Document:

Prepared by MERRILL CORPORATION

EXECUTION COUNTERPART

Exhibit 10.1

 

AMENDMENT NO. 1

 

AMENDMENT NO. 1 dated as of October 30, 2001 to the

Credit Agreement referred to below between: SINCLAIR BROADCAST GROUP, INC., a

corporation duly organized and validly existing under the laws of the State of

Maryland (the "Borrower"); each of the Subsidiaries of the

Borrower identified under the caption "SUBSIDIARY GUARANTORS" on the

signature pages hereto (individually, a "Subsidiary Guarantor"

and, collectively, the "Subsidiary Guarantors" and, together

with the Borrower, the "Obligors"); and THE CHASE MANHATTAN

BANK, as agent for the Lenders (in such capacity, together with its successors

in such capacity, the "Administrative Agent").

 

                                The Borrower,

the Subsidiary Guarantors, the lenders party thereto (the "Lenders")

and the Administrative Agent are parties to a Credit Agreement dated as of May

28, 1998 (as amended by Amendment No. 1 dated as of December 21, 1999 and

Amendment No. 2 dated as of July 21, 2000, and as amended and restated pursuant

to an Amendment and Restatement dated as of May 9, 2001, as so amended and/or

restated, the "Credit Agreement"), providing, subject to the

terms and conditions thereof, for extensions of credit (by making of loans and

issuing letters of credit) to be made by the Lenders to the Borrower in an

original aggregate principal or face amount not exceeding $1,100,000,000.

 

                                The Obligors

have requested certain amendments to the Credit Agreement and, accordingly, the

parties hereto hereby agree as follows:

 

                                Section 1.  Definitions.  Except

as otherwise defined in this Amendment No. 1, terms defined in the Credit

Agreement are used herein as defined therein.

 

                                Section 2.  Amendments. 

Subject to the satisfaction of the conditions precedent specified in

Section 4 hereof, but effective as of the date hereof, the Credit

Agreement shall be amended as follows:

 

                              2.01.        References in the Credit Agreement

(including references to the Credit Agreement as amended hereby) to "this

Agreement" (and indirect references such as "hereunder",

"hereby", "herein" and "hereof") shall be deemed

to be references to the Credit Agreement as amended hereby.

 

2.02.        Section 1.01 of the Credit Agreement is

hereby amended by adding the following new definitions (to the extent not

already included in said Section 1.01) and inserting the same in the

appropriate alphabetical locations and by amending in their entirety the

following definitions (to the extent already included in said Section 1.01), as

follows:

 

"Amendment

No. 1 Effective Date" means the date on which Amendment No. 1 dated as

of October 30, 2001 to this Agreement shall become effective.

 

                                "Applicable Rate"

means, for any day, with respect to any ABR Loan or Eurodollar Loan, or with

respect to the commitment fees payable hereunder, as the case may be, the

applicable rate per annum set forth below under the caption "ABR

Spread", "Eurodollar Spread" or "Commitment Fee Rate",

respectively, based upon the Total Indebtedness Ratio as of the most recent

determination date; provided that notwithstanding anything herein to the

contrary, effective for the period from the Amendment No. 1 Effective Date

until the third Business Day after delivery of the Borrower's unaudited

consolidated financial statements to be made pursuant to Section 6.01(b) (and the

related Financial Officer's certificate) for the fiscal quarter ending

September 30, 2002, the "Applicable Rate" with respect to Revolving

Loans for purposes of determining (x) the ABR Spread, shall be 2.25% per annum

and (y) the Eurodollar Spread, shall be 3.50% per annum:

 

	

  Total

  

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Indebtedness

  	

   

  	

  ABR 

  	

   

  	

  Eurodollar

  	

   

  	

  Commitment

  	

   

  
	

  Ratio:

  	

   

  	

  Spread (%)

  	

   

  	

  Spread (%)

  	

   

  	

  Fee Rate (%)

  	

   

  
	

  Greater

  than or equal to 6.50 to 1

  	

   

  	

  1.75

  	

   

  	

  3.00

  	

   

  	

  0.50

  	

   

  
	

  Less

  than 6.50 to 1 and greater than or equal to 6.00 to 1

  	

   

  	

  1.50

  	

   

  	

  2.75

  	

   

  	

  0.50

  	

   

  
	

  Less

  than 6.00 to 1 and greater than or equal to 5.50 to 1

  	

   

  	

  1.25

  	

   

  	

  2.50

  	

   

  	

  0.50

  	

   

  
	

  Less

  than 5.50 to 1 and greater than or equalto 5.00 to 1

  	

   

  	

  1.00

  	

   

  	

  2.25

  	

   

  	

  0.375

  	

   

  
	

  Less

  than 5.00 to 1 and greater than or equal to 4.50 to 1

  	

   

  	

  0.50

  	

   

  	

  1.75

  	

   

  	

  0.375

  	

   

  
	

  Less

  than 4.50 to 1 and greater than or equal to 4.00 to 1

  	

   

  	

  0.25

  	

   

  	

  1.50

  	

   

  	

  0.25

  	

   

  
	

  Less than 4.00 to 1

  	

   

  	

  0

  	

   

  	

  1.25

  	

   

  	

  0.25

  	

   

  

 

                                For purposes of

the foregoing (but subject to the proviso above), (i) the Total

Indebtedness Ratio shall be determined as of the end of each fiscal quarter of

the Borrower's fiscal year based upon the Borrower's consolidated financial

statements delivered pursuant to Section 6.01(a) or (b) (and as set

forth in the related certificate of a Financial Officer delivered pursuant to

Section 6.01(c)) and (ii) each change in the Applicable Rate resulting

from a change in the Total Indebtedness Ratio shall be effective on the date

three Business Days after the receipt by the Administrative Agent of such

certificate and shall remain effective until the effective date of the next

such change; provided that, notwithstanding the foregoing, the

Applicable Rate shall not as a consequence of this proviso be reduced for any

period during which an Event of Default shall have occurred and be

continuing.  Notwithstanding anything

herein to the contrary, the Applicable Rate with respect to Incremental Term

Loans (x) for the period from the Amendment No. 1 Effective Date through and

including September 30, 2002 shall be 2.75% per annum in the case of ABR Loans

and 4.00% per annum in the case of Eurodollar Loans and (y) at all times after

September 30, 2002 shall be 2.25% per annum in the case of ABR Loans and 3.50%

per annum in the case of Eurodollar Loans.

 

                                "Debt

Incurrence" means the incurrence of any Indebtedness by the Borrower

or any Subsidiary Guarantor after the Amendment No. 1 Effective Date, provided

that Debt Incurrence shall not include (x) Indebtedness permitted under Section

7.01(c) which is incurred solely for the purpose of refinancing Subordinated Indebtedness

and (y) Indebtedness permitted under Section 7.01 (other than clauses (c), (i)

and (l) thereof).

 

                                "Debt

Service" means, for any period, the sum, for the Borrower and its

Subsidiaries (determined on a consolidated basis without duplication in accordance

with GAAP), of the following: 

(a) all scheduled payments of principal of Indebtedness (including,

without limitation, the principal component of any payments in respect of

Capital Lease Obligations) scheduled to be made during such period (other than

the $25,000,000 payment of principal made by the Borrower in respect of the

Term Loans on March 30, 2001) plus (b) all Interest Expense for

such period plus (c) fees and other expenses payable in connection with

this Agreement for such period (excluding such fees and expenses constituting

transaction costs payable on the Effective Date, but including agency fees).

