Asset Exchange Agreement

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............................................................................3
2.1 KKTV Assets.........................................................................3
2.2 KCOY Assets.........................................................................5
2.3 Excluded KKTV Assets................................................................7
2.4 Excluded KCOY Assets................................................................7
2.5 Transfer of Assets..................................................................8
2.6 Non-Assignable Assets...............................................................8


3. Assumption of Liabilities.....................................................................9
3.1 Assumed Liabilities.................................................................9
3.2 Instruments of Assumption..........................................................10
3.3 Excluded KKTV Liabilities..........................................................10
3.4 Excluded KCOY Liabilities..........................................................11


4. Closing Payment; Allocation..................................................................12
4.1 Closing Payment....................................................................12
4.2 Closing Adjustments................................................................12
4.3 Allocation of Purchase Price.......................................................12


5. Closing......................................................................................12
5.1 Time of Closing....................................................................12
5.2 Time Brokerage Agreements..........................................................13


6. Governmental Consents........................................................................13
6.1 FCC Consent........................................................................13
6.2 Hart-Scott-Rodino..................................................................13
6.3 Other Governmental Consents........................................................14


7. Representations and Warranties of AKMG.......................................................14
7.1 Organization and Standing..........................................................14
7.2 Power and Authority................................................................14
7.3 No Conflicts.......................................................................14
7.4 Government Approval................................................................15
7.5 Validity...........................................................................15
7.6 Financial Statements...............................................................15
7.7 No Changes.........................................................................16
7.8 Taxes..............................................................................16
7.9 Contracts..........................................................................17
7.10 Real Estate........................................................................18
7.11 Personal Property..................................................................19
7.12 Intellectual Property..............................................................19
7.13 Insurance..........................................................................20
7.14 Litigation.........................................................................20
7.15 Compliance with Law................................................................20
7.16 Labor..............................................................................20
7.17 Employees..........................................................................21
7.18 Pension Plans......................................................................21
7.19 Environmental Warranties...........................................................22
7.20 Accuracy of Information............................................................24


8. Representations and Warranties of Benedek....................................................24
8.1 Organization and Standing..........................................................24


(i)


8.2 Power and Authority................................................................24
8.3 No Conflicts.......................................................................24
8.4 Government Approval................................................................25
8.5 Validity...........................................................................25
8.6 Financial Statements...............................................................25
8.7 No Changes.........................................................................25
8.8 Taxes..............................................................................26
8.9 Contracts..........................................................................27
8.10 Real Estate........................................................................28
8.11 Personal Property..................................................................29
8.12 Intellectual Property..............................................................29
8.13 Insurance..........................................................................30
8.14 Litigation.........................................................................30
8.15 Compliance with Law................................................................30
8.16 Labor..............................................................................30
8.17 Employees..........................................................................31
8.18 Pension Plans......................................................................31
8.19 Environmental Warranties...........................................................32
8.20 Accuracy of Information............................................................33


9. Certain Covenants and Agreements.............................................................33
9.1 Control of the Stations............................................................33
9.2 Access.............................................................................33
9.3 Interim Operations.................................................................34
9.4 Employees of the Stations..........................................................35
9.5 Compliance.........................................................................35
9.6 Compliance with Laws...............................................................35
9.7 No Solicitation....................................................................35
9.8 Payment of Taxes...................................................................36
9.9 FCC Consent........................................................................36
9.10 Time Brokerage Agreements..........................................................36


10. Conditions of Closing........................................................................36
10.1 Obligation of Benedek to Close.....................................................36


10.1.1 Representations........................................................36
10.1.2 Covenants..............................................................36
10.1.3 No Injunction..........................................................37
10.1.4 Consents...............................................................37
10.1.5 KKTV FCC Licenses......................................................37
10.1.6 Governmental Consents..................................................37
10.1.7 Instruments of Transfer................................................37
10.1.8 Assumption Agreements..................................................37
10.1.9 Books of Account.......................................................37
10.1.10 Resolutions............................................................38
10.1.11 Opinions of Counsel to AKMG............................................38
10.1.12 Hart-Scott-Rodino Compliance...........................................38
10.1.13 Environmental Condition................................................38
10.1.14 Further Documents......................................................38
10.2 Obligation of AKMG to Close........................................................38
10.2.1 Representations........................................................38
10.2.2 Covenants..............................................................39
10.2.3 No Injunction..........................................................39
10.2.4 Consents...............................................................39
10.2.5 KCOY FCC Licenses......................................................39
10.2.6 Governmental Consents..................................................39
10.2.7 Instruments of Transfer................................................39
10.2.8 Assumption Agreements..................................................39
10.2.9 Books of Account.......................................................40


(ii)


10.2.10 Resolutions............................................................40
10.2.11 Opinion of Counsels to Benedek.........................................40
10.2.12 Hart-Scott-Rodino......................................................40
10.2.13 Environmental Condition................................................40
10.2.14 Further Documents......................................................40
10.2.15 Receipt of Purchase Price Payable at Closing...........................40


11. Remedies for Breach..........................................................................40
11.1 Declining to Close.................................................................41
11.2 Election to Close..................................................................41
11.3 Remedies Cumulative................................................................41


12. Termination Rights...........................................................................41


13. Indemnification of the Parties...............................................................41
13.1 Indemnification by AKMG............................................................41
13.2 Indemnification by Benedek.........................................................42
13.3 Procedures.........................................................................42
13.4 Limitation.........................................................................43
13.5 Survival of Representations and Warranties.........................................43


14. Brokers......................................................................................43


15. Miscellaneous................................................................................43
15.1 Entire Agreement...................................................................43
15.2 Notices............................................................................43
15.3 Public Announcement................................................................44
15.4 No Waiver..........................................................................45
15.5 Governing Law......................................................................45
15.6 Consent to Jurisdiction............................................................45
15.7 Expenses...........................................................................45
15.8 Binding Agreement..................................................................45
15.9 Headings...........................................................................45
15.10 Counterparts.......................................................................45


(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


(iv)


8.3 Benedek Conflicts


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 "including" Section 1.15.4


(vii)


Term Location - ----- ------------ "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 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 ...