AGREEMENT AND PLAN OF MERGER
AMONG
SULLIVAN BROADCASTING COMPANY II, INC.
SINCLAIR BROADCAST GROUP, INC.,
and
ABRY PARTNERS, INC.
(as Stockholder Representative)
EFFECTIVE AS OF
FEBRUARY 23, 1998
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is entered into on March 16,
1998, but is effective as of March 16, 1998, among Sullivan Broadcasting Company
II, Inc., a Delaware corporation ("Sullivan"), Sinclair Broadcast Group, Inc., a
Maryland corporation ("Sinclair"), on behalf of itself and a subsidiary to be
formed by it pursuant to Article I below, and ABRY Partners, Inc., a Delaware
corporation ("ABRY Partners"), solely in its capacity as the Stockholder
Representative referred to in this Agreement.
WHEREAS, the parties to this Agreement are among the parties
to an Agreement and Plan of Merger dated as of February 23, 1998 (the "Prior
Agreement"), and the parties to the Prior Agreement have agreed to restate the
Prior Agreement by entering into this Agreement and certain other agreements;
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows, effective as of the date of the Prior Agreement:
ARTICLE I
FORMATION OF SUBSIDIARY
On or prior to March 20, 1998, Sinclair will form a wholly-owned Subsidiary
which will be a Delaware corporation. Such Subsidiary will be the "Merger Sub"
referred to in this Agreement.
Sinclair will cause such Subsidiary to become a party to this Agreement and the
Indemnity Escrow Agreement by executing and delivering to Sullivan a counterpart
thereof.
ARTICLE II
MERGER
2.A GENERAL. Upon and subject to the terms and conditions
stated in this Agreement, on the Closing Date, effective as of the Effective
Time, the Merger Sub will merge with and into Sullivan in accordance with the
terms and conditions of this Agreement. Sullivan will be the corporation which
survives such merger (the "Merger") and in such capacity is sometimes referred
to in this Agreement as "Post-Merger Sullivan."
2.B EFFECT ON SULLIVAN SHARES. Immediately after the Closing,
effective at the Effective Time, subject to the terms and conditions of this
Agreement (1) the Merger will be effected by the filing with the Secretary of
the State of Delaware of a Certificate of Merger; (2) each Sullivan Share
outstanding at the Effective Time, by said occurrence and with no further action
on the part of the holder thereof, will be canceled without consideration; (3)
each share of common stock of the
Merger Sub outstanding immediately prior to the Effective Time will, by said
occurrence and with no further action on the part of the holder thereof, be
transformed and converted into one share of common stock of Post-Merger
Sullivan, so that immediately thereafter Sinclair will be the sole and exclusive
owner of all equity securities of Post-Merger Sullivan; and (4) Post-Merger
Sullivan will be the owner of the business, assets, rights, privileges,
immunities, powers, franchises and other attributes of Sullivan and the Merger
Sub.
2.C CERTIFICATE OF INCORPORATION. Immediately after the
Effective Time, the certificate of incorporation of Post-Merger Sullivan will be
the certificate of incorporation of the Merger Sub as in effect immediately
prior to the Effective Time.
2.D BYLAWS. Immediately after theEffective Time, the bylaws of
Post-Merger Sullivan will be the bylaws of the Merger Sub as in effect
immediately prior to the Effective Time.
2.E BOARD OF DIRECTORS AND OFFICERS. The board of directors
and officers of the Merger Sub immediately prior to the Effective Time will be
the board of directors and the officers, respectively, of Post-Merger Sullivan
immediately after the Effective Time, and such individuals will serve in such
positions for the respective terms provided by applicable Legal Requirements or
in the bylaws of Post-Merger Sullivan until their respective successors are
elected and qualified.
2.F NAME. The name of Post-Merger Sullivan will be designated
by Sinclair.
2.G TRANSFER OF SULLIVAN STOCK. At the Effective Time, the
stock transfer books of Sullivan will be closed and no transfer of Sullivan
Shares will thereafter be made.
ARTICLE III
MERGER CONSIDERATION AND CLOSING
3.A MERGER CONSIDERATION. No consideration will be payable to
the holders of Sullivan Shares by reason of or in connection with the Merger.
3.B CLOSING TIME AND PLACE. Subject to Section 12.A, the
consummation of the Merger (the "Closing") will be held in the offices of
Kirkland & Ellis, in New York, New York, at 10:00 a.m., local time, on the date
determined pursuant to the following two sentences, or at such other place
and/or at such other time and date as the Merger Sub and Sullivan may agree in
writing. The Merger Closing will occur on a date designated by the Merger Sub by
written notice to Sullivan not less than ten Business Days in advance of such
date (which designated date will be not later than the Expiration Date).
Notwithstanding the foregoing, but subject to Section 12.A, if on a date for the
Closing described in the preceding sentence or specified pursuant to this
sentence any condition of the Merger Sub or Sullivan specified in Article IX or
X has not been satisfied (and will not be satisfied by the delivery of documents
at the Closing) or waived in writing, then the date for the
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Closing will be extended to any date specified by the Merger Sub to Sullivan
with not less than 10 Business Days' notice to the other (subject to the Merger
Sub's and Sullivan's respective conditions to the Closing set forth in Articles
IX and X being satisfied or waived in writing on such specified date); provided
that any such specified date will be on or prior to the Expiration Date.
3.C DELIVERIES AT THE CLOSING. All actions on the Closing Date
(including those described in Section 11.D) will be deemed to occur
simultaneously, and no document or payment to be delivered or made on the
Closing Date will be deemed to be delivered or made until all such documents and
payments are delivered or made to the reasonable satisfaction of Sullivan, the
Merger Sub, the Stockholder Representative and their respective legal counsel.
(1) DELIVERIES BY SULLIVAN. At the Closing, Sullivan
will deliver to the Merger Sub the following:
(a) the minute book, stock transfer book and
other records relating to the internal corporate affairs of
Sullivan which are in Sullivan's possession, and resignations
of the officers and directors of Sullivan, which resignations
will be effective as of the Effective Time;
(b) all mortgage discharges or releases of
Liens, if any, that will be sufficient to cause the Station
Assets held by Sullivan to be as described in Section 4.E;
(c) a certificate of the President or Chief
Executive Officer of Sullivan dated the Closing Date to the
effect that, except as specified in such certificate, to the
best of such officer's knowledge, the conditions set forth in
Sections 10.A(1) and 10.A(2) have been fulfilled;
(d) a certificate of Sullivan dated the
Closing Date to the effect that, except as specified in such
certificate, the conditions set forth in Sections 10.A(1) and
10.A(2) have been fulfilled;
(e) a certified copy of the resolutions or
action by written consent of the board of directors and
stockholders of Sullivan authorizing the Merger and Sullivan's
execution, delivery and performance of this Agreement;
(f) certificates as to the existence and/or
good standing of Sullivan, in each case issued by the
Secretary of State or a comparable official of Delaware and
each other jurisdiction (if any) in which it is then required
to be qualified to do business, certifying as to the existence
and/or good standing of such corporation in such
jurisdictions;
(g) one or more opinions of counsel or
special counsel to Sullivan, each dated the Closing Date, as
to the matters set forth in the attached Exhibit A; and
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(h) such other documents, instruments and
receipts as the Merger Sub may reasonably request in order to
effectuate the Merger and the other transactions contemplated
by this Agreement to be consummated at the Closing.
Each of the foregoing will be reasonably satisfactory in form to the
Merger Sub and its legal counsel.
(2) DELIVERIES BY THE MERGER SUB. At the Closing, the
Merger Sub will deliver to the Stockholder Representative the
following:
(a) a certificate of an officer or similar
official of the Merger Sub dated the Closing Date to the
effect that, except as specified in such certificate, to the
best of such officer's or official's knowledge, the conditions
set forth in Sections 9.A(1) and 9.A(2) have been fulfilled;
(b) a certificate of an officer or similar
official of Sinclair dated the Closing Date to the effect
that, except as specified in such certificate, to the best of
such officer's or official's knowledge, the conditions set
forth in Sections 9.A(1) and 9.A(2) have been fulfilled;
(c) a certificate of the Merger Sub dated
the Closing Date to the effect that, except as specified in
such certificate, the conditions set forth in Sections 9.A(1)
and 9.A(2) have been fulfilled;
(d) a certificate of Sinclair dated the
Closing Date to the effect that, except as specified in such
certificate, the conditions set forth in Sections 9.A(1) and
9.A(2) have been fulfilled;
(e) a certified copy of the resolutions or
action by written consent of the board of directors and
stockholders of the Merger Sub authorizing the Merger and the
Merger Sub's execution, delivery and performance of this
Agreement;
(f) a certified copy of the resolutions or
action by written consent of the board of directors of
Sinclair authorizing Sinclair's execution, delivery and
performance of this Agreement;
(g) certificates as to the existence and/or
good standing of Sinclair and the Merger Sub, in each case
issued by the Secretary of State or a comparable official of
such jurisdictions as Sullivan may reasonably request and
dated on or after the fifth Business Day prior to the Closing
Date, certifying as to the existence and/or good standing of
such corporation in such jurisdictions;
(h) one or more opinions of counsel or
special counsel to Sinclair and the Merger Sub, each dated the
Closing Date, as to the matters set forth in the
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attached Exhibit B; and
(i) such other documents, instruments and
receipts as Sullivan may reasonably request in order to
effectuate the Merger and the other transactions contemplated
by this Agreement to be consummated at the Closing.