 

                                "Interest

Expense" means, for any period, the sum, for the Borrower and its

Subsidiaries (determined on a consolidated basis without duplication in

accordance with GAAP), of the following (subject to paragraphs (d) and (e)

of Section 1.05):  (a) all

interest in respect of Indebtedness accrued or capitalized during such period

(whether or not actually paid during such period, but excluding any deferred

financing fees payable during such period) plus (b) the net amounts

payable (or minus the net amounts receivable) under Interest Rate

Protection Agreements accrued during such period (whether or not actually paid

or received during such period) minus (c) all cash interest income

received during such period; provided that the calculation of Interest

Expense for any period shall not be increased or decreased by any amount

reflected on the Borrower's relevant income statement with respect to changes

in the fair value of derivative instruments during such period.  Any reference herein to calculating Interest

Expense for any period on a "pro forma" basis means that, for

purposes of the preceding clause (a), (i) the Indebtedness on the basis of

which Interest Expense is so calculated shall mean Indebtedness outstanding as

of the relevant date of calculation after giving effect to any repayments and

any incurrence of Indebtedness on such date and (ii) such calculation shall be

made applying the respective rates of interest in effect for such Indebtedness

on such date.

 

                                "Net

Available Proceeds" means (a) in the case of any Disposition, an

amount (not less than zero) equal to the amount of Net Cash Payments received

by the Borrower and its Subsidiaries in connection with such Disposition, (b)

in the case of any Casualty Event, the aggregate amount of proceeds of

insurance, condemnation awards and other compensation received by the Borrower

and its Subsidiaries in respect of such Casualty Event net of (i) reasonable

expenses incurred by the Borrower and its Subsidiaries in connection therewith

and (ii) contractually required repayments of Indebtedness to the extent

secured by a Lien on the property to which such Casualty Event relates and any

income and transfer taxes payable by the Borrower or any of its Subsidiaries in

respect of such Casualty Event and (c) in the case of any Equity Issuance or

Debt Incurrence, the aggregate amount of all cash received by the Borrower and

its Subsidiaries in respect of such Equity Issuance or Debt Incurrence, as the

case may be, net of reasonable expenses incurred by the Borrower and its

Subsidiaries in connection therewith.

 

                                2.03.  Clause (b) of Section 2.09 is hereby amended

in its entirety to read as follows:

 

                                "(b)  Mandatory Prepayments.  The Borrower will prepay the Loans (and/or

provide cover for LC Exposure as specified in Section 2.04(k)),

and/or the Commitments shall be subject to automatic reduction, as follows:

 

                                                (i)  Excess Cash Flow.  Not later than the date 110 days after the

end of each fiscal year of the Borrower commencing with the fiscal year ending

on December 31, 1999, the Borrower shall prepay the Loans (and/or provide cover

for LC Exposure as specified in Section 2.04(k)), and/or the Commitments

shall be subject to automatic reduction, in an aggregate amount equal to the

excess of (A) 50% of Excess Cash Flow for such fiscal year over

(B) the aggregate amount of prepayments of Term Loans made during such

fiscal year pursuant to paragraph (a) of this Section and, after the

payment in full of the Term Loans, the aggregate amount of voluntary reductions

of the Revolving Commitments made during such fiscal year pursuant to

Section 2.07(c), such prepayment and/or reduction to be effected in each

case in the manner and to the extent specified in clause (vi) of this

paragraph; provided that if the Total Indebtedness Ratio as of the last

day of any fiscal year is less than 6.00 to 1, the Borrower shall not be

required to make a prepayment under this clause (i) for such fiscal year.

 

(ii)  Sale of Assets.  Without limiting the obligation of the

Borrower to obtain the consent of the Required Lenders pursuant to

Section 7.05 to any Disposition not otherwise permitted hereunder, (x)

with respect to any Disposition made on or prior to September 30, 2002, no

later than five Business Days prior to the consummation of such Disposition,

the Borrower will deliver to the Lenders a statement, certified by a Financial

Officer of the Borrower, in form and detail satisfactory to the Administrative

Agent, of the amount of the Net Available Proceeds of such Disposition and

will, on or prior to the date which is 3 days after the consummation of such

Disposition, prepay the Loans (and/or provide cover for LC Exposure as specified

in Section 2.04(k)), and/or the Commitments shall be subject to automatic

reduction, in an aggregate amount equal to the Net Available Proceeds of such

Disposition and (y) with respect to any Disposition made after September 30,

2002, in the event that the Net Available Proceeds of any Disposition (the

"Current Disposition"), and of all prior Dispositions (other

than sales of assets in the ordinary course of business or in connection with

any Receivables Financing) as to which a prepayment has not yet been made under

this paragraph, shall exceed $100,000,000 in the aggregate for any fiscal year

(such excess amount for any fiscal year, the "Excess Disposition

Proceeds"), then, no later than five Business Days prior to the

consummation of the Current Disposition, the Borrower will deliver to the

Lenders a statement, certified by a Financial Officer of the Borrower, in form

and detail satisfactory to the Administrative Agent, of the amount of the Net

Available Proceeds of the Current Disposition and of all such prior

Dispositions and will, on or prior to the date which is 270 days after the

consummation of the Current Disposition, prepay the Loans (and/or provide cover

for LC Exposure as specified in Section 2.04(k)), and/or the

Commitments shall be subject to automatic reduction, in an aggregate amount

equal to the Excess Disposition Proceeds, in each case, such prepayment and/or

reduction to be effected in each case in the manner and to the extent specified

in clause (vi) of this paragraph, provided that, notwithstanding

the foregoing, the Borrower shall not be required to make a prepayment under

this clause (ii) with respect to any Disposition (A) made on or prior to

September 30, 2002, which is permitted under clause (k) or (i) of Section 7.05

or (B) made after September 30, 2002 (I) which is permitted under Section 7.05

or (II) to the extent that on or prior to the date within 180 days following

receipt of the Net Available Proceeds of the Current Disposition the Borrower

shall have advised the Administrative Agent that it has entered into a legally

binding commitment to make any Acquisition permitted under Section 7.04(f) and

that it intends to use all or portion of the Net Available Proceeds of the

Current Disposition to finance such Acquisitions and that, on or prior to the

date which is 360 days after the Current Disposition, such proceeds are

actually so invested.

