
RADIO
     ONE

               12 March 1997

WASHINGTON, DC
WMMJ-FM        Mr. Carr T. Preston
WKYS-FM        Senior Vice President
WOL-AM         Allied Capital
               1666 K Street N.W.    
BALTIMORE, MD  9th Floor                    
WERQ-FM        Washington, D.C. 20008       
WWIN-FM               
WWIN-AM                                     
WOLB-AM        By Telecopier (202) 858-2053
               
ATLANTA, GA                                
WNTA-FM        Dear Mr. Preston:           
               
               This Letter of Intent (the "LOI")  outlines the  principal  terms
               whereby  Radio One Inc., a Delaware  corporation  ("Radio One" or
               the "Buyer"),  or any entity controled by the same principals who
               control  Buyer,  will  purchase  from  Allied  Capital  Financial
               Corporation  ("Allied"  or the  "Seller")  in a warrant and stock
               transaction (the "Transaction"),  a warrant for all of the issued
               and outstanding capital stock of Broadcast Holdings, Inc. ("BHI")
               which owns radio station WYCB (AM), licensed to Washington,  D.C.
               (the "Station").

               The  consummation of the transaction  contemplated by this LOI is
               conditioned upon: Buyer's  satisfaction,  in its sole discretion,
               with the  results of its due  diligence  review of the Company as
               further  set  forth  below  and  the   approval  of  the  Federal
               Communications  Commission  (the "FCC") and the  negotiation  and
               execution of a definitive,  mutually  acceptable  stock  purchase
               agreement (the "Definitive Agreement"). The parties hereto intend
               this LOI to set forth the fundamental  points of agreement and it
               shall constitute a legally binding document,  subject only to the
               occurrence of such future events.

               Buyer and  Seller  expect to enter into a  Definitive  Agreement,
               within  sixty (60) days of both Buyer and Seller  executing  this
               LOI, subject solely to Buyer's  reasonable  satisfaction with its
               due  diligence  investigation  for a period of two weeks from the
               date of execution of this LOI,  after which,  unless Buyer has so
               notified   Seller,   the  Buyer  and  Seller  shall  negotiate  a
               Definitive Agreement which shall be conditioned upon FCC approval
               of the  Transaction.  Seller shall give Buyer and its  authorized
               representatives  reasonable  access  at  reasonable  times to the
               Station and shall  furnish all  information  relating  thereto as
               they may request to enable  Buyer to make such  examinations  and
               investigations thereof as Buyer shall reasonably deem necessary.

               We are prepared to move forward  expeditously  with the following
               offer.

<PAGE>


               Mr. Carr T. Preston
               12 March 1997

               Page 2

               1. Consideration to be Paid by Buyer. On the date of closing, the
               warrant shall be exercised by Buyer for $1.00 to purchase the BHI
               stock.  The  consideration  paid to  Seller  for the  sale of the
               warrant for the stock of BHI shall be $4,000,000  (the  "Purchase
               Price")  of which  $2,800,000  shall be used by Seller and BHI to
               satisfy  certain   existing   obligations  of  BHI;   subject  to
               adjustment for any prorations and contingent liabilities, payable
               as follows:

                    On the date of closing,  by wire  transfer to bank  accounts
               designated  by  Seller,  the  sum  of  $4,000,00  in  immediately
               available funds.

               2. Escrow Closing.

                         (a) The  date of  closing  for  the  transaction  being
               proposed herein shall occur no later than ten (10) days after the
               consent of the FCC to the  transfer  of  control of the  licenses
               shall have become a Final Order (the "Closing Date").  If the FCC
               has not granted a transfer of control of the  Station's  licenses
               within nine months after the FCC's  acceptance  for filing of the
               application  for  transfer of control of such  licenses,  each of
               Seller and Buyer shall have the right to rescind its  obligations
               under the Definitive  Agreement,  provided that such  terminating
               party is not then in breach of the  terms and  conditions  of the
               Definitive Agreement.

                         (b)  If  Buyer   materially   breaches  the  Definitive
               Agreement  or  defaults  in the  performance  of its  obligations
               thereunder,  the sum of  $100,000  shall  be paid  to  Seller  as
               liquidated damages.