Each of the foregoing will be reasonably satisfactory in form to
Sullivan and its legal counsel.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SULLIVAN
Subject to Section 13.Q, Sullivan makes the following
representations and warranties:
4.A ORGANIZATION. Sullivan is a corporation which is duly
organized, validly existing and in good standing under the laws of the State of
Delaware. From and after the Spin- Off, Sullivan will be qualified to do
business or have similar status under the laws of each jurisdiction in which
such qualification is required by applicable Legal Requirements. Sullivan has
the power and authority to carry on the business being conducted by it, to own
and operate the Station Assets owned and operated by it, and to enter into and
consummate the transactions contemplated to be consummated by it pursuant to
this Agreement.
4.B ACTION. Each action necessary to be taken by or on the
part of Sullivan in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated to be consummated by
Sullivan pursuant to this Agreement and necessary to make the same effective
will be duly and validly taken by, and be effective at, the time by which such
action is required to be taken. This Agreement has been duly and validly
authorized, executed, and delivered by Sullivan and constitutes its valid and
binding agreement, enforceable against Sullivan in accordance with and subject
to its terms, subject to the effect of applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, arrangement, moratorium or similar laws
affecting the rights of creditors generally and the availability of equitable
remedies.
4.C FCC AUTHORIZATIONS. As of the time of the Closing,
Sullivan will be the holder of the FCC Authorizations. As of the time of the
Closing, except as set forth on the attached Schedule 4C, (i) the Authorizations
will constitute all of the licenses and authorizations required under the
Communications Act, or the current rules, regulations, and policies of the FCC,
for the operation of the Stations as now conducted; (ii) the FCC Authorizations
will be in full force and effect and are subject to or scheduled for renewal on
the respective dates specified
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on the attached Schedule 4C (unless theretofore renewed after the date of this
Agreement); (iii) the FCC Authorizations will be valid for the full respective
terms thereof; (iv) Sullivan will have no reason to believe that the FCC
Authorizations will not be renewed for a full and customary term in the ordinary
course with no materially adverse conditions (except with respect to general
rule-making and similar matters relating generally to television broadcast
stations by reason of any action or omission of Sinclair or any of its
Subsidiaries); (v) there will not be not pending, or, to the knowledge of
Sullivan, threatened, any action by or before the FCC to revoke, cancel,
rescind, modify, or refuse to renew in the ordinary course any of the FCC
Authorizations, and there will not be pending, or, to the knowledge of any such
Person, threatened, issued, or outstanding by or before the FCC, any
investigation, order to show cause, notice of violation, notice of apparent
liability, or notice of forfeiture or complaint against Sullivan with respect to
any Station, in each case other than by reason of any actual or alleged action
or omission of Sinclair or any of its Subsidiaries; (vi) Sullivan will have
complied in all material respects with the FCC Authorizations, the
Communications Act, and the current rules, regulations and policies of the FCC;
and (vii) all documents required by 47 C.F.R. Section 73.3526 to be kept in each
Station's public inspection file are in such file and such file will be
maintained in proper order and complete up to and through the Closing Date.
4.D CONDITION OF ASSETS. Except as set forth on the attached
Schedule 4D, the material tangible assets of Sullivan and the improvements on
any real property which are used by it (a) at the time of the Spin-Off and on
the Closing Date will in all material respects be in good and technically sound
operating condition (ordinary wear and tear excepted) and are not in need of
repair and in a condition which would be sufficient to permit the owner thereof
to operate the Stations (in the manner in which the Stations are operated or
programmed by Sullivan Holdings and its Subsidiaries as of the date of this
Agreement) in compliance with the terms of the FCC Authorizations, the
Communications Act and current FCC rules and regulations (if such owner had the
right to use the Station Assets not owned by Sullivan and such Station Assets
were in at least such condition), and (b) have in all material respects been
maintained in a manner consistent with generally accepted standards of good
engineering practice and to the knowledge of Sullivan, all applicable federal,
state and local statutes, ordinances, rules and regulations, including, without
limitation, all applicable tower painting and lighting requirements.
4.E TITLE, ETC. Immediately after the Spin-Off, Sullivan will
have good title to, or a valid leasehold in, the tangible assets and personal
property included in the Station Assets, and all such assets and personal
property will on the Closing Date (after the repayment in full of the
indebtedness of Sullivan and all related interest and other obligations and the
release of all related Liens and the Mission Guarantees) be free and clear of
all Liens other than Permitted Encumbrances. Sullivan possesses (and immediately
after the Merger, will possess) adequate rights, licenses, or other authority to
use the call letters presently used by the Stations, free and clear of all Liens
other than Permitted Encumbrances.
4.F LITIGATION. Except as set forth on the attached Schedule
4F:
(1) on the date of this Agreement, Sullivan is not
operating under or subject to or in default with respect to any order,
writ, injunction, or decree of any court or federal, state, municipal,
or other governmental department, commission, board, agency, or
instrumentality arising out of a proceeding to which it is or was a
party, and on the Closing Date, no such item will have or reasonably be
expected to result in a Material Adverse
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Change; and
(2) on the date of this Agreement, there is no
litigation pending by or against, or to the knowledge of Sullivan
threatened against, Sullivan which interferes with, or could reasonably
be expected to interfere with, (a) the operations of the Stations as
presently conducted or (b) the ability of Sullivan to carry out the
transactions contemplated to be carried out by it pursuant to this
Agreement, and on the Closing Date, no such pending or threatened
litigation will have or will reasonably be expected to result in a
Material Adverse Change.
There are no attachments, executions, or assignments for the benefit of
creditors or voluntary or involuntary proceedings in bankruptcy initiated or
contemplated by, or, to the knowledge of Sullivan, threatened or pending
against, Sullivan.
4.G COMPLIANCE WITH LAWS. Other than with respect to matters
disclosed in the attached Schedule 4C or the attached Schedule 4F, subject to
obtaining all applicable Consents: (a) Sullivan, with respect to the Station
Assets, is in compliance in all material respects with all applicable Legal
Requirements, and (b) the present uses by Sullivan of the Station Assets which
it owns do not in any material respect violate any such Legal Requirements.
4.H NO DEFAULTS. Except for (w) any item on the attached
Schedule 4H, (x) the requisite approval of the FCC, (y) compliance with the
requirements of the Hart-Scott-Rodino Act, and (z) any Consent which may be
required under any Contract, on the Closing Date (after giving effect to all
Consents which have been obtained) neither the execution and delivery by
Sullivan of this Agreement, nor the consummation by Sullivan of the Merger or
the other transactions contemplated by this Agreement to be consummated by
Sullivan, requires any Consent under, will constitute, or, with the giving of
notice or the passage of time or both, would constitute, a material violation of
or would conflict in any material respect with or result in any material breach
of or any material default under, or will result in the creation of any Lien
(other than any Permitted Encumbrance or any Lien in favor of one or more of the
Acquiring Parties) under, any of the terms, conditions, or provisions of any
Legal Requirement to which Sullivan is subject, or of the certificate of
incorporation or by-laws of Sullivan.
4.I SUBSIDIARIES. Sullivan does not own any shares of stock or
other equity or debt securities of or any interest in any Person.
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4.J TAX MATTERS.
