Posh"), a car care products company. In exchange for such
interest, the Company provided Posh with commercial airtime inventory valued at
$566,000 during the twelve months ended December 31, 1995 and $363,000 during
the year ended December 31, 1994. The Company has agreed to sell commercial
airtime inventory valued at $1.1 million to Posh at a discount through December
31, 1996, subject to availability and prepayment. As of the date of this
Prospectus, Posh has not purchased any such inventory from the Company.

Upon the closing of this offering, the Company and Mr. Saperstein will enter
into an agreement pursuant to which Mr. Saperstein may seek reimbursement from
the Company for any income tax obligation attributable to any period prior to
the Reorganization. Alternatively, in the event that the status

49
<PAGE>
of any of Metro Video News, Inc., Metro Reciprocal, Inc., or Metro Traffic
Control, Inc. as a subchapter S corporation is not respected, the Company may
seek reimbursement from Mr. Saperstein, but only to the extent that Mr.
Saperstein receives a tax refund attributable to amounts he previously included
in income in his capacity as a shareholder of such corporations. The Company
does not anticipate that the subchapter S status of Metro Video News, Inc.,
Metro Reciprocal, Inc., or Metro Traffic Control, Inc., will be successfully
challenged.

Immediately prior to the closing of this offering, the Company will enter
into a Stock Loan and Pledge Agreement with Mr. Saperstein pursuant to which the
Company will loan Mr. Saperstein 2,549,750 shares of Common Stock. The loan will
be for a term of ten years, although the Company will have the right to require
the return of the loaned Common Stock (the "Loaned Stock") from Mr. Saperstein
prior to that time upon three days notice. As security for the loan, Mr.
Saperstein will pledge a number of shares of Series A Convertible Preferred
Stock of the Company which when converted into common stock will be equal to the
number of shares of Loaned Stock. Mr. Saperstein will be obligated to pay to the
Company an annual fee over the term of the loan of 0.1% of the average fair
market value of the Loaned Stock during the five day period immediately
following the date of the Stock Loan and Pledge Agreement. One-half of this fee
will be payable annually, and the remaining one-half of this fee will be payable
upon the termination of the loan if such termination occurs pursuant to an Event
of Default (as defined in the Stock Loan and Pledge Agreement) or at the end of
the ten year term of the Stock Loan and Pledge Agreement. The Company will
forfeit this portion of the fee if it calls the loan prior to the end of the ten
year term. In addition, Mr. Saperstein will pay an upfront transaction fee of
$2,550 to the Company.

50
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock by (i) the Selling
Stockholder, (ii) each person known to the Company to be the beneficial owner of
5% or more thereof, (iii) each director of the Company, (iv) each Executive
Officer and (v) all executive officers and directors as a group, as of September
19, 1996, and as adjusted to reflect the sale of the Common Stock offered
hereby. Each of the named persons has sole voting and investment power with
respect to all shares of Common Stock owned by such person. See "Management."

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO THIS OFFERING AFTER THIS OFFERING
---------------------------- SHARES BEING --------------------------
NAME AND ADDRESS SHARES PERCENTAGE OFFERED SHARES PERCENTAGE
- --------------------------------------- ------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
David I. Saperstein.................... 8,300,357(1) 88.8% 3,600,000 8,300,357 (2) 53.5%
Charles I. Bortnick.................... -- -- -- --(3) *
Shane E. Coppola....................... 210,050(4) 2.2% -- 210,050 (5) 1.4%
Curtis H. Coleman...................... -- -- -- --(6) *
Gary L. Worobow........................ -- -- -- --(7) *
All executive officers and directors as
a group (5 persons)................... 8,510,407 91.0% 3,600,000 8,510,407 54.9%
</TABLE>

- ------------------------------
* Less than 1%.

(1) Does not include shares held by the Trusts (as defined below), beneficial
ownership of which Mr. Saperstein disclaims. In addition, the number of
shares beneficially owned does not include 2,549,750 shares of Series A
Convertible Preferred Stock owned by Mr. Saperstein and pledged to the
Company in connection with the stock loan under the Stock Loan and Pledge
Agreement. See "Certain Transactions." Such shares have not been included
because they can only be converted into Common Stock upon repayment of such
stock loan; repayment may be achieved either through the acquisition of
shares of Common Stock in the open market and delivery of such shares to
the Company or the delivery of shares of Series A Convertible Preferred
Stock. Mr. Saperstein will retain the voting rights to all pledged shares
of Series A Convertible Preferred Stock. See "Description of Capital Stock"
and "Certain Transactions."

(2) Does not include stock options to purchase 100,000 shares of Common Stock
granted under the 1996 Plan upon the effective date of this offering.

(3) Does not include stock options to purchase 75,000 shares of Common Stock
granted under the 1996 Plan upon the effective date of this offering.

(4) Includes 210,050 shares beneficially owned through the Michelle Joy Coppola
Trust. Mrs. Coppola, the beneficiary of the trust, is Mr. Coppola's wife.
These shares have been loaned to the Selling Stockholder in connection with
this offering. See below.

(5) Does not include stock options to purchase 75,000 shares of Common Stock
granted under the 1996 Plan upon the effective date of this offering.

(6) Does not include stock options to purchase 55,000 shares of Common Stock
granted under the 1996 Plan upon the effective date of this offering.

(7) Does not include stock options to purchase 45,000 shares of Common Stock
granted under the 1996 Plan upon the effective date of this offering.

All of the shares of Common Stock being offered for sale by David I.
Saperstein were borrowed from the Michelle Joy Coppola 1994 Trust, the Jennifer
Beth Saperstein 1994 Trust, the Jonathan Alexander Saperstein 1994 Trust, the
Alexis Daniella Saperstein 1994 Trust, and the Stefanie Nicole Saperstein 1994
Trust (collectively, the "Trusts") and the Company. Mr. Saperstein will be
obligated to repay these loans by delivering a number of shares of Common Stock
equal to the number of borrowed shares. Mr. Saperstein will pledge an equivalent
number of shares of Series A Convertible Preferred Stock as security for the
loans from the Company. See "Management" and "Certain Transactions."

51
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The Company is authorized to issue 25,000,000 shares of Common Stock, par
value $0.001 per share (the "Common Stock"), 10,000,000 shares of preferred
stock, par value $0.001 per share. At September 19, 1996, assuming the
Reorganization had occurred as of such date there would have been 9,350,607
shares of Common Stock and 2,549,750 shares of Series A Convertible Preferred
Stock outstanding.

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Stockholders casting a plurality of votes of the stockholders entitled
to vote in an election of directors may elect all of the directors standing for
election. Holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared by the Board of Directors out of funds
legally available therefore, subject to any preferential dividend rights of
Preferred Stock that may be issued at such future time or times. Upon the
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to receive ratably the net assets of the Company that may be
available after the payment of all debts and other liabilities and subject to
the prior rights of Preferred Stock that may be issued and outstanding at such
time. Holders of Common Stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of Common Stock are, and the shares of
Common Stock offered in this offering, when issued and paid for, will be fully
paid and nonassessable. The rights, preferences and privileges of holders of
Common Stock are subject to the rights of the holders of shares of any series of
Preferred Stock which the Company may designate and issue in the future.

As of September 19, 1996, assuming the Reorganization had occurred as of
such date there were 9,350,607 shares of Common Stock outstanding held only by
or for the benefit of members of the Saperstein Family.

PREFERRED STOCK

Preferred Stock may be issued from time to time by the Company's Board of
Directors, without stockholder approval, in one or more classes or series.
Subject to the provisions of the Amended and Restated Certificate of
Incorporation and the limitations prescribed by law, the Board of Directors is
expressly authorized to adopt resolutions to issue the shares of Preferred
Stock, to fix the number of shares and to change the number of shares
constituting any series, and to provide for or change the voting powers,
designations, preferences and relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof, including dividend
rights (including whether dividends are cumulative), dividend rates, terms of
redemption (including sinking fund provisions), redemption prices, conversion
rights and liquidation preferences of the shares constituting any class or
series of Preferred Stock, in each case without any further action or vote by
the stockholders.

One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a tender offer, proxy contest, merger
or otherwise, and thereby to protect the continuity of the Company's management.
The issuance of shares of the Preferred Stock pursuant to the Board of
Directors' authority described above may adversely affect the rights of the
holders of Common Stock. For example, Preferred Stock issued by the Company may
rank prior to the Common Stock as to dividend rights, liquidation preference or
both, may have full or limited voting rights and may be convertible into shares
of Common Stock. Accordingly, the issuance of shares of Preferred Stock may
discourage bids for the Common Stock at a premium or may otherwise adversely
affect the market price of the Common Stock.

SERIES A CONVERTIBLE PREFERRED STOCK

The Company has created a series of Preferred Stock designated as Series A
Convertible Preferred Stock (the "Series A Convertible Preferred Stock"). Such
series consists of 7,500,000 shares. Holders of Series A Convertible Preferred
Stock are entitled to one vote for each share held on all matters submitted to a
vote of stockholders and do not have cumulative voting rights. Shares of the
Series A Convertible

52
<PAGE>

Preferred Stock will not be entitled to receive dividends. Upon the liquidation,
dissolution or winding-up of the Company, the holders of the Series A
Convertible Preferred Stock are entitled to a liquidation preference over the
then outstanding Common Stock and any other then outstanding Preferred Stock of
other classes with respect to the assets of the Company in an amount equal to
10% of the fair market value of the issued and outstanding Common Stock to be
determined at the closing of the initial public offering. Each share of Series A
Convertible Preferred Stock is convertible with no premium into one share of
Common Stock (subject to adjustment for stock splits, stock dividends, reverse
stock splits, recapitalization and similar events) at the option of the holder,
but may not be converted while the stock loan is outstanding.

The Series A Convertible Preferred Stock will be, when issued and paid for,
fully paid and nonassessable.

CERTAIN PROVISIONS OF DELAWARE LAW

Upon consummation of this offering, the Company will be subject to the
provisions of Section 203 of Delaware General ("Section 203"). Section 203
provides, with certain exceptions, that a Delaware corporation may not engage in
any of a broad range of business combinations with a person or an affiliate, or
associate of such person, who is an "interested stockholder" for a period of
three years from the date that such person became an interested stockholder
unless (i) prior to such date either the transaction which resulted in the
person becoming an interested stockholder, or the business combination, is
approved by the board of directors, (ii) upon consummation of the transaction
which resulted in such person becoming an interested stockholder, the interested
stockholder owned 85% or more of the outstanding voting stock of the corporation
(excluding shares owned by persons who are both officers and directors of the
corporation, and shares held by certain employee stock ownership plans) or (iii)
on or after the date the person becomes an interested stockholder, the business
combination is approved by the corporation's board of directors and by the
holders of at least 66 2/3% of the corporation's outstanding voting stock at an
annual or special meeting, excluding shares owned by the interested stockholder.
Under Section 203, an "interested stockholder" is defined as any person who is
(i) the owner of 15% or more of the outstanding voting stock of the corporation
or (ii) an affiliate or associate of the corporation and who was the owner of
15% or more of the outstanding voting stock of the corporation at any time
within the three-year period immediately prior to the date on which it is sought
to be determined whether such person is an interested stockholder. Mr.
Saperstein will not be subject to the restrictions of Section 203 because he was
an interested stockholder at the time of Reorganization.

A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws by action of
its stockholders to exempt itself from coverage, provided that such bylaw or
certificate of incorporation amendment shall not become effective until 12
months after the date it is adopted. The Company intends to adopt an amendment
to its Certificate of Incorporation to exempt itself from coverage of Section
203.

CERTAIN CHARTER AND BYLAW PROVISIONS

STAGGERED BOARD OF DIRECTORS

Pursuant to Article 3 of the Company's Bylaws the Company's Board of
Directors is divided into three classes, which are elected for staggered terms
of three years. As a result, a change in a majority of the directors of the
Company cannot be effected at a single annual meeting of stockholders. While the
principal purpose of Article 3 is to provide continuity on the Board of
Directors, the provisions could have the effect of discouraging a third party
from attempting to change the management and policies of the Company by
effecting a change in the majority of the Board of Directors through a proxy
contest.

These provisions of the Company's Bylaws may have the effect of delaying
consideration of a stockholder proposal until the next annual meeting of
stockholders, unless a special meeting is called by the Chief Executive Officer
or the Board of Directors. These provisions also would prevent the holders of a
majority of the voting power of the Company from using the written consent
procedure to take stockholder action without giving all the stockholders of the
Company entitled to vote on a particular

53
<PAGE>
matter the opportunity to participate in determining such proposed action.
Additionally, a stockholder could not force consideration of a proposal by
stockholders over the opposition of the Board of Directors of the Company by
calling a special meeting of stockholders prior to the time the Board believes
such consideration to be appropriate.

ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS

The Company's Bylaws establish an advance notice procedure for the
nomination of candidates for election as directors and the presentation of
certain other matters before an annual meeting of stockholders of the Company,
other than by or at the direction of the Board of Directors or the chairman of
the meeting. For such nominations or other business to be considered properly
brought by a stockholder before an annual meeting of stockholders of the
Company, such stockholder must have given timely prior written notice to the
Secretary of the Company of his or her intent to bring such nominations or
business before the meeting. To be timely, such notice must be received by the
Secretary at least 90 days prior to the date on which, in the immediately
preceding calendar year, the annual meeting of stockholders of the Company for
such year was held (provided that if the date of the annual meeting is changed
by more than 30 days from such anniversary date, such stockholder's notice must
be received by the Secretary no later than 10 days after notice or prior public
disclosure of the meeting is first given or made to stockholders).

A stockholder notice must contain a brief description of the nomination or
business to be brought before the meeting, the name and address of the
stockholder making the notice and of any person to be nominated, a
representation that the stockholder is a holder of record of stock of the
Company entitled to vote at the meeting and intends to appear at the meeting to
bring such nominations or business before the meeting; a description of all
arrangements or understandings between the stockholder and each nominee (in the
case of a nomination) or of any material interest of the stockholder in the
business matter (in the case of other business); such other information
regarding the nominee or matter of business to be proposed as would be required
to be included in a proxy statement soliciting proxies for the election of such
nominee or approval of such other business; and, in the case of a nomination of
the nominee.

The purpose of these procedures is to provide an orderly procedure for
conducting annual meetings of stockholders and to afford the Board of Directors
a meaningful opportunity to consider the qualifications of the proposed nominees
and to inform themselves, and where appropriate to inform stockholders, in
advance of the meeting of any business proposed to be conducted at the meeting.
Although the Company's Bylaws do not give the Board of Directors any power to
approve or disapprove stockholder nominations for the election of directors or
any other business proposed by a stockholder to be conducted at any annual
meeting, the Bylaws may have the effect of precluding a nomination or the
consideration of certain business at a particular annual meeting if the proper
procedures are not followed. These procedures may also discourage or deter a
third party from conducting a solicitation of proxies to elect its own slate of
directors or from attempting to obtain control of the Company, even if the
conduct of such solicitation or such attempt might be beneficial to the Company
and its stockholders.

INDEMNIFICATION OF DIRECTORS AND OFFICERS; LIMITATION OF MONETARY LIABILITY

Section 145 of the General Corporation Law of the State of Delaware Law
permits the Company to indemnify an officer, director or employee in respect of
claims made by reason of his or her status with the Company, including
stockholder derivative suits, provided he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interest of the Company and, with respect to any criminal act or proceeding, had
no reasonable cause to believe his or her conduct was unlawful. Expenses
incurred in the defense of any such action may be paid by the Company in advance
of final disposition upon receipt of an undertaking from the officer, director
or employee to repay the advances if there is an ultimate determination that he
or she is not entitled to be indemnified. Article 8 of the Company's Amended and
Restated Certificate of Incorporation provides such indemnification to the full
extent permitted by law. The Company intends to purchase directors' and
officers' liability coverage to insure its indemnification of the Company's
directors and officers.

54
<PAGE>
Article 6 of the Company's Certificate of Incorporation exonerates the
Company's directors from personal liability to the Company or its stockholders
for monetary damages for breach of the fiduciary duty of care as a director,
provided that Article 6 does not eliminate or limit liability for any breach of
the directors' duty of loyalty for acts or omissions not in good faith or which
involve intentional misconduct or knowing violations of law, for any improper
declaration of dividend or for any transaction from which the director derived
an improper personal benefit. Article 6 does not eliminate a stockholder's right
to seek non-monetary, equitable remedies, such as an injunction or recision to
redress an action taken by the directors. However, as a principal matter,
equitable remedies may not be available in all situations, and there may be
instances in which no effective remedy is available.

The discussions of the Common Stock and Preferred Stock here and elsewhere
in this Prospectus are qualified in their entirety by reference to (i) the
Amended and Restated Certificate of Incorporation of the Company, as amended,
and the Bylaws of the Company, copies of which have been filed as exhibits to
the Registration Statement of which this Prospectus is a part, and (ii) the
applicable provisions of Delaware law.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Company's Common Stock is American
Stock Transfer & Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of this offering, there will be 15,500,357 shares of
Common Stock outstanding. Of these shares, the 7,200,000 shares sold in this
offering will be freely tradeable without restriction (except as to "Affiliates"
of the Company (as defined under the Securities Act)) or registration under the
Securities Act of 1933. The remaining 8,300,357 shares will be "Restricted
Securities" as defined in Rule 144 under the Securities Act ("Rule 144"). All of
such shares, without consideration of the contractual restrictions described
below, would be available for resale in the public market pursuant to Rule 144
(see below).

Restricted Securities may be sold in the public market only if registered or
if they qualify for an exemption from registration under Rules 144, 144(k) or
701 promulgated under the Securities Act, which rules are summarized below. As a
result of the contractual restrictions described below, and the provisions of
Rule 144 and 701, additional shares will be available for sale in the public
market as follows: (i) no shares will be available for immediate sale in the
public market on the date of the Prospectus, (ii) no shares will be issuable
upon the exercise of stock options granted under the 1996 Plan that will vest
and, if exercised, will become eligible for sale without lock-up restrictions on
various dates prior to 180 days following the date of this Prospectus and (iii)
8,300,357 shares will be eligible for sale, subject to volume and manner of sale
restrictions, upon expiration of lock-up agreements 180 days after the date of
this Prospectus.

Rule 701 under the Securities Act provides that, beginning ninety (90) days
after the date of this Prospectus, shares of Common Stock acquired upon the
exercise of outstanding options may be resold by persons other than Affiliates
subject only to the manner of sale provisions of Rule 144 (d), and by Affiliates
subject to all provisions of Rule 144 except the two-year minimum holding
period.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted shares of
Common Stock for at least two years, including an "Affiliate" as that term is
defined under the Securities Act, is entitled to sell a number of shares that
does not exceed the greater of 1% of the then outstanding shares of Common Stock
or the average weekly trading volume of the Common Stock on all exchanges and/or
reported through the automated quotation system of a registered securities
association during the four calendar weeks preceding the date on which notice of
the sale is filed with the Securities and Exchange Commission. Sales under Rule
144 are also subject to certain manner of sale provisions, notice requirements
and the availability of current public information about the Company. A person
(or persons whose shares are aggregated) who

55
<PAGE>
is not deemed to have been an Affiliate of the Company at any time during the 90
days preceding a sale, and who has beneficially owned the shares proposed to be
sold for at least three years, would be entitled to sell such shares under Rule
144(k) without regard to the limitations described above.

VALIDITY OF COMMON STOCK

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Paul, Hastings, Janofsky & Walker, New York, New York
and for the Underwriters by Sullivan & Cromwell, New York, New York.

EXPERTS

The combined financial statements of Metro Traffic Control, Inc., Metro
Reciprocal, Inc., Metro Networks, Ltd. and Metro Video News, Inc. as of December
31, 1994 and 1995, and for each of the years in the three-year period ended
December 31, 1995 and the combined financial statements of Airborne Broadcast
Consultants, Skyview Broadcasting Networks, Inc. and Airborne Broadcasting
Services, Inc. for the year ended December 31, 1994, included herein have been
included herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-1 under the Securities Act,
with respect to the shares of Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto. For further information with respect to the
Company and the shares of Common Stock offered hereby, reference is hereby made
to such Registration Statement, and the exhibits and schedules thereto, copies
of which may be inspected without charge at the public reference facilities
maintained by the Commission at Judiciary Plaza Building, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and its regional offices located at 7
World Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and
copies of all or any part thereof may be obtained from each office upon payment
of the fees prescribed by the Commission. The summaries in this Prospectus of
additional information included in the Registration Statement or any exhibit
thereto are qualified in their entirety by reference to such information or
exhibit.

56
<PAGE>
GLOSSARY

AFFILIATES. The radio and television stations to which the Company provides
information services in exchange for commercial airtime inventory. The Company
typically is the exclusive provider to an affiliate of the specific information
services contracted for by such affiliate, but such affiliate may also receive
other information from other service providers. With the exception of its
contractual relationships, the Company does not have financial interests in its
affiliates.

DMA. Designated Market Area, as listed on The Arbitron Radio Metro and
Television Market Population Estimates 1995-1996.

EXPANDED RADIO SERVICES. The Company's news, sports, weather and other
information reports provided to radio station affiliates.

EXPANDED RADIO SERVICES NETWORK. The network of radio station affiliates to
which the Company provides its Expanded Radio Services.

GAAP. Generally accepted accounting principles.

% LISTENERS. Percentage of an MSA population which hears the Company's
information reports over a 4-week period calculated using data from the Arbitron
Winter 1996 Radio Market Reports* and Strata Marketing, Inc. statistical
analysis.

METROTV NETWORK. The network of broadcast television station affiliates and
cable news channel affiliates to which the Company provides its Television
Traffic Services and Video News Services.

MSA. Metro Survey Area, as listed in The Arbitron Radio Metro and Television
Market Population Estimates 1995-1996.*

RADIO TRAFFIC SERVICES. The Company's core traffic information reports
provided to radio station affiliates.

RADIO TRAFFIC SERVICES NETWORK. The network of radio station affiliates to
which the Company provides its Radio Traffic Services.

RECIPROCAL ARRANGEMENTS. Arrangements in which the Company exchanges certain
commercial advertising inventory for goods and services.

ROS. Thirty second and sixty second commercial advertising that the
Company's affiliate radio and television stations broadcast for the Company
based on availabilities in such affiliates's schedules. Generally, ROS time
provided to the Company is broadcast between 6:00 a.m. and 11:00 p.m., Monday-
Sunday.

SPONSORSHIP. An opening announcement and ten second commercial message
broadcast during, immediately before or immediately after one of the Company's
information reports on either the Radio Traffic Services Network or the Expanded
Radio Services Network.

TELEVISION TRAFFIC SERVICES. The Company's traffic information reports
provided to television station affiliates.

VIDEO NEWS SERVICES. The Company's video news (other than traffic)
information products provided to television station affiliates.

- ------------------------
* Copyright 1996 by The Arbitron Company. All Rights Reserved. The information
provided herein regarding Arbitron's audience listening estimates is based on
Arbitron's copyrighted and proprietary data and estimates concerning the
applicable stations' average quarter hour persons share, Monday- Sunday,
6am-Midnight, from the applicable Winter 1996 Radio Market Reports for the
demographic, day-part and metro areas listed herein and from The Arbitron Radio
Metro Television Market Population Estimates 1995-1996.

57
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------

<S> <C>
The Combined Financial Statements of Metro Traffic Control, Inc., Metro Reciprocal, Inc., Metro
Networks, Ltd., and Metro Video News, Inc.:

Independent Auditors' Report........................................................................ F-2

Combined Balance Sheets............................................................................. F-3

Combined Statements of Operations................................................................... F-5

Combined Statements of Stockholder's Equity/Partners' Capital....................................... F-6

Combined Statements of Cash Flows................................................................... F-7

Notes to Combined Financial Statements.............................................................. F-9

Financial statements of business acquired:

The Combined Financial Statements of Skyview Broadcasting Networks, Inc., Airborne Broadcasting
Consultants and Airborne Broadcasting Systems, Inc.:

Independent Auditors' Report........................................................................ F-21

Combined Statement of Operations.................................................................... F-22

Combined Statement of Cash Flows.................................................................... F-23

Notes to Combined Financial Statements.............................................................. F-24

Pro Forma Condensed Financial Data:................................................................... F-26

Pro Forma Condensed Balance Sheet as of June 30, 1996............................................... F-27

Pro Forma Condensed Statement of Operations for the six months ended June 30, 1996.................. F-28

Pro Forma Condensed Statement of Operations for the year ended December 31, 1995.................... F-29

Notes to Condensed Pro Forma Financial Statements................................................... F-30
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

Boards of Directors and Partners
Metro Traffic Control, Inc.
Metro Reciprocal, Inc.
Metro Networks, Ltd.
Metro Video News, Inc.:

We have audited the accompanying combined balance sheets of Metro Traffic
Control, Inc., Metro Reciprocal, Inc., Metro Networks, Ltd., and Metro Video
News, Inc. (collectively, the "Companies") as of December 31, 1995 and 1994, and
the related combined statements of operations, stockholder's equity/ partners'
capital and cash flows for each of the years in the three-year period ended
December 31, 1995. These financial statements are the responsibility of the
Companies' management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the
Companies as of December 31, 1995 and 1994, and the combined results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP

Houston, Texas
June 13, 1996

F-2
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30, 1996
ASSETS 1994 1995 (UNAUDITED)
-------------- -------------- --------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents..................................... $ 3,676,357 $ 3,049,946 $ 3,466,200
Accounts receivable, net...................................... 8,636,230 12,662,716 19,840,971
Prepaid expenses and other current assets..................... 226,129 357,473 902,088
Reciprocal receivables, net................................... 5,002,719 4,561,786 5,744,712
Merchandise and scrip inventory............................... 422,851 399,606 384,292
Reciprocal prepaid expenses and other current assets.......... 838,249 679,199 804,155
-------------- -------------- --------------
Total current assets........................................ 18,802,535 21,710,726 31,142,418
Receivables from related parties................................ 288,669 1,075,030 1,685,792
Note receivable from stockholder................................ 1,706,641 -- --
Property and equipment:
Operating equipment........................................... 5,627,122 7,887,769 8,941,683
Transportation equipment...................................... 136,876 709,323 824,692
Leasehold improvements........................................ 476,190 615,380 667,709
-------------- -------------- --------------
6,240,188 9,212,472 10,434,084
-------------- -------------- --------------
Less: accumulated depreciation 3,046,307 4,234,972 4,961,155
-------------- -------------- --------------
3,193,881 4,977,500 5,472,929
Purchased broadcast contracts and other intangibles, net of
accumulated amortization of $4,103,863 in 1995 and $3,437,712
in 1994........................................................ 3,107,634 13,749,644 16,435,009
Other assets.................................................... 402,244 923,714 2,013,864
-------------- -------------- --------------
$ 27,501,604 $ 42,436,614 $ 56,750,012
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

See accompanying notes to combined financial statements.