 

                                                (iii)  Casualty Events.  Upon the date 90 days following the receipt

by the Borrower of the proceeds of insurance, condemnation award or other

compensation in respect of any Casualty Event affecting any property of the

Borrower or any of its Subsidiaries (or upon such earlier date as the Borrower

or such Subsidiary, as the case may be, shall have determined not to repair or

replace the property affected by such Casualty Event) (the "Current

Casualty Event"), (x) which are received by the Borrower on or prior

to September 30, 2002, the Borrower shall prepay the Loans (and/or provide

cover for LC Exposure as specified in Section 2.04(k)), and/or the

Commitments shall be subject to automatic reduction, in an aggregate amount

equal to the Net Available Proceeds of such Current Casualty Event and (y)

which are received by the Borrower after September 30, 2002, in the event that

the aggregate amount of the Net Available Proceeds of such Current Casualty

Event, together with the aggregate amount of Net Available Proceeds in respect

of any prior Casualty Event not theretofore applied to repair or replace the

property affected by such prior Casualty Event, shall exceed $25,000,000 in the

aggregate (any such excess amount, the "Excess Casualty Proceeds Amount"),

then the Borrower shall prepay the Loans (and/or provide cover for

LC Exposure as specified in Section 2.04(k)), and/or the Commitments

shall be subject to automatic reduction, in an aggregate amount, if any, equal

to the Excess Casualty Proceeds Amount, such prepayment and/or reduction to be

effected in each case in the manner and to the extent specified in

clause (vi) of this paragraph.

 

                                                (iv)  Debt Incurrence.  Upon any Debt Incurrence after the Amendment

No. 1 Effective Date but on or prior to September 30, 2002, the Borrower shall

prepay the Loans (and/or provide cover for LC Exposure as specified in Section

2.04(k)), and/or the Commitments shall be subject to automatic reduction, in an

aggregate amount equal to 100% of the Net Available Proceeds thereof, such

prepayment and/or reduction to be effected in each case in the manner and to

the extent specified in clause (vi) of this paragraph.

 

                                                (v)  Equity Issuance.  Upon any Equity Issuance after the Amendment

No. 1 Effective Date but on or prior to September 30, 2002, the Borrower shall

prepay the Loans (and/or provide cover for LC Exposure as specified in

Section 2.04(k)), and/or the Commitments shall be subject to automatic

reduction, in an aggregate amount equal to 50% of the Net Available Proceeds

thereof, such prepayment and/or reduction to be effected in each case in the

manner and to the extent specified in clause (vi) of this paragraph.

 

                                                (vi)  Application.  Prepayments and/or reductions of Commitments

pursuant to this paragraph shall be applied as follows:

 

                                                first,

to prepay the Term Loans and the Incremental Term Loans, and

 

                                                second,

after the payment in full of the Term Loans and the Incremental Term Loans, to

reduce the aggregate amount of the Revolving Commitments (and to the extent

that, after giving effect to such reduction, the total Revolving Exposures

would exceed the Revolving Commitments, the Borrower shall, first, prepay Revolving

Loans and second, provide cover for LC Exposure as specified in

Section 2.04(k) in an aggregate amount equal to such excess).

 

Each such

prepayment of the Term Loans and the Incremental Term Loans shall be applied

ratably to the then outstanding Term Loans and Incremental Term Loans and, in

each case, ratably to the installments thereof in inverse order of

maturity."

 

                                2.04.  Section 7.11 of the Credit Agreement is

hereby amended in its entirety to read as follows::

 

"SECTION

7.11.  Certain Financial Covenants.

 

                (a)  Interest Coverage Ratio.  The Borrower will not permit the Interest

Coverage Ratio on any date to be less than the ratio set forth below opposite

the period during which such date falls:

 

	

  Period

  	

   

  	

  Ratio

  
	

  From

  the Amendment No. 1 Effective Date through September 30, 2002

  	

   

  	

  1.45 to 1

  
	

   

  	

   

  	

   

  
	

  From

  October 1, 2002 through December 31, 2003

  	

   

  	

  1.80 to 1

  
	

   

  	

   

  	

   

  
	

  From

  January 1, 2004 through December 31, 2004

  	

   

  	

  2.20 to 1

  
	

   

  	

   

  	

   

  
	

  From

  January 1, 2005 and at all times thereafter

  	

   

  	

  2.50 to 1

  

 

                (b)  Fixed

Charges Ratio. The Borrower will not permit the Fixed Charges Ratio to be

less than or equal to 1.05 to 1 at any time.

 

                (c)  Senior Indebtedness Ratio.  The Borrower will not permit the Senior Indebtedness Ratio on any

date to be greater than the ratio set forth below opposite the period during

which such date falls:

 

	

  Period

  	

   

  	

  Ratio

  
	

  From the Amendment No.

  1 Effective Date through September 30, 2002

  	

   

  	

  4.75 to 1

  
	

   

  	

   

  	

   

  
	

  From

  October 1, 2002 through December 31, 2003

  	

   

  	

  4.00 to 1

  
	

   

  	

   

  	

   

  
	

  From

  January 1, 2004 and at all times thereafter

  	

   

  	

  3.50 to 1

  

 

                (d)  Total

Indebtedness Ratio.  The Borrower

will not permit the Total Indebtedness Ratio on any date to be greater than the

ratio set forth below opposite the period during which such date falls:

 

	

  Period

  	

   

  	

  Ratio

  
	

  From

  the Amendment No. 1 Effective Date through September 30, 2002

  	

   

  	

  8.50 to 1

  
	

   

  	

   

  	

   

  
	

  From

  October 1, 2002 through December 31, 2003

  	

   

  	

  6.50 to 1

  
	

   

  	

   

  	

   

  
	

  From

  January 1, 2004 through December 31, 2004

  	

   

  	

  5.50 to 1

  
	

   

  	

   

  	

   

  
	

  From

  January 1, 2005 and at all times thereafter

  	

   

  	

  5.00 to 1

  

 

                                (e)  Film Obligations.  The Borrower will not, nor will it permit

any of its Subsidiaries to, purchase, redeem, retire or otherwise acquire for

value, or set apart any money for a sinking, defeasance or other analogous fund

for, the purchase, redemption, retirement or other acquisition of, or make any

voluntary payment or prepayment of the principal of or interest on, or any

other amount owing in respect of, any Film Obligations, except for

(a) regularly scheduled payments in respect thereof required pursuant to

the instruments evidencing such Film Obligations and (b) with the consent of

the Administrative Agent, prepayments of Film Obligations not exceeding

$50,000,000 in the aggregate after the date hereof."

 

                              2.05.  Clause (a) of Section 7.12 of the Credit

Agreement is hereby amended to read in its entirety as follows:

 

                "(a)  The

Borrower will not, nor will it permit any of its Subsidiaries to, purchase,

redeem, retire or otherwise acquire for value, or set apart any money for a

sinking, defeasance or other analogous fund for, the purchase, redemption,

retirement or other acquisition of, or make any voluntary payment or prepayment

of the principal of or interest on, or any other amount owing in respect of,

any Subordinated Indebtedness, except for (i) regularly scheduled payments

of principal and interest in respect thereof required pursuant to the

instruments evidencing such Subordinated Indebtedness, (ii) the purchase,

redemption, retirement or other acquisition or defeasance of any Subordinated

Indebtedness (together with any premium and accrued interest payable therein)

solely with the proceeds of other Subordinated Indebtedness permitted under

Section 7.01(c), provided that no Default shall have occurred and be

continuing at the time of such redemption and (iii) the purchase, redemption,

retirement or other acquisition or defeasance of Subordinated Indebtedness

after September 30, 2002, provided that (x) no Default shall have

occurred and be continuing at the time of such purchase, redemption, retirement

or other acquisition or defeasance or would result therefrom and (y) the

aggregate principal amount of all Subordinated Indebtedness so purchased,

redeemed, retired, acquired or defeased under this clause (iii), together with

the aggregate amount of Investments made as permitted under Section 7.07(o),

does not exceed the sum of $200,000,000 plus the Net Available Proceeds

of any Equity Issuance to the extent not otherwise applied as permitted or

required under this Agreement."

