Nostalgia Network Inc – ‘PRER14A’ on 11/17/00

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Revised Preliminary Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRER14A     Schedule 14A Infromation Amend No. 3                 166    860K 

Document Table of Contents

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SCHEDULE 14A INFORMATION

AMENDMENT 

NO. 3 

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 

Filed by the Registrant [X]                                                     

Filed by a Party Other than the Registrant [ ]                                  

Check the appropriate Box:                                                      

                                                        [Enlarge/Download Table]
                                                                                                   
[X]  Preliminary Proxy Statement                      [ ]  Confidential, for use of Commission only
[ ]  Definitive Proxy Statement                       (as permitted by Rule 14a-6(e)(2))           
[ ]  Definitive Additional Materials                                                               
[ ]  Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12                                 

THE NOSTALGIA NETWORK, INC. 
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Payment of Filing Fee (Check the appropriate box):                              

[ ]  No fee required.                                                           

[X]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.   

CALCULATION OF FILING FEE 

                                                        [Enlarge/Download Table]

---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
                                                     AGGREGATE NUMBER OF                                                         
                                                     SECURITIES TO WHICH   PER UNIT PRICE OR OTHER    PROPOSED MAXIMUM           
         TITLE OF EACH CLASS OF SECURITIES               TRANSACTION         UNDERLYING VALUE OF     AGGREGATE VALUE OF          
     TO WHICH FILING TRANSACTION APPLIES(1)(2)           APPLIES(1)            TRANSACTION(1)          TRANSACTION(1)     AMOUNT 
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                 
Common Stock.......................................      20,275,370                 $0.07               $1,419,275.90     $283.86
Preferred Stock....................................           3,250                 $7.00               $   22,750.00     $  4.55
Total..............................................              --                    --               $1,441,958.77     $288.41
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------

(1) Estimated solely for the purpose of computing the amount of the filing fee  
    pursuant to Rule 0-11 under the Securities Exchange Act of 1934, as amended.

(2) The fee was computed in accordance with Rule 0-11(c)(1)(i) based upon the   
cash consideration to be paid to security holders.                      

[X]  Fee paid previously with preliminary materials.                            

[ ]  Check box if any part of the fee is offset as provided by Exchange Act Rule
  0-11(a)(2) and identify the filing for which the offsetting fee was paid
    previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.                   

(1)  Amount Previously Paid: $                                        

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

(2)  Form, Schedule or Registration Statement No.:                    

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

(3)  Filing Party:                                                    

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

(4)  Date Filed:                                                      

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THE NOSTALGIA NETWORK, INC. 
650 MASSACHUSETTS AVENUE, N.W.
WASHINGTON, D.C. 20001
------------------

NOTICE OF SPECIAL MEETING TO BE HELD ON 
            , 2000
------------------

To the Stockholders of                                                          
The Nostalgia Network, Inc.:                                                    

  We will hold a special meeting of stockholders on             , 2000, at
11:00 a.m., local time, at 650 Massachusetts Avenue, N.W., Washington, D.C., for
the following purposes:                                                         

        1.  to consider and vote upon the proposed merger of NNI Acquisition
     Corporation, a Delaware corporation, with and into Nostalgia pursuant to an
Agreement and Plan of Merger dated as of January 11, 2000, as amended,
between Nostalgia and NNI Acquisition; and                            

       2.  to transact such other business as may properly come before the
special meeting or any adjournments or postponements of the special   
meeting.                                                              

The proposed merger is more fully described in the accompanying proxy 
statement and its appendices, which are part of this notice.                    

Nostalgia's Board of Directors has fixed the close of business on     
             , 2000 as the record date for the determination of stockholders
entitled to notice of, and to vote at, the special meeting or any adjournments  
or postponements of the special meeting. Only stockholders of record on         
               , 2000 will be entitled to notice of, and to vote at, the special
meeting or any adjournments or postponements of the special meeting. A list of  
stockholders of record as of                , 2000 will be available for        
inspection at Nostalgia's offices at 650 Massachusetts Avenue, N.W., Washington,
D.C. at least ten days prior to the special meeting.                            

Pursuant to Section 262 of the Delaware General Corporation Law,      
stockholders of Nostalgia are entitled to appraisal rights in connection with   
the proposed merger.                                                            

     If you plan to attend the special meeting, please notify the undersigned so
that identification can be prepared for you. Whether or not you plan to attend  
the special meeting, please execute, date and promptly return the enclosed      
proxy. A return envelope is enclosed for your convenience and requires no       
postage for mailing in the United States. If you attend the special meeting, you
may withdraw your proxy and vote in person.                                     

                                       By Order of the Board of Directors,

                                      /s/ WILLARD R. NICHOLS
                                          --------------------------------------
                                         Vice President, General Counsel and
                                         Secretary

, 2000                                                  

YOUR VOTE IS IMPORTANT. TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE THE 
ENCLOSED PROXY AND MAIL IT IN THE ENCLOSED RETURN ENVELOPE.                     

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THE NOSTALGIA NETWORK, INC. 
650 MASSACHUSETTS AVENUE, N.W.
WASHINGTON, D.C. 20001
(202) 289-6633

SPECIAL MEETING OF STOCKHOLDERS 

            , 2000

PROXY STATEMENT 
------------------

 This proxy statement is being provided to stockholders of The Nostalgia
Network, Inc. in connection with the solicitation of proxies by Nostalgia's     
Board of Directors for use at a special meeting of stockholders on             ,
2000 at 11:00 a.m., local time, at 650 Massachusetts Avenue, N.W., Washington,  
D.C., and any adjournments or postponements of the special meeting.             

At the special meeting, common and preferred stockholders of record of
Nostalgia as of the close of business on                , 2000 will be asked to 
consider and vote upon a proposed merger which, if completed, will result in    
common stockholders receiving $0.07 for each share of common stock and preferred
stockholders receiving $7.00 for each share of preferred stock. The merger      
constitutes a going private transaction within the meaning of Section 13(e)(3)  
of the United States Securities Exchange Act of 1934. After the merger,         
Nostalgia will be privately owned by Crown Communications Corporation and       
Concept Communications, Inc. and will no longer be a public company, the common 
stock will no longer be quoted on the Nasdaq OTC Bulletin Board and the         
unaffiliated common and preferred stockholders of Nostalgia will no longer have 
any interest in any of Nostalgia's future earnings or growth. Funds to be used  
for the merger were loaned to Crown by Atlantic Video, Inc., which borrowed the 
funds from One Up Enterprises, Inc., which, in turn, borrowed the funds from    
Unification Church International, Inc. As the ultimate source of the            
consideration for the merger, Atlantic Video, One Up Enterprises and Unification
Church International may be deemed affiliates of Nostalgia.                     

    Concept is an affiliate of Nostalgia and majority owned by Crown. Crown is
an affiliate of Nostalgia and a wholly owned subsidiary of Crown Capital        
Corporation. Capital, Crown and Concept are the beneficial owners of 69.9% of   
the common stock and 76.9% of the preferred stock of Nostalgia. Atlantic Video  
is wholly owned by One Up Enterprises, which is wholly owned by Unification     
Church International, each of which also may be deemed to be an affiliate of    
Crown.                                                                          

     PURSUANT TO THE DELAWARE GENERAL CORPORATION LAW, STOCKHOLDERS OF NOSTALGIA
ARE ENTITLED TO APPRAISAL RIGHTS IN CONNECTION WITH THE MERGER. FOR A DETAILED  
DISCUSSION OF THESE APPRAISAL RIGHTS, INCLUDING HOW THEY ARE EXERCISED, SEE "THE
MERGER -- APPRAISAL RIGHTS," BEGINNING ON PAGE   .                              

  NEITHER THE SECURITIES AND EXCHANGE COMMISSION, NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE PROPOSED MERGER, PASSED UPON THE     
MERITS OR FAIRNESS OF THE TRANSACTION, OR PASSED UPON THE ADEQUACY OR ACCURACY  
OF THE DISCLOSURE IN THIS PROXY STATEMENT, AND ANY REPRESENTATION TO THE        
CONTRARY IS A CRIMINAL OFFENSE.                                                 

   The merger involves affiliates of Nostalgia. Certain members of the Board
of Directors of Nostalgia serve as directors, officers or employees of those    
affiliates and/or other persons with interests in the merger. As such, these    
Nostalgia directors have interests in connection with the merger that are in    
addition to, or may conflict with, those of Nostalgia and its stockholders.     
Therefore, the terms of the merger and the merger agreement were negotiated on  
behalf of Nostalgia by a special committee of the Board of Directors consisting 
entirely of independent directors of Nostalgia. See "THE MERGER -- Interests of 
Certain Persons in the Merger," beginning on page   .                           

   The common stock is listed for quotation on the Nasdaq OTC Bulletin Board
under the symbol "NNET". On             , 2000, the last reported sale price for
the common stock on the Bulletin Board was $     per share.                     
------------------
     THIS PROXY STATEMENT AND THE ACCOMPANYING PROXY CARD ARE FIRST BEING MAILED
OR DELIVERED TO THE STOCKHOLDERS OF NOSTALGIA ON OR ABOUT        , 2000.        
------------------

THE DATE OF THIS PROXY STATEMENT IS             , 2000. 

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TABLE OF CONTENTS 

                                                                [Download Table]

                                                               PAGE 
                                                              ------
                                                                    
SUMMARY TERM SHEET..........................................       4
  The Companies.............................................       4
  The Merger................................................       5
  Vote Required.............................................       5
  Proxies...................................................       5
  Consequences of the Merger................................       6
  Recommendations of the Special Committee and Nostalgia's          
     Board of Directors.....................................       6
  Interests of Certain Persons in the Merger................       7
  Conditions to the Merger..................................       8
  Termination of the Merger Agreement.......................       8
  Reasons for the Merger; Fairness Considerations...........       8
  Valuation Analysis of Daniels and Associates, L.P.........      10
  Fairness Opinion of Chatsworth Securities, LLC............      10
  Appraisal Rights..........................................      11
  Federal Income Tax Consequences...........................      11
  Accounting Treatment......................................      11
  Procedures for Receipt of Merger Consideration............      11
  Questions About the Merger................................      11
SPECIAL FACTORS.............................................      12
  Background................................................      12
  Recommendation of the Board of Directors..................      13
  Reasons for the Merger; Fairness Considerations...........      14
  Effect of the Merger on the Rights of Existing                    
     Stockholders...........................................      18
  Effect of the Merger on Nostalgia, the Concept Group and          
     the Atlantic Video Group...............................      19
  Federal Income Tax Considerations.........................      19
  Vote Required.............................................      20
  Report of the Financial Advisor to Crown..................      20
  Opinion of the Financial Advisor to the Special                   
     Committee..............................................      24
  Financial Condition.......................................      26
  Market Comparable Valuation Analysis......................      27
  Stock Price Trading History And Analysis..................      29
  Valuation Per Subscriber Analysis.........................      30
  Conclusion................................................      31
USE OF FORECASTS AND PROJECTIONS............................      32
WHERE YOU CAN FIND MORE INFORMATION.........................      33
FORWARD LOOKING STATEMENTS..................................      33
COMPARATIVE PER SHARE MARKET INFORMATION....................      34
THE SPECIAL MEETING.........................................      35
  General...................................................      35
  Matters to Be Considered..................................      35
  Recommendation of the Board of Directors..................      35
  Record Date; Shares Entitled to Vote; Quorum..............      35
  Proxies; Proxy Solicitation...............................      36
  Effects of Abstentions and Broker Non-Votes...............      36
THE CONCEPT GROUP...........................................      37
THE ATLANTIC VIDEO GROUP....................................      38

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                                                                [Download Table]

                                                               PAGE    
                                                              ------   
                                                                       
THE MERGER..................................................      40   
  Security Ownership of Management and Certain Beneficial              
     Owners.................................................      40   
  Interests of Certain Persons in the Merger................      41   
  Regulatory Approval.......................................      42   
  Appraisal Rights..........................................      42   
  Accounting Treatment......................................      45   
  Financing, Expenses and Fees..............................      45   
THE MERGER AGREEMENT........................................      47   
  Terms of the Merger.......................................      47   
  Indemnification...........................................      48   
  Effective Time of the Merger..............................      48   
  Representations and Warranties............................      48   
  Covenants.................................................      49   
  Conditions to the Merger..................................      50   
  Amendment; Waiver; Termination............................      50   
  Amendment No. 1 to Merger Agreement.......................      51   
CERTAIN TRANSACTIONS AND RELATIONSHIPS......................      52   
BUSINESS OF NOSTALGIA.......................................      55   
  Overview..................................................      55   
  Description of Business...................................      55   
  Affiliated Cable Systems and Subscribers..................      55   
  Advertising...............................................      55   
  Programming...............................................      56   
  Financial Information.....................................      57   
  Patents, Trademarks, Licenses.............................      58   
  Competition...............................................      58   
  Government Regulation.....................................      58   
  Employees.................................................      59   
  Directors and Officers....................................      60   
  Properties................................................      61   
  Legal Proceedings.........................................      62   
SELECTED FINANCIAL DATA.....................................      63   
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION            
  AND RESULTS OF OPERATIONS.................................      64   
  Material Commitments......................................      73   
INDEPENDENT ACCOUNTANTS.....................................      75   
OTHER MATTERS...............................................      75   
ANNUAL REPORT AND FORM 10-K.................................      75   
STOCKHOLDER PROPOSAL FOR 2000 ANNUAL MEETING................      76   
INDEX TO FINANCIAL STATEMENTS...............................     F-1   
AGREEMENT AND PLAN OF MERGER, AS AMENDED (AND ATTACHED                 
  EXHIBITS).................................................     A-1   
FAIRNESS OPINION OF CHATSWORTH SECURITIES, LLC..............     B-1   
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW.........     C-1   
REPORTS OF DANIELS & ASSOCIATES, L.P. ......................     D(1)-1

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SUMMARY TERM SHEET

  This summary term sheet highlights important information from this proxy
statement relating to the proposed merger. This summary term sheet may not      
contain all of the information you should consider before voting on the proposed
merger. To more fully understand the proposed merger, you should read carefully 
this entire proxy statement and all of its appendices before voting on the      
merger proposal. We have included page references to the text of the proxy      
statement parenthetically in this summary term sheet to direct you to more      
complete descriptions of the topics presented in this summary term sheet.       

THE COMPANIES (pp.      to      )                                               

Nostalgia                                                                   

  - Nostalgia's principal executive office is located at 650 Massachusetts
 Avenue, N.W., Washington, D.C. 20001. The telephone number is (202)
289-6633.                                                         

     - Nostalgia operates GoodLife TV Network, a television programming service,
which offers a variety of entertainment, information and lifestyle
       programming exemplifying traditional American culture, values and a sense
   of community. This programming mix targets America's Baby Boomers and
over audience.                                                    

The Concept Group                                                           

   The Concept Group consists of Capital, Crown, Concept and NNI Acquisition
Corporation.                                                                    

- The principal business address for Capital, Crown, Concept and NNI  
    Acquisition is 650 Massachusetts Avenue, N.W., Washington, D.C. 20001.
The telephone number is (202) 789-2124.                           

- Concept has diverse interests in the communications and             
telecommunications industries with ownership interests in firms   
    principally involved in video newsgathering and transmission services,
       corporate video communication and program production and post-production,
       including Pyramid Video, Inc. and Potomac Television Communications, both
of which are subsidiaries of Concept. Crown owns a majority of the
capital stock of Concept.                                         

    - Crown has diverse interests in the communications and telecommunications
     industries through the operation of a satellite up-linking business and
       its majority ownership interest in Concept. The sole stockholder of Crown
is Capital.                                                       

- Capital is a Delaware non-stock corporation which indirectly owns   
      interests in firms involved in the communications and telecommunications
industries through its ownership of Crown.                        

    - NNI Acquisition is a Delaware corporation formed to own the common stock
       and preferred stock of Nostalgia and to facilitate the merger. All of the
       shares of stock of NNI Acquisition are owned by Crown and Concept. If and
       when the merger takes place, NNI Acquisition will be merged with and into
Nostalgia and Nostalgia will be wholly owned by Crown and Concept.

    - Crown and Concept have transferred all of the shares of Nostalgia common
and preferred stock held by Crown and Concept, which prior to such
    transfer constituted 69.9% and 76.9% of the common stock and preferred
stock outstanding, respectively, to NNI Acquisition.              

The Atlantic Video Group                                                    

The Atlantic Video Group consists of Atlantic Video, Inc., One Up     
Enterprises, Inc. and Unification Church International.                         

     - Atlantic Video's principal office is located at 650 Massachusetts Avenue,
   N.W., Washington, D.C. 20001. The telephone number is (202) 408-0900.

  - Atlantic Video is a video production company which has had significant
production contracts with Nostalgia.                              

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    - Certain monies used to fund Nostalgia's operating deficits and set aside
      to fund the proposed merger were loaned to the Concept Group by Atlantic
Video pursuant to a promissory note which is secured by a minority
   interest in Concept. These funds were loaned to Atlantic Video by its
   parent company, One Up Enterprises, which received the funds from its
parent, Unification Church International.                         

    - One Up Enterprises is a holding company engaged in a variety of business
       enterprises through operating subsidiaries. Atlantic Video represents one
 of One Up Enterprises' media investments. Other similar investments
       include News World Communications, Inc. and, until May of 1999, Manhattan
    Center Studios, Inc., by which entities certain individuals affiliated
with the Concept Group and Nostalgia are or were employed. One Up 
Enterprises' real estate subsidiary, U.S. Property Development    
Corporation, has a controlling ownership interest in Washington   
    Television Center Limited Partnership, from which Nostalgia leases its
      offices. One Up Enterprises' principal business address is 7777 Leesburg
     Pike, Suite 406N, Falls Church, Virginia. Its telephone number is (703)
448-7333.                                                         

     - One Up Enterprises is wholly owned by Unification Church International, a
 charitable and religious non-profit corporation. Unification Church
     International's principal business address is 7777 Leesburg Pike, Suite
   406N, Falls Church, Virginia. Its telephone number is (703) 734-8618.

- Certain officers and/or directors of Nostalgia or the Concept Group 
     presently hold, or have in the past held, positions with members of the
Atlantic Video Group or their affiliates.                         

THE MERGER (pp.      to      )                                                  

     Upon completion of the merger, NNI Acquisition will be merged with and into
Nostalgia and Nostalgia will continue as the surviving corporation. The merger  
will occur according to the terms and conditions of a January 11, 2000 Agreement
and Plan of Merger, as amended, which is described in and attached as Appendix A
to this proxy statement. You should read the description of the merger agreement
contained in this proxy statement under the heading "THE MERGER AGREEMENT" and  
the attached merger agreement carefully. We expect the merger to be completed in
the           quarter of 2001.                                                  

VOTE REQUIRED (pp.      to      )                                               

     - Under Delaware law, the proposed merger must be approved by a majority of
the outstanding shares of common stock entitled to be voted on the
    merger. In accordance with Delaware law and Nostalgia's certificate of
     incorporation, the standard for approving the merger is the affirmative
  vote of a majority of the outstanding shares of common and preferred
       stock (on an as converted basis) entitled to be voted on the merger. This
      means that the affirmative vote of 10,506,189 shares of common stock and
      preferred stock (with preferred stock having 100 votes per share) and of
      1,626 shares of preferred stock voting separately as a class is required
     for approval of the merger. As of             , 2000, 20,275,370 shares
 of common stock and 3,250 shares of preferred stock were issued and
   outstanding. The vote of a majority of the shares of preferred stock,
voting as a separate class, also is required to approve the merger
proposal.                                                         

     - The transaction is not structured so that approval of at least a majority
of the unaffiliated stockholders is required.                     

   - NNI Acquisition, which owns 14,180,427 shares of common stock and 2,500
    shares of preferred stock (69.9% and 76.9%, respectively of the common
     and preferred stock outstanding) has informed Nostalgia that it intends
     to vote all of its shares of Nostalgia common stock and preferred stock
    "FOR" the merger proposal. NNI Acquisition owns a sufficient number of
  shares of common stock and preferred stock to ensure approval of the
merger proposal.                                                  

PROXIES (pp.      to      )                                                     

    - Shares of common stock represented by properly executed proxies received
   at or prior to the special meeting that have not been revoked will be
voted at the special meeting in accordance with the               
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       instructions indicated on the proxies. Shares of common stock represented
    by properly executed proxies for which no instruction is given will be
voted "FOR" the merger proposal.                                  

    - Your proxy may be revoked at any time before it is voted. You may revoke
your proxy by:                                                    

        - filing with the Secretary of Nostalgia, at or before the taking of the
         vote at the special meeting, a written notice of revocation bearing a
later date than the proxy;                                  

     - executing a later dated proxy relating to the same shares of common
    stock and delivering it to the Secretary of Nostalgia before the
taking of the vote at the special meeting; or               

- attending the special meeting and voting in person (although  
          attendance at the special meeting will not, in and of itself, revoke a
proxy).                                                     

- You should send any written revocation or subsequent proxy to The   
      Nostalgia Network, Inc., 650 Massachusetts Avenue, N.W. Washington, D.C.
   20001, Attention: Corporate Secretary, at or before the taking of the
vote at the special meeting.                                      

- If the special meeting is postponed or adjourned, at any subsequent 
     reconvening of the special meeting your proxy will be voted in the same
 manner as it would have been voted at the original convening of the
   special meeting (except if you have previously revoked or effectively
withdrawn your proxy).                                            

     - If your shares are held in "street name" by your broker, your broker will
       not have the power to vote your shares. Your broker will vote your shares
      only if you provide your broker with voting instructions. Any failure to
instruct your broker on how to vote will have the effect of a vote
"AGAINST" the proposed merger.                                    

CONSEQUENCES OF THE MERGER (pp.      )                                          

If the merger is completed:                                           

   - You will receive $0.07 in cash for each of your shares of common stock.
     Holders of preferred stock will receive $7.00 in cash for each share of
preferred stock;                                                  

 - NNI Acquisition will be merged with and into Nostalgia, the shares of
common stock and preferred stock owned by NNI Acquisition will be 
    cancelled and the shares of NNI Acquisition, all of which are owned by
  Crown and Concept, will be converted into shares of Nostalgia common
stock;                                                            

     - There presently are no plans to make changes to the Board of Directors or
    executive officers of Nostalgia. It is anticipated that, following the
merger, the business and operations of Nostalgia will be continued
substantially as currently conducted for the immediate future;    

 - Nostalgia will no longer be a public company required to file reports
under the Securities Exchange Act;                                

- The common stock will no longer be quoted on the Nasdaq OTC Bulletin
Board;                                                            

     - You no longer will have an interest in any of Nostalgia's future earnings
or growth; and                                                    

- Crown and Concept will be Nostalgia's only stockholders.            

RECOMMENDATIONS OF THE SPECIAL COMMITTEE AND NOSTALGIA'S BOARD OF DIRECTORS (pp.
to      )                                                             

- The merger is among affiliates of Nostalgia, and certain members of 
      Nostalgia's Board of Directors serve as directors, officers or employees
       of these affiliates and/or other persons with interests in the merger. As
   such, these Nostalgia directors have interests in connection with the
      merger that are in addition to, or may conflict with, those of Nostalgia
       and its unaffiliated stockholders. Therefore, the terms of the merger and
      the merger agreement were negotiated on behalf of Nostalgia by a special
     committee consisting entirely of independent directors of Nostalgia who
  are not members of management or employees of the Concept Group, the
  Atlantic Video Group or their affiliates. The special committee is a
   standing committee of the Board of Directors, consisting of Robert J.
Wussler                                                           
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and S. Robert Lichter, which addresses matters involving potential
   conflicts of interest among Nostalgia, its officers, directors and/or
stockholders. In considering the recommendations of the special   
       committee, you should be aware of these conflicts of interest. For a more
     detailed discussion of these interests, see "THE MERGER -- Interests of
Certain Persons in the Merger" beginning on page      .           

     - The special committee retained Chatsworth Securities, LLC, an independent
   financial advisor, to assist it in considering the merger. Chatsworth
     provided to the special committee its written opinion that the terms of
 the merger are fair, from a financial point of view, to Nostalgia's
       unaffiliated stockholders. For a more detailed discussion of Chatsworth's
      opinion, see "SPECIAL FACTORS -- Opinion of the Financial Advisor to the
Special Committee" beginning on page      .                       

- Based upon all of the factors it considered, including the written  
      fairness opinion of Chatsworth, the special committee concluded that the
merger is fair to, and in the best interests of, Nostalgia and    
  Nostalgia's unaffiliated stockholders and recommended to Nostalgia's
Board of Directors that the merger be approved.                   

     - Based upon the recommendation of the special committee, Nostalgia's Board
     of Directors (with the exception of Dong Moon Joo) unanimously approved
the merger as fair to and in the best interests of Nostalgia and  
       Nostalgia's unaffiliated stockholders and recommends that you approve the
      merger. Mr. Joo is a director and officer of Capital, Crown, Concept and
    NNI Acquisition. Because of his interest in these entities, he did not
   participate in any meetings concerning, or vote on, the merger or the
     merger agreement. For a more detailed discussion of these affiliations,
      see "THE MERGER -- Interests of Certain Persons in the Merger" beginning
on page      .                                                    

INTERESTS OF CERTAIN PERSONS IN THE MERGER (pp.      to      )                  

- Dong Moon Joo, a member of Nostalgia's Board of Directors, is also a
    director and president of Capital, Crown, Concept and NNI Acquisition.
       Mr. Joo is also chairman of the Board of Directors of Crown, chairman and
      chief executive officer of Atlantic Video, president and director of The
     Washington Times Corporation and News World Communications, Inc., and a
    director and president of Unification Church International. Because of
       these positions, Mr. Joo may have interests in connection with the merger
       that are in addition to, or may conflict with, the interests of Nostalgia
and its unaffiliated stockholders. For example, as an officer and 
      director of Capital, Crown, Concept, NNI Acquisition, Atlantic Video and
      Unification Church International, and an officer of The Washington Times
      and News World Communications, Mr. Joo may have an interest in obtaining
      the lowest possible purchase price per share for Nostalgia common stock,
     while Nostalgia's unaffiliated stockholders are interested in receiving
 the highest possible price. Because of these potential conflicts of
interest, Mr. Joo did not attend meetings of Nostalgia's Board of 
 Directors at which the merger was discussed and did not vote on the
   merger or the merger agreement; nor did Mr. Joo attend or vote at the
       meetings of Atlantic Video and Unification Church International where the
issue of the fairness of the merger terms was discussed.          

- Similarly, the Concept Group and the Atlantic Video Group may have  
     interests that may be adverse to those of the unaffiliated stockholders
   because their members presumably would benefit from paying the lowest
possible price per share for the shares held by the unaffiliated  
      stockholders. Messrs. Cates, Christofferson, Goto, Newton and Ambassador
     Sanchez are also directors of Nostalgia and hold or have held positions
       with certain persons having interests in the merger, including members of
the Concept Group and/or the Atlantic Video Group. Because of the 
    presumed interest of the Concept Group and the Atlantic Video Group in
      obtaining the lowest possible price in the merger, these individuals may
     be deemed to have interests that may conflict with those of Nostalgia's
unaffiliated stockholders.                                        

    - A special committee consisting of two independent directors of Nostalgia
  who are not members of management or employees of Nostalgia retained
     Chatsworth Securities to determine whether the consideration to be paid
       to Nostalgia's stockholders in the merger was fair from a financial point
of                                                                
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       view. Nostalgia's other non-employee and non-management directors did not
retain an unaffiliated representative to act solely on behalf of  
    unaffiliated security holders for purposes of negotiating the terms of
the merger proposal.                                              

For a more detailed discussion of these interests, see "THE           
MERGER -- Interests of Certain Persons in the Merger" beginning on page      .  

CONDITIONS TO THE MERGER (pp.      to      )                                    

     The obligations of Nostalgia and NNI Acquisition to complete the merger are
subject to several conditions, including:                                       

  - The merger agreement must be approved by a majority of the outstanding
     shares of common and preferred stock entitled to be voted on the merger
     proposal (with the preferred stock voting on an as converted basis) and
by a majority of the preferred stock, voting as a separate class. 

   - Nostalgia's and NNI Acquisition's representations and warranties in the
      merger agreement must be accurate and complete in all material respects.

     - The holders of not more than 5.0% of the common stock and preferred stock
shall have exercised appraisal rights.                            

  Nostalgia and/or NNI Acquisition, as applicable, may waive the foregoing
conditions.                                                                     

TERMINATION OF THE MERGER AGREEMENT (pp.      to      )                         

    - The merger agreement may be terminated at any time prior to the time the
    merger is effective. This termination may occur either before or after
   approval of the merger by Nostalgia's stockholders, by mutual written
     consent of Nostalgia and NNI Acquisition. The merger agreement also may
       be terminated by Nostalgia or NNI Acquisition under certain circumstances
     described in the merger agreement, including if the stockholders do not
approve the merger or if the merger is not effective on or before 
December 31, 2000.                                                

REASONS FOR THE MERGER; FAIRNESS CONSIDERATIONS (pp.      to      )             

     In reaching its conclusion to approve and recommend the merger, the special
committee considered, among other factors, the following:                       

- The fairness opinion of Chatsworth;                                 

 - The premium to be paid to Nostalgia's stockholders as compared to the
    historic price of the common stock from January 1, 1998 to the date of
the announcement of the merger;                                   

     - The financial condition and results of operations of Nostalgia, including
     its aggregate operating losses of over $30.0 million between January 1,
      1998 and September 30, 1999, which is the last full quarter prior to the
    announcement of the merger (with Nostalgia continuing to incur further
losses since September 30, 1999);                                 

- The inability of Nostalgia to raise equity or debt capital from     
  conventional sources and Nostalgia's resulting reliance on Crown and
      Concept and, ultimately, members of the Atlantic Video Group, to provide
working capital; and                                              

 - The lack of any assurance that Crown or Concept or the Atlantic Video
     Group would continue to provide such working capital to Nostalgia under
current circumstances.                                            

 The special committee also considered certain factors which could, as a
result of the merger, negatively affect Nostalgia and its stockholders,         
including:                                                                      

   - The loss of Nostalgia's status as a publicly traded corporation and the
corresponding loss of a market for the common stock;              

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   - The potential recognition of taxable income/gain to the stockholders of
Nostalgia upon completion of the merger; and                      

   - That minority stockholders will not participate in any future growth in
the value of Nostalgia, if any.                                   

  The Board of Directors has determined that the merger is fair to, and in
the best interests of, Nostalgia's unaffiliated stockholders and that the       
consideration to be paid to Nostalgia's unaffiliated stockholders is fair from a
financial point of view based upon the analyses and conclusions of the special  
committee (which were adopted by the Board of Directors) and on the opinion of  
Chatsworth delivered to the special committee.                                  

  For a more detailed discussion of these reasons, see "SPECIAL FACTORS --
Reasons for the Merger; Fairness Considerations" and " -- Recommendation of the 
Board of Directors," beginning on page      .                                   

The Concept Group decided to pursue the merger, and the Atlantic Video
Group loaned money to Crown to fund the consideration to be paid to the         
unaffiliated stockholders in the merger, for the purpose of more adequately     
protecting their respective interests in Nostalgia. They consider the need to   
protect their interests in Nostalgia at this time to be especially critical     
given:                                                                          

- Nostalgia's aggregate financial losses of almost $80.0 million from 
  January 1, 1995 to September 30, 1999 (and ongoing losses since such
      date), as a result of which Nostalgia remains unable to raise equity and
       debt capital from conventional sources and remains dependent on Crown and
   Concept and, ultimately, members of the Atlantic Video Group, for its
working capital;                                                  

- The historically low trading volume and market price of Nostalgia's 
stock;                                                            

- The burden and expense of maintaining Nostalgia as a public company;

     - The Concept Group's belief that cashing out the unaffiliated stockholders
      will allow it to protect its interests because it will allow the Concept
 Group to find more easily a strategic partner for Nostalgia without
having to relinquish its controlling interest in Nostalgia; and   

   - The Atlantic Video Group's belief that the availability to Nostalgia of
      additional strategic alternatives will eventually ease the burden of its
loan to the Concept Group.                                        

The Concept Group independently retained the firm of Daniels and      
Associates, L.P. to evaluate the consideration to be paid to the unaffiliated   
stockholders in the merger. When the Atlantic Video Group's opinion on the      
fairness of the consideration to be paid to the unaffiliated stockholders was   
sought in September 2000, its Boards of Directors relied principally on the     
Daniels evaluation in reaching the determination that the consideration to be   
paid to the unaffiliated stockholders was fair from a financial point of view.  
Both the Concept Group and the Atlantic Video Group considered:                 

    - That the consideration being offered in the merger of $0.07 per share of
      common stock of Nostalgia represents the high end of the range of values
     recommended by Daniels as the per share value of Nostalgia common stock
       and a substantial premium over the market price of Nostalgia common stock
      in the weeks prior to the announcement of the merger. It also represents
a substantial premium over Nostalgia's recent stock prices, which 
    averaged $          for the 30 trading days prior to           , 2000.

- That the consideration being offered in the merger also represents a
   substantial premium over Nostalgia's net book value per share and the
  liquidation value, both of which are negative values as of March 31,
2000.                                                             

 - Nostalgia's operating losses of over $30.0 million between January 1,
1998 and September 30, 1999, the last full quarter prior to the   
     negotiation of the merger agreement, with Nostalgia continuing to incur
     losses since September 30, 1999, and its lack of prospects for becoming
profitable in the foreseeable future;                             

     - If, as an alternative to the merger, Nostalgia's outstanding indebtedness
 to Crown and Concept were converted to equity, it would result in a
significant dilution to Nostalgia's minority stockholders;        
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    - The report of Daniels which indicates that the equity value per share of
      Nostalgia is no more than $0.08 per share. The valuation range suggested
    by Daniels was generally $0.02 to $0.08 per share. However, given that
 (i) all of Daniels' analyses were based on various assumptions and,
  therefore, included an element of uncertainty, and (ii) according to
    Daniels' analyses, depending on the methodology used, the equity value
       could be negative, the Concept Group and the Atlantic Video Group believe
   the merger consideration of $0.07 per share to be fair to Nostalgia's
unaffiliated stockholders;                                        

     - To the knowledge of the Concept Group and the Atlantic Video Group, since
      Nostalgia announced the merger in October 1999, no prospective buyer has
offered to complete a similar transaction with Nostalgia; and     

   - The terms of the merger and the merger agreement, which were negotiated
       on behalf of Nostalgia by the special committee which, in turn, hired its
    own financial advisor to evaluate the merger consideration and its own
legal counsel to negotiate the terms of the merger agreement.     

Capital, Crown, Concept, NNI Acquisition, Atlantic Video, One Up      
Enterprises and Unification Church International each believes that each of the 
above factors supports its conclusion that the merger consideration is fair,    
from a financial point of view, to the unaffiliated stockholders.               

  The fact that the price of Nostalgia stock rose above $0.07 per share at
certain times following the announcement of the merger may not necessarily      
support the Concept Group's conclusion that the merger price is fair to the     
unaffiliated stockholders. However, this factor was outweighed by Capital's,    
Crown's, Concept's and NNI Acquisition's belief that the rise in market prices  
was speculative. The Atlantic Video Group concurs in this belief.               

For a more detailed discussion of these reasons, see "SPECIAL         
FACTORS -- Reasons for the Merger; Fairness Considerations" beginning on page   
.                                                           

VALUATION ANALYSIS OF DANIELS AND ASSOCIATES, L.P. (pp.           to           )

     - Daniels and Associates, L.P. has delivered to Crown two reports analyzing
  the equity value of Nostalgia. Daniels issued its original report to
Crown on October 7, 1999, updated it on April 20, 2000, and orally
   reconfirmed the conclusions reflected in its April report as of early
      October 2000. Daniels expects to reconfirm its opinion as of the date of
      the special meeting. In the event Daniels does not reconfirm its opinion
    as of the date of the special meeting and the parties elect to proceed
  with the merger, Nostalgia will distribute a revised proxy statement
      indicating that Daniels did not reconfirm its opinion and will resolicit
    proxies from Nostalgia's unaffiliated stockholders with respect to the
      merger. In these reports, Daniels concluded that, based on its analysis,
  the value per share of Nostalgia is no more than $0.08 per share and
       could be negative depending on the methodology used. The full text of the
  Daniels reports is attached as Appendices D(1) and D(2) to the proxy
      statement. We encourage you to read these reports carefully and in their
entirety. The reports of Daniels are directed only to the matters 
       described in the reports and do not constitute a recommendation as to how
you should vote at the special meeting.                           

FAIRNESS OPINION OF CHATSWORTH SECURITIES, LLC (pp.      to      )              

  - Chatsworth Securities, LLC has delivered to the Board of Directors its
       written opinion, dated October 18, 1999 and orally reconfirmed on January
       27, 2000 and again on June 5, 2000, to the effect that, as of these dates
       and subject to certain assumptions, qualifications and limitations stated
in the opinion, the consideration to be paid to the unaffiliated  
     stockholders of Nostalgia in consideration of the merger is fair from a
     financial point of view. Chatsworth has informed Nostalgia that it will
       reconfirm its opinion as of the date of the special meeting. In the event
     Chatsworth does not reconfirm its opinion as of the date of the special
      meeting and the parties elect to proceed with the merger, Nostalgia will
     distribute a revised proxy statement indicating that Chatsworth did not
reconfirm its opinion and will resolicit proxies from Nostalgia's 
unaffiliated stockholders with respect to the merger.             

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   The full text of Chatsworth's October 18, 1999 opinion is attached to
       this proxy statement as Appendix B. We encourage you to read this opinion
       carefully and in its entirety. The opinion of Chatsworth is directed only
to the matters described in the opinion and does not constitute a 
recommendation as to how you should vote at the special meeting.  

APPRAISAL RIGHTS (pp.      to      )                                            

  - If you do not wish to accept the $0.07 merger consideration and you do
       not vote in favor of the merger, you have the right under Delaware law to
      seek a judicial appraisal of your shares to determine their "fair value"
      if the merger is completed. For a detailed discussion of these appraisal
   rights, see "THE MERGER -- Appraisal Rights" beginning on page      .

FEDERAL INCOME TAX CONSEQUENCES (pp.      to      )                             

  - Stockholders will be taxed on receipt of the $0.07 per share of common
   stock and/or $7.00 per share of preferred stock if, and to the extent
that, the amount received exceeds their tax basis in such stock.  
       Determining the tax consequences of the merger can be complicated and you
    should consult your tax advisor to understand fully the tax effects of
       the merger. For a more detailed discussion of the tax consequences of the
merger, see "SPECIAL FACTORS -- Federal Income Tax Considerations"
beginning on page      .                                          

ACCOUNTING TREATMENT (pp.      )                                                

    - The merger will be accounted for under the purchase method of accounting
 in accordance with generally accepted accounting principles (GAAP).

PROCEDURES FOR RECEIPT OF MERGER CONSIDERATION                                  

    - You should not send your share certificates to us now. Shortly after the
       merger is completed, we will send you written instructions explaining how
to exchange your Nostalgia certificates for cash.                 

QUESTIONS ABOUT THE MERGER                                                      

- If you have more questions about the merger or if you would like    
additional copies of this proxy statement, you should contact:    

The Nostalgia Network, Inc.                                     
650 Massachusetts Avenue, N.W.                                  
Washington, D.C. 20001                                          
(202) 289-6633                                                  
       Contact person: Willard R. Nichols, Vice President, General Counsel and
Secretary                                                       

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SPECIAL FACTORS 

BACKGROUND                                                                      

On June 28, 1999, Capital, Crown and Concept informed Nostalgia of the
possible intention to seek a transaction with Nostalgia which would either      
result in the conversion to equity of Nostalgia's indebtedness to Crown and     
Concept or in Nostalgia becoming wholly owned by Crown and Concept in a going   
private transaction.                                                            

In August 1999, prior to the receipt of the merger proposal, a        
representative of Crown initiated preliminary discussions with a representative 
of the special committee concerning the possible conversion to equity of        
Nostalgia's indebtedness to Crown and Concept or the acquisition of Nostalgia.  
The special committee met with the representative of Crown on September 8, 1999,
September 24, 1999 and October 7, 1999.                                         

  At a regular meeting of the Board of Directors on September 8, 1999, the
special committee reported to the Board of Directors concerning its discussions 
with Crown. Based upon the report of the special committee, which included the  
potential valuation range of a potential transaction, the Board of Directors    
authorized the special committee to retain an independent financial advisor and 
legal counsel. Pursuant to this authorization, the special committee retained   
Chatsworth as its financial advisor to evaluate a possible going private        
transaction. The special committee retained Caplan, Buckner, Rohrbaugh &        
Kostecka, Chtd. as its legal counsel.                                           

On October 5, 1999, Chatsworth delivered to the special committee its 
written analysis of a possible going private transaction.                       

    On October 8, 1999, Crown delivered to the special committee and the other
directors correspondence setting forth the basic terms of the merger proposal.  
The merger proposal was referred to the special committee for further           
consideration.                                                                  

Nostalgia recommended the consideration to be paid to the unaffiliated
stockholders in the merger and requested that Chatsworth determine whether the  
amount of consideration recommended by Nostalgia was fair to the unaffiliated   
stockholders.                                                                   

On October 13, 1999, the special committee determined that the merger 
proposal was in the best interests of, and fair to, Nostalgia and its           
unaffiliated stockholders. The special committee recommended that the Board of  
Directors approve the merger proposal and submit it to the stockholders for     
approval, subject to receipt by the Board of Directors of a written opinion from
Chatsworth that the consideration to be paid to Nostalgia's stockholders in the 
merger is fair to Nostalgia's unaffiliated stockholders from a financial point  
of view.                                                                        

    As the merger proposal required approval by Nostalgia by October 18, 1999,
the Board of Directors met on October 14, 1999, with Mr. Joo not attending, to  
discuss the merger proposal. Following this discussion, a vote on the merger    
proposal was postponed due to the unavailability of several directors. Due to   
the inability of the Board of Directors to meet again prior to the deadline for 
approval of the merger proposal, Nostalgia requested, and was granted, an       
extension until October 21, 1999 to approve the merger proposal.                

On October 18, 1999, Chatsworth delivered to the special committee its
written opinion that, subject to the various assumptions, qualifications and    
limitations expressed therein, the consideration to be paid to Nostalgia's      
unaffiliated stockholders in the merger is fair to Nostalgia's unaffiliated     
stockholders from a financial point of view.                                    

  On October 21, 1999, at a special meeting of the Board of Directors, the
special committee delivered to the Board of Directors its recommendation that   
the merger proposal was fair to, and in the best interests of, Nostalgia and its
unaffiliated stockholders. The Board of Directors determined that the merger    
proposal was in the best interests of Nostalgia and its unaffiliated            
stockholders and approved the merger proposal, subject to the negotiation of    
mutually satisfactory definitive documentation. At this meeting, the Board of   
Directors also requested that Chatsworth supplement the analysis it had         
delivered previously to the special committee by                                
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identifying additional valuation methodologies which it had utilized but not    
described. Mr. Joo did not attend this meeting of the Board of Directors or vote
on this matter.                                                                 

On October 26, 1999, Chatsworth delivered to the special committee the
supplemental information with respect to its analyses which had been requested  
by the Board of Directors.                                                      

  On December 20, 1999, counsel to Crown and Concept circulated an initial
draft of the proposed merger agreement. There ensued over the next fifteen days 
a series of conference calls and negotiations followed by numerous revisions and
recirculations of drafts of the proposed merger agreement. Although the parties 
had reached an agreement regarding the merger consideration by this time, they  
negotiated other material terms of the merger agreement, including the          
representations and warranties to be made by the parties, the indemnity and     
insurance coverage to be provided to the former directors of Nostalgia following
the merger and the termination of Nostalgia's stock option plans.               

   Subsequent to December 20, 1999, and prior to the meeting of the Board of
Directors on January 4, 2000, the special committee had multiple discussions    
regarding the proposed merger and the terms of the merger agreement. After an   
extensive discussion and considering such factors as the fairness of the merger 
consideration from a financial point of view and the terms of the merger        
agreement, the special committee determined that the merger agreement is in the 
best interests of Nostalgia and its unaffiliated stockholders and recommended   
that the Board of Directors approve the merger agreement.                       

    On January 4, 2000, the Board of Directors met and (i) determined that the
merger is in the best interests of, and is on terms that are fair and reasonable
to, Nostalgia and its unaffiliated stockholders, and (ii) approved the merger   
agreement. Mr. Joo did not attend this meeting of the Board of Directors or vote
on this matter.                                                                 

  The merger agreement was executed by Nostalgia on January 7, 2000 and by
NNI Acquisition on January 11, 2000, and was amended on October 4, 2000 to      
extend from June 30, 2000 until December 31, 2000 the time allowed for Nostalgia
and NNI Acquisition to complete the merger before either party has the right to 
terminate the merger agreement.                                                 

    On January 27, 2000, Chatsworth orally reconfirmed its fairness opinion to
the Board of Directors based upon financial information as of December 31, 1999.
Chatsworth confirmed its opinion again on June 5, 2000.                         

 Since the approval by the special committee and the Board of Directors,
work on the merger on behalf of Nostalgia has been primarily performed by       
Nostalgia's general counsel and corporate counsel with assistance from          
Nostalgia's finance department. Work on the merger on behalf of the Concept     
Group has been primarily performed by general counsel and corporate counsel to  
the Concept Group with assistance from each member's respective finance         
department. Work on the merger on behalf of the Atlantic Video Group has been   
primarily performed by the corporate counsel to the Atlantic Video Group with   
assistance from certain officers and directors of each member of the Atlantic   
Video Group.                                                                    

Daniels and Associates, L.P. acted as financial advisor to the Concept
Group and the Atlantic Video Group, negotiated with Chatsworth as to the value  
and terms of the merger and assisted and advised the Concept Group in its       
negotiations with the special committee. Daniels will be compensated by Crown   
for its services.                                                               

     No member of the Concept Group or the Atlantic Video Group is aware of, and
Nostalgia did not receive, any firm offers in the last two years for a merger or
consolidation of Nostalgia, the sale or other transfer of all or any substantial
part of the assets of Nostalgia or a purchase of Nostalgia's securities that    
would enable a purchaser of the securities to exercise control of Nostalgia.    

RECOMMENDATION OF THE BOARD OF DIRECTORS                                        

  Upon the recommendation of the special committee, the Board of Directors
(with Mr. Joo not participating in any meetings concerning, or voting on, the   
merger or the merger agreement) has unanimously approved the merger and the     
merger agreement, having concluded that the merger and the merger agreement are 
fair to, and in the best interests of, Nostalgia and its unaffiliated           
stockholders and unanimously                                                    
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recommends that stockholders of Nostalgia vote "FOR" the merger proposal.       
Certain directors of Nostalgia, such as Messrs. Christofferson, Cates, Newton,  
Goto and Ambassador Sanchez, are or have been employees, officers or directors  
of affiliates of Nostalgia, the Concept Group, the Atlantic Video Group or their
affiliates. Dong Moon Joo, a member of Nostalgia's board of directors, is a     
director and president of Capital, Crown, Concept and NNI Acquisition. Mr. Joo  
is also chairman of the Board of Directors of Crown and is chairman and chief   
executive officer of Atlantic Video and a director and president of Unification 
Church International. Because of these positions, Messrs. Christofferson, Cates,
Newton, Goto and Joo and Ambassador Sanchez have interests in connection with   
the merger that are in addition to, or may conflict with, the interests of      
Nostalgia and its stockholders, including, but not limited to, an interest in   
obtaining the lowest possible purchase price for the shares of the unaffiliated 
stockholders. Because of his role in the Concept Group, Mr. Joo did not attend  
meetings of Nostalgia's Board of Directors at which the merger was discussed and
he did not vote on the merger or the merger agreement; nor did Mr. Joo          
participate in, or vote at, meetings of the Boards of Directors of members of   
the Atlantic Video Group regarding the fairness of the merger.                  

REASONS FOR THE MERGER; FAIRNESS CONSIDERATIONS                                 

   Capital, Crown, Concept and NNI Acquisition.  As the owners of a majority
of the stock of Nostalgia, and the immediate source of substantially all of its 
working capital, Capital, Crown, Concept and NNI Acquisition have decided to    
pursue the merger to protect more adequately their interests in Nostalgia       
(including Nostalgia's outstanding debt of over $95.0 million to Crown and      
Concept). Capital, Crown, Concept and NNI Acquisition consider the need to      
protect their interests in Nostalgia at this time to be especially critical     
given the following factors:                                                    

    - Nostalgia has incurred an aggregate loss of almost $80.0 million between
    January 1, 1995 and September 30, 1999, the last full quarter prior to
the announcement of the merger (with Nostalgia continuing to incur
further losses since September 30, 1999, including losses of      
 approximately $21.0 million in the year ended December 31, 1999 and
       almost $10.0 million in the six months ended June 30, 2000). As a result,
       Nostalgia continues to remain unable to raise equity or debt capital from
  conventional sources and remains dependent on Crown and Concept and,
  ultimately, the members of the Atlantic Video Group, for its working
capital;                                                          

 - As a public company, Nostalgia's stock has historically traded at low
volumes and market prices; and                                    

- The burden and expense of maintaining Nostalgia as a publicly held  
       entity, including the burden and expense of filing periodic reports under
      the Securities Exchange Act and of compliance with the various rules and
     regulations of the SEC, outweighs any benefits of the extremely limited
public market for the common stock.                               

   The Concept Group believes that once Nostalgia is privately held, it will
be easier to locate a strategic partner for Nostalgia. The Concept Group        
anticipates that such a strategic relationship would allow Nostalgia to         
minimize, or potentially eliminate, its ongoing financial losses, thus          
protecting the Concept Group's financial stake in Nostalgia.                    

In reaching their conclusion that the consideration to be paid to the 
unaffiliated stockholders of Nostalgia is fair, Capital, Crown, Concept and NNI 
Acquisition considered the following factors:                                   

  - The merger consideration of $0.07 per share of common stock represents
   the high end of the range of values recommended by Daniels as the per
     share equity value of Nostalgia and a substantial premium over both the
      market prices of the common stock in the weeks prior to the announcement
   of the merger and a substantial premium over Nostalgia's recent stock
prices, which averaged $          for the 30 trading days prior to
          , 2000. Capital, Crown, Concept and NNI Acquisition have
  considered that, at certain times after the engagement of Daniels in
    January 1999 and after the announcement of the merger in October 1999,
      the price of common stock rose to a maximum of $0.25 per share. However,
       given the thin trading volume in the common stock over the last two years
     and the absence of any fundamental improvement in Nostalgia's operating
results or earnings prospects for the foreseeable                 

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     future, Capital, Crown, Concept and NNI Acquisition consider the higher
price levels to be speculative and not relevant to determining the
fairness of the merger consideration;                             

- The merger consideration also represents a substantial premium over 
     Nostalgia's net book value per share and the liquidation value, both of
      which are negative as of March 31, 2000. Capital, Crown, Concept and NNI
Acquisition do not believe the going concern value per share to be
       relevant in determining the fairness of the merger consideration because,
      based on the Daniels reports, this value is irrelevant given Nostalgia's
operating losses for the last several years;                      

     - Prior to the announcement of the merger, Nostalgia incurred a net loss of
      over $15.0 million ($0.78 per share) for the nine months ended September
      30, 1999. Nostalgia incurred a net loss of over $21.0 million ($1.05 per
  share) for the year ended December 31, 1999 and a net loss of almost
     $10.0 million ($0.25 per share) for the six months ended June 30, 2000.
Capital, Crown, Concept and NNI Acquisition believe the merger    
   consideration to be very favorable given these losses and Nostalgia's
  lack of prospects for becoming profitable in the foreseeable future;

     - If, as an alternative to the merger, Nostalgia's outstanding indebtedness
to Crown and Concept were converted to equity, it would result in 
significant dilution to Nostalgia's minority stockholders;        

  - The report of Daniels dated October 7, 1999, updated on April 20, 2000
    and reconfirmed in early October 2000, which indicates that the equity
value per share of Nostalgia is no more than $0.08 per share (and 
       depending on the valuation methodology, may be negative). Capital, Crown,
      Concept and NNI Acquisition considered that the per share price of $0.07
      per share and the premium represented thereby are at the high end of the
    valuation range suggested by Daniels and believe that, in light of all
     the circumstances, this price is fair to the unaffiliated stockholders;

  - To the knowledge of Capital, Crown, Concept and NNI Acquisition, since
Nostalgia announced the proposed merger, on October 21, 1999, no  
  prospective buyer has offered to complete a similar transaction with
Nostalgia;                                                        

- Under Delaware law, in the context of merger agreements between two 
companies, it is not advisable for a board of a target company to 
     contractually give up its right to consider third party proposals if so
      required in light of its fiduciary duties. However, Delaware courts have
    upheld the acquiring company's right to impose a termination fee or to
  require reimbursement for expenses or missed opportunities where the
      target company pursues such a third party proposal instead of a proposed
     merger. In light of the applicable law, Capital, Crown, Concept and NNI
       Acquisition consider the terms of the merger agreement to be favorable to
    the interests of the unaffiliated stockholders in that they permit the
       Board of Nostalgia to consider and consummate any unsolicited proposal by
   a third party, without penalty, if, after consultation with its legal
   counsel, the Board determines that it should consider the proposal in
light of its fiduciary duties under applicable law; and           

- The terms of the merger and the merger agreement were negotiated on 
       behalf of Nostalgia by the special committee, which consisted entirely of
     independent directors of Nostalgia who are not members of management or
  employees of the Concept Group or the Atlantic Video Group, or their
    affiliates. The special committee retained Chatsworth as its financial
   advisor and Caplan, Buckner, Rohrbaugh & Kostecka, Chtd. as its legal
     counsel to advise it in connection with its consideration of the merger
and to negotiate the terms of the merger agreement.               

     The Concept Group may have interests in connection with the merger that are
in addition to, or conflict with, the interests of Nostalgia and its            
unaffiliated stockholders, including a presumed interest in obtaining the lowest
possible purchase price for the Nostalgia common stock. However, Capital, Crown,
Concept and NNI Acquisition believe that each of the above factors supports     
their conclusion that the merger price is fair to the unaffiliated stockholders.

   The Concept Group does not believe that the approval by a majority of the
unaffiliated stockholders of Nostalgia is necessary to ensure the fairness of   
the merger to the unaffiliated stockholders given (i) the report of Daniels to  
the effect that the equity value per share of common stock generally is in the  
range of $0.02 to                                                               
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$0.08 per share and may be negative depending on the methodology used, and (ii) 
the negotiation and approval of the terms of the merger by the independent,     
non-employee directors comprising the special committee.                        

   For the reasons stated above, Capital, Crown, Concept and NNI Acquisition
also do not believe that the appointment by Nostalgia's directors of a          
representative to act solely on behalf of the unaffiliated stockholders is      
necessary to ensure the fairness of the merger to the unaffiliated stockholders.
In light of Nostalgia's weak financial condition, any marginal benefits of      
hiring such a representative would be outweighed by the additional expense to be
borne by Nostalgia to cover the representative's fees.                          

     In view of the wide variety of factors considered, as well as the fact that
Daniels has determined that the equity value per share of the common stock      
generally is in the range of $0.02 to $0.08 per share (and may be negative),    
Capital, Crown, Concept and NNI Acquisition did not find it practicable to, and 
did not independently quantify or otherwise assign relative weights to the      
individual factors considered in reaching their determination of the fairness of
the merger.                                                                     

In 1998, as an alternative to the merger, Crown and Concept sought a  
strategic alliance for Nostalgia. They engaged the services of Daniels, an      
investment banking firm with experience in providing financial services to the  
media, Internet and telecommunication industries, to assist them in seeking a   
strategic partner for Nostalgia. However, given Nostalgia's weak financial      
condition and operating losses, the parties were unsuccessful in attracting such
a strategic partner.                                                            

  In 1998 and 1999, Crown and Concept also considered as an alternative to
the merger the conversion of Nostalgia's indebtedness to each of them into      
equity. However, Capital, Crown and Concept prefer to structure the transaction 
as a merger because they believe that a strategic alliance will be more readily 
attainable if Nostalgia is privately held. This is because (i) the parties would
be able to enter into a strategic alliance without the expense and              
administrative process of seeking approval for such a transaction as would be   
the case for a public company, and (ii) once the Concept Group owns 100% of     
Nostalgia, it can bring in a private investor without relinquishing control over
Nostalgia. Furthermore, converting Nostalgia's indebtedness to Crown and Concept
into equity would have significantly diluted the interests of the unaffiliated  
stockholders.                                                                   

Capital, Crown, Concept and NNI Acquisition believe the merger and    
consideration to be paid to Nostalgia's unaffiliated stockholders is fair based 
upon the foregoing reasons, the available alternatives to the merger, including 
the benefits and risks to Nostalgia's stockholders of Nostalgia continuing to be
publicly held, and the advice of Daniels with respect to the fairness of the    
merger. In considering the above factors, the Concept Group did not assign      
relative weights to any particular factor or determine that any factor was more 
significant than another. Rather, the members of the Concept Group viewed their 
positions and recommendations as being based on the totality of the information 
presented to and considered by them. Capital, Crown, Concept and NNI Acquisition
have each adopted Daniels' conclusions as their own.                            

The Atlantic Video Group                                                    

    As the ultimate source of substantial funds for Nostalgia's historical and
continuing operating deficits, and considering Crown's obligation under its     
promissory note to Atlantic Video for sums in excess of $100.0 million, the     
Atlantic Video Group shares with the Concept Group all of the rationales        
underlying the merger proposal and fully supports the merger proposal on its    
present terms. For these reasons, the Atlantic Video Group's interests in the   
merger may conflict with those of the unaffiliated stockholders, including its  
presumed interest that the price paid to the unaffiliated stockholders be as low
as possible.                                                                    

The Atlantic Video Group did not participate in the planning and/or   
negotiations related to the proposed merger, except that Atlantic Video         
increased the amount of funds made available to Crown under the Crown promissory
note and advanced monies under that note to fund the merger. The Boards of      
Directors of each of the members of the Atlantic Video Group (with Mr. Joo not  
participating) reviewed the Daniels opinion and discussed it in detail with     
Daniels. In reliance on the specific findings and conclusions of the Daniels    
opinion and adopting the opinion as its own, each of the members of the Atlantic
Video Group concurred and adopted                                               

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as its own each of the specific findings and recommendations of the Concept     
Group. To the extent that they were addressed in the Daniels opinion, each      
member of the Atlantic Video Group considered the following factors:            

   - The current and historical market prices of the Nostalgia common stock;

- The net book value of Nostalgia; and                                

- The liquidation value of Nostalgia.                                 

The Atlantic Video Group did not make assessments of, quantify or otherwise     
assign relative weights to any of the foregoing factors. The Atlantic Video     
Group did not give significant weight to the going concern value of Nostalgia.  
The Atlantic Video Group did not consider the merger or consolidation of        
Nostalgia with or into a company other than NNI Acquisition or the sale or      
transfer of all or any substantial part of the assets of Nostalgia. On these    
bases, each member of the Atlantic Video Group reasonably believes that the     
consideration to be paid to the unaffiliated stockholders is fair.              

  The Special Committee.  In reaching its recommendation that the Board of
Directors approve the merger, the special committee considered a number of      
factors, including the following:                                               

- The terms and conditions of the merger agreement, including the     
consideration to be paid in the merger;                           

   - Historical and recent market prices of the common stock and the premium
 represented by the consideration over the historical prices for the
common stock since January 1, 1998;                               

     - The financial condition and results of operations of Nostalgia, including
       an aggregate of over $30.0 million in operating losses between January 1,
1998 and September 30, 1999, the last full quarter before the     
    announcement of the merger (with Nostalgia continuing to incur further
losses since September 30, 1999);                                 

    - The debt structure of Nostalgia and its effect on Nostalgia's ability to
obtain additional capital;                                        

- The net book value, liquidation value and going concern value of    
       Nostalgia which, according to Chatsworth's opinion, were negative values.

- The inability of Nostalgia to raise equity or debt capital from     
    conventional sources, the resulting reliance of Nostalgia on Crown and
       Concept to provide the working capital necessary for continued operations
   and the lack of any assurance that Crown and Concept will continue to
provide such capital under current circumstances;                 

    - Alternatives to the merger, including continuing to operate Nostalgia as
a publicly traded company, the possible benefits and risks of such
  alternatives and the timing and likelihood of increasing stockholder
value beyond the value of the proposed merger consideration; and  

   - The valuation analysis performed by Chatsworth and its opinion provided
    to the special committee on October 18, 1999 and orally reconfirmed on
      January 27, 2000 and again on June 5, 2000, that, as of those dates, and
   subject to certain assumptions, qualifications and limitations stated
therein, the consideration to be paid in the merger is fair to    
Nostalgia's stockholders from a financial point of view.          

 The special committee also considered certain factors which could, as a
result of the merger, negatively affect Nostalgia and its stockholders. These   
factors included the following:                                                 

- Loss of Nostalgia's status as a publicly traded corporation and the 
corresponding loss of a market for the common stock;              

     - Potential recognition of taxable income/gain to Nostalgia's stockholders;
and                                                               

    - That minority stockholders would not participate in the future growth in
the value of Nostalgia, if any.                                   

The special committee did not consider the merger or consolidation of 
Nostalgia with or into a company other than NNI Acquisition or the sale or      
transfer of all or any substantial part of the assets of Nostalgia because no   
third parties expressed an interest in any such merger, consolidation, sale or  
transfer.                                                                       

   Although the merger agreement does not provide for approval of the merger
by a majority of the unaffiliated stockholders and the special committee did not
appoint an unaffiliated representative to act solely                            
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on behalf of the unaffiliated stockholders for purposes of negotiating the      
transaction, the special committee nonetheless believes that the merger is fair 
to the unaffiliated stockholders. Among the things considered by the special    
committee in reaching this conclusion were the fact that the merger was         
evaluated and the merger agreement was negotiated by a special committee of     
disinterested directors of Nostalgia and the fairness of the price offered for  
the Nostalgia common stock held by the unaffiliated stockholders was evaluated  
by an independent financial adviser.                                            

Moreover, based on the negative book value per share $(4.32) and the  
negative liquidation value per share $(0.44) of Nostalgia as of           , and 
the fact that the stock in recent and historic trading has not maintained a     
price in excess of $0.06, the special committee determined that the offering    
price of $0.07 per share to the unaffiliated stockholders represents a premium  
over the then-current value of the Nostalgia common stock. Furthermore, the fact
that Nostalgia has been unable to attract a strategic partner and cannot        
continue as a viable concern without substantial deficit financing provided by  
Crown and Concept suggests to the special committee that the value of the       
Nostalgia common stock is unlikely to improve in the future. In light of all    
these factors, the special committee concluded that the $0.07 per share offered 
to the unaffiliated stockholders is fair from a financial point of view.        

   Accordingly, the special committee unanimously recommended that the Board
of Directors approve the merger. In view of the variety of factors and the      
amount of information considered, the special committee did not find it         
practicable to, and did not specifically make assessments of, quantify or       
otherwise assign relative weights to all of the various factors and analyses    
considered. The special committee gave special consideration to the premium     
represented by the consideration over the historical price for the common stock 
since January 1998 and the opinion of Chatsworth that the consideration to be   
paid in the merger is fair to Nostalgia's unaffiliated stockholders from a      
financial point of view.                                                        

 Board of Directors.  The Board of Directors (with Mr. Joo not attending
Board meetings where the merger was discussed or voting on the proposed merger  
or the merger agreement) has determined that the merger is fair to, and in the  
best interests of, Nostalgia's stockholders and that the consideration to be    
paid to Nostalgia's unaffiliated stockholders is fair from a financial point of 
view based on the analyses and conclusions of the special committee (which were 
adopted by the Board of Directors), the negotiations between Nostalgia, as      
directed by the special committee, and NNI Acquisition, and the opinion of      
Chatsworth delivered to the special committee. The Board of Directors did not   
quantify or otherwise assign relative weights to the specific factors considered
in reaching its determination. Neither Nostalgia nor the Board of Directors     
considered any alternatives to the merger. The Board of Directors (with Mr. Joo 
not attending Board meetings where the merger was discussed or voting on the    
proposed merger or the merger agreement) has unanimously approved the merger and
recommends that Nostalgia's stockholders vote "FOR" approval of the merger.     
Members of Nostalgia's Board of Directors, including Messrs. Cates,             
Christofferson, Goto, Joo, Newton and Ambassador Sanchez have interests that are
in addition to, or may conflict with, the interests of Nostalgia and its        
unaffiliated stockholders. These additional interests arise from, among other   
things, relationships between these directors and affiliates of Nostalgia, the  
Concept Group and/or the Atlantic Video Group. For a more detailed discussion of
these interests see "INTERESTS OF CERTAIN PERSONS IN THE MERGER."               