(1) TAX RETURNS. Except as set forth on the attached
Schedule 4J or as has not caused and is not reasonably expected to
cause a Material Adverse Change: (a) all federal, state, local and
foreign tax returns and tax reports required to be filed by Sullivan
have been timely filed (taking into account any extensions of which
Sullivan may have availed itself) with the appropriate governmental
agencies in all jurisdictions in which such returns and reports are
required to be filed, and all of the foregoing (including any summary
balance sheets included therein) are true, correct, and complete; (b)
all federal, state, local and foreign income, profits, franchise,
sales, use, occupation, property, excise, and other taxes (including
interest and penalties) due and payable by Sullivan have been fully
paid; (c) no issues have been raised in writing (or, to Sullivan's
knowledge, orally) and are currently pending by the Internal Revenue
Service or any other taxing authority in connection with any of such
returns and reports; (d) no waivers of statutes of limitations as to
tax matters have been given or requested with respect to Sullivan; (e)
the federal, state, local, and foreign income tax and franchise tax
returns of or with respect to Sullivan have not been examined by the
Internal Revenue Service or by appropriate state, provincial, or
departmental tax authorities; (f) no issue has been raised in writing
(or, to Sullivan's knowledge, orally) with Sullivan by any taxing
authority which can reasonably be expected to result in a deficiency
for any fiscal year or all deficiencies asserted or assessments
(including interest and penalties) made as a result of any examinations
have been fully paid, and no proposed (but unassessed) additional
taxes, interest, or penalties have been asserted; (h) Sullivan is not
(and has never been) a party to any Tax sharing agreement with any
Person who was not a member of an Affiliated Group consisting in whole
or in part of the parties to such agreement, and Sullivan has no
liability for the Taxes of any other Person (other than Sullivan
Holdings and its Subsidiaries) pursuant to Reg. Section 1.1502-6 under
the Tax Code (or any similar provision of state, local or foreign Tax
law) or as a transferee or successor or by contract.
(2) TAX ELECTIONS AND SPECIAL TAX STATUS. Except as
set forth on the attached Schedule 4J: (a) Sullivan is not and has
never been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Tax Code during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Tax Code; (b)
Sullivan has not made any election or filed any consent pursuant to
Section 341(f) of the Tax Code relating to collapsible corporations;
(c) Sullivan has not entered into any compensatory agreements with
respect to the performance of services which payment thereunder would
result in a nondeductible expense to Sullivan pursuant to Section 280G
of the Tax Code or an excise tax to the recipient of such payment
pursuant to Section 4999 of the Tax Code; and (d) Sullivan has not
agreed to make, nor is it required to make, any adjustment under
Section 481(a) of the Tax Code by reason of a change in accounting
method or otherwise.
4.K CAPITAL STOCK. As of the date of this Agreement, Sullivan
has authorized capital stock consisting of 80,000,000 shares of capital stock,
of which (a) 25,000,000 shares will be designated Class A One Common Stock, par
value $0.001 per share, (b) 25,000,000 shares will
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be designated Class B-1 Common Stock, par value $0.001 per share, (c) 25,000,000
shares will be designated Class B-2 Common Stock, par value $0.001 per share,
and (d) 5,000,000 shares will be designated Class C Common Stock, par value
$0.001 per share. As of the Closing Date, all of the issued and outstanding
capital stock of Sullivan will be duly authorized and validly issued, fully paid
and nonassessable, and there will be no preemptive rights in respect thereof in
favor of any Person (other than any Person which holds Sullivan Shares). There
are no outstanding options, warrants or other rights to subscribe for or
purchase from Sullivan, no contracts or commitments providing for the issuance
of, or the granting of rights to acquire, and no securities convertible into or
exchangeable for, any shares of capital stock or any other ownership interest of
Sullivan.
4.L BOOKS AND RECORDS. The minute books of Sullivan contain
records which are complete and accurate in all material respects of all meetings
and other corporate actions of its stockholders, its board of directors and all
committees, if any, appointed by its board of directors. The books of accounts,
ledgers, order books, records and documents of Sullivan, in all material
respects, accurately and completely reflect information relating to its
business, the nature, acquisitions, maintenance and location of its assets and
the transactions giving rise to its obligations and accounts receivable.
4.M ABSENCE OF SIGNIFICANT UNDISCLOSED LIABILITIES. Sullivan
has no debt, liability or obligation of any kind, whether accrued, absolute,
contingent or otherwise, including any liability or obligation on account of
Taxes or any governmental charges or penalty, interest or fines, which would be
required to be reflected in its balance sheet prepared in accordance with GAAP
and which would have, or which in the case of contingent or inchoate
liabilities, would have if accrued or absolute, a material adverse effect on the
financial condition of Sullivan, viewed as a whole with Sullivan Holdings, its
Subsidiaries and Sullivan Three as of the Closing Date, other than any liability
or obligation (a) reflected in any Sullivan Holdings Financial Statement, (b)
identified with particularity in any attached Schedule or arising under any
Contract which is described, or which is not required to be described, on any
attached Schedule or the Contracts Schedule, (c) incurred in the ordinary course
of business since September 30, 1997, (d) incurred in connection with the
transactions contemplated by this Agreement, or (e) pursuant to the promissory
note issued to Sullivan Holdings and its Subsidiaries in connection with the
Spin-Off.
4.N EMPLOYEE BENEFIT PLANS. Other than any plan described on
the attached Schedule 4N, (a) Sullivan does not maintain, is not a party to and
make no contributions to any of the following: (i) any "employee pension benefit
plan," (as such term is defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974 ("ERISA")); or (ii) any "employee welfare benefit
plan" (as such term is defined in Section 3(a) of ERISA), whether written or
oral; and (b) Sullivan has never sponsored or maintained, had any obligation to
sponsor or maintain, or had any liability (whether actual or contingent, with
respect to any of its assets or otherwise) with respect to any employee pension
benefit plan subject to Section 302 of ERISA or Section 412 of the Tax Code or
Title IV of ERISA (including any multiemployer plan). No employee or former
employee of Sullivan, and no beneficiary of any such employee or former employee
is, by reason of such employee's or former employee's employment, entitled to
receive any benefits, including death or medical benefits (whether or not
insured) beyond retirement or other termination of employment as
9
described in Statement of Financial Accounting Standards No. 106, other than
continuation coverage mandated under Section 4980B of the Tax Code or comparable
state law.
4.O BROKERS. There is no broker or finder or other Person who
would have any valid claim against Sullivan or any Acquiring Party for a
commission or brokerage fee in connection with this Agreement or the
transactions contemplated hereby as a result of any agreement or understanding
of or action taken by Sullivan or any of its Affiliates.
4.P DISCLOSURE. To the knowledge of Sullivan, no statement of
a material fact set forth in this Article IV contains any statement of any
material fact which is untrue in any material respect or omits to state a
material fact which is necessary in order to make the statements set forth in
this Article IV not misleading in any material respect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
SINCLAIR AND THE MERGER SUB
Sinclair and the Merger Sub, jointly and severally, represent
and warrant as follows:
5.A INCORPORATION. Sinclair is a corporation duly organized,
validly existing, and in good standing (or has comparable active status) under
the laws of the State of Maryland, and Sinclair has the corporate power and
authority to enter into and consummate the transactions contemplated to be
consummated by it pursuant to this Agreement. From and after the time it is
formed, the Merger Sub will be a corporation duly organized, validly existing,
and in good standing (or has comparable active status) under the laws of the
State of Delaware and will have the corporate power and authority to enter into
and consummate the transactions contemplated to be consummated by it pursuant to
this Agreement.
5.B CORPORATE ACTION. Each action necessary to be taken by or
on the part of either Sinclair or the Merger Sub in connection with the
execution and delivery of this Agreement and the consummation of transactions
contemplated hereby to be consummated by it and necessary to make the same
effective duly and validly taken by, and be effective at, the time by which such
action is required to be taken. This Agreement has been duly and validly
authorized, executed, and delivered by each of Sinclair and the Merger Sub and
constitutes a valid and binding agreement, enforceable against each of them in
accordance with and subject to its terms, subject to the effect of applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, arrangement,
moratorium or similar laws affecting the rights of creditors generally and the
availability of equitable remedies.
5.C NO DEFAULTS. Except as set forth on the attached Schedule
4H, the requisite approval of the FCC and compliance with the requirements of
the Hart-Scott-Rodino Act, on the Closing Date (after giving effect to all
approvals and consents which have been obtained), neither
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the execution and delivery by Sinclair or the Merger Sub of this Agreement, nor
the consummation by Sinclair or the Merger Sub of the Merger and the other
transactions contemplated by this Agreement to be consummated by it, will
constitute, or, with the giving of notice or the passage of time or both, would
constitute, a material violation of or would conflict in any material respect
with or result in any material breach of or any material default under, any of
the terms, conditions, or provisions of any Legal Requirement to which Sinclair
or the Merger Sub is subject, or of Sinclair's or the Merger Sub's certificate
of incorporation or by-laws or similar organizational documents, or of any
material contract, agreement, or instrument to which Sinclair or the Merger Sub
is a party or by which Sinclair or the Merger Sub is bound.
5.D BROKERS. There is no broker or finder or other Person who
would have any valid claim against Sullivan (except after the Effective Time) or
any Old Sullivan Stockholder for a commission or brokerage fee in connection
with this Agreement or the transactions contemplated hereby as a result of any
agreement or understanding of or action taken by Sinclair, the Merger Sub or any
Affiliate of any of them.