F-3
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

COMBINED BALANCE SHEETS, CONTINUED

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------ 1996
LIABILITIES 1994 1995 (UNAUDITED)
-------------- -------------- --------------
<S> <C> <C> <C>
Current liabilities:
Disbursement float............................................ $ 1,511,672 $ 1,800,433 $ 2,323,713
Accounts payable.............................................. 1,465,253 1,808,274 2,432,529
Accrued liabilities........................................... 1,146,228 1,707,085 4,002,984
Accrued payroll liabilities................................... 863,831 996,695 1,212,899
Notes payable................................................. 120,148 84,280 706,904
Current portion of long-term debt............................. 82,610 662,257 6,474,873
Deferred revenues............................................. 1,340,017 727,947 1,113,564
Income tax payable............................................ 68,868 302,000 162,228
Accrued reciprocal liabilities................................ 2,350,367 2,316,975 2,743,473
Reciprocal and airtime obligations............................ 2,439,990 3,404,296 3,126,047
-------------- -------------- --------------
Total current liabilities................................. 11,388,984 13,810,242 24,299,214
-------------- -------------- --------------
Long-term debt.................................................. 6,447,245 21,877,156 23,965,534
Deferred income tax............................................. -- 2,083,842 2,941,787
Other liabilities............................................... 264,189 187,146 200,103
-------------- -------------- --------------
Total liabilities......................................... 18,100,418 37,958,386 51,406,638
-------------- -------------- --------------

STOCKHOLDER'S EQUITY/PARTNERS' CAPITAL
<S> <C> <C> <C>
Common stock.................................................... 3,015 3,015 3,015
Additional paid-in capital...................................... 1,023,811 4,023,811 4,023,811
Partners' capital............................................... 1,235,484 650,908 575,394
Retained earnings (deficit)..................................... 7,138,876 (199,506) 741,154
-------------- -------------- --------------
Total stockholder's equity/partners' capital.............. 9,401,186 4,478,228 5,343,374
-------------- -------------- --------------
$ 27,501,604 $ 42,436,614 $ 56,750,012
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

See accompanying notes to combined financial statements.

F-4
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
FOR THE YEAR ENDED JUNE 30,
DECEMBER 31, (UNAUDITED)
---------------------------------------------- ------------------------------
1993 1994 1995 1995 1996
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Advertising revenues.................. $ 47,904,876 $ 60,048,350 $ 72,432,951 $ 30,623,017 $ 50,077,032
Broadcasting costs.................... 27,384,125 32,239,358 41,285,973 19,816,422 24,172,646
Marketing expense..................... 8,848,207 11,354,698 14,503,640 6,820,696 10,101,411
General and administrative expense.... 6,993,305 5,938,488 7,194,011 4,054,886 4,350,708
Depreciation and amortization......... 1,814,257 1,302,434 3,980,525 1,694,080 2,936,082
-------------- -------------- -------------- -------------- --------------
Total operating costs................. 45,039,894 50,834,978 66,964,149 32,386,084 41,560,847
-------------- -------------- -------------- -------------- --------------
Income (loss) from operations......... 2,864,982 9,213,372 5,468,802 (1,763,067) 8,516,185
-------------- -------------- -------------- -------------- --------------
Other (income) expense:
Interest income..................... (59,929) (165,551) (165,079) (125,559) (53,734)
Interest expense.................... 145,064 293,010 1,260,185 420,518 933,895
Other............................... 297,354 1,785 27,967 32,895 (12,600)
-------------- -------------- -------------- -------------- --------------
382,489 129,244 1,123,073 327,854 867,561
-------------- -------------- -------------- -------------- --------------
Income (loss) from continuing
operations before income tax......... 2,482,493 9,084,128 4,345,729 (2,090,921) 7,648,624
Income tax expense.................... 1,066,448 2,179,143 1,036,352 229,087 572,855
-------------- -------------- -------------- -------------- --------------
Income (loss) from continuing
operations........................... 1,416,045 6,904,985 3,309,377 (2,320,008) 7,075,769
Discontinued operations:
Loss from operations (net of tax
benefit of $166,600)............... 323,435 -- -- -- --
Loss on disposal (net of tax benefit
of $122,200)....................... 237,363 -- -- -- --
-------------- -------------- -------------- -------------- --------------
Net income (loss)................. $ 855,247 $ 6,904,985 $ 3,309,377 $ (2,320,008) $ 7,075,769
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Pro forma income data (unaudited):
Income from continuing operations as
reported before tax................ $ 4,345,729 $ 7,648,624
Proforma federal and state income
tax................................ (1,542,734) (2,715,262)
-------------- --------------
Pro forma net income................ $ 2,802,995 $ 4,933,362
-------------- --------------
-------------- --------------
Pro forma net income per share...... $ .23 $ .41
-------------- --------------
-------------- --------------
Weighted average shares
outstanding........................ 11,900,357 11,900,357
Plus shares attributable to excess
distributions...................... 351,640 61,796
-------------- --------------
Pro forma weighted average shares
outstanding........................ 12,251,997 11,962,153
-------------- --------------
-------------- --------------
</TABLE>

See accompanying notes to combined financial statements.

F-5
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

COMBINED STATEMENTS OF STOCKHOLDER'S EQUITY/PARTNERS' CAPITAL

For the years ended December 31, 1995, 1994, 1993 and
for the six month period ended June 30, 1996

<TABLE>
<CAPTION>
ADDITIONAL RETAINED
COMMON PAID-IN PARTNERS' EARNINGS
STOCK CAPITAL CAPITAL (DEFICIT) TOTAL
----------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1992......... $ 2,995 $ 21,831 $ -- $ 5,143,183 $ 5,168,009
Distribution......................... -- -- -- (1,871,296) (1,871,296)
Capital contributed.................. 10 990 -- -- 1,000
Net income........................... -- -- -- 855,247 855,247
----------- ------------- ------------- --------------- ---------------
Balance at December 31, 1993......... 3,005 22,821 -- 4,127,134 4,152,960
Distribution......................... -- -- -- (3,857,759) (3,857,759)
Stock issuance....................... 10 990 -- -- 1,000
Capital contributed.................. -- 1,000,000 1,200,000 -- 2,200,000
Net income........................... -- -- 35,484 6,869,501 6,904,985
----------- ------------- ------------- --------------- ---------------
Balance at December 31, 1994......... 3,015 1,023,811 1,235,484 7,138,876 9,401,186
Distribution......................... -- -- -- (11,232,335) (11,232,335)
Capital contributed.................. -- 3,000,000 -- -- 3,000,000
Net income (loss).................... -- -- (584,576) 3,893,953 3,309,377
----------- ------------- ------------- --------------- ---------------
Balance at December 31, 1995......... 3,015 4,023,811 650,908 (199,506) 4,478,228
Distribution - unaudited............. -- -- -- (6,210,623) (6,210,623)
Net income (loss) - unaudited........ -- -- (75,514) 7,151,283 7,075,769
----------- ------------- ------------- --------------- ---------------
Balance at June 30, 1996 -
unaudited........................... $ 3,015 $ 4,023,811 $ 575,394 $ 741,154 $ 5,343,374
----------- ------------- ------------- --------------- ---------------
----------- ------------- ------------- --------------- ---------------
</TABLE>

See accompanying notes to combined financial statements.

F-6
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.
COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED ENDED JUNE 30,
DECEMBER 31, (UNAUDITED)
------------------------------------------------ --------------------------------
1993 1994 1995 1995 1996
-------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net (loss) earnings............... $ 855,247 $ 6,904,985 $ 3,309,377 $ (2,320,008) $ 7,075,769
Adjustments to reconcile net
earnings to cash provided by (used
in) operating activities:
Depreciation and amortization... 1,814,257 1,302,434 3,980,525 1,694,080 2,936,082
(Gain) loss on disposition of
property and equipment......... 297,353 (98,215) 1,607 5,995 --
Loss on discontinued
operations..................... 849,598 -- -- -- --
Loss on investment.............. -- 100,000 26,900 26,900 --
Amortization of discount on note
payable -- -- 27,580 27,945 44,150
Provision for doubtful
receivables.................... 681,810 802,230 443,169 257,763 438,725
Deferred federal income tax..... (66,599) 366,599 -- -- (367,727)
Decrease (increase) in, net of
acquisition of businesses
Accounts receivable, net........ (1,697,853) (4,178,646) (3,496,445) 638,148 (7,063,998)
Prepaid expenses and other
current assets................. (580,491) (8,822) (124,344) (438,681) (544,614)
Other assets.................... 27,554 (116,606) (286,221) (44,506) (207,270)
(Decrease) increase in, net of
acquisition of businesses
Accounts payable................ (207,313) 365,984 (521,669) (703,315) 516,295
Accrued liabilities............. (120,861) 37,852 506,101 1,006,296 2,295,899
Accrued payroll liabilities..... 39,480 152,979 132,864 18,953 216,204
Deferred revenues............... (414,408) 725,347 (612,070) 1,817,026 385,617
Income tax payable.............. (124,015) (1,810,851) 220,328 (388,620) (139,772)
Other liabilities............... (77,043) (77,043) (77,043) (38,522) 12,956
Net reciprocal arrangements......... (2,188,772) (3,214,830) (1,424,927) 1,738,403 (1,827,737)
-------------- --------------- --------------- --------------- ---------------
Net cash provided by (used in)
operating activities............ (912,056) 1,253,397 2,105,732 3,297,857 3,770,579
-------------- --------------- --------------- --------------- ---------------
Cash flows from investing
activities:
Acquisitions of companies......... -- (585,432) (9,218,718) (9,218,718) (3,864,807)
Advances on receivables to related
parties........................... (1,004,150) (316,993) (786,361) (402,270) (680,703)
Payments on receivables from
related parties................... -- -- -- -- 150,000
Advances on receivable from
stockholders...................... 25,300 (1,693,043) (84,227) (84,227) --
Proceeds from sale of property and
equipment......................... 31,150 1,043,601 224,957 15,503 --
Acquisitions of property and
equipment......................... (270,400) (835,050) (2,043,245) (751,990) (1,957,823)
-------------- --------------- --------------- --------------- ---------------
Net cash used in investing
activities.................... $ (1,218,100) $ (2,386,917) $ (11,907,594) $ (10,441,702) $ (6,353,333)
-------------- --------------- --------------- --------------- ---------------
</TABLE>

See accompanying notes to combined financial statements.

F-7
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

COMBINED STATEMENTS OF CASH FLOWS, CONTINUED

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
FOR THE YEAR ENDED JUNE 30,
DECEMBER 31, (UNAUDITED)
--------------------------------------------- ------------------------------
1993 1994 1995 1995 1996
------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Cash flows from financing activities:
Increase (decrease) in disbursements
float................................. $ 376,085 $ 451,249 $ 288,761 $ (324,049) $ 523,280
Financing costs....................... -- (229,885) (314,601) -- --
Proceeds from long-term debt.......... 1,981,564 8,008,536 16,890,155 11,890,107 8,948,351
Principal payments on long-term
debt.................................. (395,931) (4,441,471) (2,057,748) (935,925) (468,883)
Distributions......................... -- (2,364,225) (8,631,116) (4,805,980) (6,003,740)
Issuance of stock..................... 1,000 1,000 -- -- --
Capital contributions................. -- 2,200,000 3,000,000 -- --
------------- -------------- -------------- -------------- --------------
Net cash provided by financing
activities............................. 1,962,718 3,625,204 9,175,451 5,824,153 2,999,008
------------- -------------- -------------- -------------- --------------
Net (decrease) increase in cash and cash
equivalents............................ (167,438) 2,491,684 (626,411) (1,319,692) 416,254
Cash and cash equivalents at beginning
of year................................ 1,352,111 1,184,673 3,676,357 3,676,357 3,049,946
------------- -------------- -------------- -------------- --------------
Cash and cash equivalents at end of
year................................... $ 1,184,673 $ 3,676,357 $ 3,049,946 $ 2,356,665 $ 3,466,200
------------- -------------- -------------- -------------- --------------
------------- -------------- -------------- -------------- --------------
Supplemental disclosures of cash flow
information:
Cash paid during the year for
interest.............................. $ 154,064 $ 261,000 $ 1,246,000 $ 420,518 $ 959,265
------------- -------------- -------------- -------------- --------------
------------- -------------- -------------- -------------- --------------
Cash paid during the year for income
taxes................................. $ 1,115,387 $ 4,325,000 $ 923,000 $ 604,903 $ 686,054
------------- -------------- -------------- -------------- --------------
------------- -------------- -------------- -------------- --------------
Supplemental noncash investing and
financing activities:
Stockholder distributions by:
Reduction of stockholder note
receivable............................ -- 560,165 1,790,868 1,790,868 --
Transfer of property.................. 1,871,296 933,369 966,518 830,179 206,883
------------- -------------- -------------- -------------- --------------
$ 1,871,296 $ 1,493,534 $ 2,757,386 $ 2,621,047 $ 206,941
------------- -------------- -------------- -------------- --------------
------------- -------------- -------------- -------------- --------------
Property and equipment acquired
through reciprocal activities......... $ 620,868 $ 1,877,372 $ 702,970 $ 484,060 $ 176,610
------------- -------------- -------------- -------------- --------------
------------- -------------- -------------- -------------- --------------
Reciprocal activities related to
business acquisitions................. $ -- $ 2,000,000 $ 1,500,000 $ 1,500,000 $ --
------------- -------------- -------------- -------------- --------------
------------- -------------- -------------- -------------- --------------
</TABLE>

See accompanying notes to combined financial statements.

F-8
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The combined financial statements consist of Metro Traffic Control, Inc.
("MTC"), Metro Reciprocal, Inc. ("MRI"), Metro Networks, Ltd. ("MNW") (a limited
liability partnership) and Metro Video News, Inc. ("MVN") and their subsidiaries
(collectively, the "Company"). These entities are all controlled by the same
shareholder. All intercompany accounts and transactions have been eliminated in
combination.

The Company provides traffic reporting services, local news, sports, weather
and other information reporting services to the television and radio broadcast
industries. In exchange for the Company's information reports, television and
radio station broadcast affiliates provide commercial airtime to the Company.
The packaging and sale of this commercial airtime accounts for substantially all
of the Company's revenue. The Companies' information reports are broadcast by
broadcast affiliates throughout the United states and in over 50 of the largest
metropolitan areas.

REVENUE RECOGNITION

The Company provides programming to radio and television stations in
exchange for commercial airtime. The airtime is subsequently sold to advertisers
for either cash or other goods and services. Revenue is recognized at the time
commercials are broadcasted, and accounts receivable are recorded at that time.
If cash, merchandise or services are received prior to the broadcast of the
commercial, deferred revenue is recorded.

Revenue from the Company's exchange of advertising time for goods and
services is recorded at the estimated fair market value of goods or services
received or to be received. The value of goods and services is charged to
expense when used.

Operations are charged with a provision for doubtful accounts based on
collection experience and a current review of the collectibility of accounts.
Accounts deemed uncollectible are applied against the allowance for doubtful
accounts.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents. The
disbursement float liability represents uncleared checks related to zero balance
accounts. The Company records these amounts as liabilities.

MERCHANDISE AND SCRIP INVENTORY

Merchandise and scrip inventory consists of miscellaneous merchandise and
airline tickets, lodging, meals and other goods received by the Company in
exchange for advertising time, and are valued at the fair market value of goods
received. The components of the merchandise and scrip inventory are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ JUNE 30,
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Merchandise inventory........................ $ 319,784 $ 156,496 $ 152,752
Scrip inventory.............................. 103,067 243,110 231,540
----------- ----------- -----------
$ 422,851 $ 399,606 $ 384,292
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

F-9
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. The cost of ordinary maintenance
is charged to operations, while renewals and replacements are capitalized.
Depreciation is computed based on the straight-line method over the following
estimated useful lives:

<TABLE>
<S> <C>
Operating equipment 3 - 10 years
Transportation equipment 3 years
Leasehold improvements 10 years
</TABLE>

Depreciation expense for the years ended December 31, 1995, 1994 and 1993
was $1,249,702, $882,577 and $746,919, respectively. Other expense for the year
ended December 31, 1993 of $297,354 consists of loss on disposal of certain
fixed assets.

INTANGIBLE ASSETS

Intangible assets include goodwill, purchased broadcast contracts,
non-compete agreements, trademarks and licenses. Intangible assets are amortized
on a straight-line basis over the estimated eventual term of the customer's
contract or the estimated useful life of the asset for periods ranging from
three to five years. The Company adopted FAS 121 (Accounting for Impairment Of
Long-Lived Assets And For Long-Lived Assets To Be Disposed Of) effective January
1, 1996. This standard requires that long-lived assets and certain identifiable
intangibles held and used by the Company be reviewed for impairment whenever
events or changes in events indicate that the carrying amount of the asset
cannot be recoverable. The adoption of FAS 121 did not materially affect the
Company's combined results of operations or financial position.

FEDERAL AND STATE INCOME TAX

The Companies file separate federal and state tax returns. Therefore, the
Companies record the income tax expense (recovery) based on their separate
returns.

MRI and MVN have elected to be taxed under S Corporation provisions of the
Internal Revenue Code. Effective July 1, 1994, MTC elected to be taxed under S
Corporation provisions of the Internal Revenue Code. Under these provisions,
MRI, MVN and MTC are not liable for federal income taxes. Instead, the
stockholders are liable for individual federal income taxes on their taxable
income. Accordingly, losses are not available to the Company to offset income.
MNW is a partnership for federal income tax purposes and accordingly, the
partners are liable for federal income taxes on their respective income.

MNW owns corporations which are taxed under the C corporation provisions of
the Internal Revenue Code. Taxes related to income from the entities taxed under
the C corporation provisions are reported under the liability method;
accordingly, deferred tax assets and liabilities are determined based on
differences between financial and tax basis of assets and liabilities and are
measured using the enacted tax rates and laws.

ACCRUED RECIPROCAL LIABILITIES

Accrued reciprocal liabilities represent goods and services owed to radio
stations in exchange for airtime received from these radio stations.

PRO FORMA EARNINGS PER SHARE

Weighted average shares outstanding, net income per share and pro forma net
income per share are calculated assuming the shares issued in conjunction with
the Reorganization were outstanding for

F-10
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

the periods presented. In addition, an adjustment has been made to reflect the
distributions which exceeded capital contributions and net income in accordance
with the rules of the Securities and Exchange Commission.

RECIPROCAL AND AIRTIME OBLIGATIONS

Reciprocal and airtime obligations represent broadcast obligations incurred
as part of the purchase price for acquisitions. Such obligations are recorded at
the fair market value of the airtime when the acquisition was made.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

UNAUDITED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

In the opinion of management, the unaudited interim financial statements for
the six months ended June 30, 1995 and 1996, presented herein, include all
adjustments, consisting only of normal recurring adjustments, necessary for the
fair presentation of the Company's financial position, results of operations,
shareholder's equity and cash flows for the interim period. The combined results
of operations and cash flows for the six months ended June 30, 1996 and 1995 are
not necessarily indicative of the results which would be expected for a full
year.

PRO FORMA FINANCIAL DATA (UNAUDITED)

Pro forma income taxes are set forth herein because certain of the combined
companies operate as subchapter S corporations. Pro forma income taxes reflect
federal income taxes that would have been incurred had all the combined
companies been subject to such taxes. Such amounts have been deducted from net
earnings in the accompanying statement of operations pursuant to the rules and
regulations of the Securities and Exchange Commission.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value of related party receivables, note receivable from
shareholder and long-term debt are not materially different from carrying value
for financial statement purposes.

NOTE 2 -- ACQUISITIONS

The Company made the following acquisitions, each of which has been
accounted for as a purchase.

On October 26, 1994, the Company acquired substantially all of the business
assets and assumed certain liabilities of Charlotte Traffic Patrol, Inc.
("CTP"), a North Carolina corporation. CTP is engaged in the business of
providing vehicular traffic condition reports through the broadcast media in the
metropolitan area of Charlotte, North Carolina and certain surrounding areas.
The purchase price of $3.5 million consisted of a $600,000 cash payment at
closing and notes payable of $900,000. The notes payable are secured by a
stand-by letter of credit issued by a commercial bank. As part of the
consideration for the purchase of the assets, the Company agreed to provide CTP
with advertising radio spots in

F-11
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 2 -- ACQUISITIONS (CONTINUED)
the Charlotte area each calendar month during the five-year period beginning the
date of closing and ending October 31, 1999. The Company also assumed CTP's
obligations under its existing office lease and CTP's affiliate contracts.

On July 19, 1994, the Company acquired substantially all of the tangible and
intangible assets, contracts, distributor relationships, advertiser and
affiliate lists of Hildebrand Communications, Inc. ("Hildebrand"), and assumed
certain liabilities in exchange for cash consideration of $100,000. The excess
of the aggregate purchase price over the fair market value of the net assets
acquired of $15,000 was recognized as the value of the non-compete agreement
executed by the seller and is being amortized over a five-year period.

On July 1, 1994, the Company acquired certain of the tangible and intangible
assets, contracts, distributor relationships, advertiser and affiliate lists of
Wisconsin Information Systems, Inc. d/b/a The Milwaukee Traffic Network
("Wisconsin"), and assumed certain liabilities in exchange for cash
consideration of $79,000. MTC also agreed to provide the seller with a
performance fee for the initial twenty-four months of MTC's ownership equal to
15% of net operating revenue, as defined. The excess of the aggregate purchase
price over the fair market value of the net assets acquired of $15,000 was
recognized as the value of the non-compete agreement executed by the seller and
is being amortized over a five-year period.

On March 24, 1995, the Company acquired 100% of the stock of TrafficScan,
Incorporated ("TSI"). TSI is in the business of providing traffic information
services to the broadcast media in the greater Atlanta geographic region. The
consideration for the stock of TSI included cash of approximately $4 million and
trade credits of approximately $1.5 million. Approximately $5.1 million of the
purchase price was allocated to the value of purchased broadcast contracts,
non-compete agreements and goodwill and is being amortized on a straight-line
basis over five years.

On March 9, 1995, the Company acquired all of the outstanding shares of
Skyview Broadcasting Networks, Inc. ("SBN"), an Arizona corporation. The
consideration for the stock of SBN included cash of $2.28 million and
non-interest bearing notes payable of approximately $463,000. The purchase price
was allocated to the net assets based upon their estimated fair market values.
The excess of the purchase price over the estimated fair value of the net assets
acquired was approximately $2.5 million. The excess purchase price was allocated
to the value of purchased broadcast contracts, non-compete agreements and
goodwill and is being amortized on a straight-line basis over five years.

On March 9, 1995, the Company also acquired 100% of the shares of Airborne
Broadcast Consultants, Inc. ("Airborne"), a Nevada corporation. The Company
acquired the stock for cash consideration of $1.14 million and noninterest
bearing notes payable of approximately $232,000. The purchase price was
allocated to the net assets of the acquired company based upon their estimated
fair value. The excess purchase price of approximately $1.3 million was
allocated to the value of purchased broadcast contracts, non-compete agreements
and goodwill and is being amortized on a straight-line basis over five years.
The consideration represented by the notes payable for the SBN and Airborne
stock purchases are payable in the amounts of approximately $347,000 each to the
two previous owners in twenty-three equal installments of approximately $15,000,
with a final payment in the twenty-fourth month. These notes payable are
noninterest bearing and are discounted at an interest rate of 8%.

On March 9, 1995, the Company acquired substantially all of the tangible and
intangible business assets and acquired certain liabilities of Airborne
Broadcasting Systems, Inc. ("ABS"), a Tennessee corporation. ABS operates a
network of broadcast affiliates serving the greater Nashville and Memphis,

F-12
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 2 -- ACQUISITIONS (CONTINUED)
Tennessee markets and the Louisville, Kentucky market. Through these affiliates,
ABS provides traffic, news and weather information in exchange for advertising
availabilities. The purchase price of approximately $2.1 million consisted of
cash consideration of $1,780,000 and noninterest bearing notes payable of
approximately $358,000, less note discount at 8%. The purchase price was
allocated to the net assets based upon their estimated fair market values. The
excess purchase price of approximately $2.1 million was allocated to the value
of purchased broadcast contracts, non-compete agreements and goodwill and is
being amortized over a five-year period.

Subsequent to December 31, 1995, the Company made the following asset and
stock acquisitions. These acquisitions were accounted for on the purchase method
of accounting. Accordingly, the purchase price was allocated to the net assets
based upon their fair market values. The excess purchase price was allocated to
the value of purchased affiliate contracts, non-compete agreements and goodwill
and will be amortized over five years.

On January 3, 1996, the Company acquired substantially all of the tangible
and intangible business assets and certain liabilities of Aeromedia, Inc.
("Aeromedia"), a Utah corporation. Aeromedia operates a network of broadcast
affiliates serving the Salt Lake City metropolitan area in exchange for
advertising availabilities and other compensation. As consideration for the
asset purchase, the Company paid $200,000 at closing and agreed to pay
additional contingent consideration in a final payment based upon net sales of
Aeromedia for the calendar year 1996. The final payment, based upon net sales as
defined in the Asset Purchase Agreement, ranges from zero for net sales less
than $500,000 up to $250,000 for net sales greater than $600,000.

