Asset Exchange Agreement

EXHIBIT 10.14


ASSET EXCHANGE AGREEMENT


BETWEEN


BENEDEK BROADCASTING CORPORATION
AND
BENEDEK LICENSE CORPORATION


AND


AK MEDIA GROUP, INC.


TABLE OF CONTENTS


PAGE

1. Definitions........................................... 1


2. Exchange of Assets.................................... 4
2.1 KKTV Assets.................................... 6
2.2 KCOY Assets.................................... 9
2.3 Excluded KKTV Assets........................... 10
2.4 Excluded KCOY Assets........................... 11
2.5 Transfer of Assets............................. 11
2.6 Non-Assignable Assets.......................... 11


3. Assumption of Liabilities............................. 12
3.1 Assumed Liabilities............................ 12
3.2 Instruments of Assumption...................... 14
3.3 Excluded KKTV Liabilities...................... 14
3.4 Excluded KCOY Liabilities...................... 15


4. Closing Payment; Allocation........................... 16
4.1 Closing Payment................................ 16
4.2 Closing Adjustments............................ 16
4.3 Allocation of Purchase Price................... 16


5. Closing............................................... 17
5.1 Time of Closing................................ 17
5.2 Time Brokerage Agreements...................... 17


6. Governmental Consents................................. 17
6.1 FCC Consent.................................... 17
6.2 Hart-Scott-Rodino.............................. 18
6.3 Other Governmental Consents.................... 19


7. Representations and Warranties of AKMG................ 19
7.1 Organization and Standing...................... 19
7.2 Power and Authority............................ 19
7.3 No Conflicts................................... 20
7.4 Government Approval............................ 20
7.5 Validity....................................... 21
7.6 Financial Statements........................... 21
7.7 No Changes..................................... 21
7.8 Taxes.......................................... 22
7.9 Contracts...................................... 23
7.10 Real Estate.................................... 24
7.11 Personal Property.............................. 26
7.12 Intellectual Property.......................... 27
7.13 Insurance...................................... 27
7.14 Litigation..................................... 28
7.15 Compliance with Law............................ 28
7.16 Labor.......................................... 29
7.17 Employees...................................... 29
7.18 Pension Plans.................................. 30
7.19 Environmental Warranties....................... 31
7.20 Accuracy of Information........................ 33


8. Representations and Warranties of Benedek............. 33
8.1 Organization and Standing...................... 33
8.2 Power and Authority............................ 34
(i)


8.3 No Conflicts.................................. 34
8.4 Government Approval........................... 35
8.5 Validity...................................... 35
8.6 Financial Statements.......................... 35
8.7 No Changes.................................... 36
8.8 Taxes......................................... 37
8.9 Contracts..................................... 37
8.10 Real Estate................................... 39
8.11 Personal Property............................. 40
8.12 Intellectual Property......................... 41
8.13 Insurance..................................... 41
8.14 Litigation.................................... 42
8.15 Compliance with Law........................... 42
8.16 Labor......................................... 43
8.17 Employees..................................... 43
8.18 Pension Plans................................. 44
8.19 Environmental Warranties...................... 45
8.20 Accuracy of Information....................... 47

9. Certain Covenants and Agreements........................ 47
9.1 Control of the Stations....................... 47
9.2 Access........................................ 47
9.3 Interim Operations............................ 48
9.4 Employees of the Stations..................... 49
9.5 Compliance.................................... 49
9.6 Compliance with Laws.......................... 49
9.7 No Solicitation............................... 50
9.8 Payment of Taxes.............................. 50
9.9 FCC Consent................................... 51
9.10 Time Brokerage Agreements..................... 51

10. Conditions of Closing................................... 51
10.1 Obligation of Benedek to Close............. .. 51
10.1.1 Representations..................... 51
10.1.2 Covenants........................... 51
10.1.3 No Injunction....................... 52
10.1.4 Consents............................ 52
10.1.5 KKTV FCC Licenses................... 52
10.1.6 Governmental Consents............... 52
10.1.7 Instruments of Transfer............. 52
10.1.8 Assumption Agreements.............. 53
10.1.9 Books of Account.................... 53
10.1.10 Resolutions......................... 53
10.1.11 Opinions of Counsel to AKMG......... 53
10.1.12 Hart-Scott-Rodino Compliance........ 53
10.1.13 Environmental Condition............. 54
10.1.14 Further Documents................... 54
10.2 Obligation of AKMG to Close...................... 54
10.2.1 Representations..................... 54
10.2.2 Covenants........................... 55
10.2.3 No Injunction....................... 55
10.2.4 Consents............................ 55
10.2.5 KCOY FCC Licenses................... 55
10.2.6 Governmental Consents............... 55
10.2.7 Instruments of Transfer............. 56
10.2.8 Assumption Agreements............... 56
10.2.9 Books of Account.................... 56
10.2.10 Resolutions......................... 56
10.2.11 Opinion of Counsels to Benedek...... 56