5.E QUALIFICATION AS A BROADCAST LICENSEE. Sinclair and the
Merger Sub will, at the time of the filing of the applications for the Required
FCC Consent described in Section 6.A, be legally and financially qualified under
the Communications Act, and the rules and regulations promulgated by the FCC
thereunder, to control Sullivan (in the case of Sinclair) or be the successor by
merger to Sullivan and the holder of the FCC Authorizations (in the case of the
Merger Sub). To Sinclair's and the Merger Sub's knowledge, no fact exists as of
the date of this Agreement that would, under the Communications Act, the
existing rules, regulations, policies, and practices of the FCC or any other
Legal Requirement, disqualify either Sinclair or the Merger Sub as the direct or
indirect holder of any FCC Authorization or as owner and operator of the related
Station Assets or any related Station.
5.F LITIGATION. There is no litigation pending by or against,
or to Sinclair's or the Merger Sub's knowledge (after due inquiry) threatened
against, Sinclair or the Merger Sub related to or affecting Sinclair's or the
Merger Sub's ability fully to carry out the transactions contemplated to be
consummated by them pursuant to this Agreement. There are no attachments,
executions, or assignments for the benefit of creditors or voluntary or
involuntary proceedings in bankruptcy contemplated by, or, to Sinclair's or the
Merger Sub's knowledge, threatened or pending against, Sinclair or the Merger
Sub.
5.G DISCLOSURE. To Sinclair's and the Merger Sub's knowledge,
no statement of a material fact set forth in this Article V contains a statement
of any material fact which is untrue in any material respect or omits to state a
material fact which is necessary in order to make the statements set forth in
this Article V not misleading in any material respect.
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ARTICLE VI
APPLICATIONS FOR REQUIRED FCC CONSENT
6.A PREPARATION AND FILING. Within 30 Business Days after
Sinclair's or its own written request after the Spin-Off, each of Sullivan and
Sinclair will, and will cause its Subsidiaries to, complete the portions of the
applications for the Required FCC Consent which pertain to it and jointly file
such applications with the FCC. Each of Sullivan and Sinclair will, and will
cause its Subsidiaries to, diligently take or cooperate in the taking of all
steps which are reasonably within its ability to take and which are necessary,
proper, or desirable to expedite the prosecution of such applications and to
cause the Required FCC Consent expeditiously to become Granted and expeditiously
to become a Final Order.
6.B CERTAIN ACTIONS. Sullivan will refrain from making any
filing or announcement or taking (or causing or assisting any other Person to
take) any other action which reasonably could be expected to delay the Required
FCC Consent being Granted or becoming a Final Order in any respect without
Sinclair's prior written consent. Without limiting Section 6.D, Sinclair will,
and will cause its Subsidiaries to, refrain from making any filing or
announcement or taking (or causing or assisting any other Person to take) any
other action which reasonably could be expected to delay the Required FCC
Consent being Granted or becoming a Final Order in any respect without the prior
written consent of Sullivan (or, after the Closing, the Stockholder
Representative).
6.C NOTICE OF OBJECTIONS, ETC. Sullivan will promptly provide
Sinclair (or, after the Closing, the Stockholder Representative) with a copy of
any pleading, order, or other document served on Sullivan relating to such
applications (other than any of the same which is addressed to or states that it
is to be served upon or delivered to the Person to whom such copy is to be
provided or such Person's communications counsel). Sinclair will promptly
provide Sullivan (or, after the Closing, the Stockholder Representative) with a
copy of any pleading, order, or other document served on Sinclair or any of its
Subsidiaries relating to such applications (other than any of the same which is
addressed to or states that it is to be served upon or delivered to the Person
to whom such copy is to be provided or such Person's communications counsel).
6.D PROHIBITED ACTIONS. Sinclair will not, and will not cause
or permit any of its Subsidiaries to, make any "major amendment" (as that term
is used in Section 73.3578(b) of the rules of the FCC (Ch. 47 C.F.R.)) in
respect of any such application other than (i) with prior written consent of
Sullivan (prior to the Closing) or the Stockholder Representative (after the
Closing), (ii) in order to reflect any change in the proposed operating or
ownership structure of the Merger Sub or any Station which the FCC or its staff
has indicated to Sinclair or any Affiliate or agent of Sinclair is a condition
to the Required FCC Consent to be Granted, or (iii) if required by a change in
the rules, regulations or policies of the FCC to disclose any attributable
interest which Sinclair or any of its Subsidiaries may be deemed to have by
virtue of any local marketing, time brokerage or similar arrangement in effect
on the date of this Agreement.
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ARTICLE VII
COVENANTS OF SULLIVAN
7.A ACTIONS AFTER SPIN-OFF AND PRIOR TO MERGER.
(1) OPERATION GENERALLY. After the Spin-Off and until
the Closing, Sullivan will (a) with respect to Station Assets, keep
books of account, records, and files substantially in accordance with
the practices of Sullivan Holdings and its Subsidiaries with respect to
such assets of such type prior to the Spin-Off, (b) promptly execute
and timely file any applications reasonably required for renewal of the
FCC Authorizations, (c) timely file (taking into account any extensions
of which Sullivan may avail itself) true, correct and complete federal,
state, local and foreign tax returns and tax reports required to be
filed by Sullivan, (d) fully pay all federal, state, local and foreign
income, profits, franchise, sales, use, occupation, property, excise
and other taxes (including interest and penalties) due and payable by
Sullivan, (e) to the extent necessary to the conduct of its business:
use reasonable efforts to (i) perform its obligations under all Station
Contracts to which it is a party, (ii) preserve the Station Assets held
by it, and (iii) maintain in full force and effect the FCC
Authorizations, and (f) maintain property damage insurance in such
amounts, and insuring against such risks, as Sinclair may reasonably
request.
(2) CONTRACTS. After the Spin-Off and until to the
Closing, Sullivan will be entitled to renew or extend the term of any
Contract which, by its terms, has expired at the time of such renewal
or extension or which would expire prior to the sixtieth day after the
effective date of such renewal or extension, and, in connection
therewith, to agree to increase the amounts payable thereunder during
any such renewal or extended term in accordance with Sullivan Holdings'
and its Subsidiaries' past practice in the operation of the Stations,
or enter into any other Contract which is reasonably required in order
to enable it to comply with its obligations under this Agreement.
(3) RESTRICTIONS. After the Spin-Off and until to the
Merger Closing, Sullivan will not without the prior written consent of
Sinclair (to the extent the following restrictions are permitted by the
FCC and all other applicable Legal Requirements):
(a) other than in the ordinary course of
business, sell, lease (as lessor), transfer, or agree to sell,
lease (as lessor), or transfer any Station Assets which are
required for the operation of any Station without replacement
thereof with a functionally equivalent or superior asset of
substantially equal or greater value;
(b) apply to the FCC for any construction
permit that would materially restrict any Station's present
operations or make any material adverse change in the
buildings or leasehold improvements which constitute Station
Assets;
(c) merge or consolidate, or agree to merge
or consolidate, with
13
or into any Person;
(d) enter into any Contract with any of its
Affiliates which will not be performed in its entirety or by
its terms terminate at or prior to the time of the Closing;
(e) cause any of its assets or properties to
become subject to any Lien, other than any Permitted
Encumbrance;
(f) commit any material breach of any
material Contract to which it is a party; or
(g) change any material tax election if such
change could reasonably be expected to adversely affect
Post-Merger Sullivan, except to the extent required by any
Legal Requirement, any Contract or GAAP.
(4) NO PREMATURE ASSUMPTION OF CONTROL. Nothing
contained in this Agreement will give any Acquiring Party any right to
control the programming, operations, or any other matter relating to
the Stations prior to the Closing, and Sullivan will have complete
control of the programming, operations, and all other matters relating
to the Stations up to the time of the Closing.
7.B ORGANIZATION/GOODWILL. After the Spin-Off and until to the
Closing, Sullivan will use reasonable efforts to preserve the business
organization of Sullivan with respect to the Stations and preserve the goodwill
of the Stations' suppliers, customers, and others, to the extent such Persons
have business relations with Sullivan. This Section 7.B will not apply to the
Corporate Personnel, with respect to continued service by them after the Closing
(it being understood that the Corporate Personnel intend to resign their
respective positions with Sullivan effective as of the Effective Time).