On January 4, 1996, the Company acquired the stock of Traffic Net Inc.
("TNI"), a Rhode Island corporation, Traffic Net of Connecticut, Inc. ("TNCI"),
a Connecticut corporation, and The Weather Bureau, Inc. ("TWB"), a Massachusetts
corporation (collectively, the "Traffic Net Group"). In exchange for 100% of the
outstanding shares of the Traffic Net Group, the Company paid cash consideration
of approximately $2.9 million, net of $100,000 in deferred purchase price
related to certain contingent liabilities, as described in the TNI Stock
Purchase Agreement. As additional consideration, the Company paid cash of
approximately $410,000 to acquire existing trade receivables, net of an escrow
reserve of approximately $137,000 for potentially uncollectible trade account.

F-13
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 2 -- ACQUISITIONS (CONTINUED)
The following is a summary of the acquisitions:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- JUNE 30,
1994 1995 1996
------------- ------------- -------------
<S> <C> <C> <C>
Assets acquired:
Accounts receivable............................................. $ 126,831 $ 994,803 $ 553,982
Fixed Assets.................................................... 226,911 513,670 72,870
Other assets.................................................... 30,000 17,180 70,889
Purchased broadcast contracts and other intangibles............. 5,053,258 13,187,162 4,827,149
------------- ------------- -------------
5,437,000 14,712,815 5,524,890
Liabilities assumed:
Notes payable................................................... 601,839 730,452 --
Other liabilities............................................... 3,156,161 3,752,838 1,804,498
------------- ------------- -------------
3,758,000 4,483,290 1,804,498
Less: Notes payable issued........................................ 900,000 1,052,913 --
------------- ------------- -------------
Cash paid......................................................... $ 779,000 $ 9,176,612 $ 3,720,392
------------- ------------- -------------
</TABLE>

The following unaudited pro forma information represents the combined
results of operations of the Company as if (i) the TSI, SBN, Airborne and ABS
acquisitions had been combined with the Company as of January 1, 1995 and 1994
and (ii) the CTP, Hildebrand and Wisconsin acquisitions had been combined with
the Company as of January 1, 1994.

<TABLE>
<CAPTION>
DECEMBER 31,
(000'S)
(UNAUDITED)
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Advertising Revenues................................................... $ 66,804 $ 73,377
Net Income............................................................. 7,505 2,854
</TABLE>

The pro forma information is not necessarily indicative of operating results
that would have occurred if each major acquisition had been consummated as of
January 1 of each respective period, nor is it necessarily indicative of future
operating results. The actual results of operations of an acquired company are
included in the Company's combined financial statements only from the date of
acquisition.

NOTE 3 -- ALLOWANCE FOR DOUBTFUL ACCOUNTS

The activity in the allowance for doubtful accounts is as follows:

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO WRITE-OFFS
BEGINNING OF COSTS AND NET BALANCE AT THE
PERIOD EXPENSES OF RECOVERIES END OF PERIOD
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Year ended December 31, 1993...................... $ 633,740 $ 681,810 $ (623,638) $ 691,912
Year ended December 31, 1994...................... 691,912 802,230 (1,000,299) 493,843
Year ended December 31, 1995...................... 493,843 443,169 (626,750) 310,262
</TABLE>

F-14
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 4 -- ACCRUED LIABILITIES

The following are the components of accrued liabilities as of the respective
dates:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- JUNE 30,
1994 1995 1996
------------- ------------- -------------
<S> <C> <C> <C>
Trade Payables........................ $ 492,094 $ 786,436 $ 1,655,404
Commission............................ 249,589 534,860 1,429,489
Other................................. 404,545 385,789 918,091
------------- ------------- -------------
$ 1,146,228 $ 1,707,085 $ 4,002,984
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

NOTE 5 -- RECIPROCAL REVENUES AND EXPENSES

The following is a summary of reciprocal revenues and expenses for the
respective periods:

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------------------- ----------------------------
1993 1994 1995 1995 1996
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Reciprocal Revenues......... $ 8,069,946 $ 7,983,076 $ 8,375,372 $ 2,452,322 $ 4,777,340
Reciprocal Expenses......... 8,428,187 7,755,871 9,464,790 5,608,033 3,930,548
</TABLE>

NOTE 6 -- PURCHASED BROADCAST CONTRACTS AND OTHER INTANGIBLES

Purchased broadcast contracts and other intangibles is comprised of the
following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Non-compete agreements........................................... $ 1,646,391 $ 2,935,649 $ 3,473,571
Purchased broadcast contracts.................................... 4,856,777 12,403,544 15,470,099
Goodwill, trademarks and licenses................................ 42,178 2,514,314 3,740,985
-------------- -------------- --------------
6,545,346 17,853,507 22,684,655
Less: accumulated amortization................................... 3,437,712 4,103,863 6,249,646
-------------- -------------- --------------
$ 3,107,634 $ 13,749,644 $ 16,435,009
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

Amortization expense for the years ended December 31, 1995, 1994 and 1993
was $2,669,151, $408,362 and $1,067,338, respectively.

F-15
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 7 -- NOTES PAYABLE AND LONG-TERM DEBT
Short term notes payable consists of various notes with an original maturity
of less than one year. Long-term debt consists of:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1995 JUNE 30, 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Notes payable related to $30,000,000 revolving credit agreement
at variable rates (weighted average of 7.57% at December 31,
1995).......................................................... $ 5,847,423 $ 21,121,000 $ 29,301,000
Various acquisition notes payable, discounted at 8%, due 1996
through 1999................................................... 682,432 1,224,083 933,005
Unsecured note payable to bank at prime (8.75% at December 31,
1995), due 1996 through 2000................................... -- 132,750 119,250
Various notes payable at fixed rates of 7% to 9.50%, due 1996
through 2000................................................... -- 61,580 87,152
-------------- -------------- --------------
6,529,855 22,539,413 30,440,407
Less: Current portion 82,610 662,257 6,474,873
-------------- -------------- --------------
$ 6,447,245 $ 21,877,156 $ 23,965,534
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

The following is a schedule of future maturities of long-term debt as of
December 31, 1995:

In October, 1994, the Company entered into a credit agreement, as
subsequently amended, with a commercial bank that allows borrowings up to
$30,000,000 under notes payable indexed to the bank's prime rate or the London
Interbank Offered Rate (LIBOR). The credit agreement, as amended, provides for
scheduled commitment reductions, which ranges between 5% and 10% of the original
commitment, beginning June 30, 1996 through June 30, 2000, at which time the
commitment matures. The credit agreement also contains, among other provisions,
requirements for maintaining defined levels of debt service coverage, fixed
charges coverage and maximum levels of leverage indebtedness, executive
compensation and other restrictions. The credit facility is secured by a pledge
of the stock or other equity interests of each of the combined Companies. A
commitment fee of .375% per year is charged on the daily unused balance.

The Company issued noninterest bearing notes payable, discounted at 8% per
annum, in connection with the stock acquisitions of SBN and Airborne in 1995,
and the asset acquisitions of ABS in 1995 and CTP in 1994. The Company has
guaranteed $732,000 letters-of-credit related to its acquisition of the assets
of CTP as of December 31, 1995.

F-16
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 8 -- INCOME TAXES
Income tax expense from continuing operations is comprised of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Current, federal.................................................... $ 1,022,307 $ 1,265,662 $ 722,254
Current, state...................................................... 110,740 546,882 314,098
Deferred, non-current federal....................................... (66,559) 366,599 --
------------- ------------- -------------
$ 1,066,448 $ 2,179,143 $ 1,036,352
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

The difference between the effective tax rate of income tax expense and the
amount which would be determined by applying the statutory U.S. income tax rates
to income from continuing operations before income tax expense is explained
below according to the tax implications of various items of income or expense:

<TABLE>
<CAPTION>
1993 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Provision for income tax expense at U.S. statutory rates............ $ 844,048 $ 3,088,604 $ 1,477,548
Increase (decrease) in tax provision resulting from:
Nontaxable S-Corporation and partnership (earnings) losses........ 10,410 (1,645,277) (666,838)
State income taxes, net of federal tax benefit.................... 73,088 351,042 204,164
Deferred federal income tax reversal due to change in tax
status........................................................... -- 321,599 --
Other............................................................. 138,902 63,175 21,478
------------- ------------- -------------
$ 1,066,448 $ 2,179,143 $ 1,036,352
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and amounts used for income tax purposes related to the C corporations
included in the combined group. As of December 31, 1995, this amount primarily
relates to the differential in book and tax basis of the intangibles as a result
of the recent acquisitions.

MTC is subject to IRC 1374 tax on pre-election built-in gains on property
held prior to election as an S corporation for a ten-year period following the
election. Recognition of the built-in gain and the accompanying tax liability is
contingent upon assets owned at the time of the S election being sold in the
future at amounts exceeding their tax basis and their fair market values at
election date.

The book basis exceeds the tax basis in the underlying assets of the
entities included in the combined group which have elected to be taxed under the
S corporation provisions of the Internal Revenue Code by approximately
$1,035,000.

F-17
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 9 -- COMMITMENTS AND CONTINGENCIES
The Company leases certain of its office facilities and equipment over
periods ranging from one to ten years. Rent expense for the years ended December
31, 1995, 1994 and 1993, was $2,701,000, $2,256,000 and $636,000, respectively.
Future rentals for operating leases at December 31, 1995, are as follows:

<TABLE>
<S> <C>
1996.................................................. $ 1,329,000
1997.................................................. 1,104,000
1998.................................................. 780,000
1999.................................................. 474,000
2000.................................................. 401,000
Thereafter............................................ 1,266,000
-----------
$ 5,354,000
-----------
-----------
</TABLE>

Additionally, the Company is obligated to provide advertising in exchange
for leasing certain office facilities and equipment over periods ranging from
one to ten years. Future rentals for operating leases at December 31, 1995,
based on the fair market value of the lease are as follows:

<TABLE>
<S> <C>
1996.................................................. $ 1,297,000
1997.................................................. 1,030,000
1998.................................................. 593,000
1999.................................................. 524,000
2000.................................................. 399,000
Thereafter............................................ 642,000
-----------
$ 4,485,000
-----------
-----------
</TABLE>

The Company is subject to other litigation arising in the ordinary course of
business. Management believes that the resolution of such matters will not have
a material adverse effect on the Company's financial position or results of
operations.

NOTE 10 -- PROFIT SHARING PLAN
Effective April, 1995, the Company established a profit sharing plan under
Section 401(k) of the Internal Revenue Code for all eligible employees. All
eligible employees are permitted to defer compensation up to a maximum of 10% of
their income. The plan provides for a matching contribution by the Company,
which amounted to $195,000 in 1995.

F-18
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 11 -- COMMON STOCK AND PARTNERS' CAPITAL
Common stock is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
METRO TRAFFIC CONTROL, INC.
Common stock - stated value $2.50, 2,600 shares authorized, 1,198 shares issued and
outstanding............................................................................... $ 2,995 $ 2,995
METRO RECIPROCAL, INC.
Common stock - $.01 par value, 1,000,000 shares authorized, 1,000 issued and outstanding... 10 10
METRO VIDEO NEWS, INC.
Common stock - $.01 par value, 1,000,000 shares authorized, 1,000 shares issued and
outstanding............................................................................... 10 10
--------- ---------
$ 3,015 $ 3,015
--------- ---------
--------- ---------
</TABLE>

Partners' capital account represents the partners capital of MNW.

NOTE 12 -- RELATED PARTY TRANSACTIONS
The Company leases certain real property in Vail, Colorado and in Malibu,
California from a partnership owned by the controlling shareholder. The annual
lease payments on these properties are $60,000 and $240,000, respectively.

The Company has entered into certain reciprocal arrangements with unrelated
third parties as a result of which the Company will receive goods and services
for the benefit of the controlling shareholder. The reciprocal arrangements
obligate the Company to provide commercial airtime, provide other goods and
services, and make cash disbursements to such third parties in exchange for the
goods and services received by the Company. As of June 30, 1996, the Company was
obligated to provide approximately $3.5 million (unaudited) of commercial
airtime, goods and services under these reciprocal arrangements. The Company
intends to enter into an agreement with the controlling shareholder pursuant to
which the controlling shareholder will be distributed the goods and services the
Company holds for the controlling shareholder's benefit. The Company also will
distribute to the controlling shareholder all of its rights to the goods and
services that are the subject of existing reciprocal arrangements but which have
not yet been delivered to the Company. The value of such goods and services is
expected to be approximately $3.0 million (unaudited). The Company does not
intend to enter into future reciprocal arrangements for the benefit of the
controlling shareholder.

The Company has entered into certain transactions with a company owned by
the stockholder. The Company has guaranteed the annual lease payments for such
company in the amount of $60,000; such obligations shall continue through
December 31, 1996. Additionally, the Company has posted a bond of $20,000 with
the Airline Reservations Clearinghouse for the company. The Company purchases
the majority of its travel tickets through the company.

The stockholder and members of his family have personally utilized the
services of several of the Company's employees. The total compensation paid to
such employees was $180,995 in 1995.

At December 31, 1994, the Company had a demand note receivable from the
stockholder totaling $1,706,641, bearing interest at the prime rate plus 1% for
cash advances made to the controlling stockholder. In addition, at December 31,
1995 and 1994, the Company had outstanding receivables

F-19
<PAGE>
METRO TRAFFIC CONTROL, INC., METRO RECIPROCAL, INC.,
METRO NETWORKS, LTD., AND METRO VIDEO NEWS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

NOTE 12 -- RELATED PARTY TRANSACTIONS (CONTINUED)

from affiliated entities totaling $1,075,030 and $288,669, respectively, bearing
interest at the prime rate plus 1%. For the years ended December 31, 1995, 1994
and 1993, the Company had recorded $131,797, $105,641 and $52,822, respectively,
in interest income related to the above receivables.

The Company paid $300,000 and $100,000 in rent expense to an entity related
by common control for the years ended December 31, 1995 and 1994, respectively.
Additionally, the Company is obligated under lease agreements for future minimum
lease payments of $300,000 in 1996 and $135,000 in 1997. These amounts have been
included in Note 7.

NOTE 13 -- DISCONTINUED OPERATIONS
In June 1993, the Company approved a plan to discontinue the Company's
magazine publishing business, and disposed of the business in August 1993.

NOTE 14 -- EVENT SUBSEQUENT TO DATE OF AUDITORS' REPORT - REORGANIZATION
(UNAUDITED)
From 1978 through June 1996, the business of the Company was operated
through Metro Traffic Control, Inc. and the other combined companies. All of the
equity interests in these companies were controlled by a single shareholder. In
conjunction with an anticipated offering of equity securities, a new entity was
formed. It is expected that the single shareholder will contribute or cause to
be contributed all of the issued and outstanding equity interests in the
Predecessor Companies to this newly formed entity in exchange for common stock.
Subsequent to the Reorganization, Metro Traffic Control, Inc. will be a
wholly-owned subsidiary of the Company and the other Predecessor Companies will
have been merged into Metro Traffic Control, Inc.

As the equity interests are held under common control and will be
contributed by the resulting shareholder of the Company, the underlying assets
will be recorded at their historical costs, similar to pooling of interest
accounting.

Upon the Reorganization, the resulting entity will be liable for income
taxes, at which time the entity will be required to record a deferred tax
liability for the differential between the book and tax basis of the underlying
assets. Accordingly, this differential will result in an increase in income tax
expense at the time of reorganization of approximately $352,000.

F-20
<PAGE>
INDEPENDENT AUDITORS' REPORT

Boards of Directors
Skyview Broadcasting Networks, Inc.
Airborne Broadcast Consultants
Airborne Broadcasting Systems, Inc.:

We have audited the accompanying combined statements of operations and cash
flows of Skyview Broadcasting Networks, Inc., Airborne Broadcast Consultants and
Airborne Broadcasting Systems, Inc. (collectively, the "Company") for the year
ended December 31, 1994. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the combined statements of operations and cash flows referred to
above present fairly, in all material respects, the combined results of their
operations and their cash flows for the year ended December 31, 1994, in
conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP
Houston, Texas
August 21, 1996

F-21
<PAGE>
SKYVIEW BROADCASTING NETWORKS, INC.
AIRBORNE BROADCAST CONSULTANTS
AIRBORNE BROADCASTING SERVICES, INC.

COMBINED STATEMENT OF OPERATIONS

For the year ended December 31, 1994

<TABLE>
<CAPTION>
<S> <C>
Advertising revenues............................................................................... $ 5,152,767
Broadcasting costs................................................................................. 1,423,355
Marketing expense.................................................................................. 221,813
General and administrative expenses................................................................ 3,117,608
Depreciation....................................................................................... 48,374
-------------
Total operating costs.............................................................................. 4,811,150
Income from operations............................................................................. 341,617
Interest expense................................................................................... 21,867
-------------
Income before income tax........................................................................... 319,750
Income tax expense................................................................................. 108,707
-------------
Net income......................................................................................... $ 211,043
-------------
-------------
</TABLE>

See accompanying notes to combined financial statements.

F-22
<PAGE>
SKYVIEW BROADCASTING NETWORKS, INC.
AIRBORNE BROADCAST CONSULTANTS
AIRBORNE BROADCASTING SERVICES, INC.

COMBINED STATEMENT OF CASH FLOWS

For the year ended December 31, 1994

<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net income.......................................................................................... $ 211,019
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation.................................................................................... 48,374
Decrease (increase) in:
Accounts receivable........................................................................... (253,864)
Due from stockholders......................................................................... 46,000
Other assets.................................................................................. (18,806)
Increase (decrease) in:
Accounts payable and accrued liabilities...................................................... 8,837
Income taxes payable.......................................................................... 138,749
Other Liabilities............................................................................. (2,423)
------------
Net cash provided by operating activities..................................................... 177,886
Net cash used in investing activities:
Purchase of property and equipment................................................................ (85,533)
Cash flows from financing activities:
Payments on notes payable......................................................................... (61,588)
Distributions to stockholders..................................................................... (26,670)
------------
Net cash used in financing activities......................................................... (88,258)
------------
Net increase in cash and cash equivalents........................................................... 4,095
Cash and cash equivalents at beginning of year...................................................... 60,924
------------
Cash and cash equivalents at end of year............................................................ $ 65,019
------------
------------
Supplemental disclosures of cash flow information:
Cash paid during the year for interest.......................................................... $ 35,267
------------
------------
Cash paid during the year for taxes............................................................. $ 2,145
------------
------------
</TABLE>

See accompanying notes to combined financial statements.

F-23
<PAGE>
SKYVIEW BROADCASTING NETWORKS, INC.
AIRBORNE BROADCAST CONSULTANTS
AIRBORNE BROADCASTING SYSTEMS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF COMBINATION AND GENERAL

The combined financial statements include the operations of Skyview
Broadcasting Networks, Inc., Airborne Broadcast Consultants, and Airborne
Broadcasting Systems, Inc. (collectively, the "Company"). The Company has
operations in Tuscon, Phoenix, Las Vegas, Memphis, Nashville and Louisville.
These entities are all controlled by the same shareholder. All intercompany
accounts and transactions have been eliminated in combination.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.

REVENUE RECOGNITION

The Company provides programming to radio and television stations in
exchange for commercial airtime. The airtime is subsequently sold to advertisers
for either cash or other goods and services. Revenue is recognized at the time
commercials are broadcasted. If cash, merchandise or services are received prior
to the broadcast of the commercial, deferred revenue is recorded.

USE OF ESTIMATES

INCOME TAXES

The Companies are taxed under the C corporation provisions of the Internal
Revenue Code. Taxes related to income from the entities taxed under the C
corporation provisions are reported under the asset and liability method;
accordingly, deferred tax assets and liabilities are determined based on
differences between financial and tax basis of assets and liabilities and are
measured using the enacted tax rates and laws.

F-24
<PAGE>
SKYVIEW BROADCASTING NETWORKS, INC.
AIRBORNE BROADCAST CONSULTANTS
AIRBORNE BROADCASTING SYSTEMS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income tax expense is comprised of the following:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1994
-------------------
<S> <C>
Current, federal......................................................... $ 23,121
Deferred, non-current federal............................................ 85,586
----------
$ 108,707
----------
----------
</TABLE>

NOTE 2 -- ACQUISITION

On March 8, 1995, the Company was acquired by Metro Networks, Ltd. for a
total purchase price of approximately $6.3 million, which consisted of cash
consideration of approximately $5.2 million and notes receivable of
approximately $1.1 million.

F-25
<PAGE>
PRO FORMA CONDENSED FINANCIAL DATA
(UNAUDITED)

During 1995, the Company completed the acquisitions of all of the
outstanding common stock of each of TrafficScan, Incorporated, Skyview
Broadcasting Networks, Inc., and Airborne Broadcast Consultants and
substantially all of the assets and certain liabilities of Airborne Broadcasting
Systems, Inc. During January 1996, the Company completed the acquisitions of
substantially all of the assets and certain liabilities of Aeromedia, Inc. and
all of the outstanding common stock of Traffic Net Inc, Traffic Net of
Connecticut, Inc. and The Weather Bureau, Inc. These acquisitions are reflected
in the balance sheet and statement of operations of the Predecessor Companies'
(as defined below) combined historical financial statements as of and for the
six months ended June 30, 1996. Accordingly, the separate financial data of the
completed acquisitions are not reflected in the pro forma condensed financial
data. Also in 1996, the Company signed letters of intent to acquire the assets
of Airborne Traffic Network, Inc. and Wisconsin Information Systems, Inc.
(collectively, the "Pending Acquisitions").

In May 1996, the Company was incorporated in Delaware. Immediately prior to
the closing of this offering, the issued and outstanding equity interests in the
Predecessor Companies will be exchanged for the shares of the Company's Common
Stock in order to consolidate the entities. As the equity interests in the
entities are held under common control and will be contributed by the resulting
shareholder of the Company, the underlying assets will be recorded at their
historical costs, similar to pooling of interest accounting.

The accompanying unaudited pro forma balance sheet of the Company combines
the historical combined balance sheet of the Company and the balance sheets of
the Pending Acquisitions as if these acquisitions had occurred on June 30, 1996.
Additionally, the unaudited pro forma balance sheet reflects the effects of the
pending reorganization (the "Reorganization") as if the Reorganization occurred
on June 30, 1996. The accompanying unaudited pro forma statements of operations
of the Company combine the historical combined statement of operations of the
Predecessor Companies, the acquisitions consummated in 1995, 1996, and the
Pending Acquisitions and the effects of the Reorganization as if such
acquisitions and Reorganization had occurred on January 1, 1995.

The unaudited pro forma financial statements do not purport to represent
what the Company's results of operations would have been had the acquisitions
and Reorganization occurred on the dates indicated or for any future period or
date. The pro forma adjustments give effect to available information and
assumptions that management believes are reasonable. The pro forma financial
statements should be read in conjunction with the Predecessor Companies'
historical combined financial statements and the financial statements of certain
acquired companies and the notes thereto included elsewhere herein.

F-26
<PAGE>
METRO NETWORKS, INC.
PRO FORMA CONDENSED BALANCE SHEET
AS OF JUNE 30, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
PREDECESSOR ACQUISITION REORGANIZATION
COMBINED PENDING PRO FORMA PRO FORMA PRO FORMA THE COMPANY
HISTORICAL ACQUISITIONS ADJUSTMENTS COMBINED ADJUSTMENTS PRO FORMA
------------- ------------ ------------- ----------- -------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Total current assets.... $31,142,418 $ 562,765 $ -- $31,705,183 $ -- $ 31,705,183
Receivables from related
parties................ 1,685,792 -- -- 1,685,792 -- 1,685,792
Operating equipment..... 8,941,683 122,880 -- 9,064,563 -- 9,064,563
Transportation
equipment.............. 824,692 -- -- 824,692 -- 824,692
Leasehold improvements.. 667,709 -- -- 667,709 -- 667,709
------------- ------------ ------------- ----------- ----------- --------------
10,434,084 122,880 -- 10,556,964 -- 10,556,964
Less accumulated
depreciation........... (4,961,155) (40,592) (5,001,747) (5,001,747)
------------- ------------ ------------- ----------- ----------- --------------
5,472,929 82,288 -- 5,555,217 -- 5,555,217
Purchase broadcast
contracts and other
intangibles 16,435,009 -- 1,832,543(B) 18,267,552 -- 18,267,552
Other assets............ 2,013,864 12,760 -- 2,026,624 -- 2,026,624
------------- ------------ ------------- ----------- ----------- --------------
Total assets.......... 56,750,012 657,813 1,832,543 59,240,368 -- 59,240,368
------------- ------------ ------------- ----------- ----------- --------------
------------- ------------ ------------- ----------- ----------- --------------
Total current
liabilities............ 24,299,214 340,356 151,500(C) 24,791,070 -- 24,791,070
Long-term debt.......... 23,965,534 12,253 1,986,247(C) 25,964,034 -- 25,964,034
Deferred income tax..... 2,941,787 -- -- 2,941,787 351,659(E) 3,293,446
Other liabilities....... 200,103 -- -- 200,103 3,500,000(J) 3,700,103
------------- ------------ ------------- ----------- ----------- --------------
Total liabilities..... 51,406,638 352,609 2,137,747 53,896,994 3,851,659 57,748,653
Preferred Stock......... -- -- -- -- 2,549(D) 2,549
Common stock 3,015 12,000 (12,000 (A) 3,015 6,335(D) 9,350
Additional paid-in
capital................ 4,023,811 82,500 (82,500 (A) 4,023,811 566,510(D) 4,590,321
Partners' capital....... 575,394 -- -- 575,394 (575,394)(D) --
Retained earnings
(deficit) 741,154 210,704 (210,704 (A) 741,154 (3,851,659)(D),(E),(J) (3,110,505)
------------- ------------ ------------- ----------- ----------- --------------
Total stockholder's
equity (deficit)..... 5,343,374 305,204 (305,204) 5,343,374 (3,851,659) 1,491,715
------------- ------------ ------------- ----------- ----------- --------------
Total liabilities and
stockholders'
equity............... $56,750,012 $ 657,813 $ 1,832,543 $59,240,368 $ -- $ 59,240,368
------------- ------------ ------------- ----------- ----------- --------------
------------- ------------ ------------- ----------- ----------- --------------
</TABLE>

F-27
<PAGE>
METRO NETWORKS, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
PREDECESSOR ACQUISITIONS REORGANIZATION
COMBINED PENDING PRO FORMA PRO FORMA PRO FORMA THE COMPANY
HISTORICAL ACQUISITIONS ADJUSTMENTS COMBINED REORGANIZATION PRO FORMA
------------- ------------ ------------- ----------- ---------------- --------------

<S> <C> <C> <C> <C> <C> <C>
Advertising revenues.... $50,077,032 $1,117,802 $ -- $51,194,834 $ -- $ 51,194,834
Broadcasting costs...... 24,172,646 369,762 -- 24,542,408 -- 24,542,408
Marketing expense....... 10,101,411 244,918 -- 10,346,329 -- 10,346,329
General and
administrative
expense................ 4,350,708 347,409 -- 4,698,117 -- 4,698,117
Depreciation and
amortization........... 2,936,082 12,025 192,032(K) 3,140,139 -- 3,140,139
------------- ------------ ------------- ----------- ---------------- --------------
Total operating costs... 41,560,847 974,114 192,032 42,726,993 -- 42,726,993

Income (loss) from
operations............. 8,516,185 143,688 (192,032) 8,467,841 -- 8,467,841

Other (income) expense:
Other income.......... (66,334) -- -- (66,334) -- (66,334)
Interest expense...... 933,895 3,747 104,076(L) 1,041,718 -- 1,041,718
------------- ------------ ------------- ----------- ---------------- --------------
867,561 3,747 104,076 975,384 -- 975,384

Income (loss) before
income tax............. 7,648,624 139,941 (296,108) 7,492,457 -- 7,492,457

Income tax expense
(benefit).............. 572,855 -- (53,097 (M) 519,758 2,027,677(N) 2,547,435
------------- ------------ ------------- ----------- ---------------- --------------

Income (loss)........... $ 7,075,769 $ 139,941 $ (243,011) $ 6,972,699 $ (2,027,677) $ 4,945,002
------------- ------------ ------------- ----------- ---------------- --------------
------------- ------------ ------------- ----------- ---------------- --------------
Pro forma net income per
share.................. $ .41
--------------
--------------
Pro forma weighted
average shares
outstanding............ 11,962,153
--------------
--------------
</TABLE>

F-28
<PAGE>
METRO NETWORKS, INC.

