THE FOLLOWING MATTERS ARE NOTED IN AN ABUNDANCE OF CAUTION: 1. BY ORDER RELEASED AUGUST 12, 2004, FCC 04-199, THE COMMISSION ADOPTED A CONSENT DECREE RELATING TO ALLEGED BROADCASTS OF OBSCENE, INDECENT OR PROFANE MATERIAL BY STATIONS UNDER THE CONTROL OF EMMIS COMMUNICATIONS CORPORATION ('EMMIS'). IN THAT ORDER, THE COMMISSION, INTER ALIA, CONCLUDED THAT 'THERE ARE NO SUBSTANTIAL AND MATERIAL QUESTIONS OF FACT IN REGARD TO [THE MATTERS COVERED BY THE CONSENT DECREE] AS TO WHETHER EMMIS POSSESSES THE BASIC QUALIFICATIONS, INCLUDING ITS CHARACTER QUALIFICATIONS, TO HOLD OR OBTAIN ANY FCC LICENSES OR AUTHORIZATIONS' (AT PARA. 4). THE ORDER DENIED A PETITION FOR RECONSIDERATION PREVIOUSLY FILED BY DAVID EDWARD SMITH IN WHICH HE SOUGHT REINSTATEMENT OF CERTAIN DISMISSED INDECENCY COMPLAINTS AND ALSO CONTENDED THAT EMMIS HAD ACTED IMPROPERLY IN CONNECTION WITH A LAWSUIT AGAINST SMITH FILED BY ERICH MULLER (A/K/A MANCOW). THE CONTENTION REGARDING THE LAWSUIT WAS ALSO CONTAINED IN AN INFORMAL OBJECTION FILED BY SMITH ON JULY 23, 2004, AGAINST THE LICENSE RENEWAL APPLICATIONS OF EMMIS RADIO STATIONS IN INDIANA. ON SEPTEMBER 13, 2004, SMITH FILED A PETITION FOR RECONSIDERATION OF THE ORDER. THE PETITION WAS DENIED BY THE COMMISSION BY DECISION RELEASED OCTOBER 17, 2006. ON NOVEMBER 16, 2006, SMITH APPEALED THAT DECISION IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT. 2. ON NOVEMBER 1, 2004, SMITH ET AL. FILED A PETITION TO DENY THE APPLICATION FOR RENEWAL OF LICENSE OF WKQX(FM), CHICAGO, IL. THE PETITION IS BASED PRINCIPALLY UPON THE MATTERS DESCRIBED ABOVE AND CHALLENGES THE VALIDITY OF THE CONSENT DECREE. IN ADDITION, THE PETITION CLAIMS THAT KPNT(FM), ST. GENEVIEVE, MO, ACTED IMPROPERLY IN CONNECTION WITH CORRESPONDENCE FROM THE STATION'S LOCAL COUNSEL TO A ST. LOUIS AREA RESIDENT RELATING TO HER CONTACTS WITH STATION ADVERTISERS REQUESTING THAT THEY NOT ADVERTISE ON THE STATION. 3. ON JANUARY 3, 2005, JULIE CORDRY, THE ST. LOUIS AREA RESIDENT REFERENCED IN THE SMITH PETITION, FILED A PETITION TO DENY THE KPNT RENEWAL APPLICATION. THE PETITION MAKES THE SAME CLAIMS AS THE SMITH PETITION WITH RESPECT TO THE VALIDITY OF THE SETTLEMENT AGREEMENT AND ALLEGED INAPPROPRIATE ACTS BY KPNT WITH RESPECT TO MS. CORDRY'S CONTACTS WITH STATION ADVERTISERS. THE PETITION ALSO CONTENDS THAT THE RENEWAL APPLICATION SHOULD BE DENIED BECAUSE OF ALLEGEDLY-OBJECTIONABLE LINKS ON THE STATION'S WEBSITE. 4. ON OR ABOUT SEPTEMBER 29, 2005, BROADCAST COMPANY OF THE AMERICAS, LLC ('BCA'), FILED A PETITION TO DENY (THE 'PETITION') WITH RESPECT TO APPLICATIONS BY A SUBSIDIARY OF EMMIS FOR CONSENT TO ASSIGN THE LICENSES OF TELEVISION STATIONS KGUN, WFTX, WTHI-TV, WLUK-TV, WALA-TV, WBPG, KREZ, KRQE AND KBIM-TV (FILE NOS. BALCT-20050826AAB, BALCT-20050826AAE, BALCT-20050825AFC, BALCT-20050825AFA, BALCT-20050825AEY, BALCT-20050825AEZ, BALCT-20050825AEB, BALCT-20050825ABS AND BALCT-20050825ADB, RESPECTIVELY). THE PETITION CONTENDS THAT EMMIS MADE MISREPRESENTATIONS, LACKED CANDOR AND ABUSED THE COMMISSION'S PROCESSES IN FILINGS MADE IN CONNECTION WITH ITS CHALLENGE TO SECTION 325 APPLICATIONS FILED BY BCA AND QUETZAL BILINGUAL COMMUNICATIONS, INC. BY LETTER DATED NOVEMBER 29, 2005, THE CHIEF OF THE MEDIA BUREAU VIDEO DIVISION DENIED THE PETITION AND FOUND EMMIS QUALIFIED TO BE A COMMISSION LICENSEE. ON DECEMBER 29, 2005, BCA FILED A PETITION FOR RECONSIDERATION OF THE VIDEO DIVISION ORDER; THAT PETITION REMAINS PENDING. 5. ON OR ABOUT NOVEMBER 14, 2005, BCA FILED A PETITION TO DENY ('BCA PETITION 2') WITH RESPECT TO APPLICATIONS BY SUBSIDIARIES OF EMMIS FOR CONSENT TO TRANSFER CONTROL OF THE LICENSEES OF TELEVISION STATIONS KSNW, KSNC, KSNG, KSNK, KSNT, KHON-TV, KHAW-TV, KAII-TV AND KOIN, AND TO ASSIGN THE LICENSE RADIO STATION WRDA (BTCCT-20051005ADA, BTCCT-20051005ADB, BTCCT-20051005ADC, BTCCT-20051005ADD, BTCCT-20051005ADH, BTCCT-20051005ADI, BTCCT-20051005ADJ, BTCCT-20051005ADK, BTCCT-20051005ADM AND BALH-20051006ACG, RESPECTIVELY). BCA PETITION 2 MADE THE SAME CLAIMS AS BCA'S EARLIER PETITION. BY LETTER DATED DECEMBER 20, 2005, THE CHIEF OF THE MEDIA BUREAU VIDEO DIVISION DENIED THE PETITION AND FOUND EMMIS QUALIFIED TO BE A COMMISSION LICENSEE. ON JANUARY 19, 2006, BCA FILED A PETITION FOR RECONSIDERATION OF THE VIDEO DIVISION ORDER; THAT PETITION REMAINS PENDING. EMMIS DOES NOT CONCEDE THAT THESE ALLEGATIONS VALIDLY RAISE 'CHARACTER' ISSUES, BUT DISCLOSES THEM OUT OF AN ABUNDANCE OF CAUTION.