                         (c)  If  Seller  materially   breaches  the  Definitive
               Agreement, Buyer shall have the right of specific performance.

               3. Definitive Agreement.  Radio One and Allied shall negotiate in
               good  faith the terms of the  Definitive  Agreement  which  shall
               contain representations,  warranties, covenants and conditions by
               such parties as are usual and customary in  transactions  of this
               kind, including provisions regarding (i) Indemnification of Radio
               One and Allied;  (ii)  representations by the sole shareholder of
               BHI as to the validity of the warrant and shares of stock;  (iii)
               Seller's  responsibility  for payment of all payables of BHI that
               exist  at  closing  and   Seller's   right  to  all   pre-closing
               receivables  and  cash;  (iv)  Seller's  responsibility  for  all
               obligations and  liabilities  that BHI may have for the employees
               that Buyer does not assume. Buyer and Seller will jointly file an
               application

<PAGE>


               Mr. Carr T. Preston
               12 March 1997

               Page 3


               requesting  FCC  approval  of  the  transfer  of  control  of the
               Station's licenses to Buyer as contemplated  herein no later than
               five  (5)  business  days  after   execution  of  the  Definitive
               Agreement.

               4. Agreement to Negotiate Confidentiality. Buyer and Seller agree
               to  proceed  diligently,  expeditiously,  and in good  faith,  to
               execute the Definitive Agreement and the Transaction contemplated
               herein in  accordance  with the terms set forth in this Letter of
               Intent.  Until the  expiration  or  earlier  termination  of this
               Letter of Intent,  Seller shall not solicit,  or negotiate with ,
               any other prospective purchaser of the Station.

               This Letter of Intent  shall expire and be null and void upon the
               earlier of (1) the  expiration  of the 60th day after the date of
               acceptance  of this  Letter of Intent  (subject  to a  reasonable
               extension  if  the  drafting  of  the  Definitive   Agreement  is
               proceeding  diligently,  (ii) the  execution  and delivery of the
               Definitive Agreement).

               We look forward to working with you to consummate the Transaction
               proposed   herein.   Please  do  not   hesitate  to  call  me  at
               202-885-4567 with any questions or comments you may have relative
               to anything contained herein.


               Very truly yours,

               RADIO ONE, INC.

               By:  /s/ Scott R. Royster
                    -----------------------------------------
                    Scott R. Royster, Chief Financial Officer



               Agreed:   /s/ Carr T. Preston
                         ------------------------------------

               By:       Carr T. Preston
                         ------------------------------------
                         Name

                         SVP
                         ------------------------------------
                         Title
          
                         3/13/97
                         ------------------------------------
                         Date of Acceptance

<PAGE>
July 1, 1997

Mr. Carr T. Preston
Senior Vice President
Allied Capital
1666 K Street, NW
Washington, D.C. 20006


Dear Mr. Preston:


Reference is made to that certain Letter of Intent dated as of March 12, 1997 by
and  between  Radio One,  Inc.  ("Radio  One" or  "Buyer")  and  Allied  Capital
Financial Corporation ("Allied" or "Seller") pursuant to which Radio One, or any
entity  controlled by the same  principals  who control Radio One, will purchase
from Allied, in a warrant and stock transaction, a warrant for all of the issued
and  outstanding  capital stock of BHI, as such Letter of Intent was extended by
that  certain  First  Amendment  dated as of May 6, 1997,  that  certain  Second
Amendment  dated as of May 30, 1997 and that certain Third Amendment dated as of
June 5, 1997,  which Letter of Intent,  as so amended,  lapsed on June 18, 1997.
Capitalized  terms  used  herein  without  definition  shall  have the  meanings
assigned  such terms in the Letter of Intent.  Radio One and Allied hereby agree
to  reinstate  the  provisions  of the  Letter  of  Intent,  as  amended  by the
following:

1. The final sentence of the second  paragraph of the Letter of Intent is hereby
deleted in its entirety and replaced with the following:

"The  parties  hereto  intend  this LOI to set forth the  fundamental  points of
agreement. However, this LOI shall not constitute a legally binding document."