PRO FORMA CONDENSED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)

<TABLE>
<CAPTION>
PREDECESSOR TWO MONTHS ENDED THREE MONTHS ENDED YEAR ENDED
COMBINED FEBRUARY 28, 1995 MARCH 31, 1995 DECEMBER 31, 1995
HISTORICAL SKYVIEW TRAFFICSCAN AEROMEDIA
------------- ------------------- -------------------- -------------------
<S> <C> <C> <C> <C> <C>
Advertising revenues............... $ 72,432,951 $ 515,587 $ 428,075 $ 395,868

Broadcasting costs................. 41,285,973 242,038 152,582 138,434
Marketing expense.................. 14,503,640 104,990 100,759 83,972
General and administrative
expense........................... 7,194,011 236,992 118,183 111,631
Depreciation and amortization...... 3,980,525 4,540 9,000 8,732
------------- ------------------- -------------------- -------------------
Total operating costs 66,964,149 588,560 380,524 342,769

Income (loss) from operations...... 5,468,802 (72,973) 47,551 53,099

Other (income) expense:
Interest income.................. (165,079) -- -- --
Interest expense................. 1,260,185 -- -- --
Other............................ 27,967 2,262 876 9,350
------------- ------------------- -------------------- -------------------
1,123,073 2,262 876 9,350
Income (loss) before income tax.... 4,345,729 (75,235) 46,675 43,749
Income tax expense (benefit)....... 1,036,352 -- -- --
------------- ------------------- -------------------- -------------------

Income (loss)...................... $ 3,309,377 $ (75,235) $ 46,675 $ 43,749
------------- ------------------- -------------------- -------------------
------------- ------------------- -------------------- -------------------
Pro forma income per share.........
Pro forma weighted average shares
outstanding.......................

<CAPTION>
YEAR ENDED ACQUISITION REORGANIZATION
DECEMBER 31, 1995 PENDING PRO FORMA PRO FORMA PRO FORMA THE COMPANY

TRAFFIC NET ACQUISITIONS ADJUSTMENTS COMBINED ADJUSTMENTS PRO FORMA

------------------- ------------ -------------- ----------- --------------- --------------

<S> <C> <C> <C> <C> <C> <C>
Advertising revenues............... $ 2,256,769 $2,073,107 $ -- $78,102,357 $ -- $ 78,102,357

Broadcasting costs................. 422,124 1,001,758 -- 43,242,909 -- 43,242,909

Marketing expense.................. 987,167 199,070 -- 15,979,598 -- 15,979,598

General and administrative
expense........................... 767,235 440,961 -- 8,869,013 -- 8,869,013

Depreciation and amortization...... 7,320 18,290 1,891,403(F) 5,919,810 -- 5,919.810

------------------- ------------ -------------- ----------- --------------- --------------

Total operating costs 2,183,846 1,660,079 1,891,403 74,011,330 -- 74,011,330

Income (loss) from operations...... 72,923 413,028 (1,891,403) 4,091,027 -- 4,091,027

Other (income) expense:
Interest income.................. -- 873 (164,206) -- (164,206)

Interest expense................. -- 6,849 571,195(G) 1,838,229 -- 1,838,229

Other............................ -- 819 41,274 -- 41,274

------------------- ------------ -------------- ----------- --------------- --------------

-- 8,541 571,195 1,715,297 -- 1,715,297

Income (loss) before income tax.... 72,923 404,487 (2,462,598) 2,375,730 -- 2,375,730

Income tax expense (benefit)....... -- -- (416,160)(H) 620,192 187,566(I) 807,75
8
------------------- ------------ -------------- ----------- --------------- --------------

Income (loss)...................... $ 72,923 $ 404,487 $ (2,046,438) $ 1,755,538 $ (187,566) $ 1,567,972

------------------- ------------ -------------- ----------- --------------- --------------

Pro forma income per share......... $ .13

--------------

Pro forma weighted average shares
outstanding....................... 12,251,997

--------------

</TABLE>

F-29
<PAGE>
METRO NETWORKS, INC.

NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

ACQUISITIONS

During 1995 and 1996, the Company made the following Acquisitions:

<TABLE>
<CAPTION>
COMPANY DATE
- ---------------------------------------------------- ----------------------------------------------------
<S> <C>
TrafficScan, Incorporated March 24, 1995
Skyview Broadcasting Networks, Inc. March 9, 1995
Airborne Broadcast Consultants March 9, 1995
Airborne Broadcasting Systems, Inc. March 9, 1995
Aeromedia, Inc. January 3, 1996
Traffic Net Inc. January 4, 1996
Traffic Net of Connecticut, Inc. January 4, 1996
The Weather Bureau, Inc. January 4, 1996
</TABLE>

See footnote 2 to the combined financial statements.

On June 20, 1996, the Company entered into a letter of intent to acquire of
the assets of Airborne Traffic Network, Inc. ("ATN") for approximately $1.5
million. As of June 30, 1996 ATN provided traffic services to 16 radio stations
in Kansas City, Missouri and Omaha, Nebraska. On July 24, 1996, the Company
signed a letter of intent to purchase substantially all of the assets of
Wisconsin Information Systems, Inc. for $650,000. All of the Pending
Acquisitions will be accounted for as purchases and are assumed to be financed
under credit facilities with similar terms as prior acquisitions.

REORGANIZATION

From 1978 until the closing of the offering, the business of the Company
will have been operated through the Predecessor Companies. Until the closing of
this offering, all of the equity interests in the Predecessor Companies will be
owned by the Saperstein Family.

In May 1996, Metro Networks, Inc. was incorporated in Delaware. Immediately
prior to the closing of this offering, the Saperstein Family will establish
Metro Networks, Inc. as a holding company in order to consolidate the issued and
outstanding equity interests in the Predecessor Companies, in exchange for
shares of the Company's Common Stock. As of the date of the closing of this
offering, Metro Networks, Ltd. will distribute certain of its assets, other than
MTC GP stock, to Metro Traffic Control, Inc. in partial redemption of Metro
Traffic Control, Inc.'s interest in Metro Networks, Ltd.; thereafter Metro
Networks, Ltd. will be liquidated. In addition, as of the date of the closing of
this offering, Metro Video News, Inc., Metro Reciprocal, Inc., MTC GP, Inc.,
Skyview Broadcasting Networks, Inc., Airborne Broadcast Consultants,
TrafficScan, Incorporated, Traffic Net Inc., The Weather Bureau, Inc. and
Traffic Net of Connecticut, Inc. will be merged into Metro Traffic Control, Inc.
pursuant to a transaction in which the shareholders of each corporation will
receive shares of Metro Traffic Control, Inc. stock. Metro Traffic Control, Inc.
will become a wholly-owned subsidiary of the Company as a result of a reverse
subsidiary merger of Metro Networks Acquisition, Inc. and Metro Traffic Control
Inc. with Metro Traffic Control, Inc. being the surviving entity. The reverse
subsidiary merger will qualify as a tax-free reorganization under Section
368(a)(2) of the Internal Revenue Code of 1986, as amended. Metro Networks, Inc.
expects to conduct substantially all of its operations through Metro Traffic
Control, Inc.

The unaudited pro forma combined statement of operations was prepared to
reflect the transactions as though each of the 1995 Acquisitions, 1996
Acquisitions and Pending Acquisitions had been

F-30
<PAGE>
METRO NETWORKS, INC.

NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

completed and the Reorganization effected at the beginning of the period
presented. The unaudited pro forma combined balance sheet as of June 30, 1996
was prepared as though the Pending Acquisitions and the Reorganization had
occurred on June 30, 1996.

The accompanying pro forma combined balance sheet as of June 30, 1996
reflects the following adjustments:

(A)A pro forma adjustment is made to reflect the fair value of those assets
and liabilities that were acquired as a result of the Pending
Acquisitions.

(B)A pro forma adjustment is made to purchase broadcast contracts and other
intangibles equal to the excess of the applicable purchase price over the
fair values assigned to specific assets less liabilities assumed.

(C)A pro forma entry is made to (i) reverse the $12,253 of long-term debt of
the Pending Acquisitions that will not be assumed by the Company and (ii)
record the additional current and long-term portion of debt to finance the
Pending Acquisitions.

(D)A pro forma adjustment is made to reflect the issuance of 9,350,607 of
Common Stock, 2,549,750 of Preferred Stock and the conversion of
partnerships and subchapter S corporations into C corporations.

(E)A pro forma adjustment is made to reflect the deferred taxes related to
the conversion of partnerships and subchapter S corporations to C
corporations. This adjustment has not been reflected in the pro forma statement
of operations, however, at conversion the amount will be charged to operations.

The accompanying pro forma statements of operations for the year ended
December 31, 1995 have been prepared by combining the historical results of the
Company with the 1995 and 1996 Acquisitions and the Pending Acquisitions and the
Reorganization and reflect the following adjustments:

(F)Pro forma adjustments are made to the statement of operations to reflect
additional depreciation and amortization expense on the fair value of the
assets acquired as if the acquisitions had occurred at January 1, 1995. Pro
forma depreciation is computed by the straight-line method over the remaining
estimated useful lives of the assets. The purchased broadcast contracts and
other intangibles are amortized on a straight-line method over a five-year term.

(G)Pro forma adjustments are made to the statement of operations to reflect
(i) the reversal of interest expense of $6,849 on debt not assumed by the
Company and (ii) the increase in interest expense due to the additional
borrowings to finance the 1995 Acquisitions and 1996 Acquisitions and the
Pending Acquisitions. Interest expense on the 1995 Acquisitions and 1996
Acquisitions is based on the actual interest rate under the Company's credit
facilities at the date of acquisition for the completed acquisitions. Interest
expense on the Pending Acquisitions is based on estimated terms available to the
Company at June 30, 1996 for such acquisitions. In addition, interest is
provided on the maximum deferred payments related to the pending acquisition of
ATN.

(H)A pro forma adjustment is made to reflect the effect upon the income tax
provision as if the 1995 Acquisitions, and 1996 Acquisitions and Pending
Acquisitions had occurred at January 1, 1995.

(I)A pro forma adjustment is made to reflect the effect upon the income tax
provision and deferred income taxes payable in connection with the
Reorganization to account for the conversion of partnerships and subchapter S
corporations to C corporations.

F-31
<PAGE>
METRO NETWORKS, INC.

NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

(J)A pro forma adjustment is made to reflect the Company's obligation that
results from entering into an agreement with the controlling shareholder
pursuant to which the controlling shareholder will be provided certain goods and
services in the future that are the subject of existing reciprocal arrangements
but which have not yet been earned by or delivered to the Company.

The accompanying pro forma statements of operations for the six months ended
June 30, 1996 have been prepared by combining the historical results of the
Company with the 1996 Acquisitions and the Pending Acquisitions and the
Reorganization and reflect the following adjustments:

(K)Pro forma adjustments are made to the statement of operations to reflect
additional depreciation and amortization expense on the fair value of the
assets acquired as if the acquisitions had occurred at January 1, 1995. Pro
forma depreciation is computed by the straight-line method over the remaining
estimated useful lives of the assets. The purchase broadcast contracts and other
intangibles are amortized on a straight-line method over a five-year term.

(L)Pro forma adjustments are made to the statement of operations to reflect
interest expense on the Pending Acquisitions based on estimated terms
available to the Company at June 30, 1996 for such acquisitions. In addition,
interest is provided on the maximum deferred payments related to the pending
acquisition of ATN.

(M)A pro forma adjustment is made to reflect the effect upon the income tax
provision as if the Pending Acquisitions had occurred at January 1, 1995.

(N)A pro forma adjustment is made to reflect the effect upon the income tax
provision and deferred income taxes payable in connection with the
Reorganization to account for the conversion of partnerships and subchapter S
corporations to C corporations.

F-32
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company and the Selling Stockholder have agreed to sell to each of the
Underwriters named below, and each of such Underwriters, for whom Goldman, Sachs
& Co., CS First Boston Corporation and Donaldson, Lufkin & Jenrette Securities
Corporation are acting as representatives, has severally agreed to purchase from
the Company and the Selling Stockholder, the respective number of shares of
Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
UNDERWRITER COMMON STOCK
- ------------------------------------------------------------------------- ---------------
<S> <C>
Goldman, Sachs & Co......................................................
CS First Boston Corporation..............................................
Donaldson, Lufkin & Jenrette Securities Corporation......................

---------------
Total............................................................ 7,200,000
---------------
---------------
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.

The Underwriters propose to offer the shares in part directly to the public
at the public offering price set forth on the cover page of this Prospectus and
in part to certain securities dealers at such a price less a concession of $
per share. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to certain brokers and dealers. After
the shares of Common Stock are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
representatives.

The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to an aggregate of 1,080,000
additional shares of Common Stock to cover over-allotments, if any. If the
Underwriters exercise their over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 7,200,000 shares of Common
Stock offered.

The Company, the Seller Stockholder and the Trusts have agreed that, during
the period beginning from the date of this Prospectus and continuing to and
including the date 180 days after the date of the Prospectus, they will not
offer, sell, contract to sell or otherwise dispose of any securities of the
Company (other than pursuant to employee stock option plans existing, or on the
conversion or exchange of convertible or exchangeable securities outstanding, on
the date of this Prospectus) which are substantially similar to the shares of
Common Stock or which are convertible or exchangeable into securities which are
substantially similar to the shares of Common stock without the prior written
consent of the representatives, except for the shares of Common Stock offered in
connection with the offering.

The representatives of the Underwriters have informed the Company that they
do not expect sales to accounts over which the Underwriters exercise
discretionary authority to exceed five percent of the total number of shares of
Common Stock offered by them.

U-1
<PAGE>
Prior to this offering, there has been no public market for the shares. The
initial public offering price will be negotiated among the Company, the Selling
Stockholder and the representatives. Among the factors to be considered in
determining the initial public offering price of the Common stock, in addition
to prevailing market conditions, will be the Company's historical performance,
estimates of the business potential and earnings prospects of the Company, an
assessment of the Company's management and the consideration of the above
factors in relation to market valuation of companies in related businesses.

The Common Stock will be quoted on the Nasdaq National Market under the
symbol "MTNT".

The Company and the Selling Stockholder have agreed to indemnify the several
underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.

U-2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 11
Use of Proceeds................................ 15
Dividend Policy................................ 15
Capitalization................................. 16
Dilution....................................... 17
Selected Financial and Operating Data.......... 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 20
Business....................................... 29
Management..................................... 44
Certain Transactions........................... 48
Principal and Selling Stockholders............. 51
Description of Capital Stock................... 52
Shares Eligible For Future Sale................ 55
Validity of Common Stock....................... 56
Experts........................................ 56
Additional Information......................... 56
Glossary....................................... 57
Index to Financial Statements.................. F-1
Underwriting................................... U-1
</TABLE>

THROUGH AND INCLUDING OCTOBER , 1996 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

7,200,000 SHARES

METRO NETWORKS, INC.

COMMON STOCK
(PAR VALUE $.001 PER SHARE)

[LOGO]

GOLDMAN, SACHS & CO.
CS FIRST BOSTON

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

REPRESENTATIVES OF THE UNDERWRITERS

OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts, payable by the Company in connection with the sale of
the Common Stock being registered. All amounts are estimates except the
registration and filing fees:

<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
-----------
<S> <C>
Securities and Exchange Commission
Registration Fee............................................................ $ 39,656
NASD Fee..................................................................... 12,000
Printing and engraving expenses.............................................. 150,000
Legal fees and expenses...................................................... 300,000
Accounting fees and expenses................................................. 125,000
Blue Sky fees and expenses................................................... 15,000
Transfer Agent and Registrar fee............................................. 15,000
Miscellaneous expenses....................................................... 43,344
-----------
Total........................................................................ $ 700,000
</TABLE>

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware Law General Law and Article EIGHTH of the
Company's Certificate of Incorporation provide for indemnification of the
Company's directors and officers in a variety of circumstances which may include
liabilities under the Securities Act of 1933. Article EIGHTH provides that
unless otherwise determined by the Board of Directors of the Company, the
Company shall indemnify to the full extent permitted by the laws of Delaware as
from time to time in effect, the persons described in Section 145 of Delaware
Law.

The general effect of the provisions in the Company's Amended and Restated
Certificate of Incorporation and Delaware Law is to provide that the Company
shall indemnify its directors and officers against all liabilities and expenses
actually and reasonably incurred in connection with the defense or settlement of
any judicial or administrative proceedings in which they have become involved by
reason of their status as corporate directors or officers, if they acted in good
faith and in the reasonable belief that their conduct was neither unlawful (in
the case of criminal proceedings) nor inconsistent with the best interests of
the Company. With respect to legal proceedings by or in the right of the Company
in which a director or officer is adjudged liable for improper performance of
his duty to the Company or another enterprise which such person served in a
similar capacity at the request of the Company, indemnification is limited by
such provisions that amount which is permitted by the court.

The Company will maintain officers' and directors' liability insurance which
will insure against liabilities that officers and directors of the Company may
incur in such capacities. The Company has also entered into indemnification
agreements with its directors and officers.

Reference is made to the Proposed Form of Underwriting Agreement filed as
Exhibit 1 which provides for indemnification of the directors and officers of
the Company signing the Registration Statement and certain controlling persons
of the Company against certain liabilities, including those arising under the
Securities Act in certain instances, of the Underwriters.

RECENT SALES OF UNREGISTERED SECURITIES

In connection with the Reorganization, the Company issued 8,300,357 shares
of Common Stock to Mr. David Saperstein, 210,050 shares of Common Stock to the
Michelle Joy Saperstein Coppola 1994

II-1
<PAGE>

Trust, 210,050 shares of Common Stock to the Jennifer Beth Saperstein 1994
Trust, 210,050 shares of Common Stock to the Jonathan Alexander Saperstein 1994
Trust, 210,050 shares of Common Stock to the Alexis Daniella Saperstein 1994
Trust and 210,050 shares to the Stefanie Nicole Saperstein 1994 Trust.

EXHIBITS

(2a) Exhibits. See Exhibit Index

UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes that:

(1)For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2)For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-2
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 2 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York on September 24, 1996.

METRO NETWORKS, INC.

By: /s/ DAVID I. SAPERSTEIN

-----------------------------------
David I. Saperstein
CHIEF EXECUTIVE OFFICER

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 has been signed below by the following persons in the capacities and on
the date indicated.

<TABLE>
<C> <S> <C>
NAME TITLE DATE
- ------------------------------------------------------ ------------------------------- ------------------------

/S/ DAVID I. SAPERSTEIN Chairman of the Board of
------------------------------------------- Directors and Chief Executive September 24, 1996
David I. Saperstein Officer

/s/ CHARLES I. BORTNICK*
------------------------------------------- President and Director September 24, 1996
Charles I. Bortnick

/s/ SHANE E. COPPOLA*
------------------------------------------- Executive Vice President and September 24, 1996
Shane E. Coppola Director

Senior Vice President, Chief
/s/ CURTIS H. COLEMAN* Financial Officer and Director
------------------------------------------- (Chief Financial and September 24, 1996
Curtis H. Coleman Accounting Officer)

/s/ GARY L. WOROBOW* Senior Vice President, General
------------------------------------------- Counsel, Secretary and September 24, 1996
Gary L. Worobow Director
</TABLE>

* by David I. Saperstein as attorney-in-fact

II-4
<PAGE>
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<S> <C> <C>
1.1** Form of Underwriting Agreement between the Registrant and the
Representatives.
3.1** Certificate of Incorporation of the Registrant
3.2*** Form of Amended and Restated Certificate of Incorporation of the
Registrant
3.3** Bylaws of the Registrant
3.4*** Form of Amended and Restated Bylaws of Registrant.
4.1*** Form of Common Stock Certificate
4.2*** Form of Series A Convertible Preferred Stock Certificate
5.1** Opinion of Paul, Hastings, Janofsky & Walker as to the validity of the
Common Stock.
10.1* Credit Agreement dated October 21, 1994 among Metro Traffic Control,
Inc., Metro Networks, Ltd, and NationsBank of Texas, N.A.
10.2* First Amendment to Credit Agreement dated May 22, 1995 among Metro
Traffic Control, Inc., Metro Networks, Ltd, and NationsBank of Texas,
N.A.
10.3* Second Amendment to Credit Agreement dated November 22, 1995 among
Metro Traffic Control, Inc., Metro Networks, Ltd, and NationsBank of
Texas, N.A.
10.4* Lease Agreement, dated April 15, 1988 between Tower, Limited and Metro
Traffic Control, Inc.
10.5* First Amendment to Lease Agreement, dated September 1, 1988 between
Tower, Limited and Metro Traffic Control, Inc.
10.6* Lease Amendment Number Two, dated April 23, 1991 between Tower,
Limited and the Registrant.
10.7* Lease Amendment Number Three, dated January 28, 1992 between Tower,
Limited and the Registrant.
10.8* Sublease Agreement dated January 5, 1996 between Transcontinental Gas
Pipe Line Corporation and Metro Traffic Control, Inc.
10.9* Lease Agreement dated April 18, 1980 between Transco Tower Limited and
Metro Traffic Control, Inc.
10.10* Lease Amendment Number One dated October 19, 1988 between Transco
Tower, Limited and Metro Traffic Control, Inc.
10.11* Lease Amendment Number Two dated January 29, 1992 between Transco
Tower, Limited and Metro Traffic Control, Inc.
10.12* Lease Amendment Number Three dated May 28, 1992 between Transco Tower,
Limited and Metro Traffic Control, Inc.
10.13* Employment Agreement between the Registrant and Mr. David I.
Saperstein.
10.14* Employment Agreement between the Registrant and Mr. Charles I.
Bortnick
10.15* Employment Agreement between the Registrant and Mr. Shane E. Coppola
10.16* Employment Agreement between the Registrant and Mr. Curtis H. Coleman
10.17* Employment Agreement between the Registrant and Mr. Gary L. Worobow
10.18*** Metro Networks, Inc. Employee Payroll Deduction Stock Purchase Plan
10.19* 1996 Incentive Stock Option Plan
10.20** Stock Loan and Pledge Agreement between the Registrant and David I.
Saperstein
10.21** Indemnification Agreement between the Registrant and David I.
Saperstein
10.22* Third Amendment to Credit Agreement dated June 18, 1996 among Metro
Traffic Control, Inc., Metro Networks, Ltd. and NationsBank of Texas,
N.A.
11.1** Statement re: computation of per share earnings
21.1** Subsidiaries of the Company.
23.1** Consent of KPMG Peat Marwick LLP
23.2** Consent of Paul, Hastings, Janofsky & Walker (included in Exhibit
5.1).
23.3** Consent of KPMG Peat Marwick LLP
24.* Powers of Attorney, included on pages II-3.
27.1* Financial Data Schedule
99.1* Consent of James A. Arcara
</TABLE>

- ------------------------

* Previously filed

** Filed herewith.

*** To be filed by amendment

II-3
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit Sequentially
Number Exhibit Numbered Pages
- ---------- ---------------------------------------------------------------------------------------- ---------------
<S> <C> <C>
1.1** Form of Underwriting Agreement between the Registrant and the Representatives.
3.1** Certificate of Incorporation of the Registrant
3.2*** Form of Amended and Restated Certificate of Incorporation of the Registrant
3.3** Bylaws of the Registrant
3.4*** Form of Amendment and Restated Bylaws of Registrant
4.1*** Form of Common Stock Certificate
4.2*** Form of Series A Convertible Preferred Stock Certificate
5.1** Opinion of Paul, Hastings, Janofsky & Walker as to the validity of the Common Stock.
10.1* Credit Agreement dated October 21, 1994 among Metro Traffic Control, Inc., Metro
Networks, Ltd, and NationsBank of Texas, N.A.
10.2* First Amendment to Credit Agreement dated May 22, 1995 among Metro Traffic Control,
Inc., Metro Networks, Ltd, and NationsBank of Texas, N.A.
10.3* Second Amendment to Credit Agreement dated November 22, 1995 among Metro Traffic
Control, Inc., Metro Networks, Ltd, and NationsBank of Texas, N.A.
10.4* Lease Agreement, dated April 15, 1988 between Tower, Limited and Metro Traffic Control,
Inc.
10.5* First Amendment to Lease Agreement, dated September 1, 1988 between Tower, Limited and
Metro Traffic Control, Inc.
10.6* Lease Amendment Number Two, dated April 23, 1991 between Tower, Limited and the
Registrant.
10.7* Lease Amendment Number Three, dated January 28, 1992 between Tower, Limited and the
Registrant.
10.8* Sublease Agreement dated January 5, 1996 between Transcontinental Gas Pipe Line
Corporation and Metro Traffic Control, Inc.
10.9* Lease Agreement dated April 18, 1980 between Transco Tower Limited and Metro Traffic
Control, Inc.
10.10* Lease Amendment Number One dated October 19, 1988 between Transco Tower, Limited and
Metro Traffic Control, Inc.
10.11* Lease Amendment Number Two dated January 29, 1992 between Transco Tower, Limited and
Metro Traffic Control, Inc.
10.12* Lease Amendment Number Three dated May 28, 1992 between Transco Tower, Limited and Metro
Traffic Control, Inc.
10.13* Employment Agreement between the Registrant and Mr. David I. Saperstein.
10.14* Employment Agreement between the Registrant and Mr. Charles I. Bortnick
10.15* Employment Agreement between the Registrant and Mr. Shane E. Coppola
10.16* Employment Agreement between the Registrant and Mr. Curtis H. Coleman
10.17* Employment Agreement between the Registrant and Mr. Gary L. Worobow
10.18*** Metro Networks, Inc. Employee Payroll Deduction Stock Purchase Plan
10.19* 1996 Incentive Stock Option Plan
10.20** Stock Loan and Pledge Agreement between the Registrant and David I. Saperstein
10.21** Indemnification Agreement between the Registrant and David I. Saperstein
10.22* Third Amendment to Credit Agreement dated June 18, 1996 among Metro Traffic Control,
Inc., Metro Networks, Ltd. and NationsBank of Texas, N.A.
11.1** Statement re: computation of per share earnings
21.1** Subsidiaries of the Company.
23.1** Consent of KPMG Peat Marwick LLP
23.2** Consent of Paul, Hastings, Janofsky & Walker (included in Exhibit 5.1).
23.3** Consent of KPMG Peat Marwick LLP
24.* Powers of Attorney, included on pages II-3.
27.1* Financial Data Schedule
99.1* Consent of James A. Arcara
</TABLE>

- ------------------------

* Previously filed

** Filed herewith.
*** To be filed by amendment

<PAGE>

Draft of September 5, 1996

METRO NETWORKS, INC.