(ii)


10.2.12 Hart-Scott-Rodino............................. 56
10.2.13 Environmental Condition....................... 57
10.2.14 Further Documents............................. 57
10.2.15 Receipt of Purchase Price Payable at Closing.. 57

11. Remedies for Breach......................................... 57
11.1 Declining to Close.................................. 57
11.2 Election to Close................................... 57
11.3 Remedies Cumulative................................. 58


12. Termination Rights.......................................... 58


13. Indemnification of the Parties.............................. 59
13.1 Indemnification by AKMG............................. 59
13.2 Indemnification by Benedek.......................... 59
13.3 Procedures.......................................... 60
13.4 Limitation.......................................... 60
13.5 Survival of Representations and Warranties.......... 61


14. Brokers..................................................... 61


15. Miscellaneous............................................... 61
15.1 Entire Agreement.................................... 61
15.2 Notices............................................. 62
15.3 Public Announcement................................. 63
15.4 No Waiver........................................... 63
15.5 Governing Law....................................... 63
15.6 Consent to Jurisdiction............................. 63
15.7 Expenses............................................ 64
15.8 Binding Agreement................................... 64
15.9 Headings............................................ 64
15.10 Counterparts........................................ 64


(iii)


SCHEDULES
---------


SCHEDULE NUMBER DESCRIPTION - --------------- -----------


1.9 AKMG's & Benedek's Knowledge


2.1.12 Other KKTV Assets


2.2.12 Other KCOY Assets


2.3 Excluded KKTV Assets


2.4 Excluded KCOY Assets


3.3.7 Excluded KKTV Contracts


3.4.7 Excluded KCOY Contracts


4.3 Allocation


7.3 AKMG Conflicts


7.4 KKTV FCC Licenses


7.6 KKTV Financial Statements


7.7 No Changes


7.8 Taxes


7.9 KKTV Contracts


7.9.4 KKTV Trade-Out Balance


7.10 KKTV Real Property


7.11 KKTV Personal Property


7.12 KKTV Intellectual Property


7.13 KKTV Insurance


7.14 KKTV Litigation


7.16 KKTV Labor


7.17 KKTV Employees


7.18 KKTV Employee Plans


8.3 Benedek Conflicts


(iv)


8.4 KCOY FCC Licenses


8.6 KCOY Financial Statements


8.7 No Changes


8.8 Taxes


8.9 KCOY Contracts


8.9.4 KCOY Trade-Out Balance


8.10 KCOY Real Property


8.11 KCOY Personal Property


8.12 KCOY Intellectual Property


8.13 KCOY Insurance


8.14 KCOY Litigation


8.16 KCOY Labor


8.17 KCOY Employees


8.18 KCOY Employee Plans


10.1.4 AKMG Required Consents


10.2.4 Benedek Required Consents


(v)


EXHIBITS
--------


EXHIBIT DESCRIPTION - ------- -----------


A Form of KKTV Time Brokerage Agreement


B Form of KCOY Time Brokerage Agreement


C-1 Form of Opinion of Counsel to AKMG


C-2 Form of Opinion of FCC Counsel to AKMG


C-3 Form of Opinion of Local Counsel to AKMG


D-1 Form of Opinion of Counsel to Benedek


D-2 Form of Opinion of FCC Counsel to Benedek


D-3 Form of Opinion of Local Counsel to Benedek


(vi)


INDEX TO DEFINED TERMS
----------------------


TERM LOCATION - ---- --------


"Affiliate" Section 1.1 "Agreement" Section 1.2 "AKMG" Page 1, paragraph 1 "Assumed KCOY Liabilities" Section 3.1.2 "Assumed KKTV Liabilities" Section 3.1.1 "Benedek" Page 1, paragraph 1 "BLC" Page 1, paragraph 1 "CBS" Section 2.1.4 "CERCLA" Section 7.19.2.1 "CERCLIS" Section 7.19.7 "Closing" Section 5 "Closing Date" Section 5.1 "Closing Payment" Section 4.1 "COBRA" Section 7.18.6 "Code" Page 1, 3rd WHEREAS "control" Section 1.1.1 "Employee Plans" Section 7.18 "Environmental Laws" Section 7.19.1 "ERISA" Section 1.3 "ERISA Affiliate" Section 1.4 "Excluded KCOY Assets" Section 2.4 "Excluded KCOY Contracts" Section 3.4.7 "Excluded KCOY Records" Section 2.4.3 "Excluded KKTV Assets" Section 2.3 "Excluded KKTV Contracts" Section 3.3.7 "Excluded KKTV Records" Section 2.3.4 "FCC" Page 1, 1st WHEREAS "FCC Applications" Section 6.1.1 "FCC Consents" Section 1.5 "Final Orders" Section 1.6 "GAAP" Section 1.7 "Hazardous Material" Section 7.19.2 "hazardous substance" Section 7.19.2.1 "hazardous waste" Section 7.19.2.2 "herein" Section 1.2 "hereof" Section 1.2 "hereunder" Section 1.2 "HSR Act" Section 6.2