 

Section 3.  Representations and Warranties.  The Borrower represents and warrants to the

Lenders that (a) the representations and warranties set forth in Article IV of

the Credit Agreement are true and complete on the date hereof as if made on and

as of the date hereof and as if each reference in said Article IV to "this

Agreement" included reference to this Amendment No. 1 and (b) both

immediately prior to and after giving effect to this Amendment No. 1, no

Default shall have occurred and be continuing.

 

Section 4.  Conditions

Precedent.  The amendments to the

Credit Agreement set forth in Section 2 shall become effective, as of the

date hereof, upon receipt by the Administrative Agent of each of the following

documents, each of which shall be satisfactory to the Administrative Agent in

form and substance:

 

(1)  Amendment

No. 1.  The written consent of the

Required Lenders to this Amendment No. 1 and one or more counterparts of this

Amendment No. 1 duly executed and delivered by each party hereto.

 

(2)   Opinion

of Counsel to the Obligors. A favorable written opinion (addressed to the

Administrative Agent and the Lenders and dated as of a date acceptable to the

Administrative Agent) of Thomas & Libowitz, P.A., counsel for the Obligors

in form and substance satisfactory to the Administrative Agent covering such

matters relating to the Obligors and this Amendment No. 1 as the Administrative

Agent shall reasonably request (and each Obligor hereby instructs such counsel

to deliver such opinion to the Lenders and the Administrative Agent).

 

(3)  Other

Documents.  Such other documents as

the Administrative Agent or any Lender or Milbank, Tweed, Hadley & McCloy

LLP, special New York counsel to Chase, may reasonably request.

 

(4)  Amendment

Fee.  The Administrative Agent shall

have received for account of each Lender that has consented in writing to this

Amendment No. 1 by 5:00 p.m., New York City time, October 30, 2001 an amendment

fee in an amount equal to 0.25% of the sum of Revolving Exposures and unused

Revolving Commitments and outstanding Incremental Term Loans and unused

Incremental Term Loan Commitments of each such Lender on the date hereof.

 

Section 5.  Confirmation

of Collateral Security.  Each

Obligor hereby confirms that each of the Security Documents shall continue in

effect for the benefit of the Administrative Agent and the Lenders with respect

to the obligations of the Obligors under the Credit Agreement as amended

hereby.

 

Section 6.  Miscellaneous.  Except as herein provided, the Credit

Agreement shall remain unchanged and in full force and effect.  This Amendment No. 1 may be executed in any

number of counterparts, all of which taken together shall constitute one and

the same amendatory instrument and any of the parties hereto may execute this

Amendment No. 1 by signing any such counterpart.  This Amendment No. 1 shall be governed by, and construed in

accordance with, the law of the State of New York.

 

[remainder of page

intentionally left blank]

 

IN WITNESS WHEREOF, the

parties hereto have caused this Amendment No. 1 to be duly executed and

delivered as of the day and year first above written.

 

	

   

  	

  SINCLAIR BROADCAST

  GROUP, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

  David B. Amy

  
	

   

  	

   

  	

  Title:

  	

  Executive Vice

  President

  

 

 

	

   

  	

   

  	

   

  	

   

  
	

   

  	

  SUBSIDIARY GUARANTORS

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CHESAPEAKE TELEVISION,

  INC.

  
	

   

  	

  KSMO, INC.

  
	

   

  	

  WCGV, INC.

  
	

   

  	

  SINCLAIR ACQUISITION

  IV, INC.

  
	

   

  	

  WLFL, INC.

  
	

   

  	

  SINCLAIR MEDIA I, INC.

  
	

   

  	

  WSMH, INC.

  
	

   

  	

  SINCLAIR MEDIA II, INC.

  
	

   

  	

  WSTR LICENSEE, INC.

  
	

   

  	

  WGME, INC.

  
	

   

  	

  SINCLAIR MEDIA III,

  INC.

  
	

   

  	

  WTTE, CHANNEL 28

  LICENSEE, INC.

  
	

   

  	

  WTTO, INC.

  
	

   

  	

  WTVZ, INC.

  
	

   

  	

  WYZZ, INC.

  
	

   

  	

  KOCB, INC.

  
	

   

  	

  FSF-TV, INC.

  
	

   

  	

  KSMO LICENSEE, INC.

  
	

   

  	

  WDKY, INC.

  
	

   

  	

  WYZZ LICENSEE, INC.

  
	

   

  	

  KLGT, INC.

  
	

   

  	

  SINCLAIR ACQUISITION

  II, INC.

  
	

   

  	

  SINCLAIR

  COMMUNICATIONS, INC.

  
	

   

  	

  WSYX LICENSEE, INC.

  
	

   

  	

  WGGB, INC.

  
	

   

  	

  WTWC, INC.

  
	

   

  	

  SINCLAIR COMMUNICATIONS

  II, INC.

  
	

   

  	

  SINCLAIR HOLDINGS I,

  INC.

  
	

   

  	

  SINCLAIR HOLDINGS II,

  INC.

  
	

   

  	

  SINCLAIR HOLDINGS III,

  INC.

  
	

   

  	

  SINCLAIR

  TELEVISION COMPANY, INC.

  
	

   

  	

  SINCLAIR

  TELEVISION OF BUFFALO, INC.

  
	

   

  	

  SINCLAIR

  TELEVISION OF CHARLESTON, INC.

  
	

   

  	

  SINCLAIR

  TELEVISION OF NASHVILLE, INC.

  
	

   

  	

  SINCLAIR

  TELEVISION OF NEVADA, INC.

  
	

   

  	

  SINCLAIR

  TELEVISION OF OKLAHOMA, INC.

  
	

   

  	

  SINCLAIR

  TELEVISION OF TENNESSEE, INC.

  
	

   

  	

  SINCLAIR

  TELEVISION OF LICENSE HOLDER, INC.

  
	

   

  	

  SINCLAIR

  TELEVISION OF DAYTON, INC.

  
	

   

  	

  SINCLAIR ACQUISITION

  VII, INC.

  
	

   

  	

  SINCLAIR ACQUISITION

  VIII, INC.

  
	

   

  	

  SINCLAIR ACQUISITION

  IX, INC.

  
	

   

  	

  SINCLAIR ACQUISITION X,

  INC.

  
	

   

  	

  SINCLAIR ACQUISITION

  XI, INC.

  
	

   

  	

  SINCLAIR ACQUISITION

  XII, INC.

  
	

   

  	

  MONTECITO

  BROADCASTING CORPORATION

  
	

   

  	

  CHANNEL 33, INC.

  
	

   

  	

  WNYO, INC.

  
	

   

  	

  NEW YORK TELEVISION,

  INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary (As to All)

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  SINCLAIR PROPERTIES,

  LLC

  
	

   

  	

  SINCLAIR PROPERTIES II,

  LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Manager (as to both)

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  KBSI LICENSEE L.P.