EFFECT OF THE MERGER ON THE RIGHTS OF EXISTING STOCKHOLDERS                     

  Holders of common stock, other than NNI Acquisition and stockholders who
have exercised their appraisal rights, will receive $0.07 per share and holders 
of preferred stock, other than NNI Acquisition and stockholders who have        
exercised their appraisal rights, will receive $7.00 per share. The shares of   
common stock and preferred stock owned by NNI Acquisition will be cancelled and 
each issued and outstanding share of NNI Acquisition common stock (all of which 
are owned by Crown and Concept) will be converted into one share of common      
stock. As a result of the merger:                                               

- Nostalgia will no longer be a public company;                       

- The common stock no longer will be quoted on the Nasdaq OTC Bulletin
Board;                                                            

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  - Nostalgia's stockholders (other than Crown and Concept) no longer will
   have an interest in any of Nostalgia's future earnings or growth; and

- Crown and Concept will be Nostalgia's only stockholders.            

The termination of Nostalgia's Exchange Act registration will relieve 
Nostalgia of its periodic and other Exchange Act reporting obligations and also 
will relieve Nostalgia's officers, directors and principal stockholders of      
certain reporting and other obligations under the Exchange Act.                 

EFFECT OF THE MERGER ON NOSTALGIA, THE CONCEPT GROUP AND THE ATLANTIC VIDEO     
GROUP                                                                           

  The proposed merger will have no effect on Nostalgia's net book value or
net earnings.                                                                   

    The proposed merger will result in additional losses of approximately $2.9
million to Crown, Concept and Capital for their accumulated losses as of June   
30, 2000 and net loss for the six months then ended.                            

                                                        [Enlarge/Download Table]

                                                              NET BOOK VALUE                              
                                 ------------------------------------------------------------------------ 
                                         PRE MERGER                    POST MERGER                        
                                 ---------------------------   ---------------------------    CHANGE IN   
                                    STOCK         NET BOOK        STOCK         NET BOOK       NET BOOK   
                                 OWNERSHIP(2)     VALUE(1)     OWNERSHIP(2)     VALUE(1)        VALUE     
                                 ------------   ------------   ------------   ------------   ------------ 
                                                                                                          
Public shareholders.............     28.8%      $(26,700,663)       0.0%      $         --   $(26,700,663)
The Concept Group(3)............     71.2%      $(66,009,972)     100.0%      $(92,710,635)  $(26,700,663)
Total...........................    100.0%      $(92,710,635)     100.0%      $(92,710,635)  $         -- 


                                                           NET EARNINGS IMPACT                            
                                 ------------------------------------------------------------------------ 
                                         PRE MERGER                    POST MERGER                        
                                 ---------------------------   ---------------------------    CHANGE IN   
                                    STOCK           NET           STOCK           NET            NET      
                                 OWNERSHIP(2)   EARNINGS(1)    OWNERSHIP(2)   EARNINGS(1)      EARNINGS   
                                 ------------   ------------   ------------   ------------   ------------ 
                                                                                                          
Public shareholders.............     28.8%      $ (2,912,935)       0.0%      $         --   $ (2,912,935)
The Concept Group(3)............     71.2%      $ (7,201,422)     100.0%      $(10,114,357)  $ (2,912,935)
Total...........................    100.0%      $(10,114,357)     100.0%      $(10,114,357)  $         -- 

---------------                                                                 
(1) As of June 30, 2000 Nostalgia had a negative book value of negative         
$(92,710,635) and negative earnings of $(10,114,357).                   

(2) As of June 30, 2000 20,275,370 shares of common stock were outstanding.     

(3) As of June 30, 2000, the Concept Group, which consists of Capital, Crown,   
Concept and NNI Acquisition, held 14,430,427 shares of common stock.    

    The proposed merger will have no immediate effect on the net book value or
net earnings of any member of the Atlantic Video Group.                         

FEDERAL INCOME TAX CONSIDERATIONS                                               

The following discussion summarizes material federal income tax       
considerations arising from the merger and relevant to Nostalgia and its        
stockholders. This discussion is general in nature and is not tax advice. Each  
stockholder should consult his or her own tax advisor.                          

   The exchange of common stock or preferred stock for cash by a stockholder
in the merger will be a taxable transaction under the Internal Revenue Code of  
1986, as amended. In general, a stockholder will recognize gain or loss equal to
the difference between the tax basis of his or her common stock or preferred    
stock and the amount of cash received in exchange therefor. Such gain or loss   
will be capital gain or loss if the common stock or preferred stock is a capital
asset in the hands of the stockholder and will be long-term gain or loss if the 
stockholder has held common stock or preferred stock for more than one year as  
of the effective time of the merger. These rules may not apply to stockholders  
who acquired common stock or preferred stock pursuant to the exercise of stock  
options or other compensation arrangements with Nostalgia or to stockholders who
are not citizens or residents of the United States or who are otherwise subject 
to special tax treatment under the Internal Revenue Code. A holder of Nostalgia 
shares who exercises appraisal rights generally will recognize taxable capital  
gain or loss based on the difference between the amount of cash received by the 
holder and the holder's tax basis in the shares.                                

Non-corporate stockholders of Nostalgia may be subject to backup      
withholding at a 31.0% rate on cash payments received. Backup withholding will  
not apply to a stockholder who:                                                 

     - Furnishes a correct taxpayer identification number and certifies that he,
she or it is not subject to backup withholding on Form W-9;       

- Provides a certificate of foreign status on Form W-8; or            

- Is otherwise exempt from backup withholding.                        

   Nostalgia will not recognize gain or loss for federal income tax purposes
as a result of the merger.                                                      

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     The transitory existence of NNI Acquisition will be disregarded for federal
income tax purposes, and neither NNI Acquisition nor the Concept Group will     
realize gain or loss as a result of the merger.                                 

VOTE REQUIRED                                                                   

    Under Delaware law, Nostalgia is required to submit the merger proposal to
its stockholders for approval. In accordance with Delaware law and Nostalgia's  
certificate of incorporation, the standard for approving the merger proposal is 
the affirmative vote of a majority of the outstanding shares of common and      
preferred stock (on an as converted basis) entitled to be voted on the merger   
proposal. This means that the affirmative vote of 10,506,189 shares of common   
stock and preferred stock (with preferred stock having 100 votes per share) and 
of 1,626 shares of preferred stock voting separately as a class is required for 
approval of the merger proposal. If the stockholders approve the merger and the 
transaction subsequently is challenged, Nostalgia may be entitled, under        
Delaware law, to assert stockholder approval as a defense. As of           ,    
2000 there were issued and outstanding 20,275,370 shares of common stock and    
3,250 shares of preferred stock. NNI Acquisition, which is the record owner of  
14,180,427 shares (69.9%) of common stock and 2,500 shares (76.9%)of preferred  
stock, has informed Nostalgia that it intends to vote all of its shares of      
common stock and preferred stock "FOR" the merger proposal. Separate approval by
a majority of unaffiliated security holders is not required. Therefore, the     
affirmative vote of the shares of common stock and preferred stock owned by NNI 
Acquisition will be sufficient to ensure approval of the merger.                

    Ambassador Phillip Sanchez is the only director or officer who owns shares
of common stock. Mr. Sanchez has informed Nostalgia that he intends to vote all 
of his 1,000 shares in favor of the merger.                                     

REPORT OF THE FINANCIAL ADVISOR TO CROWN                                        

 In connection with the merger, Crown engaged Daniels to issue a written
report analyzing the equity value of Nostalgia. Daniels issued its original     
report to Crown on October 7, 1999, updated it on April 20, 2000 and orally     
reconfirmed its April 2000 conclusions as of early October 2000. Daniels expects
to reconfirm its analysis as of the date of the special meeting. In the event   
that Daniels does not reconfirm its analysis as of the date of the special      
meeting and the parties elect to proceed with the merger, Nostalgia will        
distribute a revised proxy statement indicating that Daniels did not reconfirm  
its analysis and will resolicit the proxies of Nostalgia's unaffiliated         
stockholders with respect to the merger. In these reports, Daniels concluded    
that, based on its analysis, the equity value per share of common stock was no  
more than $0.08 per share and could be negative depending on the methodology    
used. No limitations were imposed by Crown on the scope of Daniels'             
investigation or the procedures followed by Daniels in rendering its report.    
Daniels has consented to the use of its opinion in connection with this proxy   
statement. The members of the Concept Group have adopted Daniels' conclusions as
their own.                                                                      

   After reviewing the Chatsworth and Daniels recommendations, on October 5,
2000, the respective Boards of Directors of Atlantic Video, One Up Enterprises  
and Unification Church International met to evaluate the fairness of the        
consideration to be paid to the unaffiliated stockholders. Mr. Joo, who is a    
director of Atlantic Video and Unification Church International, did not attend 
the Board meetings of any member of the Atlantic Video Group and did not vote on
the fairness of the merger. These Boards also discussed the Daniels report with 
one of its principal authors and requested that Daniels reconfirm its report.   
The Boards also questioned a representative of Nostalgia on current financial   
matters. The individual members of the Atlantic Video Group also concurred in   
and adopted as their own the substance of the Daniels report and, in reliance   
thereon, determined that the consideration was fair to unaffiliated             
stockholders.                                                                   

    Daniels is an investment banking firm which provides financial services in
connection with mergers and acquisitions, private equity and debt financings and
financial advisory engagements. Crown had initially engaged Daniels in December 
1998 as its exclusive representative for the purpose of assisting Crown in its  
efforts to identify a strategic partner or a strategic alliance for Nostalgia.  
For this engagement, Crown had considered two firms: Communications Equity      
Associates and Daniels. Crown selected Daniels based on Daniels' experience with
the media, Internet and telecommunications industries. Crown engaged Daniels    
again in 1999 in connection with the merger because of its familiarity with     
Nostalgia based on the prior engagement. Crown has paid Daniels a fee of        
$250,000 for its efforts to find a strategic partner. For its                   
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valuation analysis of October 1999 and April 2000, Crown has agreed to pay      
Daniels a total of $125,000, half of which has already been paid to Daniels,    
with the other half to be paid following the consummation of the merger.        
Finally, Crown plans to continue to engage Daniels following the closing of the 
merger for the purpose of locating a strategic partner for Nostalgia. Crown and 
Daniels understand that if Daniels succeeds in finding a strategic partner, it  
will receive 1.5% to 3.0% of the proceeds of the strategic alliance as          
commission. The amounts of Daniels' fees were the result of negotiations between
Crown and Daniels.                                                              

     The full text of the Daniels written reports is provided as Appendices D(1)
and D(2) to this proxy statement. Stockholders should read the Daniels reports  
for a discussion of assumptions made, matters considered and limitations of the 
review undertaken by Daniels in rendering its opinion.                          

For purposes of its reports, Daniels:                                 

- Reviewed certain publicly available financial statements and other  
information of Nostalgia;                                         

    - Reviewed historical and current reported prices and trading activity for
the common stock; and                                             

- Compared the financial performance of Nostalgia with that of certain
other comparable publicly traded companies.                       

  The following is a summary of certain financial and comparative analyses
performed by Daniels in October 1999 and April 2000 and reconfirmed orally as of
early October 2000 in connection with the valuation of Nostalgia. The           
methodologies used were:                                                        

- Net Asset Value Analysis                                            

- Market Price Analysis                                               

- Going Concern Value Analysis                                        

- Acquisition Value Analysis                                          

- Discounted Cash Flow Analysis                                       

Net Asset Value Analysis                                                        

  Daniels performed a net asset value analysis to determine the value that
would be garnered from Nostalgia's assets if it were to terminate its operations
without selling its subscriber base.                                            

     For its October report, Daniels used Nostalgia's balance sheet as of August
31, 1999, which showed that Nostalgia had $8,944,487 in total assets and        
$91,199,003 in total liabilities. Using the figures on this balance sheet,      
Daniels arrived at a net asset value of $(82,254,516) or $(4.04) per share. It  
arrived at a net asset value of $(773,704) or $(0.04) per share after excluding 
Nostalgia's long term debt and non-current liabilities from the calculation.    

     For its April report, Daniels used Nostalgia's balance sheet as of December
31, 1999, which showed that Nostalgia had $12,723,094 in total assets and       
$95,319,372 in total liabilities. Using the figures on this balance sheet,      
Daniels arrived at a net asset value of $(82,596,278) or $(4.05) per share. It  
arrived at a net asset value of $(5,955,249) or $(0.29) per share after         
excluding Nostalgia's long term debt and non-current liabilities from the       
calculation.                                                                    

 Based on its analysis, Daniels concluded in both October 1999 and April
2000 that Nostalgia had negative equity value per share.                        

Market Price Analysis                                                           

 In its market price analysis, Daniels examined Nostalgia's historic and
then-current market trading prices.                                             

    Daniels observed in its reports that, since 1994, Nostalgia had not traded
above $1.00 per share. Since 1997, it had traded, for the most part, below $0.08
per share. Nostalgia's stock price has been as low as $0.01 per share. In       
January 1999, after Crown had retained Daniels to pursue strategic options, the 
share price                                                                     
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increased to a maximum of approximately $0.25 per share. The share price        
gravitated around $0.11 before retreating to a price of around $0.06 per share  
in April 2000.                                                                  

   Daniels noted that public markets are often considered the most efficient
determinant of equity value and, as such, the more recent value of $0.06 in     
October and $0.08 in April were pertinent value parameters. In its April report,
because of the absence of any fundamental improvement in Nostalgia's operating  
results, Daniels discounted the year-to-date (January 1, 2000 through April 20, 
2000) average of $0.096 as reflecting investor hopes for a recapitalization     
event.                                                                          

     In both October and April, Daniels concluded that the market price analysis
implied an equity value per share in the range of $0.06 to $0.08 per share.     

Going Concern Value Analysis                                                    

    According to Daniels, under this analysis, cable networks tend to trade in
the range of 12 to 18 times their earnings before interest, taxes, depreciation 
and amortization (EBITDA). Daniels determined that this analysis would be       
irrelevant in evaluating Nostalgia since Nostalgia has negative EBITDA.         

Acquisition Value Analysis                                                      

  The acquisition value analysis applies the historical transaction values
paid by other purchasers for other networks to Nostalgia. The appropriate       
metrics for this analysis are EBITDA multiples and per subscriber values. Since 
Nostalgia has negative EBITDA, Daniels focused mainly on per subscriber values. 
The limitations posed by this type of analysis are that (i) information with    
regard to such comparable transactions is limited and factors that are not      
apparent may have affected the transaction values, and (ii) the analysis is     
based on full time equivalent (FTE) subscribers, which includes 24-hour analog  
and digital subscribers plus part time, satellite, tier and other subscribers   
converted to 24-hour equivalents, and these assumptions are likely to make the  
FTE measure imperfect.                                                          

     For its October report Daniels examined 25 transactions involving purchases
of media interests that took place between June 1993 and November 1998 and      
determined that its analysis of these historical transactions implied an average
of $12.00 per cable network subscriber. For its April report Daniels examined an
additional transaction involving the purchase of media interests that occurred  
in July 1999 and determined that the historical acquisition analysis implied an 
average of approximately $12.50 per cable network subscriber. For its analysis, 
Daniels examined all of the cable network programming acquisition transactions  
reported by Paul Kagan Associates, Inc. (an independent industry source) between
May 1998 and July 1999, except transactions for which terms were unavailable and
transactions involving sports-related networks. Daniels did not examine         
sports-related network acquisitions because these networks are generally        
considered substantially more valuable than general programming networks such as
Nostalgia and, as such, do not provide a realistic estimate of the acquisition  
value of Nostalgia.                                                             

   According to Paul Kagan, the average price per subscriber in transactions
commencing in 1990, was $12.50, based on FTE subscribers. Daniels believes that 
Nostalgia would be valued in a range of $12.00 to $14.00 per cable network      
subscriber. In selecting the range (which represents the lower end of the       
valuation range for recent transactions), Daniels noted the relatively small    
size of Nostalgia's network, Nostalgia's historical negative cash flow, the     
expectation that significant additional cash infusions would be required to     
bring the network to a break even level and the characteristics of Nostalgia's  
subscriber base. With respect to the subscriber base, Daniels noted in          
particular that, while the Network has approximately 9,200,000 total            
subscribers, its subscriber base is heavily weighted toward subscribers other   
than FTE subscribers. Therefore, Daniels concluded that the Nostalgia subscriber
base represents only approximately 6,900,000 subscribers on an FTE basis.       

Daniels noted that a per FTE subscriber value of $12.50 and 6,900,000 
subscribers yields a per share value of $(0.22). Daniels also indicated that,   
based on a range of $12.00 to $14.00 per FTE subscriber, the per share value of 
Nostalgia would range from $(0.39) to $0.29 and that, at $13.00, the midpoint of
the range, the per share value would be $(0.05). Daniels also noted that a per  
share value of $0.06 per share implies a value                                  

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of $13.32 per subscriber and that a per share value of $0.08 implied a per share
value of $13.38 per subscriber, both of which are in excess of the valuation    
that Daniels believes appropriate for the Nostalgia subscriber base. However, in
light of the inherent imprecision of the valuation process in general, the      
particular imprecision of computation of FTE subscribers, the $0.06 to $0.08 per
share valuation generated by the market price analysis and the possibility      
(though small likelihood) that the Nostalgia subscriber base could be sold at a 
value of $13.32 to $13.38 per subscriber, Daniels concluded that the acquisition
value analysis would support a valuation of $0.02 to $0.08 per share.           

Discounted Cash Flow Analysis                                                   

 The discounted cash flow analysis method forecasts the revenue and cash
flows of a company for a ten year period, applies a terminal value to the       
company in year ten and then discounts this value and the annual cash flows back
to the present at an applied discount rate. While warning that this type of     
analysis is highly speculative, Daniels examined two scenarios with regard to   
Nostalgia:                                                                      

    - In the first scenario, Daniels assumed that Nostalgia aggressively grows
    its subscriber base through the acquisition of subscribers. This would
require a significant capital commitment, the source of which is  
    uncertain. In its October report (using Nostalgia's budget results for
       1999), Daniels arrived at a value per share of $1.07. In its April report
     (using Nostalgia's actual results for 1999), Daniels arrived at a value
       per share of $0.91. Daniels believes that this type of analysis is highly
      speculative because it would require a capital infusion of approximately
     $100 million and the likelihood of such an infusion is remote given the
     relatively modest expected rate of return. Daniels also believes that a
  capital infusion of this size would be the minimum sum that would be
  required for Nostalgia to stop incurring losses for the next several
years.                                                            

- In the second scenario, Daniels examined the existing metrics and   
    dynamics of Nostalgia, to which it applied industry accepted analysis.
 For this scenario, Daniels assumes that Nostalgia does not grow its
      subscriber base through the acquisition of subscribers and relies purely
 on internal growth. This does not entail the capital commitments as
      described in the first scenario but involves significant annual negative
     cash flows. In this analysis, Nostalgia does not reach breakeven in the
ten year time period. This scenario creates no value for Nostalgia
       stockholders. In its October report (using Nostalgia's budget numbers for
 1999), under this scenario, Daniels arrived at a value per share of
       $(6.15). In its April report (using Nostalgia's actual results for 1999),
Daniels arrived at a value per share of $(6.28).                  

Conclusion                                                                      

In reviewing all of the valuation methodologies and the relative      
assumptions, Daniels believes that the most appropriate analyses are the market 
price and acquisition value analyses. A summary of Daniels' conclusions by      
methodology is listed below:                                                    

                                                                [Download Table]

                    ANALYSIS         EQUITY VALUE PER SHARE        
                    --------  -------------------------------------
                                                                   
Net Asset Value               negative                             
Market Price                  $0.06 to $0.08                       
Going Concern                 not meaningful                       
Acquisition Value             $0.02 to $0.08                       
Discounted Cash Flow          speculative; value created           
                              in proportion to capital commitments 

   Based on its review of the available information for Nostalgia, the cable
network industry and a review of appropriate financial metrics, Daniels believes
that the common stock should be valued at $0.06 to $0.08 per share.             

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OPINION OF THE FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE                       

Chatsworth is an investment banking firm which, among other things,   
provides financial advisory services in connection with mergers and             
acquisitions, private equity, financial advisory assignments and equity         
underwriting. Chatsworth was selected by the special committee based upon its   
expertise and prior experience with Mr. Wussler. In 1999, Mr. Wussler was chief 
executive officer and chairman of a public company the Board of Directors of    
which engaged Chatsworth to act as its financial advisor in connection with a   
proposed merger transaction. Chatsworth was the only firm considered by the     
special committee. Chatsworth delivered its written opinion to the Board of     
Directors on October 18, 1999 stating that the merger consideration is fair from
a financial point of view to Nostalgia's unaffiliated stockholders.             

 On January 27, 2000 and June 5, 2000, Chatsworth orally reconfirmed its
fairness opinion to the special committee and Chatsworth has informed Nostalgia 
that it will reconfirm its opinion as of the date of the special meeting. In the
event Chatsworth does not reconfirm its opinion as of the date of the special   
meeting and the parties elect to proceed with the merger, Nostalgia will        
distribute a revised proxy statement indicating that Chatsworth did not         
reconfirm its opinion and will resolicit proxies from Nostalgia's unaffiliated  
stockholders with respect to the merger. Chatsworth has consented to the use of 
its opinion in this proxy statement.                                            

    The full text of Chatsworth's written opinion is attached as Appendix B to
this proxy statement. Stockholders should read Chatsworth's opinion for a       
discussion of assumptions made, matters considered and limitations of the review
undertaken by Chatsworth in rendering its opinion. To fully understand          
Chatsworth's analysis, stockholders should read carefully the full text of      
Chatsworth's opinion attached as Appendix B to this proxy statement.            

No limitations were imposed by Nostalgia on the scope of Chatsworth's 
investigation or the procedures followed by Chatsworth in rendering its opinion.
Chatsworth's opinion is for the use and benefit of the special committee and    
Board of Directors and was rendered to the special committee in connection with 
its consideration of the merger. Chatsworth's opinion is not intended to be, and
does not constitute, a recommendation to any stockholder on how to vote on the  
merger. Chatsworth was not requested to opine as to, and its opinion does not   
address, Nostalgia's underlying business decision to proceed with, or effect,   
the merger.                                                                     

In connection with the preparation and delivery of its opinion to the 
special committee, Chatsworth performed a variety of financial and comparative  
analyses which are summarized below. The preparation of a fairness opinion      
involves various determinations as to the most appropriate and relevant methods 
of financial and comparative analysis and the application of those methods to   
the particular circumstances and, therefore, such an opinion is not readily     
susceptible to summary description. In arriving at its opinion, Chatsworth did  
not attribute any particular weight to any analysis or factor considered by it, 
but rather, made qualitative judgments as to the significance and relevance of  
each analysis and factor. Accordingly, Chatsworth's analyses must be considered 
as a whole and considering any portion of such analyses and factors, without    
considering all analyses and factors, could create a misleading or incomplete   
view of the process underlying Chatsworth's opinion. In its analyses, Chatsworth
made numerous assumptions with respect to industry performance, general business
and economic conditions and other matters, many of which are beyond the control 
of Nostalgia. Any estimates or projections contained in Chatsworth's analyses   
are not necessarily indicative of actual values or predictive of future results 
or values, which may be significantly more or less favorable than as set forth  
therein.                                                                        

For purposes of its opinion Chatsworth:                               

        - Reviewed certain publicly available financial statements and other
information of Nostalgia;                               

       - Reviewed certain internal financial and operating data concerning
Nostalgia prepared by management of Nostalgia;          

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       - Discussed the past and current operations and financial condition
         and the prospects of Nostalgia, including information relating to
        certain strategic, financial and operational issues, with senior
management of Nostalgia;                                

      - Reviewed the reported prices and trading activity for the common
stock; and                                              

    - Compared the financial performance of Nostalgia and prices and
       trading activity of the common stock with that of certain other
  comparable publicly traded companies and their securities.

   Chatsworth assumed and relied upon, without independent verification, the
accuracy and completeness of the information provided to it for the purposes of 
its opinion. With respect to the internal financial statements and other        
financial and operating data, including forecasts, and discussions relating to  
the strategic, financial and operational benefits anticipated from the merger,  
Chatsworth assumed that such materials were reasonably prepared on bases        
reflecting the best currently available estimates and judgments of the prospects
of Crown and Nostalgia. Chatsworth also relied upon, without independent        
verification, the assessment by management of Crown and Nostalgia of the        
strategic and other benefits expected to result from the merger. Chatsworth has 
not made any independent valuation or appraisal of the assets or liabilities of 
Crown or Nostalgia nor has it been furnished with any such appraisals.          
Chatsworth's opinion is based on financial, economic, market and other          
conditions as in effect on, and the information made available to it as of the  
date of its opinion and its opinion is for the use and benefit of the special   
committee and the Board of Directors. Chatsworth's opinion does not address the 
merits of the underlying decision by Crown to engage in the merger and does not 
constitute a recommendation to any stockholder of Nostalgia with respect to the 
merger proposal.                                                                

The following is a summary of the material financial and comparative  
analyses performed by Chatsworth and presented to the special committee and the 
Board of Directors. The following summary includes information relied upon by   
Chatsworth in its most recent confirmation of its fairness opinion to the Board 
of Directors. Certain of the analyses include information presented in tabular  
format. In order to fully understand the financial analyses used, the tables    
must be read together with the text of each summary. The tables alone do not    
constitute a complete description of the financial analyses. The methodologies  
used for the valuation were the following:                                      

- Financial Condition                                                 

- Market Comparable Valuation Analysis                                

- Stock Price Trading History and Analysis                            

- Valuation per Subscriber Analysis                                   

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FINANCIAL CONDITION                                                             

FINANCIAL CONDITION 

(IN MILLIONS OF DOLLARS)

                                                        [Enlarge/Download Table]

                                                            1Q 2000  FY 1999  FY 1998  FY 1997
                                                            -------  -------  -------  -------
                                                                                              
Income Statement Profile                                                                      
  Total Operating Revenues................................. $ 1.58   $ 5.42   $ 5.53   $ 7.18 
     Affiliated Revenue....................................    .55     2.09     2.53     2.58 
     Advertising Revenue...................................    .83     3.29     2.97     4.48 
     Other.................................................    .20      .04      .03      .12 
                                                            ------   ------   ------   ------ 
                                                              1.58     5.42     5.53     7.18 
  Total Operating Expenses.................................   (4.7)   (20.7)   (24.1)   (23.5)
  Net Loss.................................................   (5.0)   (21.2)   (23.1)   (18.9)
Balance Sheet Profile                                                                         
  Total Assets.............................................   11.4     12.7     13.0     17.0 
  Long Term Debt...........................................   89.8     88.6     66.7     46.0 
  Stockholders Deficit.....................................  (87.6)   (82.6)   (61.4)   (38.4)
  Book Value per share.....................................  (4.32)   (4.07)   (3.03)   (1.89)
Operating Profile                                                                             
  Subscribers (in millions)................................    9.6      9.2      7.7      7.0 
  Net Ad Revenue per Subscribers (in dollars)..............    N.A      .14      .16      .22 

     Nostalgia's market capitalization is $810,000 (as of June 1, 2000). For the
past three fiscal years, Nostalgia has been incurring net losses per annum of   
approximately $20.0 million per year. Total Stockholders Deficit is $87.6       
million (as of March 31, 2000).                                                 

 Nostalgia's ability to continue to operate is entirely dependent on the
financial support provided by its affiliates, Crown and Concept. Since 1990,    
Crown and Concept have been the principal source of Nostalgia's capital; and    
since 1994, they have provided over $90.0 million of debt and equity financing  
for Nostalgia.                                                                  

    Nostalgia's most important asset is its subscriber base. Substantially all
of Nostalgia's revenues are a function of its subscriber base. Affiliate revenue
is measured directly by the number of Nostalgia's subscribers and its net ad    
revenue per subscriber. From fiscal year 1997 to fiscal year 1999, total        
subscribers increased 31.0% while net ad revenue decreased 57.0%, from $0.22 in 
fiscal year 1997 to $0.14 in fiscal year 1999.                                  

Nostalgia Stock Price and Trading Volume                                    

  Nostalgia's stock trades on the Nasdaq OTC Bulletin Board. The stock was
quoted at $0.04 per share as of June 1, 2000. For the month of May 2000, the    
stock traded at an average price of $0.05-$0.06 per share. Total trading volume 
for the month was 58,700 shares representing total dollar volume activity for   
the month of $3,230.                                                            

Determination of Fairness                                                   

The following factors were considered by Chatsworth to determine the  
fairness of the proposed merger to unaffiliated security holders:               

   Nostalgia's financial condition remains weak. Given the negative net book
value per share of $ (4.32) and the continuing losses of approximately $20.0    
million per annum, Nostalgia is not a viable going concern without the deficit  
financing provided by its affiliates, Crown and Concept. In addition, the       
section on Liquidation Valuation Analysis provides an analysis that shows the   
stock price per share would at most be worth approximately negative $(0.44) per 
share on a liquidation basis.                                                   

 Chatsworth analyzed Nostalgia's stock price trading history (see "Stock
Price Trading History and Analysis") for the past two years. Chatsworth noted   
that the stock is presently quoted at $0.04 per share (as of June 1, 2000). For 
the month of May 2000, the stock traded at an average price of $0.05 - $0.06 per
share.                                                                          
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Total trading volume for the month was 58,700 shares, representing total dollar 
volume activity for the month of $3,230. Nostalgia's stock is illiquid.         
Frequently, the stock will not trade for several consecutive days and typically 
when it does trade, volume is light. In 1999 and 2000, speculative trading      
spikes briefly occurred representing abnormally high prices and trading volumes.
Although trading spikes do occur from time to time, the stock does not          
consistently maintain a price above $0.05 - $0.06 per share nor dollar trading  
volume in excess of $5,000 to $10,000 per week.                                 

  Nostalgia has sought a strategic partner during the past two years in an
effort to increase market share in a cost effective manner. It is believed that 
a strategic partner would enable Nostalgia to grow while at the same time       
achieving economies of scale. Accordingly, it is expected that a strategic      
alliance would result in an improvement in financial and operating ratios. As of
the date hereof, Nostalgia has not concluded a strategic partnership.           

For purposes of determining the fairness of the offer to unaffiliated 
stockholders, Chatsworth gave the strongest weight to the financial condition of
Nostalgia given the high negative net book value per share and negative         
liquidation value. Chatsworth also gave a strong weight to the financial and    
operating ratios in relationship to the industry average. This information shows
that Nostalgia will have difficulty developing into a viable going concern given
the present ratios which are not competitive with the industry. Nostalgia's     
stock is illiquid and is subject to periodic speculative activity. As a         
consequence, Nostalgia's stock price does not represent a meaningful valuation  
criteria on a fundamental basis given the present financial condition of        
Nostalgia.                                                                      

Based on the negative book value per share $(4.32) and the negative   
liquidation value per share $(0.44) of Nostalgia, and the fact that the stock in
recent and historic trading has not maintained a price in excess of $0.06, the  
offer price of $0.07 per share to the unaffiliated stockholders represents a    
premium over the current value of the Nostalgia common stock. Moreover, the fact
that Nostalgia has been unable to attract a strategic partner and cannot        
continue as a viable concern without substantial deficit financing provided by  
Crown and Concept suggests that the value of the Nostalgia common stock is      
unlikely to improve in the future. In light of these factors, Chatsworth        
concluded that the offer price of $0.07 per share to the unaffiliated           
stockholders is fair from a financial point of view.                            

MARKET COMPARABLE VALUATION ANALYSIS                                            

     Market Comparable Valuation Analysis is of limited value given the illiquid
nature of the common stock. In addition, the most common criteria used for      
comparative valuation analysis are EBITDA, net income and book value, which are 
all negative for Nostalgia. However, Chatsworth believes the following ratios   
provide some basis for comparison with Nostalgia's peer group.                  

    Chatsworth analyzed audited financial statements, Nostalgia's filings with
the SEC and financial and market information from comparable "peer group"       
companies. Comparable "peer group" companies are those companies that have a    
similar business and financial profile. In the cable TV industry, there are few 
public companies that are comparable to Nostalgia. Therefore, the following     
section on Market Comparable Valuation Analysis includes both recent            
acquisitions as well as publicly traded companies for the purpose of the peer   
group analysis. The most commonly used valuation multiples are enterprise value 
(EV) relative to sales, operating cash flow (EBITDA), net income, book value and
total debt. Chatsworth's analysis shows that none of Nostalgia's ratios except  
"Enterprise Value/Subscribers" are comparable to similar companies in the       
market. This is reflected in the low stock price and market capitalization of   
Nostalgia. Enterprise value is defined as market capitalization (current market 
price times the number of shares of common stock outstanding) plus short and    
long term debt plus preferred stock less cash and cash equivalents.             

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    As Nostalgia has negative EBITDA, net income and book value ratio analysis
for these multiples was not considered meaningful by Chatsworth. However,       
Chatsworth believes the following ratios provide a basis for comparison with    
Nostalgia's peer group:                                                         

EV/Sales:                        Nostalgia's ratio of 15.6x is substantially    
                               higher than the 3.1x for the peer group. This
                      reflects below average revenue given
            Nostalgia's level of debt.

Total Debt/EV:                   Nostalgia's ratio of 1.0x versus .18x also     
                                reflects a significantly greater level of debt
                           versus its current market capitalization.

EV/Subscribers:                  Nostalgia's EV/subscriber ratio is 10.3x       
                            compared to 12.1x for the peer group shown
                                below (excluding ValueVision*). This indicates
                               that the common stock is reasonably valued at
                                 current levels and the offer price of $0.07 per
                             share is fair compared to Nostalgia's stock
                           price of $0.05 on June 1, 2000. The EV or
                       Enterprise Value is defined as market
                               capitalization plus preferred stock plus long
                         and short term debt minus cash and cash
                              equivalents. The EV divided by the number of
                               subscribers provides a ratio that serves as a
                               basis to compare whether comparable companies
                                are expensive or inexpensive relative to their
                                peer group based on these particular criteria.
                            The EV/Subscriber ratio for the peer group
                              ranges from a low of 4.3x to a high of 26.5x
                             (excluding ValueVision) and averages l0.lx.
                                Nostalgia's ratio of 10.3x is in line with the
                                peer group ratio of 12.lx. This indicates that
                            Nostalgia common stock is fairly valued at
                                current levels and relative to its peer group.
                       Since this methodology indicates that
                             Nostalgia's stock price is presently fairly
                        valued as compared to the companies in
                               Nostalgia's peer group, and the price offered
                               to the unaffiliated stockholders represents a
                             40.0% premium over the present value of the
                                Nostalgia stock price, the consideration to be
                                paid in the merger is fair to the unaffiliated
stockholders. 

---------------                                                                 
(*) ValueVision's stock price appreciated significantly after its announcements 
concerning:                                                             

   - ValueVision's agreement with IBM to implement ValueVision's TV/Internet
convergence strategy,                                             

 - ValueVision's investment with General Electric and NBC in Telocity to
accelerate the use of high-speed Internet access, and             

     - ValueVision's investment with NBC in ROXY.com for multifaceted agreements
covering television and Internet programming and marketing.       

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MARKET COMPARABLES(1) 

(All Figures are in Millions, and Per Share)

                                                        [Enlarge/Download Table]

                                        RECENT ACQUISITIONS                        PUBLICLY TRADED          
                        ---------------------------------------------------  ---------------------------    
                        BTV(2)   SPZE(3)   E!(4)   CMT(4)   FAM(4)   TFN(4)   SATH      VVTV     NNET(5)    
                        ------   -------   -----   ------   ------   ------  ------   --------   -------    
                                                                                                            
Price Per Share                                                                                             
  (6/5/00).............    NA        NA                                          4 5/8       30 1/8   0.05  
  52 Wk High...........    63 1/16      7 3/32                                  14 3/4       62    0.23     
  52 Wk Low............    38 3/4      4 1/2                                     3 15/16       15 1/4   0.03
Shares Outstanding                                                                                          
  (millions)...........  10.1       3.4                                       30.9        38.2     20.3     
Market Cap............. $634.5   $ 94.1                                      $142.8   $1,150.5   $  1.0     
ST Debt + LT Debt...... $48.0    $ 12.3                                      $113.4   $   58.3   $ 99.0     
Cash & Equivalents..... $ 9.8    $  1.7                                      $ 8.1    $  138.2   $  1.1     
Preferred Stock........ $  --    $   --                                      $ 1.0    $   41.6   $  0.0     
Minority Interest...... $  --    $   --                                      $  --    $     --   $   --     
Enterprise Value                                                                                            
  (EV)................. $672.8   $104.7                                      $249.0   $1,112.2   $ 98.9     
Sales.................. $166.2   $ 30.9                                      $194.5   $  302.8   $  6.3     
CashFlow............... $47.7    $  2.5                                               $     --   $   --     
Book Value............. $113.3   $ 13.2                                      $85.8    $  413.5              
Subscribers (mm).......  56.7      22.1                                       58.4        33.1      9.6     
EV/Market Cap(6).......  1.06x     1.11x                                      1.74x       0.97x   97.57x    
EV/Sales(6)............  4.05x     3.39x                                      1.28x       3.67x   15.61x    
EV/Book Value(6).......  5.94x     7.91x                                      2.90x       2.69x      NA     
Total Debt/ EV.........  0.07x     0.12x                                      0.46x       0.05x    1.00x    
Market Cap/Book Value..  5.60x     7.11x                                      1.66x       2.78x      NA     
EV/Cash Flow(6)........ 14.11x    42.39x                                        NA          NA       NA     
Market                                                                                                      
  Cap/Subscriber.......  11.2x      4.3x                                       2.4x       34.8x     0.1x    
EV/SUBSCRIBERS(6)......  11.9X      4.7X   13.0X    14.5X    26.5X    9.5X     4.3X       33.6X    10.3X    

---------------                                                                 
(1) BTV (Black Entertainment), SPZE (Spice), E!(Entertainment), CMT (Country    
  Music Channel), FAM (Family Channel), TFN (TV Food Network), SATH (Shop at
Home), VVTV(ValueVison), NNET (GoodLife).                               

(2) Acquired for $63 per share effective 8/3/98.                                

(3) Acquired on March 16, 1999 for $105 million in cash, stock in Playboy Class 
B and Directrix and assumption of debt. Approximate value is $27.8 per  
share.                                                                  

(4) Only "EV/Subscriber" is available as these companies were private at the    
time of acquisition.                                                    

(5) Price per share is based on the average of the actual trading prices over   
the prior ten trading days.                                             

(6) EV is Enterprise Value which is defined as market capitalization plus       
preferred stock plus long and short term debt minus cash and cash       
equivalents.                                                            

STOCK PRICE TRADING HISTORY AND ANALYSIS                                        

The common stock volume and trading history was analyzed to determine 
liquidity, the frequency of trading, the average size stock trade, the average  
price for stock trades within the past twelve months and the premium represented
by the merger consideration in relation to the current bid price.               

Chatsworth concluded that the most significant activity during 1999   
occurred on January 6, 7 and 8 as the apparent result of speculation by day     
traders in response to the announcement that Crown was seeking a strategic      
partner for Nostalgia. The speculative trading activity that occurred in early  
January 1999 has been excluded from Chatsworth's analysis since Chatsworth      
concluded it does not reflect normal trading activity.                          

To conduct its analysis, Chatsworth developed a model showing the     
cumulative trading volume for each respective price from $0.01 to $0.18 during  
the 12 month period ended December 31, 1999 to show whether an offer of $0.07   
per share would represent a price higher than 83.0% of all normal stock trades  
during the preceding year.                                                      

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 For the month of December 1999, the average closing price of the common
stock was $0.0476 per share. The cash price offered of $0.07 pursuant to the    
merger proposal represents approximately a 50.0% premium over the average       
closing price of $0.0476 per share of the common stock. The offer price by an   
acquiror for the public stock of an acquiree will normally be at a premium of   
20.0-30.0% above the current market price of the acquiree's stock price.        
Accordingly, Chatsworth believes that the offer price, at the time of its       
opinion, for a 50.0% premium above the current market price, represents a fair  
offer to the unaffiliated stockholders of Nostalgia. On June 1, 2000,           
Nostalgia's stock price was $0.05 per share for the previous ten trading days.  
Thus, the offer price presently represents a 40.0% premium over the stock price 
on June 1, 2000.                                                                

PRICE/VOLUME TABLE(1) 

                                                                [Download Table]

                                                                        PERCENT OF 
                    PRICE                    VOLUME                    TOTAL VOLUME
                    -----                    -------                   ------------
                                                                                   
                    $0.010                   228,400                        9.6%   
                    $0.015                   214,000                       18.6%   
                    $0.020                    75,000                       21.8%   
                    $0.030                   205,500                       30.5%   
                    $0.035                   258,400                       41.4%   
                    $0.050                   326,900                       55.1%   
                    $0.055                   239,000                       65.2%   
                    $0.060                   301,300                       77.9%   
                    $0.065                    33,200                       79.3%   
  PRICE FOR MERGER  $0.070                    87,400                       83.0%   
-----------------------------------------------------------------------------------
                    $0.080                    99,200                       87.2%   
                    $0.090                     2,300                       87.3%   
                    $0.094                    35,000                       88.8%   
                    $0.095                    74,600                       91.9%   
                    $0.100                   123,900                       97.1%   
                    $0.110                    11,600                       97.6%   
                    $0.120                    56,800                      100.0%   
                    $0.130                        --                      100.0%   
                    $0.180                        --                      100.0%   

---------------                                                                 
(1) Represents volume trading at each respective price during 1999 except the   
volume which occurred during January 7, 1999 through January 11, 1999.  

VALUATION PER SUBSCRIBER ANALYSIS                                               

The basis for comparison was the price paid per subscriber which is   
calculated by dividing the value of the transaction by the number of            
subscribers.                                                                    

    The companies used in the following analysis were chosen because they have
a similar business and financial profile. In the cable television industry,     
there are few public companies that are comparable to Nostalgia. Therefore, the 
following analysis includes both recent acquisitions as well as publicly traded 
companies.                                                                      

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Comparable Transactions                                                     

  The following sets forth certain merger and acquisition transactions for
basic cable networks:                                                           

                                                                [Download Table]

  DATE                     NETWORK                    VALUE     SUBS     PER SUB
--------    -------------------------------------    -------    -----    -------
                                                     ($ MIL)    (MIL)      ($)  
                                                                                
11/01/98    Odyssey Channel......................      222       30        7.40 
11/01/98    ZDTV.................................      162        9       18.00 
12/01/98    Eye on People........................      100       11        9.10 
02/01/99    The Travel Channel...................      176       20        8.80 
                                                                          ----- 
Weighted Average (excluding ZDTV)................                          8.20 

---------------                                                                 
Source: Paul Kagan Associates, Inc.                                             

Chatsworth does not consider ZDTV to be a comparable transaction and  
excluded it from the calculation of the weighted average "Per Sub" valuation.   
ZDTV is the Internet cable channel purchased by Ziff-Davis from Softbank. Paul  
Allen's Vulcan Ventures also announced a $54.0 million investment for one-third 
ownership simultaneous with the purchase by Ziff-Davis. Advertisers on ZDTV     
include 3Com, America Online, Barnes & Noble, Canon, Charles Schwab, Comdisco,  
Dell, Earthlink, Egghead, IBM, Intel, Hewlett Packard, Micron, Microsoft, NEC,  
Packard Bell, PSI Net, Siebel Systems, Sprint, Sun Microsystems and ONSALE.     

    The weighted average value "Per Sub" for the above transactions, excluding
ZDTV, is $8.20. This includes the value of $8.80 per subscriber for The Travel  
Channel transaction which closed on February 1, 1999. Chatsworth noted that     
three separate equity investments in The Travel Channel which closed from June  
1997 to September 1997 ranged from $1.43 to $3.75 "Per Sub". Chatsworth also    
noted that while $8.20 was used for purposes of presenting a conservative       
valuation methodology, Chatsworth does not believe that it represents           
Nostalgia's true value per subscriber which is lower for the following reasons: 

 - Only 60.0% of Nostalgia's subscribers are full-time (see "Nostalgia's
Subscribers");                                                    

- Nostalgia does not have a high concentration of subscribers in urban
markets;                                                          

 - Nostalgia is not able to carry national advertising given the present
size and demographic profile of its subscriber base; and          

- Nostalgia's programming is not being carried by the highest profile 
networks.                                                         

Liquidation Valuation Analysis                                              

Nostalgia had 9,604,178 total subscribers as of March 31, 2000. As    
described above, only 60.0% of Nostaglia's total subscribers are full-time;     
however, to be conservative, all subscribers including part-time subscribers are
considered to be full-time subscribers for purposes of Chatsworth's valuation.  
The total subscribers of Nostalgia valued at $8.20 per subscriber gives an      
implied value for the sale of Nostaglia's subscriber base of $78,754,259.       
Nostaglia's balance sheet as of March 31, 2000 shows total liabilities of       
$98,957,023 and total assets of $11,374,580 for a net asset value of            
$(87,582,443). The subscriber base has an implied liquidation value of          
$78,754,259. This liquidation value less the net asset value of $(87,582,443)   
gives a valuation for Nostalgia of $(8,828,184) or $(0.44) per share of common  
stock.                                                                          

CONCLUSION                                                                      

     On the basis of and subject to the foregoing, Chatsworth concluded that the
cash consideration of $0.07 per share to be paid to Nostalgia's unaffiliated    
stockholders in the merger (including the holders of preferred stock, the       
consideration for which was determined on an as converted basis) is fair from a 
financial point of view. On January 27, 2000, and again on June 5, 2000,        
Chatsworth orally confirmed its fairness opinion to the Board of Directors.     
Chatsworth has agreed to reconfirm its opinion as of the date of the special    
meeting.                                                                        

   Pursuant to an August 27, 1999 engagement letter, Nostalgia agreed to pay
Chatsworth a financial advisory fee of $50,000, (which has been paid) for acting
as financial advisor to the special committee; to                               
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reimburse Chatsworth for all reasonable expenses incurred as the special        
committee's financial advisor; and to indemnify Chatsworth against certain      
liabilities relating to, or arising out of, its engagement. Pursuant to a       
September 23, 1999 letter agreement, Nostalgia agreed to pay Chatsworth an      
additional $50,000 (which has been paid) for its fairness opinion. Nostalgia    
also has agreed to pay Chatsworth an additional $25,000 for reconfirming its    
fairness opinion to the special committee based on information as of December   
31, 1999. Prior to acting as financial advisor to the special committee,        
Chatsworth had not provided any services to Nostalgia or any members of the     
Concept Group or the Atlantic Video Group.                                      

Nostalgia's Board of Directors and the special committee have adopted 
Chatsworth's analysis as to the fairness of the merger transaction.             

USE OF FORECASTS AND PROJECTIONS

     Nostalgia does not prepare three or five year financial forecasts. However,
at the time Chatsworth made its presentation to Nostalgia's Board of Directors, 
Nostalgia had a draft budget for the fiscal year 2000. The draft budget         
projected total revenue of $6,011,235, total expenses (including interest       
expense) of $27,493,199 and a net loss of $(21,481,964). As the draft budget did
not forecast material improvement, but rather projected substantial net losses  
for Nostalgia in 2000, compared to the twelve months ended December 31, 1999,   
the offer price of $0.07 per share to the unaffiliated stockholders is fair     
given the financial condition of Nostalgia. This draft budget was subsequently  
approved by Nostalgia's Board of Directors. Chatsworth used these budget        
forecasts in reaching its fairness determination. The special committee relied  
upon the opinion of Chatsworth in making its fairness determination.            

    Other than those provided by Daniels in its reports and, in addition, with
regard to the Atlantic Video Group, those provided by Chatsworth, neither the   
Concept Group or the Atlantic Video Group considered any financial forecasts or 
other material projections in making their respective determinations with regard
to the fairness of the merger. After reviewing Daniels' analysis, the members of
the Concept Group and the Atlantic Video Group, have adopted the conclusions of 
Daniels as their own.                                                           

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WHERE YOU CAN FIND MORE INFORMATION 

  Nostalgia is subject to the informational requirements of the Securities
Exchange Act of 1934, pursuant to which it files reports and other information  
with the United States Securities and Exchange Commission. Such reports and     
other information may be inspected and copied at public reference facilities    
maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,    
Washington, D.C. 20549, and at the SEC's Regional Offices at 13th Floor, 7 World
Trade Center, New York, New York 10048, and Citicorp Center, 500 West Madison   
Street, Suite 1400, Chicago, Illinois 60661, and copies may be obtained at      
prescribed rates from the Public Reference Section of the SEC at its principal  
office in Washington, D.C. The SEC also maintains an internet web site that     
contains periodic and other reports, proxy and information statements and other 
information regarding registrants that file electronically with the SEC,        
including Nostalgia. The address of the SEC's web site is http://www.sec.gov.   

  None of Capital, Crown, Concept, NNI Acquisition, Atlantic Video, One Up
Enterprises or Unification Church International is subject to the periodic      
reporting requirements of Section 13 or Section 15 of the Exchange Act.         

    All information concerning Nostalgia contained in this proxy statement has
been furnished by Nostalgia, and certain information concerning Capital, Crown, 
Concept and NNI Acquisition contained in this proxy statement has been furnished
by Capital, Crown, Concept, and NNI Acquisition. Atlantic Video, One Up         
Enterprises or Unification Church International have furnished the information  
concerning the Atlantic Video Group and its affiliates. No person is authorized 
to make any representation with respect to the matters described in this proxy  
statement other than those contained in this proxy statement, and if given or   
made, must not be relied upon as having been authorized by Nostalgia, Capital,  
Crown, Concept, NNI Acquisition, the Atlantic Video Group or any other person.  

We have not authorized anyone to give any information or make any     
representation about the merger, our company, Crown, Concept, Capital, NNI      
Acquisition, Atlantic Video, One Up Enterprises or Unification Church           
International that is different from, or in addition to, that contained in this 
proxy statement or in any of the materials that we have incorporated into this  
document. Therefore, if anyone does give you information of this sort, you      
should not rely on it. This proxy statement is dated                , 2000. You 
should not assume that the information contained in this document is accurate as
of any other date unless the information specifically indicates that another    
date applies.                                                                   

FORWARD LOOKING STATEMENTS

This proxy statement contains certain forward-looking statements which
represent Nostalgia's, the Concept Group's and the Atlantic Video Group's       
expectations or beliefs, including, but not limited to, statements concerning   
industry performance, regulatory environment and Nostalgia's operations,        
performance, financial condition, plans, growth and strategies. Any statements  
contained in this proxy statement which are not statements of historical fact   
may be deemed to be forward-looking statements. Without limiting the generality 
of the foregoing, words such as "may," "will," "expect," "anticipate," "intend,"
"could," "estimate" or "continue," or the negative or other variations thereof  
or comparable terminology are intended to be forward-looking statements. These  
statements by their nature involve substantial risks and uncertainties, certain 
of which are beyond Nostalgia's, the Concept Group's and the Atlantic Video     
Group's control, and actual results may differ materially depending on a variety
of important factors, many of which are beyond Nostalgia's, the Concept Group's 
and the Atlantic Video Group's control.                                         

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COMPARATIVE PER SHARE MARKET INFORMATION

     During the first three quarters of 2000, and each quarter of 1999 and 1998,
the common stock was quoted on the Nasdaq OTC Bulletin Board. The following     
table sets forth, for the first three quarters of 2000 and each quarter of 1999 
and 1998, the high bid and low bid quotations for the common stock as reported  
on the Bulletin Board. These quotations are representative of prices between    
dealers, do not include retail markups, markdowns or commissions and may not    
represent actual transactions.                                                  

                                                                [Download Table]

                                                                COMMON STOCK    
                                                             -------------------
                                                             HIGH BID    LOW BID
                                                             --------    -------
                                                                                
2000                                                                            
----                                                                            
First Quarter...............................................  $0.23       $0.05 
Second Quarter..............................................   0.11        0.03 
Third Quarter...............................................   0.05        0.03 
1999                                                                            
----                                                                            
First Quarter...............................................   0.24        0.01 
Second Quarter..............................................   0.10        0.05 
Third Quarter...............................................   0.08        0.05 
Fourth Quarter..............................................   0.08        0.03 

1998                                                                            
----                                                                            
First Quarter...............................................   0.05        0.04 
Second Quarter..............................................   0.04        0.03 
Third Quarter...............................................   0.03        0.02 
Fourth Quarter..............................................   0.02        0.01 

     As of                , 2000, there were approximately                record
holders of common stock.                                                        

Nostalgia has not paid a dividend since its inception and does not    
anticipate paying a dividend on its common stock or preferred stock in the      
foreseeable future.                                                             

     On October 20, 1999, the last full trading day prior to announcement of the
proposed merger, the last reported sale price per share of common stock on the  
Bulletin Board was $0.05. On                , 2000 the last reported sale price 
per share of common stock on the Bulletin Board was $          .                

    As of December 31, 1999, the book value per share of Nostalgia was $(4.07)
and the basic and diluted loss per share was $(1.05).                           

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THE SPECIAL MEETING 

GENERAL                                                                         

This proxy statement is being furnished to holders of common stock and
preferred stock in connection with the solicitation of proxies by the Board of  
Directors for use at the special meeting to be held on                2000,     
11:00 a.m., local time, at 650 Massachusetts Avenue, N.W., Washington, D.C., and
at any adjournments or postponements of the special meeting. This proxy         
statement, the attached notice of the special meeting and the accompanying proxy
card are first being mailed to stockholders of Nostalgia on or about            
, 2000.                                                 

MATTERS TO BE CONSIDERED                                                        

 At the special meeting, holders of record of common stock and preferred
stock on             , 2000 will consider and vote upon:                        

   - The merger of NNI Acquisition with and into Nostalgia pursuant to which
Nostalgia will become wholly owned by Crown and Concept; and      

  - Such other business as may properly come before the special meeting or
any adjournments or postponements of the special meeting.         

RECOMMENDATION OF THE BOARD OF DIRECTORS                                        

  Upon the recommendation of the special committee, the Board of Directors
(with Mr. Joo, not participating in any meetings concerning, or voting on, the  
merger) has unanimously approved the merger and the merger agreement, having    
concluded that the merger and the merger agreement are fair to, and in the best 
interests of, Nostalgia and its stockholders. The Board of Directors (with Mr.  
Joo not participating in any meetings concerning, or voting on, the merger or   
the merger agreement) unanimously recommends that stockholders of Nostalgia vote
"FOR" the merger proposal. See "SPECIAL FACTORS -- Recommendation of the Board  
of Directors; -- Reasons for the Merger; Fairness Considerations."              

RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM                                    

 The Board of Directors has fixed the close of business on             ,
2000 as the record date for determining the holders of shares of common stock   
and preferred stock who are entitled to notice of, and to vote at, the special  
meeting. As of the record date, 20,275,370 shares of common stock and 3,250     
shares of preferred stock were issued and outstanding and held of record by     
approximately                stockholders. The holders of record on             
 , 2000 of shares of common stock are entitled to one vote per share of common
stock. The holders of record on             , 2000 of shares of preferred stock 
are entitled to vote with the common stockholders and to 100 votes for each     
share of preferred stock. In addition to being entitled to be voted with shares 
of common stock, pursuant to Nostalgia's certificate of incorporation, approval 
of the merger requires the affirmative vote of a majority of the issued and     
outstanding shares of preferred stock voting separately as a class. Nostalgia   
has determined that, pursuant to the Delaware General Corporation Law and       
Nostalgia's certificate of incorporation, the presence of holders of shares     
representing a majority of the outstanding shares of common stock and preferred 
stock entitled to be voted, whether in person or by properly executed proxy, is 
necessary to constitute a quorum for the transaction of business at the special 
meeting. Under the Delaware General Corporation Law, abstentions and "broker    
non-votes" (i.e., proxies from brokers or nominees indicating that such persons 
have not received instructions from the beneficial owner or other persons       
entitled to vote shares as to a matter with respect to which the brokers or     
nominees do not have discretionary power to vote) will be treated as present for
purposes of determining the presence of a quorum.                               

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PROXIES; PROXY SOLICITATION                                                     

     Shares of common stock represented by properly executed proxies received at
or prior to the special meeting that have not been revoked will be voted at the 
special meeting in accordance with the instructions indicated on the proxies.   
Shares of common stock represented by properly executed proxies for which no    
instruction is given will be voted "FOR" the merger proposal. Stockholders are  
requested to complete, sign, date and promptly return the enclosed proxy card in
the postage-prepaid envelope provided for this purpose to ensure that their     
shares are voted.                                                               

    Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by:            

  - Filing with the Secretary of Nostalgia, at or before the taking of the
   vote at the special meeting, a written notice of revocation bearing a
later date than the proxy;                                        

    - Executing a later dated proxy relating to the same shares and delivering
   it to the Secretary of Nostalgia before the taking of the vote at the
special meeting; or                                               

   - Attending the special meeting and voting in person (although attendance
 at the special meeting will not, in and of itself, revoke a proxy).

Any written revocation or subsequent proxy should be sent so as to be delivered 
to The Nostalgia Network, Inc., 650 Massachusetts Avenue, N.W. Washington, D.C. 
20001, Attention: Corporate Secretary, or hand delivered to the Secretary of    
Nostalgia or his representative at or before the taking of the vote at the      
special meeting.                                                                

If the special meeting is postponed or adjourned, at any subsequent   
reconvening of the special meeting all proxies will be voted in the same manner 
as such proxies would have been voted at the original convening of the special  
meeting (except for any proxies that previously have been revoked or withdrawn  
effectively), notwithstanding that they may have been effectively voted on the  
same or any other matter at a previous meeting.                                 

   Nostalgia will bear the cost of soliciting proxies from its stockholders.

EFFECTS OF ABSTENTIONS AND BROKER NON-VOTES                                     

   For purposes of determining approval of the merger proposal and any other
proposal to be presented at the special meeting, abstentions will have the same 
legal effect as a vote "against" a matter presented at the meeting. Broker      
non-votes will have the same effect as a vote "against" the merger proposal.    

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THE CONCEPT GROUP 

The Concept Group, which owns a majority of the outstanding stock of  
Nostalgia, consists of Capital, Crown, Concept and NNI Acquisition. The         
following is a brief description of the business conducted by each of Capital,  
Crown, Concept and NNI Acquisition and identifies each of their respective      
executive officers and directors.                                               

  NNI Acquisition is a Delaware corporation formed to own the common stock
and preferred stock of Nostalgia and to facilitate the merger. Upon consummation
of the merger, NNI Acquisition will be merged with and into Nostalgia and       
Nostalgia will be wholly owned by Concept and Crown. The directors and executive
officers of NNI Acquisition are Mr. Joo (president) and Werner Seubert (vice    
president).                                                                     

    Concept has diverse interests in the communications and telecommunications
industries with ownership interests in firms principally involved in video      
newsgathering and transmission services, corporate video communication and      
program production and post-production, including Pyramid Video and Potomac     
Television. Messrs. Joo and Seubert and Max Hugel are the directors of Concept, 
and Messrs. Joo and Seubert are the president and vice president, respectively, 
of Concept.                                                                     

  Crown owns a majority of the capital stock of Concept. Crown has diverse
interests in the communications and telecommunications industries through       
operation of a satellite up-linking business and its majority ownership interest
in Concept. Mr. Joo, Theodore Agres, Robert Morton, Pauline Eby and Peter Gogan 
are the directors of Crown, and Messrs. Joo (president) and Seubert (vice       
president) are the executive officers of Crown.                                 

   The sole stockholder of Crown is Capital. Capital is a Delaware non-stock
corporation, which indirectly owns interests in firms involved in the           
communications and telecommunications industries through its ownership of Crown.
Mr. Joo, Neil A. Salonen, Thomas Ward, Anthony Guerra and Michael McDevitt are  
the members of Capital. Mr. Joo, Keith Cooperrider and Mr. Gogan are the        
directors of Capital. Messrs. Joo (president) and Seubert (vice president) are  
the executive officers of Capital.                                              

The principal business address for Concept, Crown, Capital and NNI    
Acquisition is 650 Massachusetts Avenue, N.W., Washington, D.C. 20001. The      
telephone number is (202) 789-2124.                                             

     For the last five years, Mr. Joo's primary employment has been as president
of News World Communications, Inc. (an affiliate of the Atlantic Video Group and
publisher of The Washington Times newspaper). Mr. Joo also has held and holds   
other positions within the Atlantic Video Group (including chief executive      
officer of Atlantic Video and president of Unification Church International).   
See "THE MERGER -- Interests of Certain Persons in the Merger." Mr. Joo's       
business address is 3600 New York Avenue, N.E., Washington, D.C. 20002. Mr. Joo 
is a citizen of the United States.                                              

  Mr. Hugel is chairman of the Board of Rockingham Venture, Inc., which is
engaged in the operation of a racetrack. The principal offices of Rockingham    
Venture are located at Rockingham Park Boulevard, P.O. Box 45, Salem, New       
Hampshire 03079, which is Mr. Hugel's business address. Mr. Hugel is a citizen  
of the United States.                                                           

    For the last five years, Mr. Seubert has been controller of Atlantic Video
and, until February 1998, was its vice president. Mr. Seubert's business address
is 650 Massachusetts Avenue, N.W., Suite 200, Washington, D.C. 20001. Mr.       
Seubert is a citizen of the Federal Republic of Germany.                        

     Messrs. Morton, Gogan, Agres and Cooperrider have been principally employed
by The Washington Times for the last five years. For the last three years and   
until August 2000, Ms. Eby was principally employed by the Washington Times as  
executive assistant to the President. For the two years prior to her employment 
with The Washington Times, Ms. Eby was principally employed by Atlantic Video.  
Since August 2000, Ms. Eby has been an employee of the Prince Georges County    
Public Schools. The business address of Messrs. Morton, Grogan, Agres and       
Cooperrider and the principal offices of The Washington Times are located at    
3600 New York Avenue, N.E., Washington, D.C. 20002. Ms. Eby's business address  
is 14201 School Lane, Upper Marlboro, MD 20772. For the past five years, Mr.    
Cooperrider has been employed as treasurer of The Washington Times. Mr. Morton  
serves as assistant managing editor, Mr. Gogan serves as special assistant to   
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the president and Mr. Agres is the deputy managing editor of The Washington     
Times newspaper. Messrs. Morton, Gogan, Agres and Cooperrider and Ms. Eby are   
citizens of the United States.                                                  

   Mr. Salonen is president of International Cultural Foundation, which is a
nonprofit, tax exempt foundation with the purpose of promoting academic,        
scientific, religious and cultural exchange among the countries of the world.   
The principal offices of International Cultural Foundation are located at 51    
Monroe Street, Suite 1201, Rockville, Maryland 20850, which is Mr. Salonen's    
business address. He is also president of the University of Bridgeport, which is
located at 271 Park Avenue, Bridgeport, Connecticut 06601. Mr. Salonen is a     
citizen of the United States.                                                   

For the last five years, Messrs. Ward and Guerra have been principally
employed by the University of Bridgeport the address of which is 271 Park       
Avenue, Bridgeport, Connecticut 06601. Mr. Ward serves as special assistant to  
the president for new initiatives, and Mr. Guerra serves as the dean of college 
graduate and undergraduate studies. Messrs. Ward and Guerra are citizens of the 
United States.                                                                  

For the last five years, Mr. McDevitt has been director of security at
Belvedere Estates, which operates a group of properties in Westchester County,  
New York. The principal offices of Belvedere Estates are located at 723 South   
Broadway, Tarrytown, New York 10591, which is the business address of Mr.       
McDevitt. Mr. McDevitt is a citizen of the United States.                       