COMMON STOCK
(PAR VALUE $.001 PER SHARE)

-------------------

UNDERWRITING AGREEMENT

September , 1996

Goldman, Sachs & Co.,
CS First Boston Corporation,
Donaldson, Lufkin & Jenrette
Securities Corporation
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.

Ladies and Gentlemen:

Metro Networks, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of . . . . . . .shares and, at the election of the Underwriters, up
to . . . . . . additional shares of Common Stock, par value $.001 per share
("Stock"), of the Company and the stockholder of the Company named in Schedule
II hereto (the "Selling Stockholder") proposes, subject to the terms and
conditions stated herein, to sell to the Underwriters an aggregate
of . . . . . . . shares. The aggregate of . . . . shares to be sold by the
Company and the Selling Stockholder is herein called the "Firm Shares" and the
aggregate of . . . . . additional shares to be sold by the Company is herein
called the "Optional Shares". The Firm Shares and the Optional Shares that the
Underwriters elect to purchase pursuant to Section 2 hereof are herein
collectively called the "Shares".

1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:

(i) A registration statement on Form S-1 (File No. 333-06311) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in
the form heretofore delivered to you, and, excluding exhibits thereto, to
you for each of the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended (the "Act"), which becomes effective upon filing, no other
document with respect to the Initial

<PAGE>

Registration Statement has heretofore been filed with the Commission; and
no stop order suspending the effectiveness of the Initial Registration
Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act, is hereinafter called a "Preliminary
Prospectus"); the various parts of the Initial Registration Statement and
the Rule 462(b) Registration Statement, if any, including all exhibits
thereto and including the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under the Act
in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A
under the Act to be part of the Initial Registration Statement at the time
it was declared effective, each as amended at the time such part of the
registration statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; such final
prospectus, in the form first filed pursuant to Rule 424(b) under the Act,
is hereinafter called the "Prospectus";

(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
Goldman, Sachs & Co. expressly for use therein or by the Selling
Stockholder expressly for use in the preparation of the answers therein to
Items 7 and 11(l) of Form S-1;

(iii) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; PROVIDED, HOWEVER, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter through Goldman, Sachs & Co. expressly for use therein or
by a Selling Stockholder expressly for use in the preparation of the
answers therein to Items 7 and 11(l) of Form S-1;

(iv) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in the
Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or

<PAGE>

not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or such as do not and would not,
individually or in the aggregate, have a material adverse effect on the
business, prospects, operations, financial condition, stockholders' equity
or results of operations of the Company and its subsidiaries taken as a
whole (a "Material Adverse Effect"); and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or contemplated
in the Prospectus;

(v) Neither the Company nor its subsidiaries own real property in fee
simple; the Company and its subsidiaries have good and marketable title to
all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries or such as do not and would
not, individually or in the aggregate, have a Material Adverse Effect; and
any real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries or such as do not and would not, individually
or in the aggregate, have a Material Adverse Effect;

(vi) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of Delaware, with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified to
transact business as a foreign corporation and is in good standing under
the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, or is subject
to no Material Adverse Effect by reason of the failure to be so qualified
in any such jurisdiction either individually or in the aggregate; and each
subsidiary of the Company has been duly incorporated and is validly
existing as a corporation (or, in the case of any subsidiary that is not a
corporation, duly organized and validly existing as an entity of the type
it purports to be) in good standing under the laws of its jurisdiction of
incorporation (or organization, as the case may be) and each such
subsidiary has been duly qualified to transact business as a foreign
corporation (or organization, as the case may be) and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification, or
is subject to no Material Adverse Effect by reason of the failure to be so
qualified in any such jurisdiction either individually or in the aggregate;

(vii) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description of the Stock contained in the
Prospectus; all of the issued shares of capital stock (or,

<PAGE>

in the case of any subsidiary that is not a corporation, equity interests)
of each subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and (except for directors'
qualifying shares (in the case of any subsidiary that is organized as a
corporation)) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims; and the
Reorganization (as defined in the Prospectus) has been duly and validly
consummated in compliance with applicable law;

(viii) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder and the unissued Shares to be issued and lent to the
Selling Stockholder pursuant to the Company Stock Loan and Pledge Agreement
(as defined in Section 2 hereof) for sale to the Underwriters hereunder
have been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein, will be duly and validly
issued and fully paid and non-assessable and will conform to the
description of the Stock contained in the Prospectus;

(ix) The issue and sale of the Shares to be sold by the Company and
the compliance by the Company with all of the provisions of this Agreement
and the Company Stock Loan and Pledge Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action result
in any violation of the provisions of the Certificate of Incorporation or
By-laws of the Company or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
issue and sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement and the Company Stock Loan and
Pledge Agreement, except the registration under the Act of the Shares and
such consents, approvals, authorizations, registrations or qualifications
as may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the Underwriters;

(x) Neither the Company nor any of its subsidiaries is in violation
of its Certificate of Incorporation or By-laws (or for any subsidiary that
is not a corporation, such subsidiary's constituent documents) or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound, except such
default or defaults as do not and would not, individually or in the
aggregate, have a Material Adverse Effect;

(xi) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, and under the caption
"Business--Reorganization", insofar as they purport to

<PAGE>

describe the provisions of the laws and documents referred to therein, are
accurate, complete and fair;

(xii) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a Material Adverse Effect; and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;

(xiii) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");

(xiv) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;

(xv) KPMG Peat Marwick LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder; and

(xvi) Each of the Company and its subsidiaries owns or is licensed to
use all patents, trademarks, service marks, trade names and copyrights
("Intellectual Property") necessary for the conduct of its business as
currently conducted by it. To the best knowledge of the Company and its
subsidiaries, none of the activities engaged in by the Company or its
subsidiaries infringe upon or otherwise conflict with Intellectual Property
rights of others, except for any such conflicts that would not have a
Material Adverse Effect.

(b) The Selling Stockholder represents and warrants to, and agrees with,
each of the Underwriters and the Company that:

(i) All consents, approvals, authorizations and orders necessary for
the execution and delivery by the Selling Stockholder of this Agreement and
the Stock Loan and Pledge Agreements (as defined in Section 2 hereof), for
the sale and delivery of the Shares to be sold by the Selling Stockholder
hereunder and for the pledge of the convertible preferred stock, par value
$.001 ("Preferred Stock"), of the Company pursuant to the Stock Loan and
Pledge Agreements have been obtained; and the Selling Stockholder has full
right, power and authority to enter into this Agreement and the Stock Loan
and Pledge Agreements, to sell, assign, transfer and deliver the Shares to
be sold by the Selling Stockholder hereunder and to pledge the Preferred
Stock to be pledged pursuant to the Stock Loan and Pledge Agreements.

(ii) The loan by the Company and the Trusts (as defined in Section 2
hereof) and the borrowing by the Selling Stockholder of the Shares to be
sold by the Selling

<PAGE>

Stockholder pursuant to the Stock Loan and Pledge Agreements, the sale of
such shares hereunder and the pledge of the Preferred Stock by the Selling
Stockholder pursuant to the Stock Loan and Pledge Agreements and the
compliance by the Selling Stockholder with all of the provisions of this
Agreement and the Stock Loan and Pledge Agreements and the consummation of
the transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any statute, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Selling
Stockholder, the Company or any of the Trusts is a party or by which the
Selling Stockholder, the Company or any of the Trusts is bound or to which
any of the property or assets of the Selling Stockholder, the Company or
any of the Trusts is subject, nor will such action result in any violation
of the provisions of or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Selling
Stockholder, the Company or any of the Trusts or the property of the
Selling Stockholder, the Company or any of the Trusts;

(iii) With respect to the Shares to be sold by the Selling Stockholder
borrowed from the Trusts pursuant to the Trust Stock Loan and Pledge
Agreement, each Trust has, with respect to the Shares lent by it, and
immediately prior to the Time of Delivery (as defined in Section 4 hereof)
each Trust will have, with respect to the Shares lent by it, good and valid
title to such Shares, free and clear of all liens, encumbrances, equities
or claims; and, upon delivery of such Shares and the Shares to be sold by
the Selling Stockholder borrowed from the Company pursuant to the Company
Stock Loan and Pledge Agreement and payment therefor pursuant hereto, good
and valid title to all such Shares, free and clear of all liens,
encumbrances, equities or claims, will pass to the several Underwriters;

(iv) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, the
Selling Stockholder will not offer, sell, contract to sell or otherwise
dispose of, except as provided hereunder, any securities of the Company
that are substantially similar to the Shares, including but not limited to
any securities that are convertible into or exchangeable for, or that
represent the right to receive, Stock or any such substantially similar
securities (other than pursuant to employee stock option plans existing on,
or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of, the date of this Agreement), without your
prior written consent;

(v) The Selling Stockholder has not taken and will not take, directly
or indirectly, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares;

(vi) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity
with written information furnished to the Company by the Selling
Stockholder expressly for use therein, such Preliminary Prospectus and the
Registration Statement did, and the Prospectus and any further amendments
or supplements to the Registration Statement and the Prospectus,

<PAGE>

when they become effective or are filed with the Commission, as the case
may be, will conform in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder and will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; and

(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, the Selling Stockholder will deliver to you prior to or at
the Time of Delivery (as hereinafter defined) a properly completed and
executed United States Treasury Department Form W-9 (or other applicable
form or statement specified by Treasury Department regulations in lieu
thereof).

2. Subject to the terms and conditions herein set forth, (a) the Company
and the Selling Stockholder agree, severally and not jointly, to sell to each of
the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company and the Selling Stockholder, at a purchase
price per share of $.............., the number of Firm Shares (to be adjusted by
you so as to eliminate fractional shares) determined by multiplying the
aggregate number of Firm Shares to be sold by the Company and the Selling
Stockholder as set forth opposite their respective names in Schedule II hereto
by a fraction, the numerator of which is the aggregate number of Firm Shares to
be purchased by such Underwriter as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the aggregate
number of Firm Shares to be purchased by all of the Underwriters from the
Company and the Selling Stockholder hereunder and (b) in the event and to the
extent that the Underwriters shall exercise the election to purchase Optional
Shares as provided below, the Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at the purchase price per share set forth in clause
(a) of this Section 2, that portion of the number of Optional Shares as to which
such election shall have been exercised (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying such number of Optional
Shares by a fraction the numerator of which is the maximum number of Optional
Shares which such Underwriter is entitled to purchase as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the maximum number of Optional Shares that all of the Underwriters are entitled
to purchase hereunder. Some of the Shares to be sold by the Selling Stockholder
hereunder will be borrowed from certain family trusts pursuant to a certain
Stock Loan and Pledge Agreement (the "Trust Stock Loan and Pledge Agreement")
between such family trusts (each, a "Trust" and collectively, the "Trusts") and
the Selling Stockholder as described in the Prospectus. The remainder of the
shares to be sold by the Selling Stockholder hereunder will be borrowed by the
Selling Stockholder from the Company pursuant to a Stock Loan and Pledge
Agreement (the "Company Stock Loan and Pledge Agreement" and together with the
Trust Stock Loan and Pledge Agreement, the "Stock Loan and Pledge Agreements")
between the Company and the Selling Stockholder as described in the Prospectus.

The Company, as and to the extent indicated in Schedule II hereto, hereby
grants to the Underwriters the right to purchase at their election up
to ............ Optional Shares, at the purchase price per share set forth in
the paragraph above, for the sole purpose of covering overallotments in the sale
of the Firm Shares. Any such election to purchase Optional Shares may be
exercised only by written notice from you to the Company, given within a period
of

<PAGE>

30 calendar days after the date of this Agreement and setting forth the
aggregate number of Optional Shares to be purchased and the date on which such
Optional Shares are to be delivered, as determined by you but in no event
earlier than the First Time of Delivery (as defined in Section 4 hereof) or,
unless you and the Company otherwise agree in writing, earlier than two or later
than ten business days after the date of such notice.

3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.

4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholder shall be delivered by or on
behalf of the Company and the Selling Stockholder to Goldman, Sachs & Co., for
the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by certified or official bank check
or checks, payable to the order of the Company and the Selling Stockholder, as
their interests may appear, [in New York Clearing House (same-day) funds]. The
Company will cause the certificates representing the Shares to be made available
for checking and packaging at least twenty-four hours prior to the Time of
Delivery (as defined below) with respect thereto at the office of Goldman, Sachs
& Co., 85 Broad Street, New York, New York 10004 (the "Designated Office"). The
time and date of such delivery and payment shall be, with respect to the Firm
Shares, 9:30 a.m., New York time, on August __, 1996 or such other time and date
as Goldman, Sachs & Co. and the Company may agree upon in writing, and, with
respect to the Optional Shares, 9:30 a.m., New York time, on the date specified
by Goldman, Sachs & Co. in the written notice given by Goldman, Sachs & Co. of
the Underwriters' election to purchase such Optional Shares, or such other time
and date as Goldman, Sachs & Co. and the Company may agree upon in writing. Such
time and date for delivery of the Firm Shares is herein called the "First Time
of Delivery", such time and date for delivery of the Optional Shares, if not the
First Time of Delivery, is herein called the "Second Time of Delivery", and each
such time and date for delivery is herein called a "Time of Delivery".

(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross receipt
for the Shares and any additional documents requested by the Underwriters
pursuant to Section 7(j) hereof, will be delivered at the offices of Sullivan &
Cromwell, 125 Broad Street, New York, New York 10004 (the "Closing Location"),
and the Shares will be delivered at the Designated Office, all at such Time of
Delivery. A meeting will be held at the Closing Location at 10:00 a.m., New York
City time, on the New York Business Day next preceding such Time of Delivery, at
which meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For the
purposes of this Agreement, "New York Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.

<PAGE>

5. The Company agrees with each of the Underwriters:

(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Act and, if the
Company elects to rely upon Rule 462(b) under the Act, to file a
Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 p.m., Washington D.C. time, on the date of this
Agreement and to pay to the Commission at such time of filing the filing
fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the
Act; to make no further amendment or any supplement to the Registration
Statement or Prospectus prior to the last Time of Delivery which shall be
disapproved by you promptly after reasonable notice thereof; to advise you,
promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and
to furnish you with copies thereof; to advise you, promptly after it
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or prospectus, of the suspension of the qualification of the
Shares for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by
the Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the withdrawal of
such order;

(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of the Shares, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction or to take
any action that would subject the Company to taxation in any jurisdiction
in which it is not currently so subject;

(c) Prior to 10:00 a.m. New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with copies of the Prospectus in New York City in
such quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with the offering
or sale of the Shares and if at such time any events shall have occurred as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if

<PAGE>

for any other reason it shall be necessary during such period to amend or
supplement the Prospectus in order to comply with the Act, to notify you
and upon your request to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as you may from
time to time reasonably request of an amended Prospectus or a supplement to
the Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a prospectus
in connection with sales of any of the Shares at any time nine months or
more after the time of issue of the Prospectus, upon your request but at
the expense of such Underwriter, to prepare and deliver to such Underwriter
as many copies as you may request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act;

(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);

(e) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder, any securities of the Company that are substantially similar to
the Shares, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to
receive, Stock or any such substantially similar securities (other than
pursuant to employee stock option plans existing on, or upon the conversion
or exchange of convertible or exchangeable securities outstanding as of,
the date of this Agreement), without your prior written consent;

(f) To furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company
and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter
ending after the effective date of the Registration Statement),
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;

(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to
deliver to you (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the
Company is listed; and (ii) such additional information (provided that the
Company shall not be obligated to provide information that it considers
confidential) concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the

<PAGE>

accounts of the Company and its subsidiaries are consolidated in reports
furnished to its stockholders generally or to the Commission);

(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";

(i) To use its best efforts to list for quotation the Shares on the
National Association of Securities Dealers Automated Quotations National
Market System ("NASDAQ"); and

(j) To file with the Commission such reports on Form SR as may be
required by Rule 463 under the Act.

6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey;
(iv) all fees and expenses in connection with listing for quotation the Shares
on the NASDAQ; (v) the filing fees incident to, and the fees and disbursements
of counsel for the Underwriters in connection with, securing any required review
by the National Association of Securities Dealers, Inc. of the terms of the sale
of the Shares; (vi) the cost of preparing stock certificates; (vii) the cost and
charges of any transfer agent or registrar; (viii) any fees and expenses of
counsel for the Selling Stockholder; (ix) all expenses and taxes incident to the
sale and delivery of the Shares to be sold by the Selling Stockholder to the
Underwriters hereunder; and (x) all other costs and expenses incident to the
performance of the Company's and the Selling Stockholder's obligations
hereunder. In connection with clause (x) of the preceding sentence, Goldman,
Sachs & Co. agrees to pay New York State stock transfer tax, and the Company
agrees to reimburse Goldman, Sachs & Co. for associated carrying costs if such
tax payment is not rebated on the day of payment and for any portion of such tax
payment not rebated. It is understood, however, that the Company shall bear, and
the Selling Stockholder shall not be required to pay or to reimburse the Company
for, the cost of any other matters not directly relating to the sale and
purchase of the Shares pursuant to this Agreement, and that, except as provided
in this Section, and Sections 8 and 11 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel, stock
transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make.

7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all

<PAGE>

representations and warranties and other statements of the Company and of the
Selling Stockholder herein are, at and as of such Time of Delivery, true and
correct, the condition that the Company and the Selling Stockholder shall have
performed all of its and their obligations hereunder theretofore to be
performed, and the following additional conditions:

(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have been declared effective by 10:00
p.m., Washington, D.C. time, on the date of this Agreement; no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;

(b) Sullivan & Cromwell, counsel for the Underwriters, shall have
furnished to you such opinion or opinions, dated such Time of Delivery,
with respect to the incorporation of the Company, the Underwriting
Agreement, the validity of the Shares being delivered at such Time of
Delivery, the Registration Statement, the Prospectus and such other related
matters as you may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to enable them
to pass upon such matters;

(c) Paul, Hastings, Janofsky & Walker, counsel for the Company, shall
have furnished to you their written opinion (a copy of such opinion in
final draft form being attached as Annex II(a) hereto), dated such Time of
Delivery, in form and substance satisfactory to you, to the effect that:

(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;

(ii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company (including the Shares being delivered at such Time of Delivery
by the Company and the Selling Stockholder) have been duly and validly
authorized and issued and are fully paid and non-assessable; and the
Shares conform to the description of the Stock contained in the
Prospectus;

(iii) The Company is duly qualified to transact business as a
foreign corporation and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, or is subject to no
Material Adverse Effect by reason of failure to be so qualified in any
such jurisdiction either individually or in the aggregate (such
counsel being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of matters of
fact upon certificates of officers of

<PAGE>

the Company, provided that such counsel shall state that they believe
that both you and they are justified in relying upon such opinions and
certificates);

(iv) Each subsidiary of the Company has been duly incorporated
and is validly existing as a corporation (or, in the case of any
subsidiary that is not a corporation, duly organized and validly
existing as an entity of the type it purports to be) in good standing
under the laws of its jurisdiction of incorporation (or organization,
as the case may be); and all of the issued shares of capital stock
(or, in the case of any subsidiary that is not a corporation, equity
interests) of each such subsidiary have been duly and validly
authorized and issued, are fully paid and non-assessable, and (except
for directors' qualifying shares (in the case of any subsidiary
organized as a corporation) and as described in the Prospectus) are
owned directly or indirectly by the Company, free and clear of all
material liens, encumbrances, equities or claims (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company or its subsidiaries, provided
that such counsel shall state that they believe that both you and they
are justified in relying upon such opinions and certificates);

(v) The real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries (in giving
the opinion in this clause, such counsel may state that they render no
opinion as to the title held by the lessors under the leases to the
real property and buildings leased pursuant to the leases;

(vi) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is
a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect; and, to the best of such
counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;

(vii) This Agreement has been duly authorized, executed and
delivered by the Company; and the Company Stock Loan and Pledge
Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding agreement of the Company,
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and subject, as to
enforceability, to general principles of equity including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether such enforceability is considered in a proceeding in equity
or at law);

<PAGE>

(viii) The issue and sale of the Shares being delivered at such
Time of Delivery to be sold by the Company and the compliance by the
Company with all of the provisions of this Agreement and the Company
Stock Loan and Pledge Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such counsel
to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject other than breaches, violations or defaults (other than
relating to the Certificate of Incorporation and By-laws of the
Company) that would not have, individually or in the aggregate, a
Material Adverse Effect or, individually or in aggregate, in any way
impair or delay the consummation of the transactions contemplated
hereunder or under the Company Stock Loan and Pledge Agreement, nor
will such action result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or any New York
State, Delaware corporate or federal statute, rule or regulation
(other than state securities Blue Sky laws) or any violation of any
order, judgment, writ, decree, injunction or ruling known to such
counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties;

(ix) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Shares or the consummation
by the Company of the transactions contemplated by this Agreement and
the Company Stock Loan and Pledge Agreement, except the registration
under the Act of the Shares, and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters (such
counsel being entitled to rely in respect of the opinion in this
clause upon the opinion of Gary L. Worobow, General Counsel of the
Company, provided that such counsel shall state that they believe both
you and they are justified in relying upon such opinion);

(x) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or By-laws (or, in the
case of any subsidiary that is not a corporation, its constituent
documents) or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, or lease or
agreement or other instrument known to such counsel to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or any of the Company's or any of its
subsidiaries' properties may be bound, except such default or defaults
as do not and would not, individually or in the aggregate, have a
Material Adverse Effect;

(xi) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute
a summary of the terms of the Stock and under the captions
"Business--Reorganization" and,

<PAGE>

insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair;

(xii) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in
the Investment Company Act; and

(xiii) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior
to such Time of Delivery (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder. In
addition such counsel shall state that it has participated in
conferences with directors, officers and other representatives of the
Company, the Selling Stockholder, representatives of the independent
public accountants for the Company, representatives of the
Underwriters and representatives of counsel for the Underwriters, at
which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed, and, although they do
not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or
the Prospectus, except for those referred to in the opinion in
subsection (xi) of this Section 7(c), no facts have come to such
counsel's attention which leads such counsel to believe that, as of
its effective date or on such Time of Delivery, the Registration
Statement or any further amendment thereto made by the Company prior
to such Time of Delivery (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion) contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or
that, as of its date or on such Time of Delivery, the Prospectus or
any further amendment or supplement thereto made by the Company prior
to such Time of Delivery (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion) contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and they
do not know of any amendment to the Registration Statement required to
be filed or of any contracts or other documents of a character
required to be filed as an exhibit to the Registration Statement or
required to be described in the Registration Statement or the
Prospectus which are not filed or described as required;

(d) Paul, Hastings, Janofsky & Walker, counsel for the Selling
Stockholder, shall have furnished to you their written opinion (a copy of
such opinion in final draft form being attached as Annex II(b) hereto) with
respect to the Selling Stockholder, dated the Time of Delivery, in form and
substance satisfactory to you, to the effect that:

(i) The Stock Loan and Pledge Agreements have been duly executed
and delivered by the Selling Stockholder and constitute valid and
binding agreements of the Selling Stockholder in accordance with their
terms, subject to applicable

<PAGE>

bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and subject, as to enforceability, to
general principles of equity including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
such enforceability is considered in a proceeding in equity or at
law); and the Trust Stock Loan and Pledge Agreement and the Company
Stock Loan and Pledge Agreement have been duly authorized, executed
and delivered by each of the Trusts and the Company, respectively, and
constitute valid and binding agreements of each of the Trusts and the
Company, respectively, in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and subject, as to
enforceability, to general principles of equity including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether such enforceability is considered in a proceeding in equity
or at law);

(ii) This Agreement has been duly executed and delivered by or on
behalf of the Selling Stockholder; and the loan by the Company and the
Trusts and the borrowing by the Selling Stockholder of the Shares to
be sold by the Selling Stockholder pursuant to the Stock Loan and
Pledge Agreements, the sale of such Shares hereunder and the pledge of
Preferred Stock by the Selling Stockholder pursuant to the Stock Loan
Agreements and the compliance by the Selling Stockholder with all of
the provisions of this Agreement and the Stock Loan and Pledge
Agreements and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation
of any terms or provisions of, or constitute a default under, any
statute, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the Selling
Stockholder, the Company or any of the Trusts is a party or by which
the Selling Stockholder, the Company or any of the Trusts is bound or
to which any of the property or assets of the Selling Stockholder, the
Company or any of the Trusts is subject, nor will such action result
in any violation of the provisions of any New York State, Delaware
corporate or federal statute, rule or regulation (other than state
securities Blue Sky laws) or any violation of any order, judgment,
writ, decree, injunction or ruling known to such counsel of any court
or governmental agency or body having jurisdiction over the Selling
Stockholder, the Company or any of the Trusts or the property of the
Selling Stockholder, the Company or any of the Trusts;

(iii) No consent, approval, authorization or order known to such
counsel after due inquiry of any court or governmental agency or body
is required for the consummation of the transactions contemplated by
this Agreement or the Stock Loan and Pledge Agreements in connection
with the Shares to be sold by such Selling Stockholder hereunder or
the pledge of the Preferred Stock under the Stock Loan and Pledge
Agreements, except such as have been obtained under the Act and such
as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of such Shares by the
Underwriters;

<PAGE>

(iv) With respect to the Shares to be sold by the Selling
Stockholder borrowed from the Trusts, each Trust has, with respect to
the Shares lent by it, and immediately prior to the Time of Delivery,
each Trust will have, with respect to the Shares lent by it, good and
valid title to such Shares, free and clear of all liens, encumbrances,
equities or claims; and the Selling Stockholder has full right, power
and authority to sell, assign, transfer and deliver such Shares and
the Shares borrowed from the Company pursuant to the Company Stock
Loan and Pledge Agreement; and

(v) Upon delivery to the Underwriters by such Selling
Stockholder of a certificate or certificates for the Shares to be sold
by such Selling Stockholder against receipt of the purchase price
therefor as provided in this Agreement, such Selling Stockholder will
transfer good and valid title to the Shares, free and clear of all
liens, encumbrances, equities or claims, to each of the several
Underwriters who have purchased such Shares in good faith and without
notice of any such lien, encumbrance, equity or claim or any other
adverse claim within the meaning of the Uniform Commercial Code.