  
	

   

  	

  KETK LICENSEE L.P.

  
	

   

  	

  WMMP LICENSEE L.P.

  
	

   

  	

  WSYT LICENSEE L.P.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By: 

  	

   

  	

  Sinclair Properties,

  LLC, General Partner

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Manager

  
					

 

 

	

   

  	

  WEMT LICENSEE L.P.

  
	

   

  	

  WKEF LICENSEE L.P.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  Sinclair Properties II,

  LLC, General

  
	

   

  	

   

  	

   

  	

  Partner

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Manager

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WGME LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  WGME, Inc., Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WICD LICENSEE, LLC

  
	

   

  	

  WICS LICENSEE, LLC

  
	

   

  	

  KGAN LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  Sinclair Acquisition

  IV, Inc., Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WSMH

  LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  WSMH, Inc., Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WPGH LICENSEE, LLC

  
	

   

  	

  KDNL LICENSEE, LLC

  
	

   

  	

  WCWB LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  Sinclair Media I, Inc.,

  Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WTVZ LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  WTVZ, Inc., Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  

 

 

	

   

  	

  CHESAPEAKE

  TELEVISION LICENSEE,  LLC

  
	

   

  	

  KABB LICENSEE, LLC

  
	

   

  	

  SCI - SACRAMENTO

  LICENSEE, LLC

  
	

   

  	

  WLOS LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  Chesapeake Television,

  Inc., Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  KLGT LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  KLGT, Inc., Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WCGV

  LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  WCGV, Inc., Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  SCI - INDIANA LICENSEE,

  LLC

  
	

   

  	

  KUPN LICENSEE, LLC

  
	

   

  	

  WEAR LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  Sinclair Media II, Inc.

  - Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WLFL LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  WLFL, Inc. - Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WTTO LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  WTTO, Inc. - Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WTWC LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  WTWC, Inc. - Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WGGB

  LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  WGGB, Inc. - Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  KOCB

  LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  KOCB, Inc. - Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  

 

 

	

   

  	

  WDKY

  LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  WDKY, Inc., Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  KOKH

  LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  Sinclair Television of

  Oklahoma, Inc.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WUPN LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  Sinclair Television of

  Buffalo, Inc. Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WUXP LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  Sinclair Television of

  Tennessee, Inc., 

  
	

   

  	

   

  	

   

  	

  Member

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WCHS LICENSEE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  Sinclair Media III,

  Inc.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Secretary

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  SINCLAIR FINANCE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  Sinclair Broadcast

  Group, Inc.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  David B. Amy

  
	

   

  	

   

  	

   

  	

  Executive Vice

  President and CFO

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  ADMINISTRATIVE AGENT

  
	

   

  	

  THE CHASE MANHATTAN

  BANK,

  
	

   

  	

  as Administrative Agent

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

  Title:Prepared by MERRILL CORPORATION

 

 

EMPLOYMENT AGREEMENT

 

                THIS EMPLOYMENT AGREEMENT (the

"Agreement") is made and entered into as of July 16, 2001, by and

among Aegis Communications Group, Inc., a Delaware corporation (the “Parent”),

Advanced Telemarketing Corporation, a Nevada corporation (“ATC”), IQI, Inc., a

New York corporation (“IQI”) (together, ATC and IQI are referred to as the

"Company"), and Herman M. Schwarz ("Employee").

 

R E C I T A L S:

 

                The Company and the Parent desire to employ Employee

under the terms and conditions of this Agreement.  Employee represents that as of the effective date of this

Agreement, Employee is free from any other obligation of continuing employment

with his former employer.

 

                Employee desires employment by the Company and the

Parent under the terms and conditions of this Agreement and further desires to

be granted access to the Company’s and the Parent’s proprietary information.

 

                NOW, THEREFORE, in consideration of the mutual

covenants and agreements set forth in this Agreement, the parties agree as follows:

 

                1.                Employment.  Subject to the terms and conditions set

forth in this Agreement, each of the Company and the Parent employ Employee,

and Employee accepts such employment by the Company and the Parent.

 

                2.                Duties

of Employee.

 

                                (a)                Employee will serve in the

capacities of President and Chief Executive Officer of each of the Company and

the Parent, subject in each case to the reasonable supervision of the Board of

Directors of such corporation.  In such

capacities, Employee will have all necessary powers to discharge his

responsibilities, subject in each case to the respective Board’s supervision

and control.  Employee will have all the

powers granted by the Bylaws of each of the Company and the Parent to the

President and Chief Executive Officer of such corporation, and Employee will

report to the Board of Directors of such corporation.  In addition, Employee will be elected to the Board of Directors

of each of the Company and the Parent.

 

(b)                Commencing 17, July 2001, (the “Effective Date”) and

during the remaining term of this Agreement, Employee will devote his full

business time and effort to the performance of his duties and responsibilities

as President and Chief Executive Officer of the Company and the Parent.  Notwithstanding the foregoing, Employee may

spend reasonable amounts of time on his personal civic and charitable

activities that do not interfere with the performance of his duties and

responsibilities to the Company and the Parent.  Employee acknowledges that Aegis’s headquarters are currently

located in the Dallas, Texas metropolitan area, and hereby commits that he will

perform his duties and responsibilities by officing in and physically working

from these headquarters on a routine basis 

except to the extent that ordinary and necessary business travel

obligations require otherwise or to address family emergencies, or until the

board of directors authorizes employee to work out of another location.

 

                                (c)                Employee will comply with the

written rules and regulations of the Company and the Parent respecting their

businesses and perform the reasonable directives and policies of the Company

and the Parent as they may from time to time be stated to Employee verbally or

in writing by the Board of Directors of each corporation.

 

                                (d)                Employee will comply with the

Company and Parent policy regarding maintenance of accurate business records as

may from time to time be required by the Company or the Parent.  Such records may be examined by the Company

or the Parent, as the case may be, at all reasonable times after written

request is delivered to Employee.  Any

such document will be delivered to the Company or the Parent, as the case may

be, promptly upon request.

 

                                (e)                Employee agrees not to solicit

or receive any income or other compensation from any third party in connection

with his employment with the Company and the Parent.  The Employee agrees, upon written request by the Company or the

Parent, to render an accounting of all transactions relating to his business

endeavors during the term of this employment hereunder.

 

                3.                Term.  The term of this Agreement (the

"Term") will commence on the Effective Date and continue until

terminated in accordance with Section 8 of this Agreement.

 

                4.                Salary.  Commencing on the Effective Date, the Parent

will pay Employee an annual base salary during the term of this Agreement for

his services as President and Chief Executive Officer of  the Company and the Parent of $300,000,

which will be payable in installments in accordance with the Parent's standard

payroll practice, but not less than bi-weekly. 

Such base salary will not include any benefits made available to

Employee or any contributions or payments made on his behalf pursuant to any

employee benefit plan or program of the Parent, including any health,

disability or life insurance plan or program, 401K plan, cash bonus plan, stock

incentive plan, retirement plan or similar plan or program of any nature.  Employee’s performance and base salary will

be reviewed by the Board of Directors or compensation committee thereof, may be

increased, but not decreased without Employee’s consent, by such amount as the

Board of Directors or such committee shall determine.  The Company will have no separate salary obligation to Employee.