2. The first  sentence of the third  paragraph of the Letter of Intent is hereby
deleted in its entirety.

3.  Numbered  Paragraph  1 of the  Letter of Intent  is  hereby  deleted  in its
entirety and replaced with the following:

"Consideration  to Paid by Buyer.  On the date of closing,  the warrant shall be
exercised by Buyer for $1.00 to purchase the BHI stock. The  consideration  paid
to Seller for the sale of the warrant for the stock of BHI,  assuming BHI has no
debt at  closing,  shall  be  $4,000,000  (the  "Purchase  Price"),  subject  to
adjustment for any prorations and contingent liabilities. The form of payment of
the  Purchase  Price  (i.e.,  cash,  notes or a  combination  thereof)  shall be
mutually agreed upon by Buyer and Seller."

4. The first sentence of numbered  Paragraph 4 of the Letter of Intent is hereby
deleted in its entirety and replaced with the following:

"Buyer and Seller agree to proceed diligently,  expeditiously, and in good faith
to reach agreement on the form of payment of the Purchase Price,  and thereafter
to execute the Definitive Agreement and consummate the Transaction  contemplated
herein in  accordance  with the terms set  forth in this  Letter of  Intent,  as
amended;  provided,  however,  that nothing in this letter shall be construed to
create a duty of exclusive dealings between the parties."

5. The final sentence of numbered  Paragraph 4 of the Letter of Intent is hereby
deleted in its entirety.

4. The  penultimate  paragraph of the Letter of Intent is hereby  deleted in its
entirety and replaced with the following:

"This Letter of Intent shall expire and be null and void upon the earlier of (i)
July  31,  1997  (subject  to a  reasonable  extension  if the  drafting  of the
Definitive  Agreement  is  proceeding  diligently)  and (ii) the  execution  and
delivery of the Definitive Agreement."

<PAGE>

We look forward to working with you to consummate the transactions  contemplated
by the Letter of Intent as modified hereby. Please do not hesitate to call me at
301/429-2642  with any  questions or comments you may have  relative to anything
contained herein.


Very truly yours,

RADIO ONE, INC.

By:  /s/ Scott R. Royster
     -------------------------------
     Scott R. Royster
     Chief Financial Officer



Agreed:

ALLIED CAPITAL FINANCIAL CORPORATION

By:  /s/ Carr T. Preston
     -------------------------------
     Carr T. Preston
     Senior Vice President



<PAGE>

          FIRST AMENDMENT TO LETTER OF INTENT TO ENTER INTO OPTION AND
                            STOCK PURCHASE AGREEMENT

         THIS FIRST AMENDMENT TO LETTER OF INTENT TO ENTER INTO OPTION AND STOCK
PURCHASE  AGREEMENT,  is dated this 6th day of May,  1997,  and is made  between
RADIO ONE, INC., and ALLIED CAPITAL FINANCIAL CORPORATION.

         Radio One, Inc.  ("Buyer")  and Allied  Capital  Financial  Corporation
("Seller")  have  executed a letter of intent  dated March 12,  1997,  which was
accepted by Seller on March 13, 1997 ("Letter").  The Letter describes the terms
upon which the parties would enter into an Option and Stock  Purchase  Agreement
("Agreement")  whereby Buyer would acquire from Seller its option to acquire the
stock of Broadcast  Holdings,  Inc.,  licensee of Station WYCB(AM),  Washington,
D.C.

         Buyer and Seller  agree that it would be mutually  beneficial  to amend
the provision contained in the Letter which requires that the parties enter into
an Agreement on or before May 12, 1997.

         In  consideration  of the parties' mutual agreement to continue in good
faith  to  finalize  the  Agreement,   which  the  parties  hereby   acknowledge
constitutes  good and valuable  consideration,  Buyer and Seller agree to extend
the time  period  to May 30,  1997,  in which to  negotiate  and  enter  into an
Agreement.

         Except as described above, the terms and conditions of the Letter shall
not be modified.

         This amendment may be signed in counterparts,  facsimile  signatures to
be binding upon receipt by facsimile transmission.