(e) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of
any post-effective amendment to the Registration Statement filed subsequent
to the date of this Agreement and also at each Time of Delivery, KPMG Peat
Marwick LLP shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory to
you, to the effect set forth in Annex I hereto (the executed copy of the
letter delivered prior to the execution of this Agreement is attached as
Annex I(a) hereto and a draft of the form of letter to be delivered on the
effective date of any post-effective amendment to the Registration
Statement and as of each Time of Delivery is attached as Annex I(b)
hereto);

(f)(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus,
and (ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any change, or
any development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole, otherwise
than as set forth or contemplated in the Prospectus, the effect of which,
in any such case described in Clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;

(g) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on NASDAQ; (ii) a
suspension or material limitation in

<PAGE>

trading in the Company's securities on NASDAQ; (iii) a general moratorium
on commercial banking activities declared by either Federal or New York
State authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in
this Clause (iv) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;

(h) The Shares at such Time of Delivery shall have been duly approved
for quotation, subject to notice of issuance, on the Nasdaq National
Market, and the Company's Registration Statement on Form 8-A for the Shares
shall have become or been declared effective;

(i) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from Michelle Jay Coppola, on behalf of the
Michelle Jay Coppola 1994 Trust, Jennifer Beth Saperstein, on behalf of the
Jennifer Beth Saperstein 1994 Trust and Suzanne Saperstein, on behalf of
the Jonathan Alexander Saperstein 1994 Trust, the Alexis Daniella
Saperstein 1994 Trust and the Stephanie Nicole Saperstein 1994 Trust,
substantially to the effect set forth in Subsection 1(b)(iv) hereof in form
and substance satisfactory to you;

(j) The Company and the Selling Stockholder shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of
officers of the Company and of the Selling Stockholder, respectively,
satisfactory to you as to the accuracy of the representations and
warranties of the Company and the Selling Stockholder, respectively, herein
at and as of such Time of Delivery, as to the performance by the Company
and the Selling Stockholder of all of their respective obligations
hereunder to be performed at or prior to such Time of Delivery, and as to
such other matters as you may reasonably request, and the Company shall
have furnished or caused to be furnished certificates as to the matters set
forth in subsections (a) and (f) of this Section;

(k) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of copies of prospectus on the
New York Business Day next succeeding the date of this Agreement;

(l) The Reorganization (as defined in the Prospectus) shall have been
duly and validly consummated in accordance with applicable law; and

(m) On or prior to the First Time of Delivery, the Company shall have
entered into the $30,000,000 Amended and Restated Reducing Revolving Credit
Facility with NationsBank on terms substantially similar to the terms set
forth in the commitment letter for such facility, dated August 16, 1996,
between the Company and NationsBank.

8. (a) The Company and the Selling Stockholder, jointly and severally,
will indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or

<PAGE>

otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; PROVIDED, HOWEVER, that the Company and the Selling
Stockholder shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through Goldman, Sachs &
Co. expressly for use therein; and, PROVIDED, FURTHER, that the liability of the
Selling Stockholder pursuant to this Section 8(a) shall not exceed the product
of the number of Shares sold by such Selling Stockholder and the initial public
offering price of the Shares as set forth in the Prospectus.

(b) Each Underwriter will indemnify and hold harmless the Company and
Selling Stockholder against any losses, claims, damages or liabilities to which
the Company or the Selling Stockholder may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through Goldman, Sachs & Co. expressly for use therein; and will
reimburse the Company and the Selling Stockholder for any legal or other
expenses reasonably incurred by the Company or the Selling Stockholder in
connection with investigating or defending any such action or claim as such
expenses are incurred.

(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; the omission so to notify the indemnifying party shall
relieve it from any liability which it may have to any indemnified party under
such subsection to the extent such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses, but shall not relieve it
from its obligations under subsection (d) hereof. In case any such action shall
be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the

<PAGE>

indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified
party.

(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Selling Stockholder on the one hand and the Underwriters
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Selling Stockholder on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholder on the one hand and
the Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Company and the Selling Stockholder bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Selling
Stockholder on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Stockholder and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were determined by PRO RATA allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the

<PAGE>

total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.

(e) The obligations of the Company and the Selling Stockholder under this
Section 8 shall be in addition to any liability which the Company and the
Selling Stockholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company or the Selling Stockholder within the meaning of the Act.

9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company and the Selling Stockholder shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Shares on such terms. In the
event that, within the respective prescribed periods, you notify the Company and
the Selling Stockholder that you have so arranged for the purchase of such
Shares, or the Company and the Selling Stockholder notify you that they have so
arranged for the purchase of such Shares, you or the Company and the Selling
Stockholder shall have the right to postpone a Time of Delivery for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares.

(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholder as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company and the Selling Stockholder shall have the right to require
each non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.

<PAGE>

(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholder as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of all of the Shares to be purchased at such Time of Delivery,
or if the Company and the Selling Stockholder shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Company to sell the Optional Shares) shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company or the Selling Stockholder, except for the expenses
to be borne by the Company and the Underwriters as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.

10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Stockholder and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company or the Selling Stockholder, or any officer or
director or controlling person of the Company, or any controlling person of the
Selling Stockholder, and shall survive delivery of and payment for the Shares.

11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Stockholder shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if for any other reason any Shares are not delivered by or on behalf of the
Company and the Selling Stockholder as provided herein, the Company will
reimburse the Underwriters through you for all out-of-pocket expenses approved
in writing by you, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Shares not so delivered, but the Company and the Selling
Stockholder shall then be under no further liability to any Underwriter in
respect of the Shares not so delivered except as provided in Sections 6 and 8
hereof.

12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives; and in all dealings with any Selling Stockholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Stockholder made or given by any
or all of the Attorneys-in-Fact for such Selling Stockholder.

All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department; if to the Company or the Selling Stockholder shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Company set
forth in the Registration Statement, Attention: Secretary; provided, however,

<PAGE>

that any notice to an Underwriter pursuant to Section 8(c) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its Underwriters' Questionnaire or telex
constituting such Questionnaire, which address will be supplied to the Company
or the Selling Stockholder by you on request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.

13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and the Selling Stockholder and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of the Company
and each person who controls the Company, the Selling Stockholder or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.

14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.

15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.

If the foregoing is in accordance with your understanding, please sign and
return to us seven counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the Company
and the Selling Stockholder. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company and the Selling Stockholder for examination, upon
request, but without warranty on your part as to the authority of the signers
thereof.

<PAGE>

Any person executing and delivering this Agreement as Attorney-in-Fact for
the Selling Stockholder represents by so doing that he has been duly appointed
as Attorney-in-Fact by the Selling Stockholder pursuant to a validly existing
and binding Power-of-Attorney which authorizes such Attorney-in-Fact to take
such action.

Very truly yours,

METRO NETWORKS, INC.

By:__________________________________________
Name:
Title:

David I. Saperstein

_____________________________________________
Selling Stockholder

Accepted as of the date hereof

Goldman, Sachs & Co.
CS First Boston Corporation
Donaldson, Lufkin & Jenrette Securities Corporation

By:______________________________________________
(Goldman, Sachs & Co.)

On behalf of each of the Underwriters

<PAGE>

SCHEDULE I
<TABLE>
<CAPTION>

Number of
Optional
Shares to be
Total Number of Purchased if
Firm Shares Maximum Option
Underwriter to be Purchased Exercised
- ----------- --------------- ---------
<S> <C> <C>
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . .
CS First Boston Corporation
Donaldson, Lufkin & Jenrette Securities Corporation

------------ ------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . .
------------ ------------
------------ ------------

</TABLE>

25
<PAGE>

SCHEDULE II
<TABLE>
<CAPTION>

Number of
Optional
Shares to be
Total Number of Purchased if
Firm Shares Maximum Option
Underwriter to be Purchased Exercised
- ----------- --------------- ---------
<S> <C> <C>

The Company. . . . . . . . . . . . . . . . . . . . . . .

David I. Saperstein. . . . . . . . . . . . . . . . . . . 0

------------ ------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . .
------------ ------------
------------ ------------

</TABLE>

<PAGE>

ANNEX I(b)

DESCRIPTION OF COMFORT LETTER

Pursuant to Section 7(e) of the Underwriting Agreement, KPMG Peat Marwick
LLP shall furnish letters to the Underwriters to the effect that:

(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;

(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included in the Prospectus or the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their
reports thereon, copies of which have been furnished to the representatives
of the Underwriters (the "Representatives");

(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus as
indicated in their reports thereon copies of which have been separately
furnished to the Representatives and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations,
nothing came to their attention that caused them to believe that the
unaudited condensed consolidated financial statements do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the related published rules and regulations;

(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus agrees
with the corresponding amounts (after restatements where applicable) in the
audited consolidated financial statements for such five fiscal years;

(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;

<PAGE>

(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:

(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;

(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus;

(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived any unaudited condensed
financial statements referred to in Clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;

(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;

(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial statements
included in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any decreases
in consolidated net current assets or stockholders' equity or other
items specified by the Representatives, or any increases in any items
specified by the

<PAGE>

Representatives, in each case as compared with amounts shown in the
latest balance sheet included in the Prospectus, except in each case
for changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such letter; and

(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (E) there were any decreases in consolidated net
revenues, operating cash flow or adjusted EBITDA or the total or per
share amounts of consolidated net income or other items specified by
the Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
decreases or increases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and

(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(vi) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Prospectus, or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and have
found them to be in agreement.

<PAGE>
CERTIFICATE OF INCORPORATION

METRO NETWORKS, INC.

The name of the Corporation is Metro Networks, Inc.

II.

The address of the registered office of the Corporation in the State
of Delaware is the Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, and the name of its registered agent at that
address is The Corporation Trust Company.

III.

The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.

IV.

The Corporation is authorized to issue two hundred (200) shares of
Common Stock, $0.01 par value per share.

The number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the Bylaws of the
Corporation.

VI.

In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind the Bylaws of the Corporation.

VII.

Election of directors at an annual or special meeting of stockholders
need not be by written ballot unless the Bylaws of the Corporation shall so
provide.

<PAGE>

VIII.

No director shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director;
provided that this Article VIII shall not eliminate or limit the liability of a
director (i) for any breach of such director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law,
(iii) under Section 174 of the General Corporation Law of the State of Delaware,
or (iv) for any transaction from which such director derives an improper
personal benefit. If the General Corporation Law of the State of Delaware is
amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of the State of Delaware as so amended.

IX.

The Corporation shall, to the full extent permitted by Section 145 of
the Delaware General Corporation Law, as amended from time to time, indemnify
all persons whom it may indemnify pursuant thereto.

The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.

XI.

The name and mailing address of the incorporator of the Corporation
are:

-2-

<PAGE>

NAME MAILING ADDRESS

Mary Lee Liggett c/o Paul, Hastings, Janofsky
& Walker
399 Park Avenue
30th Floor
New York, New York 10022

IN WITNESS WHEREOF, this Certificate has been signed on the 31st day
of May, 1996.

/s/ Mary Lee Liggett
------------------------------
Mary Lee Liggett, Incorporator

-3-

<PAGE>

EXHIBIT 3.3

BYLAWS

METRO NETWORKS, INC.
a Delaware Corporation

ARTICLE I
OFFICES

Section 1.01 REGISTERED OFFICE. The registered office of Metro
Networks, Inc. (hereinafter called the "Corporation") shall be at such place in
the State of Delaware as shall be designated by the Board of Directors
(hereinafter called the "Board").

Section 1.02 PRINCIPAL OFFICE. The principal office for the
transaction of the business of the Corporation shall be at such location, within
or without the State of Delaware, as shall be designated by the Board.

Section 1.03 OTHER OFFICES. The Corporation may also have an office
or offices at such other place or places, either within or without the State of
Delaware, as the Board may from time to time determine or as the business of the
Corporation may require.

ARTICLE II
MEETINGS OF STOCKHOLDERS

Section 2.01 ANNUAL MEETINGS. Annual meetings of the stockholders of
the Corporation for the purpose of electing directors and for the transaction of
such other proper business as may come before such meetings may be held at such
time, date and place as the Board shall determine by resolution.

Section 2.02 SPECIAL MEETINGS. Special meetings of the stockholders
of the Corporation for any purpose or purposes may be called at any time by the
Board, or by a committee of the Board which has been duly designated by the
Board and whose powers and authority, as provided in a resolution of the Board
or in the Bylaws, include the power to call such meetings, but such special
meetings may not be called by any other person or persons; provided, however,
that if and to the extent that any special meeting of stockholders may be called
by any other person or persons specified in any provisions of the Certificate of
Incorporation or any amendment thereto or any certificate

<PAGE>

filed under Section 151(g) of the General Corporation Law of Delaware (or its
successor statute as in effect from time to time hereafter), then such
special meeting may also be called by the person or persons, in the manner,
at the time and for the purposes so specified.

Section 2.03 PLACE OF MEETINGS. All meetings of the stockholders
shall be held at such places, within or without the State of Delaware, as may
from time to time be designated by the person or persons calling the respective
meetings and specified in the respective notices or waivers of notice thereof.

Section 2.04 NOTICE OF MEETINGS. Except as otherwise required by
law, notice of each meeting of the stockholders, whether annual or special,
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder of record entitled to vote at such
meeting by delivering a typewritten or printed notice thereof to him personally,
or by depositing such notice in the United States mail, in a postage prepaid
envelope, directed to him at his address furnished by him to the Secretary of
the Corporation for such purpose or, if he shall not have furnished to the
Secretary his address for such purpose, then at his address last known to the
Secretary, or by transmitting a notice thereof to him at such address by
telegraph, cable or wireless. Except as otherwise expressly required by law, no
publication of any notice of a meeting of the stockholders shall be required.
Every notice of a meeting of the stockholders shall state the place, date and
hour of the meeting, and, in the case of a special meeting shall also state the
purpose or purposes for which the meeting is called. Except as otherwise
expressly required by law, notice of any adjourned meeting of the stockholders
need not be given if the time and place thereof are announced at the meeting at
which the adjournment is taken.

Section 2.05 QUORUM. The holders of record of a majority in voting
interest of the shares of stock of the Corporation entitled to be voted, present
in person or by proxy, shall constitute a quorum for the transaction of business
at any meeting of the stockholders of the Corporation or any adjournment
thereof. The stockholders present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. In the
absence of a quorum at any meeting or any adjournment thereof, a majority in
voting interest of the stockholders present in person or by proxy and entitled
to vote thereat or, in the absence therefrom of

-2-

<PAGE>

all the stockholders, any officer entitled to preside at or to act as
secretary of such meeting may adjourn such meeting from time to time. At any
such adjourned meeting at which a quorum is present any business may be
transacted which might have been transacted at the meeting as originally
called.

Section 2.06 VOTING.

(a) At each meeting of the stockholders, each stockholder shall
be entitled to vote in person or by proxy each share or fractional share of the
stock of the Corporation which has voting rights on the matter in question and
which shall have been held by him and registered in his name on the books of the
Corporation:

(i) on the date fixed pursuant to Section 6.05 of these
Bylaws as the record date for the determination of stockholders entitled to
notice of and to vote at such meeting, or

(ii) if no such record date shall have been so fixed, then
(A) at the close of business on the day next preceding the day on which notice
of the meeting shall be given or (B) if notice of the meeting shall be waived,
at the close of business on the day next preceding the day on which the meeting
shall be held.

(b) Shares of its own stock belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors in such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity
shall be entitled to vote such stock. Persons whose stock is pledged shall be
entitled to vote, unless in the transfer by the pledgor on the books of the
Corporation he shall have expressly empowered the pledgee to vote thereon, in
which case only the pledgee, or his proxy, may represent such stock and vote
thereon. Stock having voting power standing of record in the names of two or
more persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, tenants by the entirety or otherwise, or with respect to
which two or more persons have the same fiduciary relationship, shall be voted
in accordance with the provisions of the General Corporation Law of Delaware.

(c) Any such voting rights may be exercised by the stockholder
entitled thereto in person or by his proxy appointed by an instrument in
writing, subscribed by such stockholder or by his attorney thereunto authorized
and

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delivered to the secretary of the meeting; provided, however, that no proxy
shall be voted or acted upon after three years from its date unless said proxy
shall provide for a longer period. The attendance at any meeting of a
stockholder who may theretofore have given a proxy shall not have the effect of
revoking the same unless he shall in writing so notify the secretary of the
meeting prior to the voting of the proxy. At any meeting of the stockholders
all matters, except as otherwise provided in the Certificate of Incorporation,
in these Bylaws or by law, shall be decided by the vote of a majority in voting
interest of the stockholders present in person or by proxy and entitled to vote
thereat and thereon. The stockholders present at a duly called or held meeting
at which a quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum. The vote at any meeting of the stockholders on any question need not be
by ballot, unless so directed by the chairman of the meeting. On a vote by
ballot, each ballot shall be signed by the stockholder voting, or by his proxy
if there by such proxy, and it shall state the number of shares voted.

Section 2.07 LIST OF STOCKHOLDERS. The Secretary of the Corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the entire duration thereof, and may be inspected by any stockholder who
is present.

Section 2.08 INSPECTOR OF ELECTION. If at any meeting of the
stockholders a vote by written ballot shall be taken on any question, the
chairman of such meeting may appoint an inspector or inspectors of election to
act with respect to such vote. Each inspector so appointed shall first
subscribe an oath faithfully to execute the duties of an inspector at such
meeting with strict impartiality and according to the best of his ability. Such
inspectors shall decide upon the qualification of the voters and shall report
the number of shares represented at the meeting and entitled to vote on such
question, shall conduct and accept the

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votes, and, when the voting is completed, shall ascertain and report the
number of shares voted respectively for and against the question. Reports of
the inspectors shall be in writing and subscribed and delivered by them to
the Secretary of the Corporation. Inspectors need not be stockholders of the
Corporation, and any officer of the Corporation may be an inspector on any
question other than a vote for or against a proposal in which he shall have a
material interest.

Section 2.09 STOCKHOLDER ACTION WITHOUT MEETINGS. Any action
required by the General Corporation Law of Delaware to be taken at any annual or
special meeting of the stockholders, or any action which may be taken at any
annual or special meeting of the stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing setting forth
the action so taken shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.

ARTICLE III
BOARD OF DIRECTORS

Section 3.01 GENERAL POWERS. The property, business and affairs of
the Corporation shall be managed by or under the direction of the Board, which
may exercise all of the powers of the Corporation, except such as are by the
Certificate of Incorporation, by these Bylaws or by law conferred upon or
reserved to the stockholders.

Section 3.02 NUMBER. (a) The authorized number of directors of the
Corporation shall be no less than one (1) nor more than nine (9) until changed
by an amendment of this Section 3.02. Directors need not be stockholders in the
Corporation. (b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of Directors constituting the
whole Board permits, with the term of office of one class expiring each year.
At each annual meeting of stockholders, the successors to the class of Directors
whose term shall then expire shall be elected to hold office for a term expiring
at the third succeeding annual meeting and each Director so elected shall hold
office until his successor is elected and qualified, or until his earlier
resignation or removal.

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Section 3.03 ELECTION OF DIRECTORS. The directors shall be elected
by the stockholders of the Corporation, and at each election the persons
receiving the greatest number of votes, up to the number of directors then to be
elected, shall be the persons then elected. The election of directors is
subject to any provisions contained in the Certificate of Incorporation relating
thereto, including any provisions for a classified board.

Section 3.04 RESIGNATIONS. Any director of the Corporation may
resign at any time by giving written notice to the Board or to the Secretary of
the Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time is not specified, it shall take effect immediately upon
its receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.

Section 3.05 VACANCIES. Except as otherwise provided in the
Certificate of Incorporation, any vacancy in the Board, whether because of
death, resignation, disqualification, an increase in the number of directors, or
any other cause, may be filled by vote of the majority of the remaining
directors, although less than a quorum, or by a sole remaining director. Each
director so chosen to fill a vacancy shall hold office until his successor shall
have been elected and shall qualify or until he shall resign or shall have been
removed. No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.

Upon the resignation of one or more directors from the Board,
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have the power to fill such vacancy
or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each director so chosen shall hold
office as provided hereinabove in the filling of other vacancies.

Section 3.06 PLACE OF MEETING; TELEPHONE CONFERENCE MEETING. The
Board may hold any of its meetings at such place or places within or without the
State of Delaware as the Board may from time to time by resolution designate or
as shall be designated by the person or persons calling the meeting or in the
notice or waiver of notice of any such meeting. Directors may participate in
any regular or special meeting of the Board by means of conference telephone or
similar communications equipment pursuant to which all persons participating in
the meeting of the Board

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can hear each other, and such participation shall constitute presence in
person at such meeting.

Section 3.07 FIRST MEETING. The Board shall meet as soon as
practicable after each annual election of directors and notice of such first
meeting shall not be required.

Section 3.08 REGULAR MEETINGS. Regular meetings of the Board may be
held at such times as the Board shall from time to time by resolution determine.
If any day fixed for a meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting shall be held at the same hour and place
on the next succeeding business day which is not a legal holiday. Except as
provided by law, notice of regular meetings need not be given.

Section 3.09 SPECIAL MEETINGS. Special meetings of the Board may be
called at any time by the Chairman of the Board or the Chief Executive Officer
or by any two (2) directors, to be held at the principal office of the
Corporation, or at such other place or places, within or without the State of
Delaware, as the person or persons calling the meeting may designate.

Notice of the time and place of special meetings shall be given to
each director either (i) by mailing or otherwise sending to him a written notice
of such meeting, charges prepaid, addressed to him at his address as it is shown
upon the records of the Corporation, or if it is not so shown on such records or
is not readily ascertainable, at the place in which the meetings of the
directors are regularly held, at least seventy-two (72) hours prior to the time
of the holding of such meeting; or (ii) by orally communicating the time and
place of the special meeting to him at least forty-eight (48) hours prior to the
time of the holding of such meeting. Either of the notices as above provided
shall be due, legal and personal notice to such director.

Whenever notice is required to be given, either to a stockholder or a
director, under any provision of the General Corporation Law of Delaware, the
Certificate of Incorporation or these Bylaws, a written waiver thereof, signed
by the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting, whether in person or by proxy, shall constitute a waiver of notice of
such meeting, except when the person attends a meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the

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meeting is not lawfully called or convened. Neither the business to be
transacted at nor the purpose of any regular or special meeting of directors
or committee of directors need be specified in any written waiver of notice.

All such waivers shall be filed with the corporate records or made a
part of the minutes of the meeting.

Section 3.10 QUORUM AND ACTION. Except as otherwise provided in
these Bylaws or by law, the presence of a majority of the authorized number of
directors shall be required to constitute a quorum for the transaction of
business at any meeting of the Board, and all matters shall be decided at any
such meeting, a quorum being present, by the affirmative votes of a majority of
the directors present. In the absence of a quorum, a majority of directors
present at any meeting may adjourn the same from time to time until a quorum
shall be present. Notice of any adjourned meeting need not be given. The
directors shall act only as a Board, and the individual directors shall have no
power as such.

Section 3.11 ACTION BY CONSENT. Any action required or permitted to
be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or such committee. Such
action by written consent shall have the same force and effect as the unanimous
vote of such directors.

Section 3.12 COMPENSATION. No stated salary need be paid to
directors, as such, for their services but, as fixed from time to time by
resolution of the Board, the directors may receive directors' fees, compensation
and reimbursement for expenses for attendance at directors' meetings, for
serving on committees and for discharging their duties; provided that nothing
herein contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.

Section 3.13 COMMITTEES. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. Any such committee,
to the extent provided in the resolution of the Board, shall have and may
exercise all the powers and authority of the Board in the management of the
business and affairs of the Corporation, and may authorize the seal of

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the Corporation to be affixed to all papers which may require it; but no such
committee shall have any power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the Bylaws of the Corporation; and
unless the resolution of the Board expressly so provides, no such committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock. Any such committee shall keep written minutes of its
meetings and report the same to the Board when required.