7.C ACCESS TO FACILITIES, FILES, AND RECORDS. From time to
time at the request of Sinclair after the Spin-Off and prior to the Closing,
Sullivan will give or cause to be given to the officers, employees, accountants,
counsel, and representatives of Sinclair and the Merger Sub
(a) access (in the presence of any
representative designated by Sullivan, at Sullivan's option),
upon reasonable prior notice, during normal business hours, to
all facilities, property, accounts, books, deeds, title
papers, insurance policies, licenses, agreements, contracts,
commitments, records, equipment, machinery, fixtures,
furniture, vehicles, accounts payable and receivable, and
inventories of Sullivan (but, in any event, not personnel,
unless Sullivan otherwise consents) related to the Stations,
including for purposes of permitting Sinclair to perform
"Phase One" (and, after consulting with Sullivan as to the
scope thereof, "Phase Two") environmental surveys with respect
to the Station Assets, and
14
(b) all such other information in Sullivan's
possession con cerning the affairs of the Stations as Sinclair
may reasonably request,
in each case at Sinclair's expense; provided that the foregoing does
not disrupt or interfere with the business and operations of Sullivan
or any Station in any material respect ("materiality," for purposes of
this proviso, being determined by reference to each Station
individually, and not taken as a whole).
7.D HART-SCOTT-RODINO MATTERS. Within thirty (30) days after
Sinclair's or its own request after the Spin-Off, Sullivan will complete all
documents (if any) required to be filed with the Federal Trade Commission (the
"FTC") and the United States Department of Justice (the "DOJ") with respect to
itself and/or its Affiliate(s) and concerning the Merger in order to comply with
the Hart-Scott-Rodino Act and together with Sinclair and/or the appropriate
Affiliate(s) of Sinclair who are required to join in such filings, will file the
same with the FTC and the DOJ. Sullivan will promptly furnish all materials
thereafter required by the FTC, the DOJ or any other governmental entity having
jurisdiction over such filings, and will take all reasonable actions and will
file and use reasonable efforts to have declared effective or approved all
documents and notifications with any such governmental entity, as may be
required under the Hart-Scott-Rodino Act or other federal antitrust laws for the
consummation of the Merger.
7.E CONSENTS. Except as provided in Article VI and Section
7.D, it is agreed that (1) as among Sullivan and the Acquiring Parties, it will
be the sole responsibility of the Acquiring Parties to timely obtain all
Acquiring Party Consents, (2) so long as Sullivan complies with its obligations
pursuant to the following sentence and Article VI and Section 7.D, Sullivan, the
Old Sullivan Stockholders and the Stockholder Representative will not be liable
to any Person for any failure to obtain or other absence of any effective
Acquiring Party Consent, and (3) except as provided in Sections 10.C and 10.D,
the absence of any effective Consent will not excuse any Acquiring Party from
consummating the Merger. Sullivan will use reasonable efforts (without being
required to make any payment not specifically required by the terms of any
licenses, leases, and other contracts), including executing any related
agreement or undertaking which does not take effect until the Effective Time, to
obtain the Sullivan Consents and to assist the Acquiring Parties (at the
Acquiring Parties' request and expense) to (a) timely obtain all Acquiring Party
Consents or, in the absence of any Acquiring Party Consent (where applicable),
one or more replacement agreements, and (b) cause each Consent or replacement
agreement to become effective as of the time of the Spin-Off or the Effective
Time, as applicable.
7.F NOTICE OF PROCEEDINGS. After the Spin-Off and prior to the
Closing, Sullivan will promptly notify Sinclair in writing upon becoming aware
of any order or decree or any complaint praying for an order or decree
restraining or enjoining the consummation of the Merger or any other transaction
contemplated by this Agreement to be consummated by Sullivan, or upon receiving
any notice from any governmental department, court, agency, or commission of its
intention to institute an investigation into or institute a suit or proceeding
to restrain or enjoin the consummation of the Merger or any such other
transaction, or to nullify or render ineffective this Agreement, the Merger or
any such other transaction if consummated.
15
7.G CONFIDENTIAL INFORMATION. If for any reason the
transactions contemplated in this Agreement are not consummated, Sullivan will
not use or disclose to any Person (except to its agents, representatives and
advisors, to its lenders and securityholders and their respective agents,
representatives and advisors, or as may be required by any Legal Requirement)
any confidential information received from any Acquiring Party or any of their
respective agents, representatives and advisors (each a "disclosing party" for
purposes of this Section 7.G) in the course of investigating, negotiating, and
completing the transactions contemplated by this Agreement. Nothing will be
deemed to be confidential information for purposes of this Section 7.G that: (a)
is or was known to any Sullivan-Related Entity at the time of its initial
disclosure by a disclosing party to any Sullivan-Related Entity; (b) has become
or becomes publicly known or available other than through disclosure by any
Sullivan-Related Entity; (c) is or was rightfully received by any
Sullivan-Related Entity from any Person unrelated to any Sullivan-Related Entity
(other than any Person engaged by any Sullivan-Related Entity in connection with
the transactions contemplated by this Agreement); or (d) is or was independently
developed by any Sullivan- Related Entity.
7.H EFFORTS TO CONSUMMATE. Subject to the provisions of
Article IX and Section 12.A, Sullivan will use reasonable efforts to fulfill and
perform all conditions and obligations on its part to be fulfilled and performed
under this Agreement and to cause the conditions set forth in Articles IX and X
to be fulfilled and cause the Merger and the other transactions contemplated by
this Agreement in connection with the Closing to be fully carried out. In
addition, promptly after Sullivan becomes aware prior to the Closing of a breach
of any fact or circumstance which constitutes or would constitute a breach of
any other Party's representation or warranty set forth in this Agreement,
Sullivan will give such Party notice thereof so that such Party may attempt to
cure the same.
7.I NOTICE OF CERTAIN DEVELOPMENTS. Sullivan will give prompt
written notice to Sinclair if, after the Spin-Off and prior to the Closing: (1)
Sullivan receives notice from any Market Cable System currently carrying a
Station's signal of such Market Cable System's intention to delete such Station
from carriage or change such Station's channel position on such Market Cable
System, or (2) Sullivan becomes aware of any breach of any representation or
warranty of Sullivan set forth in Article IV.
7.J UPDATED INFORMATION. Sullivan agrees to provide to
Sinclair and the Merger Sub at or prior to the Closing, for informational
purposes only, copies of all material Contracts in existence at the time of the
Closing and which are entered into after the Spin-Off and prior to the Closing.
7.K NON-SOLICITATION. After the Spin-Off and prior to the
Closing or the earlier termination of this Agreement, each of ABRY Partners and
Sullivan will not, and each of them will not cause (and will use reasonable
efforts not to permit) any of its Subsidiaries, affiliates, directors, officers,
employees, representatives or agents to, directly or indirectly solicit, or
initiate, entertain or enter into any discussions or transactions with, or
encourage or provide any information to, any Person (other than any Person
described in Section 7.C), concerning any sale of any of the assets of Sullivan
(other than any sale which is not prohibited by Section 7.A(3)) or any merger,
stock
16
acquisition or similar transaction involving Sullivan (other than an issuance of
capital stock or capital stock equivalents by Sullivan); provided that nothing
in this Section 7.K will prohibit ABRY Partners or Sullivan from furnishing, or
causing or permitting any other Person to furnish, information concerning
Sullivan to any governmental authority or court of competent jurisdiction or any
other Person as may be required by any Legal Requirement.
ARTICLE VIII
COVENANTS OF SINCLAIR AND THE MERGER SUB
8.A HART-SCOTT-RODINO MATTERS. Within 30 days after Sullivan's
or its own request after the Spin-Off, Sinclair will complete all documents (if
any) required to be filed with the FTC and the DOJ with respect to itself and/or
its Affiliate(s) and concerning Merger in order to comply with the
Hart-Scott-Rodino Act and together with Sullivan and/or the appropriate
Affiliate(s) of Sullivan who are required to join in such filings, will file the
same with the FTC and the DOJ. Sinclair will pay the filing fees associated with
all such filings and the filings described in Section 6.A. Sinclair and the
Merger Sub will promptly furnish all materials thereafter required by the FTC,
the DOJ or any other governmental entity having jurisdiction over such filings,
and will take all reasonable actions and will file and use reasonable efforts to
have declared effective or approved all documents and notifications with any
such governmental entity, as may be required under the Hart-Scott-Rodino Act or
other federal antitrust laws for the consummation of the Merger.