    To the knowledge of the Concept Group, during the last five years, none of
Nostalgia, any member of the Concept Group, Ms. Eby or Messrs. Joo, Hugel,      
Gogan, Seubert, Agres, Cooperrider, Morton, Salonen, Ward, Guerra or McDevitt   
has been convicted in a criminal proceeding (excluding traffic violations or    
similar misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and, as a result of such          
proceeding, was or is subject to a judgment, decree or final order enjoining    
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.    

THE ATLANTIC VIDEO GROUP

The Atlantic Video Group consists of Atlantic Video, Inc., its sole   
stockholder, One Up Enterprises, Inc. and One Up Enterprises' sole stockholder, 
Unification Church International. The members of the Atlantic Video Group have  
elected to be considered "affiliates" solely for purposes of this proxy         
statement and the accompanying Schedule 13E-3 because (i) Atlantic Video loaned 
to Crown the funds used by Crown to fund Nostalgia's operating deficits and the 
funds advanced by Crown to NNI Acquisition to fund the merger, and (ii) certain 
individual officers and/or directors of Nostalgia and/or the Concept Group      
presently hold, or in the past have held, responsible positions with members of 
the Atlantic Video Group or their affiliates.                                   

Atlantic Video is a Delaware corporation with its principal place of  
business at 650 Massachusetts Avenue, N.W., Washington, D.C. 20001, where its   
telephone number is (202) 408-0900. Atlantic Video is engaged in the business of
producing and editing videos primarily for the television and cable industries. 
Atlantic Video's officers and directors include Messrs. Dong Moon Joo (chief    
executive officer and director), William Todd Mason (president and director),   
Werner Seubert (treasurer), and Richard Wojcik (director).                      

     See "THE CONCEPT GROUP" for information concerning Messrs. Joo and Seubert.

 Mr. Mason has been employed by Atlantic Video since February 1998. From
July 1996 through October 1997, he was President of PVS*Spear International,    
Inc. of Washington, D.C. From November 1990 through July 1996, he was Senior    
Vice President and Chief Financial Officer of Henninger Media Services, Inc. of 
Arlington, Virginia. His business address is 650 Massachusetts Avenue, N.W.,    
Washington, D.C. 20001. Mr. Mason is a citizen of the United States.            

    Mr. Wojcik's principal employment for the past five years has been as vice
president of U.S. Property Development Corporation. His business address is 7777
Leesburg Pike, Suite 406N, Falls Church, VA 22043. Mr. Wojcik is a citizen of   
the United States.                                                              

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Atlantic Video's sole stockholder is One Up Enterprises, a Delaware   
corporation with its principal place of business at 7777 Leesburg Pike, Suite   
406N, Falls Church, Virginia 22043. Its telephone number is (703) 448-7333. One 
Up Enterprises is a corporate holding company with investments in various       
subsidiaries conducting a wide variety of business operations. These            
subsidiaries include U.S. Property Development, Atlantic Video and News World   
Communications. The officers and directors of One Up Enterprises are Mr. R.     
Michael Runyon (president and director) and Mr. Victor E. Walters (treasurer and
director).                                                                      

For the last five years, Mr. Runyon has served as president of One Up 
Enterprises. His business address is 7777 Leesburg Pike, Suite 406N, Falls      
Church, Virginia. Mr. Runyon is a citizen of the United States.                 

Mr. Walters' principal employment for the past five years has been as 
treasurer of One Up Enterprises. His business address is 7777 Leesburg Pike,    
Suite 406N, Falls Church, Virginia 22043. Mr. Walters is a citizen of the United
States.                                                                         

   One Up Enterprises is wholly owned by Unification Church International, a
District of Columbia non-stock, non-profit corporation formed for religious and 
educational purposes. Unification Church International's principal place of     
business is 7777 Leesburg Pike, Suite 406N, Falls Church, Virginia and its      
telephone number is (703) 734-8618. The directors and officers of Unification   
Church International are Dr. Bo Hi Pak (director), Mr. Joo (president and       
director), Mr. Runyon (vice president and director), Mr. Walters (treasurer and 
director) and Mr. Richard Steinbronn (assistant secretary and director).        

     Dr. Pak's principal employment for the past five years has been as chairman
and president of the Korean Cultural Foundation. His business address is 25     
Hung-Dong Kwangjin-KU, Seoul, Korea. Dr. Pak is a citizen of the Republic of    
Korea.                                                                          

   For the past five years Mr. Steinbronn's principal employment has been as
general counsel to Unification Church International. His business address is    
7777 Leesburg Pike, Suite 406N, Falls Church, Virginia. Mr. Steinbronn is a     
citizen of the United States.                                                   

  To the knowledge of the Atlantic Video Group, during the last five years
none of the members of the Atlantic Video Group or its officers and directors   
has been convicted in a criminal proceeding (excluding traffic violations and   
similar misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and, as a result of such          
proceeding, was or is subject to a judgment, decree or final order enjoining    
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.    

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THE MERGER

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS                  

The following table sets forth, as of December 31, 1999, the number of
shares of common stock and preferred stock beneficially owned by each of        
Nostalgia's executive officers and directors, by all executive officers and     
directors as a group and by each person known by Nostalgia to own beneficially  
more than 5.0% of the outstanding shares of common stock or preferred stock.    

                                                        [Enlarge/Download Table]

                                                    COMMON STOCK             PREFERRED STOCK     
                                              -------------------------  ------------------------
                                                            PERCENT OF                PERCENT OF 
                                              NUMBER OF     OUTSTANDING  NUMBER OF    OUTSTANDING
NAME                                            SHARES        SHARES      SHARES        SHARES   
----                                          ----------    -----------  ---------    -----------
                                                                                                 
EXECUTIVE OFFICERS                                                                               
  Squire D. Rushnell(1)......................    839,840(2)     4.1%           0            *    
                                                               ----                              
  Willard R. Nichols.........................          0          *            0            *    
  Diane C. Fuller............................      6,000(2)       *            0            *    
DIRECTORS                                                                                        
  Christopher A. Cates.......................     26,000(2)       *            0            *    
  Floyd Christofferson.......................      6,000(2)       *            0            *    
  Dianne M. Faure............................      6,000(2)       *            0            *    
  Hiroshi Goto...............................      1,000(2)       *            0            *    
  Dong Moon Joo..............................      6,000(2)       *            0            *    
  Dr. S. Robert Lichter......................      1,000(2)       *            0            *    
  Frederick W. Newton........................      1,000(2)       *            0            *    
  Phillip Sanchez............................      6,000(3)       *            0            *    
  Robert J. Wussler..........................      6,000(2)       *            0            *    
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A                                                        
  GROUP......................................    903,840        4.5%           0            *    
                                                               ----                              
  Concept Group(4)........................... 14,430,427(5)    70.0%       2,500         76.9%   
                                              ----------       ----                              
  Charles Potter.............................     75,000(6)       *          750         23.1%   

---------------                                                                 
*  Less than one percent.                                                     

(1) Mr. Rushnell also is a director of Nostalgia.                               

(2) Consists entirely of shares of common stock subject to acquisition pursuant 
to options, all of which options have vested.                           

(3) Consists of 1,000 shares of common stock and options to purchase 5,000      
shares of common stock, all of which options have vested.               

(4) The Concept Group consists of Capital, Crown, Concept and NNI Acquisition,  
which constitute a "group" within the meaning of Section 13(d)(3) of the
 Securities Exchange Act. NNI Acquisition, Concept, Crown and Capital have
    informed Nostalgia that they share voting and dispositive power with respect
to all shares as to which NNI Acquisition is the owner.                 

(5) Includes 14,180,427 shares of common stock, and 250,000 shares of common    
 stock issuable upon conversion of 2,500 shares of preferred stock, all of
which are held of record by NNI Acquisition.                            

(6) Includes 75,000 shares of common stock issuable upon conversion of 750      
shares of preferred stock.                                              

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INTERESTS OF CERTAIN PERSONS IN THE MERGER                                      

   In considering the recommendations of the special committee, stockholders
should be aware that some of Nostalgia's officers and directors have interests  
in the proposed merger or have relationships, including those referred to below,
that present actual or potential conflicts of interest in connection with the   
merger. The special committee was aware of these actual or potential conflicts  
of interest and considered them along with other matters which have been        
described in this proxy statement under the headings "SPECIAL                   
FACTORS -- Recommendations of the Board of Directors" and "-- Reasons for the   
Merger; Fairness Considerations."                                               

 Certain Relationships of Directors with the Concept Group, the Atlantic
Video Group and their Respective Affiliates                                     

     Mr. Dong Moon Joo, a director of Nostalgia, is the president and a director
of each of Capital, Crown and Concept, president and chairman of the Board of   
Directors of NNI Acquisition, the president and a director of Unification Church
International, a director and president of The Washington Times Corporation and 
News World Communications, Inc. and chief executive officer and chairman of the 
Board of Directors of Atlantic Video. As such, he may have interests in         
connection with the merger that are in addition to, or conflict with, those of  
Nostalgia and its unaffiliated stockholders. For instance, as a director and/or 
officer of these entities, Mr. Joo may have an interest in obtaining the lowest 
possible purchase price per share for Nostalgia common stock. Similarly, the    
Concept Group and the Atlantic Video Group may have interests that are adverse  
to those of the unaffiliated stockholders because the Concept Group and the     
Atlantic Video Group may have an interest in obtaining the lowest possible price
per share for the Nostalgia stock held by the unaffiliated stockholders.        

 Because of his positions with Nostalgia and the Concept Group, and as a
result of possible conflicts of interest, Mr. Joo did not participate in        
meetings of the Board of Directors of the Concept Group relating to, or vote on,
the merger or the merger agreement. To ensure that the unaffiliated stockholders
receive a fair price, Capital, Crown, Concept and NNI Acquisition retained an   
independent adviser to conduct a valuation analysis of the Nostalgia common     
stock. See "SUMMARY TERM SHEET -- Valuation Analysis of Daniels and Associates, 
L.P.," "THE MERGER -- Report of the Financial Adviser to Crown" and Appendices  
D(1) and D(2) to this proxy statement. NNI Acquisition, which is wholly owned by
Crown and Concept, is the record owner of 14,180,427 shares of common stock and 
2,500 shares of preferred stock. Capital, Crown, Concept and NNI Acquisition are
the beneficial owners of 14,430,427 shares of common stock (including 250,000   
shares of common stock subject to acquisition upon conversion of 2,500 shares of
preferred stock). Concept is majority owned by Crown. Crown is a wholly owned   
subsidiary of Capital. See "THE MERGER -- Security Ownership of Management      
Certain Beneficial Owners" and "CERTAIN TRANSACTIONS AND RELATIONSHIPS."        

Members of the Atlantic Video Group were not required to and did not  
participate in the negotiation and initial approvals of the merger proposal.    
Because of the continuing financial support which Atlantic Video had provided to
Crown, which support continues and includes funds borrowed by Crown and set     
aside by NNI Acquisition specifically for the consideration to be paid to the   
unaffiliated stockholders in the merger, the Atlantic Video Group has provided  
certain disclosures in this proxy statement. The Atlantic Video Group also      
requested and obtained permission to rely on the Daniels report. The Board of   
Directors of each of the members of the Atlantic Video Group met, considered and
adopted as its own the Daniels opinion, concluding (for the reasons articulated 
by the Concept Group) that the consideration to be offered to the unaffiliated  
stockholders in the merger is fair from a financial point of view. Because his  
positions with Nostalgia, the Concept Group, and the Atlantic Video Group create
a potential conflict of interest, Mr. Joo did not attend, participate in or vote
at the meetings of the Boards of Directors of Atlantic Video and Unification    
Church International at which the merger or the merger agreement was discussed. 

   Christopher A. Cates, a director of Nostalgia, was an officer of Atlantic
Video until February 1999 and an officer of Pyramid Video until January 1998.   
Floyd Christofferson, a director of Nostalgia, was an officer of Potomac        
Television Communications, Inc. from April 1997 until October 1999, and from    
1994 to 1997 president and director of Manhattan Center Studios, Inc., a former 
affiliate of the Atlantic Video Group.                                          
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Potomac Television is an affiliate of Capital, Crown and Concept. Hiroshi Goto, 
a director of Nostalgia, is the budget director of The Washington Times         
newspaper, which is published by News World Communications, Inc. Ambassador     
Sanchez, chairman of the Board of Directors of Nostalgia, is a vice president of
News World Communications. Frederick W. Newton, also a director of Nostalgia, is
president of Corporate Recovery Services, Inc., which provides consulting       
services to area corporations, including Capital and News World Communications. 
Mr. Newton also presently serves as president of Stellar Printing, Inc. and     
Freestate Publishing, Inc. Both Stellar Printing and Freestate Publishing are   
wholly owned subsidiaries of News World Communications.                         

    Because of their positions with these members or affiliates of the Concept
Group and/or the Atlantic Video Group, Messrs. Cates, Christofferson, Goto,     
Newton, and Ambassador Sanchez have interests that may conflict with those of   
Nostalgia's unaffiliated stockholders which may include wanting to obtain the   
lowest possible purchase price for the stock of the unaffiliated stockholders.  

Continued Employment By Nostalgia                                     

 As of the date of this proxy statement, Capital, Crown, Concept and NNI
Acquisition intend that the current officers of Nostalgia will continue to      
provide services to Nostalgia, the surviving corporation, following the merger. 

REGULATORY APPROVAL                                                             

 Nostalgia and NNI Acquisition are not aware of any material approval or
other action by any state, federal or foreign governmental agency that is       
required prior to the consummation of the merger in order to effect the merger  
or of any license or regulatory permit that is material to the businesses of    
Nostalgia or NNI Acquisition which is likely to be adversely affected by the    
consummation of the merger.                                                     

APPRAISAL RIGHTS                                                                

     If the merger is consummated, stockholders who do not vote "FOR" the merger
proposal, who hold shares of common stock or preferred stock of record on the   
date of making a written demand for appraisal as described below and who        
otherwise comply fully with Section 262 of the Delaware General Corporation Law,
will be entitled to a judicial determination of the fair value of their shares  
of common stock and preferred stock in accordance with the provisions of Section
262 and to receive from Nostalgia payment of such fair value in cash together   
with a fair rate of interest, if any, as determined by such court. Stockholders 
who properly perfect their appraisal rights will not be entitled to surrender   
their shares of common stock and preferred stock for payment in the manner      
provided in the merger agreement and described in this proxy statement. The     
merger agreement provides that the obligation of NNI Acquisition to consummate  
the merger is conditioned upon stockholders of Nostalgia owning not more than   
5.0% of the issued and outstanding shares of common stock (which, for purposes  
of determining whether this condition has been satisfied, includes 325,000      
shares of common stock issuable upon conversion of preferred stock) exercising  
appraisal rights. This condition may be waived by NNI Acquisition.              

     Under Section 262, where a merger agreement is to be submitted for approval
and adoption at a meeting of stockholders, as in the case of the special        
meeting, not less than 20 calendar days prior to the meeting, a constituent     
corporation in the merger must notify each of the holders of its stock who was  
such on the record date for the meeting that such appraisal rights are available
and include in each such notice, a copy of Section 262. This proxy statement    
constitutes such notice to the holders of record of common stock and preferred  
stock.                                                                          

   The following is a summary of the procedures to be followed under Section
262, the full text of which is attached as Appendix C to this proxy statement.  
Stockholders should read carefully the full text of Section 262 because failure 
to follow any Section 262 procedures may result in the loss of appraisal rights.
Stockholders should assume that Nostalgia will take no action to perfect any    
appraisal rights of any stockholder. Any stockholder who desires to exercise    
appraisal rights should review carefully Section 262 and is urged to consult a  
legal advisor before electing or attempting to exercise appraisal rights.       
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   Holders of record of shares of common stock or preferred stock who desire
to exercise appraisal rights must not vote in favor of the merger proposal or   
consent to the merger in writing (including by returning a signed proxy without 
indicating any voting instructions as to the proposal) and must deliver a       
separate written demand for appraisal of such shares to Nostalgia prior to the  
taking of the vote on the merger proposal. A holder of shares of common stock or
preferred stock wishing to exercise appraisal rights must hold of record such   
shares on the date the written demand for appraisal is made and must continue to
hold such shares through the effective time of the merger. The demand for       
appraisal will be sufficient if it reasonably informs Nostalgia of the identity 
of the stockholder and that the stockholder intends to demand an appraisal of   
the fair value of shares of common stock or preferred stock.                    

 If the shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, the demand must be executed by or for the record
owner, and if the shares are owned of record by more than one person, as in a   
joint tenancy or tenancy in common, the demand must be made by or for all owners
of record. An authorized agent, including an agent for one or more joint owners,
may execute the demand for appraisal for a holder of record provided the agent  
identifies the record owner or owners and expressly discloses in such demand    
that the agent is acting as agent for the record owner or owners of such shares.

A record holder, such as a broker, who holds shares of common stock or
preferred stock as a nominee for beneficial owners, some or all of whom desire  
to demand appraisal, must exercise appraisal rights on behalf of such beneficial
owners with respect to the shares held for such beneficial owners. In such case,
the written demand for appraisal should set forth the number of shares covered  
by such demand. Unless a demand for appraisal specifies a number of shares, the 
demand will be presumed to be applicable to all shares outstanding in the name  
of such record owner. If a stockholder holds shares of common stock or preferred
stock through a broker which in turn holds the shares through a central         
securities depository nominee such as Cede & Co., a demand for appraisal of such
shares must be made by or on behalf of the depository nominee and must identify 
the depository nominee as record holder. BENEFICIAL OWNERS WHO ARE NOT RECORD   
OWNERS AND WHO INTEND TO EXERCISE APPRAISAL RIGHTS SHOULD INSTRUCT THE RECORD   
OWNER TO COMPLY STRICTLY WITH THE STATUTORY REQUIREMENTS WITH RESPECT TO THE    
DELIVERY OF WRITTEN DEMAND FOR APPRAISAL. A DEMAND FOR APPRAISAL SUBMITTED BY A 
BENEFICIAL OWNER WHO IS NOT THE RECORD OWNER WILL NOT BE HONORED.               

   A proxy or vote against the merger agreement will not constitute a demand
for appraisal. Stockholders should not expect to receive any additional notice  
with respect to the deadline for demanding appraisal rights.                    

Any stockholder who elects to exercise appraisal rights must mail or  
deliver the written demand for appraisal prior to the taking of the vote on the 
merger proposal. All demands for appraisal should be addressed to The Nostalgia 
Network, Inc., 650 Massachusetts Avenue, N.W. Washington, D.C. 20001, Attention:
Corporate Secretary.                                                            

     If the merger is approved, then within ten days after the effective time of
the merger, Nostalgia will provide notice of the effective time of the merger to
all stockholders who have complied with Section 262.                            

    A stockholder may withdraw a demand for appraisal within 60 days after the
effective time of the merger and accept the terms of the merger. Thereafter, the
approval of Nostalgia will be needed for such a withdrawal.                     

    Within 120 days after the effective time of the merger, in compliance with
Section 262, any stockholder who has properly demanded an appraisal and who has 
not withdrawn his or her demand as provided above and Nostalgia each has the    
right to file in the Delaware Court of Chancery a petition, with a copy served  
on Nostalgia in the case of a petition filed by a dissenting stockholder,       
demanding a determination of the fair value of the shares held by all dissenting
stockholders. If, within the 120-day period following the effective time of the 
merger, no petition shall have been filed as provided above, all rights to      
appraisal will cease and all dissenting stockholders who owned shares of common 
stock or preferred stock will become entitled to receive for each share of      
common stock or preferred stock the applicable consideration, as if such        
stockholder had initially voted to approve and adopt the merger proposal.       
Nostalgia is not obligated, and does not currently intend, to file such a       
petition.                                                                       

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     Any dissenting stockholder is entitled, within the 120-day period following
the effective time of the merger and upon written request to Nostalgia, to      
receive from Nostalgia a statement setting forth:                               

   - The aggregate number of shares of common stock or preferred stock which
      have not voted to adopt and approve the merger proposal and with respect
to which demands for appraisal have been received; and            

- The aggregate number of dissenting stockholders.                    

   Such statement must be mailed within ten days after a written request for
such statement has been received by Nostalgia, or within ten days after the     
expiration of the period for delivery of demands, as described above, whichever 
is later.                                                                       

   Upon the filing of a petition, the Delaware court may order a hearing and
that notice of the time and place fixed for the hearing on the petition be      
mailed to Nostalgia and all dissenting stockholders. Notice will also be        
published at least one week before the day of the hearing in a newspaper of     
general circulation published in the City of Wilmington, Delaware or in another 
publication deemed advisable by the Delaware court. The costs relating to these 
notices will be borne by Nostalgia.                                             

  If a hearing on the petition is held, the Delaware court is empowered to
determine which dissenting stockholders have complied with the provisions of    
Section 262 and are entitled to an appraisal of their shares. The Delaware court
may require that dissenting stockholders submit their share certificates for    
notation thereon of the pendency of the appraisal proceedings and the Delaware  
court may dismiss the proceedings as to any dissenting stockholder who does not 
comply with such requirement.                                                   

     The Delaware court will appraise shares of common stock and preferred stock
owned by the dissenting stockholders, determining the fair value of such shares 
exclusive of any element of value arising from the accomplishment or expectation
of the merger. In determining the fair value, the Delaware court is to take into
account all relevant factors. In WEINBERGER V. UOP, INC., the Delaware Supreme  
Court discussed the factors that could be considered in determining fair value  
in an appraisal proceeding, stating that "proof of value by any techniques or   
methods which are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered and that "[f]air" price     
obviously requires consideration of all relevant factors involving the value of 
a company. The Delaware Supreme Court has stated, that in making this           
determination of fair value, the Delaware courts must consider market value,    
asset value, dividends, earnings prospects, the nature of the enterprise and any
other factors which could be ascertained as of the date of the merger and which 
"throw any light on future prospects of the merged corporation." The Delaware   
Supreme Court noted that Section 262 provides that fair value is to be          
determined "exclusive of any element of value arising from the accomplishment or
expectation of the merger." In CEDE & CO. V. TECHNICOLOR, INC., the Delaware    
Supreme Court stated that such exclusion is a "narrow exclusion [that] does not 
encompass known elements of value" but which applies only to the speculative    
elements of value arising from such accomplishment or expectation. In           
WEINBERGER, the Delaware Supreme Court held that "elements of future value,     
including the nature of the enterprise, which are known or susceptible of proof 
as of the date of the merger and not the product of speculation, may be         
considered."                                                                    

  Stockholders considering seeking appraisal should consider that the fair
value of their shares determined by the Delaware court under Section 262 could  
be more than, the same as, or less than, the consideration payable pursuant to  
the merger agreement. Nostalgia does not anticipate offering more than the      
consideration payable pursuant to the merger agreement to any dissenting        
stockholder and reserves the right to assert in any appraisal proceedings, that,
for purposes of Section 262, the "fair value" of a share of common stock or     
preferred stock is less than the consideration payable pursuant to the merger   
agreement.                                                                      

The Delaware court may also:                                          

- Determine a fair rate of interest, if any, to be paid to dissenting 
stockholders in addition to the fair value of the shares;         

- Determine the costs of the proceeding and tax such costs against the
  parties as the Delaware court deems equitable (however, costs do not
include attorneys' and expert witnesses' fees); and               

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   - Upon application of a dissenting stockholder, order all or a portion of
    the expenses incurred by any dissenting stockholder in connection with
 the appraisal proceeding, including, without limitation, reasonable
      attorneys' fees and fees and expenses of experts, to be charged pro rata
against the value of all shares entitled to appraisal.            

    No appraisal proceedings in the Delaware court will be dismissed as to any
dissenting stockholder without the approval of the Delaware court, and this     
approval may be conditioned upon terms which the Delaware court deems just.     

  From and after the effective time of the merger, dissenting stockholders
will not be entitled to vote (or consent by written action) any shares subject  
to demand for appraisal for any purpose and will not be entitled to receive     
payment of any dividends or other distributions payable to stockholders of      
record except dividends or distributions declared prior to the effective time of
the merger.                                                                     

   Failure to take any required step in connection with appraisal rights may
result in the loss of such rights. Any stockholder who loses such rights will   
only be entitled to receive the consideration offered in the merger.            

ACCOUNTING TREATMENT                                                            

     The merger will be accounted for under the purchase method of accounting in
accordance with GAAP, whereby the value of the consideration paid in the merger 
will be allocated based upon the estimated fair values of the assets acquired   
and liabilities assumed at the effective date of the merger.                    

Pro forma financial information has not been included in this proxy   
solicitation because the stockholders, other than NNI Acquisition, are receiving
cash consideration only and will not retain or receive a continuing interest in 
Nostalgia's business after the merger.                                          

FINANCING, EXPENSES AND FEES                                                    

The parties estimate that the total amount of funds to be used in     
connection with the merger (including the funds to be paid by NNI Acquisition to
the holders (other than NNI Acquisition) of common stock and preferred stock,   
and the funds necessary for NNI Acquisition and Nostalgia to consummate the     
merger) will amount to approximately $1,242,290. Of this amount, the funds to be
used by NNI Acquisition to consummate the merger will amount to $500,000, which 
has been loaned to NNI Acquisition by Crown. As of October 4, 2000, funds were  
transferred from Crown into a bank account in the name of NNI Acquisition to be 
used for the purpose of paying the merger consideration to the unaffiliated     
stockholders. NNI Acquisition and Crown have agreed that, if the merger is not  
consummated by December 31, 2000, Crown may demand that the funds be returned to
Crown and that any funds in excess of those required to pay merger consideration
likewise be returned. NNI Acquisition does not have any specific plans in place 
for the repayment of the funds it will borrow pursuant to this lending          
arrangement.                                                                    

The funds loaned by Crown to NNI Acquisition were loaned to Crown by  
Atlantic Video pursuant to a demand promissory note dated July 21, 1993, as     
amended, between Crown and Atlantic Video. This promissory note entitles Crown  
to borrow up to $126.0 million at an annual interest rate of 6.0% and is payable
upon demand made by Atlantic Video. As collateral for the promissory note, Crown
has pledged to Atlantic Video, 430 shares of Concept owned by Crown             
(representing a minority interest in Concept) under a restated security         
agreement dated as of December 30, 1993 by and between Crown and Atlantic Video.
At the current time, Crown does not have any specific plans in place for the    
repayment of funds borrowed pursuant to the demand note.                        

The funds which Atlantic Video loaned to Crown, and which were then   
transferred to NNI Acquisition to pay the merger consideration to the           
unaffiliated stockholders, were borrowed by Atlantic Video from its parent One  
Up Enterprises and evidenced by a demand promissory note dated September 12,    
2000, bearing interest at the annual rate of 6%. Atlantic Video has no specific 
plans for the repayment of these funds at this time and One Up has no present   
plans to demand payment. One Up Enterprises received the funds from its parent, 
Unification Church International, as a non-interest-bearing advance repayable on
demand. This intercompany                                                       

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obligation is evidenced by journal entries. One Up Enterprises has no specific  
plans for the repayment of this advance and Unification Church International has
no present plans to demand payment.                                             

Each party will bear its own expenses incurred in connection with the 
merger. Nostalgia will bear expenses arising out of or incurred in connection   
with the preparation of this proxy statement and the special meeting, including 
printing, mailing, solicitation, accounting and other fees and expenses related 
thereto. Nostalgia, the Concept Group and the Atlantic Video Group estimate     
their respective expenses to be incurred in connection with the merger as       
follows:                                                                        

                                                                [Download Table]
                                                                      
Nostalgia                                                             
  Legal.....................................................  $175,000
  Accounting................................................  $ 12,000
  Financial Advisors........................................  $135,000
  Filing....................................................  $    290
  Transfer Agent............................................  $  5,000
  Printing..................................................  $ 60,000
The Concept Group                                                     
  Legal.....................................................  $200,000
  Financial Advisors........................................  $125,000
  Disbursement Agent........................................  $ 10,000
The Atlantic Video Group                                              
  Legal.....................................................  $ 20,000

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THE MERGER AGREEMENT

The following is a description of the material terms of the merger    
agreement. To understand fully the terms of the merger agreement, stockholders  
should read carefully the full text of the merger agreement, a copy of which is 
attached as Appendix A to this proxy statement.                                 

TERMS OF THE MERGER                                                             

   The Merger.  Subject to the terms and conditions of the merger agreement,
NNI Acquisition will merge with and into Nostalgia, which will result in        
Nostalgia becoming wholly owned by Crown and Concept, and the separate corporate
existence of NNI Acquisition ceasing. Nostalgia will continue to exist following
the merger and its internal corporate affairs will continue to be governed by   
Delaware law. Crown and Concept, as the only stockholders of Nostalgia, will    
have sole power and authority to control all aspects of the internal corporate  
and business affairs of Nostalgia following the merger. NNI Acquisition is      
wholly owned by Crown and Concept. Concept is majority owned by Crown. Crown is 
a wholly owned subsidiary of Capital.                                           

 Certificate of Incorporation and Bylaws.  The merger agreement provides
that, at the effective time of the merger and without any further action on the 
part of Nostalgia or NNI Acquisition:                                           

 - Nostalgia's certificate of incorporation will be amended and restated
       substantially as set forth in Exhibit A to the merger agreement and, from
    and after the effective time of the merger, Nostalgia's certificate of
   incorporation, as so amended and restated, will be the certificate of
incorporation of Nostalgia; and                                   

    - The bylaws of NNI Acquisition, as in effect at the effective time of the
merger, shall be the bylaws of Nostalgia.                         

Pursuant to the amended and restated certificate of incorporation, among other  
things, Nostalgia will have authorized 1,000 shares of common stock, par value  
$0.01 per share.                                                                

   Conversion of Common Stock and Preferred Stock.  At the effective time of
the merger:                                                                     

   - Each issued and outstanding share of common stock, other than shares of
      common stock owned by NNI Acquisition or for which appraisal rights have
been exercised, will be converted into the right to receive $0.07;

   - Each issued and outstanding share of preferred stock, other than shares
       of preferred stock owned by NNI Acquisition or for which appraisal rights
     have been exercised, will be converted into the right to receive $7.00;

- The issued and outstanding shares of common stock owned by NNI      
Acquisition will be cancelled; and                                

     - Each share of NNI Acquisition common stock will be converted into a share
of Nostalgia common stock.                                        

Options.  Prior to the effective time of the merger, Nostalgia will:  

- Take all steps necessary to terminate all stock option plans, to the
     extent permitted by their terms, without prejudice to the rights of the
holders of options under such plans; and                          

- Grant no additional options.                                        

Nostalgia will use its best efforts to take all actions necessary to cause each 
outstanding stock option, whether or not exercisable or vested, to be cancelled,
as of the effective time of the merger and to obtain the consent of each holder 
of an option (whether or not then exercisable) to the cancellation of the       
option. In exchange for the cancellation of options, Nostalgia may make payments
to, or enter into other agreements with, the option holders in consideration of 
the termination of the options.                                                 

     Directors and Officers.  There are no present plans to change the directors
and executive officers of Nostalgia as a result of the merger, and each director
and executive officer of Nostalgia will continue to serve                       
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in that capacity until his or her successor has been duly elected or appointed  
and qualified or until his or her earlier death, resignation or removal.        

INDEMNIFICATION                                                                 

     From and after the effective time of the merger, Nostalgia will continue to
indemnify each present and former officer, director, employee and agent of      
Nostalgia against any and all claims, losses, damages, liabilities, costs,      
judgments, amounts paid in settlement and expenses (including reasonable        
attorneys' fees) in connection with any threatened, pending or completed action,
suit, claim, proceeding or investigation arising out of, or pertaining to, any  
act or omission prior to the effective time to the fullest extent permitted     
under Nostalgia's bylaws and Delaware law. Nostalgia has agreed to use its best 
efforts to provide to those officers and directors of Nostalgia as of October   
21, 1999 who also are officers or directors of Nostalgia immediately following  
the effective time of the merger officers' and directors' liability insurance   
comparable to that maintained by Nostalgia as of October 21, 1999, subject only 
to certain limitations with respect to the cost of such insurance. Pursuant to  
the terms of the merger agreement, this liability insurance will remain in      
effect until the third anniversary of the merger.                               

EFFECTIVE TIME OF THE MERGER                                                    

  Promptly following the satisfaction or waiver (where permissible) of the
conditions to the merger, the merger will be consummated and become effective on
the date and at the time the required certificate of merger is filed with the   
Secretary of State of Delaware.                                                 

REPRESENTATIONS AND WARRANTIES                                                  

  Representations and Warranties of NNI Acquisition.  The merger agreement
includes representations and warranties of NNI Acquisition as to the following  
material issues:                                                                

- The due authorization of the merger agreement and the transactions  
    contemplated thereby by the Board of Directors and the stockholders of
NNI Acquisition, and the enforceability of the merger agreement;  

   - That NNI Acquisition has received commitments for the funding necessary
to complete the transactions contemplated by the merger; and      

   - The accuracy of information provided by NNI Acquisition for use in this
proxy statement.                                                  

     Representations and Warranties of Nostalgia.  The merger agreement includes
representations and warranties of Nostalgia as to the following material issues:

- The due authorization and approval of the merger agreement and the  
transactions contemplated by the merger agreement by the Board of 
     Directors of Nostalgia, and the enforceability of the merger agreement,
subject to approval by Nostalgia's stockholders;                  

     - The capitalization of Nostalgia, the validity of the common stock and the
     preferred stock and the absence of any undisclosed options, warrants or
    other similar rights with respect to the common stock or the preferred
stock;                                                            

- The absence of any undisclosed material liabilities other than those
     incurred in the ordinary course of the business of Nostalgia consistent
with past practice and liabilities incurred in connection with the
merger;                                                           

- That the execution or delivery of the merger agreement or the       
    consummation of the merger will not violate Nostalgia's certificate of
     incorporation or bylaws or result in a breach of any material contract,
      agreement, order, law, rule or regulation to which Nostalgia is subject;
and                                                               

     - The accuracy in all material respects of this proxy statement, except for
     the information provided by NNI Acquisition, and the conformity of this
   proxy statement to the requirements of the Exchange Act and the rules
promulgated under the Exchange Act.                               

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COVENANTS                                                                       

The merger agreement contains a number of customary and               
transaction-specific covenants. The following is a summary of the material      
covenants.                                                                      

     Business of Nostalgia.  Nostalgia has agreed, except as contemplated by the
merger agreement, from the date of the merger agreement to the effective time of
the merger, not to take any action that adversely affects its ability to pursue 
its business in the ordinary course, to seek to preserve its current business   
organization, to keep available the services of its current officers and        
employees, and to use its best efforts to preserve its relationships with       
customers, suppliers and others having business dealings with it. Nostalgia also
has agreed that before the effective time, except as expressly permitted by the 
merger agreement or by NNI Acquisition, it will not:                            

  - Split, combine or reclassify any shares of its capital stock, declare,
pay or set aside for payment any dividend or other distribution in
     respect of its capital stock or directly or indirectly redeem, purchase
       or otherwise acquire any shares of its capital stock or other securities;

- Authorize for issuance, issue, sell, pledge, dispose of or encumber,
   deliver or agree or commit to issue, sell, pledge or deliver (whether
     through the issuance or granting of any options, warrants, commitments,
       subscriptions, rights to purchase or otherwise) any stock of any class of
Nostalgia or any securities convertible into or exercisable or    
    exchangeable for shares of stock of any class of Nostalgia, other than
       the issuance of shares pursuant to the exercise of options outstanding as
of the date of the merger agreement;                              

   - Except in the ordinary and usual course of business and consistent with
      past practice, incur any material liability, obligation or indebtedness,
  issue any debt securities or assume, guarantee, endorse or otherwise
become responsible for, the obligations of any other individual or
entity;                                                           

- Acquire any other business or make any material investment;         

- Change in any material respect its accounting methods, principles or
practices except in accordance with GAAP, consistently applied;   

     - File for voluntary bankruptcy or become subject to involuntary bankruptcy
proceedings;                                                      

- Take any action or course of action inconsistent with any of the    
covenants and agreements contained in the merger agreement; and   

- Take or agree to commit to take any action that would make any      
representation or warranty of Nostalgia in the merger agreement   
       inaccurate in any material respect at the effective time of the merger or
     omit to take any action necessary to prevent any such representation or
  warranty from being inaccurate in any material respect at such time.

     Deposit of Funds.  Not less than ten days prior to the special meeting, NNI
Acquisition will deposit or cause to be deposited with an agent retained for    
purposes of facilitating the payment of the consideration in exchange for common
stock and preferred stock, immediately available funds in an amount equal to    
$0.07 for each issued and outstanding share of common stock and $7.00 for each  
issued and outstanding share of preferred stock, excluding shares of common     
stock and preferred stock owned by NNI Acquisition which will be cancelled. As  
of October 4, 2000, Crown transferred the sum of $500,000 to a bank account in  
the name of NNI Acquisition in order to fund the payment of merger consideration
to Nostalgia's unaffiliated stockholders. Pursuant to a letter agreement between
Crown and NNI Acquisition, Crown may demand that the funds be returned if the   
merger is not consummated by December 31, 2000 and that any funds in excess of  
those required to fund merger consideration likewise be returned.               

    Best Efforts.  Each of Nostalgia and NNI Acquisition has agreed to utilize
its best efforts to cause the merger, and all transactions contemplated by the  
merger agreement, to be completed.                                              

No Solicitation.  Nostalgia will not, and will use its best efforts to
ensure that its officers, directors, representatives or agents do not, directly 
or indirectly, solicit or initiate (including by way of furnishing any          
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non-public information concerning Nostalgia's business, properties or assets)   
negotiations with and, subject to the exercise of their fiduciary               
responsibilities on advice of counsel, participate in any negotiations leading  
to any proposals or enter into any agreement with any corporation, partnership, 
person or other entity or group (other than NNI Acquisition) concerning any     
tender offer, exchange offer, merger, consolidation, sale of substantial assets 
or of a significant amount of assets, sale of securities, liquidation,          
dissolution or similar transactions involving Nostalgia.                        

  Nostalgia will promptly inform NNI Acquisition of any inquiry (including
the terms thereof and the identity of the third party making such inquiry) that 
it receives with respect to any proposal to acquire all or a substantial portion
of the stock or assets of Nostalgia and will furnish to NNI Acquisition a copy  
of any such inquiry.                                                            

CONDITIONS TO THE MERGER                                                        

Conditions to Each Party's Obligations to Effect the Merger.  The     
respective obligations of Nostalgia and NNI Acquisition are subject to the      
following material conditions:                                                  

     - The merger shall have been duly approved by Nostalgia's stockholders; and

     - Chatsworth shall have delivered to Nostalgia its written opinion that the
      consideration is fair to Nostalgia's stockholders from a financial point
of view.                                                          

   Conditions to the Obligations of NNI Acquisition.  The obligations of NNI
Acquisition to effect the merger also are subject to satisfaction or waiver of  
the following material conditions:                                              

- The accuracy and completeness in all material respects of the       
  representations and warranties of Nostalgia in the merger agreement;

    - The performance by Nostalgia in all material respects of its obligations
       under the merger agreement which are required to be performed at or prior
to the effective time of the merger; and                          

     - Holders of not more than 5.0% of the common stock and the preferred stock
    (calculated on an "as converted" basis to common stock at the ratio of
      100 shares of common stock for each share of preferred stock) shall have
exercised appraisal rights;                                       

NNI Acquisition may waive any of the foregoing or other such conditions to the  
merger.                                                                         

     Conditions to the Obligations of Nostalgia.  The obligation of Nostalgia to
effect the merger also is subject to satisfaction or waiver of the following    
conditions:                                                                     

- The accuracy and completeness in all material respects of the       
representations and warranties of NNI Acquisition in the merger   
agreement; and                                                    

- The performance by NNI Acquisition in all material respects of its  
       obligations under the merger agreement which are required to be performed
at or prior to the effective time.                                

Nostalgia may waive either or both of the foregoing conditions.                 

AMENDMENT; WAIVER; TERMINATION                                                  

Amendment.  The merger agreement may be amended at any time by written
agreement of Nostalgia and NNI Acquisition (prior to the effective time of the  
merger), as applicable. An amendment to the merger agreement subsequent to      
adoption by stockholders of Nostalgia may not alter or change the amount or kind
of consideration to be received in exchange for, or on conversion of, the common
stock or the preferred stock without the approval of the holders thereof.       

   Waiver.  Either party to the merger agreement may extend the time for the
performance of any of the obligations or other acts of the other party thereto, 
or waive compliance with any of the agreements or any condition to the          
obligations thereunder of the other party thereto, to the extent that such      
obligations, agreements and conditions are intended for its benefit.            
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   Termination.  The merger may be abandoned and the merger agreement may be
terminated prior to the effective time of the merger, before or after approval  
by the stockholders of Nostalgia, by the mutual written consent of Nostalgia and
NNI Acquisition or by either party if:                                          

  - There has been a material failure by the other party to perform any of
     its covenants, obligations, agreements or conditions or the other party
 has breached any of the representations or warranties of the merger
agreement;                                                        

  - There shall be in effect any permanent injunction or action preventing
the consummation of the merger; or                                

    - The effective time of the merger shall not have occurred by December 31,
2000.                                                             

    Upon termination of the merger agreement pursuant to its terms, the merger
agreement shall become void and no longer be of any force and effect and there  
shall be no liability of either party to the other party to the merger          
agreement.                                                                      

AMENDMENT NO. 1 TO MERGER AGREEMENT                                             

On October 4, 2000, Nostalgia and NNI Acquisition amended the merger  
agreement to extend until December 31, 2000 the time allowed for the parties to 
complete the merger before either party has the right to terminate the merger   
agreement.                                                                      

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CERTAIN TRANSACTIONS AND RELATIONSHIPS

   The following are descriptions of material transactions and relationships
between Nostalgia and any of its affiliates and the Concept Group, the Atlantic 
Video Group or their respective affiliates.                                     

  Between 1990 and October 2000, Crown and Concept have been the principal
source of Nostalgia's capital, most of which was borrowed by Concept from       
Atlantic Video. Crown and Concept have invested approximately $2.1 million and  
provided approximately $88.0 million in financing since 1994, including $15.0   
million loaned by Crown to Nostalgia during the year ended December 31, 1999. Of
the $88.0 million, approximately $66.5 million consists of loans from Crown and 
approximately $21.5 million consists of loans from Concept. On December 30,     
1999, Nostalgia entered into a new promissory note with each of Crown and       
Concept to refinance the entire amounts of their respective loans at an annual  
interest rate of 8.5% and to mature on January 1, 2001. Under the terms of the  
new notes, Nostalgia makes monthly interest payments of $55,000 to Crown and    
$5,000 to Concept. The promissory notes to Crown and Concept are secured by all 
of the assets (other than real property, if any) of Nostalgia.                  

    Additionally, as of October 10, 2000, Nostalgia had issued and outstanding
promissory notes to Crown in the aggregate principal amount of $11.25 million,  
bearing interest of approximately 8.5% to 9.5% per annum, for financing provided
to Nostalgia between January 1, 2000 and October 1, 2000. The promissory notes  
mature on January 1, 2001. On March 22, 2000, Crown delivered to Nostalgia's    
outside accountants a letter representing Crown's ability and intention to      
provide financial support to Nostalgia throughout the remainder of 2000. Subject
to the conditions set forth in the letter, Crown has agreed to provide          
continuing financial support to Nostalgia up to a total amount of $15.0 million 
(including the $11.25 million already provided) for the year 2000. The financial
support will be provided on an as needed basis and may be in the form of debt or
equity. To the extent that it is in the form of debt, it will not mature prior  
to January 1, 2001.                                                             

   During 1998, Nostalgia paid interest to Crown and Concept of $400,000 and
$320,000, respectively. During 1999, Nostalgia paid interest to Crown and       
Concept of $655,000 and $125,000, respectively. No principal was paid by        
Nostalgia to either Crown or Concept during 1998 or 1999. During 1998,          
$1,310,005.61 and $1,105,673.69 of accrued and unpaid interest owed by Nostalgia
to Crown and Concept, respectively, was recapitalized. During 1999,             
$5,687,286.40 and $2,371,242.83 of accrued and unpaid interest owed by Nostalgia
to Crown and Concept, respectively, was recapitalized.                          

    Nostalgia and Atlantic Video are parties to an agreement pursuant to which
Atlantic Video provides to Nostalgia certain exclusive television production,   
post-production and master control/uplink services and equipment and, until May 
31, 2000 leased to Nostalgia 4,300 square feet of office space in Atlantic      
Video's Alexandria, Virginia production facilities at a monthly rent of $3,896. 
Under the terms of the agreement with Atlantic Video, Nostalgia is required to  
purchase a minimum number of hours of such services during each year at         
specified rates. Nostalgia has agreed to pay a minimum monthly fee of $93,000 to
Atlantic Video. If Nostalgia does not actually purchase $50,000 of services in a
month from Atlantic Video, the difference, up to an aggregate maximum of        
$75,000, subject to certain limitations, may be used as a credit against future 
fees. The net amount payable to Atlantic Video for these additional services    
with respect to 1999 was approximately $1,126,000.                              

Nostalgia has utilized the facilities and services of Manhattan Center
Studios, Inc. for both remote and on-site television production on an as needed 
basis. Until mid-1999, Manhattan Center was an affiliate of the Atlantic Video  
Group. During the first nine months of 1999, Nostalgia paid approximately       
$107,500 for such production services and facilities.                           

    At June 30, 2000 Nostalgia was indebted to Atlantic Video in the principal
amount of $305,000 and accrued interest of approximately $383,949 pursuant to a 
promissory note bearing interest at the annual rate of 10.0% and which matures  
on March 31, 2002. The Atlantic Video note is convertible into Nostalgia senior 
preferred stock (which Nostalgia currently is not authorized to issue). Pursuant
to a security agreement entered into between Nostalgia and Atlantic Video at the
time of the execution of the Atlantic Video note Nostalgia granted Atlantic     
Video a security interest in (1) $150,000 in specified accounts receivable and  
certain other accounts and contracts and the proceeds thereof, and (2) copies of
certain books and records.                                                      
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Atlantic Video agreed not to perfect its security interest with respect to the  
Atlantic Video note provided Nostalgia was not in default thereof.              

Nostalgia's executive offices are located at 650 Massachusetts Avenue,
N.W., Washington, D.C., where Nostalgia leases approximately 5,100 square feet  
of space from Washington Television Center Limited Partnership at a monthly rate
of $12,750. Nostalgia's traffic and finance facility, consisting of             
approximately 4,300 square feet in Alexandria, Virginia was leased on a         
month-to-month basis at a monthly rate of $3,896 from Atlantic Video. As of May 
31, 2000, the traffic and finance departments were relocated from the Atlantic  
Video production facilities to Nostalgia's executive offices. Consequently, the 
monthly lease payments of $3,896 have ceased. A build-out of the corporate      
offices is planned to facilitate the finance department's relocation and a      
completion date is scheduled for December 2000. At that time, lease payments for
this additional space will commence at a rate of approximately $5,000 per month.
All of the interest in Washington Television Center is owned by U.S. Property   
Development Corporation, of which Mr. Joo is an officer and a director. U.S.    
Property Development Corporation Washington Television Center is an affiliate of
the Atlantic Video Group.                                                       

Mr. Joo, a director of Nostalgia, is the president and chairman of the
Board of Directors of each of Capital, Crown, Concept and NNI Acquisition. Mr.  
Joo is also an officer and chairman of the Board of Directors of Atlantic Video 
and a director and president of Unification Church International. Christopher A.
Cates and Floyd Christofferson, directors of Nostalgia, were officers of Pyramid
Video, Inc. and Potomac Television, respectively, until January 26, 1999 and    
October 27, 1999, respectively. Both Pyramid Video and Potomac Television are   
subsidiaries of Concept. Mr. Cates was also an officer of Atlantic Video until  
January 1999.                                                                   

Hiroshi Goto, a director of Nostalgia, is the budget director of The  
Washington Times, which is published by News World Communications, an affiliate 
of the Atlantic Video Group. Frederick W. Newton, also a director of Nostalgia, 
is president of Corporate Recovery Services, a company that provides consulting 
services to area corporations, including Capital and News World Communications. 
Mr. Newton is also president of Stellar Printing, Inc. and Freestate Publishing,
Inc. each of which are wholly owned subsidiaries of News World Communications.  
Ambassador Sanchez, chairman of the Board of Directors of Nostalgia, is a vice  
president of News World Communications.                                         

 On July 1, 1999, Nostalgia entered into a one year employment agreement
with SQuire D. Rushnell, a director of Nostalgia, which provided that Mr.       
Rushnell would hold the offices of President and Chief Executive Officer and    
that Nostalgia would pay Mr. Rushnell an annual base salary of $270,000. This   
employment agreement replaced the previous employment agreement between         
Nostalgia and Mr. Rushnell, which expired on May 12, 1999. The employment       
agreement automatically renews for one year periods unless certain notification 
requirements are met by either Nostalgia or Mr. Rushnell. Mr. Rushnell's annual 
base salary increases by 20.0% for each renewal period. Under the employment    
agreement, Mr. Rushnell is entitled to receive a benchmark bonus of up to       
$80,000, payable quarterly, if Nostalgia attains or exceeds its business plan.  
Mr. Rushnell received a benchmark bonus of $33,030 for 1999. The benchmark bonus
increases to $100,000 for each renewal period. The employment agreement also    
provides for alternative benchmark bonuses under certain circumstances where    
some, but not all, criteria applicable to the benchmark bonus have been met.    
Nostalgia also has provided Mr. Rushnell with a monthly stipend of $600 for     
obtaining and maintaining an automobile. Mr. Rushnell is entitled to receive a  
severance payment of $135,000 if Nostalgia does not renew his employment        
agreement. The terms of Mr. Rushnell's employment agreement will continue in    
full force and effect if the proposed merger is completed.                      

 Pursuant to a letter agreement dated March 29, 1995 between Concept and
Nostalgia that was signed in anticipation of a possible conversion of           
Nostalgia's indebtedness to Concept into equity, which debt conversion has not  
occurred, as of the date of such letter agreement, Nostalgia:                   

- Agreed to sell at least 2,000 shares of preferred stock to Concept  
pursuant to the conversion;                                       

  - Agreed not to issue additional shares of preferred stock until Concept
     and Nostalgia reached mutual agreement as to the price per share of the
debt conversion;                                                  

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    - Granted to Concept the right of first refusal with regard to the sale of
    in excess of 500,000 shares of common stock or 500 shares of preferred
stock in the aggregate; and                                       

     - Agreed to issue additional shares of common stock to Concept in the event
       of future sales of capital stock by Nostalgia to third parties at a price
   per share less than that agreed upon by Concept and Nostalgia for the
debt conversion.                                                  

  Nostalgia leases equipment from Pyramid Video, Inc., which is a majority
owned subsidiary of Concept, at the monthly rate of $2,440 and expended         
approximately $24,440 for the leased equipment during the year ended December   
31, 1999. Mr. Joo is a director of Pyramid Video and Mr. Cates was an officer of
Pyramid Video until January 26, 1999.                                           

     On January 7, 2000, Crown and Concept transferred to NNI Acquisition all of
their respective shares of common stock and preferred stock of Nostalgia in     
exchange for 10,000 shares of the NNI Acquisition common stock.                 

 On October 4, 2000, Crown transferred $500,000 to a bank account in the
name of NNI Acquisition in order to fund the payment of merger consideration to 
Nostalgia's unaffiliated stockholders. Pursuant to a letter agreement between   
Crown and NNI Acquisition, Crown may demand that the funds be returned if the   
merger is not consummated by December 31, 2000 and that any funds in excess of  
those required to pay merger consideration likewise be returned.                

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BUSINESS OF NOSTALGIA 

OVERVIEW                                                                        

   Nostalgia operates a television programming service, GoodLife TV Network,
which offers a variety of entertainment, information and lifestyle programming  
exemplifying traditional American culture, values and sense of community. This  
programming mix targets the most neglected audience on television, America's    
Boomer and over audience. Nostalgia was originally incorporated in Colorado in  
1983. In 1987, Nostalgia changed its name from Boston Investments, Inc., and    
reincorporated in Delaware through a merger into a wholly-owned subsidiary.     

DESCRIPTION OF BUSINESS                                                         

   The Network's programming is telecast over a network of cable television,
wireless cable, satellite and video-dial-tone systems which are commonly        
referred to as "affiliates." Nostalgia uplinks its programming from facilities  
in Alexandria, Virginia to a satellite which then transmits the programming to  
the affiliates. Nostalgia derives revenue primarily from the sale of advertising
time and from fees paid by affiliates for its programming.                      

AFFILIATED CABLE SYSTEMS AND SUBSCRIBERS                                        

     The Network's programming is distributed by approximately 1,425 affiliates,
from which Nostalgia derives fees, typically based upon the number of monthly   
subscribers in each affiliate's system. As of December 31, 1999, the Network had
9,232,523 subscribers, an increase of 19.6% from December 31, 1998, when the    
Network had 7,718,053 subscribers. The length of each affiliate contract varies,
but generally ranges from three to five years. Certain of the Network's         
affiliate contracts have expired and carriage is currently provided on a        
month-to-month basis. Many of these affiliates have declined to enter into new  
contracts until their plans for channel expansion are completed. During 1999,   
Nostalgia had revenues of approximately $2,089,466 from affiliate fees. Three   
multiple system operator affiliates accounted for approximately 18.0%, 16.0% and
10.0% of affiliate revenue for the year ended December 31, 1999. These multiple 
system operators are Time Warner Cable, NCTC -- National Cable Television       
Cooperative and AT&T Bis, respectively. Nostalgia currently does not have       
long-term contracts with these three affiliates. Marketplace condition trends   
are resulting in a smaller number of multiple systems operators. Nostalgia does 
not believe that the consolidation of cable operators has a direct effect on    
day-to-day operations. As cable systems are acquired, any existing agreements   
verbal or written would remain in effect.                                       

  Each affiliate has a limited number of "channels" over which programming
can be distributed to its subscribers. The must carry/retransmission consent    
provisions of the Cable Act of 1992 caused affiliates to increase the number of 
channels allocated to broadcasters and affiliates of broadcasters, resulting in 
a corresponding decrease in the number of channels available to independent     
networks such as the Network. As a result of intense competition among cable    
networks for this reduced number of channels, Nostalgia's per subscriber fees   
from affiliates have declined and may continue to decline as small networks, and
particularly those unaffiliated with the major multiple system cable operators, 
such as the Network, now are required to make payments to the cable operators   
and waive or not require per subscriber fees to be paid to them to obtain       
carriage.                                                                       

ADVERTISING                                                                     

 Nostalgia also derives revenues from the sale of advertising, receiving
fees for approximately, on average, ten minutes of advertising time per hour of 
programming, with an additional two minutes of each hour of programming reserved
for the use of affiliates. Nostalgia also derives advertising revenue from the  
sale of time for infomercials, which are program length advertisements, and from
programming sponsorship and home shopping revenue sharing arrangements. In 1999,
Nostalgia redirected its focus from national spot advertising to direct response
and infomercial advertising, and, accordingly, has reduced its reliance on and  
use of Nielsen ratings. Since direct response and infomercial advertising rates 
are based on per inquiry or response performance rather than audience ratings,  
from a business and financial perspective, continued reliance on and            

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payment for such rating service is not necessary. During 1999, Nostalgia derived
revenues of $3,288,663 from advertising.                                        

PROGRAMMING                                                                     

   The Network has continued to expand and improve its original programming.
The following are descriptions of programs aired on the Network during 1999.    

GTV DanceSport (Original)                                                   

 Competition dancing has become one of the fastest growing trends in the
United States. Through its exclusive agreement with DanceSport America, the     
Network covers major dance competitions, including the national championships in
Miami. This exciting program showcases not only the champions in each class, but
also provides insight into the techniques and fine points of competition.       

Cafe DuArt (Original)                                                       

     Renowned impressionist/comedian Louise DuArt serves as the owner/hostess of
a New York cabaret club where a wide variety of famous guests interact with the 
club's staff in comedic settings. Musical variety acts are intertwined in the   
comedic setting to provide a well balanced source of entertainment.             

The Real Me Autobiographies (Original)                                      

   Set in a casual atmosphere, The Real Me Autobiographies provides a unique
insight into the lives and significant influences of its guest hosts as they    
tell their own stories in their own words.                                      

American Couples (Original Pilot)                                           

Hosted by Nancy Glass, American Couples is an hour long show which    
celebrates the family values, love, commitment and partnership of famous        
couples.                                                                        

Heroes & Sheroes (Original Pilot)                                           

    Heroes & Sheroes profiles ordinary men and women who have performed heroic
tasks for the benefit of their fellow man.                                      

American Families (Original Elements began airing in January 2000)          

American Families spotlights regular families discussing contemporary 
solutions to issues raised in episodes of classic family programs of Ozzie &    
Harriet and Make Room for Daddy.                                                

Cookbook Cooking with Christopher Kent (Original)                           

 This program features the Network's Flea Market Movie host, Christopher
Kent, who also is an accomplished chef, preparing dishes from famous cookbooks. 

The Bull & The Bear (Original)                                              

The "Siskel and Ebert" of Wall Street, hosts Llewellyn King and Linda 
Gasperillo, answer viewer calls to provide unique insight into stocks and       
investment opportunities.                                                       

More Money with The Dolans (Original)                                       

Ken and Daria Dolan, "the first family of finance," present a one hour
televised version of their nationally syndicated daily radio program on money   
issues. On More Money with The Dolans, Network viewers can call in questions to 
Ken and Daria about retirement plans, investment and tax strategies, saving     
money for college and how to get a good buy on a new car.                       

Flea Market Movie (Original Elements)                                       

The Network has added short segments to every commercial break in its 
movies where its collectibles aficionado, Christopher Kent, dispenses his wit   
and wisdom about all sorts of collectable items. In these short interstitials,  
viewers can learn about the value of various collectibles. Additionally, viewers
can call to discuss or send in pictures of items for Christopher to appraise.   
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American Soldier (Original Elements)                                        

Interviews with veterans, focusing on their wartime experiences, are  
wrapped around three classic dramatic television shows. The shows, which the    
Network has licensed for two years, are Combat!, Twelve O'clock High and        
Garrison's Gorillas. The programs and their wrap around elements are part of a  
weekday and weekend block entitled American Soldier.                            

GTV Variety Hour                                                            

     The GTV Variety Hour features classic variety programs such as Tony Orlando
and Dawn, Leslie Uggams and Dean Jones which were purchased by the Network.     

Acquired Programming                                                        

     Off-network series airing on the Network include The Love Boat and Bonanza.

Dual Language Programming                                                   

In an effort to provide service to a broader community of viewers, the
Network commenced airing dual language programming during 1997. Found on the SAP
channel, where available, the Network provides Spanish language versions of The 
Love Boat.                                                                      

Programming for the Visually Impaired                                       

     The Company has had a significant and mutually beneficial relationship with
the Narrative Television Network (NTN). Found on the SAP channel, where         
available, these narrative tracks of certain Network programming provide        
descriptive narratives of the on-screen action to allow visually impaired       
viewers to better understand and account for noises and actions they cannot see.

FINANCIAL INFORMATION                                                           

  During 1999, the Network continued to focus on rebuilding and rebranding
its programming. In an effort to differentiate itself from its many competitors,
and in response to comments from cable system operators, Nostalgia continued its
efforts to increase original programming.                                       

 Nostalgia also continued its efforts to grow its subscriber base. As of
December 31, 1999 the Network had 9,232,523 subscribers, compared to 7,718,053  
subscribers at December 31, 1998. The Service Transmission Agreement between    
Nostalgia and National Digital Television Center providing for digital          
distribution of the Network's signal through the Headend in the Sky program     
(HITS) contributed significantly to Nostalgia's increase in subscribers. As the 
cable industry has moved to upgrade its local existing plant and facilities with
digital distribution technology, nationwide digital distribution such as HITS is
increasingly important to and the basis for most of the potential growth in     
subscribers available to the Network.                                           

    Nostalgia also continued its analysis of, and efforts to seek, a strategic
alliance. Nostalgia has had contact with several possible strategic partners,   
but no serious discussions have occurred. There can be no assurance that        
Nostalgia will be able to obtain a strategic partner, or that any strategic     
partner will be willing to invest the sums required by Nostalgia in order to    
continue to grow the Network's subscriber base. It is anticipated that,         
following the merger, the business and operations of Nostalgia will be continued
substantially as currently conducted for the immediate future. Crown and Concept
have informed Nostalgia that they intend to reevaluate the business and         
operations of Nostalgia following the merger and take such actions with respect 
to the future business and operations of Nostalgia as they deem appropriate.    
Although there are no definitive plans or agreements in place, Crown and Concept
may cause Nostalgia to enter into joint ventures or other agreements with other 
business entities after the merger.                                             

  In March 1999, to more closely align its sales and marketing activities,
Nostalgia determined to consolidate these efforts at its headquarters in        
Washington, D.C. and closed its Englewood, Colorado and Ft. Washington,         
Pennsylvania offices, resulting in a reduction of its staffing levels by eleven 
positions.                                                                      

For a description of the revenue obtained by Nostalgia from external  
customers and Nostalgia's loss and total assets, see Nostalgia's audited        
financial statements for the fiscal year ended December 31, 1999 and the Notes  
to the financial statements which are included in this proxy statement.         
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Financing for the Network has previously been provided by Concept and 
Crown. Crown loaned to Nostalgia $15.0 million in 1999 and $10.0 million in the 
first nine months of 2000.                                                      

PATENTS, TRADEMARKS, LICENSES                                                   

Nostalgia neither holds nor depends on any material patent, trademark,
license, franchise or concession except for its trademarks "Nostalgia Channel"  
and "Nostalgia Television." In 1998, Nostalgia licensed the right to use        
"GoodLife TV Network" from Scripps Howard Broadcasting Company for ten years.   

COMPETITION                                                                     

There is intense competition among providers of programming via cable 
television, direct broadcast satellite (DBS) and other video delivery systems.  
The Network competes with other programmers for access to limited channel space 
on affiliates and for viewers; for advertising revenues with other cable        
networks, broadcast television, radio and print media; and more generally, with 
various other leisure-time activities such as home video, movies, the internet  
and other forms of information and entertainment.                               

  A number of basic networks (such as USA Network, American Movie Classics
and Turner Network Television), pay television networks (such as The Disney     
Channel) and superstations (such as WOR and WGN) provide programming directed   
towards various sub-groups which are included in the Network's target audience. 
Most providers of these programming services are comprised of a group of        
programming services or are affiliated with cable system operators or motion    
picture studios, and may enjoy advantages that independent services, such as the
Network, do not. Many of the Network's competitors have substantially greater   
financial and other resources than the Network.                                 

Technological advances over the next five years, such as digital      
compression technology, which will allow cable systems to expand channel        
capacity, and the development of fiber optic cable, which has the capacity to   
carry a much greater number of channels than coaxial cable, are expected to     
increase the number of available channels. Nostalgia believes that the increase 
in the number of channels will both reduce competition for access to channel    
space and increase competition for viewers. There can be no assurance as to when
technological advances will be commercially implemented to increase             
significantly overall channel capacity.                                         

Many of Nostalgia's competitors pay cable systems, DBS and other video
delivery systems a significant upfront "per subscriber" fee. This fee may act as
an incentive to a system to carry a certain network because it will receive fees
based upon the number of subscribers to that system. Nostalgia pays some        
competitive, upfront fees, but only in circumstances judged to be most          
beneficial in terms of launch opportunities. Nostalgia has relied more on waiver
of future fees to be paid to the Network by its affiliates, and on quality      
original programming and other branding efforts to distinguish the Network from 
its competitors and, thereby, provide a substantive reason for cable systems to 
choose the Network for carriage. While this determination may have, in the short
term, an adverse impact on the Network's ability to gain carriage, Nostalgia    
believes it is the most appropriate way to maximize the value and impact of     
Nostalgia's financial resources. Nostalgia also is actively engaged in efforts  
to review and identify potential strategic alliance partners that could provide 
support to Nostalgia's efforts to increase its subscriber base. By obtaining    
strategic alliances with one or more cable system operators, the Network could  
recognize an immediate increase in the subscriber base, thus in turn increasing 
both affiliate and advertising revenues.                                        

GOVERNMENT REGULATION                                                           

    The Telecommunications Act of 1996, among other things, repealed statutory
provisions and regulations of the Federal Communications Commission (FCC) that  
prohibited telephone companies from operating cable television or other         
multi-channel distribution systems in areas in which those companies offer      
telephone service and restricted the ability of such telephone companies to     
produce, acquire an interest in, or distribute programming in which they have an
interest. The Telecommunications Act of 1996 limits the ability of telephone    
companies to purchase existing cable systems, but otherwise imposes minimal     
constraints upon their entry into multi-channel video distribution and program  
production. Pursuant to the Telecommunications Act of 1996, the FCC has extended
to common carriers the regulations imposed upon traditional cable systems by the
Cable Television Consumer Protection and Competition Act of 1992. These         
regulations are intended to                                                     
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prevent telephone companies from favoring program services in which they have an
interest and from unreasonably denying access to unaffiliated programmers.      