(vii)


"including" Section 1.15.4 "Information Technology" Section 1.8 "Injured Party" Section 13.3 "Internal Revenue Service" Section 4.3 "KCOY" Page 1, 1st WHEREAS "KCOY Assets" Section 2.2 "KCOY Financial Statements" Section 8.6 "KCOY Leases" Section 8.10 "KKTV" Page 1, 2nd WHEREAS "KKTV Assets" Section 2.1 "KKTV Financial Statements" Section 7.6 "KKTV Leases" Section 7.10 "knowledge" Section 1.9 "Lien" Section 1.10 "Losses" Section 13.1 "Material Adverse Effect" Section 1.12 "or" Section 1.15.3 "Other Party" Section 13.3 "Parties" Page 1, paragraph 1 "Party" Page 1, paragraph 1 "Person" Section 1.13 "Station" Page 1, 2nd WHEREAS "Stations" Page 1, 2nd WHEREAS "Time Brokerage Agreement" Section 1.11 "Trade Rights" Section 7.12 "trade-out agreements" Section 3.1.1 "Transferred Assets" Section 2.2 "Year 2000 Compliant" Section 1.14


(viii)


ASSET EXCHANGE AGREEMENT
------------------------


AGREEMENT dated this 30th day of December, 1998, between BENEDEK BROADCASTING CORPORATION ("Benedek") and BENEDEK LICENSE CORPORATION ("BLC"), each a Delaware corporation having its principal place of business at 100 Park Avenue, Rockford, Illinois 61101, and AK MEDIA GROUP, INC., a Washington corporation having its principal place of business at 1301 Fifth Avenue, Suite 4000, Seattle, Washington 98101 ("AKMG") (Benedek and AKMG being each referred to herein as a "Party" and collectively referred to herein as the "Parties").


W I T N E S S E T H :
- - - - - - - - - -


WHEREAS, Benedek and its wholly-owned direct subsidiary BLC own and operate television station KCOY(TV), Channel 12, Santa Maria, California and its auxiliary facilities ("KCOY") pursuant to licenses issued by the Federal Communications Commission (the "FCC"); and


WHEREAS, AKMG owns and operates television station KKTV(TV), Channel 11, Colorado Springs, Colorado and its auxiliary facilities ("KKTV") pursuant to licenses issued by the FCC (KCOY and KKTV being each referred to herein as a "Station" and collectively referred to herein as the "Stations"); and


WHEREAS, Benedek desires to exchange all of the KCOY Assets (as hereinafter defined) and Assumed KCOY Liabilities (as hereinafter defined) for the KKTV Assets (as hereinafter defined) and the Assumed KKTV Liabilities (as hereinafter defined), and AKMG also desires to make such exchange, in each case as a like- kind exchange under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), and in each case upon the terms and subject to the conditions set forth in this Agreement; and


WHEREAS, contemporaneously with the execution of this Agreement, AKMG and Benedek are entering into Time Brokerage Agreements (as herein defined) with respect to certain aspects of the operation of the Stations between the date hereof and the Closing Date (as herein defined).


NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto agree as follows:


1. DEFINITIONS. Unless otherwise stated in this Agreement, the following
----------- terms shall have the following meanings:


1.1 The term "Affiliate" means, with respect to a Person, any other Person which, directly or indirectly, is in control of, is controlled by or is under common control with such Person. For purposes of the foregoing definition, "control" of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.


1.2 The term "Agreement" means this agreement, including the Schedules and all Exhibits hereto, as the same may be amended


1


or otherwise modified from time to time, and the terms "herein", "hereof", "hereunder" and like terms shall be taken as referring to this Agreement in its entirety and shall not be limited to any particular section or provision hereof.


1.3 The term "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute thereto and all final or temporary regulations promulgated thereunder.