8.B CONFIDENTIAL INFORMATION. If for any reason the
transactions contemplated in this Agreement are not consummated, each of
Sinclair and the Merger Sub will not use or disclose to any Person (except to
its agents, representatives and advisors, to its lenders and their respective
agents, representatives and advisors, or as may be required by any Legal
Requirement) any confidential information received from Sullivan Holdings, any
of its Subsidiaries, Sullivan or any of their respective agents, representatives
and advisors (each a "disclosing party" for purposes of this Section 8.B) in the
course of investigating, negotiating, and completing the transactions
contemplated by this Agreement. Nothing will be deemed to be confidential
information for purposes of this Section 8.B that: (a) is or was known to any
Sinclair-Related Entity at the time of its initial disclosure by a disclosing
party to any Sinclair-Related Entity; (b) has become or becomes publicly known
or available other than through disclosure by any Sinclair-Related Entity; (c)
is or was rightfully received by any Sinclair-Related Entity from any Person
unrelated to any Sinclair-Related Entity (other than any Person engaged by any
Sinclair- Related Entity in connection with the transactions contemplated by
this Agreement); or (d) is or was independently developed by any
Sinclair-Related Entity. In addition, the Merger Sub agrees to be bound by the
same obligations as Sinclair is bound pursuant to the confidentiality agreement
dated as of November 20, 1997 between Sinclair and Sullivan Broadcasting, which
confidentiality agreement will survive the execution and delivery of this
Agreement and will survive the execution and termination of this Agreement, and
no provision of this Section 8.B will be deemed to supersede or in any way limit
any obligation or right under such confidentiality agreement.
17
8.C EFFORTS TO CONSUMMATE. Subject to the provisions of
Article X and Section 12.A, each of Sinclair and the Merger Sub will use
reasonable efforts to fulfill and perform all conditions and obligations on its
part to be fulfilled and performed under this Agreement and to cause the
conditions set forth in Articles IX and X to be fulfilled and cause the Merger
and the transactions contemplated by this Agreement in connection with the
Merger to be fully carried out. In addition, promptly after Sinclair or the
Merger Sub becomes aware prior to the Closing of a breach of any fact or
circumstance which constitutes or would constitute a breach of any
representation or warranty of Sullivan set forth in this Agreement, Sinclair
will give Sullivan notice thereof so that Sullivan may attempt to cure the same.
8.D NOTICE OF PROCEEDINGS. Each of Sinclair and the Merger Sub
will promptly notify Sullivan (prior to the Closing) or the Stockholder
Representative (after the Closing) in writing upon becoming aware of any order
or decree or any complaint praying for an order or decree restraining or
enjoining the consummation of the Merger or any other transaction contemplated
by this Agreement, or upon receiving any notice from any governmental
department, court, agency, or commission of its intention to institute an
investigation into or institute a suit or proceeding to restrain or enjoin the
consummation of the Merger or any such other transaction, or to nullify or
render ineffective this Agreement, the Merger or any such other transaction, if
consummated. Sinclair will give the Stockholder Representative prompt written
notice if any Acquiring Party becomes aware of any breach of any representation
or warranty of any Acquiring Party set forth in Article V.
8.E SECTION 338 ELECTION. Without the Stockholder
Representative's prior written consent, Sinclair will not, and will not cause or
permit any of its Subsidiaries to, make an election under Section 338 of the Tax
Code, or under any analogous provision of any other Legal Requirements relating
to Taxes, with respect to the Merger.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF SULLIVAN AT THE CLOSING
The obligation of Sullivan to consummate the Merger is, at
Sullivan's option, subject to the fulfillment of the following conditions at the
time of the Closing (Sullivan expressly acknowledging that the effectiveness of
the Sullivan Consents is not a condition to such obligation):
9.A REPRESENTATIONS, WARRANTIES, COVENANTS.
(1) Each of the representations and warranties of
Sinclair and the Merger Sub set forth in Article V, considered without
regard to any materiality qualifiers contained therein, will be deemed
to be made again at and as of the time of the Closing (other than any
such representation or warranty which is expressly made with reference
to a time prior to the time of the Closing, which will be deemed remade
as of such time only), and taken as a whole such representations and
warranties, as so remade, will have been true and accurate
18
in all material respects, except to the extent of deviations therefrom
permitted or contemplated by this Agreement; and
(2) each of Sinclair and the Merger Sub will in all
material respects have performed and complied with the covenants and
agreements required by this Agreement to be performed or complied with
by it prior to or at the time of the Closing, taken as a whole.
9.B PROCEEDINGS.
(1) No action or proceeding will have been instituted
and be pending before any court or governmental body to restrain or
prohibit, or to obtain a material amount of damages in respect of, the
consummation of the transactions contemplated by this Agreement that,
in the reasonable opinion of Sullivan, may reasonably be expected to
result in a preliminary or permanent injunction against such
consummation or, if the transactions contemplated hereby were
consummated, an order to nullify or render ineffective this Agreement
or such transactions or for the recovery against any Sullivan- Related
Entity or any officer, director or stockholder of any Sullivan-Related
Entity of a material amount of damages; and
(2) no Party will have received written notice from
any governmental body of (a) such governmental body's intention to
institute any action or proceeding to restrain or enjoin or nullify
this Agreement or the transactions contemplated hereby, or to commence
any investigation (other than a routine letter of inquiry, including,
without limitation, a routine Civil Investigative Demand) into the
consummation of the transactions contemplated by this Agreement, or (b)
the actual commencement of such an investigation, in each case unless
the same has been withdrawn, resolved, concluded or abandoned.
9.C HART-SCOTT-RODINO AND FCC MATTERS. The Approval Date will
have occurred and the Required FCC Consent will be in full force and effect.
9.D SPIN-OFF. The Spin-Off will have been consummated.
9.E OTHER DELIVERIES. The Merger Sub will have delivered, or
will stand ready to deliver, to Sullivan such instruments, documents, and
certificates as are contemplated by Section 3.B(1).
ARTICLE X
CONDITIONS TO THE OBLIGATIONS OF THE MERGER SUB AT THE CLOSING
The obligations of the Merger Sub to consummate the Merger on
the Closing Date are, at the Merger Sub's option, subject to the fulfillment of
the following conditions at the time of the Closing (Sinclair and the Merger Sub
expressly acknowledging that the effectiveness of the
19
Acquiring Party Consents is not a condition to such obligations):
10.A REPRESENTATIONS, WARRANTIES, COVENANTS.
(1) Each of the representations and warranties of
Sullivan set forth in Article IV, considered without regard to any
materiality qualifiers contained therein, will be deemed to be made
again at and as of the time of the Closing (other than any such
representation or warranty which is expressly made with reference to a
time prior to the time of the Closing, which will be deemed remade as
of such time only), and taken as a whole such representations and
warranties, as so remade, will have been true and accurate, except to
the extent of deviations therefrom which are permitted or contemplated
by this Agreement or which, in the aggregate, do not constitute and
have not caused a Material Adverse Change; and
(2) Sullivan will in all material respects have
performed and complied with the covenants agreements required by this
Agreement to be performed or complied with by it prior to or at the
time of the Closing, taken as a whole, and Sullivan will in all
material respects have performed and complied with the covenants and
agreements required by this Agreement to be performed or complied with
by it prior to or at the time of the Closing, taken as a whole.
10.B PROCEEDINGS.
(1) No action or proceeding will have been instituted
and be pending before any court or governmental body to restrain or
prohibit, or to obtain a material amount of damages in respect of, the
consummation of the transactions contemplated by this Agreement that,
in the reasonable opinion of Sinclair, may reasonably be expected to
result in a preliminary or permanent injunction against such
consummation or, if the transactions contemplated hereby were
consummated, an order to nullify or render ineffective this Agreement
or such transactions or for the recovery against any Sinclair- Related
Entity or any officer, director or stockholder of any Sinclair-Related
Entity of a material amount of damages; and
(2) no Party will have received written notice from
any governmental body of (a) such governmental body's intention to
institute any action or proceeding to restrain or enjoin or nullify
this Agreement or the transactions contemplated hereby, or to commence
any investigation (other than a routine letter of inquiry, including,
without limitation, a routine Civil Investigative Demand) into the
consummation of the transactions contemplated by this Agreement, or (b)
the actual commencement of such an investigation, in each case unless
the same has been withdrawn, resolved, concluded or abandoned.
10.C HART-SCOTT-RODINO AND FCC MATTERS. The Approval Date will
have occurred and the Required FCC Consent will be in full force and effect.
20
10.D OTHER INSTRUMENTS. Sullivan will have delivered, or will
stand ready to deliver, to the Merger Sub such instruments, documents, and
certificates as are contemplated by Section 3.C(1).
ARTICLE XI
POST-CLOSING MATTERS
11.A SURVIVAL. The representations, warranties and
certifications of the Parties contained in or made pursuant to this Agreement
(including any certification contained in any certificate to be delivered
pursuant to Section 3.C) will survive the execution of this Agreement and the
Closing only to the extent expressly provided in the Indemnity Agreement. The
covenants and agreements of the Parties set forth in this Agreement will survive
until performed and discharged in full.
