Asset Exchange Agreement

ASSET EXCHANGE AGREEMENT


BY AND AMONG


WGRC, INC.,


AND


BENEDEK BROADCASTING CORPORATION


AND


BENEDEK LICENSE CORPORATION


TABLE OF CONTENTS


Page


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


2. Exchange of Assets.......................................................................................5
2.1 WWLP Assets..............................................................................5
2.2 WWLP Excluded Assets.....................................................................7
2.3 Chronicle Assets.........................................................................8
2.4 Chronicle Excluded Assets................................................................8
2.5 Transfer of Assets.......................................................................8
2.6 Accounts Receivable......................................................................9
2.7 Power of Attorney.......................................................................10
2.8 Non-Assignable WWLP Assets..............................................................10
2.9 Non-Assignable Chronicle Assets.........................................................10


3. Assumption of Liabilities...............................................................................11
3.1 WWLP Assumed Liabilities................................................................11
3.2 Chronicle Assumed Liabilities...........................................................11
3.3 Instruments of Assumption for the WWLP Assumed Liabilities..............................12
3.4 Instruments of Assumption for the Chronicle Assumed Liabilities.........................12
3.5 WWLP Excluded Liabilities...............................................................12
3.6 Chronicle Excluded Liabilities..........................................................13


4. Closing Payment; Allocation.............................................................................13
4.1 Closing Payment.........................................................................13
4.2 Letter of Credit........................................................................13
4.3 WWLP Closing Adjustments................................................................14
4.4 Allocation..............................................................................15


5. Closing.................................................................................................15


6. Governmental Consents...................................................................................16
6.1 FCC Consent.............................................................................16
6.2 Hart-Scott-Rodino.......................................................................16
6.3 Other Governmental Consents.............................................................17


7. Representations and Warranties of Benedek...............................................................17
7.1 Organization and Standing...............................................................17
7.2 Power and Authority.....................................................................17
7.3 No Conflicts............................................................................18
7.4 Government Approval.....................................................................18
7.5 Validity................................................................................18
7.6 Financial Statements....................................................................19
7.7 Taxes...................................................................................19
7.8 Contracts...............................................................................20
7.9 Real Estate.............................................................................21
7.10 Personal Property.......................................................................22
7.11 Intellectual Property...................................................................22
7.12 Insurance...............................................................................22
7.13 Litigation..............................................................................23
7.14 Compliance with Law.....................................................................23


(i)


7.15 Labor...................................................................................24
7.16 Employees...............................................................................24
7.17 Employee Benefit Plans..................................................................24
7.18 Environmental Matters...................................................................26
7.19 Chronicle Agreement.....................................................................27
7.20 Entire Business.........................................................................27
7.21 Transactions with Affiliates............................................................28


8. Representations and Warranties of WGRC..................................................................28
8.1 Organization and Standing...............................................................28
8.2 Power and Authority.....................................................................28
8.3 No Conflicts............................................................................28
8.4 Government Approval.....................................................................29
8.5 Validity................................................................................29
8.6 Litigation..............................................................................29
8.7 Independent Investigation...............................................................29


9. Covenants of Benedek....................................................................................30
9.1 Books and Records.......................................................................30
9.2 Interim Operations......................................................................30
9.3 Discharge of Liens......................................................................32
9.4 Licenses................................................................................32
9.5 Maintenance of Insurance................................................................32
9.6 Compliance..............................................................................32
9.7 Compliance with Laws....................................................................33
9.8 Payment of Taxes........................................................................33
9.9 Financial Statements....................................................................34
9.10 Action..................................................................................34
9.11 Further Assurances......................................................................34
9.12 Chronicle Agreement.....................................................................34


10. Covenants of WGRC.......................................................................................35
10.1 Compliance..............................................................................35
10.2 Control of the Station..................................................................36
10.3 FCC Compliance..........................................................................36
10.4 Books and Records.......................................................................36
10.5 Action..................................................................................36
10.6 Employees and Employee Benefit Matters..................................................36
10.7 Further Assurances. ...................................................................38
10.8 Conditions of Closing...................................................................39
10.9 Obligation of WGRC to Close.............................................................39
10.10 Obligation of Benedek to Close..........................................................40


11. Remedies for Breach.....................................................................................42
11.1 WGRC Declines to Close..................................................................42
11.2 WGRC Elects to Close....................................................................42
11.3 Benedek Declines to Close...............................................................42
11.4 Benedek Elects to Close.................................................................42
11.5 Remedies Cumulative.....................................................................42


12. Termination Rights......................................................................................42


13. Risk of Loss............................................................................................43


(ii)