AGREED TO:                         AGREED TO:
/s/ Alfred C. Liggins, III         /s/ Carr T. Preston
---------------------------        ---------------------------
Alfred C. Liggins, III             Carr T. Preston
Radio One, Inc.                    Allied Capital Financial
                                   Corporation



<PAGE>



          SECOND AMENDMENT TO LETTER OF INTENT TO ENTER INTO OPTION AND
                            STOCK PURCHASE AGREEMENT

         THIS  SECOND  AMENDMENT  TO LETTER OF INTENT TO ENTER  INTO  OPTION AND
STOCK  PURCHASE  AGREEMENT,  is dated  this 30th day of May,  1997,  and is made
between RADIO ONE, INC., and ALLIED CAPITAL FINANCIAL CORPORATION.

         Radio One, Inc.  ("Buyer")  and Allied  Capital  Financial  Corporation
("Seller")  have  executed a letter of intent  dated March 12,  1997,  which was
accepted by Seller on March 13, 1997 ("Letter").  The Letter describes the terms
upon which the parties would enter into an Option and Stock  Purchase  Agreement
("Agreement")  whereby Buyer would acquire from Seller its option to acquire the
stock of Broadcast  Holdings,  Inc.,  licensee of Station WYCB(AM),  Washington,
D.C.

         Buyer and Seller  agree that it would be mutually  beneficial  to amend
the provision contained in the Letter which requires that the parties enter into
an Agreement on or before May 30, 1997.

         In  consideration  of the parties' mutual agreement to continue in good
faith  to  finalize  the  Agreement,   which  the  parties  hereby   acknowledge
constitutes  good and valuable  consideration,  Buyer and Seller agree to extend
the time  period  to June 6,  1997,  in which to  negotiate  and  enter  into an
Agreement.

         Except as described above,  the terms and conditions of the Letter,  as
amended on May 6, 1997, shall not be modified.

         This amendment may be signed in counterparts,  facsimile  signatures to
be binding upon receipt by facsimile transmission.

AGREED TO:                         AGREED TO:
/s/ Alfred C. Liggins, III         /s/ Carr T. Preston
---------------------------        ---------------------------
Alfred C. Liggins, III             Carr T. Preston
Radio One, Inc.                    Allied Capital Financial
                                   Corporation


<PAGE>

          THIRD AMENDMENT TO LETTER OF INTENT TO ENTER INTO OPTION AND
                            STOCK PURCHASE AGREEMENT

         THIS THIRD AMENDMENT TO LETTER OF INTENT TO ENTER INTO OPTION AND STOCK
PURCHASE  AGREEMENT,  is dated this 5th day of June,  1997,  and is made between
RADIO ONE, INC., and ALLIED CAPITAL FINANCIAL CORPORATION.

         Radio One, Inc.  ("Buyer")  and Allied  Capital  Financial  Corporation
("Seller")  have  executed a letter of intent  dated March 12,  1997,  which was
accepted by Seller on March 13, 1997 ("Letter").  The Letter describes the terms
upon which the parties would enter into an Option and Stock  Purchase  Agreement
("Agreement")  whereby Buyer would acquire from Seller its option to acquire the
stock of Broadcast  Holdings,  Inc.,  licensee of Station WYCB(AM),  Washington,
D.C.

         Buyer and Seller  agree that it would be mutually  beneficial  to amend
the provision contained in the Letter which requires that the parties enter into
an Agreement on or before June 6, 1997.

         In  consideration  of the parties' mutual agreement to continue in good
faith  to  finalize  the  Agreement,   which  the  parties  hereby   acknowledge
constitutes  good and valuable  consideration,  Buyer and Seller agree to extend
the time  period to June 18,  1997,  in which to  negotiate  and  enter  into an
Agreement.

         Except as described above,  the terms and conditions of the Letter,  as
amended on May 6, 1997, and May 30, 1997, shall not be modified.

         This amendment may be signed in counterparts,  facsimile  signatures to
be binding upon receipt by facsimile transmission.

AGREED TO:                         AGREED TO:
/s/ Alfred C. Liggins, III         /s/ Carr T. Preston
---------------------------        ---------------------------
Alfred C. Liggins, III             Carr T. Preston
Radio One, Inc.                    Allied Capital Financial
                                   Corporation