The Telecommunications Act of 1996 also significantly relaxed multiple
ownership and other restrictions imposed by FCC rules on traditional            
over-the-air broadcast stations and television networks, such as CBS, NBC, ABC, 
and Fox. The Telecommunications Act of 1996 required the FCC to adopt rules     
which allow the traditional networks to operate more than one television        
network, except that, absent rulemaking by the FCC, none of the four largest    
networks are permitted to merge with any of the other four or with either of the
two "emerging networks" (Time Warner's WB Network and the United Paramount      
Network). Under the statute, companies that own and operate television broadcast
networks also will be permitted to own and operate cable television systems,    
subject to certain safeguards designed to prevent discrimination against        
unaffiliated program service providers.                                         

    The Telecommunications Act of 1996 also modified, to a limited extent, the
system of rate regulation imposed upon traditional cable operators pursuant to  
the Cable Television Act of 1992. Under the Telecommunications Act of 1996, rate
regulation by the FCC of the upper tiers of service (where the Network typically
is carried) expired on March 31, 1999. Basic service, which cable operators are 
required to offer to all subscribers, remains subject to rate regulation in     
communities in which the cable system is not subject to "effective competition."
The institution of an alternative multi-channel video distribution system by a  
telephone company serving substantially the same area as the cable system is    
deemed to constitute "effective competition" under the Telecommunications Act of
1996.                                                                           

The Telecommunications Act of 1996 did not alter the "must carry" and 
"retransmission consent" requirements of the Cable Television Act of 1992. These
provisions, coupled with rate regulation, have forced cable systems to increase 
the number of channels carrying broadcast or broadcaster-affiliated channels,   
causing a corresponding decrease in the number of channels available to         
satellite distributed networks such as the Network. In the past, the Network has
lost carriage on cable systems because the system needed to reassign the channel
used by the Network either to comply with the Cable Television Act of 1992 must 
carry provisions or to fulfill a contractual obligation to a broadcaster arising
out of the "retransmission consent" requirements of the Cable Television Act of 
1992. Broadcasters are urging the FCC to apply "must carry" obligations to      
broadcasters' transmission of digital television signals on a second assigned   
channel. While the FCC thus far has declined to act on these requests, the      
imposition of additional "must carry" obligations could significantly restrict  
the availability of channels for cable services, including the Network.         
Similarly, cable companies' decision to allocate limited cable capacity to      
Internet and other data services could adversely affect channel availability,   
particularly if cable operators should be obliged by law or regulation to offer 
"open access" to their cable capacity for competing providers of internet/data  
services. On the other hand, the construction of higher capacity systems to     
permit the offering of internet/data services greatly expands the cable capacity
and may aid the Network's ability to gain access to such rebuilt cable systems. 
In addition, the end of upper tier rate regulations on March 31, 1999 removed a 
significant constraint on cable company revenues which may further encourage    
cable operators to invest in new facilities that will accommodate additional    
programming to the benefit of the Network.                                      

   Nostalgia is unable to predict what effect, if any, these legislative and
regulatory changes will have on its operations or finances. In general,         
Nostalgia believes that the relaxation of rate regulation and the introduction  
of competition in the multi-channel distribution business will improve          
Nostalgia's ability to obtain carriage of the Network in markets in which the   
service is not now available and will have a favorable effect on affiliate      
subscriber fees earned by the Network. The entry of telephone companies into the
program production business and the relaxation of existing constraints on       
broadcast stations and traditional broadcast networks are expected to increase  
the competition the Network already faces for advertising revenues and          
audiences.                                                                      

EMPLOYEES                                                                       

On December 31, 1999, Nostalgia had a total of 27 full-time, non-union
employees. On March 2, 1999, Nostalgia announced its determination to           
consolidate the Network's sales and marketing staffs at its headquarters in     
Washington, DC, resulting in a reduction of its staffing levels by eleven       
positions. Nostalgia                                                            

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has experienced no work stoppage, is not a party to any collective bargaining   
agreements and believes that it enjoys good relations with its current          
employees.                                                                      

DIRECTORS AND EXECUTIVE OFFICERS                                                

Directors                                                                   

 Christopher Cates is currently president and chief executive officer of
MediaComm, a teleproduction facility located in Charlotte, N.C. From February   
1998 to February 1999, Mr. Cates served as senior vice president of corporate   
development of Atlantic Video, which is engaged in the production and recording 
of videotapes, the provision of post-production services and related activities.
Mr. Cates served as vice president/ general manager of Atlantic Video from July 
1989 to January 1998. From March 1992 to January 1998, he also served as        
president of Pyramid Video, which is engaged in satellite transmission services,
the production and recording of videotapes, the provision of post-production    
services and related activities. Mr. Cates' business address is 9700 Southern   
Pines Boulevard, Charlotte, North Carolina 28273. Mr. Cates is a citizen of the 
United States.                                                                  

     Floyd Christofferson has served as president and chief executive officer of
Potomac Television Communications, Inc. from April 1997 to October 1999. From   
November 1994 to April 1997, Mr. Christofferson served as president of Manhattan
Center Studios, a multimedia group which at the time was an affiliate of the    
Atlantic Video Group. Mr. Christofferson's business address is 245 Henbree Park 
Drive, Suite 100, Roswell, Georgia 30076. Mr. Christofferson is a citizen of the
United States.                                                                  

     Dianne M. Faure is an attorney in private practice and, since October 1989,
has worked in the areas of health care, insurance and contract law. During this 
time, she also has served as a board member to numerous civic and nonprofit     
associations. Ms. Faure's business address is 15100 Candytuft Lane, Rockville,  
Maryland 20853. Ms. Faure is a citizen of the United States.                    

Hiroshi Goto has served as the budget director of The Washington Times
since August 1997. From September 1986 through July 1997, Mr. Goto served in    
various capacities at Washington Times, including finance manager, assistant    
finance manager and internal auditor. The Washington Times newspaper is         
published by News World Communications, an affiliate of the Atlantic Video      
Group. Mr. Goto's business address is 3600 New York Avenue, N.E., Washington,   
D.C. 20002. Mr. Goto is a citizen of Japan.                                     

     Dong Moon Joo's primary employment since 1992 has been as president of News
World Communications. Mr. Joo's business address is 3600 New York Avenue, N.E., 
Washington, D.C. 20002. Mr. Joo is a citizen of the United States.              

 Since 1985, S. Robert Lichter has served as president of the Center for
Media and Public Affairs, a nonpartisan, nonprofit research organization that   
analyzes how news and entertainment media treat social and political issues, and
Statistical Assessment Service, a nonprofit research organization. Dr. Lichter  
is currently an adjunct professor of government at Georgetown University. Dr.   
Lichter's business address is 2100 L Street, N.W., Suite 300, Washington, D.C.  
20037. Dr. Lichter is a citizen of the United States.                           

Since 1987, Frederick W. Newton has served as president of Corporate  
Recovery Inc., which provides consulting services to area corporations,         
including News World Communications. Mr. Newton has served as president of      
Stellar Printing Inc., since 1989, and as president of Freestate Publishing     
Inc., which publishes a community newspaper, since 1993. Both Stellar Printing  
and Freestate Publishing are wholly owned subsidiaries of News World            
Communications. Mr. Newton's business address is 10 Dale Drive, Rockville,      
Maryland 20850. Mr. Newton is a citizen of the United States.                   

     Since June 1996, Squire D. Rushnell has served as Nostalgia's president and
chief executive officer. From August 1995 to December 1995, Mr. Rushnell was    
president and co-founder of Our Time Television, Inc., a cable television       
network targeted to emerging baby boomers. From January 1990 to March 1996, Mr. 
Rushnell served as president of Rushnell Communications and Publishing, Inc.,   
producing programming for broadcast networks and syndication. Mr. Rushnell's    
business address is 650 Massachusetts Avenue, N.W., Suite 200, Washington, D.C. 
20001. Mr. Rushnell is a citizen of the United States.                          

     Ambassador Phillip Sanchez has served since February 1987 as vice president
of News World Communications, which publishes numerous newspapers and           
periodicals, including Noticias Del Mundo, a                                    
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national Spanish-language daily newspaper, and Tiempos Del Mundo, a             
Spanish-language weekly newspaper published throughout the western hemisphere.  
Ambassador Sanchez currently is the publisher of Noticias Del Mundo and Tiempos 
del Mundo. Ambassador Sanchez is the chairman of the Board of Trustees of the   
National Hispanic University (San Jose, California), and serves on the Board of 
Trustees of the Educational Foundation of the Americas, and of the University of
Bridgeport (Bridgeport, Connecticut). Ambassador Sanchez's business address is  
3600 New York Avenue, N.E., Washington, D.C. 20002. Ambassador Sanchez is a     
citizen of the United States.                                                   

Since June 1995, Robert J. Wussler has served as president and chief  
executive officer of Affiliate Enterprises, Inc., a television syndication      
company. Mr. Wussler also has served as chairman of the Board of Directors and  
chief executive officer of U.S. Digital Communications, Inc., which specializes 
in internet broadcasting services and satellite technology, since May 1998, and 
as president and chief executive officer of The Wussler Group, a worldwide media
consulting group, since February 1992. Mr. Wussler's business address is 2      
Wisconsin Circle, Suite 700, Chevy Chase, Maryland 20815. Mr. Wussler is a      
citizen of the United States.                                                   

Executive Officers                                                          

    Willard R. Nichols currently serves as vice president, general counsel and
secretary of Nostalgia. Mr. Nichols served as general counsel and secretary from
May 1997 to June 1998. He has served as a vice president of Nostalgia since his 
election by the Board of Directors to that position in June 1998. Prior to his  
service with Nostalgia, Mr. Nichols was an attorney in private practice engaged 
in domestic and international telecommunications consulting. He also served for 
the calendar year 1995 as executive vice president and managing director of     
UTAM, Inc. Mr. Nichols' business address is 650 Massachusetts Avenue, N.W.,     
Suite 200, Washington, D.C. 20001. Mr. Nichols is a citizen of the United       
States.                                                                         

   Diane C. Fuller currently serves as chief financial officer and treasurer
of Nostalgia. Ms. Fuller has served as treasurer of Nostalgia since her election
to that position by the Board of Directors in March 1999. She has served as     
chief financial officer of Nostalgia since December 1999. From July 1990 to     
February 1999, Ms. Fuller served in various capacities with Nostalgia, including
assistant controller. Ms. Fuller's business address is 650 Massachusetts Avenue,
N.W., Suite 200, Washington, D.C. 20001. Ms. Fuller is a citizen of the United  
States.                                                                         

    To the knowledge of Nostalgia, during the last five years, none of Messrs.
Cates, Christofferson, Goto, Joo, Newton, Rushnell, Wussler or Nichols, or Dr.  
Lichter, Ambassador Sanchez, Ms. Faure or Ms. Fuller has been convicted in a    
criminal proceeding (excluding traffic violations and similar misdemeanors) or  
has been a party to a civil proceeding of a judicial or administrative body of  
competent jurisdiction and, as a result of such proceeding, was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or state securities laws or finding 
any violation with respect to such laws.                                        

PROPERTIES                                                                      

Nostalgia's executive offices are located at 650 Massachusetts Avenue,
N.W., Washington, D.C., where Nostalgia leases, at a monthly rate of $12,750,   
approximately 5,100 square feet of office space and 900 square feet of storage  
space from Washington Television Center Limited Partnership, which is controlled
by a subsidiary of U.S. Property Development Corporation, of which Mr. Joo is an
officer and a director. U.S. Property Development Corporation is an affiliate of
the Atlantic Video Group. See "CERTAIN TRANSACTIONS AND RELATIONSHIPS."         

     Nostalgia's traffic and finance facility, consisting of approximately 4,300
square feet in Alexandria, Virginia, was leased on a month-to-month basis at a  
monthly rate of $3,896 from Atlantic Video. As of May 31, 2000, the traffic and 
finance departments were relocated from the Atlantic Video production facilities
to Nostalgia's corporate offices in the District of Columbia. Consequently, the 
monthly lease payments of $3,896 have ceased. A build-out of the corporate      
offices is planned to facilitate the finance department's relocation and        
completion is scheduled for December 2000. At that time, lease payments for this
additional                                                                      

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space will commence at a rate of approximately $5,000 per month. See "CERTAIN   
TRANSACTIONS AND RELATIONSHIPS."                                                

LEGAL PROCEEDINGS                                                               

   Roger M. Rosenberg, et al. v. Sam Oolie, et al. On or about September 29,
1989, an action was commenced in the Delaware Court of Chancery for New Castle  
County. Nostalgia was a nominal defendant for purposes of the derivative claims 
asserted. The claim alleged that certain former directors of Nostalgia breached 
their fiduciary duties to Nostalgia and its stockholders in connection with the 
consideration and negotiation of several proposals by third parties to purchase 
some or all of Nostalgia's common stock. On June 23, 1997 the Delaware court of 
Chancery granted summary judgment in favor of the defendants, including         
Nostalgia, on all but one class claim. On May 24, 2000 the Court of Chancery    
granted summary judgment in favor of the defendants on the remaining claim.     
Nostalgia is required to indemnify those former directors of Nostalgia and to   
pay their costs of defense.                                                     

     The Marlin Entertainment Group, Ltd. v. The Nostalgia Network, Inc. and Jay
Garfinkel.  On February 8, 2000, a complaint was filed in the United States     
District Court for the Southern District of New York making claims against      
Nostalgia for breach of contract, interference with contractual relations,      
business disparagement and injurious falsehood. The relief sought in this action
is in the aggregate approximately $5,750,000. Nostalgia believes the allegations
of the complaint are without merit, intends to vigorously defend all claims and 
has filed a counterclaim for damages against the plaintiff. On August 17, 2000, 
an order was entered by the court dismissing all claims as against Jay Garfinkel
and on September 14, 2000, a Stipulation of Partial Dismissal was agreed to by  
the parties dismissing those claims referencing interference with contractual   
relations, business disparagement and injurious falsehood as against Nostalgia. 
Nostalgia does not believe that this matter will have a material adverse effect 
on Nostalgia's financial condition or results of operations.                    

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SELECTED FINANCIAL DATA 

 The following is a summary of selected financial data for Nostalgia for
each of the last five fiscal years.                                             

                                                        [Enlarge/Download Table]

                                      1999            1998           1997           1996          1995     
                                  -------------   ------------   ------------   ------------   ----------- 
                                                                                                           
Number of Subscribers............     9,232,523      7,718,000      7,060,000      7,694,000     8,905,000 
BALANCE SHEET DATA                                                                                         
         Total Assets............ $  12,723,094   $ 12,979,711   $ 16,997,972   $ 17,486,702   $23,955,541 
Long Term Obligations............    88,551,527     66,664,879     45,989,547     28,202,711    22,881,635 
Stockholders' Deficit............   (82,596,278)   (61,403,423)   (38,352,747)   (19,464,221)   (7,522,733)
INCOME STATEMENT DATA                                                                                      
Affiliate Sales Revenue..........     2,089,466      2,530,714      2,579,376      3,850,745     4,205,324 
Advertising Sales Revenue........     3,288,663      2,965,896      4,474,597      5,652,938     5,812,663 
Other Revenue....................        41,648         34,750        124,960                    1,248,898 
         Total Operating                                                                                   
           Revenues..............     5,419,777      5,531,360      7,178,933      9,503,683    11,266,885 
Operating Expenses...............    20,694,728     24,058,635     23,467,791     20,394,940    20,260,931 
Loss From Operations.............   (15,274,951)   (18,527,275)   (16,288,858)   (10,891,257)   (8,994,046)
Net Loss.........................   (21,192,925)   (23,050,676)   (18,888,526)   (11,941,488)   (9,476,367)
Net Loss Per Common Share --                                                                               
  Basic and Diluted..............         (1.05)         (1.14)         (0.93)         (0.59)        (0.47)

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
AND RESULTS OF OPERATIONS 

General Comments                                                            

    Nostalgia's most important asset is its subscriber base. Substantially all
of Nostalgia's revenues are a function of its subscriber base. Affiliate revenue
is measured directly by the number of Nostalgia's subscribers. Advertising      
revenue is based on viewership, which is a product of the number of subscribers.
Over the past few years, competition for subscribers among television networks  
like the Network has increased dramatically. In part, this has been the result  
of technological advances promising greatly expanded channel capacity that has  
been repeatedly delayed. Technological advances have inspired the creation of   
many new programming services, but the expanded capacity to carry those services
is not yet available. Compounding the effects of this technological bottleneck  
was the Cable Television Consumer Protection and Competition Act of 1992, which 
had the effect of allocating already scarce cable capacity to the owners of     
broadcast television channels. The Cable Act of 1992 instituted the "must carry"
provisions which gave broadcasters, some of whose programming was of little     
interest to cable subscribers, the right to demand carriage on local cable      
systems. In many cases, cable operators had to discontinue carriage of network  
services like that provided by Nostalgia in order to carry such broadcast       
channels. To those broadcasters whose programming was of interest to cable      
subscribers, the Cable Act of 1992 gave the right to demand payment for their   
programming (the "retransmission consent" provisions). In lieu of cash payments,
the cable operators gave channel capacity to non-broadcast programming services 
affiliated with these broadcasters. In many cases, services like that provided  
by Nostalgia were dropped to make room for affiliates of broadcasters. Despite  
these changes, Nostalgia's subscriber base increased from 7,718,053 at December 
31, 1998 to 9,232,523 at December 31, 1999, although the subscriber base is     
still below 1993 levels. Until such time as channel capacity increases          
significantly, Nostalgia will remain vulnerable to subscriber declines.         
Nostalgia believes that Baby Boomer and older adults are a valuable market which
currently is not being served by any other network. Government statistics show  
that this demographic is the fastest growing demographic segment and will       
account for 30.0% of the population in 2000. As the technological front         
continues to change, Nostalgia believes that its best approach is to brand      
further the Network and build consumer awareness of the Network. In furtherance 
of this goal, Nostalgia is actively pursuing development of new original        
programming specifically targeted to Boomers and over which will be unique to   
the Network. Nostalgia believes that investment in the Network's programming and
consumer awareness will provide a greater long-term benefit than diverting funds
for short-term launch opportunities. Nostalgia's revenues, ratings and          
subscriber base have not risen in proportion to the costs of production of      
Nostalgia's original programming. Nostalgia will continue to invest in original 
programming in an attempt to increase subscribers to a point where revenues will
exceed expenditures, but there can be no assurance that such a point will be    
achieved or that Nostalgia will be able to obtain financing for such            
expenditures.                                                                   

Nine months ended September 30, 2000 compared to nine months ended September
30, 1999                                                                        

Results of Operations                                                       

     Total revenues increased $352,386, or 8.92% (from $3,948,917 to $4,301,303)
for the nine months ended September 30, 2000 (the "2000 Period") as compared    
with the nine months ended September 30, 1999 (the "1999 Period") and decreased 
$27,064, or 2.18% (from $1,239,026 to $1,211,962) for the three months ended    
September 30, 2000 (the "2000 Quarter") as compared with the three months ended 
September 30, 1999 (the "1999 Quarter"). The increase in revenues for the 2000  
Period was primarily a result of selling available radio spot airtime of which a
portion was acquired in 1999.                                                   

    Overall advertising revenues increased $485,278 or 21.41% (from $2,267,090
to $2,752,368) for the 2000 Period and decreased $9,927, or 1.38% (from $720,754
to $710,827) for the 2000 Quarter. Infomercial sales decreased $418,515, or     
50.21% (from $833,465 to $414,950) for the 2000 Period and decreased $6,005, or 
4.27% (from $140,732 to $134,727) for the 2000 Quarter. The decrease in         
Infomercial revenue is due to the Company's decision to shift from selling      
Infomercial time during the overnight block to selling Nested Programs, which   
combine all of the available time during the overnights and allows the Company  
to sell it as a                                                                 

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block of time designated for Nested Programs. Revenue from Nested Programs,     
which are included in conventional advertising increased $754,466, for the 2000 
Period and $29,464 for the 2000 Quarter. Conventional advertising increased     
$4,855 or .39% (from $1,233,396 to $1,238,251) for the 2000 Period and decreased
$161,621, or 43.26% (from $373,586 to $211,965) for the 2000 Quarter. Other     
revenue increased by $144,472, or 110.06% (from $(131,270) to $13,202) for the  
2000 Period and increased by $128,235, or 102.54% (from $(125,063) to $3,172)   
for the 2000 Quarter.                                                           

Affiliate revenues decreased by $132,892, or 7.90% (from $1,681,827 to
$1,548,935) for the 2000 Period and decreased by $17,137, or 3.31% (from        
$518,272 to $501,135) for the 2000 Quarter. This was primarily as a result of   
renegotiated contracts of affiliate customers who had dropped the service. The  
length of each affiliate contract varies, but generally ranges from three to    
five years. Certain of Nostalgia's affiliate contracts have expired and carriage
currently is provided on a month-to-month basis. Many of these affiliates have  
declined to enter into new contracts until their plans for channel expansion are
completed. As a result of intense competition among cable networks for this     
reduced number of channels, Nostalgia's per subscriber fees from affiliates may 
decline.                                                                        

The Company believes that baby boomer and older adults are a valuable 
market, which currently is not being served by any other network. Government    
statistics show that this demographic is the fastest growing demographic segment
and will account for 30% of the population in 2000. As the technological front  
continues to change, the Company believes its best approach is to further brand 
and build consumer awareness of the Network. In furtherance of this goal, the   
Company is actively pursuing development of new original programming            
specifically targeted to boomers and over which will be unique to the Network.  
The Company believes that investment in the Network's programming and consumer  
awareness will provide a greater long-term benefit than diverting funds for     
short-term launch opportunities.                                                

 Operating expenses decreased $2,015,747, or 13.07% (from $15,428,429 to
$13,412,682) for the 2000 Period and decreased $916,967, or 18.51% (from        
$4,954,919 to $4,037,952) for the 2000 Quarter. The decrease for the 2000 Period
was primarily a result of a decrease in sales and marketing costs of $1,150,229,
or 43.48% (from $2,645,641 to $1,495,412), a decrease in programming            
amortization costs of $861,056, or 13.21% (from $6,516,270 to $5,655,214), a    
decrease in finance and administrative costs of $87,504, or 3.34%. These        
decreases were offset by an increase in programming, production and transmission
costs of $83,042, or 2.28% (from $3,643,449 to $3,726,491). The decrease for the
2000 Quarter was primarily the result of a decrease in programming amortization 
of $668,595, or 29.39% (from $2,275,208 to $1,606,613, a decrease in sales and  
marketing costs of $451,089, or 54.42% (from $828,930 to $377,841), a decrease  
in finance, general and administrative costs of $16,247, or 2.14% (from $758,967
to $742,720). These decreases were offset by an increase in production and      
transmission costs of $218,964, or 20.06% (from $1,091,814 to $1,310,778).      

Programming, production and transmission costs, net of $5,655,214 and 
$1,606,613 in programming amortization costs for the 2000 Period and the 2000   
Quarter increased by $83,042, or 2.28% (from $3,643,449 to $3,726,491) for the  
2000 Period and increased by $218,964, or 20.06% (from $1,091,814 to $1,310,778)
for the 2000 Quarter. The increase is a result of increased programming costs of
$755,032, or 27.68% (from $2,727,720 to $3,482,752) for the 2000 Period, and an 
increase of $442,479 or 44.39% (from $996,745 to $1,439,224) for the 2000       
Quarter, an increase in transmission costs of $255,869, or 10.20% (from         
$2,507,717 to $2,763,586) for the 2000 Period, and an increase of $109,637, or  
12.73% (from $861,555 to $971,192) for the 2000 Quarter. These increases were   
offset by decreases in production and traffic costs of $27,954, or 7.85% (from  
$356,093 to $328,139) for the 2000 Period, and a decrease of $829, or .77% (from
$107,918 to $107,089) for the 2000 Quarter. Programming amortization costs      
decreased by $861,056 or 13.21% (from $6,516,270 to $5,655,214) for the 2000    
Period and decreased $668,595 or 29.39% (from $2,275,208 to $1,606,613) for the 
2000 Quarter primarily as a result of changes in the Network's programming      
lineup and programming contracts. The Company expects to incur additional       
increases in future programming and studio production costs as a consequence of 
the Network's programming initiatives and the creation of new original programs.
These additional future expenditures will adversely impact the Company's results
of operations in the short-term; however, management believes they are critical 
to the Company's long-term survival and growth.                                 

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     The Company continues its schedule of new and original productions in 2000,
including the following programs: GTV DanceSport, which spotlights a rapidly    
growing trend in America, ballroom and performance dancing, which is slated to  
become a recognized Olympic sport; American Couples, hosted by esteemed         
television journalist Nancy Glass, which is an hour long show celebrating the   
family values, love, commitment and partnership of famous couples; Heroes &     
Sheroes, which profiles ordinary men and women who have performed heroic tasks  
for the benefit of their fellow man; American Families hosted by Nancy Glass,   
which is a unique series that juxtaposes members of contemporary families       
against the classic TV families of The Adventures of Ozzie and Harriet and Make 
Room for Daddy and references how today's parents and children deal with age-old
issues confronting Ozzie Nelson and Danny Thomas; Flea Market Movie, where      
collectibles aficionado, Christopher Kent, appraises viewer's attic treasures   
during movie breaks; The Cookbook Show which features the Network's Flea Market 
Movie host, Christopher Kent, who also is an accomplished chef, preparing dishes
from famous cookbooks; More Money with the Dolans, starring Ken and Daria Dolan,
the "first family of finance," which provides an entertaining program on money  
issues; The Bull and the Bear, which features stock market reports by a "Siskel 
and Ebert" type pair of hosts, Llewellyn King and Linda Gasparello; The Real Me 
Autobiographies, which are true stories of famous people told in their own      
words; and American Soldier, which features interviews with World War II        
veterans as wraparounds to the dramatic series, Combat!, Garrison's Gorillas and
12 O'clock High.                                                                

Sales and marketing expenses decreased by $1,150,229, or 43.48% (from 
$2,645,641 to $1,495,412) for the 2000 Period and decreased $451,089, or 54.42% 
(from $828,930 to $377,841) for the 2000 Quarter primarily as a result of       
decreases in salaries and wages of $207,210, or 22.19% (from $933,888 to        
$726,678) for the 2000 Period and decreased by $7,122, or 2.88% (from $247,619  
to $240,497) for the 2000 Quarter. Marketing allowance decreased by $423,839, or
116.37% (from $364,228 to $(59,611) for the 2000 Period and decreased $284,679, 
or 190.63% (from $149,336 to $(135,343) for the 2000 Quarter as a result of     
renegotiated contracts of affiliate customers who had dropped the service.      
Professional fees decreased by $275,838, or 65.45% (from $421,477 to $145,639)  
for the 2000 Period and decreased by $95,581, or 72.07% (from $132,620 to       
$37,039) for the 2000 Quarter primarily as a result of reduced expenditures on  
the Network's affinity and new media efforts, as well as bringing the Network's 
public relations operations in house.                                           

  Finance, general and administrative costs decreased by $87,504, or 3.34%
(from $2,623,069 to $2,535,565) for the 2000 Period and decreased by $16,247, or
2.14% (from $758,967 to $742,720) for the 2000 Quarter. This decrease was       
primarily as a result of a decrease in consolidation and retention costs of     
$130,623, 36.33% (from $359,518 to $228,895) for the 2000 Period and decreased  
by $13,070, or 13.99% (from $93,394 to $80,324) for the 2000 Quarter. This      
increase was offset partially by an increase in legal and professional fees of  
$114,743, or 48.39% (from $237,123 to $351,866) for the 2000 Period and         
decreased by $9,682, or 18.48% (from $52,397 to $42,715) for the 2000 Quarter.  

As a result of increased revenues ($352,386); decreased programming   
amortization costs ($861,056); decreased sales and marketing costs ($1,150,229);
decreased finance, general and administrative costs ($87,504); offset by        
increased programming, production and transmission costs ($83,042), the         
Company's loss from operations decreased $2,368,133, or 20.63% (from $11,479,512
to $9,111,379) for the 2000 Period. As a result of decreased revenues ($27,064);
increased programming, production and transmission costs ($218,964); offset by  
decreases in programming amortization ($668,595); decreased sales and marketing 
costs ($451,089); decreased finance, general and administrative costs ($16,247),
the Company's loss from operations decreased $889,903, or 23.95% (from          
$3,715,893 to $2,825,990) for the 2000 Quarter.                                 

 Other income/expense increased $1,539,736 or 35.15% (from $4,380,023 to
$5,919,759) for the 2000 Period and increased $594,039, or 39.69% (from         
$1,496,752 to $2,090,791) for the 2000 Quarter, primarily as a result of        
interest on outstanding debt.                                                   

Liquidity and Capital Resources                                             

Cash increased for the 2000 Period (from $674,177 to $1,380,768),     
principally due to $11,250,000 in financing received during the 2000 Period,    
offset by cash outlays to cover operating losses and repayments of certain      
debts. Working capital decreased in the 2000 Period (from $1,952,296 to         
$1,950,820) principally as a                                                    

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result of a decrease in programming and cablecast rights. Cablecast rights have 
decreased by $2,630,939, or 26.08% in the 2000 Period as a result of            
amortization of the Network's investment in its primetime line-up. Total        
liabilities increased primarily due to $11,250,000 in additional financing.     

 Cash used in operating activities decreased $1,819,545, or 31.08% (from
($5,854,094) to $(4,034,549)), for the 2000 Period compared to the 1999 Period, 
principally as a result of decreases in accounts payable, improved collections  
on accounts receivable and reduced overall expenditures primarily in sales and  
marketing as a result of reductions in staff due to consolidation.              

Cash used in investing activities increased $528,475, or 20.98% (from 
($2,518,795) to ($3,047,270)) principally due to an increase in purchases of    
programming and cablecast rights of $560,437, or 22.7% (from $2,463,837 to      
$3,024,274).                                                                    

Cash flows from financing activities decreased $659,140, or 7.8% (from
$8,447,550 to $7,788,410) due principally to decreases in financing of $750,000,
or 6.25% (from $12,000,000 to $11,250,000) and decreased repayment of long-term 
obligations of $90,860, or 2.5% (from $3,552,450 to $3,461,590).                

In light of the Company's recurring losses, management is actively    
monitoring expenses and examining operating methods to increase efficiencies.   
These measures may provide short-term improvement, but do not address the more  
critical long-term growth needs for the Network. In order to grow, the Network  
needs to increase its affiliate base which, in turn, will increase the          
subscriber base and should allow the Network to increase its advertising rates  
as well as Affiliate revenues. To provide for necessary future growth,          
management continues its focus on aggressive affiliate marketing, including     
consumer awareness advertising and events, prominent presence at major trade    
shows and new trade advertising.                                                

Since 1990, Crown and Concept have been the principal sources of the  
Company's capital. Crown and Concept have invested $2,300,000 and provided      
$85,781,000 in debt financing since 1994, including $15,000,000 loaned by Crown 
to the Company in 1999. Additionally, between January 1, 2000 and November 13,  
2000, Crown has provided $12,500,000 in debt financing to the Company and has   
committed to advance, as needed, an additional $2,500,000 in debt or equity     
financing during the balance of the calendar year. The Company believes that    
these funds will be sufficient to satisfy its operating needs for 2000. In      
connection with the borrowings, the Company has entered into a security         
agreement pledging substantially all the Company's assets as security for its   
indebtedness to Crown and Concept.                                              

     In October 1999, the Company announced that it had received and accepted an
offer from Crown to enter into a cash merger which, if consummated, would result
in the elimination of the Company's publicly-held shares of common stock and    
constitute a going-private transaction within the meaning of Section 13(e)(3) of
the Exchange Act. Crown and Concept, which is majority-owned by Crown, in the   
aggregate are the beneficial owners of 70.3% of the Company's issued and        
outstanding shares of common stock.                                             

    Upon receipt, Crown's offer was referred to and reviewed by a committee of
the Company's independent directors, which recommended that the offer be        
accepted. The Company's Board of Directors voted to accept Crown's offer and to 
authorize the negotiation of definitive documentation for the merger.           
Consummation of the merger remains contingent upon, among other things, the     
approval of the Company's stockholders. Crown has indicated that it and its     
affiliates will vote in favor of the merger.                                    

   In January 2000, Crown and Concept transferred their respective shares of
the Company's common stock and preferred stock to NNI Acquisition Corporation, a
Delaware corporation ("Acquisition"), which was formed to facilitate the merger.
Crown and Concept retain beneficial control of the transferred shares, as       
Acquisition is wholly owned by Crown and Concept.                               

     It is anticipated that following the merger, the business and operations of
the Company will be continued substantially as currently conducted for the      
immediate future, including continuing the Company's analysis of and efforts to 
seek a strategic alliance. The Company has had contact with several possible    
strategic partners, but no serious discussions have occurred. There can be no   
assurance that the Company will be able to obtain a strategic partner, or that  
any strategic partner will be willing to invest the sums required by the Company
in order to continue to grow the Network's subscriber base. Crown and Concept   
have informed the Company                                                       

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that they intend to reevaluate the business and operations of the Company       
following the merger and take such actions with respect to the future business  
and operations of the Company as they deem appropriate. Although there are no   
definitive plans or agreements in place, Crown and Concept may cause the Company
to enter into joint venture or other agreements with other business entities    
after the merger.                                                               

     Because of the unpredictable factors involved in the search for a strategic
alliance, and the dynamic changes taking place in the industry, there is        
considerable uncertainty about the Company's future needs. There can be no      
assurance that the Company will be able to locate sufficient financing in excess
of that committed from Crown, nor that it will be able to achieve a strategic   
alliance.                                                                       

  Fiscal year ended December 31, 1999 compared to fiscal year ended December 31,
1998                                                                            

Results of Operations                                                       

Net loss in 1999 decreased $1,858,000, or 8.1% (from $23,051,000 to   
$21,193,000). This decrease was due primarily to reduced expenses in sales and  
marketing (a decrease of $4,027,000); decreased programming, production and     
transmission expenses (a decrease of $728,000); offset in part by a reduction in
revenues (a reduction of $112,000); increased programming amortization expenses 
(an increase of $982,000); increased finance, general and administration        
expenses (an increase of $409,000) and increased interest expenses (an increase 
of $1,405,000).                                                                 

Revenues                                                                    

   Total revenues in 1999 decreased by $111,000, or 2.0% (from $5,531,000 to
$5,420,000). This decrease was primarily attributed to a decrease in affiliate  
revenues, offset by increases in advertising revenue.                           

Affiliate revenues declined $442,000, or 17.5% (from $2,531,000 to    
$2,089,000). The length of each affiliate contract varies, but generally ranges 
from three to five years. Certain of Nostalgia's affiliate contracts have       
expired and carriage is currently provided on a month-to-month basis. Many of   
these affiliates have declined to enter into new contracts until their plans for
channel expansion are completed. As a result of intense competition among cable 
networks for this reduced number of channels, Nostalgia's per subscriber fees   
from affiliates have declined and may continue to decline as small networks,    
particularly those unaffiliated with the major multiple system cable operators, 
such as the Network, now are required to make payments to the cable operators   
and waive or not require per subscriber fees to be paid to them to obtain       
carriage.                                                                       

Advertising revenues increased $323,000, or 10.9% (from $2,966,000 to 
$3,289,000), primarily as a result of increased rates associated with           
Nostalgia's national spot ads and direct response (short format commercial      
advertising of two minutes or less in length) advertising. Revenues from        
national spot ads increased $188,000, or 63.1% (from $298,000 to $486,000) and  
is due to increases in the average rate per spot. Revenues from direct response 
increased $221,000, or 24.9% (from $886,000 to $1,107,000) and is due to        
increases in the average rate per spot. Revenues from infomercials decreased    
$777,000, or 43.6% (from $1,781,000 to $1,004,000), primarily due to Nostalgia's
decision in July 1999 to shift from selling infomercial time during the         
overnight block and begin selling nested or sponsored programs. Nested or       
sponsored programs combines all of the available time during the overnights and 
allows Nostalgia to sell it as a solid block of time. As a result, revenue      
generated from nested programs amounted to $693,000 for 1999. Other revenues    
increased approximately $7,000, or 20.0% (from $35,000 to $42,000) and is due to
the sale of books and GTV DanceSport video tapes.                               

Operating Expenses                                                          

   Total operating expenses decreased $3,364,000, or 14.0% (from $24,059,000
to $20,695,000). The decrease was due principally to decreased sales and        
marketing expenses (a decrease of $4,027,000); decreased programming, production
and transmission expenses (a decrease of $728,000); offset by increased         
programming amortization expenses (an increase of $982,000); increased finance, 
general and administrative expenses (an increase of $409,000).                  

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     Programming expenses for 1999 decreased $728,000, or 12.9% (from $5,660,000
to $4,932,000). Programming costs, net of $2,403,000 in capitalized costs,      
decreased by $959,000, or 46.9% (from $2,045,000 to $1,086,000) primarily as a  
result of costs associated with new original programs. Transmission costs       
increased by $301,000, or 9.8% (from $3,073,000 to $3,374,000) primarily as a   
result of incurring HITS transport fees, which allow Nostalgia to transmit its  
signal digitally, as well as incurring higher master control and uplink charges 
for the year. Program, production and traffic expenses decreased $70,000, or    
12.9% (from $542,000 to $472,000) primarily as a result of reduced Network      
branding costs for the current year.                                            

   Programming amortization increased $982,000, or 12.7% (from $7,758,000 to
$8,740,000). The majority of this increase results from a shorter amortization  
period for original programming, which comprises the bulk of capitalized costs  
and for newly acquired series.                                                  

    Sales expenses and marketing costs decreased by $4,027,000, or 54.6% (from
$7,374,000 to $3,347,000) primarily as a result of management's decision in     
March 1999 to more closely align its sales and marketing activities by          
consolidating these efforts at its headquarters in Washington, DC. Salaries,    
wages and benefits decreased by $564,000, or 32.9% (from $1,716,000 to          
$1,152,000). Travel and entertainment decreased by $293,000, or 65.6% from      
($447,000 to $154,000). Other employee costs decreased by $20,278, or 38.9%     
(from $52,145 to $31,867). These decreases were primarily due to the departure  
of personnel who have not been replaced. Convention expense decreased by        
$1,231,000, or 93.0% (from $1,324,000 to $93,000). Advertising expenditures     
decreased by $1,062,000, or 83.5% (from $1,271,000 to $209,000). Sales and      
marketing materials decreased by $140,000, or 66.0% (from $212,000 to $72,000). 
Premium expenditures decreased by $102,000, or 87.9% (from $116,000 to $14,000).
These decreases were also due to Nostalgia's efforts to reduce marketing costs. 
Professional fees decreased by $437,000, or 75.7% (from $577,000 to $140,000)   
primarily as a result of reduced expenditures on Nostalgia's affinity and new   
media efforts, as well as bringing Nostalgia's public relations operations in   
house. These decreases were offset by increases in part by an increase in       
marketing allowance costs of $167,000, or 49.4% (from $338,000 to $505,000).    

   Finance, general and administrative costs increased by $409,000, or 12.5%
(from $3,267,000 to $3,676,000). This increase was primarily a result of an     
increase on consolidation and retention costs by $661,000, or 100.0% and rent   
expense increases by $15,000, or 6.7%. These increases were offset by decreases 
in salaries and wages of $110,000, or 9.2% (from $1,192,000 to $1,082,000).     
Legal and professional fees decreased by $21,000, or 4.3% (from $489,000 to     
$468,000). Office expenses decreased by $53,000, or 30.6% (from $173,000 to     
$120,000).                                                                      

As a result of decreased revenue ($112,000), increased programming    
amortization costs ($982,000), increased finance, general and administrative    
costs ($409,000), and increased interest expense of ($1,405,000) which were     
offset by decreases in programming, production and transmission costs           
($728,000), and decreased sales and marketing costs ($4,027,000) Nostalgia's net
loss decreased $1,858,000, or 8.1% for the year ended 1999.                     

Other expense increased by $1,395,000, or 30.8% (from $4,523,000 to   
$5,918,000) primarily as a result of interest on outstanding debt.              

  Fiscal year ended December 31, 1998 compared to fiscal year ended December 31,
1997                                                                            

Net loss in 1998 increased $4,162,000, or 22.0% (from $18,889,000 to  
$23,051,000). This increase was due principally to reduced revenues (a reduction
of $1,648,000); increased interest expenses (an increase of $1,924,000);        
increased program amortization expenses (an increase of $867,000); increased    
finance, general and administrative expenses (an increase of $335,000); and     
increased programming, production and transmission expenses (an increase of     
$136,000); offset by decreased sales and marketing expenses (a decrease of      
$746,000).                                                                      

Revenues:                                                                   

   Total revenues in 1998 decreased by $1,648,000, or 23.0% (from $7,179,000
to $5,531,000). This decrease was primarily attributed to advertising revenues. 
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Affiliate revenues declined $48,000, or 1.9% (from $2,579,000 to      
$2,531,000), reflecting earlier losses of subscribers as a result of competition
for scarce channel capacity. Additionally, increased competition has put        
downward pressure on the rates which Nostalgia can charge its affiliates. While 
subscriber losses are immediately reflected in affiliate revenue, the same is   
not true for increases in subscribers as it is common for a new affiliate to    
receive a minimum of two years of free service as an incentive for commencing   
carriage of a programming service. For these reasons, Nostalgia expects future  
increases in its subscriber base, if any, to result in less than fully          
proportionate increases in affiliate revenues.                                  

 Advertising revenues decreased $1,509,000, or 33.7% (from $4,475,000 to
$2,966,000), primarily as a result of decreased rates associated with           
Nostalgia's reduced subscriber base from past years. Revenues from infomercials 
decreased approximately $1,182,000, or 39.9%, primarily due to a decrease in    
average rate per half hour which was primarily the result of market pressures as
well as a 10.0% decrease from 1997 with respect to the amount of time devoted to
this format. Revenues from short-format commercial advertising (two minutes or  
less in length) decreased by approximately $327,000, or 21.6%, due to a 26.3%   
decrease in the average rate charged per spot. This decrease was due to market  
pressures and make goods to certain advertisers. Other revenues decreased       
approximately $90,000, or 72.2% (from $125,000 to $35,000) due to extraordinary 
collections of previously written-off affiliate fees in the prior year.         

Operating Expenses:                                                         

   Total operating expenses increased $591,000, or 2.5% (from $23,468,000 to
$24,059,000). The increase was due principally to increased program amortization
expenses (an increase of $867,000); increased finance, general and              
administrative expenses (an increase of $335,000); and increased programming,   
production and transmission expenses (an increase of $136,000); offset by       
decreased sales and marketing expenses (a decrease of $746,000).                

    Programming expenses for 1998 increased $136,000, or 2.5% (from $5,524,000
to $5,660,000). Programming costs, net of $4,179,000 in capitalized costs,      
increased by $68,000, or 3.4% (from $1,977,000 to $2,045,000) primarily as a    
result of costs associated with new original programs. Transmission costs       
increased by $216,000, or 7.6% (from $2,857,000 to $3,073,000) primarily as a   
result of incurring HITS transport fees, which allow Nostalgia to transmit its  
signal digitally, as well as incurring higher master control and uplink charges 
for the year. Program, production and traffic expenses decreased $149,000, or   
21.6% (from $691,000 to $542,000) primarily as a result of reduced Network      
branding costs for the current year.                                            

   Programming amortization increased $867,000, or 12.6% (from $6,891,000 to
$7,758,000). The majority of this increase results from a shorter amortization  
period for original programming, which comprises the bulk of capitalized costs. 

 Sales expenses and marketing costs decreased by $746,000, or 9.2% (from
$8,120,000 to $7,374,000) primarily as a result of the following: advertising   
expenses decreased by $1,556,000, or 55.0% (from $2,827,000 to $1,271,000) as a 
result of not incurring satellite, ad sale and special programming advertising  
costs within the current year; conventions and national events increased by     
$318,000, or 31.5% (from $1,009,000 to $1,327,000) as a result of increased     
presence and activities at cable trade shows and other special events;          
professional fees increased by $123,000, or 27.2% (from $452,000 to $575,000) as
a result of increased public relations efforts and increased consulting in      
relation to satellite sales and affinity programs; program guide costs increased
by $97,000, or 43.5% (from $223,000 to $320,000) as a result of associated costs
with redesigning the guides; employee related costs decreased by $93,000, or    
4.0% (from $2,307,000 to $2,214,000) primarily as a result of decreased travel  
and entertainment expenses within the affiliate sales and marketing areas.      

Finance, general and administrative expenses increased by $335,000, or
11.4% (from $2,932,000 to $3,267,000). The increase was attributable to a       
$432,000 or 423.5% increase in bad debt expense (from $102,000 to $534,000), due
primarily to an increase in affiliate write-offs during the year as well as any 
reserves for certain advertising revenues that were placed in litigation.       

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   Nostalgia entered into affiliate agreements with C-Band customers whereby
certain of these customers were granted free carriage for periods up to eighteen
months. The contracts specified a fee per subscriber that would be payable to   
Nostalgia on a monthly basis following the free carriage period. Subsequent to  
the free carriage period, certain customers threatened to drop Nostalgia's      
programming unless a reduced fee for carriage was negotiated. Ultimately, a     
reduced fee was negotiated with these customers and any amounts included in     
accounts receivable in excess of the renegotiated rates were written off.       
Nostalgia has modified its collection procedures to more effectively collect    
account receivables. This modification allows for strict adherence to internal  
credit policies, which further ensures constant review and maintenance of       
accounts. Write-offs have decreased because potential past due clients are being
recognized early on, which allows Nostalgia's collections department greater    
ability to recover what would have been written off. These changes have         
significantly lowered the accounts receivable turnover.                         

Following the commencement of litigation with a former advertising    
customer, Nostalgia determined to reserve an amount of $109,480 against         
outstanding accounts receivable that had not been paid for advertising that had 
been run on the Network. In conjunction with settlement of this litigation, the 
outstanding accounts receivable were forgiven.                                  

Personnel costs increased by $74,000, or 6.6% (from $1,118,000 to     
$1,192,000) due to the addition of staff within the accounting department.      
Professional fees decreased $73,000, or 13.0% (from $562,000 to $489,000)       
principally as a result of reduced consulting and legal fees. Other expenses    
decreased by $42,000, or 10.3% (from $406,000 to $364,000) primarily due to a   
reduction in directors' fees, shareholders' expenses, repairs and maintenance   
expenses and dues and subscriptions expenses. These were offset by increases in 
insurance expenses that were related to increases in various policy coverages.  
Office expenses decreased by $38,000, or 18.0% (from $211,000 to $173,000),     
primarily due to lower general expenditures.                                    

    Net interest expense increased by $1,923,000, or 74.0% (from $2,600,000 to
$4,523,000) due to increased principal on the notes payable to Crown. Interest  
expense is expected to increase in 1999 as a result of a full year's interest on
1998 borrowings as well as interest on additional borrowings anticipated in     
1999.                                                                           

Liquidity and Capital Resources                                                 

  Fiscal year ended December 31, 1999 compared to fiscal year ended December 31,
1998                                                                            

     Working capital increased $727,000, (59.3%) from $1,225,000 at December 31,
1998 to $1,952,000 at December 31, 1999. The increase is primarily a result of a
reduction in trade payables as a result of paying down existing debt.           

Cash used in operating activities decreased $3,889,000 (33.2%) from   
($11,724,000) to ($7,835,000), due to an increase in programming amortization   
and accrued interest.                                                           

Cash used in investing activities decreased $1,647,000 (39.0%) from   
($4,216,000) to ($2,569,000), due primarily to decreases in acquisition of      
programming and cablecast rights of $1,665,000.                                 

 Cash provided by financing activities decreased $4,141,000 (28.2%) from
$14,680,000 to $10,539,000, due primarily to decreases in financing from Crown  
of $4,000,000.                                                                  

  Fiscal year ended December 31, 1998 compared to fiscal year ended December 31,
1997                                                                            

Working capital increased $1,039,000, or 558.6% (from $186,000 to     
$1,225,000). The increase is primarily a result of increases in current portion 
of programming rights, offset by increases in accounts payable.                 

Cash used in operating activities increased $3,123,000, or 36.3% (from
($8,601,000) to ($11,724,000)), due to an increased loss of $4,162,000, offset  
by an increase in programming amortization and accrued interest.                

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Cash used in investing activities increased $560,000, or 15.3% (from  
($3,660,000) to ($4,220,000)), due primarily to an increase in acquisition of   
programming and cablecast rights of $821,000, offset by a decrease in the       
acquisition of property and equipment of $231,000.                              

    Cash provided by financing activities increased $2,037,000, or 16.1% (from
$12,643,000 to $14,680,000), due primarily to decreased payments on financing   
for programming and other debt of $2,536,000, offset by a decrease in financing 
by Crown of $500,000.                                                           

     In light of Nostalgia's recurring losses, management is actively monitoring
expenses and examining operating methods to increase efficiencies. These        
measures may provide short-term improvement, but do not address the more        
critical long-term growth needs for the Network. In order to grow, the Network  
needs to increase its affiliate base which, in turn, will increase the          
subscriber base and should allow the Network to increase its advertising rates  
as well as affiliate revenues. To provide for necessary future growth,          
management continued its focus on planning an aggressive affiliate marketing    
campaign over the next three to five years. This campaign will include consumer 
awareness advertising and events, prominent presence at major trade shows and   
new trade advertising.                                                          

 Increased competition from networks with strong strategic alliances and
significant financial resources continue to significantly effect Nostalgia's    
ability to increase its subscriber base and, correspondingly, has reduced       
revenues from affiliates and advertising. This competition also has increased   
the costs, which Nostalgia must pay for programming. Nostalgia does not         
anticipate significant improvement in the results of its operations until such  
time as the number of its subscribers increases significantly.                  

     Since 1990, Crown and Concept have been the principal source of Nostalgia's
capital. Crown and Concept have invested $2,300,000 and provided $85,781,000 in 
financing since 1994, including $15,000,000 loaned by Crown to Nostalgia in     
1999. Additionally, between January 1, 2000 and March 20, 2000, Crown has       
provided $3,750,000 in debt financing to Nostalgia, and has committed to advance
as needed an additional $11,250,000 in debt or equity financing during the      
balance of the calendar year. Nostalgia believes that these funds will be       
sufficient to satisfy its operating needs for 2000. In connection with the      
borrowings, Nostalgia has entered into a security agreement pledging            
substantially all Nostalgia's assets as security for its indebtedness to Crown  
and Concept.                                                                    

   In October 1999, Nostalgia announced that it had received and accepted an
offer from Crown to enter into a cash merger which, if consummated, would result
in the elimination of Nostalgia's publicly-held common stock and constitute a   
going-private transaction within the meaning of Section 13(e)(3) of the         
Securities Exchange Act of 1934. Crown and Concept, in the aggregate, are the   
beneficial owners of 70.3% of Nostalgia's issued and outstanding shares of      
common stock.                                                                   

    Upon receipt, Crown's offer was referred to and reviewed by a committee of
Nostalgia's independent directors which recommended that the offer be accepted. 
Nostalgia's Board of Directors voted to accept Crown's offer and to authorize   
the negotiation of definitive documentation for the merger. Consummation of the 
merger remains contingent upon, among other things, the approval of Nostalgia's 
stockholders. Crown has indicated that it and its affiliates will vote in favor 
of the merger.                                                                  

Nostalgia continued to pursue identification of potential strategic   
alliance candidates. Nostalgia also continued in its analysis of and efforts to 
seek a strategic alliance. Nostalgia has engaged in active discussions with     
several possible strategic partners, but no serious discussions have occurred.  
There can be no assurance that Nostalgia will be able to obtain a strategic     
partner, or that any strategic partner will be willing to invest the sums       
required by Nostalgia in order to continue to grow the Network's subscriber     
base. It is anticipated that following the merger, the business and operations  
will be continued substantially as currently conducted for the immediate future.
Crown and Concept have informed Nostalgia that they intend to re-evaluate the   
business with respect to the future business and operations of Nostalgia, as    
they deem appropriate. Although there are no definitive plans or agreements in  
place, Crown and Concept intend to continue to seek material transactions and/or
relationships such as joint ventures, strategic partnerships, mergers or other  
forms of business combinations with third parties following the merger.         

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     Because of the unpredictable factors involved in the search for a strategic
alliance, and the dynamic changes taking place in the industry, there is        
considerable uncertainty about Nostalgia's future needs. There can be no        
assurance that Nostalgia will be able to locate sufficient financing in excess  
of that committed from Crown, nor that it will be able to achieve a strategic   
alliance.                                                                       

MATERIAL COMMITMENTS                                                            

     Nostalgia leases transponder space and related services on a satellite at a
base monthly rental of $205,400. The lease provides for greater back-up         
protection than did Nostalgia's previous leases in the event of satellite       
failure. The lease terminates with the life of the satellite, which is expected 
in the year 2006, and Nostalgia was required to pay a launch protection fee of  
$1,000,000 plus capitalized interest at 12.0% and other direct costs.           

As of August 31, 2000, Nostalgia had issued and outstanding promissory
notes to Concept and Crown in the aggregate principal amount of $21,783,608 and 
$73,997,292, respectively, bearing interest of approximately 8.50% to 9.5% per  
annum which are due and payable on January 1, 2001. Nostalgia does not intend to
the repay this debt on January 1, 2001, but instead plans to negotiate with     
Crown and Concept for the issuance of a substitution note that will extend this 
maturity date. Crown and Concept have permitted Nostalgia to issue substitution 
notes in the past in exchange for the payment of indebtedness owed by Nostalgia 
to Crown and Concept.                                                           

   Atlantic Video.  Nostalgia and Atlantic Video are parties to an agreement
pursuant to which Atlantic Video provides to Nostalgia certain exclusive        
television production, post-production and master control/uplink services and   
equipment and leased to Nostalgia 4,300 square feet of office space in Atlantic 
Video's Alexandria, Virginia production facilities at a monthly rate of $3,896. 
As of May 31, 2000, the traffic and finance departments were relocated from     
Atlantic Video production facilities to Nostalgia's corporate offices in the    
District of Columbia. Consequently, the monthly lease payments of $3,896 have   
ceased. A build-out of the corporate offices is planned to facilitate the       
finance department's relocation and a completion date is scheduled for December 
2000. At that time, lease payments for this additional space will commence at a 
rate of approximately $5,000 per month. Under the terms of the agreement with   
Atlantic Video, Nostalgia is required to purchase a minimum number of hours of  
such services during each year at specified rates. Nostalgia has agreed to pay a
minimum monthly fee of $93,000 to Atlantic Video. If Nostalgia does not actually
purchase $50,000 of services in a month from Atlantic Video, the difference, up 
to an aggregate maximum of $75,000, subject to certain limitations, may be used 
as a credit against future fees. The net amount payable to Atlantic Video for   
these additional services with respect to 1999 was approximately $1,126,000.    

   Crown and Concept.  Since 1990, Crown and Concept have been the principal
source of Nostalgia's capital. Crown and Concept have invested $2,300,000 and   
provided $85,781,000 in financing since 1994, including $15,000,000 loaned by   
Crown to Nostalgia in 1999. Additionally, between January 1, 2000 and October   
10, 2000, Crown has provided $11,250,000 million in debt financing to Nostalgia 
and has committed to advance, as needed, an additional $3,750,000 million in    
debt or equity financing through December 31, 2000. Nostalgia believes that     
these funds will be sufficient to satisfy its operating needs through December  
31, 2000. In connection with the borrowings, Nostalgia has entered into a       
security agreement pledging substantially all Nostalgia's assets as security for
its indebtedness to Crown and Concept.                                          

 On December 30, 1999, Nostalgia issued two substitution and replacement
notes to Crown and Concept in the amounts of $63,997,292 and $21,783,608,       
respectively. These notes bear interest at 8.5% and require aggregate minimum   
monthly interest payments of $60,000, with principal and unpaid interest due on 
January 1, 2001. These notes replace all previously issued notes plus unpaid    
interest as of December 30, 1999 and are collateralized by substantially all of 
Nostalgia's assets. As of October 10, 2000, Crown made additional loans totaling
$11,250,000 to Nostalgia bearing interest at 8.50% to 9.5%. Principal and unpaid
interest on these notes are due on January 1, 2001.                             

Transponder Lease.  Nostalgia leases satellite transponder space and  
services on a 24-hour per day basis. In connection with Nostalgia's satellite   
transponder, which launched March 1994, a launch protection fee of              
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$1,000,000 was paid and other direct costs were capitalized. The basic monthly  
rate is $205,400 for a term spanning the life of the satellite, which is        
estimated to be 12 years. Expense for satellite transponder space and services  
was $2,404,800, for 1999, 1998 and 1997. Lease expense for premises and         
equipment for 1999, 1998 and 1997, which consisted entirely of minimum rentals, 
was $274,000, $280,000 and $273,000, respectively. Approximate minimum rental   
commitments under all non-cancelable leases, including the transponder lease,   
having terms in excess of a year are as follows:                                

                                                                [Download Table]

                                            FACILITY  TRANSMISSION            
         YEAR ENDING DECEMBER 31,            LEASES      LEASES       TOTAL   
         ------------------------           --------  ------------  ----------
                                                                              
2000.......................................   29,000    2,913,000    2,942,000
2001.......................................   29,000    2,892,000    2,921,000
2002.......................................   30,000    2,885,000    2,915,000
2003.......................................   21,000    2,885,000    2,906,000
2004.......................................             2,885,000    2,885,000
Thereafter.................................       --   10,426,000   10,426,000
                                            --------   ----------   ----------
                                            $109,000   24,866,000   24,995,000
                                            ========   ==========   ==========

 Office Studio and Equipment.  Nostalgia had a long term lease agreement
with Atlantic Video. The lease agreement terminated as of November 30, 1999.    
Effective December 1999, Nostalgia is renting the office space on a             
month-to-month basis. Rental expense under this lease was $215,000, $194,000 and
$184,600 for the years ended December 31, 1999, 1998 and 1997, respectively.    
Nostalgia is in negotiations to commence a five-year lease.                     

     Up until May 31, 2000, Nostalgia leased office space from Atlantic Video on
a month-to-month basis. Rent expense under this lease for the years ended       
December 31, 1999, 1998 and 1997 was approximately $47,000.                     

     Rating Service Contract.  In 1995, Nostalgia contracted with a service that
provides ratings reports, analysis reports, demographic reports and other       
special reports. The agreement covered a minimum period of five years and       
required a monthly base charge of approximately $40,000. In November 1999,      
Nostalgia renegotiated the service agreement to receive partial services        
throughout the remaining contract term at approximately $9,000 per month.       

    Cablecast Rights Payable.  Prime-time series consist of broadcast licenses
for classic television series and other programming acquired from various film  
studios or other sources and include:                                           

- American Soldier Block.  Interviews with veterans, focusing on their
       wartime experiences, are wrapped around three classic dramatic television
      shows. The programs and their wrap around elements are part of a weekday
       and weekend block entitled American Soldier. The shows, which the Network
     has licensed for two years, are Combat!, Garrison's Gorillas and Twelve
       O'clock High. Combat! and Garrisons Gorilla's have quarterly license fees
     of $15,625 and $16,250, respectively, and run through June 2000. Twelve
O'clock High has a monthly license fee of $27,153 and runs through
February 2000.                                                    

- American Families Block.  This block spotlights regular families    
       discussing contemporary solutions to issues raised in episodes of classic
 family programs of Ozzie & Harriet and Make Room for Daddy. Ozzie &
      Harriet and Make Room for Daddy were acquired in September 1999 and have
monthly license fees of $16,250 and $48,750, respectively. Ozzie &
   Harriet runs through August 2002 and Make Room for Daddy runs through
August 2001                                                       

- Bonanza.  This program was acquired September 1999 and has monthly  
license fees of $178,125 which runs through August 2001.          

- The GTV Variety Hour.  The GTV Variety Hour features classic variety
   programs such as Tony Orlando and Dawn, Leslie Uggams and Dean Jones,
       which were purchased by the Network. These shows, other than Tony Orlando
    and Dawn, have a final annual payment of $195,000 due January 1, 2001.
 Monthly payments of approximately $4,000 are due each month and the
balance is $47,812.                                               

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INDEPENDENT ACCOUNTANTS 

    The consolidated financial statements and financial statement schedules of
Nostalgia for the year ended December 31, 1999 included in this proxy statement 
have been audited by Grant Thornton, LLP. The financial statements and financial
statement schedules for the two-year period ended December 31, 1998 included in 
this proxy statement have been audited by BDO Seidman, LLP.                     

   As reported on Nostalgia's Form 8-K, filed with the SEC on April 5, 1999,
BDO Seidman notified Nostalgia on April 1, 1999 that the auditor-client         
relationship between Nostalgia and BDO Seidman had terminated and that it would 
decline to stand for re-election. BDO Seidman's report on the financial         
statements for the past two years contained no adverse opinion or disclaimer of 
opinion, nor was the report qualified or modified as to uncertainty, audit      
scope, or accounting principles. During the last two fiscal years and through   
the subsequent interim period, there were no disagreements with BDO Seidman on  
any matter of accounting principles or practices, financial statement           
disclosure, or auditing scope or procedure. Nostalgia engaged Grant Thornton LLP
as Nostalgia's independent accountant on April 2, 1999. Grant Thornton was      
ratified as Nostalgia's independent accountants at Nostalgia's 1999 Annual      
Meeting of Stockholders.                                                        

OTHER MATTERS 

  The Board of Directors knows of no other business to be presented at the
special meeting. If other matters properly come before the meeting in accordance
with the bylaws, the persons named as proxies will vote on them in accordance   
with their best judgment.                                                       

ANNUAL REPORT AND FORM 10-K 

   Nostalgia's annual report on Form 10-K for the fiscal year ended December
31, 1999 was filed with the SEC on March 30, 2000. A list of the Exhibits       
included in the Form 10-K and the exhibits may be obtained by writing to        
investor relations, The Nostalgia Network, Inc. 650 Massachusetts Avenue, N.W., 
Washington, D.C. 20001.                                                         

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STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING 

     The deadline for submission of stockholder proposals intended for inclusion
in Nostalgia's proxy statement for the 2000 Annual Meeting of Stockholders was  
December 31, 1999. Upon completion of the merger, Crown and Concept will be the 
only stockholders of Nostalgia and Nostalgia will terminate its Exchange Act    
registration.                                                                   

   You are urged to complete, date, sign and return your proxy card promptly
to make certain your shares will be voted at the special meeting, even if you   
plan to attend the meeting in person. If you desire to vote your shares in      
person at the meeting, your proxy may be revoked. For your convenience in       
returning the proxy card, a pre-addressed and postage paid envelope has been    
enclosed.                                                                       

YOUR PROXY IS IMPORTANT 
WHETHER YOU OWN FEW OR MANY SHARES

Please date, sign and mail the enclosed proxy card today. 