 

                5.                Bonus Compensation.

 

(a)  The Parent will pay

Employee annual performance based cash bonuses of up to 100% of Employee’s then

current salary in accordance with  the

bonus plan adopted by the Board of Directors for each applicable year.

 

(b)  The Company shall have no

separate obligations to Employee with respect to bonus compensation, but shall

be jointly and severally liable with the Parent for the payment of the bonus

payments contemplated by subparagraph (a) above.

 

6.                Employee Benefits.  During the term of this Agreement, the Parent will provide

Employee with all benefits made available from time to time by the Parent to

its employees generally and to Executives who hold positions similar to that of

Employee (including the benefits granted to other officers of the Parent), such

benefits to be in accordance with the Parent's policies.  Specifically, employee’s benefits will

include, at a minimum, participation in medical and dental benefit plans or

programs (providing coverage for Employee’s immediate family); disability

insurance; 401-K plans as soon as Employee is eligible to participate in such

plans; term life insurance payable to Employee’s designated beneficiary; up to

two weeks’ sick leave annually or personal leave (if needed); and three weeks’

paid vacation.

 

                7.                Reimbursement

of Expenses.  The Parent will

reimburse Employee, in accordance with Parent and Company policy, for all

expenses actually and reasonably incurred by him in the business interests of

the Parent or the Company. 

Reimbursement will be made to Employee upon appropriate documentation of

such expenditures in accordance with the Parent’s written policies.

 

8.                Early Termination.  It is the desire and expectation of each party that the

employer-employee relationship will continue as specified herein and be a pleasant

and rewarding experience for the parties hereto.  The Company or the Parent will, however, be entitled to terminate

Employee’s employment at any time with or without Cause (as defined in this

Section 8). If the Parent or the Company terminate Employee’s employment

without Cause, if the Parent or the Company terminate Employee’s employment

following a Change in Control (as defined in this Section 8), or Employee

terminates such employment following occurrence of an Employee Termination

Event, however, the Parent will pay Employee twelve months’ salary as severance

compensation (based on Employee’s then current annual base salary) in

accordance with the Parent’s standard payroll practice, but not less than

monthly.

 

                If Employee dies, is unable to perform his duties and

responsibilities as a result of disability that continues for 120 consecutive

days or more or that exists for 180 days in any twelve month period

(“Disability”), voluntarily resigns from the Company or the Parent (other than

a termination by Employee following occurrence of an Employee Termination

Event), or is terminated for Cause, the Parent will pay Employee (or his

estate, executor or legal representative, as appropriate) any salary that has

accrued to the date employment ceases, and the Parent’s obligations to pay

additional salary or cash compensation or benefits will terminate as of such

date.

                “Cause,” for the purpose of this Agreement, will mean

the occurrence of any of the following events:

 

(a)                Performance by Employee of any willful misconduct

relating to the activities of the Company or the Parent, or commission by

Employee of any illegal or fraudulent acts or criminal conduct which in the

opinion of the Parent’s Board of Directors will have or is reasonably likely to

have a material adverse effect on the profitability, reputation or goodwill of

the company or Parent;

 

(b)                A conviction of or nolo contendere plea by

Employee for any criminal acts involving moral turpitude having or reasonably

likely to have a material adverse effect upon the Company or the Parent,

including, without limitation, upon their profitability, reputation or

goodwill;

 

(c)                Willful or grossly negligent failure by Employee to

perform his duties in a manner consistent with the Company’s or the Parent’s

best interests which he fails to cure within thirty (30) days after receiving

written notice thereof;

 

(d)                Willful refusal by Employee to carry out reasonable

instructions of the Company’s or the Parent’s Board of Directors not

inconsistent with the provisions of this Agreement which he fails to cure

within thirty (30) days after receiving written notice thereof;

 

(e)                Employee’s failure to honor his obligations referred

to in Section 2(b) which he fails to cure within thirty (30) days after

receiving written notice thereof;

 

(f)                Willful violation by Employee’s covenants and

agreements contained in Sections 9, 10 or 11 of this Agreement;

 

(g)                Any other material breach of Employee’s obligations

hereunder, which he fails to cure within thirty (30) days after receiving

written notice thereof.

 

                “Termination without Cause” shall mean termination by

Parent or the Company for a reason other than “Cause” and “Employee Termination

Event” shall mean termination by Employee, as a consequence of any of the

following events, if such event occurs without Employee’s prior consent:

 

(a)                Employee’s compensation is reduced or Parent fails to

make available to Employee a performance bonus plan with a target bonus of at

least 100% of Employee’s base salary based upon full achievement of the goals

established by the plan;

 

                (b)                Employee’s

responsibilities, functions or duties as 

President and Chief Executive Officer of the Company or the Parent are

materially reduced; or

 

(c)                Employee’s

title or reporting relationships change.

 

(d)                Employee is forced to transfer his principal office

or principal place of residence from the Atlanta area.

 

(e)                Employee is asked to do an illegal or unlawful act.

 

A

“Change in Control” will be deemed to occur in the following events:

 

(i)            The

acquisition in one or more transactions 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 “1934 Act”), of “Beneficial Ownership” (within the

meaning of Rule 13d-3 promulgated under the 1934 Act) of a majority of the

combined voting power of the Parent’s then outstanding voting securities (the

“Voting Securities”), provided, however, that for purposes of

this subsection (i), the Voting Securities acquired directly from the Parent by

any Person shall be excluded from the determination of such Person’s Beneficial

Ownership of Voting Securities (but such Voting Securities shall be included in

the calculation of the total number of Voting Securities then outstanding), and

provided further, however, that for purposes of this subsection (i),

Person shall in no event include Questor Partners Fund II, L.P., Thayer Equity

Investors III, L.P., or any of their affiliates; or

 

(ii)                Approval

by stockholders of the Parent of (A) a merger or consolidation involving the

Parent if the stockholders of the Parent immediately before such merger or

consolidation do not own, directly or indirectly immediately following such

merger or consolidation, at least a majority of the combined voting power of

the outstanding voting securities of the corporation resulting from such merger

or consolidation in substantially the same proportion as their ownership of the

Voting Securities immediately before such merger or consolidation or (B) a

complete liquidation or dissolution of the Parent or an agreement for the sale

or other disposition of all or substantially all of the assets of the Parent.

 

(iii)                A

sale or transfer of all, or substantially all, of the assets and business of

the Company and the Parent to any entity or group of entities of which the

Company and/or Parent does not hold a controlling interest (i.e., more than 50%

of the ownership interest in the entity or group of entities).

 

(iii)                Notwithstanding

the foregoing, a Change in Control shall not be deemed to occur solely because

a majority or more of the then outstanding Voting Securities is acquired by (i)

a trustee or other fiduciary holding securities under one or more employee

benefit plans maintained by the Parent or any of its subsidiaries or (ii) any corporation

that, immediately prior to such acquisition, is owned directly or indirectly by

the stockholders of the Parent in the same proportion as their ownership of

stock in the Parent immediately prior to such acquisition;

 

(iv)                Moreover,

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 outstanding Voting Securities as a

result of the acquisition of Voting Securities by the Parent which, by reducing

the number of Voting Securities outstanding, increases the proportional number

of shares Beneficially Owned by the Subject Person, 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 Parent, and after such share

acquisition by the Parent, 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.