1.4 The term "ERISA Affiliate" shall mean with respect to a Party, all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with such Party, are treated as a single employer under any or all of Sections 414(b), (c), (m) or (o) of the Code.


1.5 The term "FCC Consents" means action by the FCC granting its consent to the assignment of the KKTV FCC Licenses to BLC and action by the FCC granting its consent to the assignment of the KCOY FCC Licenses to AKMG, as contemplated by this Agreement.


1.6 The term "Final Orders" means written actions or orders issued by the FCC, setting forth the FCC Consents and (a) which have not been reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with respect to which no requests have been filed for administrative or judicial review, reconsideration, appeal or stay and the periods provided by statute or FCC regulations for filing of any such requests for administrative or judicial review, reconsideration, appeal or stay or for the FCC to set aside the actions on its own motion have expired.


1.7 The term "GAAP" means generally accepted accounting principles set forth in opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, in each case as the same are applicable to the circumstances as of the date of determination.


1.8 "Information Technology" means computer software, computer firmware, computer hardware (whether general or specific purpose) and other similar or related items of automated, computerized or software system(s) that are used or relied on by a Party in the conduct of the business of its Station.


2


1.9 The term "knowledge" or similar words shall be deemed to mean the actual personal knowledge as of the date specified or if no such date is specified, as of the Closing Date, of each Party's officers, directors and employees identified on Schedule 1.9 attached hereto.


1.10 The term "Lien" means any charge, claim, lien, mortgage, obligation, pledge, security interest or other encumbrance of any nature whatsoever upon, of or in property or other assets of a Person, whether absolute or conditional, voluntary or involuntary, whether created pursuant to agreement, arising by force of statute, by judicial proceedings or otherwise.


1.11 The term "Material Adverse Effect" means, with respect to a Station, a material adverse effect upon the business, operations, assets or financial condition of such Station.


1.12 The term "Person" shall include an individual, a partnership, a joint venture, a corporation, a trust, an estate, an unincorporated organization or association and a governmental agency.


1.13 The term "Time Brokerage Agreements" means (i) the Time Brokerage Agreement of even date herewith between AKMG, as owner, and Benedek, as programmer, with respect to KKTV in the form of Exhibit A annexed hereto and (ii) the Time Brokerage Agreement of even date herewith between Benedek, as owner, and AKMG, as programmer, with respect to KCOY in the form of Exhibit B annexed hereto.


1.14 The term "Year 2000 Compliant" means that Information Technology is designed to be used prior to, during and after the calendar year 2000 A.D., and that Information Technology used during each such time period will accurately receive, provide and process date/time data (including, but not limited to, calculating, comparing and sequencing) from, into and between the 20th and 21st centuries, including the years 1999 and 2000, and leap-year calculations and will not malfunction, cease to function, or provide invalid or incorrect results as a result of date/time data.


1.15 Unless the context otherwise requires:

1.15.1 a term has the meaning assigned to it;


1.15.2 an accounting term not otherwise defined has the meaning assigned to it in accordance GAAP and all accounting


3


calculations will be determined in accordance with such principles;


1.15.3 "or" is not exclusive;


1.15.4 "including" means including without limitation; and


1.15.5 words in the singular include the plural and words in the plural include the singular as the context may require.


2. EXCHANGE OF.
-----------


2.1 KKTV ASSETS. On the terms and subject to the conditions of
----------- this Agreement, at the Closing AKMG shall transfer, convey, assign and deliver to Benedek (or, with respect to the assets described in Section 2.1.1 below, to BLC) all of the right, title and interest in and to all assets, properties and rights of others, of every nature, kind and description, wherever located, tangible and intangible, real, personal and mixed exclusively with respect to KKTV (excluding only the Excluded KKTV Assets as specified in Section 2.3 below) (the "KKTV Assets"), as the same shall exist at and as of the Closing Date, including, without limitation, the following:


2.1.1 all rights in and to the licenses, permits and other authorizations issued by any governmental authority and held by AKMG and used or intended for exclusive use in the conduct of the business and operation of KKTV, including the KKTV FCC Licenses listed on Schedule 7.4 annexed hereto, together with any renewals, extensions or modification thereof and additions thereto between the date hereof and the Closing Date, the goodwill and other intangible personal property associated with or related to KKTV or the operation thereof, the business of KKTV as a going concern, and all of AKMG's rights in and to the call letters "KKTV";


2.1.2 all land, leaseholds and other interests of every kind and description in real property, buildings, towers, and antennae, and fixtures and improvements thereon as of the date hereof and used or held for exclusive use in connection with the business and operation of KKTV, including, without limitation, those shown on Schedule 7.10 annexed hereto, and any additions, improvements, replacements a ...