                                      By Order of the Board of Directors

                          /s/ WILLARD R. NICHOLS
                                          --------------------------------------
                                       Vice President, General Counsel and
             Secretary

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INDEX TO FINANCIAL STATEMENTS 

                                                                [Download Table]

                                                               PAGE  
                                                              -------
                                                                     
THE NOSTALGIA NETWORK, INC.                                          
Reports of Independent Certified Public Accountants.........    F-2-3
Balance Sheets as of September 30, 2000 and December 31,             
  1999 and 1998.............................................      F-4
Statements of Operations for the Nine Months Ended September         
  30, 2000 and 1999, and the Years Ended December 31, 1999,          
  1998 and 1997.............................................      F-5
Statements of Changes in Stockholders' Equity (Deficit) for          
  the Years Ended December 31, 1999, 1998 and 1997 and the           
  Nine Months Ended September 30, 2000......................      F-6
Statements of Cash Flows for the Nine Months Ended September         
  30, 2000 and 1999, and the Years Ended December 31, 1999,          
  1998 and 1997.............................................      F-7
Notes to Financial Statements...............................   F-8-19
Report of Independent Certified Public Accountants on                
  Schedule II...............................................     F-20
Schedule II.................................................     F-21

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors                                                       
The Nostalgia Network, Inc.                                                     

  We have audited the accompanying balance sheet of The Nostalgia Network,
Inc. (the "Company") as of December 31, 1999, and the related statements of     
operations, changes in stockholders' deficit and cash flows for the year then   
ended. These 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 1999 financial statements referred to above present
fairly, in all material respects, the financial position of The Nostalgia       
Network, Inc. at December 31, 1999, and the results of its operations and its   
cash flows for the year then ended, in conformity with generally accepted       
accounting principles.                                                          

                       Grant Thornton, LLP

Vienna, Virginia                                                                
March 3, 2000 (Except for Notes 1 and 4 as to which the date is March 21, 2000) 

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders                                      
The Nostalgia Network, Inc.                                                     

  We have audited the accompanying balance sheet of The Nostalgia Network,
Inc. (the "Company") as of December 31 1998 and the related statements of       
operations, changes in stockholders' deficit and cash flows for the years ended 
December 31, 1998 and 1997. We have also audited Schedule II for the years ended
December 31, 1998 and 1997. These financial statements and schedule are the     
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements and schedule based on our audits.         

We conducted our audits 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 and schedule are    
free of material misstatement. An audit includes examining, on a test basis,    
evidence supporting the amounts and disclosures in the financial statements and 
schedule. An audit also includes assessing the accounting principles used and   
significant estimates made by management, as well as evaluating the overall     
presentation of the financial statements and schedule. We believe that our      
audits provide a reasonable basis for our opinion.                              

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Nostalgia Network, Inc. 
at December 31, 1998, and the results of its operations and cash flows for the  
years then ended December 31, 1998 and 1997, in conformity with generally       
accepted accounting principles. Also, in our opinion, Schedule II presents      
fairly, in all material respects, the information set forth therein for the     
years ended December 31, 1998 and 1997.                                         

                    BDO SEIDMAN, LLP

Washington DC                                                                   
March 23, 1999                                                                  

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THE NOSTALGIA NETWORK, INC. 

BALANCE SHEETS

                                                        [Enlarge/Download Table]

                                                  (UNAUDITED)                DECEMBER 31,          
                                               SEPTEMBER 30, 2000        1999             1998     
                                               ------------------    -------------    ------------ 
                                                                                                   
                                              ASSETS                                               
CURRENT ASSETS:                                                                                    
  Cash and cash equivalents..................    $   1,380,768       $     674,177    $    539,371 
  Accounts receivable, less allowance of                                                           
     $75,000, 161,000, and 302,000,                                                                
     respectively............................          553,305             826,588         935,230 
  Prepaid expenses...........................          165,946             114,096         168,362 
  Programming and cablecast rights, net......        4,561,566           7,105,280       7,300,000 
                                                 -------------       -------------    ------------ 
          Total current assets...............        6,661,585           8,720,141       8,942,963 
  Programming and cablecast rights, net......        2,894,191           2,981,416       2,788,129 
  Property and equipment, net................          785,364             972,107       1,191,879 
  Deposits...................................           76,431              49,430          56,740 
                                                 -------------       -------------    ------------ 
          Total assets.......................    $  10,417,571       $  12,723,094    $ 12,979,711 
                                                 =============       =============    ============ 

                              LIABILITIES AND STOCKHOLDERS' DEFICIT                                
CURRENT LIABILITIES:                                                                               
  Current maturities of programming and                                                            
     cablecast fees..........................    $   3,310,487       $   4,810,822    $  5,068,000 
  Accounts payable -- Trade..................          742,159           1,172,475       1,948,725 
                     -- Related parties......           29,282              32,191         278,919 
  Accrued expenses and other liabilities.....          421,920             531,341         395,081 
  Unearned income............................          206,917             221,016          27,530 
                                                 -------------       -------------    ------------ 
          Total current liabilities..........        4,710,765           6,767,845       7,718,255 
                                                 -------------       -------------    ------------ 
LONG-TERM OBLIGATIONS, LESS CURRENT                                                                
  MATURITIES:                                                                                      
  Programming and cablecast fees.............          173,909           2,135,164         114,465 
  Notes payable to related parties...........       97,335,900          86,085,900      62,832,873 
  Accrued interest payable -- Related                                                              
     parties.................................        5,824,413             330,463       3,382,125 
  Other......................................               --                  --         335,416 
                                                 -------------       -------------    ------------ 
          Total Long-term liabilities........      103,334,222          88,551,527      66,664,879 
                                                 -------------       -------------    ------------ 
          Total liabilities..................      108,044,987          95,319,372      74,383,134 
                                                 -------------       -------------    ------------ 

COMMITMENTS AND CONTINGENCIES                                                                      
STOCKHOLDERS' DEFICIT:                                                                             
  Preferred stock, convertible: $2 par value,                                                      
     125,000 shares authorized, 3,250 issued                                                       
     and outstanding.........................            6,500               6,500           6,500 
  Common stock: $0.04 par value, 30,000,000                                                        
     shares authorized, 20,275,370 shares                                                          
     issued and outstanding at September 30,                                                       
     2000 and December 31, 1999 and                                                                
     20,274,370 issued and outstanding at                                                          
     December 31, 1998.......................          811,015             811,015         810,975 
  Additional paid-in capital.................       30,213,584          30,213,584      30,213,554 
  Deficit....................................     (128,658,515)       (113,627,377)    (92,434,452)
                                                 -------------       -------------    ------------ 
          Total stockholders' deficit........      (97,627,416)        (82,596,278)    (61,403,423)
                                                 -------------       -------------    ------------ 
          Total liabilities and stockholders'                                                      
            deficit..........................    $  10,417,571       $  12,723,094    $ 12,979,711 
                                                 =============       =============    ============ 

The accompanying summary of accounting policies and notes are an integral part
of these financial statements.
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THE NOSTALGIA NETWORK, INC. 

STATEMENTS OF OPERATIONS

                                                        [Enlarge/Download Table]

                                                  (UNAUDITED)                                                         
                                              FOR THE NINE MONTHS                    FOR THE YEARS ENDED              
                                              ENDED SEPTEMBER 30,                        DECEMBER 31,                 
                                          ----------------------------   -------------------------------------------- 
                                              2000            1999           1999            1998            1997     
                                          ------------    ------------   ------------    ------------    ------------ 
                                                                                                                      
OPERATING REVENUES:                                                                                                   
  Affiliate revenues..................... $  1,548,935    $  1,681,827   $  2,089,466    $  2,530,714    $  2,579,376 
  Advertising revenues...................    2,752,368       2,267,090      3,288,663       2,965,896       4,474,597 
  Other..................................           --              --         41,648          34,750         124,960 
                                          ------------    ------------   ------------    ------------    ------------ 
        Total operating revenues.........    4,301,303       3,948,917      5,419,777       5,531,360       7,178,933 
                                          ------------    ------------   ------------    ------------    ------------ 
OPERATING EXPENSES:                                                                                                   
  Programming, production and                                                                                         
    transmission.........................    3,726,491       3,643,449      4,931,769       5,659,937       5,524,078 
  Programming amortization...............    5,655,214       6,516,270      8,740,105       7,757,637       6,891,161 
  Sales and marketing....................    1,495,412       2,645,641      3,346,909       7,373,867       8,120,458 
  Finance, general and administrative....    2,535,565       2,623,069      3,675,945       3,267,194       2,932,094 
                                          ------------    ------------   ------------    ------------    ------------ 
        Total operating expenses.........   13,412,682      15,428,429     20,694,728      24,058,635      23,467,791 
                                          ------------    ------------   ------------    ------------    ------------ 
        Loss from operations.............   (9,111,379)    (11,479,512)   (15,274,951)    (18,527,275)    (16,288,858)
OTHER (EXPENSE) INCOME:                                                                                               
  Interest expense -- related parties....   (5,919,759)     (4,380,023)    (5,986,480)     (4,581,460)     (2,689,000)
  Other income...........................           --              --         68,506          58,059          89,332 
                                          ------------    ------------   ------------    ------------    ------------ 
        Net loss......................... $(15,031,138)   $(15,859,535)  $(21,192,925)   $(23,050,676)   $(18,888,526)
                                          ============    ============   ============    ============    ============ 
LOSS PER COMMON SHARE -- BASIC AND                                                                                    
  DILUTED................................ $      (0.74)   $      (0.78)  $      (1.05)   $      (1.14)   $      (0.93)
                                          ============    ============   ============    ============    ============ 
WEIGHTED AVERAGE SHARES OUTSTANDING......   20,275,370      20,274,382     20,274,839      20,274,370      20,274,370 

The accompanying summary of accounting policies and notes are an integral part
of
these financial statements. 
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THE NOSTALGIA NETWORK, INC. 

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) 

FOR THE PERIODS ENDED SEPTEMBER 30, 2000 AND THE YEARS ENDED DECEMBER 31, 1999, 
1998 AND 1997 

                                                        [Enlarge/Download Table]

                                        PREFERRED            COMMON              ADDITIONAL                       TOTAL    
                                          STOCK              STOCK                 PAID-IN                    STOCKHOLDERS'
                                         SHARES    AMOUNT    SHARES     AMOUNT     CAPITAL       DEFICIT         DEFICIT   
                                        ---------  ------  ----------  --------  -----------  -------------   -------------
                                                                                                                           
BALANCE AT JANUARY 1, 1997.............   3,250    $6,500  20,274,370  $810,975  $30,213,554  $ (50,495,250)  $(19,464,221)
Net loss...............................      --       --           --        --           --    (18,888,526)   (18,888,526)
                                          -----    ------  ----------  --------  -----------  -------------   ------------ 
BALANCE AT DECEMBER 31, 1997...........   3,250    6,500   20,274,370   810,975   30,213,554    (69,383,776)   (38,352,747)
Net loss...............................      --       --           --        --           --    (23,050,676)   (23,050,676)
                                          -----    ------  ----------  --------  -----------  -------------   ------------ 
BALANCE AT DECEMBER 31, 1998...........   3,250    6,500   20,274,370   810,975   30,213,554    (92,434,452)   (61,403,423)
Common stock issued....................      --       --        1,000        40           30             --             70 
Net loss...............................      --       --           --        --           --    (21,192,925)   (21,192,925)
                                          -----    ------  ----------  --------  -----------  -------------   ------------ 
BALANCE AT DECEMBER 31, 1999...........   3,250    6,500   20,275,370   811,015   30,213,584   (113,627,377)   (82,596,278)
Net loss...............................      --       --           --        --           --    (15,031,138)   (15,031,138)
                                          -----    ------  ----------  --------  -----------  -------------   ------------ 
BALANCE AT SEPTEMBER 30, 2000..........   3,250    $6,500  20,275,370  $811,015  $30,213,584  $(128,658,515)  $(97,627,410)
                                          =====    ======  ==========  ========  ===========  =============   ============ 

The accompanying summary of accounting policies and notes are an integral part
of these financial statements.

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THE NOSTALGIA NETWORK, INC. 

STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                   (UNAUDITED)                                                         
                                               FOR THE NINE MONTHS                    FOR THE YEARS ENDED              
                                               ENDED SEPTEMBER 30,                        DECEMBER 31,                 
                                           ----------------------------   -------------------------------------------- 
                                               2000            1999           1999            1998            1997     
                                           ------------    ------------   ------------    ------------    ------------ 
                                                                                                                       
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                  
  Net loss...............................  $(15,031,138)   $(15,859,535)  $(21,192,925)   $(23,050,676)   $(18,888,526)
  Adjustments to reconcile net loss to                                                                                 
    net cash used in operating                                                                                         
    activities:                                                                                                        
    Depreciation.........................       209,739         218,773        275,548         286,159         310,416 
    Programming amortization.............     5,655,213       6,516,270      8,740,105       7,757,637       6,891,161 
    Provision for losses on accounts                                                                                   
      receivable.........................       309,040         288,731        522,554         534,000         102,000 
  Net change in operating assets and                                                                                   
    liabilities:                                                                                                       
    Decrease (increase) in accounts                                                                                    
      receivable.........................       (35,757)       (297,083)      (413,912)       (745,464)       (119,132)
    Decrease (increase) in prepaid                                                                                     
      expenses...........................       (51,850)        (57,901)        53,590         (28,021)          5,657 
    Decrease (increase) in deposits......       (27,001)              0          7,310          (4,000)        (35,000)
    (Decrease) increase in accounts                                                                                    
      payable............................      (430,316)       (304,268)    (1,022,978)        (93,989)        998,175 
    (Decrease) increase in accrued                                                                                     
      expenses and other liabilities.....      (112,331)        567,778       (199,155)       (299,440)        121,155 
    Increase in accrued interest.........     5,493,951       2,944,548      5,201,364       3,921,296       1,978,058 
    Increase (decrease) in unearned                                                                                    
      income.............................       (14,099)        128,593        193,486          (5,082)              0 
                                           ------------    ------------   ------------    ------------    ------------ 
        Net cash used in operating                                                                                     
          activities.....................    (4,034,549)     (5,854,094)    (7,835,013)    (11,727,580)     (8,636,036)
                                           ------------    ------------   ------------    ------------    ------------ 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                  
  Purchases of property and equipment....       (22,996)        (54,958)       (55,100)        (36,748)       (267,294)
  Acquisition of programming and                                                                                       
    cablecast rights.....................    (3,024,274)     (2,463,837)    (2,513,672)     (4,179,120)     (3,357,900)
                                           ------------    ------------   ------------    ------------    ------------ 
        Net cash used in investing                                                                                     
          activities.....................    (3,047,270)     (2,518,795)    (2,568,773)     (4,215,868)     (3,625,194)
                                           ------------    ------------   ------------    ------------    ------------ 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                  
  Proceeds from notes payable............    11,250,000      12,000,000     15,000,000      19,000,000      19,500,000 
  Payments of long-term cablecast rights                                                                               
    obligations..........................    (3,461,590)     (3,552,450)    (4,461,479)     (4,320,370)     (6,856,592)
  Proceeds from issuance of common                                                                                     
    stock................................            --              --             70               0               0 
                                           ------------    ------------   ------------    ------------    ------------ 
        Net cash provided by financing                                                                                 
          activities.....................     7,788,410       8,447,550     10,538,591      14,679,630      12,643,408 
                                           ------------    ------------   ------------    ------------    ------------ 
NET INCREASE (DECREASE) IN CASH AND CASH                                                                               
  EQUIVALENTS............................       706,591          74,661        134,806      (1,263,818)        382,178 
CASH AND CASH EQUIVALENTS -- BEGINNING OF                                                                              
  YEAR...................................       674,177         539,371        539,371       1,803,189       1,421,011 
                                           ------------    ------------   ------------    ------------    ------------ 
CASH AND CASH EQUIVALENTS -- END OF                                                                                    
  YEAR...................................  $  1,380,768    $    614,032   $    674,177    $    539,371    $  1,803,189 
                                           ============    ============   ============    ============    ============ 

The accompanying summary of accounting policies and notes are an integral part
of these financial statements.
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THE NOSTALGIA NETWORK, INC. 

NOTES TO FINANCIAL STATEMENTS 

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                      

The Nostalgia Network, Inc. is engaged in the operation of GoodLife TV
Network, a television programming service offering a variety of entertainment,  
lifestyle and informational programming to a target audience of "Boomers and    
over" via satellite to cable television and alternative broadcasting systems    
(Affiliates) throughout the United States.                                      

Significant accounting policies used by Nostalgia are described below:

Interim Reporting                                                               

  The accompanying financial information as of September 30, 2000, and for
the nine months ended September 30, 2000 and 1999, is unaudited. In the opinion 
of management, all adjustments, consisting only of normal and recurring         
adjustments, considered necessary for a fair presentation have been included.   
Operating results for any interim period are not necessarily indicative of the  
results for any other interim period or for an entire year.                     

Revenue Recognition                                                         

    Revenue from providing programming services to cable systems is recognized
on a monthly basis as the services are provided. Revenue from sales to          
advertisers is recognized as the advertisements are aired. Fees received in     
advance for services to be provided in the future are recorded as unearned      
revenue.                                                                        

     Nostalgia grants credit to cable systems and advertisers upon evaluation of
credit worthiness. Management periodically reviews customer account balances and
establishes reserves to state such amounts at their net realizable values.      

Property and Equipment                                                      

  Property and equipment are stated at cost. Depreciation and amortization
are computed using the straight-line method over estimated useful lives ranging 
from 4-7 years. Leasehold improvements are amortized on a straight-line basis   
over the shorter of the lease term or the related estimated useful lives of the 
improvement.                                                                    

Maintenance and repairs of property and equipment are charged to      
operations, and major improvements extending the useful life are capitalized.   
Upon retirement, sale or other disposition of property and equipment, the cost  
and accumulated depreciation are eliminated from the accounts, and any gain or  
loss is included in the operations.                                             

Programming and Cablecast Rights                                            

    Original programming costs, which include direct labor, fees paid to hosts
and special guests, and production fees paid to third parties are capitalized on
a program-by-program basis and are amortized on a straight-line basis over the  
estimated life of the programs since the programs are available to be aired for 
an unlimited number of showings.                                                

    Film library and cablecast rights are recorded at the lower of unamortized
costs or estimated net realizable value and are amortized using the             
straight-line method, which approximates the anticipated revenue stream, over   
the estimated useful life or the lives of the rights agreements. The estimated  
lives of original programming, film library and cablecast rights range from 2 to
11 years.                                                                       

     Cablecast rights for programs to be amortized within the following year are
classified as current assets. Nostalgia periodically evaluates its programming  
and cablecast rights for possible changes in estimated useful life or the       
possibility of impairment. In the event a programming or cablecast right is     
considered impaired, the carrying amount of such right is adjusted to its net   
realizable value.                                                               
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THE NOSTALGIA NETWORK, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Advertising Costs                                                           

Advertising and promotional costs are charged to operating expenses as
incurred and amounted to $182,000, $1,279,000, and $2,828,000 for the years     
ended December 31, 1999, 1998 and 1997, respectively.                           

Stock Based Compensation                                                    

     Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," encourages but does not require companies to record  
stock-based employee compensation plans at their fair value. Nostalgia has      
elected to account for stock-based employee compensation using the intrinsic-   
value method prescribed in Accounting Principles Board (APB) Opinion No. 25,    
"Accounting for Stock Issued to Employees," and related interpretations.        
Accordingly, compensation cost for employee stock options is measured as the    
excess, if any, of the quoted market price of Nostalgia's stock at the date of  
grant over the exercise price an employee must pay to acquire the stock.        

Fair Value on Financial Instruments                                         

 The carrying amounts reflected in the balance sheets for cash, accounts
receivable, notes payable and accounts payable approximate fair value due to the
short maturities of these instruments.                                          

Earnings Per Share                                                          

 Earnings per share is based on the weighted average number of shares of
common stock and dilutive common stock equivalents outstanding. Basic earnings  
per share is computed by dividing income available to common shareholders by the
weighted average number of common shares outstanding for the period. Diluted    
earnings per share reflects the potential dilution of securities that could     
share in the earnings of an entity.                                             

    The net loss per common share -- basic and diluted is computed by dividing
the net loss for the period by the weighted average number of shares            
outstanding. Convertible preferred stock, outstanding stock warrants and options
are not included in the diluted calculation because their effect would be       
anti-dilutive.                                                                  

Cash Equivalents                                                            

     For purposes of the statement of cash flows, Nostalgia considers all highly
liquid debt instruments purchased with a maturity of three months or less to be 
cash equivalents. Certain cash balances are in excess of insured amounts.       

Risks and Uncertainties                                                     

   The Network competes with other programmers for access to limited channel
space and must also compete with other programmers for viewers. Based on the    
decline of sales, resulting primarily from providing free carriage to           
affiliates, and increases in operating expenses, Nostalgia is dependent on      
financing from Crown and Concept or other outside sources to fund operations.   

Use of Estimates                                                            

 In preparing financial statements in accordance with generally accepted
accounting principles, management is required to make estimates and assumptions 
that effect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and   
revenues and expenses during the reporting periods. Actual results could differ 
from those estimates.                                                           

Comprehensive Income                                                        

Statement of Financial Accounting Standards No. 130, "Reporting       
Comprehensive Income" (SFAS No. 130), establishes standards for reporting and   
display of comprehensive income, its components and accumulated balances.       
Comprehensive income is defined to include all changes in equity except those   
resulting from investment by owners and distributions to owners. Among other    
disclosures, SFAS No. 130                                                       
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THE NOSTALGIA NETWORK, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

requires that all items that are required to be recognized under current        
accounting standards as components of comprehensive income be reported in a     
financial statement that is displayed with the same prominence as other         
financial statements. Nostalgia adopted SFAS No. 130 during the first quarter of
1998 and has no items of comprehensive income to report for the years ended     
December 31, 1999 and 1998.                                                     

Segment Reporting                                                           

    Statement of Financial Accounting Standards No 131 (SFAS 131), "Disclosure
about Segments of a Business Enterprise" requires companies to report           
information about operating segments. SFAS 131 also requires disclosures        
regarding products and services, geographic areas and major customers. Nostalgia
is engaged in one line of business, the operation of GoodLife TV Network, and   
therefore reports as one operating segment.                                     

Recent Accounting Pronouncements                                            

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." In 1999, the    
required implementation date of SFAS No. 133 was delayed to fiscal years        
beginning after June 15, 2000. SFAS 133 requires that all derivative instruments
be recorded on the balance sheet at their fair value. Changes in the fair value 
of derivatives are recorded each period in current earnings or other            
comprehensive income, depending on whether a derivative is designed as part of a
hedge transaction and, if it is, the type of hedge transaction. The adoption of 
SFAS 133 is not expected to have a significant effect on Nostalgia's results of 
operations or its financial position.                                           

Reclassifications                                                           

          Certain 1998 and 1997 amounts have been reclassified to conform to the
current presentation.                                                 

1. MANAGEMENT STATEMENT                                                         

     In light of Nostalgia's recurring losses, management is actively monitoring
expenses and examining operating methods to increase efficiencies. These        
measures are intended to address short term operating requirements, but do not  
address the more critical long-term growth needs for the Network. In order to   
grow, the Network needs to increase its affiliate base which, in turn, should   
increase the subscriber base allowing the Network to increase its advertising   
rates as well as affiliate revenues.                                            

  Management has continued its efforts to further brand the Network as the
only network targeted to the ever growing Boomer and over audience, America's   
fastest growing demographic. In June 1998, the Network began operating under the
"GoodLife TV Network" name. Management believes that this designation more      
accurately captures and reflects the Network's mission and has been a           
significant help in presenting the Network to potential customers.              

  A critical component to the Network's growth is to continually brand and
improve the quality of programming and the Network's on-air look. Original      
programming is a key to such branding, as it allows the consumer to             
differentiate the Network from other networks. The Network has continued to     
produce new original programming reflecting the American culture and traditional
values of its Boomer and over audience. The Network reflects the "good life     
state of mind" of its audience in its mix of entertainment and information      
programs. GTV DanceSport showcases the sport of ballroom dance competitions, a  
dance form popular with                                                         

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THE NOSTALGIA NETWORK, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1. MANAGEMENT STATEMENT -- (CONTINUED)                                          
past generations that has become all the rage with today's generation. The      
Network covers major dance competitions, including the national championship in 
Miami. This exciting program showcases not only the champion in each class, but 
also provides insight into the techniques and fine points of competition. Cafe  
DuArt, features impressionist/comedian Louise Duart, providing cabaret music,   
comedy and a humorous slice of life set in a New York cabaret club. The Real Me 
Autobiographies, features prominent guests recounting their life's stories in   
their own words, surrounded by friends and family. Cookbook Cooking with        
Christopher Kent, features the Network's Flea Market Movie host, Christopher    
Kent, who also is an accomplished chef, preparing dishes from famous cookbooks. 
The Bull & The Bear provides stock market reports by a "Siskel and Ebert-type"  
pair of hosts. More Money with The Dolans starring Ken and Daria Dolan, the     
First Family of Finance, offers practical financial advice for everyday         
Americans. The Network, in searching for creative, new original programming for 
prime time in the year 2000 produced a number of pilots. One of these pilots is 
Heroes & Sheroes, which profile ordinary people who manage to do the            
extraordinary and transform the lives of the people they touch. The other pilot,
American Couples, hosted by esteemed television journalist Nancy Glass, is an   
hour-long show which celebrates the family values, love, commitment and         
partnership of famous couples.                                                  

     In addition to its new original programming, the Network continues to offer
its viewers classic off network television series. The Network currently airs,  
Bonanza, The Love Boat, Make Room for Daddy and The Adventures of Ozzie and     
Harriet. The Adventures of Ozzie & Harriet and Make Room for Daddy are being    
telecast each weekday evening under the umbrella title of American Families.    
Hosted by Nancy Glass, this unique series juxtaposes members of contemporary    
families against the classic TV families; we see how today's parents and        
children deal with age-old issues that Ozzie Nelson and Danny Thomas wrestled   
with. In Flea Market Movie, short segments are added to commercial breaks where 
the Network's collectibles aficionado, Christopher Kent, dispenses his wit and  
wisdom about all sorts of collectable items. The GTV Variety Hour features      
classic variety programs such as Tony Orlando and Dawn, Leslie Uggams, The      
Lennon Sisters and others. American Soldier features interviews with veterans,  
focusing on their wartime experiences, which are wrapped around three classic   
dramatic television shows: Combat!, Twelve O'clock High and Garrison's Gorillas.

     Since 1990, Crown and Concept have been the principal source of Nostalgia's
capital. Crown and Concept have invested $2,300,000 and provided $85,781,000 in 
financing since 1994, including $15,000,000 loaned by Crown to Nostalgia in     
1999. Additionally, Crown has provided $3,750,000 in debt financing to Nostalgia
since January 1, 2000 and also has committed to provide, as needed, an          
additional $11,250,000 in debt or equity financing during the balance of the    
calendar year. Nostalgia believes that these funds will be sufficient to satisfy
its operating needs for 2000.                                                   

   In October 1999, Nostalgia announced that it had received and accepted an
offer from Crown to enter into a cash merger which, if consummated, would result
in the elimination of Nostalgia's publicly-held shares of Nostalgia common stock
and constitute a going-private transaction within the meaning of Section        
13(e)(3) of the Securities Exchange Act of 1934. Crown and Concept, which is    
majority-owned by Crown, in the aggregate are the beneficial owners of 70.3% of 
Nostalgia's issued and outstanding shares of Nostalgia common stock.            

    Upon receipt, Crown's offer was referred to and reviewed by a committee of
Nostalgia's independent directors which recommended that the offer be accepted. 
Nostalgia's Board of Directors voted to accept Crown's offer and to authorize   
the negotiation of definitive documentation for the merger. Consummation of the 
merger remains contingent upon, among other things, the approval of Nostalgia's 
stockholders. Crown has indicated that it and its affiliates will vote in favor 
of the merger.                                                                  

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THE NOSTALGIA NETWORK, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1. MANAGEMENT STATEMENT -- (CONCLUDED)                                          
Nostalgia also continued in its analysis of, and efforts to seek a    
strategic alliance. Nostalgia has had contact with several possible strategic   
partners, but no serious discussions have occurred. There can be no assurance   
that Nostalgia will be able to obtain a strategic partner, or that any strategic
partner will be willing to invest the sums required by Nostalgia in order to    
continue to grow the Network's subscriber base. It is anticipated that following
the Merger, the business and operations of Nostalgia will be continued          
substantially as currently conducted for the immediate future. Crown and Concept
have informed Nostalgia that they intend to reevaluate the business and         
operations of Nostalgia following the merger and take such actions with respect 
to the future business and operations of Nostalgia as they deem appropriate.    
Although there are no definitive plans or agreements in place, Crown and Concept
may cause Nostalgia to enter into joint venture or other agreements with other  
business entities after the merger.                                             

2. PROPERTY AND EQUIPMENT                                                       

Major classifications of property and equipment and their respective  
estimated service lives are summarized below:                                   

                                                        [Enlarge/Download Table]

                                                  1999          1998                   
                                               -----------   -----------               
                                                                                       
Transponder................................... $ 1,427,968   $ 1,427,968     12 years  
Machinery and equipment.......................   1,450,011     1,397,333   5 to 7 years
Furniture and fixtures........................     289,460       299,890   5 to 7 years
Leasehold improvements........................      99,780        99,780     5 years   
                                               -----------   -----------               
                                                 3,267,219     3,224,971               
Accumulated depreciation and amortization.....  (2,295,112)   (2,033,092)              
                                               -----------   -----------               
                                               $   972,107   $ 1,191,879               
                                               ===========   ===========               

Depreciation expense included in Finance, General and Administrative  
expenses was approximately $276,000, $286,000 and $310,000 for 1999, 1998 and   
1997, respectively.                                                             

3. PROGRAMMING AND CABLECAST RIGHTS                                             

Prime time series consist of broadcast licenses for classic television
series and other programming acquired from various film studios or other        
sources. Original programs consists of series or specials developed and produced
by the Network. Music programs include musical series or specials both those    
produced by the Network and those acquired or licensed from third parties. The  
film library consists of vintage feature films, interstitial material and other 
programming produced and/or owned by the Network. Film rights included broadcast
licenses for films and specialty programming. Other programming and cablecast   
rights include                                                                  

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THE NOSTALGIA NETWORK, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. PROGRAMMING AND CABLECAST RIGHTS -- (CONCLUDED)                              
productions and post-production costs as well as costs to duplicate and edit    
programs and interstitial materials for broadcasting.                           

                                                        [Enlarge/Download Table]

                                                              1999           1998     
                                                          ------------   ------------ 
                                                                                      
Prime time series:....................................... $ 20,803,500   $ 14,578,500 
Original programs........................................   10,436,229      8,047,753 
Music programs...........................................    1,551,207      1,537,095 
Film library.............................................    1,266,667      1,266,667 
Other....................................................    1,636,492      1,525,409 
                                                          ------------   ------------ 
                                                            35,694,095     26,955,424 
Less accumulated amortization............................  (25,607,399)   (16,867,295)
                                                          ------------   ------------ 
                                                          $ 10,086,696   $ 10,088,129 
                                                          ============   ============ 
Consisting of:                                                                        
  Current................................................ $  7,105,280   $  7,300,000 
  Long term..............................................    2,981,416      2,788,129 
                                                          ------------   ------------ 
                                                          $ 10,086,696   $ 10,088,129 
                                                          ============   ============ 

Estimated future amortization of programming and cablecast rights and 
maturities of related long-term obligations are approximately as follows:       

                                                                [Download Table]

YEAR                                                 2000        2001       2002  
----                                              ----------  ----------  --------
                                                                                  
Amortization..................................... $7,105,280  $2,836,973  $144,443
Obligation maturities............................ $4,810,822  $2,005,164  $130,000

  Nostalgia acquired or produced the following rights and materials during
the years ended December 31,                                                    

                                                                [Download Table]

                                                    1999        1998        1997   
                                                 ----------  ----------  ----------
                                                                                   
Prime time series............................... $6,225,000  $  255,000  $1,073,500
Original programs...............................  2,388,476   4,162,100   3,532,600
Music programs..................................     14,112          --   1,185,500
Other...........................................    111,083     592,000     254,700
Film rights.....................................         --          --          --
                                                 ----------  ----------  ----------
                                                 $8,738,671  $5,009,100  $6,046,300
                                                 ==========  ==========  ==========

4. NOTES PAYABLE TO RELATED PARTIES                                             

Notes payable consists of the following:                              

                                                                [Download Table]

                                                               1999         1998    
                                                            -----------  -----------
                                                                                    
Notes payable to Crown Communications Corporation bearing                           
  interest at 8.50% per annum, compounded monthly, and                              
  minimum monthly interest payment of $55,000 payable                               
  commencing on January 31, 2000 through December 31, 2000.                         
  The principal balance with remaining unpaid interest is                           
  due on January 1, 2001................................... $63,997,292  $        --

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THE NOSTALGIA NETWORK, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. NOTES PAYABLE TO RELATED PARTIES -- (CONCLUDED)                              

                                                        [Enlarge/Download Table]

                                                                1999         1998    
                                                             -----------  -----------
                                                                                     
Notes payable to Concept Communications, Inc. bearing                                
  interest at 8.50% per annum, compounded monthly, and                               
  minimum monthly interest payment of $5,000 payable                                 
  commencing on January 31, 2000 through December 31, 2000.                          
  The principal balance with remaining unpaid interest is                            
  due on January 1, 2001...................................   21,783,608           --
Notes payable to Concept Communications, Inc. bearing                                
  interest approximating 7.75% per annum, due upon the                               
  earlier of an equity investment of not less than the                               
  amount of the Notes or January 1, 2000...................           --   19,217,867
Notes payable to Crown Communications Corporation bearing                            
  interest approximating 7.75% per annum, due upon the                               
  earlier of an equity investment of not less than the                               
  amount of the Notes or January 1, 2000...................           --   43,310,006
Subordinated note payable to Atlantic Video in the                                   
  principal amount of $305,000, bearing interest at the                              
  rate of 2.5% per quarter, compounded quarterly, with                               
  principal and interest payable on March 31, 2002. The                              
  note agreement contains certain restrictive covenants                              
  including limitations on liens, disposition of collateral                          
  and compliance with related contracts....................      305,000      305,000
                                                             -----------  -----------
                                                             $86,085,900  $62,832,873
                                                             ===========  ===========

 On December 30, 1999, Nostalgia issued two substitution and replacement
notes to Crown and Concept in the amounts of $63,997,292 and $21,783,608,       
respectively. These notes bear interest at 8.5% and require aggregate minimum   
monthly interest payments of $60,000 with principal and unpaid interest due on  
January 1, 2001. These notes replace all previously issued notes plus unpaid    
interests as of December 30, 1999 and are collateralized by substantially all of
Nostalgia's assets.                                                             

  As of March 20, 2000, Crown made additional loans totaling $3,750,000 to
Nostalgia bearing interest at 8.50% to 8.75%. Principal and unpaid interest on  
these notes are due on January 1, 2001. These loans are also secured by         
substantially all of Nostalgia's assets.                                        

5. STOCK OPTIONS                                                                

  In 1987, Nostalgia's Board of Directors adopted an Employee Stock Option
Plan (the "1987 Plan") which provided for discretionary grants to employees,    
officers or directors employed by Nostalgia or its Parent, as well as other     
individuals who perform services for Nostalgia. The 1987 Plan has been replaced 
and no further options may be granted under this Plan. A total of 12,000 options
were cancelled during 1998 reducing the total outstanding options from 45,000 at
December 31, 1997 to 33,500 at December 31, 1998 with option prices ranging from
$0.48 to $1.25 per share. There was no activity during 1999 under this Plan.    

In 1990 Nostalgia's Board of Directors adopted an Incentive and       
Non-qualified Stock Option Plan (the "1990 Plan") which provides for            
discretionary grants to employees, officers or directors of Nostalgia. The 1990 
Plan has been replaced and no further option may be granted under this Plan. As 
of the years ended December 31, 1999, 1998, and 1997, 175,000 options were      
outstanding at exercise price of $0.48 to $1.57.                                

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THE NOSTALGIA NETWORK, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. STOCK OPTIONS -- (CONCLUDED)                                                 
     In November 1995, Nostalgia's Board of Directors authorized registration of
Nostalgia's existing stock option plans and agreements under the Securities Act 
of 1933 and the establishment of a new stock option plan (the "1996 Plan") which
replaced the two existing plans. This action did not result in any additional   
shares being reserved for options.                                              

     The 1996 Plan provides for all remaining reserved shares under the 1987 and
1990 Plans to be transferred into the 1996 Plan as well as any subsequent       
cancellations of any options currently outstanding in the 1987 and 1990 Plans.  
Additionally, the 1996 Plan provides for annual "formula" grants to non-employee
directors of 3,000 shares which vest over three years. The 1996 Plan was        
approved to provide an option plan which conforms to current securities law and 
was adopted by shareholder approval at Nostalgia's 1996 Annual Meeting. Data    
with respect to stock options under the 1996 Plan are as follows:               

                                                        [Enlarge/Download Table]

                                                   SHARES       OPTIONS      PRICE     
                                                  RESERVED    OUTSTANDING  PER SHARE   
                                                  ---------   -----------  ----------  
                                                                                       
Outstanding at January 1, 1998................... 1,053,166      48,000    $0.07 - 0.27
Granted..........................................   (27,000)     27,000     0.07 - 0.2 
Canceled.........................................    12,000     (12,000)    0.07 - 0.2 
Expired from 1987 Plan...........................    12,000                            
                                                  ---------     -------                
Outstanding at December 31, 1998................. 1,050,166      63,000    $0.07 - 0.27
Exercised........................................                (1,000)      0.07     
Granted..........................................   (27,000)     27,000       0.07     
                                                  ---------     -------                
Outstanding at December 31, 1999................. 1,023,166      89,000    $0.07 - 0.27
                                                  =========     =======                
Exercisable at December 31, 1999.................                39,000    $0.07 - 0.27
                                                                =======                

    The exercise price of stock options at December 31, 1999 ranged from $1.57
to $0.07 per share with a weighted exercise price and remaining contractual life
of $0.25 and 9 years, respectively.                                             

   On May 13, 1996, Nostalgia entered into an agreement with SQuire Rushnell
to be employed as Nostalgia's President and Chief Executive Officer. Under the  
terms of the agreement, Nostalgia entered into a stock option agreement which   
reserves 839,840 shares of Nostalgia common stock at an exercise price of $0.35,
which was equal to the fair market value at the date of grant. The shares vest  
at a rate of 25.0% each nine months and the options expire at the earliest of   
(a) purchase of all shares, (b) 90 days following termination of employment, or 
(c) May 12, 2006. At December 31, 1999, 839,840 shares were vested.             

  The effects of SFAS 123 are not material to the financial statements for
all years presented.                                                            

   On January 4, 2000, the Board of Directors approved an agreement and plan
of merger with Crown. Such transaction is subject to shareholder approval. Upon 
consummation of this transaction, Nostalgia will take necessary actions to      
terminate all outstanding stock options.                                        

6. CAPITAL STRUCTURE                                                            

Preferred Stock                                                             

Each share of preferred stock is convertible into 100 shares of common
stock at the option of the holder thereof. Each preferred share is entitled to  
vote as 100 shares of common stock. Preferred stockholders are entitled to      
preferential rights on dividends. To date, no dividend have been declared or    
paid.                                                                           

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THE NOSTALGIA NETWORK, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. FEDERAL INCOME TAXES                                                         

    Nostalgia has incurred net operating losses since its inception for income
tax purposes. Accordingly, since realization of benefits from these losses is   
not assured, tax benefits were not recorded for financial statement purposes.   

     At December 31, 1999, Nostalgia has unused net operating loss carryforwards
which will be limited. In accordance with the Internal Revenue Code Section 382,
the amount of income that can be offset by net operating losses is limited due  
to the change in ownership of Nostalgia in 1993. The amount of the limitation is
approximately $1,700,000 per year for losses incurred prior to the change of    
ownership. The net operating loss carryforwards prior to the application of the 
limitations are as follows:                                                     

                                                                [Download Table]
                                                                     
1999-2000.............................................         87,000
2001..................................................      1,323,000
2002..................................................      3,493,000
2003..................................................      1,725,000
2004..................................................      2,424,000
2005..................................................      3,630,000
2006..................................................      2,786,000
2007..................................................      2,803,000
2008..................................................      2,218,000
2009..................................................      3,719,000
2010..................................................      8,787,000
2011..................................................     13,094,000
2012..................................................     19,644,000
2018..................................................     22,482,000
2019..................................................     22,724,000
                                                         ------------
Total.................................................   $110,939,000

    Under the asset and liability approach specified by Statement of Financial
Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes", deferred   
tax assets and liabilities are determined based on the difference between the   
financial statement and tax bases of assets and liabilities as measured by the  
currently enacted tax rates. Deferred tax expense or benefit is the result of   
the changes in deferred tax assets and liabilities.                             

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THE NOSTALGIA NETWORK, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. FEDERAL INCOME TAXES -- (CONCLUDED)                                          
Deferred income taxes arise from the difference between the financial 
statement and income tax basis of assets and liabilities. Principal items       
comprising net deferred tax assets as of December 31, 1999 and 1998 are as      
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                              1999           1998     
                                                          ------------   ------------ 
                                                                                      
Current:                                                                              
  Allowance for doubtful accounts........................ $     61,000   $    103,000 
  Accrued liabilities and other..........................       75,000         81,000 
                                                          ------------   ------------ 
     Total current deferred tax assets...................      136,000        184,000 
                                                          ------------   ------------ 
Long-Term:                                                                            
  Net operating loss carryforwards.......................   42,157,000     22,993,000 
  Accumulated depreciation and amortization..............     (450,000)      (397,000)
                                                          ------------   ------------ 
     Total net long-term deferred tax assets.............   41,707,000     29,596,000 
                                                          ------------   ------------ 
     Total net deferred tax assets.......................   41,843,000     29,780,000 
     Valuation allowance.................................  (41,843,000)   (29,780,000)
                                                          ------------   ------------ 
     Net deferred tax asset.............................. $         --   $         -- 
                                                          ============   ============ 

Management believes that a valuation allowance is necessary due to    
uncertainty regarding the timing and amount of future utilization of net        
operating loss carryforwards.                                                   

8. RELATED PARTY TRANSACTIONS                                                   

Office Leases                                                               

  Nostalgia had a long term lease agreement with an affiliate of Crown and
Concept. The lease agreement terminated as of November 30, 1999 and the parties 
have not yet re-negotiated to extend the lease. Effective December 1999,        
Nostalgia is renting the office space on a month to month basis. Rental expense 
under this lease was $215,000, $194,000 and $184,600 for the years ended        
December 31, 1999, 1998 and 1997, respectively.                                 

Nostalgia leases office space from Atlantic Video on a month to month 
basis. Rent expense under this lease for the years ended December 31, 1999, 1998
and 1997 was approximately $47,000.                                             

Production and Post Production Services                                     

     During 1997, Nostalgia renewed its agreement with Atlantic Video, an entity
of which two directors of Nostalgia were officers and directors, including one  
serving as chairman, during 1999, for studio, production and post-production    
services. Under the terms of the agreement, Nostalgia is required to purchase a 
minimum number of hours of such services during each year at specified rates.   
Nostalgia has agreed to pay a minimum monthly flat fee of $50,000. If Nostalgia 
does not actually purchase $50,000 of services in a month, the differences can  
be used as credits for future months when actual expenses exceed the $50,000.   
Such credit can be applied within the next twelve consecutive months from the   
month of its origination. The aggregate balance of the credits may not exceed   
$75,000 at any time. This agreement also provides for master control and uplink 
services for a flat rate of $43,000 per month. Services rendered to Nostalgia   
under this agreement amount to $1,126,000, $1,397,000 and $1,525,000 for the    
years ended December 31, 1999, 1998 and 1997, respectively.                     

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THE NOSTALGIA NETWORK, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

9. COMMITMENTS AND CONTINGENCIES                                                

Litigation                                                                  

 On or about September 29, 1989, an action was commenced in the Delaware
Court of Chancery for New Castle County. Nostalgia is named as a nominal        
defendant for purposes of the derivative claims asserted. However, Nostalgia has
no liability, and a summary judgment has been entered dismissing all counts in  
which Nostalgia had been named, although counts against the other individual    
defendants continue. Nostalgia is required to indemnify the directors and to pay
the cost of their defense.                                                      

 On February 8, 2000, a law suit was filed in the United States District
Court for the Southern District of New York making claims against Nostalgia for 
breach of contract, interference with contractual relations and business        
disparagement and injurious falsehood. Nostalgia intends to vigorously defend   
all claims and file counter suit for damages against the plaintiff. The outcome 
and the extent of potential liability are unknown at this time.                 

Employment Agreements                                                       

  On July 1, 1999, Nostalgia entered into an employment agreement with its
President for one year with an automatic renewal for one year unless terminated 
by either party. The agreement provides for an annual salary of $270,000,       
increasing at a rate of 20.0% for the renewal term. The agreement also provides 
for annual benchmark bonuses of $80,000 ($100,000 in any renewal term), payable 
quarterly upon meeting or exceeding certain budgetary goals. The agreement also 
provides for alternative benchmark bonuses under certain circumstances where    
some, but not all, criteria applicable to the benchmark bonus have been met.    

Leases                                                                      

Transponder                                                           

    Nostalgia leases satellite transponder space and services on a 24-hour per
day basis. At the inception of the lease, Nostalgia was required to pay a       
$1,000,000 launch protection fee for backup services in the event of delivery   
failure. The launch protection fee, plus other direct costs associated with     
obtaining the transponder lease were necessary costs to secure the transmission 
of Nostalgia's programming. As such, these costs were capitalized and included  
in property and equipment and are being amortized on a straight-line basis over 
the life of the agreement. The unamortized balance of these costs at December   
31, 1999 was approximately $718,000. The basic monthly rate for transponder     
services is $205,400 and is for a term spanning the life of the satellite, which
is estimated to be 12 years. Expense for satellite transponder space and        
services was $2,404,800, for 1999, 1998 and 1997. Nostalgia accounts for the    
lease of transponder services as an operating lease in accordance with SFAS 13. 

Office, Studio, and Equipment                                         

  Nostalgia conducts operations from leased premises which include studio,
office, sales and storage facilities. Nostalgia also leases certain production  
and communication equipment. Generally, the leases provide for renewal for      
various periods at stipulated rates. Some of the leases provide that Nostalgia  
pay taxes, maintenance, insurance and other occupancy expenses applicable to the
leased premises.                                                                

 Lease expense for premises and equipment for 1999, 1998 and 1997, which
consisted entirely of minimum rentals, was $274,000, $280,000 and $273,000,     
respectively. Approximate minimum rental commit-                                

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THE NOSTALGIA NETWORK, INC. 

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

9. COMMITMENTS AND CONTINGENCIES -- (CONCLUDED)                                 
ments under all non-cancelable leases, including the transponder lease having   
terms in excess of a year are as follows:                                       

                                                                [Download Table]

                                                FACILITY  TRANSMISSION             
YEAR ENDING DECEMBER 31,                         LEASES      LEASES        TOTAL   
------------------------                        --------  ------------  -----------
                                                                                   
2000........................................... $ 29,000  $ 2,913,000   $ 2,942,000
2001...........................................   29,000    2,892,000     2,921,000
2002...........................................   30,000    2,885,000     2,915,000
2003...........................................   21,000    2,885,000     2,906,000
2004...........................................             2,885,000     2,885,000
Thereafter.....................................       --   10,426,000    10,426,000
                                                --------  -----------   -----------
                                                $109,000  $24,866,000   $24,995,000
                                                ========  ===========   ===========

Rating Service Contract                                                     

In 1995, Nostalgia contracted with a service that provides ratings,   
reports, analysis reports, demographic reports and other special reports. The   
agreement covered a minimum period of 5 years and required a monthly base charge
of approximately $40,000. In November 1999, Nostalgia renegotiated the service  
agreement to receive partial services throughout the remaining contract term at 
approximately $9,000 per month.                                                 

Major Customers                                                             

During 1999, 1998, and 1997, three major customers accounted for      
approximately 35.0%, 28.0%, and 10.0%, respectively, of total revenues.         

10. STATEMENTS OF CASH FLOWS                                                    

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                     

                                                                [Download Table]

CASH PAID DURING THE YEAR FOR:                          1999      1998      1997  
------------------------------                        --------  --------  --------
                                                                                  
Interest............................................. $720,000  $660,000  $635,000
Income taxes.........................................     None      None      None

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:  

Fiscal 1999                                                           

  Programming acquisition totaling $6,225,000 were financed through vendor
debt obligation.                                                                

Interest accrued and payable to Concept and Crown in the amounts of   
$2,565,740 and $5,687,286, respectively, were re-capitalized into notes payable 
as part of February 1, 1999, March 27, 1999 and December 30, 1999 re-financings 
of debt owed to Crown and Concept.                                              

Fiscal 1998                                                           

 Programming acquisitions totaling $830,000 were financed through vendor
debt obligations.                                                               

Interest accrued and payable to Concept and Crown in the amounts of   
$1,105,673 and $1,310,006, respectively, were re-capitalized into notes payable 
as part of a March 31, 1998 re-financing of debt owed to Crown and Concept.     

Fiscal 1997                                                           

   Programming acquisitions totaling $2,659,000 were financed through vendor
debt obligations.                                                               

 Interest accrued and payable to Concept in the amount of $1,612,194 was
re-capitalized into a note payable as part of a March 31, 1997 refinancing of   
debt owed to Crown and Concept.                                                 
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SCHEDULE II 

Board of Directors of The Nostalgia Network, Inc.                               

   In connection with our audit of the financial statements of The Nostalgia
Network, Inc. in our report dated March 3, 2000, (Except for Notes 1 and 4 as to
which the date is March 21, 2000) which is included in Form 10-K for the year   
ended December 31, 1999, we have also audited Schedule II for the year then     
ended. In our opinion, this schedule presents fairly, in all material respects, 
the information required to be set forth therein.                               

                          /s/ GRANT THORNTON LLP

Vienna, Virginia                                                                
March 3, 2000 (Except for Notes 1 and 4 as to which the date is March 21, 2000) 

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THE NOSTALGIA NETWORK, INC. 

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

                                                        [Enlarge/Download Table]

                                                          BALANCE AT  CHARGED TO  CHARGED TO              BALANCE AT
                                                          BEGINNING   COSTS AND     OTHER     DEDUCTIONS    END OF  
                       DESCRIPTION                         OF YEAR     EXPENSES    ACCOUNTS      (1)         YEAR   
                       -----------                        ----------  ----------  ----------  ----------  ----------
                                                                                                                    
Year ended December 31, 1997                                                                                        
  Allowance for doubtful accounts receivable............. $1,154,000   $102,000       $--      $789,000    $467,000 
                                                          ==========   ========       ==       ========    ======== 
Year ended December 31, 1998                                                                                        
  Allowance for doubtful accounts receivable............. $  467,000   $534,000       $--      $699,000    $302,000 
                                                          ==========   ========       ==       ========    ======== 
Year ended December 31, 1999                                                                                        
  Allowance for doubtful accounts receivable............. $  302,000   $523,000       $--      $664,000    $161,000 
                                                          ==========   ========       ==       ========    ======== 

---------------                                                                 
(1) Uncollectible accounts written off.                                         

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TABLE OF CONTENTS 

ARTICLE I 

MERGER

                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
1.1  The Merger.............................................    1 
1.2  Surviving Corporation; Effects of the Merger...........    1 
1.3  Effective Time.........................................    1 
1.4  Certificate of Incorporation of the Surviving                
  Corporation...............................................    1 
1.5  Bylaws of the Surviving Corporation....................    1 
1.6  Board of Directors and Officers of the Surviving             
  Corporation...............................................    1 
1.7  Conversion of Shares...................................    2 
1.8  Dissenting Shares......................................    2 
1.9  Payment for Shares.....................................    2 
1.10 No Further Rights or Transfers.........................    3 

ARTICLE II                                                        
          REPRESENTATIONS AND WARRANTIES OF THE COMPANY           
2.1  Corporate Organization.................................    3 
2.2  Authorization..........................................    4 
2.3  Capitalization of the Company..........................    4 
2.4  Certain Fees...........................................    4 
2.5  SEC Filings............................................    4 
2.6  Consents and Approvals; No Violations..................    4 
2.7  No Undisclosed Material Liabilities....................    5 
2.8  Proxy Statement; Other Information.....................    5 

ARTICLE III                                                       
              REPRESENTATIONS AND WARRANTIES OF NAC               
3.1  Corporate Organization.................................    5 
3.2  Authorization..........................................    5 
3.3  Commitments for the Financing..........................    5 
3.4  Consents and Approvals; No Violations..................    5 
3.5  Proxy Statement; Other Information.....................    6 

ARTICLE IV                                                        
                            COVENANTS                             
4.1  Conduct of Business of the Company.....................    6 
4.2  No Solicitation........................................    8 
4.3  Access to Information..................................    8 
4.4  Best Efforts...........................................    9 
4.5  Public Announcements...................................    9 
4.6  Supplemental Information...............................    9 
4.7  Schedule 13E-3 and Proxy Material; Stockholders'             
  Meeting...................................................    9 
4.8  Agreement to Defend and Indemnify......................   10 
4.9  Option Plans...........................................   10 
4.10 Deposit of Funds.......................................   11 

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ARTICLE V 

CONDITIONS TO THE MERGER

                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
5.1  Conditions to Each Party's Obligation to Effect the          
  Merger....................................................   11 
5.2  Conditions to the Obligation of NAC to Effect the            
  Merger....................................................   11 
5.3  Conditions to the Obligations of the Company to Effect       
  the Merger................................................   12 

ARTICLE VI                                                        
                             CLOSING                              
6.1  Time and Place.........................................   12 
6.2  Deliveries at the Closing..............................   12 

ARTICLE VII                                                       
                   TERMINATION AND ABANDONMENT                    
7.1  Termination............................................   12 
7.2  Procedure and Effect of Termination....................   13 

ARTICLE VIII                                                      
                        GENERAL PROVISIONS                        
8.1  Survival of Representations, Warranties, Covenants and       
  Agreements................................................   13 
8.2  Amendment, Modification and Waiver.....................   13 
8.3  Waiver of Compliance; Consents.........................   13 
8.4  Severability...........................................   13 
8.5  Fees and Expenses......................................   13 
8.6  No Third Party Beneficiaries...........................   14 
8.7  Additional Agreements..................................   14 
8.8  Notices................................................   14 
8.9  Governing Law..........................................   14 
8.10 Counterparts...........................................   14 
8.11 Headings...............................................   15 
8.12 Entire Agreement.......................................   15 

EXHIBIT A  AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF THE NOSTALGIA   
NETWORK, INC.                                                                   

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AGREEMENT AND PLAN OF MERGER

 THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), is made as of the
11th day of January, 2000 by and between (i) THE NOSTALGIA NETWORK, INC., a     
Delaware corporation (the "Company"), and (ii) NNI ACQUISITION CORPORATION, a   
Delaware corporation ("NAC").                                                   

   WHEREAS, the Boards of Directors of the Company and NAC deem it advisable
and in the best interests of the stockholders of such corporations to effect the
merger of NAC with and into the Company (the "Merger"), to be consummated upon  
the terms and conditions set forth in this Agreement and in accordance with the 
applicable laws of the State of Delaware, whereby the outstanding shares of     
Common Stock, Four Cents ($0.04) par value, of the Company (the "Common         
Shares"), and the outstanding shares of Preferred Stock, Two Dollars ($2.00) par
value, of the Company (the "Preferred Shares"), other than Common Shares and    
Preferred Shares held by NAC and other than Dissenting Shares (as defined in    
Section 1.8 hereof), be converted upon the Merger into the right to receive cash
as provided in this Agreement.                                                  

NOW THEREFORE, the parties hereto agree as follows:                   

ARTICLE I 

MERGER

    1.1 The Merger.  At the Effective Time (as defined in Section 1.3 hereof),
and subject to the terms and conditions of this Agreement and the General       
Corporation Law of the State of Delaware (the "DGCL"), NAC shall be merged with 
and into the Company, the separate corporate existence of NAC shall thereupon   
cease, and the Company shall be the surviving corporation in the Merger         
(sometimes hereinafter referred to as the "Surviving Corporation").             

   1.2 Surviving Corporation; Effects of the Merger.  At the Effective Time,
the Surviving Corporation shall continue its corporate existence under the laws 
of the State of Delaware. The Merger shall have the effects specified in Section
259 of the DGCL. The name of the Surviving Corporation shall be The Nostalgia   
Network, Inc.                                                                   

1.3 Effective Time.  As soon as practicable following the Closing (as 
defined in Section 6.1 hereof), the parties hereto shall effect the Merger by   
filing with the Delaware Secretary of State a certificate of merger (the        
"Certificate of Merger") in such form as is required by, and executed in        
accordance with, the relevant provisions of the DGCL (the time of such filing   
being herein referred to as the "Effective Time").                              

1.4 Certificate of Incorporation of the Surviving Corporation.  At the
Effective Time and without any further action on the part of the Company or NAC,
the Certificate of Incorporation of the Company shall be amended and restated to
read substantially as set forth in Exhibit A to this Agreement. From and after  
the Effective Time, the Certificate of Incorporation of the Company, as so      
amended and restated, shall be the Certificate of Incorporation of the Surviving
Corporation, subject to the right of the Surviving Corporation to amend its     
Certificate of Incorporation after the Merger in accordance with the DGCL.      

     1.5 Bylaws of the Surviving Corporation.  At the Effective Time and without
any further action on the part of the Company or NAC, the Bylaws of NAC, as in  
effect at the Effective Time, shall be the Bylaws of the Surviving Corporation. 

   1.6 Board of Directors and Officers of the Surviving Corporation.  At the
Effective Time, the directors of the Company immediately prior to the Effective 
Time shall be the directors of the Surviving Corporation, each of such directors
to hold office, subject to the applicable provisions of the Certificate of      
Incorporation and Bylaws of the Surviving Corporation, until the next annual    
shareholders' meeting of the Surviving Corporation and until their successors   
shall be duly elected or appointed and qualified. The officers of the Company   
immediately prior to the Effective Time shall be the officers of the Surviving  
Corporation until their successors are duly elected or appointed and qualified. 

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   1.7 Conversion of Shares.  At the Effective Time, by virtue of the Merger
and without any action on the part of the holders thereof:                      

          (a) Each Common Share that is issued and outstanding immediately prior
     to the Effective Time (other than Common Shares which are Dissenting Shares
   as defined in Section 1.8 hereof, and any Common Shares which are held by
     NAC or are held in the treasury of the Company) shall be converted into and
represent the right to receive Seven Cents ($0.07) (the "Common Stock 
Merger Consideration"), in cash payable to the holder thereof, without
interest thereon, upon surrender of the certificate representing such 
Common Share.                                                         

       (b) Each Preferred Share that is issued and outstanding immediately
prior to the Effective Time (other than Preferred Shares which are    
Dissenting Shares as defined in Section 1.8 hereof, and any Preferred 
  Shares which are held by NAC or are held in the treasury of the Company)
  shall be converted into and represent the right to receive Seven Dollars
  ($7.00) (the "Preferred Stock Merger Consideration"), in cash payable to
the holder thereof, without interest thereon, upon surrender of the   
certificate representing such Preferred Share.                        

        (c) Each share of Common Share of NAC that is issued and outstanding
immediately prior to the Effective Time shall be converted into and   
   represent the right to receive one fully paid and non-assessable share of
    Common Share, par value $0.01 per share, of the Surviving Corporation, and
   such shares of Common Share of the Surviving Corporation shall constitute
the only issued shares of the Surviving Corporation.                  

          (d) Each Common Share and Preferred Share owned by NAC, or held in the
   treasury of the Company, immediately prior to the Effective Time shall be
cancelled and cease to exist at and after the Effective Time and no   
consideration shall be paid with respect thereto.                     

1.8 Dissenting Shares.  Notwithstanding the provisions of Section 1.7 
hereof, or any other provision of this Agreement to the contrary, Common Shares 
or Preferred Shares which are issued and outstanding immediately prior to the   
Effective Time and which are held by stockholders who have not voted such Common
Shares or Preferred Shares in favor of the Merger and who shall have delivered a
written demand for appraisal of such Common Shares or Preferred Shares in the   
manner provided in Section 262 of the DGCL (the "Dissenting Shares") shall not  
be converted into the right to receive cash at or after the Effective Time,     
unless and until the holder of such Dissenting Shares shall have failed to      
perfect or shall have effectively withdrawn or lost such right to appraisal and 
payment under the DGCL. If a holder of Dissenting Shares shall have so failed to
perfect or shall have effectively withdrawn or lost such right to appraisal and 
payment, then, as of the Effective Time or the occurrence of such event,        
whichever last occurs, such holder's Dissenting Shares shall automatically be   
converted into and represent the right to receive cash, without any interest    
thereon, as provided in Section 1.7(a) or 1.7(b) hereof, as the case may be.    

1.9 Payment for Shares.                                               

(a) Prior to the Effective Time, NAC shall deposit, or cause to be    
deposited in trust for the benefit of the Company's stockholders, in immediately
available funds with a disbursing agent selected by NAC and reasonably          
satisfactory to the Company (the "Exchange Agent"), an amount (the "Fund") equal
to the sum of (i) the product obtained by multiplying (A) the number of Common  
Shares issued and outstanding immediately prior to the Effective Time (other    
than Common Shares which are registered in the name of NAC or held in the       
treasury of the Company and other than Common Shares which are Dissenting       
Shares) as reflected on the stock transfer books of the Company immediately     
prior to the Effective Time by (B) the Common Stock Merger Consideration plus   
(ii) the product obtained by multiplying (A) the number of Preferred Shares     
issued and outstanding immediately prior to the Effective Time (other than      
Preferred Shares which are registered in the name of NAC or held in the treasury
of the Company and other than Preferred Shares which are Dissenting Shares) as  
reflected on the stock transfer books of the Company immediately prior to the   
Effective Time by (B) the Preferred Stock Merger Consideration. Out of the fund,
the Exchange Agent shall, pursuant to irrevocable instructions, make the        
payments referred to in Sections 1.7(a) and 1.7(b) hereof.                      

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  (b) As soon as practicable after the Effective Time, the Exchange Agent,
pursuant to irrevocable instructions, shall mail to each holder of record (other
than NAC) of a certificate or certificates which immediately prior to the       
Effective Time represented issued and outstanding Common Shares or Preferred    
Shares (the "Certificates"), a notice of effectiveness of the Merger, a form    
letter of transmittal (the "Letter of Transmittal") for return to the Exchange  
Agent, and instructions for use in effecting the surrender of the Certificates  
and to receive cash for each of such holder's Common Shares and Preferred       
Shares. The notice, Letter of Transmittal and instructions shall be in forms    
reasonably approved by counsel to the Company. The Letter of Transmittal shall  
specify that delivery shall be effected and risk of loss and title shall pass,  
only upon proper delivery to and receipt of such Certificate or Certificates by 
the Exchange Agent. The Exchange Agent, promptly following receipt of any such  
Certificate or Certificates, together with the Letter of Transmittal, duly      
executed, and any other items specified by the Letter of Transmittal, shall pay,
by check or draft, to the holders of Certificates an amount equal to the sum of 
(i) the product obtained by multiplying (A) the number of Common Shares         
represented by the Certificate or Certificates so surrendered by (B) Seven Cents
($0.07) plus (ii) the product obtained by multiplying (A) the number of         
Preferred Shares represented by the Certificate or Certificates so surrendered  
by (B) Seven Dollars ($7.00). No interest will be paid or accrued on the cash   
payable upon the surrender of a Certificate or Certificates.                    

(c) Any portion of the Fund which remains unclaimed for six (6) months
after the Effective Time shall be paid to the Surviving Corporation upon demand,
subject to any applicable escheat and other similar laws. Any holders of        
Certificates who have not theretofore complied with 1.9(b) hereof shall         
thereafter look only to the Surviving Corporation for payment of their claim for
the consideration set forth in Section 1.7 hereof, without any interest thereon,
but shall have no greater rights against the Surviving Corporation than may be  
accorded to general creditors of the Surviving Corporation under Delaware law.  