 

9.                (a)  Non-Competition

Agreement.  Employee understands

that during the course of his employment by the Company and the Parent,

Employee will (i) have access to and receive the benefit of special training

and unique information, including, but not limited to, inbound and outbound

telemarketing and customer care services, whether conducted by telephone or the

internet, research, systems, development, marketing, management, business

development, customer satisfaction methods and techniques, business process

improvements and other developments in marketing methods and providing services

to  customers, and (ii) represent the

Company and the Parent and their affiliates and develop contacts and

relationships with other persons and entities on behalf of such entities,

including but, not limited to, customers, potential customers and other

employees of such entities.  To protect

such entities' interest in this information and in these contacts and

relationships, Employee agrees and covenants that during the term of his

employment by the Company and the Parent, and for a period of one year after

the termination of such employment for any reason, without prior written

approval of the Company and the Parent, Employee will not, in connection with

any business that is engaged in, or is about to be engaged in, by the Company

or the Parent, which includes, but is not limited to, inbound and outbound

telemarketing and customer care services, whether conducted by telephone or the

internet, and the provision of market research services as currently provided

by Elrick & Lavidge, and the consulting, design and implementation of any

of these services, including organization and investment in related industries

or professions (the “Business”), directly or indirectly, either as an

individual or as an employee, partner, officer, director, shareholder, advisor,

or consultant or in any other capacity whatsoever, of any person (other than

ownership of less than 5% of the issued and outstanding voting securities of a

publicly held corporation conduct or assist others in conducting any business

or activity that competes with the Business in the United States, its

territories or possessions.

 

                (b)           Non-Hire Agreement.  Employee agrees that for a period of one year after the

termination of such employment for any reason, without prior written approval

of the Company and the Parent, employee will not recruit, hire, assist others in

recruiting or hiring, discuss employment with or refer to others for employment

any person who is or within the 12 month period immediately preceding the date

of any such activity was an employee of the Company or the Parent or its

subsidiaries or  affiliates.

 

                It is understood and agreed that the scope of the

foregoing covenants is reasonable as to time, area and persons and is necessary

to protect the legitimate business interests of the Company, the Parent and

their affiliates.  It is further agreed

that such covenants will be regarded as divisible and will be operative as to

time, area and persons to the extent that it may be so operative, and if any

part of such covenant is declared invalid, unenforceable, or void as to time,

area or persons, the validity and enforceability of the remainder will not be

affected.

 

                If Employee violates the restrictive covenants of

this Section 9 and the Company or the Parent brings legal action for

injunctive or other relief, neither the Company nor the Parent will be deprived

of the benefit of the full period of the restrictive covenant, as a result of

the time involved in obtaining the relief. 

Accordingly, Employee agrees that the restricted period following the

term of employment will have a duration of one year, and the regularly

scheduled expiration date of such covenant will be extended by the same amount

of time that Employee is determined to have violated such covenant.

 

                10.                Confidentiality.  Employee acknowledges that Employee has

learned and will learn Confidential Information (as defined herein) relating to

the business conducted and to be conducted by the Company, the Parent or their

affiliates.  Employee agrees that

Employee will not, except in the normal and proper course of his duties

hereunder, disclose or use or authorize any third party to disclose or use any

such Confidential Information, without prior written approval of the Company or

the Parent.  As used in this Section 10,

"Confidential Information" will mean information disclosed to or

known to Employee as a direct or indirect consequence of or through his

employment with the Company or the Parent, about any customer’s, supplier’s or

the Company’s or the Parent’s business, methods, business plans, operations,

products, processes, and services, including, but not limited to, information

relating to research, development, inventions, recommendations, programs,

systems, and systems analyses, flow charts, finances, and financial statements,

marketing plans and strategies, merchandising, pricing strategies, merchandise

sources, client sources, system designs, procedure manuals, automated data

programs, financing methods, financial projections, terms and conditions of

arrangements of any business, computer software, terms and conditions of

business arrangements with clients or suppliers, reports, personnel procedures,

supply and services resources, names and addresses of clients, the Company’s or

the Parent’s contacts, names of professional advisors, and all other

information pertaining to clients and suppliers, including, but not limited to

assets, business interests, personal data and all other information pertaining

to the Company or the Parent, clients or suppliers whatsoever, including all

accompanying documentation therefore. 

All information disclosed to Employee, or to which Employee has access

during the period of his employment, which is treated by the Employer as

Confidential Information, will be presumed to be Confidential Information

hereunder. Confidential Information will not, however, include information that

(i) is publicly known or becomes publicly known through no fault of Employee,

or (ii) is generally or readily obtainable by the public, or (iii) constitutes

general skills, knowledge and experience acquired by Employee before and/or

during his employment with the Company and the Parent.

 

                Employee agrees that all documents of any nature

pertaining to activities of the Company, the Parent or their affiliates, or

that include any Confidential Information, in his possession now or at any time

during the term of his employment, including without limitation, memoranda,

notebooks, notes, data sheets, records and computer programs, are and will be

the property of such entity and that all copies thereof will be surrendered to

the appropriate entity upon termination of his employment.

 

                11.                Inventions;

Developments.  Employee agrees to

notify the Company and the Parent of any discovery, invention, innovation, or

improvement which is related to the Business or to the business of any customer

or supplier (collectively called “Developments”) conceived or developed by

Employee during the term of the Employee’s employment.  Developments will include, without

limitation, developments in computer software, logical systems, algorithms, and

any or all other intellectual properties related to the Business.  All Developments, including but not limited

to all written documents pertaining thereto, will be the exclusive property of

the Company or the Parent, as the case may be, and will be considered

Confidential Information subject to the terms of this Agreement.  Employee agrees that when appropriate, and

upon written request of the Company or the Parent, as the case may be, the

Employee will acknowledge that Developments are “works for hire” and will file

for patents or copyrights with regard to any or all Developments and will sign

documentation necessary to evidence ownership of Developments in the Company or

the Parent, as the case may be.

 

                12.                Exit

Interview.  To insure a clear

understanding of this Agreement, including, but not limited to, the protection

of the Company’s and the Parent’s business interests, Employee agrees, at no

additional expense to the Company and the Parent, at a mutually acceptable time

and place to engage in an exit interview with the Company and the Parent prior

to Employee's departure from the Company and the Parent.

 

                13.                Right

of Setoff.  The Company and the

Parent will be entitled, at their option and not in lieu of any other remedies

to which they may be entitled, to set off any amounts due Employee or any

affiliate of Employee against any amount due and payable by Employee or any

affiliate of Employee to the Company and the Parent ("Set-Offs")

pursuant to this Agreement or otherwise, provided that the Set-Offs are set

forth in detail in writing with supporting evidence to substantiate each

Set-Off and Employee has agreed that the Set-Offs are due and payable.

 

                14.                Miscellaneous.

 

                                (a)                Any notice, demand or request

required or permitted to be given or made under this Agreement will be in writing

and will be deemed given or made when delivered in person, when sent by United

States registered or certified mail, or postage prepaid, or when telecopied to

a party at its address or telecopy number specified below:

 

If

to the Parent or the Company:

 

Attn:

EVP Administration

Aegis

Communications Group, Inc.