In the absence of any member of any such committee, the members
thereof present at any meeting and not disqualified from voting, whether or not
they constitute a quorum, may appoint another member of the Board to act at the
meeting in the place of such absent member.

A majority of the members, or replacements thereof, of any such
committee shall constitute a quorum for the transaction of business. Every act
or decision done or made by a majority of the members, or replacements thereof,
of any such committee shall be regarded as the act or decision of the entire
committee.

Section 3.14 OFFICERS OF THE BOARD. The Board shall have a Chairman
of the Board and may, at the discretion of the Board, have one or more Vice
Chairmen. The Chairman of the Board and the Vice Chairmen shall be appointed
from time to time by the Board and shall have such powers and duties as shall be
designated by the Board.

ARTICLE IV
OFFICERS

Section 4.01 OFFICERS. The officers of the Corporation shall be a
Chairman of the Board, a Chief Executive Officer, a President, a Secretary and a
Chief Financial Officer. The Corporation may also have, at the discretion of
the Board, one or more Vice Presidents, one or more Assistant Vice Presidents,
one or more Assistant Secretaries, one or more Assistant Treasurers and such
other officers as may be appointed in accordance with the provisions of Section
4.03 of these Bylaws. One person may hold two or more offices, except that the
Secretary may not also hold the office of President. The salaries of all
officers of the Corporation shall be fixed by the Board.

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Section 4.02 ELECTION. The officers of the Corporation, except such
officers as may be appointed in accordance with the provisions of Section 4.03
or Section 4.05 of these Bylaws, shall be chosen annually by the Board, and each
shall hold his office until he shall resign or shall be removed or otherwise
disqualified to serve, or until his successor shall be elected and qualified.

Section 4.03 SUBORDINATE OFFICERS. The Board may appoint, or may
authorize the Chief Executive Officer to appoint, such other officers as the
business of the Corporation may require, each of whom shall have such authority
and perform such duties as are provided in these Bylaws or as the Board or the
President from time to time may specify, and shall hold office until he shall
resign or shall be removed or otherwise disqualified to serve.

Section 4.04 REMOVAL AND RESIGNATION. Any officer may be removed,
with or without cause, by a majority of the directors at the time in office, at
any regular or special meeting of the Board, or, except in case of an officer
chosen by the Board, by the Chief Executive Officer upon whom such power of
removal may be conferred by the Board.

Any officer may resign at any time by giving written notice to the
Board, the Chairman of the Board, the President or the Secretary of the
Corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.

Section 4.05 VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the Bylaws for the regular appointments to such office.

Section 4.06 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of
the Corporation shall, subject to the control of the Board, have general
supervision, direction and control of the business and affairs of the
Corporation. He shall preside at all meetings of stockholders and the Board.
He shall have the general powers and duties of management usually vested in the
chief executive officer of a corporation, and shall have such other powers and
duties with respect to the administration of the business and affairs of the
Corporation as may from time to time be assigned to him by the Board or as
prescribed by the Bylaws. In the absence or disability of the President, the
Chief Executive Officer, in addition to his assigned duties and

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powers, shall perform all the duties of the President and when so acting
shall have all the powers and be subject to all restrictions upon the
President.

Section 4.07 PRESIDENT. The President shall exercise and perform
such powers and duties with respect to the administration of the business and
affairs of the Corporation as may from time to time be assigned to him by the
Chief Executive Officer (unless the President is also the Chief Executive
Officer) or by the Board or as is prescribed by the Bylaws. In the absence or
disability of the Chief Executive Officer, the President shall perform all of
the duties of the Chief Executive Officer and when so acting shall have all the
powers and be subject to all the restrictions upon the Chief Executive Officer.

Section 4.08 VICE PRESIDENT. The Vice President(s), if any, shall
exercise and perform such
powers and duties with respect to the administration of the business and affairs
of the Corporation as from time to time may be assigned to each of them by the
President, by the Chief Executive Officer, by the Board or as is prescribed by
the Bylaws. In the absence or disability of the President, the Vice Presidents,
in order of their rank as fixed by the Board, or if not ranked, the Vice
President designated by the Board, shall perform all of the duties of the
President and when so acting shall have all of the powers of and be subject to
all the restrictions upon the President.

Section 4.09 SECRETARY. The Secretary shall keep, or cause to be
kept, a book of minutes at the principal office for the transaction of the
business of the Corporation, or such other place as the Board may order, of all
meetings of directors and stockholders, with the time and place of holding,
whether regular or special, and if special, how authorized and the notice
thereof given, the names of those present at directors' meetings, the number of
shares present or represented at stockholders' meetings and the proceedings
thereof.

The Secretary shall keep, or cause to be kept, at the principal office
for the transaction of the business of the Corporation or at the office of the
Corporation's transfer agent, a share register, or a duplicate share register,
showing the names of the stockholders and their addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the same, and the number and date of cancellation of every certificate
surrendered for cancellation.

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The Secretary shall give, or cause to be given, notice of all the
meetings of the stockholders and of the Board required by these Bylaws or by law
to be given, and he shall keep the seal of the Corporation in safe custody, and
shall have such other powers and perform such other duties as may be prescribed
by the Board or these Bylaws. If for any reason the Secretary shall fail to
give notice of any special meeting of the Board called by one or more of the
persons identified in Section 3.09 of these Bylaws, or if he shall fail to give
notice of any special meeting of the stockholders called by one or more of the
persons identified in Section 2.02 of these Bylaws, then any such person or
persons may give notice of any such special meeting.

Section 4.10 CHIEF FINANCIAL OFFICER. The Chief Financial Officer
shall keep and maintain or cause to be kept and maintained, adequate and correct
accounts of the properties and business transactions of the Corporation,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, surplus and shares. Any surplus, including earned surplus,
paid-in surplus and surplus arising from a reduction of capital, shall be
classified according to source and shown in a separate account. The books of
account at all reasonable times shall be open to inspection by any director.

The Treasurer shall deposit all moneys and other valuables in the name
and to the credit of the Corporation with such depositories as may be designated
by the Board. He shall disburse the funds of the Corporation as may be ordered
by the Board, shall render to the President, to the Chief Executive Officer and
to the directors, whenever they request it, an account of all of his
transactions as Treasurer and of the financial condition of the Corporation, and
shall have such other powers and perform such other duties as may be prescribed
by the Board or these Bylaws.

ARTICLE V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.

Section 5.01 EXECUTION OF CONTRACTS. The Board, except as otherwise
provided in these Bylaws, may authorize any officer or officers, agent or
agents, to enter into any contract or execute any instrument in the name and on
behalf of the Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board or by these Bylaws, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or in any amount.

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Section 5.02 CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for payment of money, notes or other evidence of indebtedness, issued in the
name of or payable to the Corporation, shall be signed or endorsed by such
person or persons and in such manner as, from time to time, shall be determined
by resolution of the Board. Each such person shall give such bond, if any, as
the Board may require.

Section 5.03 DEPOSIT. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, attorney or attorneys, of the Corporation to whom such power shall have
been delegated by the Board. For the purpose of deposit and for the purpose of
collection for the account of the Corporation, the President, the Chief
Executive Officer, any Vice President or the Treasurer (or any other officer or
officers, assistant or assistants, agent or agents, or attorney or attorneys of
the Corporation who shall be determined by the Board from time to time) may
endorse, assign and deliver checks, drafts and other orders for the payment of
money which are payable to the order of the Corporation.

Section 5.04 GENERAL AND SPECIAL BANK ACCOUNTS. The Board from time
to time may authorize the opening and keeping of general and special bank
accounts with such banks, trust companies or other depositories as the Board may
select or as may be selected by an officer or officers, assistant or assistants,
agent or agents, or attorney or attorneys of the Corporation to whom such power
shall have been delegated by the Board. The Board may make such special rules
and regulations with respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.

ARTICLE VI
SHARES AND THEIR TRANSFER

Section 6.01 CERTIFICATES FOR STOCK. Every owner of stock of the
Corporation shall be entitled to have a certificate or certificates, in such
form as the Board shall prescribe, certifying the number and class of shares of
the stock of the Corporation owned by him. The certificates representing shares
of such stock shall be numbered in the order in which they shall be issued and
shall be signed in the name of the Corporation by the Chairman of the Board,

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the President or a Vice President and by the Secretary or an Assistant
Secretary or by the Treasurer or an Assistant Treasurer. Any or all of the
signatures on the certificates may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has
been placed upon any such certificate shall thereafter have ceased to be such
officer, transfer agent or registrar before such certificate is issued, such
certificate may nevertheless be issued by the Corporation with the same
effect as though the person who signed such certificate, or whose facsimile
signature shall have been placed thereupon, were such officer, transfer agent
or registrar at the date of issue. A record shall be kept of the respective
names of the persons, firms or corporations owning the stock represented by
such certificates, the number and class of shares represented by such
certificates, respectively, and the respective dates thereof, and in case of
cancellation, the respective dates of cancellation. Every certificate
surrendered to the Corporation for exchange or transfer shall be cancelled,
and no new certificate or certificates shall be issued in exchange for any
existing certificate until such existing certificate shall have been so
cancelled, except in cases provided for in Section 6.04 of these Bylaws.

Section 6.02 TRANSFER OF STOCK. Transfer of shares of stock of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary, or with a transfer clerk or a
transfer agent appointed as provided in Section 6.03 of these Bylaws, and upon
surrender of the certificate or certificates for such shares properly endorsed
and the payment of all taxes thereon. The person in whose name shares of stock
stand on the books of the Corporation shall be deemed the owner thereof for all
purposes as regards the Corporation. Whenever any transfer of shares shall be
made for collateral security, and not absolutely, such fact shall be stated
expressly in the entry of transfer if, when the certificate or certificates
shall be presented to the Corporation for transfer, both the transferor and the
transferee request the Corporation to do so.

Section 6.03 REGULATIONS. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these Bylaws,
concerning the issue, transfer and registration of certificates for shares of
the stock of the Corporation. The Board may appoint, or authorize any officer
or officers to appoint, one or more transfer clerks or one or more transfer
agents and one or

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more registrars, and may require all certificates for stock to bear the
signature or signatures of any of them.

Section 6.04 LOST, STOLEN, DESTROYED AND MUTILATED CERTIFICATES. In
any case of loss, theft, destruction, or mutilation of any certificate of stock,
another may be issued in its place upon proof of such loss, theft, destruction,
or mutilation and upon the giving of a bond of indemnity to the Corporation in
such form and in such sums as the Board may direct; provided, however, that a
new certificate may be issued without requiring any bond when, in the judgment
of the Board, it is proper to do so.

Section 6.05 RECORD DATE. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
the stockholders or any adjournment thereof, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any other change, conversion or exchange of
stock or for the purpose of any other lawful action, the Board may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action. If, in any case involving the determination of
stockholders for any purpose other than notice of or voting at a meeting of
stockholders, the Board shall not fix such a record date, the record date for
determining stockholders for such purpose shall be the close of business on the
day on which the Board shall adopt the resolution relating thereto. A
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of such meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting.

Section 6.06 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The
President or any Vice President and the Secretary or any Assistant Secretary of
this Corporation are authorized to vote, represent and exercise on behalf of
this Corporation all rights incident to all shares of any other corporation or
corporations standing in the name of this Corporation. The authority herein
granted to said officers to vote or represent on behalf of this Corporation any
and all shares held by this Corporation in any other corporation or corporations
may be exercised either by such officers in person or by any person authorized
so to do by proxy or power of attorney duly executed by said officers.

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ARTICLE VII
INDEMNIFICATION

Section 7.01 ACTIONS OTHER THAN BY OR IN THE RIGHT OF THE
CORPORATION. The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise or as a member of any committee or similar
body, against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, that he had
reasonable cause to believe that his conduct was unlawful.

Section 7.02 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or as a member of any committee or similar
body, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of

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<PAGE>

Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.

Section 7.03 DETERMINATION OF RIGHT OF INDEMNIFICATION. Any
indemnification under Section 7.01 or 7.02 of these Bylaws (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in Sections 7.01 and 7.02 of these Bylaws. Such
determination shall be made (i) by the Board by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (ii) if such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (iii) by the stockholders.

Section 7.04 INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding the other provisions of this Article VII, to the extent that a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Section 7.01 or 7.02 of these Bylaws, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.

Section 7.05 ADVANCE OF EXPENSES. Expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board upon receipt of an undertaking by or on
behalf of the director or officer, to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article VII. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the Board deems
appropriate.

Section 7.06 OTHER RIGHTS AND REMEDIES. The indemnification and
advancement of expenses provided by, or granted pursuant to, the other Sections
of this Article VII shall not be deemed exclusive and are declared expressly to

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<PAGE>

be nonexclusive of any other rights to which those seeking indemnification or
advancements of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.

Section 7.07 INSURANCE. Upon resolution passed by the Board, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise or as a member of any committee or similar body against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article VII.

Section 7.08 CONSTITUENT CORPORATIONS. For the purposes of this
Article VII, references to "the Corporation" include in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise or as a member of any committee or similar body shall
stand in the same position under the provisions of this Article VII with respect
to the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.

Section 7.09 EMPLOYEE BENEFIT PLANS. For the purposes of this
Article VII, references to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a person
with respect to any employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service as a director, officer,
employee or agent of the Corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries; and a person who acted
in

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<PAGE>

good faith and in a manner he reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the Corporation"
as referred to in this Article VII.

Section 7.10 BROADEST LAWFUL INDEMNIFICATION. In addition to the
foregoing, the Corporation shall, to the broadest and maximum extent permitted
by Delaware law, as the same exists from time to time (but, in case of any
amendment to or change in Delaware law, only to the extent that such amendment
or change permits the Corporation to provide broader rights of indemnification
than is permitted to the Corporation prior to such amendment or change),
indemnify each person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative by reason of the fact that he
is or was a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding. In addition, the Corporation shall, to the broadest
and maximum extent permitted by Delaware law, as the same may exist from time to
time (but, in case of any amendment to or change in Delaware law, only to the
extent that such amendment or change permits the Corporation to provide broader
rights of payment of expenses incurred in advance of the final disposition of an
action, suit or proceeding than is permitted to the Corporation prior to such
amendment or change), pay to such person any and all expenses (including
attorneys' fees) incurred in defending or settling any such action, suit or
proceeding in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer, to repay such amount if it shall ultimately be determined by a final
judgment or other final adjudication that he is not entitled to be indemnified
by the Corporation as authorized in this Section 7.10. The first sentence of
this Section 7.10 to the contrary notwithstanding, the Corporation shall not
indemnify any such person with respect to any of the following matters: (i)
remuneration paid to such person if it shall be determined by a final judgment
or other final adjudication that such remuneration was in violation of law; or
(ii) any accounting of profits made from the purchase or sale by such person of
the Corporation's securities within the meaning of Section 16(b) of the
Securities Exchange Act of 1934 and

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<PAGE>

amendments thereto or similar provisions of any federal, state or local
statutory law; or (iii) actions brought about or contributed to by the
dishonesty of such person, if a final judgment or other final adjudication
adverse to such person establishes that acts of active and deliberate
dishonesty were committed or attempted by such person with actual dishonest
purpose and intent and were material to the adjudication; or (iv) actions
based on or attributable to such person having gained any personal profit or
advantage to which he was not entitled, in the event that a final judgment or
other final adjudication adverse to such person establishes that such person
in fact gained such personal profit or other advantage to which he was not
entitled; or (v) any matter in respect of which a final decision by a court
with competent jurisdiction shall determine that indemnification is unlawful;
provided, however, that the Corporation shall perform its obligations under
the second sentence of this Section 7.10 on behalf of such person until such
time as it shall be ultimately determined by a final judgment or other final
adjudication that he is not entitled to be indemnified by the Corporation as
authorized by the first sentence of this Section 7.10 by virtue of any of the
preceding clauses (i), (ii), (iii), (iv) or (v).

Section 7.11 TERM. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article VII shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.

Section 7.12 SEVERABILITY. If any part of this Article VII shall be
found, in any action, suit or proceeding or appeal therefrom or in any other
circumstances or as to any particular officer, director, employee or agent to be
unenforceable, ineffective or invalid for any reason, the enforceability, effect
and validity of the remaining parts or of such parts in other circumstances
shall not be affected, except as otherwise required by applicable law.

Section 7.13 AMENDMENTS. The foregoing provisions of this Article
VII shall be deemed to constitute an agreement between the Corporation and each
of the persons entitled to indemnification hereunder, for as long as such
provisions remain in effect. Any amendment to the foregoing provisions of this
Article VII which limits or otherwise adversely affects the scope of
indemnification or rights of any such persons hereunder shall, as to such
persons, apply only to claims arising, or causes of action based on actions or
events occurring, after such amendment and delivery of

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<PAGE>

notice of such amendment is given to the person or persons so affected.
Until notice of such amendment is given to the person or persons whose rights
hereunder are adversely affected, such amendment shall have no effect on such
rights of such persons hereunder. Any person entitled to indemnification
under the foregoing provisions of this Article VII shall, as to any act or
omission occurring prior to the date of receipt of such notice, be entitled
to indemnification to the same extent as had such provisions continued as
Bylaws of the Corporation without such amendment.

ARTICLE VIII
MISCELLANEOUS

Section 8.01 SEAL. The Board shall provide a corporate seal, which
shall be in the form of a circle and shall bear the name of the Corporation and
words and figures showing that the Corporation was incorporated in the State of
Delaware and showing the year of incorporation.

Section 8.02 WAIVER OF NOTICES. Whenever notice is required to be
given by these Bylaws or the Certificate of Incorporation or by law, the person
entitled to said notice may waive such notice in writing, either before or after
the time stated therein, and such waiver shall be deemed equivalent to notice.

Section 8.03 LOANS AND GUARANTIES. The Corporation may lend money
to, or guarantee any obligation of, and otherwise assist any officer or other
employee of the Corporation or of its subsidiaries, including any officer who is
a director, whenever, in the judgment of the Board, such loan, guaranty or
assistance may reasonably be expected to benefit the Corporation. The loan,
guaranty, or other assistance may be with or without interest, and may be
unsecured or secured in such manner as the Board shall approve, including,
without limitation, a pledge of shares of stock of the Corporation.

Section 8.04 GENDER. All personal pronouns used in these Bylaws
shall include the other genders, whether used in the masculine, feminine or
neuter gender, and the singular shall include the plural, and vice versa,
whenever and as often as may be appropriate.

Section 8.05 AMENDMENTS. These Bylaws, or any of them, may be
rescinded, altered, amended or repealed, and new Bylaws may be made (i) by the
Board, by vote of a majority of the number of directors then in office as
directors, acting at any meeting of the Board or (ii) by the

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<PAGE>

stockholders, by the vote of a majority of the outstanding shares of voting
stock of the Corporation, at an annual meeting of stockholders, without
previous notice, or at any special meeting of stockholders, provided that
notice of such proposed amendment, modification, repeal or adoption is given
in the notice of special meeting; provided, however, that Section 2.02 of
these Bylaws can only be amended if that Section as amended would not
conflict with the Corporation's Certificate of Incorporation. Any Bylaw made
or altered by the stockholders may be altered or repealed by the Board or may
be altered or repealed by the stockholders.

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<PAGE>

[Letterhead of Paul, Hastings, Janofsky & Walker]

September 24, 1996

25383.75646

METRO NETWORKS, INC.
2700 Post Oak Boulevard, Suite 1400
Houston, Texas

Ladies and Gentlemen:

We have acted as counsel to Metro Networks, Inc., a Delaware
corporation (the "Company"), and to certain stockholders of the Company (the
"Selling Stockholders") in connection with the sale of up to an aggregate of
7,200,000 shares (the "Shares") of the Company's Common Stock, par value $.001
per share, in a public offering pursuant to a Registration Statement on Form S-1
(Registration No. 333-6311), as amended (the "Registration Statement"), filed by
the Company with the Securities and Exchange Commission under the Securities Act
of 1933, as amended. Of the Shares, 3,600,000 are to be offered and sold by the
Company, 3,600,000 are to be offered and sold by the Selling Stockholder, and
1,080,000 are subject to an option granted to the underwriters by the Company to
cover over-allotments, if any.

In our capacity as counsel for the Company and the Selling Stockholder
in connection with the matters referred to above, we have examined the Amended
and Restated Certificate of Incorporation and the form of Restated Bylaws of the
Company, and the originals or copies certified or otherwise identified, of
records of corporate action of the Company as furnished to us by the Company,
certificates of public officials and of representatives of the Company,

<PAGE>

METRO NETWORKS, INC.
September 24, 1994
Page 2

statutes and other instruments and documents, as a basis for the opinions
hereinafter expressed.

Based upon our examination as aforesaid, we are of the opinion that
the Shares, when purchased and paid for as described in the Registration
Statement, will be duly authorized, validly issued, fully paid and
nonassessable.

We hereby consent to the filing of this opinion of counsel as
Exhibit 5.1 to the Registration Statement and to the reference to our Firm under
the caption "Legal Matters" in the prospectus included in the Registration
Statement.

Very truly yours,

/s/ Neil A. Torpey
Neil A. Torpey
of Paul, Hastings, Janofsky & Walker LLP

<PAGE>

Exhibit 10.20

STOCK LOAN AND PLEDGE AGREEMENT

DATED AS OF _______________________, 1996

BETWEEN

METRO NETWORKS, INC.

AND

DAVID I. SAPERSTEIN

<PAGE>

TABLE OF CONTENTS

STOCK LOAN AND PLEDGE AGREEMENT

PAGE

1. Loan of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Delivery of Collateral Securities. . . . . . . . . . . . . . . . . 1
2.2 Grant of Security Interest . . . . . . . . . . . . . . . . . . . . 1
2.3 Substitution of Collateral Securities. . . . . . . . . . . . . . . 2
2.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 2

3. Obligations of Lender; Distributions. . . . . . . . . . . . . . . . . . 2
3.1 Obligations of the Lender with Respect to the Collateral . . . . . 2
3.2 Right of Borrower in Respect of Loaned Securities. . . . . . . . . 3
3.3 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . 3

4. Term of Loan; Return of Loaned Securities . . . . . . . . . . . . . . . 4
4.1 Term of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Return of Loaned Securities. . . . . . . . . . . . . . . . . . . . 4

5. Loan Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

6. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

7. Remedies of Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7.1 Rights of Secured Creditor . . . . . . . . . . . . . . . . . . . . 6
7.2 Calculation of Unpaid Remedy Amount. . . . . . . . . . . . . . . . 6
7.3 Setoffs of Collateral. . . . . . . . . . . . . . . . . . . . . . . 7
7.4 No Counterclaim, Waiver, etc.. . . . . . . . . . . . . . . . . . . 7
7.5 No Rights Against Transferees. . . . . . . . . . . . . . . . . . . 7

8. Transfer Taxes and Other Costs of Transfer. . . . . . . . . . . . . . . 7

9. Representations, etc. of Lender and Borrower. . . . . . . . . . . . . . 8
9.1 Representations of Lender. . . . . . . . . . . . . . . . . . . . . 8
9.2 Representations, Warranties and Covenants of the Borrower. . . . . 8

10. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

11. Payments, Deliveries, Notices . . . . . . . . . . . . . . . . . . . . . 9

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<PAGE>

12. Deliveries to Custodian; Lender's Right to Appoint Agents . . . . . . . 10

13. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 10

14. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

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<PAGE>

STOCK LOAN AND PLEDGE AGREEMENT

STOCK LOAN AND PLEDGE AGREEMENT, dated as of __________, 1996 (the
"AGREEMENT"), between Metro Networks, Inc. (the "LENDER") and David I.
Saperstein (the "BORROWER"). Capitalized terms used herein and not otherwise
defined are used as defined in Section 13.

The Lender and the Borrower agree as follows:

1. LOAN OF SHARES. Subject to the terms and conditions hereof, the
Lender agrees to lend (the "LOAN") to the Borrower on the date hereof (the "LOAN
DATE") ______ shares of Common Stock (the "LOANED SHARES") of Metro Networks,
Inc., a Delaware corporation (the "COMPANY"), represented by the stock
certificates identified on Schedule A attached hereto, together with all
securities which are distributed by the Company with respect to the Loaned
Shares, or are received in exchange for the Loaned Shares in connection with a
merger, recapitalization or reorganization involving the Company (collectively,
the "LOANED SECURITIES"), PROVIDED that Loaned Securities shall not include any
Distribution which has been delivered to the Custodian in accordance with
Section 3.3. The transfer of the Loaned Shares from the Lender to the Borrower
shall be reflected on the share register of the Company.

2. COLLATERAL.

2.1 DELIVERY OF COLLATERAL SECURITIES. The Borrower is concurrently
delivering to the Custodian a number of shares of Series A Convertible Preferred
Stock of the Company equal to the number of Loaned Shares (the "PLEDGED
SHARES"), represented by the stock certificates identified on Schedule B
attached hereto. The Pledged Shares shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Lender and the Custodian.

2.2 GRANT OF SECURITY INTEREST. To secure the due and punctual
performance of the obligations of the Borrower under this Agreement, the
Borrower hereby grants to the Lender a first lien on and security interest in
the Pledged Shares and all securities and obligations delivered by the Borrower
after the Loan Date pursuant to Section 2.3 and all securities which are
distributed by the Company with respect thereto, or are received in exchange for
any of the foregoing in connection with a merger, recapitalization or
reorganization involving the Company (collectively the "COLLATERAL SECURITIES"),
PROVIDED that Collateral Securities shall not include any securities returned to
the Borrower pursuant to Section 3.1 or 4.2. The Borrower

<PAGE>

recognizes that the Collateral Securities will be held by, or on the books
and records of, the Custodian or other agents of the Lender or one or more
financial intermediaries to perfect the Lender's security interest therein.
Except for the security interests granted hereby, the Borrower shall not
create or suffer to exist any security interest, lien or encumbrance in
respect of any Collateral Securities.