1.10 No Further Rights or Transfers.                                  

At and after the Effective Time of the Merger, (i) each holder of a   
Certificate or Certificates that represented issued and outstanding Common      
Shares or Preferred Shares immediately prior to the Effective Time shall cease  
to have any rights as a stockholder of the Company, except for the right to     
surrender his or her Certificate or Certificates in exchange for the payment    
provided pursuant to Sections 1.7 and 1.9 hereof, or to perfect his or her right
to receive payment for his or her Common Shares or Preferred Shares pursuant to 
Section 262 of the DGCL and Section 1.8 hereof, if such holder has validly      
exercised and perfected and not withdrawn his or her right to receive payment   
for his or her Common Shares or Preferred Shares, and (ii) no transfer of Common
Shares or Preferred Shares outstanding prior to the Effective Time shall be made
on the stock transfer books of the Surviving Corporation. If, after the         
Effective Time, Certificates formerly representing Common Shares or Preferred   
Shares are presented to the Surviving Corporation, they shall be cancelled and  
exchanged for the consideration set forth in Section 1.7 hereof.                

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

The Company hereby represents and warrants to NAC that:               

   2.1 Corporate Organization.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its 
incorporation, with all requisite power and authority to own, operate and lease 
its properties and to carry on its business as now being conducted. To the best 
knowledge of the executive officers of the Company, the Company is duly         
qualified or licensed as a foreign corporation in good standing in each         
jurisdiction in which the character of its properties or nature of its business 
activities requires such qualification, except to the extent that the failure to
be so qualified or licensed would not have a material adverse effect upon the   
business, operations or the financial condition, of the Company. There are no   
corporations, limited liability companies, partnerships, joint venture          
associations or other entities of which the Company, directly or indirectly,    
owns or controls more than 10% of the voting securities or other voting         
interests ("Subsidiary").                                                       

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2.2 Authorization.  The Company has the necessary corporate power and 
authority to enter into this Agreement. The execution and delivery of this      
Agreement by the Company, the performance by the Company of its obligations     
hereunder and the consummation by the Company of the transactions contemplated  
hereby have been duly and validly authorized by the Company's Board of Directors
and no other corporate proceeding on the part of the Company is necessary to    
authorize this Agreement or to consummate the transactions contemplated hereby  
(other than the approval of this Agreement by the requisite vote of the         
stockholders of the Company). This Agreement has been duly and validly executed 
and delivered by the Company and, assuming the due authorization, execution and 
delivery hereof by NAC, is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.                   

   2.3 Capitalization of the Company.  As of the date hereof, the authorized
capital stock of the Company consists of thirty million (30,000,000) shares of  
Common Stock, Four Cents ($0.04) par value, and one hundred twenty-five thousand
(125,000) shares of Preferred Stock, Two Dollars ($2.00) par value. As of the   
date hereof, there are twenty million two hundred seventy-four thousand four    
hundred eleven (20,274,411) Common Shares issued and outstanding and three      
thousand two hundred fifty (3,250) Preferred Shares issued and outstanding. As  
of the date hereof, there are no Common Shares or Preferred Shares held in the  
Company's treasury. All of the outstanding Common Shares and Preferred Shares   
have been validly issued, and are fully paid, nonassessable and free of         
preemptive rights with no personal liability attaching to the ownership thereof.
As of the date hereof, two million (2,000,000) Common Shares and no Preferred   
Shares are issuable upon exercise of options (the "Company Options") under stock
option plans of the Company (collectively, the "Option Plans"). A description of
the Option Plans and a list of all outstanding options, including the exercise  
price and other terms thereof, is set forth on Disclosure Schedule 2.3 attached 
hereto and made a part of hereof. Except as set forth above, as of the date     
hereof, there are no outstanding options, warrants, subscriptions, conversion or
other rights, agreements or commitments obligating the Company to issue any     
additional shares of the capital stock or any other securities convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of the    
capital stock of the Company.                                                   

2.4 Certain Fees.  With the exception of a fee payable to Chatsworth  
Securities LLC, which has acted as financial advisor to the Company's Board of  
Directors (including its disinterested directors) pursuant to a letter agreement
which has been delivered to NAC, the Company has not employed any broker or     
finder or incurred any liability for any financial advisory, brokerage or       
finders' fees or commissions in connection with the transactions contemplated   
hereby.                                                                         

  2.5 SEC Filings.  To the best knowledge of the executive officers of the
Company, the Company has timely made all of its filings required by the         
Securities and Exchange Commission (the "Commission"). All such filings are true
and complete in all material respects.                                          

2.6 Consents and Approvals; No Violations.                            

 (a) To the best knowledge of the executive officers of the Company, the
Company is not in violation of any applicable law, statute, order, rule or      
regulation promulgated or judgment entered by any federal, state, local or      
foreign court or governmental authority relating to or affecting the operation, 
conduct or ownership of the property or business of the Company, which violation
or violations would have a material adverse effect on the business, operations  
or financial condition of the Company.                                          

   (b) Except for (i) applicable requirements of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder (the "Exchange    
Act"), (ii) the filing and recordation of the Certificate of Merger as required 
by the DGCL and (iii) applicable requirements of state blue sky laws, no filing 
or registration with, no notice to and no permit, authorization, consent or     
approval of any public or governmental body or authority is necessary for the   
consummation by the Company of the transactions contemplated by this Agreement  
or to enable the Company to continue to conduct its business after the Effective
Time in a manner which is in all material respects consistent with that in which
they are presently conducted, except where the failure to make such filing or to
obtain such permit, authorization, consent or approval will not have a material 
adverse effect on the business, operations or financial condition of the        
Company. Neither the execution and delivery of this Agreement by the Company nor
the consummation by the Company of the transactions contemplated hereby nor     
compliance by the Company with any of the provisions hereof will (i) conflict   
with                                                                            
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or result in any breach of any provision of the Certificate of Incorporation or 
Bylaws of the Company, (ii) result in a violation or breach of, or constitute   
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,       
agreement or other instrument or obligation to which the Company is a party or  
by which the Company or any of its properties or assets may be bound or (iii) to
the best knowledge of the executive officers of the Company, violate any order, 
writ, injunction, decree, statute, rule or regulation applicable to the Company 
or any of its properties or assets, excluding from the foregoing clauses (ii)   
and (iii) violations, breaches or defaults which in the aggregate would not have
a material adverse effect on the business, operations or financial condition of 
the Company.                                                                    

 2.7 No Undisclosed Material Liabilities.  Except for intercompany loans
made by Crown Communications Corporation, a Delaware corporation, and except as 
and to the extent set forth on the audited consolidated balance sheet of the    
Company at December 31, 1998, including the notes thereto (the "Balance Sheet"),
the Company had, at December 31, 1998, no liabilities or obligations material to
the Company. Since the date of the Balance Sheet, the Company has not incurred  
any liabilities material to the Company except (a) liabilities incurred in the  
ordinary and usual course of business and consistent with past practice and (b) 
liabilities incurred in connection with this Agreement and the transactions     
contemplated herein.                                                            

   2.8 Proxy Statement; Other Information.  None of the information supplied
by the Company included in the letter to stockholders, notice of meeting, proxy 
statement and form of proxy to be distributed to stockholders of the Company in 
connection with the Merger (collectively, the "Proxy Statement") or any         
schedules, including a Schedule 13E-3, required to be filed with the Commission 
in connection therewith (the "Schedules"), will, as of the date the Proxy       
Statement is first mailed to such stockholders, and on the date of the special  
meeting of the Company's stockholders and the date of any adjournment thereof,  
contain any untrue statement of a material fact or omit to state any material   
fact required to be stated therein or necessary in order to make the statements 
therein not misleading. The Proxy Statement and Schedules will comply as to form
in all material respects with all applicable provisions of the Exchange Act.    

ARTICLE III 

REPRESENTATIONS AND WARRANTIES OF NAC 

NAC hereby represents and warrants to the Company that:               

   3.1 Corporate Organization.  NAC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has   
all requisite corporate power and authority to own, operate and lease its       
properties and to carry on its business as it is now being conducted.           

     3.2 Authorization.  NAC has the necessary, corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The       
execution and delivery of this Agreement by NAC, the performance by NAC, its    
obligations hereunder and the consummation by NAC of the transactions           
contemplated hereby, have been duly and validly authorized by the Board of      
Directors of NAC, and will have been duly and validly approved by the           
stockholders of NAC prior to the Effective Time, and no other corporate         
proceeding on the part of NAC is necessary for the execution and delivery of    
this Agreement by NAC, the performance of its obligations hereunder and the     
consummation by NAC of the transactions contemplated hereby. This Agreement has 
been executed and delivered by NAC and, assuming the due authorization,         
execution and delivery hereof by the Company, is a legal, valid and binding     
obligation of NAC, enforceable against NAC in accordance with its terms.        

  3.3 Commitments for the Financing.  NAC, or its respective associates or
affiliates, has heretofore received commitments to provide sufficient funds to  
complete the transactions contemplated by this Agreement.                       

3.4 Consents and Approvals; No Violations.                            

    (a) NAC is not in violation of any applicable law, statute, order, rule or
regulation promulgated or judgment entered by any federal, state, local or      
foreign court or governmental authority relating to or affecting                
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the operation, conduct or ownership of the property or business of NAC, which   
violation or violations would have a material adverse effect on the business,   
operations or financial condition of NAC.                                       

    (b) Except for applicable requirements of the Exchange Act, state blue sky
laws and the filing and recordation of the Certificate of Merger as required by 
the DGCL, no filing or registration with, no notice to and no permit,           
authorization, consent or approval of any public or governmental body or        
authority is necessary for the consummation by NAC of the transactions          
contemplated by this Agreement or to enable the Surviving Corporation to        
continue to conduct its business after the Effective Time, except where the     
failure to make such filing, or to obtain such permit, authorization, consent or
approval will not have a material adverse effect on the business, operations, or
financial condition of NAC. Neither the execution and delivery of this Agreement
by NAC nor the consummation by NAC of the transactions contemplated hereby nor  
compliance by NAC with any of the provisions hereof will (i) conflict with or   
result in any breach of any provision of the Certificate of Incorporation or    
Bylaws of NAC, (ii) result in a violation or breach of, or constitute (with or  
without due notice or lapse of time or both) a default (or give rise to any     
right of termination, cancellation or acceleration) under, any of the terms,    
conditions or provisions of any note, bond, mortgage, indenture, license,       
agreement or other instrument or obligation to which NAC is a party or by which 
it or any of its properties or assets may be bound or (iii) to the best         
knowledge of the executive officers of NAC, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to NAC, excluding from the       
foregoing clauses (ii) and (iii) violations, breaches or defaults which in the  
aggregate would not have a material adverse effect on the business, operations  
or financial condition of NAC.                                                  

   3.5 Proxy Statement; Other Information.  None of the information supplied
by NAC included in the Proxy Statement or any Schedule, or in any amendments or 
supplements thereto, required to be filed with the Commission in connection     
therewith, will, as of the date the Proxy Statement is first mailed to          
stockholders of the Company, and on the date of the meeting of the Company's    
stockholders and the date of any adjournment thereof, contain any untrue        
statement of a material fact or omit to state any material fact required to be  
stated therein or necessary in order to make the statements therein not         
misleading. The Proxy Statement and Schedules will comply as to form in all     
material respects with all applicable provisions of the Exchange Act.           

ARTICLE IV

COVENANTS 

   4.1 Conduct of Business of the Company.  Except as expressly contemplated
by this Agreement, including cancellation of Company Options in accordance with 
Section 4.9(a) hereof, during the period from the date of this Agreement to the 
Effective Time, the Company will conduct its operations only in, and the Company
shall not take any action except in, the ordinary and usual course of business  
and consistent with prior practice, and the Company shall use its best efforts  
to preserve substantially intact its business organization, goodwill, assets,   
permits and licenses, to keep available the services of its current officers and
employees and to maintain satisfactory relationships with licensors, licensees, 
suppliers, contractors, distributors, customers and others having business      
relationships with it; to comply in all material respects with all laws,        
statutes, ordinances, rules and regulations applicable to the Company; and,     
prior to the Effective Time, the Company covenants and agrees that it will not, 
without the prior consent of NAC:                                               

     (a) split, combine or reclassify any shares of its capital stock,
     declare, pay or set aside for payment any dividend or other distribution in
     respect of its capital stock, or directly or indirectly redeem, purchase or
otherwise acquire any shares of its capital stock or other securities;

  (b) authorize for issuance, issue, sell, pledge, dispose of or
encumber, deliver or agree or commit to issue, sell, pledge or deliver
(whether through the issuance or granting of any options, warrants,   
   commitments, subscriptions, rights to purchase or otherwise) any stock of
    any class of the Company or any securities convertible into or exercisable
     or exchangeable for shares of stock of any class of the Company, other than
the issuance of shares pursuant to the exercise of Company Options    
outstanding as of the date hereof;                                    

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         (c) except as set forth in Section 4.9 and except in the ordinary and
usual course of business and consistent with past practice, incur any 
material liability or obligation, issue any debt securities or assume,
     guarantee, endorse or otherwise as an accommodation become responsible for,
the obligations of any other individual or entity;                    

     (d) except as set forth in Section 4.9, adopt or amend any bonus,
   profit-sharing, compensation, stock option, pension, retirement, deferred
    compensation, employment or other employee benefit plan, agreement, trust,
  plan, fund or other arrangement (collectively, "Compensation Plans"), or
grant, or become obligated to grant, any general increase in the      
     compensation of officers or employees (including any such increase pursuant
     to any Compensation Plan) or any increase in the compensation payable or to
    become payable to any officer, institute any new employee benefit, welfare
   program or Compensation Plan, make any change in any Compensation Plan or
    other employee welfare or benefit arrangement or enter into any employment
or similar agreement or arrangement with any employee;                

    (e) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
 division thereof or make any material investment, either by purchase of
stock or securities, contributions to capital, property transfer, or  
purchase of any material amount of properties or assets of any other  
individual or entity;                                                 

        (f) amend the Certificate of Incorporation or Bylaws of the Company;

 (g) except in the ordinary course of business, and except for
  settlements made by insurers, enter into any compromise or settlement of
  any litigation, proceeding or governmental investigation relating to the
Company or its properties;                                            

         (h) change in any material respect its accounting methods, principles
    or practices except as in accordance with United States generally accepted
accounting principles, consistently applied ("GAAP");                 

         (i) revalue any of its assets, including, without limitation, writing
off notes or accounts receivable, other than in the ordinary course of
business consistent with prior practice;                              

    (j) create, incur, assume, maintain or permit to exist any lien,
pledge, mortgage, security interest, assessment, claim, lease, charge,
   option, right of first refusal, imperfection of title, easement, transfer
    restriction under any shareholder or similar agreement, encumbrance or any
    other restriction or limitation of any kind whatsoever ("Encumbrances") on
 any real, personal or mixed property, tangible or intangible, including
    without limitation, any leased property ("Property") of the Company, other
than liens for federal, state or local taxes and assessments not yet  
payable ("Permitted Encumbrances");                                   

    (k) create, incur or assume any indebtedness for borrowed money,
including obligations in respect of capital leases, or guarantee any  
    indebtedness for borrowed money or any other obligation of any individual,
   corporation, partnership, limited liability company, firm, joint venture,
association, joint stock company, trust, unincorporated organization, 
governmental or regulatory authority or other entity ("Person");      

     (l) pay or discharge any material claim, liability or Encumbrance
   (whether absolute, accrued, contingent or otherwise), or waive any right,
     other than in the ordinary course of business consistent with past practice
    or pursuant to binding contractual obligations of the Company in existence
on the date hereof;                                                   

  (m) hire any new employees, agents, independent contractors or
consultants, except for those earning less than Fifty Thousand Dollars
($50,000) per annum who are hired in the ordinary course of business  
    consistent with past practice and the then applicable Board of Directors',
approved budget;                                                      

       (n) authorize or make any capital expenditure inconsistent with the
then applicable Board of Directors' approved budget;                  

  (o) issue or agree to issue any shares of its capital stock or
securities exchangeable for or convertible into such capital stock;   
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     (p) become a party to any agreement, amend or terminate any other
     agreement, contracts, leases, subleases, licenses, obligations, instruments
   or other legally binding commitments, arrangements or undertakings of any
kind ("Contract"), other than in the ordinary course of business and  
   consistent with past practice and the then applicable Board of Directors'
approved budget;                                                      

(q) make any investments in noninvestment grade securities; 

          (r) make any loan, advance or capital contribution to or investment by
  the Company in any Person, except in the ordinary course of business and
consistent with past practice;                                        

      (s) file for voluntary bankruptcy or become subject to involuntary
bankruptcy proceedings;                                               

    (t) consider or adopt a plan of complete or partial liquidation,
dissolution, rehabilitation, restructuring, recapitalization,         
re-domestication or other reorganization;                             

          (u) enter into any joint venture, partnership, managing general agency
or similar arrangement with any Person;                               

 (v) take any action or course of action inconsistent with its
   compliance with the covenants and agreements contained in this Agreement;
and                                                                   

      (w) take or agree to commit to take any action that would make any
  representation or warranty of the Company contained herein inaccurate in
any material respect at the Effective Time or omit to take any action 
necessary to prevent any such representation or warranty from being   
inaccurate in any material respect at such time.                      

   4.2 No Solicitation.  The Company will not, and will use its best efforts
to ensure that its officers, directors, representatives or agents shall not,    
directly or indirectly (i) solicit or initiate (including by way of furnishing  
any non-public information concerning the Company's business, properties or     
assets) negotiations with and (ii) subject to the exercise of their fiduciary   
responsibilities on advice of counsel, participate in any negotiations leading  
to any proposals or enter into any agreement with any corporation, partnership, 
person or other entity or group (other than NAC) (the "Third Party") concerning 
any tender offer, exchange offer, merger, consolidation, sale of substantial    
assets or of a significant amount of assets, sale of securities, liquidation,   
dissolution or similar transactions involving the Company (such proposals,      
announcements or transactions being referred to herein as "Acquisition          
Proposals"). The Company will promptly inform NAC of any inquiry (including the 
terms thereof and the identity of the Third Party making such inquiry) which it 
may receive in respect of an Acquisition Proposal and furnish to NAC a copy of  
any such inquiry. Nothing contained herein shall be construed to prohibit the   
Company from taking and disclosing to its stockholders a position contemplated  
by Rule 14e-2(a)(2) or (3) promulgated under the Exchange Act or from making    
such other disclosure to stockholders which, in the judgment of the Board of    
Directors, on advice of counsel, may be required by law.                        

4.3 Access to Information.                                            

    (a) Between the date of this Agreement and the Effective Time, the Company
will give NAC and its authorized representatives access during normal business  
hours to all personnel, offices and other facilities of the Company and to all  
books and records of the Company and will permit NAC to make such inspections as
it may reasonably request and will cause its officers to furnish NAC with such  
financial and operating data and other information with respect to the business 
and properties of the Company as NAC may from time to time reasonably request.  

   (b) NAC will hold and will cause its representatives (and its affiliates)
to hold in strict confidence, unless compelled to disclose by judicial or       
administrative process, or, in the opinion of its counsel, by other requirements
of law, all documents and information concerning the Company furnished to NAC   
(or its affiliates) in connection with the transactions contemplated by this    
Agreement (except to the extent that such information can be shown to have been 
(i) known by NAC or its affiliates (other than affiliates who are directors,    
officers or employees of the Company) prior to its disclosure to NAC or its     
affiliates by the Company, (ii) in the public domain through no fault of NAC or 
its affiliates or (iii) later lawfully acquired by                              

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NAC or its affiliates from other sources) and will not release or disclose such 
information to any other person, except in connection with this Agreement on a  
confidential basis to (A) its auditors, attorneys, financial advisors, other    
consultants and advisors and (B) responsible financial institutions,            
corporations, partnerships and individuals in connection with the Merger. If the
transactions contemplated by this Agreement are not consummated, such confidence
shall be maintained except to the extent such information can be shown to have  
been (i) previously known by NAC or its affiliates (other than affiliates who   
are directors, officers or employees of the Company) prior to its disclosure to 
NAC or its affiliates by the Company, (ii) in the public domain through no fault
of NAC (or its affiliates) or (iii) later lawfully acquired by NAC (or its      
affiliates) from other sources, and, if requested by the Company, NAC (or its   
affiliates) will destroy or return to the Company all copies of written         
information furnished by the Company to NAC or to NAC's affiliates, agents,     
representatives or advisors. No investigation or access to information pursuant 
to this Section 4.3 shall affect any representation or warranty made by the     
Company.                                                                        

     4.4 Best Efforts.  Upon the terms and subject to the conditions hereof, NAC
and the Company agree to use their respective best efforts to take, or cause to 
be taken, all actions and to do, or cause to be done, all things necessary,     
proper or advisable to consummate and make effective the transactions           
contemplated by this Agreement, including providing information necessary for   
inclusion in the Proxy Statement and Schedules, and shall use their respective  
best efforts to obtain all waivers, permits, consents and approvals and to      
effect all registrations, filings and notices with or to third parties or       
governmental or public bodies or authorities which are in the opinion of NAC or 
the Company necessary or desirable in connection with the transactions          
contemplated by this Agreement, including, without limitation, filings to the   
extent required under the Exchange Act. If at any time after the Effective Time 
any further action is necessary or desirable to carry out the purposes of this  
Agreement, the proper officers or directors of NAC, the Company and the         
Surviving Corporation shall take such action.                                   

     4.5 Public Announcements.  NAC and the Company will consult with each other
before issuing any press release or otherwise making any public statements with 
respect to the Merger and shall not issue any such press release or make any    
such public statement prior to such consultation, except as may be required by  
law.                                                                            

 4.6 Supplemental Information.  From time to time prior to the Effective
Time, each party hereto will promptly disclose in writing to the other any      
matter hereafter arising which, if existing, occurring or known at the date of  
this Agreement, would have been required to be disclosed to such other party.   

    4.7 Schedule 13E-3 and Proxy Material; Stockholders' Meeting.  NAC and the
Company will prepare and file with the Commission the documents, Schedules and  
amendments and supplements thereto required to be filed with respect to the     
transactions contemplated by this Agreement. The Company, acting through its    
Board of Directors, shall cause a meeting of its stockholders to be duly called,
give notice of, convene and hold such meeting as soon as practicable for the    
purpose, inter alia, of approving this Agreement and all actions contemplated   
hereby which require the approval of the Company's stockholders. The Company    
will use its best efforts to obtain and furnish the information required to be  
included by it in any required Proxy Statement and, after consultation with NAC,
respond promptly to any comments of the Commission relating to any preliminary  
proxy material or regarding the transactions contemplated by this Agreement and 
to cause the Proxy Statement relating to the transactions contemplated by this  
Agreement to be mailed to its stockholders, all at the earliest practicable     
time. Whenever any event occurs which should be set forth in an amendment or    
supplement to the Proxy Statement, Schedules or any other filing required to be 
made with the Commission, each party will promptly inform the other and         
cooperate in filing with the Commission and/or mailing to stockholders such     
amendment or supplement. The Proxy Statement, Schedules and all amendments and  
supplements thereto shall comply with applicable law and be in form and         
substance satisfactory to NAC and the Company. The Board of Directors of the    
Company, subject to the exercise of its fiduciary obligations, shall include in 
the Proxy Statement its recommendation that stockholders of the Company vote in 
favor of the approval and adoption of the Agreement and take such further       
actions as NAC may reasonably request in order to secure such approval and      
adoption. NAC shall cause to be present for the purpose of obtaining a quorum   
and shall vote, or cause to be voted, all of the Common Shares and Preferred    
Shares then owned by NAC or its affiliates in favor of the Merger at any meeting
of the stockholders of the Company.                                             
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4.8 Agreement to Defend and Indemnify.                                

    (a) In the event any action, suit, proceeding or investigation relating to
the Merger, this Agreement or the transactions contemplated hereby or thereby is
commenced, whether before or after the Effective Time, the parties hereto agree 
to cooperate and use their best efforts to defend against and respond thereto.  
It is understood and agreed that the Company shall indemnify and hold harmless, 
and, after the Effective Time, the Surviving Corporation shall indemnify and    
hold harmless, each present and former director, officer, employee and agent of 
the Company (the "Indemnified Parties") against losses, claims, damages,        
liabilities, costs, expenses (including attorneys' fees), judgments and amounts 
paid in settlement in connection with any threatened, pending or completed      
action, suit, claim, proceeding or investigation arising out of or pertaining to
any action or omission occurring at or prior to the Effective Time (including,  
without limitation, any which arise out of or relate to the transactions        
contemplated by this Agreement) to the full extent permitted or required under  
Delaware law and the Company's Bylaws (and the Company or the Surviving         
Corporation, as the case may be, will advance expenses to each such person to   
the full extent so permitted). Neither the Company, the Surviving Corporation   
nor NAC shall be liable for any settlement effected by such Indemnified Party   
(or group of Indemnified Parties) unless the Company, the Surviving Corporation 
or NAC, respectively, have approved such settlement in writing. Any Indemnified 
Party wishing to claim indemnification under this Section 4.8, upon learning of 
any such claim, action, suit, proceeding or investigation, shall notify, in     
writing, the Company or the Surviving Corporation and NAC thereof; provided,    
however, that any failure to so notify the Company or the Surviving Corporation 
and NAC shall not relieve the Company or the Surviving Corporation and NAC of   
any obligation to indemnify such Indemnified Party or of any other obligation   
imposed by this Section 4.8 unless and to the extent such failure to so notify  
shall prejudice the position of the Company or the Surviving Corporation.       

(b) From the date of this Agreement, the Company or the Surviving     
Corporation, as the case may be, shall use its best efforts to provide officers'
and directors' liability insurance covering the Indemnified Parties who were    
covered by the Company's officers' and directors' liability insurance on October
21, 1999 or who become officers or directors of the Company after such date and 
prior to the Effective Time with respect to actions and omissions occurring     
prior to the Effective Time upon terms no less favorable to the Indemnified     
Parties than such insurance maintained in effect by the Company on October 21,  
1999 in terms of coverage and amounts, subject to the availability of such      
insurance at a cost not in excess of $82,000 per year, and if the amount of such
insurance available for $82,000 per year is less than the amount in effect as of
October 21, 1999, the amount of coverage provided will be the maximum amount    
available for $82,000 per year. The Surviving Corporation shall advise the      
Indemnified Parties at least annually as to the amount and coverage of such     
insurance then in effect. Such officers' and directors' liability insurance     
shall remain in full force and effect until the third anniversary of the        
Effective Time.                                                                 

    (c) The covenants contained in this Section 4.8 shall survive the Closing,
shall continue without time limit and are intended to benefit the Company and   
each of the Indemnified Parties. Subject to the requirements of the DGCL, the   
Certificate of Incorporation and Bylaws of the Company and the Surviving        
Corporation shall not be amended in a manner which adversely affects the rights 
of the Indemnified Parties under this Section 4.8.                              

4.9 Option Plans.  The Company shall take all steps necessary to (a)  
terminate, to the extent permitted by the terms thereof, the Option Plans       
immediately prior to the Effective Time, without prejudice to the rights of the 
holders of Company Options and (b) grant no additional Company Options under the
Option Plans. Except as set forth below in this Section 4.9, the Company shall  
use its best efforts to take all actions necessary as soon a practicable after  
the date hereof (i) to cause each outstanding Company Option, whether or not    
exercisable or vested, to be cancelled, as of the Effective Time and (ii) to    
obtain the consent of each holder of a Company Option (whether or not then      
exercisable) to the cancellation thereof, to take effect as of the Effective    
Time. In exchange for the cancellation of each such Company Option, the Company 
may pay in respect thereof an amount to be mutually agreed upon by NAC and the  
holders of such Company Options or enter into other arrangements mutually       
acceptable to NAC and the holders of such Company Options.                      

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    4.10 Deposit of Funds.  Not less than ten days prior to the meeting of the
Company's stockholders at which this Agreement will be voted upon, NAC shall    
cause to have deposited with a depository acceptable to the Company funds       
sufficient to make the payments required by Section 1.9(a) hereof.              

ARTICLE V 

CONDITIONS TO THE MERGER

5.1 Conditions to Each Party's Obligation to Effect the Merger.  The  
respective obligations of each party to this Agreement to consummate the Merger 
shall be subject to the following conditions, which may not be waived:          

          (a) This Agreement and the Merger shall have been approved and adopted
by the requisite vote or consent, if any, of the stockholders of the  
Company required by the Company's Certificate of Incorporation and the
DGCL;                                                                 

   (b) No order, statute, rule, regulation, executive order, stay,
  decree, judgment or injunction shall have been enacted, entered, issued,
promulgated or enforced by any court or governmental authority which  
prohibits or restricts the consummation of the Merger; and            

        (c) Chatsworth Securities LLC ("Chatsworth") shall have delivered to
the Company a written fairness opinion for inclusion in the Proxy     
 Statement, relating to the transactions contemplated by this Agreement.

5.2 Conditions to the Obligation of NAC to Effect the Merger.  The    
obligations of NAC to effect the merger shall be further subject to the         
fulfillment at or prior to the Effective Time of the following conditions, any  
one or more of which may be waived by NAC:                                      

     (a) The Company shall have performed and complied in all material
  respects with the agreements and obligations contained in this Agreement
required to be performed and complied with by it at or prior to the   
Effective Time;                                                       

      (b) The representations and warranties of the Company contained in
     this Agreement shall be true and correct as of the date hereof and shall be
  deemed to have been made again at and as of the Effective Time and shall
then be true and correct in all material respects;                    

    (c) All licenses, permits, consents or approvals of governmental
  authorities or agencies necessary to consummate the Merger and to permit
   the continuance of operations of the Company by the Surviving Corporation
    thereafter shall have been received and shall be in full force and effect;

         (d) The terms of the Merger shall have been approved by a majority of
the Company's disinterested directors;                                

        (e) The terms of the Merger shall have been approved and recommended
by a majority of the Company's Board of Directors;                    

         (f) The terms of the Merger shall have been approved by a majority of
Company's stockholders;                                               

          (g) Stockholders of the Company owning not more than five percent (5%)
   of the Company's issued and outstanding shares (on an as converted basis)
shall have exercised dissenters' rights;                              

          (h) The Company shall have obtained and provided NAC a written opinion
from Chatsworth that the terms of the Merger are fair to the Company's
stockholders; and                                                     

        (i) The Company shall have obtained any and all regulatory approvals
for the consummation of the Merger, and there shall have been no      
outstanding order of a court of competent jurisdiction enjoining the  
consummation of the Merger.                                           

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     5.3 Conditions to the Obligations of the Company to Effect the Merger.  The
obligations of the Company to effect the Merger shall be further subject to the 
fulfillment at or prior to the Effective Time of the following conditions, any  
one or more of which may be waived by the Company:                              

      (a) NAC shall have performed and complied in all material respects
     with the agreements and obligations contained in this Agreement required to
     be performed and complied with by it at or prior to the Effective Time; and

   (b) The representations and warranties of NAC contained in this
    Agreement shall be true as of the date hereof, and shall be deemed to have
    been made again at and as of the Effective Time and shall then be true and
correct in all material respects.                                     

ARTICLE VI

CLOSING 

6.1 Time and Place.  Subject to the provisions of Articles V and VII  
hereof, the closing (the "Closing") of the transactions contemplated hereby     
shall take place at the offices of Tucker Flyer, 1615 L Street, N.W., Suite 400,
Washington, D.C. 20036, at 10:00 A.M., local time, as soon as practicable after 
the meeting of stockholders referred to in Section 4.7 hereof (the "Closing     
Date") or at such other place or at such other time as NAC and the Company may  
mutually agree upon for the Closing to take place.                              

   6.2 Deliveries at the Closing.  At the Closing, the Company and NAC shall
cause the Certificate of Merger to be filed and recorded in accordance with the 
applicable provisions of the DGCL and shall take any and all other lawful       
actions necessary to cause the Merger to become effective.                      

ARTICLE VII 

TERMINATION AND ABANDONMENT 

7.1 Termination.  This Agreement may be terminated and the Merger     
contemplated hereby may be abandoned at any time prior to the Effective Time,   
whether before or after approval of the Merger by the stockholders of the       
Company:                                                                        

   (a) By mutual consent of the Boards of Directors of NAC and the
Company;                                                              

       (b) If NAC and the Company shall mutually agree that there shall be
     threatened, instituted or pending any action, proceeding or counterclaim by
or before any court of competent jurisdiction or governmental         
administrative or regulatory agency or commission which, in the mutual
 agreement of NAC and the Company, might permanently restrain, enjoin or
otherwise prohibit the transactions contemplated by this Agreement;   

(c) By either NAC or the Company:                           

             (i) If the Effective Time shall not have occurred by June 30, 2000;

    (ii) If a court of competent jurisdiction or governmental,
      regulatory or administrative agency or commission shall have issued an
    order, decree or ruling or taken any other action which has not been
        lifted (which order, decree or ruling the parties hereto shall use their
      best efforts to lift), in each case permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this  
Agreement;                                                      

         (iii) If there has been a material failure to perform or comply
with any of the covenants, obligations, agreements or conditions
        required in this Agreement to be performed or complied with by the other
        party and such nonperformance or noncompliance shall not have been cured
     or eliminated promptly or by its nature cannot be cured or eliminated
promptly; or                                                    

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          (iv) By either party if the other shall have breached any of its
       representations or warranties contained in this Agreement, which breach
        (A) is incapable of being cured by the breaching party or (B) would give
rise to failure of the conditions set forth in Article V.       

   7.2 Procedure and Effect of Termination.  In the event of termination and
abandonment of the Merger by the Company or NAC or both pursuant to Section 7.1 
hereof, written notice thereof shall forthwith be given to the other and this   
Agreement shall terminate and the Merger shall be abandoned, without further    
action by any of the parties hereto. If this Agreement is terminated as provided
herein:                                                                         

    (a) Upon request therefor, each party will redeliver any and all
  documents, work papers and other material of any other party relating to
    the transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing the same; and               

         (b) No party hereto shall have any liability or further obligation to
any other party to this Agreement except that the provisions of this  
    Section 7.2 and Sections 4.3(b) and 4.8 hereof, shall remain in full force
and effect.                                                           

ARTICLE VIII

GENERAL PROVISIONS

     8.1 Survival of Representations, Warranties, Covenants and Agreements.  The
respective representations, warranties, covenants and agreements of the parties 
hereto, other than those contained in Sections 1.8, 1.9, 4.3(b) and 4.8 hereof, 
shall not survive the Effective Time.                                           

  8.2 Amendment, Modification and Waiver.  Subject to applicable law, this
Agreement may not be amended except by written agreement with the approval of   
the Boards of Directors of NAC and the Company, before or after the meeting of  
stockholders of the Company, at any time prior to the Effective Time with       
respect to any of the terms contained herein, except that the price per Common  
Share or Preferred Share to be paid pursuant to this Agreement to the holders of
Common Shares or Preferred Shares shall in no event be decreased and the form of
consideration to be received by the holders of such Common Shares or Preferred  
Shares in the Merger shall in no event be altered without the approval of such  
holders. The waiver of any term or condition in this Agreement shall only be    
effective if in writing and shall not be construed as a waiver of any subsequent
breach or waiver of the same term or condition, or a waiver of any other term or
condition of this Agreement. Any failure or delay on the part of either party in
exercising any power or right hereunder shall not operate as a waiver thereof,  
nor shall any single or partial exercise of any other right or power hereunder. 

   8.3 Waiver of Compliance; Consents.  Any failure of NAC, on the one hand,
or the Company, on the other hand, to comply with any obligation, covenant,     
agreement or condition herein may be waived in writing by the Company or NAC,   
respectively, but such waiver or failure to insist upon strict compliance with  
such obligation, covenant, agreement or condition shall not operate as a waiver 
of, or estoppel with respect to, any subsequent or other failure. Whenever this 
Agreement requires or permits consent by or on behalf of either party hereto,   
such consent shall be given in writing in a manner consistent with the          
requirements for a waiver of compliance as set forth in this Section 8.3.       

8.4 Severability.  If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public    
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of   
the transactions contemplated hereby is not affected in any manner adverse to   
either party. Upon such determination that any term or other provision is       
invalid, illegal or incapable of being enforced, the parties hereto shall       
negotiate in good faith to modify this Agreement so as to effect the original   
intent of the parties as closely as possible in a mutually acceptable manner in 
order that the transactions contemplated hereby be consummated as originally    
contemplated to the greatest extent possible.                                   

     8.5 Fees and Expenses.  Whether or not the Merger is consummated, all costs
and expenses incurred in connection with the Merger, this Agreement and the     
transactions contemplated hereby will be paid by the party incurring such       
expenses.                                                                       
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8.6 No Third Party Beneficiaries.  Except for the provisions of this  
Agreement relating to Indemnified Parties, this Agreement shall be binding upon 
and inure solely to the benefit of each party hereto and their permitted        
successors, and nothing in this Agreement, express or implied, is intended to   
confer upon any other person or entity any legal or equitable rights benefit or 
remedy of any nature whatsoever under or by reason of this Agreement.           

8.7 Additional Agreements.  Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to    
take, or cause to be taken, all action, and to do, or cause to be done, all     
things necessary, proper or advisable under applicable laws and regulations to  
consummate and make effective the transactions contemplated by this Agreement.  
In case at any time after the Effective Time any further action is necessary or 
desirable to carry out the purposes of this Agreement, the proper officers and  
directors of each corporation which is a party to this Agreement shall take all 
such necessary action.                                                          

  8.8 Notices.  All notices and other communications hereunder shall be in
writing and shall be deemed duly given or made as of (i) the date delivered     
personally against written receipt or (ii) five days after mailing if mailed by 
registered or certified mail (return receipt requested); to the parties at the  
following addresses (or at such other address for a party as shall be specified 
by like notice):                                                                

(a) if to NAC:                                              

NNI Acquisition Corporation                               
c/o Crown Communications Corporation                      
650 Massachusetts Avenue, N.W.                            
Washington, DC 20001                                      
Attn: President                                           
Facsimile: (202) 408-8496                                 

with a copy under separate cover to:                            

Arthur E. Cirulnick, Esquire                              
Venable, Baetjer, Howard & Civiletti, LLP                 
1615 L Street, N.W., Suite 400                            
Washington, D.C. 20036                                    
Facsimile: (202) 429-3231                                 

(b) if to the Company:                                      

The Nostalgia Network, Inc.                               
650 Massachusetts Avenue, N.W.                            
Washington, D.C. 20001                                    
Attn: President                                           
Facsimile: (202) 289-6632                                 

with a copy under separate cover to:                            

Robert Kostecka, Esquire                                  
Caplan, Buckner, Rohrbaugh & Kostecka Chtd.               
3 Bethesda Metro, Suite 430                               
Bethesda, MD 20814                                        
Facsimile: (301) 718-8358                                 

  8.9 Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to the conflict
of laws rules thereof.                                                          

8.10 Counterparts.  This Agreement may be executed in two or more     
counterparts, each of which shall be deemed an original, but all of which       
together shall constitute one and the same agreement.                           

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8.11 Headings.  The article and section headings contained in this    
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not affect in any way the meaning or interpretation of 
this Agreement.                                                                 

   8.12 Entire Agreement.  This Agreement, including the exhibits hereto and
the documents and instruments referred to herein, constitutes the entire        
agreement of the parties hereto in respect of the subject matter contained      
herein. There are no agreements, restrictions, promises, representations,       
warranties, covenants or undertakings, other than those expressly set forth or  
referred to herein. This Agreement supersedes all prior agreements and          
understandings between the parties with respect to such subject matter.         

     IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first written above on its behalf by its duly        
authorized officers.                                                            

                               The Nostalgia Network, Inc.

                                 By:    /s/ SQUIRE D. RUSHNELL
                                            ------------------------------------
                                Name: SQuire D. Rushnell
                                            Title: President and Chief Executive
                   Officer

                               NNI ACQUISITION CORPORATION

                               By:       /s/ DONG MOON JOO
                                            ------------------------------------
                           Name: Dong Moon Joo
                        Title: President

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AMENDMENT 1 

TO
AGREEMENT AND PLAN OF MERGER

    Pursuant to Section 8.2 of the AGREEMENT AND PLAN OF MERGER made as of the
11th day of January, 2000 by and between (i) THE NOSTALGIA NETWORK, INC., a     
Delaware corporation (the "Company"), and (ii) NNI ACQUISITION CORPORATION, a   
Delaware corporation ("NAC"), the parties hereby agree to the following         
Amendment 1 to this AGREEMENT AND PLAN OF MERGER:                               

1. Section 7.1 (c)(i) is hereby removed and replaced by the following:

      "(i) If the Effective Time shall not have occurred by December 31,
2000;"                                                                

 2. The parties agree that all other terms of the Agreement not directly
amended by the above shall remain in full effect through the remainder of its   
term.                                                                           

IN WITNESS WHEREOF, the parties hereby execute this Amendment 1.      

                                                        [Enlarge/Download Table]
                                                                                            
THE NOSTALGIA NETWORK, INC.                    NNI Acquisition Corporation                  
650 Massachusetts Avenue, NW                   650 Massachusetts Avenue, NW                 
Washington, DC 20001                           Washington, DC 20001                         

           By: /s/ WILLARD R. NICHOLS                       By: /s/ WERNER SEUBERT          
  -------------------------------------------    -------------------------------------------
            Name: Willard R. Nichols                         Name: Werner Seubert           
     Title: Vice President, General Counsel                 Title: Vice President           
                 and Secretary                                                              

Date: October 4, 2000                          Date: October 4, 2000                        

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                                                                       EXHIBIT A

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
THE NOSTALGIA NETWORK, INC. 

   The Nostalgia Network, Inc., a corporation existing under the laws of the
State of Delaware, hereby certifies as follows:                                 

  1.  The name of the corporation is THE NOSTALGIA NETWORK, INC.

         2.  The original Certificate of Incorporation of this corporation was
filed with the Secretary of State of the State of Delaware on July 15,
   1987. Certificate of Ownership and Merger was filed with the Secretary of
State of the State of Delaware on October 9, 1987 and Certificates of 
Amendment of the Certificate of Incorporation of this corporation were
   filed with the Secretary of State of the State of Delaware on October 25,
1990 and June 15, 1992.                                               

          3.  This Restated Certificate of Incorporation restates and integrates
  and further amends the provisions of the Certificate of Incorporation of
  the Corporation (as previously amended) and has been adopted pursuant to
  the provisions of Sections 242 and 245 of the General Corporation Law of
the State of Delaware.                                                

     4.  The Certificate of Incorporation of the corporation is hereby
further amended and restated to read in its entirety as follows:      

            FIRST:  The name of the corporation is THE NOSTALGIA NETWORK, INC.

          SECOND:  The name of the registered agent and the address of the
    registered office of the Corporation in the State of Delaware is The
   Corporation Trust Company, Corporation Trust Center, 1209 N. Orange
Street, Wilmington, Delaware 19801, County of New Castle.       

            THIRD:  The purposes of the Corporation are to engage in, promote,
conduct and carry on any lawful acts or activities for which    
      corporations may be organized under the Delaware General Corporate Law
of the State of Delaware, as amended (the "DGCL").              

            FOURTH:  The total number of shares of stock which the Corporation
       shall have authority to issue is Ten Thousand (10,000) shares of Common
Stock, par value One Cent ($0.01) per share.                    

 FIFTH:  The Corporation is to have perpetual existence.

           SIXTH:  The private property or assets of the stockholders of the
        Corporation shall not to any extent whatsoever be subject to the payment
of the debts of the Corporation.                                

        SEVENTH:  Elections of directors need not be by written ballot
unless otherwise provided in the Bylaws of the Corporation.     

           EIGHTH:  The number of directors of the Corporation shall be such
        number as from time to time shall be fixed by, or in the manner provided
  in, the Bylaws of the Corporation. None of the directors need be a
stockholder or a resident of the State of Delaware.             

           NINTH:  No director shall be personally liable to the Corporation
    or its stockholders for monetary damages for any breach of fiduciary
  duty by such director as a director. Notwithstanding the foregoing
sentence, a director shall be liable to the extent provided by  
      applicable law (i) for breach of the 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
law, (iii) pursuant to Section 174 of the DGCL or (iv) for any  
transaction from which the director derived an improper personal
     benefit. All references in this paragraph to a director shall also be
       deemed to refer to any other person who, pursuant to a provision of the
      certificate of incorporation in accordance with Section 141 subsection
  (a) of the DGCL, exercises or performs any of the powers or duties
       otherwise conferred or imposed upon the board of directors by the DGCL.
No amendment                                                    

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       to or repeal of this Article NINTH shall apply to or have any effect on
     the liability or alleged liability of any director of the Corporation
       for or with respect to any acts or omissions of such director occurring
prior to such amendment.                                        

             TENTH:  In furtherance and not in limitation of the rights, powers,
      privileges and discretionary authority granted or conferred by DGCL or
       other statutes or laws of the State of Delaware, the Board of Directors
is expressly authorized:                                        

     A.  To make, amend, alter or repeal the Bylaws of the
Corporation;                                              

             B.  To authorize and cause to be executed mortgages and liens
upon the real and personal property of the Corporation;   

              C.  To set apart out of any funds of the Corporation available
        for dividends, a reserve or reserves for any proper purpose and to
        reduce any such reserve in the manner in which it was created; and

               D.  To adopt from time to time Bylaw provisions with respect to
         indemnification of directors, officers, employees, agents and other
         persons as it shall deem expedient and in the best interests of the
Corporation and to the extent permitted by law.           

             ELEVENTH:  The books of the Corporation may be kept (subject to any
     provision contained in the statutes) outside the State of Delaware at
        such place or places as may be designated from time to time by the Board
of Directors or in the Bylaws of the Corporation.               

       TWELFTH:  The Corporation reserves the right to amend, alter,
      change or repeal any provisions herein contained, in the manner now or
       hereafter prescribed by statute, and all rights, powers, privileges and
        discretionary authority granted or conferred herein upon stockholders or
directors are granted subject to this reservation.              

       5.  This Amended and Restated Certificate of Incorporation has been
  duly approved and adopted by the Board of Directors of this Corporation.

       6.  This Amended and Restated Certificate of Incorporation has been
    duly adopted of the stockholders of the Corporation in accordance with the
provisions of Sections 228, 242 and 245 of the DGCL.                  

  IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated
Certificate of Incorporation to be signed and executed in its corporate name by 
SQuire D. Rushnell, its President and CEO, and affirmed and acknowledged by     
Willard R. Nichols, its Secretary, this      day of                ,      .     

                               THE NOSTALGIA NETWORK, INC.

       By:
                                            ------------------------------------
                            Name: SQuire D. Rushnell
                          Its: President and CEO

ATTEST:                                                                         

---------------------------------------------------------                       
Willard R. Nichols, Secretary                                                   

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THE NOSTALGIA NETWORK, INC. 

1996 STOCK OPTION PLAN
(AS ADOPTED JUNE 5, 1996) 

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THE NOSTALGIA NETWORK, INC. 

1996 STOCK OPTION PLAN

1.  PURPOSE AND EFFECT ON FORMER PLANS.                               

    The purpose of this Plan is to strengthen The Nostalgia Network, Inc. (the
"Company"), by providing an incentive to its employees, officers, and directors 
and thereby encouraging them to devote their abilities and industry to the      
success of the Company's business enterprise. It is intended that this purpose  
be achieved by extending to employees, officers, and directors of the Company   
and its Subsidiaries an added long-term incentive for high levels of performance
and unusual efforts through the grant of Incentive Stock Options and            
Nonqualified Stock Options. After the Effective Date of this Plan, no further   
awards shall be made under The Nostalgia Network, Inc. 1987 Stock Option Plan or
The Nostalgia Network, Inc. Incentive and Nonqualified Stock Option Plan (1990) 
(collectively, the "Former Plans"). Each award outstanding under a Former Plan  
as of the Effective Date of this Plan shall remain outstanding and continue to  
be subject to the terms of the Former Plan and the award agreement under which  
such award was granted. Each Share that is available for the granting of new    
awards under either of the Former Plans as of the Effective Date of this Plan   
and each Share that is the subject of an award under either of the Former Plans 
but is not issued prior to the time that such award expires or otherwise        
terminates shall, after the Effective Date of this Plan, not be available for   
the granting of awards under either of the Former Plans, but shall instead be   
available for the granting of Options under this Plan.                          

2.  DEFINITIONS.                                                      

For purposes of the Plan:                                             

2.1  "Adjusted Fair Market Value" means, in the event of a Change in  
Control, the greater of (i) the highest price per Share paid to holders of the  
Shares in any transaction (or series of transactions) constituting or resulting 
in a Change in Control or (ii) the highest Fair Market Value of a Share during  
the ninety (90) day period ending on the date of a Change in Control.           

 2.2  "Agreement" means the written agreement between the Company and an
Optionee evidencing the grant of an Option.                                     

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

2.4  "Cause" means:                                                   

         (a) for purposes of Section 6.4, the commission of an act of fraud or
   intentional misrepresentation or an act of embezzlement, misappropriation
    or conversion of assets or opportunities of the Company or any Subsidiary,
and                                                                   

         (b) for all other purposes, unless otherwise defined in the Agreement
  evidencing a particular Option, an Eligible Individual's (i) intentional
   failure to perform reasonably assigned duties, (ii) dishonesty or willful
     misconduct in the performance of duties, (iii) involvement in a transaction
   in connection with the performance of duties to the Company or any of its
   Subsidiaries thereof which transaction is adverse to the interests of the
 Company or any of its Subsidiaries and which is engaged in for personal
profit or (iv) willful violation of any law, rule or regulation in    
     connection with the performance of duties (other than traffic violations or
similar offenses).                                                    

2.5  "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in     
value) in the Shares or exchange of Shares for a different number or kind of    
shares or other securities of the Company, by reason of a reclassification,     
recapitalization, merger, consolidation, reorganization, spin-off, split-up,    
issuance of warrants or rights or debentures, stock dividend, stock split or    
reverse stock split, cash dividend, property dividend, combination or exchange  
of shares, repurchase of shares, change in corporate structure or otherwise.    

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     2.6  A "Change in Control" shall mean the occurrence during the term of the
Plan of:                                                                        

    (a) An acquisition (other than directly from the Company) of any
    voting securities of the Company (the "Voting Securities") by any "Person"
   (as the term person is used for purposes of Section 13(d) or 14(d) of the
  Securities Exchange Act of 1934, as amended (the "Exchange Act")) (other
   than Concept Communications Corp. or any of its affiliates, collectively,
    "Concept"), immediately after which such Person has "Beneficial Ownership"
  (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
(i) thirty percent (30%) or more of the combined voting power of the  
  Company's then outstanding Voting Securities and (ii) a number of Voting
Securities greater than the aggregate number of Voting Securities then
    Beneficially Owned by Concept; provided, however, in determining whether a
   Change in Control has occurred, Voting Securities which are acquired in a
    "Non-Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control     
    Acquisition" shall mean an acquisition by (i) an employee benefit plan (or
  a trust forming a part thereof) maintained by (A) the Company or (B) any
    corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or     
indirectly, by the Company (for purposes of this definition, a        
    "Subsidiary") (ii) the Company or its Subsidiaries, or (iii) any Person in
connection with a "Non-Control Transaction" (as hereinafter defined); 

        (b) The individuals who, as of June 5, 1996 are members of the Board
(the "Incumbent Board"), cease for any reason to constitute at least a
majority of the members of the Board; provided, however, that if the  
    election, or nomination for election by the Company's common stockholders,
  of any new director was approved by a vote of at least a majority of the
 Incumbent Board, such new director shall, for purposes of this Plan, be
   considered as a member of the Incumbent Board; provided further, however,
   that no individual shall be considered a member of the Incumbent Board if
     such individual initially assumed office as a result of either an actual or
 threatened "Election Contest" (as described in Rule 14a-l 1 promulgated
under the Exchange Act) or other actual or threatened solicitation of 
 proxies or consents by or on behalf of a Person other than the Board (a
    "Proxy Contest") including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest; or                      

(c) Approval by stockholders of the Company of:             

     (i) A merger, consolidation or reorganization involving the
 Company, unless such merger, consolidation or reorganization is a
   "Non-Control Transaction." A "Non-Control Transaction" shall mean a
merger, consolidation or reorganization of the Company where:   

            (A) the stockholders of the Company, immediately before such
         merger, consolidation or reorganization, own directly or indirectly
         immediately following such merger, consolidation or reorganization,
        at least seventy percent (70%) of the combined voting power of the
          outstanding voting securities of the corporation resulting from such
merger or consolidation or reorganization (the "Surviving 
           Corporation") in substantially the same proportion as their ownership
of the Voting Securities immediately before such merger,  
consolidation or reorganization,                          

           (B) the individuals who were members of the Incumbent Board
       immediately prior to the execution of the agreement providing for
        such merger, consolidation or reorganization constitute at least a
        majority of the members of the board of directors of the Surviving
       Corporation, or a corporation beneficially directly or indirectly
 owning a majority of the Voting Securities of the Surviving
Corporation, and                                          

              (C) no Person other than (i) the Company, (ii) any Subsidiary,
           (iii) any employee benefit plan (or any trust forming a part thereof)
  maintained by the Company, the Surviving Corporation, or any
           Subsidiary, or (iv) any Person who, immediately prior to such merger,
        consolidation or reorganization had Beneficial Ownership of thirty
           percent (30%) or more of the then outstanding Voting Securities), has
          Beneficial Ownership of thirty percent (30%) or more of the combined
         voting power of the Surviving Corporation's then outstanding voting
securities.                                               

       (ii) A complete liquidation or dissolution of the Company; or
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        (iii) An agreement for the sale or other disposition of all or
        substantially all of the assets of the Company to any Person (other than
a transfer to a Subsidiary).                                    

   Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial      
Ownership of more than the permitted amount of the then outstanding Voting      
Securities as a result of the acquisition of Voting Securities by the Company   
which, by reducing the number of Voting Securities then outstanding, increases  
the proportional number of shares Beneficially Owned by the Subject Persons,    
provided that if a Change in Control would occur (but for the operation of this 
sentence) as a result of the acquisition of Voting Securities by the Company,   
and after such share acquisition by the Company, the Subject Person becomes the 
Beneficial Owner of any additional Voting Securities which increases the        
percentage of the then outstanding Voting Securities Beneficially Owned by the  
Subject Person, then a Change in Control shall occur.                           

2.7  "Code" means the Internal Revenue Code of 1986, as amended.      

    2.8  "Committee" means a committee, as described in Section 3.1, appointed
by the Board to administer the Plan and to perform the functions set forth      
herein.                                                                         

2.9  "Company" means The Nostalgia Network, Inc.                      

2.10  "Director Option" means an Option granted pursuant to Section 6.

   2.11  "Disability" means a physical or mental infirmity which impairs the
Optionee's ability to perform substantially his or her duties for a period of   
one hundred eighty (180) consecutive days.                                      

2.12  "Disinterested Director" means a director of the Company who is 
"disinterested" within the meaning of Rule 16b-3 under the Exchange Act.        

   2.13  "Effective Date" means the effective date of the Plan as determined
by the Board pursuant to Section 19.                                            

  2.14  "Eligible Individual" means any director (other than a Nonemployee
Director), officer or employee of the Company or a Subsidiary, or any consultant
or advisor who is receiving cash compensation from the Company or a Subsidiary, 
designated by the Committee as eligible to receive Options subject to the       
conditions set forth herein.                                                    

2.15  "Employee Option" means an Option granted pursuant to Section 5.

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

     2.17  "Fair Market Value" on any date means the average of the high and low
sales prices of the Shares on such date on the principal national securities    
exchange on which such Shares are listed or admitted to trading, or, if such    
Shares are not so listed or admitted to trading, the arithmetic mean of the per 
Share highest bid price and per Share lowest asked price on such date as quoted 
on the National Association of Securities Dealers Automated Quotation System or 
such other market in which such prices are regularly quoted, or, if there have  
been no published bid or asked quotations with respect to Shares on such date,  
the Fair Market Value shall be the value established by the Board in good faith 
and, in the case of an Incentive Stock Option, in accordance with Section 422 of
the Code.                                                                       

  2.18  "Former Plans" means The Nostalgia Network, Inc. 1987 Stock Option
Plan and The Nostalgia Network, Inc. Incentive and Nonqualified Stock Option    
Plan (1990), collectively.                                                      

    2.19  "Incentive Stock Option" means an Option satisfying the requirements
of Section 422 of the Code and designated by the Committee as an Incentive Stock
Option.                                                                         

    2.20  "Nonemployee Director" means a director of the Company who is not an
employee of the Company or any Subsidiary.                                      

     2.21  "Nonqualified Stock Option" means an Option which is not an Incentive
Stock Option.                                                                   

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2.22  "Option" means a Nonqualified Stock Option, an Incentive Stock  
Option, a Director Option, or any or all of them.                               

  2.23  "Optionee" means a person to whom an Option has been granted under
the Plan.                                                                       

    2.24  "Parent" means any corporation which is a parent corporation (within
the meaning of Section 424(e) of the Code) with respect to the Company.         

2.25  "Plan" means The Nostalgia Network, Inc. 1995 Stock Option Plan.

2.26  "Pooling Transaction" means an acquisition of the Company in a  
transaction which is intended to be treated as a "pooling of interests" under   
generally accepted accounting principles.                                       

2.27  "Shares" means the common stock, par value $.04 per share of the
Company.                                                                        

    2.28  "Subsidiary" means any corporation which is a subsidiary corporation
(within the meaning of Section 424(f) of the Code) with respect to the Company. 

2.29  "Successor Corporation" means a corporation, or a parent or     
subsidiary thereof within the meaning of Section 424(a) of the Code, which      
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.                                                                   

   2.30  "Ten-Percent Stockholder" means an Eligible Individual, who, at the
time an Incentive Stock Option is to be granted to him or her, owns (within the 
meaning of Section 422(b)(6) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company,
or of a Parent or a Subsidiary.                                                 

3.  ADMINISTRATION.                                                   

3.1  The Plan shall be administered by the Committee which shall hold 
meetings at such times as may be necessary for the proper administration of the 
Plan. The Committee shall keep minutes of its meetings. A quorum shall consist  
of a majority of the members of the Committee and a majority of a quorum may    
authorize any action. Any decision or determination reduced to writing and      
signed by a majority of all of the members of the Committee shall be as fully   
effective as if made by a majority vote at a meeting duly called and held. The  
Committee shall consist of at least two (2) directors of the Company each of    
whom shall be a Disinterested Director. No member of the Committee shall be     
liable for any action, failure to act, determination or interpretation made in  
good faith with respect to this Plan or any transaction hereunder, except for   
liability arising from his or her own willful misfeasance, gross negligence or  
reckless disregard of his or her duties. The Company hereby agrees to indemnify 
each member of the Committee for all costs and expenses and, to the extent      
permitted by applicable law, any liability incurred in connection with defending
against, responding to, negotiating for the settlement of or otherwise dealing  
with any claim, cause of action or dispute of any kind arising in connection    
with any actions in administering this Plan or in authorizing or denying        
authorization to any transaction hereunder.                                     

3.2  Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:                            

     (a) determine those Eligible Individuals to whom Employee Options
    shall be granted under the Plan and the number of such Employee Options to
 be granted and to prescribe the terms and conditions (which need not be
   identical) of each such Employee Option, including the purchase price per
Share subject to each Employee Option, and make any amendment or      
     modification to any Option Agreement consistent with the terms of the Plan;

  (b) to construe and interpret the Plan and the Options granted
    hereunder and to establish, amend and revoke rules and regulations for the
   administration of the Plan, including, but not limited to, correcting any
   defect or supplying any omission, or reconciling any inconsistency in the
 Plan or in any Agreement, in the manner and to the extent it shall deem
necessary or advisable so that the Plan complies with applicable law  
including Rule 16b-3 under the Exchange Act and the Code to the extent
   applicable, and otherwise to make the Plan fully effective. All decisions
and determinations by the                                             

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Committee in the exercise of this power shall be final, binding and   
     conclusive upon the Company, its Subsidiaries, the Optionees, and all other
persons having any interest therein;                                  

          (c) to determine the duration and purposes for leaves of absence which
     may be granted to an Optionee on an individual basis without constituting a
termination of employment or service for purposes of the Plan;        

        (d) to exercise its discretion with respect to the powers and rights
granted to it as set forth in the Plan; and                           

          (e) generally, to exercise such powers and to perform such acts as are
    deemed necessary or advisable to promote the best interests of the Company
with respect to the Plan.                                             

4.  Stock Subject to the Plan.                                        

   4.1  The maximum number of Shares that may be made the subject of Options
granted under this Plan is the aggregate number of Shares that would have been  
available for new awards under the Former Plans after the Effective Date of this
Plan (but for the prospective termination of the Former Plans), including the   
Shares that were available for new grants under each of the Former Plans as of  
the Effective Date of this Plan and the Shares that are subject to awards       
granted under either of the Former Plans which Shares are not issued prior to   
the expiration or other termination of such awards (including Shares subject to 
awards that expire or terminate after the expiration of the term of a Former    
Plan). Upon a Change in Capitalization the maximum number of Shares shall be    
adjusted in number and kind pursuant to Section 9. The Company shall reserve for
the purposes of the Plan, out of its authorized but unissued Shares or out of   
Shares held in the Company's treasury, or partly out of each, such number of    
Shares as shall be determined by the Board.                                     

   4.2  Upon the granting of an Option, the number of Shares available under
Section 4.1 for the granting of further Options shall be reduced by the number  
of Shares subject to such Option.                                               

4.3  Whenever any outstanding Option or portion thereof expires, is   
canceled or is otherwise terminated for any reason without having been exercised
or payment having been made in respect of the entire Option (including any      
outstanding Options under either of the Former Plans), the Shares allocable to  
the expired, canceled or otherwise terminated portion of the Option may again be
the subject of Options granted hereunder.                                       

  4.4  Notwithstanding anything contained in this Section 4, the number of
Shares available for Options at any time under the Plan shall be reduced to such
lesser amount as may be required pursuant to the methods of calculation         
necessary so that the exemptions provided pursuant to Rule 16b-3 under the      
Exchange Act will continue to be available for transactions involving all       
current and future Options. In addition, during the period that any Options     
remain outstanding under the Plan, the Committee may make good faith adjustments
with respect to the number of Shares attributable to such Options for purposes  
of calculating the maximum number of Shares available for the granting of future
Options under the Plan, provided that following such adjustments the exemptions 
provided pursuant to Rule 16b-3 under the Exchange Act will continue to be      
available for transactions involving all current and future Options.            

5.  Option Grants for Eligible Individuals.                           

  5.1  Authority of Committee.  Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible          
Individuals who will receive Employee Options, the terms and conditions of which
shall be set forth in an Agreement.                                             

5.2  Purchase Price.  The purchase price or the manner in which the   
purchase price is to be determined for Shares under each Employee Option shall  
be determined by the Committee and set forth in the Agreement; provided,        
however, that the purchase price per Share under each Incentive Stock Option    
shall not be less than 100% of the Fair Market Value of a Share on the date the 
Incentive Stock Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder).                                          

 5.3  Maximum Duration.  Employee Options granted hereunder shall be for
such term as the Committee shall determine, provided that an Incentive Stock    
Option shall not be exercisable after the                                       
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expiration of ten (10) years from the date it is granted (five (5) years in the 
case of an Incentive Stock Option granted to a Ten-Percent Stockholder) and a   
Nonqualified Stock Option shall not be exercisable after the expiration of ten  
(10) years from the date it is granted. The Committee may, subsequent to the    
granting of any Employee Option, extend the term thereof but in no event shall  
the term as so extended exceed the maximum term provided for in the preceding   
sentence.                                                                       

  5.4  Vesting.  Subject to Section 7.4, each Employee Option shall become
exercisable in such installments (which need not be equal) and at such times as 
may be designated by the Committee and set forth in the Agreement. To the extent
not exercised, installments shall accumulate and be exercisable, in whole or in 
part, at any time after becoming exercisable, but not later than the date the   
Employee Option expires. The Committee may accelerate the exerciseability of any
Employee Option or portion thereof at any time.                                 

   5.5  Modification.  No modification of an Employee Option shall adversely
alter or impair any rights or obligations under the Employee Option without the 
Optionee's consent.                                                             

6.  Option Grants for Nonemployee Directors.                          

     6.1  Grant.  Director Options shall be granted to each Nonemployee Director
on the first business day of August of each year that the Plan is in effect.    
Each Director Option granted shall be in respect of 3,000 Shares. Such Options  
shall be evidenced by an Agreement containing such other terms and conditions   
not inconsistent with the provisions of this Plan as determined by the Board;   
provided, however, that such terms shall not vary the price, amount or timing of
Director Options provided under this Section 6, including provisions dealing    
with vesting, forfeiture and termination of such Director Options.              