7880

Bent Branch Drive

Suite

150

Irving,

Texas  75063

Telecopy

number:  (972) 830-1804

 

 

With

a copy to:

 

Hughes

& Luce, L.L.P.

1717

Main Street

Suite

2800

Dallas,

Texas 75201

Attn:  Jim Hunter Birch

Telecopy

number:  (214)939-6100

 

If

to Employee:

 

Herman

M. Schwarz

1706

Brandywine Drive

Atlanta,

George 30338

 

With

a copy to:

 

Craig

M. Frankel

Frankel

& Associates, LLC

The

Grand, Suite 2840

75

14th Street

Atlanta,

Georgia 30309

404-888-3731

 

                The parties to this Agreement may change their

addresses for notice in the manner provided above.

 

                                (b)                All section titles and captions

in this Agreement are for convenience only, will not be deemed part of this

Agreement, and in no way will define, limit, extend or describe the scope or

intent of any provisions hereof.

 

                                (c)                Whenever the context may

require, any pronoun used in this Agreement will include the corresponding

masculine, feminine or neuter forms, and the singular form of nouns, pronouns

and verbs will include the plural and vice versa.

 

                                (d)                The parties will execute all

documents, provide all information and take or refrain from taking all actions

as may be reasonably necessary or appropriate to achieve the purposes of this

Agreement.

 

                                (e)                This Agreement will be binding

upon and inure to the benefit of the parties hereto, their representatives and

permitted successors and assigns. 

Except for the provisions of Sections 9, 10 and 11 of this Agreement,

which are intended to benefit the Company’s and the Parent’s affiliates as

third party beneficiaries, or as otherwise expressly provided in this

Agreement, nothing in this Agreement, express or implied, is intended to confer

upon any person other than the parties to this Agreement, their respective representatives

and permitted successors and assigns, any rights, remedies or obligations under

or by reason of this Agreement.

 

                                (f)                This Agreement constitutes the entire agreement among

the parties hereto pertaining to the specific subject matter hereof and

supersedes all prior agreements and understandings pertaining thereto.

 

                                (g)                None of the provisions of this Agreement will be for

the benefit of or enforceable by any creditors of the parties, except as

otherwise expressly provided herein.

 

                                (h)                No failure by any party to

insist upon the strict performance of any covenant, duty, agreement or

condition of this Agreement or to exercise any right or remedy consequent upon

a breach thereof will constitute waiver of any such breach or any other

covenant, duty, agreement or condition.

 

                                (i)                This Agreement may be executed

in counterparts, all of which together will constitute one agreement binding on

all the parties hereto, notwithstanding that all such parties are not

signatories to the original or the same counterpart.

 

                                (j)                THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH

AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE

PRINCIPLES OF CONFLICTS OF LAW.  All

claims, disputes, and controversies arising out of or relating to this Agreement

or the performance, breach, validity, interpretation, application or

enforcement hereof, including any claims for equitable relief or claims based

on contract, tort, statute, or any alleged breach, default, or

misrepresentation in connection with any of the provisions hereof, will be

resolved by binding arbitration. 

Provided, however, an aggrieved party may petition a federal or state

court of competent jurisdiction in Dallas County, Texas for interim injunctive

or other equitable relief to preserve the status quo until

arbitration can be completed in the event of an alleged breach of Section 9,

10, or 11 of this agreement.  A party

may initiate arbitration by sending written notice of its intention to

arbitrate to the other party and to the American Arbitration Association

(“AAA”) office located in Dallas, Texas (the “Arbitration Notice”).  The Arbitration Notice will contain a

description of the dispute and the remedy sought.  The arbitration will be conducted at the offices of the AAA in

Dallas, Texas before an independent and impartial arbitrator who is selected by

mutual agreement, or, in the absence of such agreement, before three

independent and impartial arbitrators, of whom each party will appoint one,

with the third being chosen by the two appointed by the parties.  In no event may the demand for arbitration

be made after the date when the institution of a legal or equitable proceeding

based on such claim, dispute, or other matter in question would be barred by

the applicable statute of limitations. 

The arbitration and any discovery conducted in connection therewith will

be conducted n accordance with the Commercial Rules of arbitration and

procedures established by AAA in effect at the time of the arbitration,

including without limitation the expedited procedures set forth therein (the

“AAA Rules”).  The decision of the

arbitrator(s) will be final and binding on all parties and their successors and

permitted assignees.  The judgment upon

the award rendered by the arbitrator(s) may be entered by any court having

jurisdiction thereof.  The arbitrator(s)

will be selected no later than 30 days after the date of the Arbitration

Notice.  The arbitration hearing will

commence no later than 60 days after the arbitrator(s) is selected.  The arbitrator(s) will render a decision no

later than 30 days after the close of the hearing, in accordance with AAA

Rules.  The arbitrator’s fees and costs

will conform to the then current AAA fee schedule and will be borne equally by

the parties.

 

                                (k)                If any provision of this

Agreement is declared or found to be illegal, unenforceable, or void, in whole

or in part, then the parties will be relieved of all obligations arising under

such provision, but only to the extent that it is illegal, unenforceable or

void, it being the intent and agreement of the parties that this Agreement will

be deemed amended by modifying such provision to the extent necessary to make

it legal and enforceable while preserving its intent or, if that is not

possible, by substituting therefore another provision that is legal and

enforceable and achieves the same objectives.

 

                                (l)                No supplement, modification or

amendment of this agreement or waiver of any provision of this Agreement will

be binding unless executed in writing by all parties to this Agreement.  No waiver of any of the provisions of this

Agreement will be deemed or will constitute a waiver of any other provision of

this Agreement (regardless of whether similar), nor will any such waiver constitute

a continuing wavier unless otherwise expressly provided.

 

                                (m)                Employee acknowledges and agrees

that the Company and the Parent would be irreparably harmed by any violation of

Employee's obligations under Sections 9, 10 and 11 hereof and that, in addition

to all other rights or remedies available at law or in equity, the Company and

the Parent will be entitled to injunctive and other equitable relief to prevent

or enjoin any such violation.  The

provisions of Sections 9, 10 and 11 hereof will survive any termination of this

Agreement, in accordance with their terms.

                                (n)                No party may assign this

Agreement or any rights or benefits hereunder without the written consent of

the other parties to this Agreement.

 

                EXECUTED as of the date first above written.

 

	

   

  	

  AEGIS COMMUNICATIONS

  GROUP,INC.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ 

  John R. Birk

  
	

   

  	

   

  	

            John R. Birk

  
	

   

  	

   

  	

            Chairman of the Board

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  ADVANCED

  TELEMARKETING CORPORATION

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  John R. Birk

  
	

   

  	

   

  	

            John R. Birk

  
	

   

  	

   

  	

            Chairman of the Board

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  IQI, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  John R. Birk

  
	

   

  	

   

  	

            John R. Birk

  
	

   

  	

   

  	

            Chairman of the Board

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Herman M. Schwarz

  
	

   

  	

   

  	

            Herman M. Schwarz

  
	

   

  	

   

  	

            President and CEO

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