13.2 Failure of Broadcast Transmission.......................................................44


13.3 Resolution of Disagreements.............................................................44


14. Indemnification.........................................................................................44
14.1 Indemnification of Benedek..............................................................44
14.2 Indemnification of WGRC.................................................................45
14.3 Procedures for Indemnification..........................................................46
14.4 Procedures for Third-Party Claims.......................................................46
14.5 Survival of Representations, Warranties and Covenants...................................47


15. Brokers.................................................................................................47


16. Tax Matters.............................................................................................47


17. Miscellaneous...........................................................................................48
17.1 Confidentiality.........................................................................48
17.2 Entire Agreement........................................................................48
17.3 Notices.................................................................................48
17.4 Public Announcement.....................................................................49
17.5 No Waiver...............................................................................50
17.6 Governing Law...........................................................................50
17.7 Consent to Jurisdiction.................................................................50
17.8 Expenses................................................................................50
17.9 Binding Agreement.......................................................................50
17.10 Intent..................................................................................50
17.11 Good Faith..............................................................................51
17.12 Headings................................................................................51
17.13 Counterparts............................................................................51


(iii)


SCHEDULES


Schedule Number Description - --------------- -----------


1.16 Benedek's Knowledge


1.16 WGRC's Knowledge


2.2.11 Other Excluded Assets


3.5.6 WWLP Excluded Contracts


7.3 Conflicts


7.4 FCC Licenses


7.6 Financial Statements


7.8 Contracts, agreements and commitments of Benedek


7.9 Real Property, Liens


7.10 Personal Property, Liens


7.11 Intellectual Property


7.12 Insurance


7.13 Litigation


7.15 Representation or labor contracts; Delinquency in
payments to employees


7.16 Employees


7.17 Employee Benefit Plans


7.18.1 Environmental Matters


(iv)


EXHIBITS


EXHIBIT DESCRIPTION - ------- -----------
A Form of Letter of Credit


(v)


INDEX TO DEFINED TERMS


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


"Affiliate" Section 1.1 "Agreement" Section 1.2 "Assignment Agreement" Page 1, 3rd WHEREAS "BBC" Page 1, paragraph 1 "Benedek" Page 1, paragraph 1 "Benedek 401(k) Plan" Section 10.6.2 "Benedek Cafeteria Plan" Section 10.6.5 "BLC" Page 1, paragraph 1 "Chronicle" Page 1, 2nd WHEREAS "Chronicle Agreement" Page 1, 2nd WHEREAS "Chronicle Assets" Section 1.4 "Chronicle Assumed Liabilities" Section 1.5 "Chronicle Cash Payment" Section 1.6 "Chronicle Excluded Assets" Section 1.7 "Chronicle Excluded Liabilities" Section 1.8 "Chronicle Station Licenses" Section 1.9 "Chronicle Stations" Page 1, 2nd WHEREAS "Closing" Section 5 "Closing Date" Section 5 "Closing Payment" Section 4.1 "COBRA" Section 7.17.6 "Code" Page 1, 5th WHEREAS "Collection Period" Section 2.6 "Communications Act" Section 1.3 "Confidentiality Agreement" Section 1.10 "control" Section 1.1 "Employee Plans" Section 7.17 "Environmental Law(s)" Section 7.18.1 "Environmental Claims" Section 7.18.2 "Environmental Reports" Section 7.18.1 "ERISA" Section 1.11 "ERISA Affiliate" Section 1.12 "FCC" Page 1, 1st WHEREAS "FCC Application" Section 6.1.1 "FCC Consent" Section 1.13 "Final Order" Section 1.14 "Final Proration Schedule" Section 4.3.2 "Financial Statements" Section 7.6


(vi)


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


"GAAP" Section 1.15 "Hazardous Substances" Section 7.18.1 "herein" Section 1.2 "hereof" Section 1.2 "hereunder" Section 1.2 "HSR Act" Section 6.2 "including" Section 1.25.4 "Indemnified Party" Section 14.3 "Indemnifying Party" Section 14.3 "Intellectual Property" Section 1.17 "IRS" Section 4.4 "knowledge" Section 1.16 "Leased Real Property" Section 7.9.1 "Leases" Section 7.9.1 "Lien" Section 1.18 "Losses" Section 14.1.1 "Material Adverse Effect" Section 1.19 "NBC" Section 2.1.4 "Notice of Disagreement" Section 4.3.2 "or" Section 1.25.3 "Owned Real Property" Section 7.9.1 "Permitted Liens" Section 1.20 "Person" Section 1.21 "Premises" Section 7.18.1 "Proprietary Rights" Section 1.22 "Real Property" Station 7.9.1 "Receivables" Section 2.6 "Specified Event" Section 13.2 "Station" Page 1, 1st WHEREAS "Station Licenses" Section 1.23 "Tax" Section 7.7.8 "Taxes" Section 7.7.8 "Tax Return" Section 7.7.8 "Third-Party Claim" Section 14.4.1 "trade-out agreements" Section 4.3.1 "Transfer Taxes" Section 9.8 "Transferred Employees" Section 10.6 "WGRC" Page 1, paragraph 1 "WGRC 401(k) Plan" Section 10.6 "WGRC Cafeteria Plan" Section 10.6.5 "WGRC's Proration Amount" Section 4.3.2