 6.2  Purchase Price.  The purchase price for Shares under each Director
Option shall be equal to 100% of the Fair Market Value of such Shares on the    
date immediately preceding the date of grant.                                   

    6.3  Vesting.  Subject to Sections 6.4 and 7.4, each Director Option shall
become exercisable with respect to 33 1/3% of the Shares subject thereto        
effective as of each of the first, second, and third anniversaries of the grant 
date; provided, however, that the Optionee continues to serve as a Director as  
of such dates. If an Optionee ceases to serve as a Director for any reason, the 
Optionee shall have no rights with respect to that portion of a Director Option 
which has not then vested pursuant to the preceding sentence and the Optionee   
shall automatically forfeit that portion of the Director Option which remains   
unvested.                                                                       

   6.4  Duration.  Each Director Option shall terminate on the date which is
the tenth anniversary of the grant date, unless terminated earlier as follows:  

        (a) If an Optionee's service as a Director terminates for any reason
 other than Disability, death or Cause, the Optionee may for a period of
   three (3) months after such termination exercise his or her Option to the
 extent, and only to the extent, that such Option or portion thereof was
    vested and exercisable as of the date the Optionee's service as a Director
  terminated, after which time the Option shall automatically terminate in
full.                                                                 

          (b) If an Optionee's service as a Director terminates by reason of the
 Optionee's resignation or removal from the Board due to Disability, the
     Optionee may, for a period of one (1) year after such termination, exercise
   his or her Option to the extent, and only to the extent, that such Option
or portion thereof was vested and exercisable, as of the date the     
Optionee's service as Director terminated, after which time the Option
shall automatically terminate in full.                                

        (c) If an Optionee's service as a Director terminates for Cause, the
 Option granted to the Optionee hereunder shall immediately terminate in
full and no rights thereunder may be exercised.                       

       (d) If an Optionee dies while a Director or within three (3) months
  after termination of service as a Director as described in clause (a) of
    this Section 6.4 or within twelve (12) months after termination of service
  as a Director as described in clause (b) of this Section 6.4, the Option
 granted to the Optionee may be exercised at any time within twelve (12)
 months after the Optionee's death by the person or persons to whom such
  rights under the Option shall pass by will, or by the laws of descent or
distribution,                                                         
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 after which time the Option shall terminate in full; provided, however,
     that an Option may be exercised to the extent, and only to the extent, that
the Option or portion thereof was exercisable on the date of death or 
earlier termination of the Optionee's services as a Director.         

    6.5  Limitations on Amendment.  The provisions in this Section 6 shall not
be amended more than once every six months, other than to comport with changes  
in the Code or the rules and regulations thereunder.                            

7.  TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS.                   

7.1  Non-Transferability.  No Option granted hereunder shall be       
transferable by the Optionee to whom granted except by will or the laws of      
descent and distribution, and an Option may be exercised during the lifetime of 
such Optionee only by the Optionee or his or her guardian or legal              
representative. The terms of such Option shall be final, binding and conclusive 
upon the beneficiaries, executors, administrators, heirs and successors of the  
Optionee.                                                                       

     7.2  Method of Exercise.  The exercise of an Option shall be made only by a
written notice delivered in person or by mail to the Secretary of the Company at
the Company's principal executive office, specifying the number of shares to be 
purchased and accompanied by payment therefor and otherwise in accordance with  
the Agreement pursuant to which the Option was granted. The purchase price for  
any Shares purchased pursuant to the exercise of an Option shall be paid in full
in cash upon such exercise. Notwithstanding the foregoing, the Committee shall  
have discretion to determine at the time of grant of each Employee Option or at 
any later date (up to and including the date of exercise) that the form of      
payment acceptable in respect of the exercise of such Employee Option may       
consist of either of the following (or any combination thereof): (i) cash or    
(ii) the transfer of Shares to the Company upon such terms and conditions as    
determined by the Committee. Any Shares transferred to the Company as payment of
the purchase price under an Option shall be valued at their Fair Market Value on
the day preceding the date of exercise of such Option. In addition, both        
Employee Options and Director Options may be exercised through a registered     
broker-dealer pursuant to such cashless exercise procedures (other than Share   
withholding) which are, from time to time, deemed acceptable by the Committee.  
The Optionee shall deliver the Agreement evidencing the Option to the Secretary 
of the Company who shall endorse thereon a notation of such exercise and return 
such Agreement to the Optionee. No fractional Shares (or cash in lieu thereof)  
shall be issued upon exercise of an Option and the number of Shares that may be 
purchased upon exercise shall be rounded to the nearest number of whole Shares. 

   7.3  Rights of Optionees.  No Optionee shall be deemed for any purpose to
be the owner of any Shares subject to any Option unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Company shall 
have issued and delivered Shares to the Optionee and (iii) the Optionee's name  
shall have been entered as a stockholder of record on the books of the Company. 
Thereupon, the Optionee shall have full voting, dividend, and other ownership   
rights with respect to such Shares, subject to such terms and conditions as may 
be set forth in the applicable Agreement.                                       

     7.4  Effect of Change in Control.  In the event of a Change in Control, all
Options outstanding on the date of such Change in Control shall become          
immediately and fully exercisable. In addition, to the extent set forth in an   
Agreement evidencing the grant of an Employee Option, an Optionee will be       
permitted to surrender for cancellation within sixty (60) days after such Change
in Control any Employee Option or portion of an Employee Option to the extent   
not yet exercised and the Optionee will be entitled to receive a cash payment in
an amount equal to the excess, if any, of (x) (A) in the case of a Nonqualified 
Stock Option, the greater of (1) the Fair Market Value, on the date preceding   
the date of surrender, of the Shares subject to the Employee Option or portion  
thereof surrendered or (2) the Adjusted Fair Market Value of the Shares subject 
to the Employee Option or portion thereof surrendered or (B) in the case of an  
Incentive Stock Option, the Fair Market Value, on the date preceding the date of
surrender, of the Shares subject to the Employee Option or portion thereof      
surrendered, over (y) the aggregate purchase price for such Shares under the    
Employee Option or portion thereof surrendered; provided, however, that in the  
case of an Employee Option granted within six (6) months prior to the Change in 
Control to any Optionee who may be subject to liability under Section 16(b) of  
the Exchange Act, such Optionee shall be entitled to surrender for cancellation 
his or her Employee Option during the sixty (60) day period commencing upon the 
expiration of six (6) months from the date of grant of any such Employee Option.
In the event an Optionee's employment                                           
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with, or service as a Director of, the Company is terminated by the Company     
following a Change in Control each Option held by the Optionee that was         
exercisable as of the date of termination of the Optionee's employment or       
service shall remain exercisable for a period ending not before the earlier of  
the first anniversary of the termination of the Optionee's employment or service
or the expiration of the stated term of the Option.                             

8.  EFFECT OF A TERMINATION OF EMPLOYMENT.                            

     The Agreement evidencing the grant of each Option shall set forth the terms
and conditions applicable to such Option upon a termination or change in the    
status of the employment of the Optionee by the Company, a Subsidiary or a      
Division (including a termination or change by reason of the sale of a          
Subsidiary or a Division), which, except for Director Options, shall be as the  
Committee may, in its discretion, determine at the time the Option is granted or
thereafter.                                                                     

9.  ADJUSTMENT UPON CHANGES IN CAPITALIZATION.                        

9.1  In the event of a Change in Capitalization, the Committee shall  
conclusively determine the appropriate adjustments, if any, to the (i) maximum  
number and class of Shares or other stock or securities with respect to which   
Options may be granted under the Plan, (ii) maximum number and class of Shares  
or other stock or securities with respect to which Options may be granted to any
Eligible Individual during the term of the Plan, (iii) the number and class of  
Shares or other stock or securities which are subject to outstanding Options    
granted under the Plan and the purchase price therefor, if applicable, and (iv) 
the number and class of Shares or other securities in respect of which Director 
Options are to be granted under Section 6.                                      

     9.2  Any such adjustment in the Shares or other stock or securities subject
to outstanding Incentive Stock Options (including any adjustments in the        
purchase price) shall be made in such manner as not to constitute a modification
as defined by Section 424(h)(3) of the Code and only to the extent otherwise    
permitted by Sections 422 and 424 of the Code.                                  

   9.3  If, by reason of a Change in Capitalization, or an Optionee shall be
entitled to exercise an Option with respect to new, additional or different     
shares of stock or securities, such new, additional or different shares shall   
thereupon be subject to all of the conditions, restrictions and performance     
criteria which were applicable to the Shares subject to the Option prior to such
Change in Capitalization.                                                       

10.  EFFECT OF CERTAIN TRANSACTIONS.  Subject to Sections 7.4 or as   
otherwise provided in an Agreement, in the event of (i) the liquidation or      
dissolution of the Company or (ii) a merger or consolidation of the Company (a  
"Transaction"), the Plan and the Options issued hereunder shall continue in     
effect in accordance with their respective terms, except that following a       
Transaction each Optionee shall be entitled to receive in respect of each Share 
subject to any outstanding Options, as the case may be, upon exercise of any    
such Option, the same number and kind of stock, securities, cash, property, or  
other consideration that each holder of a Share was entitled to receive in the  
Transaction in respect of a Share; provided, however, that such stock,          
securities, cash, property, or other consideration shall remain subject to all  
of the conditions, restrictions and performance criteria which were applicable  
to the Options prior to such Transaction.                                       

11.  INTERPRETATION.                                                  

    11.1  The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and the Committee shall interpret and administer the provisions of 
the Plan or any Agreement in a manner consistent therewith. Any provisions      
inconsistent with such Rule shall be inoperative and shall not affect the       
validity of the Plan.                                                           

   11.2  The Director Options described in Section 6 are intended to qualify
as formula awards under Rule 16b-3 promulgated under the Exchange Act (thereby  
preserving the disinterested status of Nonemployee Directors receiving such     
awards) and the Committee shall interpret and administer the provisions of the  
Plan or any Agreement in a manner consistent therewith. Any provisions          
inconsistent with the foregoing intent shall be inoperative and shall not affect
the validity of the Plan.                                                       

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12.  POOLING TRANSACTIONS.                                            

Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event of a Change in Control which is also intended to         
constitute a Pooling Transaction, the Committee shall take such actions, if any,
which are specifically recommended by an independent accounting firm retained by
the Company to the extent reasonably necessary in order to assure that the      
Pooling Transaction will qualify as such, including but not limited to (i)      
deferring the vesting, exercise, payment or settlement with respect to any      
Option, (ii) providing that the payment or settlement in respect of any Option  
be made in the form of cash, Shares or securities of a successor or acquirer of 
the Company, or a combination of the foregoing and (iii) providing for the      
extension of the term of any Option to the extent necessary to accommodate the  
foregoing, but not beyond the maximum term permitted for any Option.            

13.  TERMINATION AND AMENDMENT OF THE PLAN.                           

    The Plan shall terminate on the day preceding the tenth anniversary of the
date of its adoption by the Board and no Option may be granted thereafter.      
Subject to Section 6.5, the Board may sooner terminate the Plan and the Board   
may at any time and from time to time amend, modify or suspend the Plan;        
provided, however, that:                                                        

        (a) No such amendment, modification, suspension or termination shall
   impair or adversely alter any Options theretofore granted under the Plan,
except with the consent of the Optionee, nor shall any amendment,     
    modification, suspension or termination deprive any Optionee of any Shares
   which he or she may have acquired through or as a result of the Plan; and

       (b) To the extent necessary under Section 16(b) of the Exchange Act
  and the rules and regulations promulgated thereunder or other applicable
     law, no amendment shall be effective unless approved by the stockholders of
the Company in accordance with applicable law and regulations.        

14.  NON-EXCLUSIVITY OF THE PLAN.                                     

   The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangement or as     
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the       
granting of stock options otherwise than under the Plan, and such arrangements  
may be either applicable generally or only in specific cases.                   

15.  LIMITATION OF LIABILITY.                                         

 As illustrative of the limitations of liability of the Company, but not
intended to be exhaustive thereof, nothing in the Plan shall be construed to:   

       (i) give any person any right to be granted an Option other than at
the sole discretion of the Committee (except to the extent provided in
Section 6 hereof);                                                    

     (ii) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;                          

    (iii) limit in any way the right of the Company to terminate the
employment of any person at any time; or                              

    (iv) be evidence of any agreement or understanding, expressed or
    implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.                    

16.  REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.                  

    16.1  Except as to matters of federal law, this Plan and the rights of all
persons claiming hereunder shall be construed and determined in accordance with 
the laws of the State of Delaware without giving effect to conflicts of laws    
principles thereof.                                                             

    16.2  The obligation of the Company to sell or deliver Shares with respect
to Options granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state                     
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securities laws, and the obtaining of all such approvals by governmental        
agencies as may be deemed necessary or appropriate by the Committee.            

     16.3  The Board may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any government authority, or to obtain 
for Eligible Individuals granted Incentive Stock Options the tax benefits under 
the applicable provisions of the Code and regulations promulgated thereunder.   

  16.4  Each Option is subject to the requirement that, if at any time the
Committee determines, in its discretion, that the listing, registration or      
qualification of Shares issuable pursuant to the Plan is required by any        
securities exchange or under any state or federal law, or the consent or        
approval of any governmental regulatory body is necessary or desirable as a     
condition of, or in connection with, the grant of an Option or the issuance of  
Shares, no Options shall be granted or payment made or Shares issued, in whole  
or in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions as acceptable to the Committee.

  16.5  Notwithstanding anything contained in the Plan or any Agreement to
the contrary, in the event that the disposition of Shares acquired pursuant to  
the Plan is not covered by a then current registration statement under the      
Securities Act of 1933, as amended (the "Securities Act"), and is not otherwise 
exempt from such registration, such Shares shall be restricted against transfer 
to the extent required by the Securities Act and Rule 144 or other regulations  
thereunder. The Committee may require any individual receiving Shares pursuant  
to an Option granted under the Plan, as a condition precedent to receipt of such
Shares, to represent and warrant to the Company in writing that the Shares      
acquired by such individual are acquired without a view to any distribution     
thereof and will not be sold or transferred other than pursuant to an effective 
registration thereof under said Act or pursuant to an exemption applicable under
the Securities Act or the rules and regulations promulgated thereunder. The     
certificates evidencing any of such Shares shall be appropriately legended to   
reflect their status as restricted securities as aforesaid.                     

17.  MULTIPLE AGREEMENTS.                                             

  The terms of each Option may differ from other Options granted under the
Plan at the same time, or at some other time. The Committee may also grant more 
than one Option to a given Eligible Individual during the term of the Plan,     
either in addition to, or in substitution for, one or more Options previously   
granted to that Eligible Individual.                                            

18.  WITHHOLDING OF TAXES.                                            

    18.1  At such times as an Optionee recognizes taxable income in connection
with the receipt of Shares or cash hereunder (a "Taxable Event"), the Optionee  
shall pay to the Company an amount equal to the federal, state and local income 
taxes and other amounts as may be required by law to be withheld by the Company 
in connection with the Taxable Event (the "Withholding Taxes") prior to the     
issuance, or release from escrow, of such Shares or the payment of such cash.   
The Company shall have the right to deduct from any payment of cash to an       
Optionee an amount equal to the Withholding Taxes in satisfaction of the        
obligation to pay Withholding Taxes. In satisfaction of the obligation to pay   
Withholding Taxes to the Company, the Optionee may make a written election (the 
"Tax Election"), which may be accepted or rejected in the discretion of the     
Committee to have withheld a portion of the Shares then issuable to him or her  
having an aggregate Fair Market Value, on the date preceding the date of such   
issuance, equal to the Withholding Taxes, provided that in respect of an        
Optionee who may be subject to liability under Section 16(b) of the Exchange Act
either: (i) (A) the Tax Election is made at least six (6) months prior to the   
date of the Taxable Event and (B) the Tax Election is irrevocable with respect  
to all Taxable Events of a similar nature occurring prior to the expiration of  
six (6) months following a revocation of the Tax Election; or (ii) (A) the      
Optionee makes the Tax Election at least six (6) months after the date the      
Option was granted, (B) the Option is exercised during the ten (10) day period  
beginning on the third business day and ending on the twelfth business day      
following the release for publication of the Company's quarterly or annual      
statement of sales and earnings (a "Window Period") and (C) the Tax Election is 
made during the Window Period in which the related Option is exercised or prior 
to such Window Period and subsequent to the immediately preceding Window Period.
Notwithstanding the foregoing, the Committee may, by the adoption of rules or   

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otherwise, (i) modify the provisions of this Section 18.1 (other than as regards
Director Options) or impose such other restrictions or limitations on Tax       
Elections as may be necessary to ensure that the Tax Elections will be exempt   
transactions under Section 16(b) of the Exchange Act, and (ii) permit Tax       
Elections to be made at such other times and subject to such other conditions as
the Committee determines will constitute exempt transactions under Section 16(b)
of the Exchange Act.                                                            

 18.2  If an Optionee makes a disposition, within the meaning of Section
424(c) of the Code and regulations promulgated thereunder, of any Share or      
Shares issued to such Optionee pursuant to the exercise of an Incentive Stock   
Option within the two-year period commencing on the day after the date of the   
grant or within the one-year period commencing on the day after the date of     
transfer of such Share or Shares to the Optionee pursuant to such exercise, the 
Optionee shall, within ten (10) days of such disposition, notify the Company    
thereof, by delivery of written notice to the Company at its principal executive
office.                                                                         

19.  EFFECTIVE DATE                                                   

     The effective date of the Plan shall be as determined by the Board, subject
only to the approval by the affirmative vote of the holders of a majority of the
securities of the Company present, or represented, and entitled to vote at a    
meeting of stockholders duly held in accordance with the applicable laws of the 
State of Delaware within twelve (12) months of the adoption of the Plan by the  
Board.                                                                          

THE NOSTALGIA NETWORK, INC. 

STOCK OPTION AGREEMENT

This Stock Option Agreement (this "Agreement") is made as of the      
              day of             , 1998, by and between The Nostalgia Network,
Inc. (the "Company"), a Delaware corporation, and,               , a member of  
the Company's Board of Directors (the "Director").                              

W I T N E S S E T H:

 A.  The Board of Directors of the Company (the "Board") has adopted The
Nostalgia Network, Inc. 1996 Stock Option Plan (the "Plan") for the purpose of  
providing an incentive to selected directors, officers and employees of the     
Company and encouraging them to devote their abilities and industries to the    
success of the Company. Unless otherwise defined herein, capitalized terms shall
have the same meaning as in the Plan.                                           

  B.  The Plan provides for the grant of an option to Director as provided
herein.                                                                         

NOW, THEREFORE, it is hereby agreed as follows:                       

1. GRANT OF OPTION.  Subject to and upon the terms, conditions and    
restrictions set forth in this Agreement and the Plan, a copy of which is       
attached hereto, the Company hereby grants to Director, as of the Grant Date, an
option (the "Option") to purchase up to 3,000 shares (the "Shares") of the      
common stock, par value $.04 per share, of the Company from time to time during 
the Option Term (as defined in Section 3 hereof) at the Exercise Price provided 
for herein.                                                                     

2. EXERCISE PRICE.  The price at which Director shall be entitled to  
purchase Shares upon the exercise of this Option shall be $     per share.      

    3. OPTION TERM.  The term of the Option (the "Option Term") shall commence
on                (the "Grant Date") and, unless earlier terminated in          
accordance with the terms of the Plan or this Agreement, shall terminate at 5:00
p.m., Washington, D.C. time, on                (the "Expiration Date"). Upon the
Expiration Date or earlier termination of this Option as provided herein, the   
Option shall expire, cease to be exercisable and be of no further force or      
effect except as may be expressly provided herein.                              

  4. OPTION NONTRANSFERABLE.  Neither this Agreement nor Director's rights
hereunder shall be transferable nor assignable by Director other than by will or
by the laws of descent and distribution, and the Option may be exercised, during
Director's lifetime, only by Director.                                          

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    5. EXERCISE.  Unless otherwise provided in this Agreement or the Plan, the
Option shall entitle Director to purchase in whole at any time or in part from  
time to time, 1,000 of the Shares beginning on                , an additional   
1,000 of the Shares beginning on                and an additional 1,000 of the  
Shares beginning on                . Each such right of purchase shall be       
cumulative and shall continue, unless sooner exercised or terminated as herein  
provided, during the remainder of the Option Term. Exercisable installments may 
be exercised in whole or in part and, to the extent not exercised, shall be     
exercisable at any time on or before the Expiration Date or earlier termination 
of the Option Term. This Option shall be subject in all respects to the Plan.   

     6. TERMINATION.  The Option shall terminate prior to the Expiration Date as
follows:                                                                        

(a) If the Director ceases to be a member of the Board (a   
     "Termination") and the Termination is for any reason other than Disability,
  death or Cause, the Director may, for a period of three (3) months after
     the Termination, exercise the Option provided, and only to the extent that,
   the Option or portion thereof is vested and exercisable as of the date of
the Termination after which time the Option shall terminate in full.  

          (b) If the Termination is by resignation or removal due to Disability,
the Director may, for a period of one (1) year after the Termination, 
  exercise the Option provided, and only to the extent that, the Option or
portion thereof is vested and exercisable, as of the date of the      
Termination, after which time the Option shall terminate in full.     

   (c) If the Termination is for Cause, the Option shall terminate
immediately in full.                                                  

        (d) If Termination is the result of death while a Director or within
  three (3) months after Termination other than for Disability or Cause or
 within twelve (12) months after Termination by reason of the Director's
    resignation or removal from the Board due to Disability, the Option may be
    exercised at any time within twelve (12) months after the Director's death
   by Director's legal representative provided, and only to the extent that,
the Option or portion thereof is vested and exercisable on the date of
Termination.                                                          

7.  MANNER OF EXERCISE.                                               

   To exercise this Option with respect to all or any part of the Shares for
which this Option is then exercisable, Director must take the following actions 
(in addition to any specified in the Plan):                                     

       (a) Provide the Secretary of the Company with ten (10) days written
    notice of such exercise, by providing to the Company a fully completed and
executed Option Exercise Form a copy of which is attached hereto;     

        (b) Furnish to the Company appropriate documentation that the person
  exercising the Option, if other than Director, has the right to exercise
this Option on behalf of and for Director;                            

          (c) If requested, deliver to the Company a signed statement, in a form
   satisfactory to the Company, confirming that each of the representations,
     warranties, acknowledgments and agreements contained in paragraph 15 hereof
is true as to Director as of the date of exercise;                    

        (d) Furnish to the Company such additional agreements, undertakings,
documents or information as the Company or its counsel may reasonably 
request.                                                              

     8.  LIABILITY OF COMPANY.  The inability of the Company to obtain approval,
after the Company exercises its reasonable efforts to obtain such approval, from
any regulatory body having authority deemed by the Company to be necessary to   
the lawful issuance and sale of any Shares pursuant to this Option shall relieve
the Company of any liability in respect of its failure to deliver and sell the  
Shares as to which such approval shall not have been obtained.                  

9.  SUCCESSORS AND ASSIGNS.  Subject to the terms of the Plan, the    
provisions of this Agreement shall inure to the benefit of, and be binding upon,
the successors, administrators, heirs, devisees, legal representatives and      
assigns of Director, and the successors and assigns of the Company.             

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 10.  CONSTRUCTION.  This Agreement and this Option are made and granted
pursuant to the Plan and are in all respects limited by and subject to the      
express terms and provisions of the Plan.                                       

 11.  GOVERNING LAW.  The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of Delaware.          

     12.  STOCKHOLDER RIGHTS.  Neither the Director, nor any person who succeeds
to the Option by will or by the laws of descent and distribution, shall have any
rights of a stockholder of the Company with respect to any Shares to be         
delivered upon exercise of the Option unless, and only to the extent that, the  
Option shall have been duly and lawfully exercised in accordance with all       
requirements for exercise of the Option pursuant to its terms, this Agreement   
and/or the Plan.                                                                

13.  NOTICES.  Except as otherwise provided herein, all notices to the
Company shall be addressed to the Secretary of the Company at the principal     
office of the Company, and all notices to Director shall be addressed to        
Director at the address of Director on file with the Company or its             
Subsidiaries, or to such other address as either party may designate to the     
other in writing. A notice shall be deemed to be given if and when enclosed in a
properly addressed sealed envelope deposited, first class postage prepaid, with 
the United States Postal Service. In lieu of giving notice by mail, written     
notices under this Agreement may be given by personal delivery to Director or to
the Secretary of the Company (as the case may be) or by facsimile at the last   
known facsimile number designated by either party. Notices given by facsimile   
shall be deemed given upon receipt of facsimile confirmation.                   

  14.  SEVERABILITY.  In the event any provision of this Agreement (or any
part thereof) is, or is for any reason adjudged to be, void, unlawful,          
unenforceable or invalid, then disregarding such provision or provisions (or any
void, unlawful, unenforceable or invalid part thereof), the remaining provisions
hereof shall be valid and be carried into full force and effect.                

15.  REPRESENTATIONS AND WARRANTIES OF DIRECTOR.                      

 Director hereby represents, warrants and acknowledges to the Company as
follows:                                                                        

(a) As of the Grant Date, Director does not own, directly or
    indirectly, more than ten percent (10%) of the total combined voting power
or value of all classes of voting stock of the Company.               

          (b) Director will acquire and hold the Shares purchased on exercise of
    this Option for his or her own account and not with the view to the resale
    or distribution thereof, except for resales or distributions in accordance
     with federal and state securities laws, and that Director will not directly
    or indirectly transfer all, any portion of, or any interest in, any Shares
  acquired pursuant to the exercise of this Option (or solicit an offer to
transfer all or any portion thereof), except pursuant to either (i) an
   effective and current registration statement (a "Registration Statement")
under the Securities Act of 1933, as amended (the "Act"), or (ii) an  
applicable exemption from the registration requirements of the Act the
 availability of which exemption shall, at the option of the Company, be
   confirmed by an opinion of counsel for the Director in form and substance
satisfactory to the Company and its counsel.                          

       (c) Director acknowledges that (i) this Option may not be exercised
unless the Shares are the subject of a Registration Statement or an   
 exemption from registration under the Act is available; (ii) the Shares
must be held indefinitely unless registered or an exemption from      
     registration is available under the Act and any applicable state securities
     laws; (iii) the Company is under no obligation to register the Shares or to
  comply with any exemption from registration, including those portions of
   Rule 144 under the Act ("Rule 144") to be complied with by the transferor
   of the Shares; (iv) if Rule 144 is available for sales of the Shares (and
   there is no assurance that Director will be able to sell under Rule 144),
     such sales in reliance upon Rule 144 may be made only after the Shares have
   been held for the requisite holding period and may also be subject to the
    volume limitations of Rule 144; and (v) Director must continue to bear the
  economic risk of an investment in the Shares for an indefinite period of
time after the exercise of this Option.                               

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       (d) Director acknowledges that all certificates representing shares
  transferred pursuant to this Agreement, unless subject to a Registration
Statement, will bear the following restrictive legend:                

   "The shares represented by this certificate have not been
       registered under the Securities Act of 1933, as amended, and may not be
        transferred or hypothecated without prior registration under said Act or
       any exemption therefrom established to the satisfaction of the issuer."

      (e) Director acknowledges that if counsel advises the Company that
   registration of the Shares under the Act or that listing of the Shares on
   any exchange is required prior to delivery thereof, the Company shall not
   be required to deliver the Shares unless and until the Company is advised
   by its counsel that registration and/or listing has been completed and is
    effective. Director understands that the Company is under no obligation to
effectuate such registration or listing and may issue stop transfer   
 instructions to its transfer agent with respect to the Shares delivered
upon exercise of this Option.                                         

  17.  MISCELLANEOUS.  This Agreement contains the entire agreement of the
parties relating to the subject matter hereof, subject to the provisions of the 
Plan. Any prior agreements, promises, understandings, representations or        
warranties relating to the subject matter hereof are of no force or effect.     
Paragraph headings in this Agreement are for convenience and are not a part of  
the agreement of the parties, and shall not be used in the construction hereof. 
Whenever the context of this Agreement requires, references to the singular     
shall be deemed to include the plural and the plural the singular, and the      
masculine the feminine, and the feminine the masculine.                         

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate on its behalf by its duly authorized officer and Director has also    
executed this Agreement in duplicate, all as of the day and year first above    
written.                                                                        

                               THE NOSTALGIA NETWORK, INC.

       By:
                                          --------------------------------------

       Its
                                          --------------------------------------

            DIRECTOR

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

14

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THE NOSTALGIA NETWORK, INC. 

1996, 1990, 1987 STOCK OPTION PLANS 

                                                        [Enlarge/Download Table]

                                                                            VESTING              OPTIONS      OPTIONS  
                        STATUS OF  DATE OF   EXPIRATION           EXERCISE  PERIOD    OPTIONS   EXPIRED OR   CURRENTLY 
RECIPIENT                EMPLOY.    GRANT       DATE     SHARES    PRICE    (YEARS)  EXERCISED  CANCELLED   OUTSTANDING
---------               ---------  --------  ----------  -------  --------  -------  ---------  ----------  -----------
                                                                                                                       
Employee A.............     A      08/16/95  8/16/2005    15,000   $1.00       3                              15,000   
Employee A.............     A      10/08/92                2,000   $1.57       3         0             0       2,000   
Employee A.............     A      09/13/90                1,000   $0.63       3         0             0       1,000   
Employee B.............     A      08/16/95  8/16/2005    29,000   $1.00       3                              29,000   
Employee B.............     A      10/08/92                4,000   $1.57       3         0             0       4,000   
Employee B.............     A      09/13/90                1,000   $0.63       3         0             0       1,000   
Employee C.............     A      08/16/95  8/16/2005    29,000   $1.00       3                              29,000   
Employee C.............     A      10/08/92               10,000   $1.57       3         0             0      10,000   
Employee C.............     A      09/13/90               30,000   $0.63       3         0             0      30,000   
Employee C.............     A      09/23/88               12,000   $1.25       3         0        12,000           0   
Employee D.............     A      08/16/95  8/16/2005     4,000   $1.00       3                               4,000   
Employee D.............     A      10/08/92                1,000   $1.57       3         0             0       1,000   
Employee D.............     A      09/04/91                  500   $0.48       3         0             0         500   
Employee D.............     A      09/13/90                  500   $0.63       3         0             0         500   
Employee E.............     A      08/16/95  8/16/2005     4,000   $1.00       3                               4,000   
Employee F.............            08/16/95  8/16/2005    29,000   $1.00       3                              29,000   
(deceased)                                                                                                             
                                                         -------                                                       
                                                         172,000                                                       
                                                         =======                                                       

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THE NOSTALGIA NETWORK, INC. 

DIRECTORS' STOCK OPTIONS SCHEDULE 

                                                        [Enlarge/Download Table]

                              PRIOR PLAN            8/1/96             8/1/97             8/3/98             8/2/99      
                           -----------------  ------------------  -----------------  -----------------  -----------------
                           VESTED   UNVESTED  VESTED    UNVESTED  VESTED   UNVESTED  VESTED   UNVESTED  VESTED   UNVESTED
                           ------   --------  -------   --------  ------   --------  ------   --------  ------   --------
                                                                                                                         
Christopher Cates......... 20,000     --        3,000             2,000     1,000    1,000     2,000     --       3,000  
Floyd Christofferson......     --     --        3,000             2,000     1,000    1,000     2,000     --       3,000  
Diane M. Faure............     --     --        3,000             2,000     1,000    1,000     2,000     --       3,000  
Dong Moon Joo.............     --     --        3,000             2,000     1,000    1,000     2,000     --       3,000  
Hiroshi Goto..............     --     --           --        --      --        --    1,000     2,000     --       3,000  
Dr. S. Robert Lichter.....     --     --           --        --      --        --    1,000     2,000     --       3,000  
Frederick W. Newton.......     --     --           --        --      --        --    1,000     2,000     --       3,000  
Phillip Sanchez                                                                                                          
  (Chrman)................     --     --        2,000             2,000     1,000    1,000     2,000     --       3,000  
Robert J. Wussler.........     --     --        3,000             2,000     1,000    1,000     2,000     --       3,000  
SQuire D. Rushnell Stk                                                                                                   
  Option Agreement                                                                                                       
  As of 5-13-96...........                    629,880   209,960                                                          



                            TOTAL                                                                                        
                           VESTED                                                                                        
                           -------                                                                                       
                                                                                                                         
Christopher Cates.........  26,000                                                                                       
Floyd Christofferson......   6,000                                                                                       
Diane M. Faure............   6,000                                                                                       
Dong Moon Joo.............   6,000                                                                                       
Hiroshi Goto..............   1,000                                                                                       
Dr. S. Robert Lichter.....   1,000                                                                                       
Frederick W. Newton.......   1,000                                                                                       
Phillip Sanchez                                                                                                          
  (Chrman)................   5,000                                                                                       
Robert J. Wussler.........   6,000                                                                                       
SQuire D. Rushnell Stk                                                                                                   
  Option Agreement                                                                                                       
  As of 5-13-96........... 629,880                                                                                       

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CHATSWORTH SECURITIES LLC 

October 18, 1999                                                                

The 144 Committee                                                               
The Nostalgia Network, Inc.                                                     
650 Massachusetts Avenue, NW                                                    
Washington, D.C. 20001                                                          

Gentlemen:                                                                      

   We understand that Crown Communications Corporation ("Crown"), a Delaware
corporation, desires to enter into a merger transaction with The Nostalgia      
Network, Inc. ("Nostalgia"), a Delaware corporation, pursuant to which Nostalgia
and a subsidiary of Crown will merge (the "Merger"). As part of the Merger, all 
of the stockholders of Nostalgia will receive cash for their shares of Nostalgia
Common Stock at a price of $0.07 per share (including the holders of shares of  
Nostalgia's Preferred Stock, who will receive consideration for their shares on 
an as converted Basis). Upon consummation of the Merger, Crown and its          
affiliates will be the sole stockholders of Nostalgia, and Nostalgia shall cease
to be an SEC reporting company.                                                 

     You have asked for our opinion as to whether the offer price for the Merger
is fair from a financial point of view to the minority holders of shares of     
Nostalgia.                                                                      

For purposes of the opinion set forth herein, we have:                

 (i)  reviewed certain publicly available financial statements and other
information of Nostalgia;                                   

(ii) reviewed certain internal financial and operating data concerning
Nostalgia prepared by the management of Nostalgia;          

     (iii) discussed the past and current operations and financial condition and
           the prospects of Nostalgia, including information relating to certain
         strategic, financial and operational issues, with senior executives
of Nostalgia;                                             

  (iv) reviewed the reported prices and trading activity for the Nostalgia
Common Stock;                                               

     (v)  compared the financial performance of Nostalgia and prices and trading
 activity of Nostalgia Common Stock with that of certain other
comparable publicly-traded companies and their securities;  

    (vi) performed such other analyses and considered such other factors as we
have deemed appropriate.                                    

We have assumed and relied upon, without independent verification, the
accuracy and completeness of the information received by us for the purposes of 
this opinion. With respect to the internal financial statements and other       
financial and operating data, including forecasts, and discussions relating to  
the strategic, financial and operational benefits anticipated from the Merger,  
we have assumed that they have been reasonably prepared on bases reflecting the 
best currently available estimates and judgments of the prospects of Crown and  
Nostalgia. We have also relied upon, without independent verification, the      
assessment by the management of Crown and Nostalgia of the strategic and other  
benefits expected to result from the Merger. We have not made any independent   
valuation or appraisal of the assets or liabilities of Crown or Nostalgia nor   
have we been furnished with any such appraisals. Our opinion is necessarily     
based on financial, economic, market and other conditions as in effect on, and  
the information made available to us as of, the date hereof. This opinion is for
the use and benefit of The 144 Committee and the Board of Directors of The      
Nostalgia Network, Inc. Our opinion does not address the merits of the          
underlying decision by Crown to engage in the Merger and does not constitute a  
recommendation to any stockholder of Nostalgia.                                 

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   On the basis of and subject to the foregoing, we are of the opinion that,
as of the date hereof, the cash offer price to all shareholders of Nostalgia for
their shares of Nostalgia Common Stock at a price of $0.07 per share (including 
the holders of shares of Nostalgia's Preferred Stock, who will receive          
consideration for their shares on an as converted basis) is fair from a         
financial point of view to the holders of Nostalgia Common Stock.               

                     Very truly yours,

                             CHATSWORTH SECURITIES LLC

                                 /s/ CHATSWORTH SECURITIES LLC

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SECTION 262. APPRAISAL RIGHTS.                                                  

(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this  
section with respect to such shares, who continuously holds such shares through 
the effective date of the merger or consolidation, who has otherwise complied   
with subsection (d) of this section and who has neither voted in favor of the   
merger or consolidation nor consented thereto in writing pursuant to Section 228
of this title shall be entitled to an appraisal by the Court of Chancery of the 
fair value of the stockholder's shares of stock under the circumstances         
described in subsections (b) and (c) of this section. As used in this section,  
the word "stockholder" means a holder of record of stock in a stock corporation 
and also a member of record of a nonstock corporation; the words "stock" and    
"share" mean and include what is ordinarily meant by those words and also       
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a       
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository. 

(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be 
effected pursuant to Section 251(other than a merger effected pursuant to       
Section 251(g) of this title), Section 252, Section 254, Section 257, Section   
258, Section 263 or Section 264 of this title:                                  

      (1) Provided, however, that no appraisal rights under this section
  shall be available for the shares of any class or series of stock, which
    stock, or depository receipts in respect thereof, at the record date fixed
    to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or    
    consolidation, were either (i) listed on a national securities exchange or
     designated as a national market system security on an interdealer quotation
     system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no    
appraisal rights shall be available for any shares of stock of the    
  constituent corporation surviving a merger if the merger did not require
    for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of Section 251 of this title.           

          (2) Notwithstanding paragraph (1) of this subsection, appraisal rights
     under this section shall be available for the shares of any class or series
   of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to   
   Sections 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:                                           

           a. Shares of stock of the corporation surviving or resulting from
        such merger or consolidation, or depository receipts in respect thereof;

             b. Shares of stock of any other corporation, or depository receipts
    in respect thereof, which shares of stock (or depository receipts in
    respect thereof) or depository receipts at the effective date of the
      merger or consolidation will be either listed on a national securities
 exchange or designated as a national market system security on an
      interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;     

       c. Cash in lieu of fractional shares or fractional depository
   receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or                                                   

            d. Any combination of the shares of stock, depository receipts and
   cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this  
paragraph.                                                      

          (3) In the event all of the stock of a subsidiary Delaware corporation
    party to a merger effected under Section 253 of this title is not owned by
  the parent corporation immediately prior to the merger, appraisal rights
   shall be available for the shares of the subsidiary Delaware corporation.

  (c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any    
class or series of its stock as a result of an amendment to its certificate of  
incorporation, any merger or consolidation in which the corporation is a        
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a            
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provision, the procedures of this section, including those set forth in         
subsections (d) and (e) of this section, shall apply as nearly as is            
practicable.                                                                    

(d) Appraisal rights shall be perfected as follows:                   

        (1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a  
  meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
 record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that    
appraisal rights are available for any or all of the shares of the    
   constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such    
     stockholder's shares shall deliver to the corporation, before the taking of
    the vote on the merger or consolidation, a written demand for appraisal of
    such stockholder's shares. Such demand will be sufficient if it reasonably
 informs the corporation of the identity of the stockholder and that the
   stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not 
   constitute such a demand. A stockholder electing to take such action must
     do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or  
 resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
   favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or                      

       (2) If the merger or consolidation was approved pursuant to Section
228 or Section 253 of this title, each constituent corporation, either
     before the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
    stock of such constituent corporation who are entitled to appraisal rights
  of the approval of the merger or consolidation and that appraisal rights
 are available for any or all shares of such class or series of stock of
  such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the   
   effective date of the merger or consolidation, such notice shall be given
    by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to  
    appraisal rights. Such notice may, and, if given on or after the effective
   date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder 
    entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting     
corporation the appraisal of such holder's shares. Such demand will be
    sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the    
appraisal of such holder's shares. If such notice did not notify      
   stockholders of the effective date of the merger or consolidation, either
     (i) each such constituent corporation shall send a second notice before the
     effective date of the merger or consolidation notifying each of the holders
  of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or   
 consolidation or (ii) the surviving or resulting corporation shall send
  such a second notice to all such holders on or within 10 days after such
    effective date; provided, however, that if such second notice is sent more
    than 20 days following the sending of the first notice, such second notice
   need only be sent to each stockholder who is entitled to appraisal rights
   and who has demanded appraisal of such holder's shares in accordance with
     this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either 
   notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of     
determining the stockholders entitled to receive either notice, each  
  constituent corporation may fix, in advance, a record date that shall be
     not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
   consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
  record date shall be the close of business on the day next preceding the
day on which the notice is given.                                     

(e) Within 120 days after the effective date of the merger or         
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to   
appraisal rights, may file a petition in the Court of Chancery demanding a      
determination of the value of the stock of all such stockholders.               
Notwithstanding the foregoing, at any time within 60 days after the             
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effective date of the merger or consolidation, any stockholder shall have the   
right to withdraw such stockholder's demand for appraisal and to accept the     
terms offered upon the merger or consolidation. Within 120 days after the       
effective date of the merger or consolidation, any stockholder who has complied 
with the requirements of subsections (a) and (d) hereof, upon written request,  
shall be entitled to receive from the corporation surviving the merger or       
resulting from the consolidation a statement setting forth the aggregate number 
of shares not voted in favor of the merger or consolidation and with respect to 
which demands for appraisal have been received and the aggregate number of      
holders of such shares. Such written statement shall be mailed to the           
stockholder within 10 days after such stockholder's written request for such a  
statement is received by the surviving or resulting corporation or within 10    
days after expiration of the period for delivery of demands for appraisal under 
subsection (d) hereof, whichever is later.                                      

 (f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which   
shall within 20 days after such service file in the office of the Register in   
Chancery in which the petition was filed a duly verified list containing the    
names and addresses of all stockholders who have demanded payment for their     
shares and with whom agreements as to the value of their shares have not been   
reached by the surviving or resulting corporation. If the petition shall be     
filed by the surviving or resulting corporation, the petition shall be          
accompanied by such a duly verified list. The Register in Chancery, if so       
ordered by the Court, shall give notice of the time and place fixed for the     
hearing of such petition by registered or certified mail to the surviving or    
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at    
least 1 week before the day of the hearing, in a newspaper of general           
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication  
shall be approved by the Court, and the costs thereof shall be borne by the     
surviving or resulting corporation.                                             

(g) At the hearing on such petition, the Court shall determine the    
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an   
appraisal for their shares and who hold stock represented by certificates to    
submit their certificates of stock to the Register in Chancery for notation     
thereon of the pendency of the appraisal proceedings; and if any stockholder    
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.                                                               

    (h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or        
consolidation, together with a fair rate of interest, if any, to be paid upon   
the amount determined to be the fair value. In determining such fair value, the 
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of 
interest which the surviving or resulting corporation would have had to pay to  
borrow money during the pendency of the proceeding. Upon application by the     
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery 
or other pretrial proceedings and may proceed to trial upon the appraisal prior 
to the final determination of the stockholder entitled to an appraisal. Any     
stockholder whose name appears on the list filed by the surviving or resulting  
corporation pursuant to subsection (f) of this section and who has submitted    
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally          
determined that such stockholder is not entitled to appraisal rights under this 
section.                                                                        

 (i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court 
may direct. Payment shall be so made to each such stockholder, in the case of   
holders of uncertificated stock forthwith, and the case of holders of shares    
represented by certificates upon the surrender to the corporation of the        
certificates representing such stock. The Court's decree may be enforced as     
other decrees in the Court of Chancery may be enforced, whether such surviving  
or resulting corporation be a corporation of this State or of any state.        

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  (j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon        
application of a stockholder, the Court may order all or a portion of the       
expenses incurred by any stockholder in connection with the appraisal           
proceeding, including, without limitation, reasonable attorney's fees and the   
fees and expenses of experts, to be charged pro rata against the value of all   
the shares entitled to an appraisal.                                            

  (k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of  
this section shall be entitled to vote such stock for any purpose or to receive 
payment of dividends or other distributions on the stock (except dividends or   
other distributions payable to stockholders of record at a date which is prior  
to the effective date of the merger or consolidation); provided, however, that  
if no petition for an appraisal shall be filed within the time provided in      
subsection (e) of this section, or if such stockholder shall deliver to the     
surviving or resulting corporation a written withdrawal of such stockholder's   
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as       
provided in subsection (e) of this section or thereafter with the written       
approval of the corporation, then the right of such stockholder to an appraisal 
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems  
just.                                                                           

(l) The shares of the surviving or resulting corporation to which the 
shares of such objecting stockholders would have been converted had they        
assented to the merger or consolidation shall have the status of authorized and 
unissued shares of the surviving or resulting corporation.                      

(8 Del. C. 1953, Section 262; 56 Del. Laws, c. 50; 56 Del. Laws, c. 186, Section
24; 57 Del. Laws, c. 148, Sections 27-29; 59 Del. Laws, c. 106, Section 12; 60  
Del. Laws, c. 371, Sections 3-12; 63 Del. Laws, c. 25, Section 14; 63 Del. Laws,
c. 152, Sections 1, 2; 64 Del. Laws, c. 112, Sections 46-54; 66 Del. Laws, c.   
136, Sections 30-32; 66 Del. Laws, c. 352, Section 9; 67 Del. Laws, c. 376,     
Sections 19, 20; 68 Del. Laws, c. 337, Sections 3, 4; 69 Del. Laws, c. 61,      
Section 10; 69 Del. Laws, c. 262, Sections 1-9; 70 Del. Laws, c. 79, Section 16;
70 Del. Laws, c. 186, Section 1; 70 Del. Laws, c. 299, Sections 2, 3; 70 Del.   
Laws, c. 349, Section 22; 71 Del. Laws, c. 120, Section 15; 71 Del. Laws, c.    
339, Sections 49-52.)                                                           

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                                                                   APPENDIX D(1)

[DANIELS & ASSOCIATES LETTERHEAD] 

MEMORANDUM                                                                      

                                                                [Download Table]
                                                 
TO:                NICK CHIAIA                   
                   CROWN COMMUNICATIONS          

FROM:              GREG AINSWORTH                
                   CHRISTOPHER DOWNIE            

DATE:              4/17/00                       

SUBJECT:           GOODLIFE VALUATION DISCUSSION 
                   (UPDATE OF 10/7/99 MEMORANDUM)

     As per your request, we have prepared the following discussion and analyses
to provide you with what we believe are the critical and appropriate factors in 
ascribing an equity value to The Nostalgia Network, Inc., dba GoodLife          
Television (herein referred to as GoodLife). We understand that you are pursuing
the acquisition of the approximately 30% of GoodLife that is held by public     
shareholders and, in doing so, effectively take GoodLife private. We are        
prepared to discuss the following analysis with you in greater detail at your   
convenience. Please note that while we have had access to significant           
information with regards to GoodLife and its operations, we have not performed a
comprehensive diligence effort.                                                 

     While not an exact science, the valuation process for any public or private
company is based on several relatively standard valuation methodologies. These  
methodologies include the following:                                            

I. NET ASSET VALUE ANALYSIS, which includes:                

            -- Value of assets in use, potentially discounted for time, risks,
costs and ability to obtain asset value         

-- Liquidation Value                                  

II. MARKET PRICE ANALYSIS, which includes:                  

-- Current and historical pricing analysis            

-- Corporate or insider transaction history           

  -- Any third party transactions with respect to GoodLife

III. GOING CONCERN VALUE ANALYSIS, which includes:          

    -- Multiple of Operating Statistics, such as EBITDA, EBIT,
earnings, free cash flow                        

    -- Review of selected publicly traded comparable companies

IV. ACQUISITION VALUE ANALYSIS, which includes:             

     -- Comparable historical acquisition analysis of comparable
          companies, taking into account minority or non-controlling
interests                                       

V. DISCOUNTED CASH FLOW ANALYSIS, which includes:           

    -- A ten year cash flow projection and terminal valuation,
discounted to the present                       

     All of these different valuation methodologies should be considered in your
determination of an equity value for GoodLife and its shareholders. The         
following pages will review each analysis and provide a conclusion based on the 
analysis provided. We have concluded this Memorandum with a summary conclusion  

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of our thoughts with regards to an appropriate equity valuation for GoodLife,   
subject to the information available to us at this time.                        

     NET ASSET VALUE ANALYSIS -- The following table provides a summary analysis
that primarily focuses on GoodLife's balance sheet as of December 31, 1999. We  
have assumed that there is no material difference from December 31, 1999 to the 
date of this memorandum.                                                        

GOODLIFE NET ASSET VALUE ANALYSIS 

                                                                [Download Table]
                                                                           
ASSETS                                                                     
Current assets                                                             
  Cash & cash equivalents...................................  $    674,177 
     Net accounts receivables...............................  $    826,588 
     Prepaid Expenses.......................................  $    114,096 
     Current portion programming............................  $  7,105,280 
          Total current assets..............................  $  8,720,141 
                                                              ------------ 
Other assets                                                               
  Film & film rights, net...................................  $  2,981,416 
  Net PP&E..................................................  $    972,107 
  Deposits..................................................  $     49,430 
                                                              ------------ 
          TOTAL ASSETS......................................  $ 12,723,094 
                                                              ------------ 
LIABILITIES                                                                
Current Liabilities                                                        
  Accounts payable..........................................  $  1,204,666 
  Accrued liabilities & Other...............................  $    752,357 
  Cablecast rights payable..................................  $  4,810,822 
                                                              ------------ 
          Total Current Liabilities.........................  $  6,767,845 
Other liabilities                                                          
  Long term debt............................................  $  2,135,164 
  Non-current liabilities...................................  $ 86,416,363 
                                                              ------------ 
          TOTAL LIABILITIES.................................  $ 95,319,372 
                                                              ------------ 
NET ASSET VALUE.............................................  $(82,596,278)
NET ASSET VALUE PER SHARE...................................  $      (4.05)
                                                              ------------ 
SHARES OUTSTANDING..........................................    20,374,371 
                                                              ------------ 
NET ASSET VALUE (EXCL. LTD).................................  $  5,955,249 
                                                              $       0.29 
                                                              ------------ 

    This analysis is essentially a liquidation scenario analysis. In theory it
assumes that if you were to shut down operations tomorrow this value is what    
would you be able to garner from the assets. This assumes no sale of the        
subscriber base. It is important to note that no liquidation discounts (i.e.    
probability of achieving full book value for assets) are factored into this     
analysis, which would likely serve to lower the liquidation value.              

CONCLUSION:  This Net Asset Value analysis implies that GoodLife has a
negative equity value per share.                                                

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MARKET PRICE ANALYSIS -- The following table and discussion provide a 
review of GoodLife's historical public market trading history. We have provided 
comments where appropriate.                                                     

                                                        [Enlarge/Download Table]

        TRADING PRICES PER SHARE                                                                         
                                                                                                         
Current Price............................ $0.060                                                         
52 Week High............................. $0.230                                                         
52 Week Low.............................. $0.030                                                         
Last 30 days avg......................... $0.113                                                         
Last 60 days avg......................... $0.101                                                         
Last 90 days avg......................... $0.097                                                         
Last 180 days avg........................ $0.085                                                         
Last 365 days avg........................ $0.082                                                         
1994 Average............................. $1.090                                                         
1995 Average............................. $0.509                                                         
1996 Average............................. $0.285                                                         
1997 Average............................. $0.079                                                         
1998 Average............................. $0.027                                                         
1999 Average............................. $0.074  Daniels Engagement for Strategic Options Public --12/98
1/1/00 to date Average................... $0.096                                                         

Since 1994, GoodLife has not traded above $1.00 per share. Since 1997,
GoodLife has traded, for the most part, below $0.08 per share. GoodLife's share 
price has been as low as $0.01. In December 1998, Crown Communications retained 
Daniels to pursue strategic options at which point the share price increased to 
a maximum of approximately $0.25 per share. The share price gravitated around   
$0.11 per share before retreating to its current price of $0.06.                

It is often argued that the public markets are the most efficient     
determinant of equity value and as such the more recent range of GoodLife's     
share value in the $0.08 is a pertinent value parameter. However, given the     
increase in perceived value since the announcement of the engagement of Daniels,
the annual year-to-date average of $0.096 is probably a better gage of potential
value.                                                                          

    CONCLUSION:  While imperfect, this Market Price Analysis implies an equity
value per share in the $0.06 to $0.08 range. Using the current shares           
outstanding, this implies GoodLife has a current equity value of $1.2 million to
$1.6 million, and a market capitalization (adding back net debt and payables of 
$90.7 million) of approximately $91.9 million to $92.3 million.                 

     GOING CONCERN VALUE ANALYSIS -- In valuing cable programming network assets
in general, comparable public company analysis is not a very effective measure. 
Many of the cable networks are either private or are consolidated into much     
larger media companies, such as cable or other media companies. In other        
situations, such as with Liberty Media, cable network assets are combined for   
reporting purposes with other internet or other media assets. In general, this  
makes the traditional measures of EBITDA, earnings, etc. very difficult to      
determine. We have thus ignored this analysis for the purposes of valuing       
GoodLife.                                                                       

Historically, cable networks tended to trade in the 12.0 to 18.0 times
EBITDA range. Since, GoodLife has no positive EBITDA, this measure would again  
be irrelevant. Such multiples, however, are applicable in the Discounted Cash   
Flow analysis to be discussed later.                                            

ACQUISITION VALUE ANALYSIS -- This analysis is perhaps one of the more
useful with regards to determining an equity value for GoodLife. This analysis  
applies the historical transaction values paid by purchasers for other networks 
to GoodLife. The appropriate metrics for this analysis are EBITDA multiples and 
Per Subscriber values. Again, since GoodLife has no EBITDA, we have focussed    
primarily on Per Subscriber values. It should be noted that information on most 
of these transactions is limited and may involve                                

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other factors that are not apparent that have affected the transaction values.  
The historical acquisition activity in the cable network industry is as follows:

SELECTED CABLE NETWORK PROGRAMMING TRANSACTIONS (3) 
($ IN MILLIONS) 

                                                        [Enlarge/Download Table]

                                                                                  %                                EST./IMPLIED
 DATE            SELLER                          BUYER                PRICE   PURCHASED          NETWORK              VALUE    
 ----            ------                          -----                -----   ---------          -------           ------------
                                                                                                                               
Jul-99  Fox/Liberty                News Corp                          $4,260    100.0%   Fox Sports Net, FX           $4,260   
Nov-98  CBS                        Discovery Comm                     $  100    100.0%   Eye on the People            $  100   
Nov-98  Ziff-Davis Inc             Vulcan Ventures                    $   54     33.0%   ZDTV                         $  164   
Nov-98  Liberty/Nat. Interfaith    Hallmark/Jim Henson                $  100     45.0%   Odyssey Channel              $  222   
Apr-98  Liberty Media              Cox/MediaOne/Comcast               $   95     33.0%   Speedvision/Outdoor Life     $  288   
Mar-98  TW, NBC, Liberty           Discovery Communications           $  350    100.0%   CourtTV                      $  350   
Mar-98  BTV Holdings               Liberty/Bob Johnson                $  288     36.0%   Black Entertainment TV       $  800   
Oct-97  Viacom                     Seagram/Universal                  $1,700     50.0%   USA & Sci-Fi (1)             $3,400   
Oct-97  Seagram                    HSN Inc                            $3,285    100.0%   USA & Sci-Fi (1)             $3,285   
Sep-97  Paxson Communications      Discovery Comm                     $   20     70.0%   The Travel Channel           $   29   
Sep-97  Classic Sports Network     ESPN                               $  175    100.0%   Classic Sports Network       $  175   
Jun-97  Landmark Communications    Paxson Communications              $   75    100.0%   The Travel Channel           $   75   
Jun-97  Int. Family Entertainment  News Corp. (Fox Kids WW)           $1,430    100.0%   Family Channel               $1,430   
Feb-97  Gaylord Entertainment      Westinghouse (CBS)                 $1,485    100.0%   TNN and Country Music TV     $1,485   
Feb-97  Time Warner Inc            Steve Brill (founder)              $   78     20.0%   CourtTV                      $  390   
Jan-97  Time Warner Inc            Walt Disney Co./Comcast            $  321     58.0%   CourtTV                      $  550   
Aug-96  Fox News Corp              The Golf Channel                   $   50     33.3%   The Golf Channel             $  150   
Aug-96  Liberty Media Inc          Silver King Communications         $1,104    100.0%   Home Shopping Network        $1,104   
May-96  AH Belo                    EW Scripps                         $  125     56.0%   TV Food Network              $  223   
Dec-95  NBC                        Microsoft                          $  220     50.0%   America's Talking            $  440   
                                                                                         Network                               
Oct-95  News Corp                  Liberty Media                      $  200     50.0%   FX                           $  400   
Jul-95  CapCities ABC              Walt Disney Co                     $2,904     80.0%   ESPN                         $3,630   
Jul-94  QVC Network                Comcast/Liberty                    $1,420     62.0%   QVC                          $2,290   
Mar-94  Viacom/Paramount           Hearst/Cap Cities ABC              $  318     33.3%   Lifetime                     $  953   
Sep-93  Liberty Media              Cablevision Systems                $  170     50.0%   American Movie Classic       $  340   
Jun-93  n/a                        Radio City Music Hall Productions  $   50     13.0%   A&E                          $  400   
                                                                                                                   ------------


            FTE       VALUE/                                                                                                   
 DATE   SUBSCRIBERS    SUB                                                                                                     
 ----   -----------   ------                                                                                                   
                                                                                                                               
Jul-99    101,000     $42.18                                                                                                   
Nov-98     11,000     $ 9.09                                                                                                   
Nov-98      9,000     $18.18                                                                                                   
Nov-98     30,000     $ 7.41                                                                                                   
Apr-98     28,000     $10.28                                                                                                   
Mar-98     33,600     $10.42(4)                                                                                                
Mar-98     53,800     $14.87                                                                                                   
Oct-97     71,100     $47.82(1)                                                                                                
Oct-97    118,400     $27.74(1)                                                                                                
Sep-97     20,000     $ 1.43                                                                                                   
Sep-97     10,400     $16.83                                                                                                   
Jun-97     20,000     $ 3.75                                                                                                   
Jun-97     69,200     $20.67                                                                                                   
Feb-97    106,000     $14.01                                                                                                   
Feb-97     29,500     $13.22                                                                                                   
Jan-97     42,700     $12.87                                                                                                   
Aug-96      3,800     $39.47                                                                                                   
Aug-96     69,400     $15.91                                                                                                   
May-96     25,800     $ 8.65                                                                                                   
Dec-95     20,000     $22.00                                                                                                   
Oct-95     25,000     $16.00                                                                                                   
Jul-95     61,400     $59.11                                                                                                   
Jul-94    100,000     $22.90                                                                                                   
Mar-94     59,000     $16.15                                                                                                   
Sep-93     46,000     $ 7.39                                                                                                   
Jun-93     56,300     $ 7.10                                                                                                   
        --------------------                                                                                                   
          High        $59.11                                                                                                   
          Low         $ 1.43                                                                                                   
          Avg         $18.67                                                                                                   
          Median      $15.39                                                                                                   
          Avg.        $12.50                                                                                                   
          Since                                                                                                                
          1990                                                                                                                 

---------------                                                                 
Source: Paul Kagan Associates, Inc.                                             

(1) SciFi valued at $15/sub                                                     

(2) As reported by Paul Kagan, May 15, 1998                                     

(3) Excludes sports-related networks and transactions where terms were          
unavailable.                                                            

(4) Transaction not completed.                                                  

The historical acquisition/transaction history implies an average of  
approximately $12.50 per cable network subscriber. It is important to note that 
this analysis is based on Full Time Equivalent (FTE) subscribers, which includes
24-hour analog subscribers plus other part time, satellite, tier and other      
subscribers converted to 24-hour equivalents. This FTE measure is most likely   
imperfect.                                                                      

    We believe that in a sale transaction, GoodLife would be valued in a range
of $12.00 to $14.00 per subscriber. This is the lower end of the range based on 
the following factors:                                                          

-- GoodLife is comparatively one of the smaller networks at 
approximately 9,200 subscribers;                      

-- GoodLife is not generating positive cash flow;           

        -- Breakeven for most cable networks is at least a critical point of
      20 million subscribers, implying that GoodLife would require
significant cash infusion to reach this point.        

         -- GoodLife's subscriber base is heavily weighted towards subscribers
other than full-time analog carriage.                 

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In order to apply the analysis on the prior page to GoodLife, we must first     
determine the appropriate FTE subscriber figure for GoodLife. We understand that
GoodLife has approximately 4,600,000 full-time basic analog subscribers and     
approximately 9,200,000 total subscribers, including digital, full-time and     
part-time tier, C-Band and other. We have applied a 50% conversion factor to the
remaining 4,600,000 subscribers and thus computed a FTE subscriber count for    
GoodLife of approximately 6,900,000 FTE subscribers. While many networks tend to
inflate their FTE figures for reporting purposes, we believe that in a sale     
process the FTE subscriber count will be scrutinized and rationalized           
appropriately.                                                                  

Based on this FTE, we applied a range of potential subscriber values to GoodLife
to achieve an effective gross enterprise value and a net equity value. This is  
presented below.                                                                

ENTERPRISE VALUATION OF GOODLIFE BASED ON 100% SALE 
-FOR DISCUSSION PURPOSES ONLY - 

                                                        [Enlarge/Download Table]
                                                                                                
GOODLIFE EQUIVALENT                                                                             
  SUBSCRIBER                                                                                    
  BASE(1)............     6,900,000      6,900,000      6,900,000      6,900,000      6,900,000 
IMPLIED VALUE PER                                                                               
  SUBSCRIBER.........        $12.00         $12.50         $13.00         $13.50         $14.00 
GROSS ENTERPRISE                                                                                
  VALUE..............   $82,800,000    $86,250,000    $89,700,000    $93,150,000    $96,600,000 
Less Notes Payable...  ($88,551,527)  ($88,551,527)  ($88,551,527)  ($88,551,527)  ($88,551,527)
Less Other Long Term                                                                            
  Debt...............            $0             $0             $0             $0             $0 
Less Accounts Payable                                                                           
  & Other............   ($1,957,023)   ($1,957,023)   ($1,957,023)   ($1,957,023)   ($1,957,023)
Less Cablecast Rights                                                                           
  Payable............   ($4,810,822)   ($4,810,822)   ($4,810,822)   ($4,810,822)   ($4,810,822)
Plus Accounts                                                                                   
  Receivable &                                                                                  
  Other..............    $3,922,100     $3,922,100     $3,922,100     $3,922,100     $3,922,100 
Plus Cash &                                                                                     
  Equivalents........      $674,177       $674,177       $674,177       $674,177       $674,177 
          Total......  ($90,723,095)  ($90,723,095)  ($90,723,095)  ($90,723,095)  ($90,723,095)
NET EQUITY VALUE.....   ($7,923,095)   ($4,473,095)   ($1,023,095)    $2,426,905     $5,876,905 
SHARES OUTSTANDING...    20,374,271     20,374,271     20,374,271     20,374,271     20,374,271 
VALUE PER SHARE......        ($0.39)        ($0.22)        ($0.05)         $0.12          $0.29 
CROWN/CONCEPT                                                                                   
  SHARES(3)..........    14,432,417     14,432,417     14,432,417     14,432,417     14,432,417 
CROWN/CONCEPT SHARE                                                                             
  VALUE..............   ($5,612,442)   ($3,168,583)     ($724,725)    $1,719,134     $4,162,993 
MINORITY SHARE                                                                                  
  VALUE..............   ($2,310,653)   ($1,304,512)     ($298,370)      $707,771     $1,713,912 

---------------                                                                 
(1) Assumes Subscribers are considered full-time equivalents.                   