2.3 SUBSTITUTION OF COLLATERAL SECURITIES. The Borrower may
substitute for all or any portion of the Collateral Securities cash or
marketable securities ("SUBSTITUTE COLLATERAL SECURITIES") so long as at all
times after giving effect to such substitution the Value of all Substitute
Collateral Securities shall be equal to at least 120% of the amount, if any, by
which the Value of the Loaned Securities exceeds the Value of the Collateral
Securities held by the Custodian and not withdrawn in connection with such
substitution, PROVIDED that the Borrower shall have given the Lender at least
ten (10) days' prior written notice of the proposed substitution specifying the
substitute Collateral Securities; and, PROVIDED FURTHER, that, prior to
effecting any such substitution, the Borrower shall have received from its
counsel an opinion to the effect that, after giving effect to such substitution,
the Borrower will not be in violation of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.

2.4 FURTHER ASSURANCES. In connection with the delivery of any
Substitute Collateral Securities (other than cash) pursuant to Section 2.3, the
Borrower shall deliver to the Custodian certificates representing such
securities and shall execute and deliver all instruments and documents and take
all further action that may be necessary or desirable, in order to perfect the
security interest purported to be granted pursuant to Section 2.2 or to enable
the Lender to exercise and enforce its rights and remedies hereunder.

3. OBLIGATIONS OF LENDER; DISTRIBUTIONS.

3.1 OBLIGATIONS OF THE LENDER WITH RESPECT TO THE COLLATERAL. The
Lender shall cause the Custodian to record on its books all Collateral
Securities delivered to it, and to keep the Collateral Securities identifiable.
The Lender shall cause the Custodian not to commingle the Collateral Securities
with the Custodian's or the Lender's other assets or assets of the Custodian's
other custodial clients or any collateral delivered by other borrowers. The
Lender shall not, and shall cause the Custodian not to, use, invest, transfer,
lend or pledge the Collateral Securities, except as permitted by Section 7.1 or
7.3. The Lender shall cause the Custodian to vote the Collateral

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<PAGE>

Securities in accordance with the instructions of the Borrower, so long as no
Event of Default has occurred and is continuing.

Except as otherwise expressly provided herein, the sole obligations of
the Lender in respect of the Collateral Securities are to return to the Borrower
all Collateral Securities at the termination of the Loan, in accordance with and
subject to the provisions of Section 4.2 (against return of the Loaned
Securities), and, so long as no Event of Default has occurred and is continuing,
to pay over or deliver to the Borrower, in accordance with its instructions to
the Lender, all Distributions received by the Custodian with respect to
Collateral Securities.

3.2 RIGHT OF BORROWER IN RESPECT OF LOANED SECURITIES. Except as set
forth in Section 3.3, until the Loaned Securities are required to be redelivered
to the Lender upon termination of the Loan, the Borrower shall have all the
incidents of ownership of the Loaned Securities, including the right to transfer
the Loaned Securities to others, including, without limitation, in connection
with an initial public offering of the Common Stock, but in the event the
Borrower shall so transfer the Loaned Securities to any other person, the
Borrower shall not be relieved of its obligations under Section 4.2 to return
the Loaned Securities (or an equivalent quantity of securities of the same class
and issuer). The Lender hereby waives the right to vote or to provide any
consent or to take any similar action with respect to the Loaned Securities in
the event that the record date or deadline for such vote, consent or other
action falls during the term of the Loan.

3.3 DISTRIBUTIONS. If any Distribution on any Loaned Securities
shall be made, and the record or other date for determining the security holders
entitled to receive such Distribution shall be on or after the delivery of such
Loaned Securities to the Borrower and any necessary registration of transfer in
connection therewith, but before the return of such Loaned Securities to the
Lender and any necessary registration of transfer in connection therewith, the
Borrower shall on the date for such distribution, and whether or not the same is
actually received by the Borrower, pay to the Custodian for the benefit of the
Lender such cash, and shall deliver to the Custodian for the benefit of the
Lender such property (other than securities), as shall have been included in
such Distribution. Any securities included in a distribution shall be added to
the Loaned Securities on the date for such distribution and shall thereupon for
all purposes constitute Loaned Securities delivered under the Loan.

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<PAGE>

4. TERM OF LOAN; RETURN OF LOANED SECURITIES.

4.1 TERM OF LOAN. The Loan shall terminate on the first to occur of

(a) five business Days after written or telephone notice of demand,
given to the Borrower by the Lender or the Custodian, for the return of any
Loaned Securities;

(b) any termination of the Loan pursuant to Section 6; and

4.2 RETURN OF LOANED SECURITIES. Upon termination of the Loan, the
Borrower shall deliver the Loaned Securities (or an equivalent quantity of
securities of the same class and issuer) to the Custodian, together with all
Distributions thereon (i) which shall not have previously been paid over to the
Custodian pursuant to Section 3.3 and (ii) with respect to which the record or
other date for determining the security holders entitled to receive payment or
distribution thereof shall have occurred prior to the return of the Loaned
Securities (or such equivalent securities) to the Custodian and any necessary
registration of transfer in connection therewith, except that if any such
Distributions shall not have been made prior to such time, the Borrower shall
deliver such distributions to the Custodian immediately upon the making thereof,
whether or not the same is actually received by the Borrower. Delivery of
Loaned Securities (or such equivalent securities) by the Borrower in accordance
with the first sentence of this Section 4.2 shall be made against return of
Collateral Securities to the Borrower, PROVIDED, HOWEVER, that if an Event of
Default shall have occurred and be continuing, such Collateral Securities shall
not be returned to the Borrower, despite the return of such Loaned Securities
(or such equivalent securities), and all Collateral Securities shall be subject
to all of the terms and conditions hereof until such Event of Default shall have
been cured or waived.

5. LOAN FEE. In consideration of the Loan, the Borrower shall pay
to the Lender during the term of the Loan annually on each anniversary date of
this Agreement and on any termination of the Loan pursuant to Section 4.1, an
annual loan fee (the "LOAN FEE") equal to 0.10% of the average Value of the
Loaned Securities during the five day trading period (E.G., any day on which
trading takes place in the NASDAQ national market) following the Loan Date.
One-half of this fee will be paid on an annual basis and one-half will be paid
upon the termination of

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<PAGE>

the Loan but the deferred portion shall only be payable if such termination
occurs pursuant to Section 4.1(b) or (c) hereof. In the event of a
termination pursuant to Section 4.1(b), the Loan Fee shall be prorated on the
basis of the number of months (including any portion of a month) that have
elapsed since the Loan Date or the date of the immediately preceding payment
of a portion of the Loan Fee. In addition, the Borrower will pay the Lender
an upfront fee of $____________ within ten days of the date hereof.

6. EVENTS OF DEFAULT. If any of the following events ("EVENTS OF
DEFAULT") shall occur,

(a) the Borrower shall fail in any material respect to perform or
observe any term hereof; or

(b) any representation or warranty made by the Borrower herein shall
have been untrue when made in any material respect and the Lender notifies
the Borrower that such untruth is to constitute an Event of Default; or

(c) the Borrower shall (I) file, or consent by answer or otherwise to
the filing against it of, a petition for relief, reorganization,
rehabilitation, arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency or
rehabilitation law of any jurisdiction, (II) make an assignment for the
benefit of creditors, (III) consent to the appointment of a custodian,
receiver, trustee, rehabilitator or other officer with similar powers of
either or both of itself or of any substantial part of its property, (IV)
be adjudicated insolvent or be liquidated or (V) take action for the
purpose of any of the foregoing; or

(d) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without the consent of the Borrower, a
custodian, receiver, trustee, rehabilitator or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or if any order for relief shall be entered in any case or
proceeding for liquidation or reorganization or otherwise to take advantage
of any bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Borrower, or if any petition
for any such relief shall be filed against the Borrower.

-5-

<PAGE>

then, unless otherwise specified by the Lender to the Borrower in writing, the
loan shall terminate immediately without any further notice by the Lender.

7. REMEDIES OF LENDER.

7.1 RIGHTS OF SECURED CREDITOR. If any Event of Default shall have
occurred and be continuing, the Lender shall have all the rights and remedies,
with respect to all Collateral Securities, of a secured party under Articles 8
and 9 of the Uniform Commercial Code of the State of New York in effect at that
time and as otherwise provided by law, and, in addition, may, at its sole
option, exercise, or cause the Custodian to exercise on its behalf, any one or
more of the remedies described in Sections 7.3 and 7.4.

7.2 CALCULATION OF UNPAID REMEDY AMOUNT. If any Event of Default
shall have occurred and be continuing, the Borrower will pay in cash to the
Custodian the "Unpaid Remedy Amount", which shall be equal to the sum of the
following amounts:

(a) the Value as of such time of the Loaned Securities other than any
Loaned Securities (or their equivalent) previously returned to the Lender;

(b) all taxes, fines, penalties or interest incurred by the Lender,
the Custodian or any other agent of the Lender as a result of the
Borrower's failure to perform its obligations hereunder, including (without
limitation) the Borrower's obligation to return Loaned Securities (or
equivalent securities) within the time provided by Section 4.2;

(c) any unpaid Loan Fee or other unpaid amounts (in the form of cash
or otherwise) owing to the Lender under this Agreement;

(d) any amounts not included in clauses (a) through (c) of this
Section 7.2 which are owing pursuant to Section 3, 4, 5, 8 or 10; and

(e) interest on each of the foregoing amounts until payment thereof
in full has been made, to accrue daily at an annual rate equal to 2% above
the amount announced as its "prime" rate (its "PRIME RATE"), as in effect
from time to time (such rate to be adjusted simultaneously with each change
in such prime rate);

-6-
<PAGE>

minus the aggregate Value of Collateral Securities absolute ownership of which
has been assumed by the Lender under Section 7.3 (which ownership is not subject
to any judicial or statutory stay against enforcement).

7.3 SETOFFS OF COLLATERAL. If any Event of Default shall have
occurred and be continuing, including, but not limited to, the Borrower's
failure to return the Loaned Securities (or their equivalents) in accordance
with Section 4.2, the Lender or the Custodian may, at any time and in the
Lender's sole discretion, set off all or any portion of the Collateral
Securities against any Unpaid Remedy Amount (or a portion thereof) as of such
time, by assuming absolute ownership of all or a portion of the Collateral
Securities, and, at the discretion of the Lender, selling any or all of such
Collateral Securities and assuming absolute ownership of the proceeds, PROVIDED
that the Value of the Collateral Securities absolute ownership of which is so
assumed does not exceed the Unpaid Remedy Amount as of the time of such
assumption of ownership.

7.4 NO COUNTERCLAIM, WAIVER, ETC. The Lender's rights against the
Collateral Securities shall be absolute and subject to no counterclaim, offset,
recoupment, deduction or defense in favor of the Borrower, whether such
counterclaim, offset, recoupment, deduction or defense relates to the Lender or
the Custodian. No failure on the part of the Lender or the Custodian to
exercise, and no delay on its part in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise by the Lender or the Custodian of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies provided herein are cumulative and are not
exclusive of any remedies provided by law.

7.5 NO RIGHTS AGAINST TRANSFEREES. In no event shall the Lender have
any rights against any transferee of the Loaned Securities (or any further
transferees thereof) or against any Loaned Securities so transferred.

8. TRANSFER TAXES AND OTHER COSTS OF TRANSFER. The Borrower shall
be responsible for, and shall pay or reimburse the Lender for, all transfer
taxes and other costs involved in all transfers of Loaned Securities or
Collateral Securities between the Lender or the Custodian, on the one hand, and
the Borrower, on the other hand. In connection with deliveries hereunder, the
Borrower shall execute all appropriate transfer tax exemption certificates.

-7-

<PAGE>

9. REPRESENTATIONS, ETC. OF LENDER AND BORROWER.

9.1 REPRESENTATIONS OF LENDER. The Lender represents that (A) the
Lender has the legal right and authority to execute, deliver and perform this
Agreement, and no disability or contractual obligation exists which would
prohibit the Lender from so doing; (B) the Lender has obtained all necessary
approvals or authorizations by all regulatory bodies and other third parties
required to be obtained by the Lender to consummate the transactions
contemplated hereby; (C) the execution and delivery of this Agreement by the
Lender complies, and all transactions by the Lender contemplated hereby will
comply, with all applicable laws and regulations applicable to the Lender,
including, without limitation, all rules and regulations of the Securities and
Exchange Commission, and will not be in violation of any of the foregoing; (D)
when transferred to the Borrower pursuant hereto, the Loaned Securities shall be
transferred free and clear of any security interests, liens or encumbrances, and
(E) the Loaned Securities are validly issued, fully paid and nonassessable.

9.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER. The
Borrower represents, warrants and covenants to the Lender that (A) the Borrower
has the legal right and authority to execute, deliver and perform this Agreement
and no disability or contractual obligation exists which would prohibit the
Borrower from so doing; (B) the Borrower has obtained all necessary approvals or
authorizations by all regulatory bodies and other third parties to consummate
the transactions contemplated hereby; (C) the execution and delivery of this
Agreement complies, and all transactions contemplated hereby will comply, with
all applicable laws and regulations, including, without limitation, all rules
and regulations of the Securities and Exchange Commission, and will not be in
violation of any of the foregoing; (D) the Collateral Securities are owned by
the Borrower free and clear of any security interests, liens or encumbrances
other than the liens contemplated hereby; and (E) the pledge of the Pledged
Shares pursuant to this Agreement creates a valid security interest in the
Collateral Securities in favor of the Lender and securing the payment of the
Loan.

10. INDEMNIFICATION. Except for taxes (other than transfer taxes),
the Borrower agrees to indemnify, defend and hold and save harmless the Lender
and the Custodian from any claims, actions, demands or lawsuits of any kind
whatsoever arising (A) in any way out of the use that the Borrower may make of
the Loaned Securities, or (B) out of transactions by the Lender involving the
purchase or sale of securities, but only to the extent that the liability
arising out of such transactions is

-8-

<PAGE>

due, in whole or in part, to the Borrower's failure to perform its
obligations in accordance with the terms of this Agreement, including the
Borrower's obligation to return the Loaned Securities (or equivalent
securities) within the time specified in Section 4.2, PROVIDED that the
Borrower shall not be required to indemnify the Lender or Custodian for any
claims, actions, demands or lawsuits as may be caused by the gross negligence
or willful acts of the Lender or the Custodian. The Borrower agrees that the
Custodian shall have the right to enforce its third party rights of
indemnification under this Section 10 directly against the Borrower.

11. PAYMENTS, DELIVERIES, NOTICES. All payments under this Agreement
between the parties hereto shall be made by (A) certified or official bank
check, or (B) wire transfer in immediately available funds to the account of the
payee or its designated agent.

Except as otherwise expressly provided herein, all notices, requests,
consents, and other communications hereunder between the Lender or the Custodian
and the Borrower shall be in writing and shall be deemed to have been given (a)
when delivered, if sent by hand or first class mail, postage prepaid, or (b)
when sent, if transmitted by facsimile. Each such notice or other communication
shall be addressed as follows:

(i) if to the Borrower, at the address set forth after its signature
at the end of this Agreement, and

(ii) if to the Lender, at:

_____________________

_____________________
Fax:

(iii) if to the Custodian, at:

_____________________

_____________________
Fax:

or to such other addresses as either party may furnish the other party by
written notice under this Section 11.

-9-

<PAGE>

12. DELIVERIES TO CUSTODIAN; LENDER'S RIGHT TO APPOINT AGENTS. The
Borrower agrees that at the time of giving any notice or making any deliveries
to the Custodian, the Borrower shall identify such notice or delivery as
relating to the Loan or a specific provision under this Agreement. The Borrower
acknowledges that the Custodian will be acting hereunder as the Lender's agent,
and not in its individual capacity.

The Borrower further acknowledges that the Lender may at any time
appoint such agent or agents as the Lender in its sole discretion may select to
perform any other functions on its behalf in connection with any provision of
this Agreement.

13. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the following respective meanings:

BUSINESS DAY: any weekday other than one which is not recognized as a
settlement day by the NASDAQ National Market, or on which banking institutions
are authorized or required to be closed in the State of New York.

COMMON STOCK: common stock, par value $0.001 per share, issued by the
Company.

CUSTODIAN: [BANK] until such time as the Lender shall give the
Borrower notice of the Lender's appointment, as agent for the Lender, of a
different custodian for purposes of this Agreement.

DISTRIBUTION: with reference to any Loaned Securities or Collateral
Securities, any interest, dividend or other payment or distribution of cash,
securities, or other property with respect to such Loaned Securities, or any
option, warrant, right, privilege or other security of any kind distributed with
respect thereto or in exchange therefor.

SERIES A CONVERTIBLE PREFERRED STOCK: preferred stock, par value
$.001 per share, issued by the Company and convertible into Common Stock.

VALUE: the Value at any time of any Loaned Securities or Collateral
Securities shall be determined as follows:

(a) if such Loaned Securities or Collateral Securities are
traded on one or more national securities exchanges, the Value thereof
shall be determined on the basis of the closing price on the

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<PAGE>

preceding Business Day on the consolidated tape as reported by the
Wall Street Journal, or such other pricing service as may be selected
by the Custodian and approved by the Lender; or

(b) if such Loaned Securities or Collateral Securities are not
traded on a national securities exchange, the Value thereof shall be
determined on the basis of the low asked price last quoted on the
preceding Business Day by any principal market maker for such Loaned
Securities or Collateral Securities chosen by the Custodian, PROVIDED
that if no such quotations shall be available for such day, such
market value shall be determined on the basis of the last low asked
price quoted on the next preceding day for which such quotations are
available.

To the market value of any Loaned Securities or Collateral Securities as
determined under the foregoing clauses (a) and (b), shall be added all interest
accrued, and all amortized discount, on such Loaned Securities or Collateral
Securities as of the close of the preceding Business Day, to the extent that
such accrued interest or amortized discount is neither reflected in the amounts
computed under clauses (a) or (b) nor has previously been paid to the Custodian.

14. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties and supersedes any other oral or written
agreement between the parties concerning securities loans. The headings in this
Agreement are for convenience of reference only and shall not expand, limit or
otherwise affect the meaning hereof. This Agreement may be executed in any
number of counterparts, each of which shall be an original and all of which
together shall constitute one and the same instrument. This Agreement shall not
be assignable by either party without the prior written consent of the other
party, shall be binding upon and inure to the benefit of the parties and their
respective legal representatives, distributees and successors and permitted
assigns, may not be amended, changed, modified or terminated except by an
instrument in writing signed by each of the parties hereto, and shall be
governed by and construed in accordance with New York law (without giving effect
to principles of conflicts of laws).

-11-

<PAGE>

LENDER BORROWER

By: _________________________ By ________________________
Name: Name:
Title: Title:

Address of Borrower

______________________

Fax:

-12-

<PAGE>

SCHEDULE A

# of Shares of Common
Common Stock Certificate # Stock Represented
-------------------------- ---------------------

<PAGE>

SCHEDULE B

Series A Convertible
Preferred Stock # of Shares of Convertible
Certificate # Preferred Stock Represented
-------------------- ---------------------------

<PAGE>

This INDEMNIFICATION AGREEMENT is made and entered into as of
______________, 1996 between Metro Networks, Inc., a Delaware corporation
("Metro Networks") and David I. Saperstein ("Saperstein").

WHEREAS, as of the date hereof, Metro Networks has acquired all of the
business operations of Metro Traffic Control, Inc. ("Traffic"), Metro
Reciprocal, Inc. ("Reciprocal") and Metro Video News, Inc. ("Video");

WHEREAS, Traffic, Reciprocal and Video had elected under Section 1362
of the Internal Revenue Code of 1986, as amended (the "Code") to be treated and
operated as Subchapter S corporations;

WHEREAS, Saperstein was at all times the sole shareholder of Traffic,
Reciprocal and Video;

NOW, THEREFORE, in consideration of the premises and mutual provisions
hereinafter set forth, the parties hereto hereby agree as follows:

Article 1. METRO NETWORKS INDEMNITY. Metro Networks will
indemnify Saperstein for any United States Federal income tax liability, to the
extent such liability is attributable to a claim by the Internal Revenue Service
that Saperstein's income with respect to his ownership of stock in Traffic,
Reciprocal or Video for any taxable year exceeds the income reported to
Saperstein by Traffic, Reciprocal or Video on its Internal Revenue Service Form
K-1 for such taxable year. Such indemnity will be payable upon notification by
Saperstein that payment is due.

Article 2. SAPERSTEIN INDEMNITY. Saperstein will indemnify Metro
Networks for Metro Networks' United States Federal income tax liability
resulting from a claim by any taxing authority that Traffic, Reciprocal or Video
was not properly treated as a Subchapter S corporation for any period in which
Traffic, Reciprocal or Video filed a tax return on which it claimed that it was
properly treated as a Subchapter S corporation; PROVIDED, HOWEVER, that
Saperstein's obligation to indemnify Metro Networks shall be limited to the
amount that Saperstein receives as a refund of United States Federal income
taxes previously paid with respect to his share of income generated by Traffic,
Video or Reciprocal.

Article 3. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to principals of conflicts of laws.

<PAGE>

Article 4. NOTICES. All notices or other communications provided
for under this Agreement shall be given in writing and shall be delivered
personally or sent by post telex or facsimile transmission to the other party.

If to Metro Networks:

Metro Networks, Inc.
2800 Post Oak Boulevard
Suite 4000
Houston, Texas 77056

If to Saperstein:

David I. Saperstein
c/o Metro Networks, Inc.
2800 Post Oak Boulevard
Suite 4000
Houston, Texas 77056

Article 5. ASSIGNMENT. Except as otherwise specifically provided
herein, this Agreement and any rights and obligations hereunder may not be
assigned by either party without the prior written approval of the other party,
and any attempted assignment not in compliance with this Article shall be void
and of no effect.

Article 6. COSTS. In any proceeding to enforce any rights under
this Agreement by legal proceedings or otherwise, the prevailing party shall be
reimbursed by the defaulting party for all of the costs and expenses of the
prevailing party in pursuing such proceedings, including, without limitation,
reasonable attorneys' or solicitors' fees.

Article 7. PARTIES NOT PARTNERS. Nothing contained in this
Agreement shall constitute a partnership or other agency agreement between the
parties hereto or their respective subsidiaries or any of them, nor shall
anything contained in this Agreement give any of the parties hereto or any of
the respective subsidiaries the right to bind, or pledge the credit of, any of
the other parties hereto or any of their respective subsidiaries.

Article 8. ANNUAL REVIEW. This Agreement may be amended by mutual
consultation among the parties, evidenced in a writing signed by both parties,
and the parties agree to engage in mutual consultation in good faith during each
annual period from the date hereof at the request of any party to maintain in
this Agreement the

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<PAGE>

principles of fairness and equity, and to amend this Agreement accordingly.

Article 9. SEVERABILITY. If any provision in this Agreement is
found by any court or administrative body of competent jurisdiction to be
invalid or unenforceable, the invalidity or unenforceability of such provision
shall not affect the other provisions of this Agreement and all provisions not
affected by such invalidity or unenforceability shall remain in full force and
effect unless the severance of the invalid or unenforceable provision would
unreasonably frustrate the commercial purposes of this Agreement. The parties
hereby agree to attempt to substitute for any invalid or unenforceable provision
a valid or enforceable provision which achieves to the greatest extent possible
the economic objectives of the invalid or unenforceable provision.

Article 10. WAIVER. The waiver by either party of a breach or
default of any of the provisions of this Agreement by the other party shall not
be construed as a waiver of any succeeding breach of the same or other
provisions nor shall any delay or omission on the part of either party to
exercise or avail itself of any right power or privilege that it has or may have
hereunder operate as a waiver of any breach or default by the other party.

Article 11. ENTIRE AGREEMENT. This Agreement constitutes the
entire and only Agreement between the parties hereto relating to the subject
matter hereof and overrides and supersedes any prior arrangements or oral
discussions and shall not be modified except in writing by agreement between the
parties.

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.

METRO NETWORKS, INC.

By: _________________________
Name:
Title:

_________________________
David I. Saperstein

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<PAGE>

Exhibit 11.1
Metro Traffic Control, Inc., Metro Reciprocal, Inc.
Metro Networks, Ltd., and Metro Video News, Inc.
Calculation of Earnings Per Share
Year ended December 31, 1995 and for the Six Months ended June 30, 1996

Six Months ended
Year ended June 30, 1996
December 31, 1996 (unaudited)
----------------- ---------------
<S> <C> <C>
Income from continuing operations as reported
before tax 4,345,729 7,648,624

Pro forma federal and state income tax (1) (1,542,734) (2,715,262)
--------------- ---------------

Pro forma net income $ 2,802,995 $ 4,933,362
--------------- ---------------
--------------- ---------------

Shares Outstanding:
Common shares 9,350,607 9,350,607

Preferred shares 2,549,750 2,549,750
--------------- ---------------

Total shares 11,900,357 11,900,357

Shares attributable to excess distributions
with a dilutive effect (2) 351,640 61,796

--------------- ---------------
Weighted average shares outstanding 12,251,997 11,962,153
--------------- ---------------
--------------- ---------------

Pro forma net income per share $ 0.23 $ 0.41
--------------- ---------------
--------------- ---------------

</TABLE>

(1) Pro forma income taxes are set forth herein because certain of the
combined companies operate as subchapter S corporations. Pro forma
income taxes reflect federal income taxes that would have been incurred
had all the companies been subject to such taxes. Such amounts have
been deducted from net earnings pursuant to the rules and regulations of
the Securities and Exchange Commission.

(2) An adjustment has been made to reflect the distributions which exceeded
capital contributions and net income in accordance with the rules of the
Securities and Exchange Commission (Staff Accounting Bulletin 1:B:3)

Note: Weighted average shares outstanding and pro forma net income per share
are calculated assuming that the shares issued in conjunction with the
Reorganization were outstanding for the periods presented.

<PAGE>
Exhibit 21.1

SUBSIDIARIES OF THE COMPANY

Metro Traffic Control, Inc.

<PAGE>
EXHIBIT 23.1

Boards of Directors and Partners
Metro Traffic Control, Inc.
Metro Reciprocal, Inc.
Metro Networks, Ltd.
Metro Video News, Inc.:

We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Houston, Texas
September 24, 1996

<PAGE>
EXHIBIT 23.3

Boards of Directors
Skyview Broadcasting Networks, Inc.
Airborne Broadcast Consultants
Airborne Broadcasting Systems, Inc.:

We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Houston, Texas
September 24, 1996