11.I LIMITATION OF RECOURSE. Except as provided in the
Indemnity Agreement, after the Closing, no claim may be brought or maintained
against any Party or any Old Sullivan Stockholder or any of their respective
present or former officers, directors, employees or other affiliates by any
Party or Old Sullivan Stockholder or any of its successors or assigns, and no
recourse may be sought or granted against any Person, by virtue of or based upon
any alleged misstatement, omission, inaccuracy in, or breach of any
representation, warranty or certification of any Party set forth in or made
pursuant to this Agreement, and in no event will Sinclair or Post-Merger
Sullivan be entitled to claim or seek any rescission of the Merger or any of the
other transactions consummated pursuant to the Transaction Documents, any such
right of rescission or rights to damages which any such Party might otherwise
have being hereby expressly waived and any claims or judgments being limited
accordingly.
11.C ACKNOWLEDGMENT BY THE ACQUIRING PARTIES. Each of the
Acquiring Parties has conducted, to its satisfaction, an independent
investigation and verification of Sullivan, its Subsidiaries, the Stations and
the Station Assets and the financial condition, results of operations, assets,
liabilities, properties and projected operations of Sullivan, its Subsidiaries,
the Stations and the Station Assets. In determining to enter into this Agreement
and proceed with the transactions contemplated by this Agreement, each Acquiring
Person has relied on the covenants of Sullivan, the results of such independent
investigation and verification and the representations and warranties of
Sullivan (in conjunction with the Schedules hereto) set forth in this Agreement
(including the certifications to be made in any certificate to be delivered
pursuant to Section 3.C), all of which each Acquiring Party acknowledges and
agrees will survive for a limited duration. SUCH REPRESENTATIONS, WARRANTIES AND
CERTIFICATIONS CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS, WARRANTIES AND
CERTIFICATIONS WITH RESPECT TO SULLIVAN, ITS SUBSIDIARIES, THE STATIONS AND THE
STATION ASSETS TO THE ACQUIRING PARTIES IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY, AND EACH ACQUIRING PARTY UNDERSTANDS, ACKNOWLEDGES AND
AGREES THAT ALL OTHER
21
REPRESENTATIONS, WARRANTIES AND CERTIFICATIONS OF ANY KIND OR NATURE AND WHETHER
ORAL OR CONTAINED IN ANY WRITING OTHER THAN THIS AGREEMENT OR ANY SUCH
CERTIFICATE (INCLUDING WITHOUT LIMITATION, ANY REPRESENTATION, WARRANTY OR
CERTIFICATION RELATING TO THE PROJECTED, FUTURE OR HISTORICAL FINANCIAL
CONDITION, RESULTS OR OPERATIONS, ASSETS OR LIABILITIES RELATING TO THE
STATIONS) ARE SPECIFICALLY DISCLAIMED BY SULLIVAN, THE STOCKHOLDER
REPRESENTATIVE, THE OFFICERS OF SULLIVAN AND ITS SUBSIDIARIES AND THE OLD
SULLIVAN STOCKHOLDERS.
11.D CORPORATE NAME. After the Merger (but on the Closing
Date), Post- Merger Sullivan will take and will cause its Subsidiaries to take
such action as is necessary to change its corporate name in its certificate or
articles of incorporation filed with the Secretary of State or similar official
of the jurisdiction of its incorporation to a name which does not include, and
is not confusingly similar to, the name "Sullivan" and will cease the use of all
Sullivan Broadcasting logos or any similar mark. Notwithstanding anything in
this Agreement to the contrary, Post-Merger Sullivan will be entitled to
continue to use its present corporate name until such time as such name change
is effective and to the extent necessary to accomplish such name change, and may
endorse checks and other instruments in such name.
ARTICLE XII
TERMINATION
12.A TERMINATION OF AGREEMENT PRIOR TO CLOSING. Subject to
Section 12.A(3), this Agreement may be terminated at any time prior to the
Closing as follows:
(1) BY SULLIVAN. By Sullivan, by written notice (a
"Sullivan Termination Notice") to Sinclair:
(a) at any time when any material breach by
any Acquiring Party of its obligations pursuant to this
Agreement has occurred and is continuing, if both
(i) such breach materially and
adversely affects the likelihood that any of the
conditions set forth in Article IX or X which has not
been satisfied or waived will be satisfied or
materially and adversely affects any Party's ability
to comply with its obligations pursuant to this
Agreement, and
(ii) at least thirty days have
elapsed since Sullivan gave Sinclair written notice
requesting that such Person cure such breach,
unless prior to the giving of the Sullivan gave each such
breaching Acquiring Party
22
has cured such breach;
(b) at any time after the Expiration Date,
if
(i) as of the Expiration Date, each
of Sullivan's and the Merger Sub's conditions to
closing set forth in Articles IX and X was satisfied
or waived in writing,
(ii) the absence of satisfaction of
each of Sullivan's and the Merger Sub's conditions to
closing set forth in Articles IX and X which was not
waived in writing or satisfied as of the Expiration
Date was caused by a breach by one or more of the
Acquiring Parties of any of its or their
representations, warranties and/or obligations under
this Agreement and/or the failure of any Acquiring
Party Consent to have been obtained,
(iii) the Approval Date had not
occurred on or prior to the Expiration Date as a
result of any breach by one or more of the Acquiring
Parties of any provision of this Agreement, or
(iv) one or more of the Acquiring
Parties and the Affiliates thereof refused, failed or
declined to take any action (other than divesting
itself of an broadcast television or radio station of
which it or one of its Subsidiaries is the licensee
or terminating any time brokerage or similar
arrangement) which the FCC, the FTC, the DOJ or the
staff of any of them indicates to any Acquiring Party
or agent thereof is a condition to the grant of the
Required FCC Consent or the expiration or termination
of the requisite waiting period under the
Hart-Scott-Rodino Act for the Merger; or
(c) at any time after the Expiration Date,
in any circumstance which is not described in Section
12.A(1)(b), unless the absence of satisfaction of each of
Sullivan's and the Merger Sub's closing conditions set forth
in Articles IX and X which has not been satisfied or waived in
writing has been caused by a breach by Sullivan of its
obligations under this Agreement.
(2) BY SINCLAIR. By Sinclair, by written notice (a
"Sinclair Termination Notice") to Sullivan:
(a) at any time when any material breach by
Sullivan of its obligations pursuant to this Agreement has
occurred and is continuing, if both
(i) such breach materially and
adversely affects the likelihood that any of the
conditions set forth in Article IX or X will be
satisfied or materially and adversely affects any
Party's ability to comply with its obligations
pursuant to this Agreement and
23
(ii) at least thirty days have
elapsed since Sinclair gave Sullivan written notice
requesting that Sullivan cure such breach,
unless prior to the giving of such Sinclair Termination Notice
Sullivan has cured such breach; or
(b) at any time after the Expiration Date,
under any circumstances described in Section 12.A(1)(b) or
Section 12.A(1)(c).
(3) WHEN TERMINATION NOT PERMITTED. Sullivan may not
terminate this Agreement pursuant to Section 12.A(1) at any time when
Sullivan is in material breach of a material obligation under this
Agreement. Sinclair may not terminate this Agreement pursuant to
Section 12.A(2) at any time when any Acquiring Party is in material
breach of a material obligation under this Agreement.
12.B SURVIVAL OF CERTAIN PROVISIONS; REMEDIES.
(1) GENERAL. No Party will have any liability to any
other Party for costs, expenses, damages (consequential or otherwise),
loss of anticipated profits, or otherwise as a result of a termination
pursuant to Section 12.A except as provided in Section 12.B(2) or
12.B(3). The Parties agree that time is of the essence with respect to
the provisions of Sections 3.B and 12.A. Sections 7.G and 8.G, this
Article XII and Article XIII will survive the termination of this
Agreement pursuant to Section 12.A.
(2) FOR SULLIVAN. Sullivan will have such remedies as
it may have at law or in equity in the event of a termination of this
Agreement pursuant to Section 12.A.
(3) FOR THE ACQUIRING PARTIES. The Acquiring Parties'
sole and exclusive remedies for the termination of this Agreement or
any failure of performance or compliance by Sullivan with any covenant
or agreement contained in this Agreement prior to the Closing, or by
Sullivan with any covenant or agreement contained in this Agreement
prior to the Closing, will be
(a) their respective rights (if any) under
applicable law or equitable principles to seek damages in
respect of their direct out-of-pocket losses or expenses (but
not any damages in respect of lost profits or other similar or
consequential or incidental damages) occasioned by and as a
consequence of such breach;
(b) their respective rights (if any) under
applicable law or equitable principles to seek specific
enforcement of this Agreement against Sullivan, including
specific enforcement of Sullivan's obligation to consummate
the Merger (subject to FCC approval and other required
Consents being obtained), it being acknowledged by Sullivan
that the Acquiring Parties would not have an adequate
24
remedy at law in the event of any such failure, provided that
no Acquiring Party will be entitled to such specific
performance unless (i) each Acquiring Party has complied in
all material respects with its material obligations under this
Agreement and (ii) either (A) each condition to closing of
Sullivan set forth in Article IX has been satisfied or waived
in writing or (B) the absence of satisfaction of each such
condition to closing which has not been satisfied or waived in
writing is caused solely by a breach by Sullivan of its
obligations under this Agreement.