(2) Includes Accrued Interest.                                                  

(3) Ownership as per Proxy statement.                                           

As depicted in the chart above, the value for GoodLife ranges from a negative   
value per share to $0.29 per share. We believe the mid-point at $13.00 is the   
most appropriate focus point, implying a $(0.05) per share value. For           
comparative purposes, the $0.06 per share value determined in the Market Price  
Analysis, implies a 13.32x per subscriber value, while the $0.08 per share price
implies a 13.38x per subscriber value.                                          

In case it is argued that the FTE subscriber count should be the 9,200,000      
number (which we would strongly disagree with), the analysis would provide the  
results on the following page.                                                  

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ENTERPRISE VALUATION OF GOODLIFE BASED ON 100% SALE 
-FOR DISCUSSION PURPOSES ONLY - 

                                                        [Enlarge/Download Table]
                                                                                                   
GOODLIFE EQUIVALENT                                                                                
  SUBSCRIBER BASE(1).....    9,200,000      9,200,000      9,200,000      9,200,000      9,200,000 
IMPLIED VALUE PER                                                                                  
  SUBSCRIBER.............       $12.00         $12.50         $13.00         $13.50         $14.00 
GROSS ENTERPRISE VALUE... $110,400,000   $115,000,000   $119,600,000   $124,200,000   $128,800,000 
Less Notes Payable....... ($88,551,527)  ($88,551,527)  ($88,551,527)  ($88,551,527)  ($88,551,527)
Less Other Long Term                                                                               
  Debt...................           $0             $0             $0             $0             $0 
Less Accounts Payable &                                                                            
  Other..................  ($1,957,023)   ($1,957,023)   ($1,957,023)   ($1,957,023)   ($1,957,023)
Less Cablecast Rights                                                                              
  Payable................  ($4,810,822)   ($4,810,822)   ($4,810,822)   ($4,810,822)   ($4,810,822)
Plus Accounts Receivable                                                                           
  & Other................   $3,922,100     $3,922,100     $3,922,100     $3,922,100     $3,922,100 
Plus Cash &                                                                                        
  Equivalents............     $674,177       $674,177       $674,177       $674,177       $674,177 
          Total.......... ($90,723,095)  ($90,723,095)  ($90,723,095)  ($90,723,095)  ($90,723,095)
NET EQUITY VALUE.........  $19,676,905    $24,276,905    $28,876,905    $33,476,905    $38,076,905 
SHARES OUTSTANDING.......   20,374,271     20,374,271     20,374,271     20,374,271     20,374,271 
VALUE PER SHARE..........        $0.97          $1.19          $1.42          $1.64          $1.87 
CROWN/CONCEPT SHARES(3)..   14,432,417     14,432,417     14,432,417     14,432,417     14,432,417 
CROWN/CONCEPT SHARE                                                                                
  VALUE..................  $13,938,427    $17,196,906    $20,455,384    $23,713,862    $26,972,340 
MINORITY SHARE VALUE.....   $5,738,478     $7,079,999     $8,421,521     $9,763,043    $11,104,565 

---------------                                                                 
(1) Assumes Subscribers are considered full-time equivalents.                   

(2) Includes Accrued Interest.                                                  

(3) Ownership as per Proxy statement.                                           

Again, we believe that any valuation of GoodLife's subscribers that does not    
recognize the "FTE" quality of these customers is inappropriate and potentially 
leads to unsupportable valuations.                                              

CONCLUSION:  We believe that this analysis supports an equity valuation range   
per share of $0.02 to $0.08 per share                                           

DISCOUNTED CASH FLOW ANALYSIS -- This valuation methodology is perhaps the most 
speculative of all of the aforementioned valuation methods, however, it has also
received wide adoption on Wall Street as the most effective method to value     
companies. This analysis forecasts the revenue and cash flows of the company for
a ten year period, applies a terminal value to the Company in year ten and then 
discounts this value and the annual cash flows back to the present at an applied
discount rate. We have created two scenarios, which are outlined on the next two
pages. The critical assumptions are detailed as appropriate.                    

Again, this analysis is highly speculative.                                     

-- SCENARIO 1 assumes that GoodLife aggressively grows its subscriber base  
   through the acquisition of subscribers (20 million at $5 per subscriber).
This generates a capital commitment of $100 million in addition to the
   annual negative cash flow until breakeven. Obviously, the source of these
     funds is uncertain. It is important to note that the equity value generated
  in Scenario 1 is dependent upon these significant capital contributions.

 -- SCENARIO 2 assumes that GoodLife does not grow its subscriber base through
   the acquisition of subscribers and relies purely on internal growth. This
     does not entail the capital commitments as described in Scenario 1 but does
    involve significant annual negative cash flows. In this analysis, GoodLife
     does not reach breakeven in the ten year time period. Obviously, again, the
source of these funds is uncertain. This scenario creates no value for
GoodLife shareholders.                                                

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SUMMARY DCF MODEL FOR GOODLIFE
ASSUMES ACQUISITION OF SUBSCRIBERS

1) Moderate Internal Growth in Subscribers                                      
2) Cash-for-Carriage Deals at $5/sub, no affiliate fees for five years (ex.     
Comcast/Adelphia/Cox)                                                           
3) Affiliate Revenues Increase 5% per year                                      
4) Advertising Revenue/Subscriber Growth Moderate Until 25/30 million Subs      
Achieved                                                                        
5) Programming Expenditures as per GoodLife; Scales Up Based on Industry Metrics
6) Operating Expenditures as per GoodLife; Scaled Based on Industry Metrics     
7) Breakeven Achieved in Year 4                                                 

                                                        [Enlarge/Download Table]

                                                                                       PROJECTIONS                          
                                                   ACTUAL    ---------------------------------------------------------------
                                                    1999       2000       2001       2002       2003       2004       2005  
                                                  --------   --------   --------   --------   --------   --------   --------
                                                                                                                            
BEGINNING SUBSCRIBERS............................    8,095      9,200     14,660     20,393     26,413    32,733     34,370 
  Internal Growth (5% of beginning base).........    1,105        460        733      1,020      1,321     1,637      1,718 
  Acquired Subscribers (5 yr free, $0.05/sub/mo.                                                                            
    thereafter)..................................       --      5,000      5,000      5,000      5,000        --         -- 
                                                  --------   --------   --------   --------   --------   -------    ------- 
ENDING SUBSCRIBERS...............................    9,200     14,660     20,393     26,413     32,733    34,370     36,088 
Price for Purchased Subscribers (see cash for                                                                               
  carriage worksheet)............................ $   0.00   $   5.00   $   5.00   $   5.00   $   5.00   $  0.00    $  0.00 
REVENUES ASSUMPTIONS                                                                                                        
Affiliate Revenue (5% per annum, except acq.                                                                                
  Subs).......................................... $  2,089   $  2,194   $  2,304   $  2,419   $  2,540   $ 5,667    $11,950 
Advertising Per Avg. Subscriber.................. $   0.36   $   0.50   $   0.65   $   0.80   $   1.00   $  1.10    $  1.15 
Advertising Revenue.............................. $  3,330   $  5,965   $ 11,392   $ 18,722   $ 29,573   $36,907    $40,514 
        TOTAL REVENUES........................... $  5,420   $  8,159   $ 13,696   $ 21,141   $ 32,113   $42,574    $52,464 
  Less Programming Costs.........................   13,672     15,000     15,750     16,538     17,364    19,158     23,084 
                                                       252%       184%       115%        78%        54%       45%        44%
  Less Operating Costs...........................    7,023      7,234      7,451      7,674      8,028    10,218     12,067 
                                                       130%        89%        54%        36%        25%       24%        23%
OPERATING CASH FLOW.............................. $(15,275)  $(14,075)  $ (9,505)  $ (3,070)  $  6,720   $13,198    $17,313 
    CASH FLOW MARGIN.............................                                                 20.9%     31.0%      33.0%
  Subscriber Cash for Carriage...................       --     25,000     25,000     25,000     25,000        --         -- 
FREE CASH FLOW................................... $(15,275)  $(39,075)  $(34,505)  $(28,070)  $(18,280)  $13,198    $17,313 
  TERMINAL MULTIPLE OF EBITDA....................                                                                           
  ENTERPRISE VALUE...............................                                                                           
FREE CASH FLOW TO DISCOUNT....................... $(15,275)  $(39,075)  $(34,505)  $(28,070)  $(18,280)  $13,198    $17,313 


                                                                 PROJECTIONS                                                
                                                  -----------------------------------------                                 
                                                    2006       2007       2008       2009                                   
                                                  --------   --------   --------   --------                                 
                                                                                                                            
BEGINNING SUBSCRIBERS............................  36,088     37,893     39,788      41,777                                 
  Internal Growth (5% of beginning base).........   1,804      1,895      1,989       2,089                                 
  Acquired Subscribers (5 yr free, $0.05/sub/mo.                                                                            
    thereafter)..................................      --         --         --          --                                 
                                                  -------    -------    -------    --------                                 
ENDING SUBSCRIBERS...............................  37,893     39,788     41,777      43,866                                 
Price for Purchased Subscribers (see cash for                                                                               
  carriage worksheet)............................ $  0.00    $  0.00    $  0.00    $   0.00                                 
REVENUES ASSUMPTIONS                                                                                                        
Affiliate Revenue (5% per annum, except acq.                                                                                
  Subs).......................................... $21,548    $34,625    $36,356    $ 38,174                                 
Advertising Per Avg. Subscriber.................. $  1.20    $  1.25    $  1.30    $   1.35                                 
Advertising Revenue.............................. $44,389    $48,550    $53,017    $ 57,809                                 
        TOTAL REVENUES........................... $65,936    $83,175    $89,373    $ 95,983                                 
  Less Programming Costs.........................  28,353     34,934     36,643      38,393                                 
                                                       43%        42%        41%         40%                                
  Less Operating Costs...........................  14,506     17,467     17,875      18,237                                 
                                                       22%        21%        20%         19%                                
OPERATING CASH FLOW.............................. $23,078    $30,775    $34,855    $ 39,353                                 
    CASH FLOW MARGIN.............................    35.0%      37.0%      39.0%       41.0%                                
  Subscriber Cash for Carriage...................      --         --         --          --                                 
FREE CASH FLOW................................... $23,078    $30,775    $34,855    $ 39,353                                 
  TERMINAL MULTIPLE OF EBITDA....................                                     15.00                                 
  ENTERPRISE VALUE...............................                                  $590,294                                 
FREE CASH FLOW TO DISCOUNT....................... $23,078    $30,775    $34,855    $629,647                                 
                                                                [Download Table]
                                         DISCOUNT                        
                                           RATE                          
                                        ----------                       
                                                                         
NET PRESENT VALUE......................       15.0%  $109,353            
LESS DEBT..............................              $(90,723)           
                                                     --------            
                                                     $ 18,630            

VALUE PER SHARE........................ 20,374,271   $   0.91   per share


                                                        [Enlarge/Download Table]


                                EXIT MULTIPLE SENSITIVITY ANALYSIS                   
           --------------------------------------------------------------------------
              12.00     13.00      14.00      15.00      16.00      17.00       18.00
           --------------------------------------------------------------------------
                                                                                     
PER SHARE    $(0.52)   $(0.04)     $0.44      $0.91      $1.39      $1.87       $2.25

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SUMMARY DCF MODEL FOR GOODLIFE
ASSUMES NO ACQUISITION OF SUBSCRIBERS 

1) Moderate Internal Growth in Subscribers                                      
2) No Cash-for-Carriage Deals                                                   
3) Affiliate Revenues Increase 5% per year                                      
4) Moderate Growth in Advertising Revenue/Subscriber                            
5) Programming Expenditures as per GoodLife; Scale at 5% per year               
6) Operating Expenditures as per GoodLife; Scale at 3% per year                 
7) No Breakeven Achieved                                                        

                                                        [Enlarge/Download Table]

                                                                                       PROJECTIONS                                 
                                              ACTUAL    -------------------------------------------------------------------------- 
                                               1999       2000       2001       2002       2003       2004       2005       2006   
                                             --------   --------   --------   --------   --------   --------   --------   -------- 
                                                                                                                                   
BEGINNING SUBSCRIBERS.......................    8,095      9,200      9,660     10,143     10,650     11,183     11,742     12,329 
  Internal Growth (5% of beginning base)....    1,105        460        483        507        533        559        587        616 
  Acquired Subscribers......................       --         --         --         --         --         --         --         -- 
                                             --------   --------   --------   --------   --------   --------   --------   -------- 
ENDING SUBSCRIBERS..........................    9,200      9,660     10,143     10,650     11,183     11,742     12,329     12,945 
Price for Purchased Subscribers............. $   0.00   $   5.00   $   5.00   $   5.00   $   5.00   $   0.00   $   0.00   $   0.00 
REVENUES ASSUMPTIONS                                                                                                               
Affiliate Revenue (99 Budget+5% per                                                                                                
  annum).................................... $  2,143   $  2,250   $  2,363   $  2,481   $  2,605   $  2,735   $  2,872   $  3,015 
Advertising Per Avg. Subscriber............. $   0.36   $   0.45   $   0.65   $   0.65   $   0.65   $   0.65   $   0.65   $   0.65 
Advertising Revenue......................... $  3,277   $  4,244   $  6,436   $  6,758   $  7,096   $  7,450   $  7,823   $  8,214 
        TOTAL REVENUES...................... $  5,420   $  6,494   $  8,799   $  9,239   $  9,700   $ 10,186   $ 10,695   $ 11,230 
  Less Programming Costs....................   13,167     15,000     15,750     16,538     17,364     18,233     19,144     20,101 
                                                  243%       231%       179%       179%       179%       179%       179%       179%
  Less Operating Costs......................    6,700      6,901      7,108      7,322      7,541      7,768      8,001      8,241 
                                                  124%       106%        81%        79%        78%        77%        76%        75%
OPERATING CASH FLOW......................... $(14,448)  $(15,408)  $(14,060)  $(14,621)  $(15,205)  $(15,815)  $(16,450)  $(17,112)
    CASH FLOW MARGIN........................                                               -156.7%    -155.3%    -153.8%    -152.4%
  Subscriber Cash for Carriage..............       --         --         --         --         --         --         --         -- 
FREE CASH FLOW.............................. $(14,448)  $(15,408)  $(14,060)  $(14,621)  $(15,205)  $(15,815)  $(16,450)  $(17,112)
                                                                                                                          Per Sub. 
                                                                                                                             (Neg. 
  TERMINAL MULTIPLE OF EBITDA...............                                                                               EBITDA) 
  ENTERPRISE VALUE..........................                                                                                       
FREE CASH FLOW TO DISCOUNT.................. $(14,448)  $(15,408)  $(14,060)  $(14,621)  $(15,205)  $(15,815)  $(16,450)  $(17,112)


                                                      PROJECTIONS                                                                  
                                             ------------------------------                                                        
                                               2007       2008       2009                                                          
                                             --------   --------   --------                                                        
                                                                                                                                   
BEGINNING SUBSCRIBERS.......................   12,945     13,593     14,272                                                        
  Internal Growth (5% of beginning base)....      647        680        714                                                        
  Acquired Subscribers......................       --         --         --                                                        
                                             --------   --------   --------                                                        
ENDING SUBSCRIBERS..........................   13,593     14,272     14,986                                                        
Price for Purchased Subscribers............. $   0.00   $   0.00   $   0.00                                                        
REVENUES ASSUMPTIONS                                                                                                               
Affiliate Revenue (99 Budget+5% per                                                                                                
  annum).................................... $  3,166   $  3,324   $  3,491                                                        
Advertising Per Avg. Subscriber............. $   0.65   $   0.65   $   0.65                                                        
Advertising Revenue......................... $  8,625   $  9,056   $  9,509                                                        
        TOTAL REVENUES...................... $ 11,791   $ 12,381   $ 13,000                                                        
  Less Programming Costs....................   21,107     22,162     23,270                                                        
                                                  179%       179%       179%                                                       
  Less Operating Costs......................    8,488      8,742      9,005                                                        
                                                   74%        73%        72%                                                       
OPERATING CASH FLOW......................... $(17,803)  $(18,524)  $(19,275)                                                       
    CASH FLOW MARGIN........................   -151.0%    -149.6%    -148.3%                                                       
  Subscriber Cash for Carriage..............       --         --         --                                                        
FREE CASH FLOW.............................. $(17,803)  $(18,524)  $(19,275)                                                       
  TERMINAL MULTIPLE OF EBITDA...............                       $  12.00                                                        
  ENTERPRISE VALUE..........................            $179,830                                                                   
FREE CASH FLOW TO DISCOUNT.................. $(17,803)  $(18,524)  $160,555                                                        
                                                        [Enlarge/Download Table]
                                            DISCOUNT                                                                
                                              RATE                                                                  
                                           ----------                                                               
                                                                                                                    
NET PRESENT VALUE........................        15.0%               $ (37,327)                                     
LESS DEBT................................                            $ (90,723)                                     
                                                                     ---------                                      
                                                                     $(128,050)                                     
                                                                                                 PER SUB. VALUE EXIT
                                                                                                            MULTIPLE
                                                                                                         SENSITIVITY
                                                                                                            ANALYSIS
                                                                                                 -------------------
VALUE PER SHARE..........................  20,374,271                $   (6.28)  per share          10.00     11.00 
                                                                                                 -------------------
                                                                                                   $(6.65)   $(6.47)

                                                                                                                    
NET PRESENT VALUE........................                                                                           
LESS DEBT................................                                                                           
                                              PER SUB. VALUE EXIT MULTIPLE SENSITIVITY ANALYSIS                     
                                           ----------------------------------------------------                     
VALUE PER SHARE..........................    12.00      13.00      14.00      15.00      16.00                      

----------------------------------------------                                                                      
                                            $(6.28)    $(6.10)    $(5.92)    $(5.74)    $(5.56)                     

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NET PRESENT VALUE 15.0% ($35,142) 
LESS DEBT ($90,723) 
($125,866)
VALUE PER SHARE 20,374,271 ($6.18) PER SHARE           PER SUB. VALUE EXIT
SENSITIVITY ANALYSIS
($6) 10.00 11.00 12.00 13.00 14.00 15.00 16.00
($6.54) ($6.36) ($6.18) ($6.00) ($5.81) ($5.63) ($5.45) 

CABLE NETWORK CASH-FOR-CARRIAGE BENCHMARKS

                                                                [Download Table]

YEAR             NETWORK                       PRICE/SUB        
----             -------                       ---------        
                                                                
1990               CNBC                          $3.00          
1994                Q2                           $5.00          
1994                S                            $9.00          
1996             Fox News                       $11.00          
1997          Animal Planet                      $7.00          
1997          Eye on People                      $6.00          
1998          Great American                     $5.00          
1998              Style                          $6.00          
1998          Travel Channel                     $6.00          
1998              Paxson                        $10.00          
1998               ZDTV                 10 Year No License Fee  
1998   Access Entertainment Network   $1.50 Reverse Fee/Sub/Year

---------------                                                                 
Source: Paul Kagan Associates, Inc.                                             

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SUMMARY CONCLUSION

In reviewing all of the valuation methodologies and the relative      
assumptions, we believe the most appropriate analyses are the Market Price and  
Acquisition Value Analyses. A summary of all the analyses and our conclusion for
each is provided below:                                                         

                                                                [Download Table]

      ANALYSIS                           EQUITY VALUE PER SHARE
      --------                           ----------------------
                                                               
Net Asset Value       Negative                                 
Market Price          $0.06 to $0.08                           
Going-Concern         Not Meaningful                           
Acquisition Value     $0.02 to $0.08                           
Discounted Cash Flow  Speculative; Value created in            
                      proportion to capital commitments        

  Based on our review of the available information for GoodLife, the cable
network industry and a review of appropriate financial metrics, we believe that 
GoodLife should be valued at between $0.06 to $0.08 per share. The following    
table provides a review of the effective value that Crown would need to pay for 
the public shareholder interest at various values per share.                    

MINORITY SHAREHOLDER PURCHASE PRICE ANALYSIS

                                                        [Enlarge/Download Table]
                                                                                                                            
Total Shares Outstanding                                                                                                    
  (000s)                    20,374    20,374    20,374    20,374    20,374    20,374    20,374    20,374    20,374    20,374
  Crown/Concept Shares                                                                                                      
    (000s)                  14,432    14,432    14,432    14,432    14,432    14,432    14,432    14,432    14,432    14,432
  Minority Shares (000s)     5,942     5,942     5,942     5,942     5,942     5,942     5,942     5,942     5,942     5,942
Value per Share              $0.02     $0.03     $0.04     $0.05     $0.06     $0.07     $0.08     $0.09     $0.10     $0.11
Crown/Concept Purchase                                                                                                      
  Price                   $118,837  $178,256  $237,674  $297,093  $356,511  $415,930  $475,348  $534,767  $594,185  $653,604

                                                                                                                            
Total Shares Outstanding                                                                                                    
  (000s)                    20,374    20,374    20,374    20,374                                                            
  Crown/Concept Shares                                                                                                      
    (000s)                  14,432    14,432    14,432    14,432                                                            
  Minority Shares (000s)     5,942     5,942     5,942     5,942                                                            
Value per Share              $0.12     $0.13     $0.14     $0.15                                                            
Crown/Concept Purchase                                                                                                      
  Price                   $713,022  $772,441  $831,860  $891,278                                                            

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                                                                   APPENDIX D(2)

[DANIELS & ASSOCIATES LETTERHEAD] 

MEMORANDUM                                                                      

                                                                [Download Table]
                                                  
TO:                  NICK CHIAIA                  
                     CROWN COMMUNICATIONS         

FROM:                GREG AINSWORTH               
                     CHRISTOPHER DOWNIE           

DATE:                10/7/99                      

SUBJECT:             GOODLIFE VALUATION DISCUSSION

     As per your request, we have prepared the following discussion and analyses
to provide you with what we believe are the critical and appropriate factors in 
ascribing an equity value to The Nostalgia Network, Inc., dba GoodLife          
Television (herein referred to as GoodLife). We understand that you are         
potentially interested in acquiring the approximately 30% of GoodLife that is   
held by public shareholders and, in doing so, effectively take GoodLife private.
We are prepared to discuss the following analysis with you in greater detail at 
your convenience. Please note that while we have had access to significant      
information with regards to GoodLife and its operations, we have not performed a
comprehensive diligence effort.                                                 

     While not an exact science, the valuation process for any public or private
company is based on several relatively standard valuation methodologies. These  
methodologies include the following:                                            

I. NET ASSET VALUE ANALYSIS, which includes:                

            -- Value of assets in use, potentially discounted for time, risks,
costs and ability to obtain asset value         

-- Liquidation Value                                  

II. MARKET PRICE ANALYSIS, which includes:                  

-- Current and historical pricing analysis            

-- Corporate or insider transaction history           

  -- Any third party transactions with respect to GoodLife

III.  GOING CONCERN VALUE ANALYSIS, which includes:         

    -- Multiple of Operating Statistics, such as EBITDA, EBIT,
earnings, free cash flow                        

    -- Review of selected publicly traded comparable companies

IV. ACQUISITION VALUE ANALYSIS, which includes:             

     -- Comparable historical acquisition analysis of comparable
          companies, taking into account minority or non-controlling
interests                                       

V. DISCOUNTED CASH FLOW ANALYSIS, which includes:           

    -- A ten year cash flow projection and terminal valuation,
discounted to the present                       

     All of these different valuation methodologies should be considered in your
determination of an equity value for GoodLife and its shareholders. The         
following pages will review each analysis and provide a conclusion based on the 
analysis provided. We have concluded this Memorandum with a summary conclusion  
of our thoughts with regards to an appropriate equity valuation for GoodLife,   
subject to the information available to us at this time.                        

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     NET ASSET VALUE ANALYSIS -- The following table provides a summary analysis
that primarily focuses on GoodLife's balance sheet as of August 31, 1999. We    
have assumed that there is no material difference from August 31, 1999 to the   
date of this memorandum.                                                        

GOODLIFE NET ASSET VALUE ANALYSIS 

                                                                [Download Table]
                                                                           
ASSETS                                                                     
Current assets                                                             
  Cash & cash equivalents...................................  $    901,729 
  Net accounts receivables..................................  $    823,043 
  Prepaid Expenses..........................................  $    241,480 
  Current portion programming...............................  $  5,189,696 
                                                              ------------ 
          Total current assets..............................  $  7,155,948 
Other assets                                                               
  Film & film rights, net...................................  $    681,883 
  Net PP&E..................................................  $    296,664 
  Trademark & Other Intangibles.............................  $    757,252 
  Deposits..................................................  $     52,740 
                                                              ------------ 
          TOTAL ASSETS......................................  $  8,944,487 
                                                              ------------ 
LIABILITIES                                                                
Current Liabilities                                                        
  Accounts payable..........................................  $  2,021,753 
  Accrued liabilities.......................................  $    466,642 
  Cablecast rights payable..................................  $  7,229,796 
                                                              ------------ 
          Total Current Liabilities.........................  $  9,718,191 
Other liabilities                                                          
  Long term debt............................................  $  6,875,957 
  Non-current liabilities...................................  $ 74,604,855 
                                                              ------------ 
          TOTAL LIABILITIES.................................  $ 91,199,003 
NET ASSET VALUE.............................................  $(82,254,516)
NET ASSET VALUE PER SHARE...................................  $      (4.04)
                                                              ------------ 
SHARES OUTSTANDING..........................................    20,374,371 
                                                              ------------ 
NET ASSET VALUE (EXCL. LTD).................................  $   (773,704)
                                                              $      (0.04)
                                                              ------------ 

  This analysis is essentially a liquidation scenario analysis, in that if
you were to shut down operations tomorrow what would you be able to garner from 
the assets. This assumes no sale of the subscriber base. It is important to note
that no liquidation discounts (i.e. probability of achieving full book value for
assets) are factored into this analysis, which would likely serve to lower the  
liquidation value.                                                              

CONCLUSION:  This Net Asset Value analysis implies that GoodLife has a
negative equity value per share.                                                

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MARKET PRICE ANALYSIS -- The following table and discussion provide a 
review of GoodLife's historical public market trading history. We have provided 
comments where appropriate.                                                     

                                                        [Enlarge/Download Table]

        TRADING PRICES PER SHARE                                                                         
                                                                                                         
Current Price............................ $0.060                                                         
52 Week High............................. $0.250                                                         
52 Week Low.............................. $0.010                                                         
Last 30 days avg......................... $0.058                                                         
Last 60 days avg......................... $0.060                                                         
Last 90 days avg......................... $0.067                                                         
Last 180 days avg........................ $0.076                                                         
Last 365 days avg........................ $0.066                                                         
1994 Average............................. $1.090                                                         
1995 Average............................. $0.509                                                         
1996 Average............................. $0.285                                                         
1997 Average............................. $0.079                                                         
1998 Average............................. $0.027                                                         
1/1/99 to date Average................... $0.082  Daniels Engagement for Strategic Options Public --12/98

Since 1994, GoodLife has not traded above $1.00 per share. Since 1997,
GoodLife has traded, for the most part, below $0.08 per share. GoodLife's share 
price has been as low as $0.01. In December, 1998, Crown Communications retained
Daniels to pursue strategic options at which point the share price increased to 
a maximum of approximately $0.25 per share. The share price gravitated around   
$0.11 per share before retreating to its current price of $0.06.                

It is often argued that the public markets are the most efficient     
determinant of equity value and as such the more recent range of GoodLife's     
share value in the $0.06 is a pertinent value parameter. However, given the     
increase in perceived value since the announcement of the engagement of Daniels,
the annual year-to-date average of $0.082 is probably a better gage of potential
value.                                                                          

    CONCLUSION:  While imperfect, this Market Price Analysis implies an equity
value per share in the $0.06 to $0.08 range. Using the current shares           
outstanding, this implies GoodLife has a current equity value of $1,222,460 to  
$1,629,950, and a market capitalization (assuming net debt of $84 million) of   
approximately $85,200,000 to $85,600,000.                                       

     GOING CONCERN VALUE ANALYSIS -- In valuing cable programming network assets
in general, comparable public company analysis is not a very effective measure. 
Many of the cable networks are either private or are consolidated into much     
larger media companies, such as cable or other media companies. In other        
situations, such as with Liberty Media, cable network assets are combined for   
reporting purposes with other internet or other media assets. In general, this  
makes the traditional measures of EBITDA, earnings, etc. very difficult to      
determine. We have thus ignored this analysis for the purposes of valuing       
GoodLife.                                                                       

Historically, cable networks tended to trade in the 12.0 to 18.0 times
EBITDA range. Since, GoodLife has no positive EBITDA, this measure would again  
be irrelevant. Such multiples, however, are applicable in the Discounted Cash   
Flow analysis to be discussed later.                                            

ACQUISITION VALUE ANALYSIS -- This analysis is perhaps one of the more
useful with regards to determining an equity value for GoodLife. This analysis  
applies the historical transaction values paid by purchasers for other networks 
to GoodLife. The appropriate metrics for this analysis are EBITDA multiples and 
Per Subscriber values. Again, since GoodLife has no EBITDA, we have focussed    
primarily on Per Subscriber values. It should be noted that information on most 
of these transactions is limited and may involve other factors that are not     
apparent that have affected the transaction values. The historical acquisition  
activity in the cable network industry is as follows:                           

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SELECTED CABLE NETWORK PROGRAMMING TRANSACTIONS (3) 
($ IN MILLIONS) 

                                                        [Enlarge/Download Table]

                                                                                %                                EST./IMPLIED
 DATE           SELLER                         BUYER                PRICE   PURCHASED          NETWORK              VALUE    
 ----           ------                         -----                -----   ---------          -------           ------------
                                                                                                                             
Nov-98  CBS                      Discovery Comm                     $  100    100.0%   Eye on the People            $  100   
Nov-98  Ziff-Davis Inc           Vulcan Ventures                    $   54     33.0%   ZDTV                         $  164   
Nov-98  Liberty/Nat. Interfaith  Hallmark/Jim Henson                $  100     45.0%   Odyssey Channel              $  222   
Apr-98  Liberty Media            Cox/MediaOne/Comcast               $   95     33.0%   Speedvision/Outdoor Life     $  288   
Mar-98  TW, NBC, Liberty         Discovery Communications           $  350    100.0%   CourtTV                      $  350   
Mar-98  BTV Holdings             Liberty/Bob Johnson                $  288     36.0%   Black Entertainment TV       $  800   
Oct-97  Viacom                   Seagram/Universal                  $1,700     50.0%   USA & Sci-Fi (1)             $3,400   
Oct-97  Seagram                  HSN Inc                            $3,285    100.0%   USA & Sci-Fi (1)             $3,285   
Sep-97  Paxson Communications    Discovery Comm                     $   20     70.0%   The Travel Channel           $   29   
Sep-97  Classic Sports Network   ESPN                               $  175    100.0%   Classic Sports Network       $  175   
Jun-97  Landmark Communications  Paxson Communications              $   75    100.0%   The Travel Channel           $   75   
Jun-97  Int. Family              News Corp. (Fox Kids WW)           $1,430    100.0%   Family Channel               $1,430   
        Entertainment                                                                                                        
Feb-97  Gaylord Entertainment    Westinghouse (CBS)                 $1,485    100.0%   TNN and Country Music TV     $1,485   
Feb-97  Time Warner Inc          Steve Brill (founder)              $   78     20.0%   CourtTV                      $  390   
Jan-97  Time Warner Inc          Walt Disney Co./Comcast            $  321     58.0%   CourtTV                      $  550   
Aug-96  Fox News Corp            The Golf Channel                   $   50     33.3%   The Golf Channel             $  150   
Aug-96  Liberty Media Inc        Silver King Communications         $1,104    100.0%   Home Shopping Network        $1,104   
May-96  AH Belo                  EW Scripps                         $  125     56.0%   TV Food Network              $  223   
Dec-95  NBC                      Microsoft                          $  220     50.0%   America's Talking            $  440   
                                                                                       Network                               
Oct-95  News Corp                Liberty Media                      $  200     50.0%   FX                           $  400   
Jul-95  CapCities ABC            Walt Disney Co                     $2,904     80.0%   ESPN                         $3,630   
Jul-94  QVC Network              Comcast/Liberty                    $1,420     62.0%   QVC                          $2,290   
Mar-94  Viacom/Paramount         Hearst/Cap Cities ABC              $  318     33.3%   Lifetime                     $  953   
Sep-93  Liberty Media            Cablevision Systems                $  170     50.0%   American Movie Classic       $  340   
Jun-93  n/a                      Radio City Music Hall Productions  $   50     13.0%   A&E                          $  400   
                                                                                                                 ------------


            FTE       VALUE/                                                                                                 
 DATE   SUBSCRIBERS    SUB                                                                                                   
 ----   -----------   ------                                                                                                 
                                                                                                                             
Nov-98     11,000     $ 9.09                                                                                                 
Nov-98      9,000     $18.18                                                                                                 
Nov-98     30,000     $ 7.41                                                                                                 
Apr-98     28,000     $10.28                                                                                                 
Mar-98     33,600     $10.42(4)                                                                                              
Mar-98     53,800     $14.87                                                                                                 
Oct-97     71,100     $47.82(1)                                                                                              
Oct-97    118,400     $27.74(1)                                                                                              
Sep-97     20,000     $ 1.43                                                                                                 
Sep-97     10,400     $16.83                                                                                                 
Jun-97     20,000     $ 3.75                                                                                                 
Jun-97     69,200     $20.67                                                                                                 
Feb-97    106,000     $14.01                                                                                                 
Feb-97     29,500     $13.22                                                                                                 
Jan-97     42,700     $12.87                                                                                                 
Aug-96      3,800     $39.47                                                                                                 
Aug-96     69,400     $15.91                                                                                                 
May-96     25,800     $ 8.65                                                                                                 
Dec-95     20,000     $22.00                                                                                                 
Oct-95     25,000     $16.00                                                                                                 
Jul-95     61,400     $59.11                                                                                                 
Jul-94    100,000     $22.90                                                                                                 
Mar-94     59,000     $16.15                                                                                                 
Sep-93     46,000     $ 7.39                                                                                                 
Jun-93     56,300     $ 7.10                                                                                                 
        --------------------                                                                                                 
          HIGH        $59.11                                                                                                 
          LOW         $ 1.43                                                                                                 
          AVG.        $17.73                                                                                                 
          MEDIAN      $14.87                                                                                                 
          AVG.        $12.35(2)                                                                                              
          SINCE                                                                                                              
          1990                                                                                                               

---------------                                                                 
Source: Paul Kagan Associates, Inc.                                             

(1) SciFi valued at $15/sub                                                     

(2) As reported by Paul Kagan, May 15, 1998                                     

(3) Excludes sports-related networks and transactions where terms were          
unavailable.                                                            

(4) Transaction not completed.                                                  

The historical acquisition/transaction history implies an average of  
approximately $12.00 per cable network subscriber. It is important to note that 
this analysis is based on Full Time Equivalent (FTE) subscribers, which includes
24-hour analog subscribers plus other part time, satellite, tier and other      
subscribers converted to 24-hour equivalents. This FTE measure is most likely   
imperfect.                                                                      

    We believe that in a sale transaction, GoodLife would be valued in a range
of $12.00 to $14.00 per subscriber. This is the lower end of the range based on 
the following factors:                                                          

-- GoodLife is comparatively one of the smaller networks at 
approximately 8,500 subscribers;                      

-- GoodLife is not generating positive cash flow;           

        -- Breakeven for most cable networks is at least a critical point of
      20 million subscribers, implying that GoodLife would require
significant cash infusion to reach this point.        

     In order to apply the analysis on the prior page to GoodLife, we must first
determine the appropriate FTE subscriber figure for GoodLife. We understand that
GoodLife has approximately 4,500,000 24-hour analog subscribers. We have applied
a 50% conversion factor to the remaining 4,000,000 subscribers and thus computed
a FTE subscriber count for GoodLife of approximately 6,500,000 FTE subscribers. 
While many networks tend to inflate their FTE figures for reporting purposes, we
believe that in a sale process the FTE subscriber count will be scrutinized and 
rationalized appropriately.                                                     

 Based on this FTE, we applied a range of potential subscriber values to
GoodLife to achieve an effective gross enterprise value and a net equity value. 
This is presented below.                                                        

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ENTERPRISE VALUATION OF GOODLIFE BASED ON 100% SALE 
FOR DISCUSSION PURPOSES ONLY

                                                        [Enlarge/Download Table]
                                                                                                           
GOODLIFE EQUIVALENT SUBSCRIBER                                                                             
  BASE(1)........................    6,500,000      6,500,000      6,500,000      6,500,000      6,500,000 
IMPLIED VALUE PER SUBSCRIBER..... $      12.00   $      12.50   $      13.00   $      13.50   $      14.00 
GROSS ENTERPRISE VALUE........... $ 78,000,000   $ 81,250,000   $ 84,500,000   $ 87,750,000   $ 91,000,000 
Less Notes Payable (as of                                                                                  
  8/31/99)....................... $(81,480,812)  $(81,480,812)  $(81,480,812)  $(81,480,812)  $(81,480,812)
Less Other Long Term Debt........ $          0   $          0   $          0   $          0   $          0 
Less Accounts Payable & Other.... $ (2,488,395)  $ (2,488,395)  $ (2,488,395)  $ (2,488,395)  $ (2,488,395)
Less Cablecast Rights Payable.... $ (7,229,796)  $ (7,229,796)  $ (7,229,796)  $ (7,229,796)  $ (7,229,796)
Plus Accounts Receivable &                                                                                 
  Other.......................... $  6,254,219   $  6,254,219   $  6,254,219   $  6,254,219   $  6,254,219 
Plus Cash & Equivalents.......... $    901,729   $    901,729   $    901,729   $    901,729   $    901,729 
                                  ------------   ------------   ------------   ------------   ------------ 
    Total........................ $(84,043,055)  $(84,043,055)  $(84,043,055)  $(84,043,055)  $(84,043,055)
NET EQUITY VALUE................. $ (6,043,055)  $ (2,793,055)  $    456,945   $  3,706,945   $  6,956,945 
SHARES OUTSTANDING...............   20,374,271     20,374,271     20,374,271     20,374,271     20,374,271 
VALUE PER SHARE.................. $      (0.30)  $      (0.14)  $       0.02   $       0.18   $       0.34 
CROWN/CONCEPT SHARES(3)..........   14,432,417     14,432,417     14,432,417     14,432,417     14,432,417 
CROWN/CONCEPT SHARE VALUE........ $ (4,280,688)  $ (1,978,502)  $    323,684   $  2,625,869   $  4,928,055 
MINORITY SHARE VALUE............. $ (1,762,367)  $   (814,553)  $    133,261   $  1,081,076   $  2,028,890 

---------------                                                                 
(1) Assumes Subscribers are considered full-time equivalents.                   

(2) Includes Accrued Interest.                                                  

(3) Ownership as per Proxy statement.                                           

As depicted in the chart above, the value for GoodLife ranges from a  
negative value per share to $0.34 per share. We believe the mid-point at $13.00 
is the most appropriate focus point, implying a $0.02 per share value. For      
comparative purposes, the $0.06 per share value determined in the Market Price  
Analysis, implies a 13.10x per subscriber value, while the $0.08 per share price
implies a 13.17x per subscriber value.                                          

    In case it is argued that the FTE subscriber count should be the 8,500,000
number (which we would strongly disagree with), the analysis would provide the  
results on the following page.                                                  

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ENTERPRISE VALUATION OF GOODLIFE BASED ON 100% SALE 
FOR DISCUSSION PURPOSES ONLY

                                                        [Enlarge/Download Table]
                                                                                                           
GOODLIFE EQUIVALENT SUBSCRIBER                                                                             
  BASE(1)........................    8,500,000      8,500,000      8,500,000      8,500,000      8,500,000 
IMPLIED VALUE PER SUBSCRIBER..... $      12.00   $      12.50   $      13.00   $      13.50   $      14.00 
GROSS ENTERPRISE VALUE........... $102,000,000   $106,250,000   $110,500,000   $114,750,000   $119,000,000 
Less Notes Payable (as of                                                                                  
  8/31/99)....................... $(81,480,812)  $(81,480,812)  $(81,480,812)  $(81,480,812)  $(81,480,812)
Less Other Long Term Debt........ $          0   $          0   $          0   $          0   $          0 
Less Accounts Payable & Other.... $ (2,488,395)  $ (2,488,395)  $ (2,488,395)  $ (2,488,395)  $ (2,488,395)
Less Cablecast Rights Payable.... $ (7,229,796)  $ (7,229,796)  $ (7,229,796)  $ (7,229,796)  $ (7,229,796)
Plus Accounts Receivable &                                                                                 
  Other.......................... $  6,254,219   $  6,254,219   $  6,254,219   $  6,254,219   $  6,254,219 
Plus Cash & Equivalents.......... $    901,729   $    901,729   $    901,729   $    901,729   $    901,729 
                                  ------------   ------------   ------------   ------------   ------------ 
    Total........................ $(84,043,055)  $(84,043,055)  $(84,043,055)  $(84,043,055)  $(84,043,055)
NET EQUITY VALUE................. $ 17,956,945   $ 22,206,945   $ 26,456,945   $ 30,706,945   $ 34,956,945 
SHARES OUTSTANDING...............   20,374,271     20,374,271     20,374,271     20,374,271     20,374,271 
VALUE PER SHARE.................. $       0.88   $       1.09   $       1.30   $       1.51   $       1.72 
CROWN/CONCEPT SHARES(3)..........   14,432,417     14,432,417     14,432,417     14,432,417     14,432,417 
CROWN/CONCEPT SHARE VALUE........ $ 12,720,068   $ 15,730,619   $ 18,741,169   $ 21,751,720   $ 24,762,270 
MINORITY SHARE VALUE............. $  5,236,877   $  6,476,326   $  7,715,776   $  8,955,225   $ 10,194,675 

---------------                                                                 
(1) Assumes Subscribers are considered full-time equivalents.                   
(2) Includes Accrued Interest.                                                  
(3) Ownership as per Proxy statement.                                           

Again, we believe that this analysis and its conclusions are false.   

 CONCLUSION:  We believe that this analysis supports an equity valuation
range per share of $0.02 to $0.08 per share.                                    

  DISCOUNTED CASH FLOW ANALYSIS--This valuation methodology is perhaps the
most speculative of all of the aforementioned valuation methods, however, it has
also received wide adoption on Wall Street as the most effective method to value
companies. This analysis forecasts the revenue and cash flows of the company for
a ten year period, applies a terminal value to the company in year ten and then 
discounts this value and the annual cash flows back to the present at an applied
discount rate. We have created two scenarios, which are outlined on the next two
pages. The critical assumptions are detailed as appropriate.                    

Again, this analysis is highly speculative.                           

         -- SCENARIO 1 assumes that GoodLife aggressively grows its subscriber
           base through the acquisition of subscribers (20 million at $5 per
             subscriber). This generates a capital commitment of $100 million in
    addition to the annual negative cash flow until breakeven.
            Obviously, the source of these funds is uncertain. It is important
            to note that the equity value generated in Scenario 1 is dependent
upon these significant capital contributions.         

         -- SCENARIO 2 assumes that GoodLife does not grow its subscriber base
     through the acquisition of subscribers and relies purely on
          internal growth. This does not entail the capital commitments as
     described in Scenario 1 but does involve significant annual
        negative cash flows. In this analysis, GoodLife does not reach
             breakeven in the ten year time period. Obviously, again, the source
         of these funds is uncertain. This scenario creates no value for
GoodLife shareholders.                                

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SUMMARY DCF MODEL FOR GOODLIFE
ASSUMES ACQUISITION OF SUBSCRIBERS
1) Moderate Internal Growth in Subscribers                                      
2) Cash-for-Carriage Deals at $5/sub, no affiliate fees for five years (ex.     
Comcast/Adelphia/Cox)                                                           

3) Affiliate Revenues Increase 5% per year                                      

4) Advertising Revenue/Subscriber Growth Moderate Until 25/30 million Subs      
Achieved                                                                        

5) Programming Expenditures as per GoodLife; Scales Up Anased on Industry       
Metrics                                                                         

6) Operating Expenditures as per GoodLife; Scaled Based on Industry Metrics     

7) Breakeven Achieved in Year 4                                                 

                                                        [Enlarge/Download Table]

                                                                                       PROJECTIONS                          
                                                   BUDGET    ---------------------------------------------------------------
                                                    1999       2000       2001       2002       2003       2004       2005  
                                                  --------   --------   --------   --------   --------   --------   --------
                                                                                                                            
BEGINNING SUBSCRIBERS............................    8,095      8,500     13,925     19,621     25,602    31,882     33,476 
  Internal Growth (5% of beginning base).........      405        425        696        981      1,280     1,594      1,674 
  Acquired Subscribers (5 yr free, $0.05/sub/mo.                                                                            
    thereafter)..................................       --      5,000      5,000      5,000      5,000        --         -- 
                                                  --------   --------   --------   --------   --------   -------    ------- 
ENDING SUBSCRIBERS...............................    8,500     13,925     19,621     25,602     31,882    33,476     35,150 
Price for Purchased Subscribers (see cash for                                                                               
  carriage worksheet)............................ $   0.00   $   5.00   $   5.00   $   5.00   $   5.00   $  0.00    $  0.00 
REVENUES ASSUMPTIONS                                                                                                        
Affiliate Revenue (5% per annum, except acq.                                                                                
  Subs).......................................... $  2,143   $  2,250   $  2,363   $  2,481   $  2,605   $ 5,735    $12,022 
Advertising Per Avg. Subscriber.................. $   0.39   $   0.50   $   0.65   $   0.80   $   1.00   $  1.10    $  1.15 
Advertising Revenue.............................. $  3,277   $  5,606   $ 10,902   $ 18,089   $ 28,742   $35,947    $39,460 
        TOTAL REVENUES........................... $  5,420   $  7,856   $ 13,265   $ 20,570   $ 31,347   $41,682    $51,482 
  Less Programming Costs.........................   13,167     15,000     15,750     16,538     17,364    18,757     22,652 
                                                       243%       191%       119%        80%        55%       45%        44%
  Less Operating Costs...........................    6,700      6,901      7,108      7,322      7,837    10,004     11,841 
                                                       124%        88%        54%        36%        25%       24%        23%
OPERATING CASH FLOW.............................. $(14,448)  $(14,045)  $ (9,593)  $ (3,289)  $  6,146   $12,921    $16,989 
    CASH FLOW MARGIN.............................                                                 19.6%     31.0%      33.0%
  Subscriber Cash for Carriage...................       --     25,000     25,000     25,000     25,000        --         -- 
FREE CASH FLOW................................... $(14,448)  $(39,045)  $(34,593)  $(28,289)  $(18,854)  $12,921    $16,989 
  TERMINAL MULTIPLE OF EBITDA....................                                                                           
  ENTERPRISE VALUE...............................                                                                           
FREE CASH FLOW TO DISCOUNT....................... $(14,448)  $(39,045)  $(34,593)  $(28,289)  $(18,854)  $12,921    $16,989 


                                                                 PROJECTIONS                                                
                                                  -----------------------------------------                                 
                                                    2006       2007       2008       2009                                   
                                                  --------   --------   --------   --------                                 
                                                                                                                            
BEGINNING SUBSCRIBERS............................  35,150     36,908     38,753      40,691                                 
  Internal Growth (5% of beginning base).........   1,758      1,845      1,938       2,035                                 
  Acquired Subscribers (5 yr free, $0.05/sub/mo.                                                                            
    thereafter)..................................      --         --         --          --                                 
                                                  -------    -------    -------    --------                                 
ENDING SUBSCRIBERS...............................  36,908     38,753     40,691      42,725                                 
Price for Purchased Subscribers (see cash for                                                                               
  carriage worksheet)............................ $  0.00    $  0.00    $  0.00    $   0.00                                 
REVENUES ASSUMPTIONS                                                                                                        
Affiliate Revenue (5% per annum, except acq.                                                                                
  Subs).......................................... $21,623    $34,704    $36,439    $ 38,261                                 
Advertising Per Avg. Subscriber.................. $  1.20    $  1.25    $  1.30    $   1.35                                 
Advertising Revenue.............................. $43,235    $47,288    $51,638    $ 56,306                                 
        TOTAL REVENUES........................... $64,857    $81,992    $88,078    $ 94,567                                 
  Less Programming Costs.........................  27,889     34,437     36,112      37,827                                 
                                                       43%        42%        41%         40%                                
  Less Operating Costs...........................  14,269     17,218     17,616      17,968                                 
                                                       22%        21%        20%         19%                                
OPERATING CASH FLOW.............................. $22,700    $30,337    $34,350    $ 38,772                                 
    CASH FLOW MARGIN.............................    35.0%      37.0%      39.0%       41.0%                                
  Subscriber Cash for Carriage...................      --         --         --          --                                 
FREE CASH FLOW................................... $22,700    $30,337    $34,350    $ 38,772                                 
  TERMINAL MULTIPLE OF EBITDA....................                                     15.00x                                
  ENTERPRISE VALUE...............................                                  $581,586                                 
FREE CASH FLOW TO DISCOUNT....................... $22,700    $30,337    $34,350    $620,358                                 

                                                                [Download Table]

                                 DISCOUNT RATE                       
                                 -------------                       
                                                                     
NET PRESENT VALUE..............         15.0%          $105,837      
LESS DEBT......................                        $(84,043)     
                                                       --------      
                                                       $ 21,794      
                                                       $   1.07per   
VALUE PER SHARE................   20,374,271                    share

                                                        [Enlarge/Download Table]

                               EXIT MULTIPLE SENSITIVITY ANALYSIS                    
           --------------------------------------------------------------------------
            12.00      13.00      14.00      15.00      16.00      17.00      18.00  
           --------   --------   --------   --------   --------   --------   --------
                                                                                     
PER SHARE   $(0.34)    $0.13      $0.60      $1.07      $1.54      $2.01      $2.48  

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SUMMARY DCF MODEL FOR GOODLIFE
ASSUMES NO ACQUISITION OF SUBSCRIBERS 
1) Moderate Internal Growth in Subscribers                                      

2) No Cash-for-Carriage Deals                                                   

3) Affiliate Revenues Increase 5% per year                                      

4) Moderate Growth in Advertising Revenue/Subscriber                            

5) Programming Expenditures as per GoodLife; Scale at 5% per year               

6) Operating Expenditures as per GoodLife; Scale at 3% per year                 

7) No Breakeven Achieved                                                        

                                                        [Enlarge/Download Table]

                                                                                      PROJECTIONS                                  
                                             BUDGET    --------------------------------------------------------------------------  
                                              1999       2000       2001       2002       2003       2004       2005       2006    
                                            --------   --------   --------   --------   --------   --------   --------   --------  
                                                                                                                                   
BEGINNING SUBSCRIBERS......................    8,095      8,500      8,925      9,371      9,840     10,331     10,848     11,390  
  Internal Growth (5% of beginning base)...      405        425        446        469        492        517        542        570  
                                            --------   --------   --------   --------   --------   --------   --------   --------  
  Acquired Subscribers.....................       --         --         --         --         --         --         --         --  
                                            --------   --------   --------   --------   --------   --------   --------   --------  
ENDING SUBSCRIBERS.........................    8,500      8,925      9,371      9,840     10,331     10,848     11,390     11,960  
Price for Purchased Subscribers............ $   0.00   $   5.00   $   5.00   $   5.00   $   5.00   $   0.00   $   0.00   $   0.00  
REVENUES ASSUMPTIONS                                                                                                               
Affiliate Revenue (99 Budget+5% per                                                                                                
  annum)................................... $  2,143   $  2,250   $  2,363   $  2,481   $  2,605   $  2,735   $  2,872   $  3,015  
Advertising Per Avg. Subscriber............ $   0.39   $   0.45   $   0.65   $   0.65   $   0.65   $   0.65   $   0.65   $   0.65  
Advertising Revenue........................ $  3,277   $  3,921   $  5,946   $  6,243   $  6,556   $  6,883   $  7,228   $  7,589  
        TOTAL REVENUES..................... $  5,420   $  6,171   $  8,309   $  8,724   $  9,160   $  9,618   $ 10,099   $ 10,604  
  Less Programming Costs...................   13,167     15,000     15,750     16,538     17,364     18,233     19,144     20,101  
                                                 243%       243%       190%       190%       190%       190%       190%       190% 
  Less Operating Costs.....................    6,700      6,901      7,108      7,322      7,541      7,768      8,001      8,241  
                                                 124%       112%        86%        84%        82%        81%        80%        79% 
OPERATING CASH FLOW........................ $(14,448)  $(15,731)  $(14,550)  $(15,135)  $(15,745)  $(16,382)  $(17,045)  $(17,738) 
    CASH FLOW MARGIN.......................                                               (171.9)%   (170.3)%   (168.8)%   (167.3)%
  Subscriber Cash for Carriage.............       --         --         --         --         --         --         --         --  
FREE CASH FLOW............................. $(14,448)  $(15,731)  $(14,550)  $(15,135)  $(15,745)  $(16,382)  $(17,045)  $(17,738) 
                                                                                                                         Per Sub.  
                                                                                                                            (Neg.  
  TERMINAL MULTIPLE OF EBITDA..............                                                                               EBITDA)  
  ENTERPRISE VALUE.........................                                                                                        
FREE CASH FLOW TO DISCOUNT................. $(14,448)  $(15,731)  $(14,550)  $(15,135)  $(15,745)  $(16,382)  $(17,045)  $(17,738) 


                                                      PROJECTIONS                                                                  
                                            -------------------------------                                                        
                                              2007        2008       2009                                                          
                                            ---------   --------   --------                                                        
                                                                                                                                   
BEGINNING SUBSCRIBERS......................    11,960     12,558     13,186                                                        
  Internal Growth (5% of beginning base)...       598        628        659                                                        
                                            ---------   --------   --------                                                        
  Acquired Subscribers.....................        --         --         --                                                        
                                            ---------   --------   --------                                                        
ENDING SUBSCRIBERS.........................    12,558     13,186     13,845                                                        
Price for Purchased Subscribers............ $    0.00   $   0.00   $   0.00                                                        
REVENUES ASSUMPTIONS                                                                                                               
Affiliate Revenue (99 Budget+5% per                                                                                                
  annum)................................... $   3,166   $  3,324   $  3,491                                                        
Advertising Per Avg. Subscriber............ $    0.65   $   0.65   $   0.65                                                        
Advertising Revenue........................ $   7,968   $  8,367   $  8,785                                                        
        TOTAL REVENUES..................... $  11,135   $ 11,691   $ 12,276                                                        
  Less Programming Costs...................    21,107     22,162     23,270                                                        
                                                  190%       190%       190%                                                       
  Less Operating Costs.....................     8,488      8,742      9,005                                                        
                                                   78%        77%        76%                                                       
OPERATING CASH FLOW........................ $ (18,460)  $(19,213)  $(19,999)                                                       
    CASH FLOW MARGIN.......................    (165.8)%   (164.3)%   (162.9)%                                                      
  Subscriber Cash for Carriage.............        --         --         --                                                        
FREE CASH FLOW............................. $ (18,460)  $(19,213)  $(19,999)                                                       
  TERMINAL MULTIPLE OF EBITDA..............                        $  12.00                                                        
  ENTERPRISE VALUE.........................                        $166,142                                                        
FREE CASH FLOW TO DISCOUNT................. $ (18,460)  $(19,213)  $146,144                                                        

                                                                [Download Table]

                                 DISCOUNT RATE                       
                                 -------------                       
                                                                     
NET PRESENT VALUE..............         15.0%          $ (41,188)    
LESS DEBT......................                        $ (84,043)    
                                                       ---------     
                                                       $(125,231)    
                                                       $   (6.15)per 
VALUE PER SHARE................   20,374,271                    share
                                                                [Download Table]


                                                                          


                 PER SUB. VALUE EXIT SENSITIVITY ANALYSIS                 
--------------------------------------------------------------------------
 10.00      11.00      12.00      13.00      14.00      15.00      16.00  
--------   --------   --------   --------   --------   --------   --------
                                                                          
 $(6.48)    $(6.31)    $(6.15)    $(5.98)    $(5.81)    $(5.64)    $(5.47)

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CABLE NETWORK CASH-FOR-CARRIAGE BENCHMARK 

                                                                [Download Table]

      YEAR            NETWORK                     PRICE/SUB         
      ----            -------                     ---------         
                                                                    
1990                    CNBC                        $3.00           
1994                     Q2                         $5.00           
1994                     S                          $9.00           
1996                  Fox News                      $11.00          
1997               Animal Planet                    $7.00           
1997               Eye on People                    $6.00           
1998               Great American                   $5.00           
1998                   Style                        $6.00           
1998               Travel Channel                   $6.00           
1998                   Paxson                       $10.00          
1998                    ZDTV                10 Year No License Fee  
1998        Access Entertainment Network  $1.50 Reverse Fee/Sub/Year

---------------                                                                 
Source: Paul Kagan Associates, Inc.                                             

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SUMMARY CONCLUSION

In reviewing all of the valuation methodologies and the relative      
assumptions, we believe the most appropriate analyses are the Market Price and  
Acquisition Value Analyses. A summary of all the analyses and our conclusion for
each is provided below:                                                         

                                                                [Download Table]

ANALYSIS                                 EQUITY VALUE PER SHARE          
--------                                 ----------------------          
                                                                         
Net Asset Value       Negative                                           
Market Price          $0.06 to $0.08                                     
Going-Concern         Not Meaningful                                     
Acquisition Value     $0.02 to $0.08                                     
Discounted Cash Flow  Speculative; Value created in proportion to capital
                      commitments                                        

  Based on our review of the available information for GoodLife, the cable
network industry and a review of appropriate financial metrics, we believe that 
GoodLife should be valued at between $0.06 to $0.08 per share. The following    
table provides a review of the effective value that Crown would need to pay for 
the public shareholder interest at various values per share.                    

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MINORITY SHAREHOLDER PURCHASE PRICE ANALYSIS

                                                        [Enlarge/Download Table]
                                                                                                                                 
Total Shares Outstanding                                                                                                         
  (000s)                         20,374    20,374    20,374    20,374    20,374    20,374    20,374    20,374    20,374    20,374
  Crown/Concept Shares (000s)    14,432    14,432    14,432    14,432    14,432    14,432    14,432    14,432    14,432    14,432
  Minority Shares (000s)          5,942     5,942     5,942     5,942     5,942     5,942     5,942     5,942     5,942     5,942
Value per Share                   $0.02     $0.03     $0.04     $0.05     $0.06     $0.07     $0.08     $0.09     $0.10     $0.11
Crown/Concept Purchase Price   $118,837  $178,256  $237,674  $297,093  $356,511  $415,930  $475,348  $534,767  $594,185  $653,604

                                                                                                                                 
Total Shares Outstanding                                                                                                         
  (000s)                         20,374    20,374    20,374    20,374                                                            
  Crown/Concept Shares (000s)    14,432    14,432    14,432    14,432                                                            
  Minority Shares (000s)          5,942     5,942     5,942     5,942                                                            
Value per Share                   $0.12     $0.13     $0.14     $0.15                                                            
Crown/Concept Purchase Price   $713,022  $772,441  $831,860  $891,278                                                            

 D(2)-11

PRER14A
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           CONTINUED ON OTHER SIDE

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PRER14A
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THE NOSTALGIA NETWORK, INC. 
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE NOSTALGIA NETWORK, INC. FOR USE ONLY AT THE SPECIAL MEETING OF
STOCKHOLDERS TO BE HELD ON         , 2000 AND ANY ADJOURNMENTS THEREOF. 

The undersigned, being a stockholder of the Nostalgia Network, Inc.             
("Nostalgia"), hereby authorizes Diane Fuller and Daniel P. Collins, and each of
them, as proxies, with the full power of substitution, to represent the         
undersigned at the Special Meeting of Stockholders of Nostalgia to be held at   
650 Massachusetts Avenue, N.W. Washington, D.C. on       , 2000 at 11:00 a.m.,  
local time, and at any adjournments or postponements thereof, and at the        
meeting to act with respect to all votes that the undersigned would be entitled 
to cast, if then personally present, as appears on the reverse side of this     
proxy.                                                                          

In their discretion, the proxies are authorized to vote with respect to matters 
incident to the conduct of the meeting and upon such other matters as may       
properly come before the meeting. This proxy may be revoked at any time before  
it is exercised.                                                                

Shares of the Common Stock of Nostalgia will be voted as specified. If no       
specification is made, shares will be voted FOR the matters set forth on the    
reverse side and IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES as to any     
other matter which may properly come before the Meeting.                        

                                                         SEE REVERSE
                                                      SIDE

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/ x /  PLEASE MARK YOUR                                                         
VOTES AS IN THIS                                                
EXAMPLE                                                         

                                                        [Enlarge/Download Table]
                                                                                                                               
                                                                                         FOR           AGAINST          ABSTAIN

THE NOSTALGIA NETWORK, INC.     1. MERGER OF NNI ACQUISITION CORPORATION WITH           /  /            /  /              /  / 
                                   AND INTO THE NOSTALGIA NETWORK, INC.                                                        

                                                                               The Special Meeting of Stockholders of The      
                                                                               Nostalgia Network, Inc. will be held            
                                                                                                           , at 11:00 a.m.,    
                                                                               at 650 Massachusetts Avenue, N.W., Washington,  
                                                                               D.C.                                            

                                                                               The undersigned hereby acknowledges receipt     
                                                                               of a Notice of Special Meeting of Stockholders  
                                                                               of The Nostalgia Network, Inc. called for       
                                                                                     , 2000, and a Proxy Statement for the     
                                                                               Meeting prior to the signing of this proxy.     

Signature(s)__________________________________ DATED:______________,2000                                                       

NOTE: Please sign exactly as your name(s) appear(s) on this proxy. When signing 
in a representative capacity, please give title.                    

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘PRER14A’ Filing		Date		First		Last			Other Filings
		5/12/06		93
		3/31/02		54		92
		1/1/01		54		92
		12/31/00		10		117
Filed on:		11/17/00							SC 13E3/A
		11/13/00		69
		10/10/00		54		75
		10/5/00		22
		10/4/00		15		117
		10/1/00		54
		9/30/00		66		86			10-Q
		9/14/00		64
		9/12/00		47
		8/31/00		75
		8/17/00		64
		6/30/00		15		113			10-Q
		6/15/00		88
		6/5/00		12		33
		6/1/00		28		32
		5/31/00		54		76			SC 13D/A
		5/24/00		64
		4/20/00		12		24
		3/31/00		11		33			10-Q
		3/30/00		77					10-K405
		3/22/00		54
		3/21/00		80		98
		3/20/00		74		92
		3/3/00		80		98
		2/8/00		64		96
		1/31/00		91		92
		1/27/00		12		33
		1/11/00		2		15
		1/7/00		15		56
		1/4/00		15		93
		1/1/00		24		92
		12/31/99		15		144			10-K405
		12/30/99		54		97
		12/20/99		15
		11/30/99		76		95
		10/27/99		55
		10/26/99		15
		10/21/99		14		111
		10/20/99		36
		10/18/99		12		137
		10/14/99		14
		10/13/99		14
		10/8/99		14					SC 13D/A
		10/7/99		12		22
		10/5/99		14
		9/30/99		10		86			10-Q
		9/24/99		14
		9/23/99		34
		9/8/99		14
		8/31/99		23		154
		8/27/99		33
		7/1/99		55		96
		6/28/99		14
		5/12/99		55
		4/5/99		77					8-K
		4/2/99		77
		4/1/99		77					8-K,  8-K/A
		3/31/99		61					10-K405,  10-Q
		3/27/99		97
		3/23/99		81
		3/16/99		31
		3/2/99		61
		2/1/99		33		97
		1/26/99		55		56
		1/11/99		32
		1/7/99		32
		12/31/98		57		106			10-K405
		5/15/98		146		156			10-Q
		3/31/98		97					10-Q
		1/1/98		10		93
		12/31/97		71		99			10-K405,  NT 10-K
		6/23/97		64
		3/31/97		97					10-K,  10-Q
		1/1/97		84
		6/5/96		120		122			DEF 14A
		5/13/96		93					8-K
		3/29/95		55
		1/1/95		11		16
		12/30/93		47
		7/21/93		47
		6/15/92		118
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