(vii)


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


"WWLP Assets" Section 2.1 "WWLP Assumed Liabilities" Section 3.1 "WWLP Excluded Assets" Section 2.2 "WWLP Excluded Contracts" Section 3.5.6 "WWLP Excluded Liabilities" Section 3.5 "WWLP Excluded Records" Section 2.2.6 "WWLP Value" Section 1.24


(viii)


ASSET EXCHANGE AGREEMENT


AGREEMENT dated as of this 10th day of December, 1999, by and among WGRC, Inc. ("WGRC"), a Delaware corporation, having its principal place of business at 79 Ridge Road, Bristol, Rhode Island 02809, and Benedek Broadcasting Corporation, a Delaware corporation ("BBC"), and Benedek License Corporation, a Delaware corporation ("BLC"), each having its principal place of business at 100 Park Avenue, Rockford, Illinois 61101 (BBC and BLC are collectively referred to as "Benedek").


W I T N E S S E T H :


WHEREAS, BBC and its wholly-owned subsidiary, BLC, own and operate television station WWLP (TV), Channel 22, Springfield, Massachusetts and its auxiliary facilities (the "Station") pursuant to licenses issued by the Federal Communications Commission (the "FCC"); and


WHEREAS, BBC has entered into an Asset Purchase Agreement dated as of November 17, 1999, as the same may be amended from time to time (the "Chronicle Agreement"), with The Chronicle Publishing Company ("Chronicle") pursuant to which the purchaser thereunder will acquire television stations WOWT(TV), Omaha, Nebraska and KAKE-TV, Wichita Kansas (together with its satellite stations, KUPK-TV, Garden City, Kansas and KLBY(TV), Colby, Kansas) (collectively, the "Chronicle Stations"); and


WHEREAS, Benedek and WGRC are entering into an Assignment and Assumption Agreement of even date herewith (the "Assignment Agreement") pursuant to which Benedek's rights under the Chronicle Agreement to acquire the Chronicle Stations will be assigned to WGRC; and


WHEREAS, Benedek desires to acquire the Chronicle Stations by way of an exchange transaction for substantially all of the assets of the Station; and


WHEREAS, Benedek and WGRC have agreed that WGRC will transfer the Chronicle Stations to Benedek in exchange for the Station in a transaction intended to qualify as a like-kind exchange under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), as contemplated herein.


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 "Communications Act" means the Communications Act of 1934, as amended.


1.4 The term "Chronicle Assets" means the Purchased Assets, as that term is defined in the Chronicle Agreement, which will be acquired by WGRC pursuant to the Chronicle Agreement.


1.5 The term "Chronicle Assumed Liabilities" means the Assumed Liabilities, as that term is defined in the Chronicle Agreement, which will be assumed by WGRC pursuant to the Chronicle Agreement.


1.6 The term "Chronicle Cash Payment" means the Cash Payment, as that term is defined in the Chronicle Agreement, adjusted as contemplated by Section 3.3(a) of the Chronicle Agreement.


1.7 The term "Chronicle Excluded Assets" means the Excluded Assets, as that term is defined in the Chronicle Agreement.


1.8 The term "Chronicle Excluded Liabilities" means the Excluded Liabilities, as that term is defined in the Chronicle Agreement.


1.9 The term "Chronicle Station Licenses" means the Station Licenses, as that term is defined in the Chronicle Agreement.


1.10 The term "Confidentiality Agreement" means the Confidentiality Agreement dated October 21, 1999 between LIN Television Corporation and Benedek.


1.11 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.


2


1.12 The term "ERISA Affiliate" shall mean with respect to Benedek, 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 Benedek, are treated as a single employer under any or all of Sections 414(b), (c), (m) or (o) of the Code.


1.13 The term "FCC Consent" means action by the FCC granting its consent to the assignment of the Station Licenses as contemplated by this Agreement.


1.14 The term "Final Order" means a written action or order issued by the FCC, setting forth the FCC Consent and which has not been reversed, stayed, enjoined, set aside, annulled or suspended, and 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 or appeal or for the FCC to set aside the action on its own motion have expired.


1.15 The term "GAAP" means generally accepted accounting principals set forth in opinions and pronouncements of the Accounting Principals Board of the American Institute of Certified Public Accountants and statements and pronouncements of ...