ARTICLE XIII
MISCELLANEOUS
13.A EXPENSES. Except as otherwise expressly provided in this
Agreement, Sullivan will bear all of the expenses incurred prior to the Closing
by Sullivan and the Stockholder Representative in connection with the
transactions contemplated by this Agreement, and each of the Acquiring Parties
will bear all of its expenses incurred in connection with the transactions
contemplated by this Agreement, in each case including, without limitation,
account ing and legal fees incurred in connection herewith.
13.B ASSIGNMENTS.
(1) BY SULLIVAN. This Agreement may not be assigned
by Sullivan without the prior written consent of the Acquiring Parties.
Notwithstanding the foregoing, Sullivan may assign its rights under
this Agreement for collateral purposes only to any lender to it, or any
agent for any such lender(s), without the consent of any other Party,
and any such lender or agent may transfer such rights pursuant to the
exercise of remedies with respect to such collateral security to any
other Person (it being understood that any such lender or agent will be
a third-party beneficiary of the agreement constituted by this Section
13.B(1)).
(2) BY SINCLAIR. Sinclair or the Merger Sub may
assign its rights under this Agreement without the consent of Sullivan
or the Stockholder Representative.
(3) GENERAL RULES. Any attempt to assign this
Agreement or any rights or obligations hereunder without first
obtaining any consent which is required by this Section 13.B will be
void. This Agreement will be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns. Each Old Sullivan Stockholder is an express third-party
beneficiary of this Agreement.
13.C FURTHER ASSURANCES. From time to time prior to, at, and
after the Closing, each Party will execute all such instruments and take all
such actions as any other of them, being advised by counsel, may reasonably
request in connection with carrying out and effectuating the intent and purpose
hereof, and all transactions and things contemplated by this Agreement,
including the execution and delivery of any and all consents, confirmatory and
other instruments, in addition
25
to those to be delivered at the Closing, and any and all actions which may
reasonablybe necessary to complete the transactions contemplated hereby.
13.D NOTICES. All notices, demands, and other communications
which may or are required to be given under or with respect to this Agreement
will be in writing, will be delivered personally or sent by nationally
recognized overnight delivery service, charges prepaid, or by registered or
certified mail, return-receipt requested, and will be deemed to have been given
or made when personally delivered, or on the next Business Day after delivery to
such overnight delivery service, or on the fifth day after it is deposited in
the mail, registered or certified, first class postage prepaid, as the case may
be, if addressed as follows:
(1) If to Sullivan (prior to the Closing) or the
Stockholder Representative:
c/o ABRY Partners, Inc.
18 Newbury Street
Boston, Massachusetts 02116
Attn: Royce Yudkoff, President
with a copy (which will not constitute notice to
Sullivan or the Stockholder Representative) to:
John L. Kuehn, Esq.
Kirkland & Ellis
153 E. 53rd Street
New York, New York 10022
or to such other address and/or with such other copies as the
Person to whom such notice is to be given may from time to
time designate by notice to the Acquiring Parties given in
accordance with this Section 13.D.
(2) If to Sinclair, the Merger Sub or Post-Merger
Sullivan:
Sinclair Broadcast Group, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Attn: David D. Smith, President
with a copy (which will not constitute notice to
Sinclair, the Merger Sub or Post-Merger Sullivan) to:
Steven A. Thomas, Esq.
Thomas & Libowitz, P.A.
100 Light Street, Suite 1100
Baltimore, Maryland 21202
26
and
Sinclair Communications, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Attn: General Counsel
or to such other address and/or with such other copies as the
Person to whom such notice is to be given may from time to
time designate by notice to Sullivan (if prior to the Closing)
and the Stockholder Representative given in accordance with
this Section 13.D.
13.E CAPTIONS. The captions of Articles and Sections of this
Agreement are for convenience only, and will not control or affect the meaning
or construction of any of the provisions of this Agreement.
13.F LAW GOVERNING. THIS AGREEMENT WILL BE GOVERNED BY,
CONSTRUED, AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REFERENCES TO THE PRINCIPLES OF CONFLICT OF LAWS OF THE STATE OF NEW
YORK, EXCEPT TO THE EXTENT THAT THE FEDERAL LAW OF THE UNITED STATES GOVERNS THE
TRANSACTIONS CONTEMPLATED HEREBY.
13.G WAIVER OF PROVISIONS. The terms, covenants,
representations, warranties, and conditions of this Agreement may be waived as
to any Party only by a written instrument executed by such Party. The terms,
covenants, representations, warranties, and conditions of this Agreement may be
waived as to any Old Sullivan Stockholder only by a written instrument executed
by Sullivan, prior to the Closing, or the Stockholder Representative, after the
Closing. The failure of any Party or any Old Sullivan Stockholder at any time or
times to require performance of any provision of this Agreement will in no
manner affect the right at a later date to enforce the same. No waiver by or on
behalf of any Party to this Agreement or any Old Sullivan Stockholder of any
condition or the breach of any provision, term, covenant, representation, or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, will be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation, or warranty of this Agreement.
13.H COUNTERPARTS. This Agreement may be executed in two (2)
or more counterparts, and all counterparts so executed will constitute one (1)
agreement binding on all of the parties hereto, notwithstanding that all the
parties hereto are not signatory to the same counterpart.
13.I ENTIRE AGREEMENT. This Agreement (including the Schedules
and Exhibits hereto) and the confidentiality agreement referred to in Section
8.C (including the Acquiring Parties' obligations with respect thereto, as
provided in Section 8.C), constitute the entire agreement among
27
the parties hereto pertaining to the subject matter hereof and supersede any and
all prior agreements, understandings, negotiations, and discussions, whether
oral or written, between them relating to the subject matter hereof.
13.J ACCESS TO BOOKS AND RECORDS.
(1) Post-Merger Sullivan will, and will cause its
Subsidiaries to, preserve for not less than five (5) years after the
Closing Date all books and records included in the Station Assets.
After such five-year period, Post-Merger Sullivan will not, and will
not cause or permit its Subsidiaries to, destroy any books or records
relating to the conduct of business of the Stations prior to the
Effective Time unless Post-Merger Sullivan first offers to transfer
such books and records to the Stockholder Representative at no cost to
the Stockholder Representative, and if Post-Merger Sullivan is
requested to do so, Post-Merger Sullivan will transfer, or cause a
Subsidiary of Post-Merger Sullivan to transfer, such books or records
to the Stockholder Representative.
(2) At the request of the Stockholder Representative,
Post-Merger Sullivan will, and will cause each of its Subsidiaries to,
permit the Stockholder Representative (including its officers,
employees, accountants, and counsel) any access, upon reasonable prior
written notice during normal business hours, to all of its property,
accounts, books, contracts, records, accounts payable and receivable,
records of employees, FCC logs and other information concerning the
affairs or operation of the Stations as the Stockholder Representative
may reasonably request for any reasonable purpose relating to the
transactions contemplated by this Agreement or the ownership or
operation of any Station prior to the Effective Time, and to make
extracts or copies from the foregoing at the Stockholder
Representative's expense. At Post-Merger Sullivan's request, prior to
receiving any such requested information, the Stockholder
Representative will execute a confidentiality agreement with respect
thereto which is reasonably acceptable to Post-Merger Sullivan.
13.K PUBLIC ANNOUNCEMENTS. Prior to the Closing, no Party
will, except by mutual agreement of Sullivan and Sinclair (including agreement
as to content, text and method of distribution or release), make any press
release or other public announcement or disclosure concerning the transactions
contemplated by this Agreement, except as may be required by any Legal
Requirement (including filings and reports required to be made with or pursuant
to the rules of the Securities and Exchange Commission); provided that, prior to
making any such announcement or disclosure required by any Legal Requirement, to
the extent practicable, the disclosing Party gives each Person named above prior
written notice of the context, text and content of, the method of distribution
or release of, and all other material facts concerning, such disclosure.
13.L DISCLOSURE. If and to the extent that any information
required to be furnished by Sullivan in any attached Schedule is contained in
this Agreement or in any attached Schedule, such information will be deemed to
have been included in each other attached Schedule in which such information is
required to be included to the extent its relevance to such latter Schedule is
28
reasonably apparent. By including any information in any attached Schedule,
Sullivan will not be deemed to have admitted or acknowledged that such
information is material to or outside the ordinary course of the business of
Sullivan or any Station.
13.M DEFINITIONAL PROVISIONS.
(1) TERMS DEFINED IN APPENDIX. Each capitalized term
which is used and not otherwise defined in this Agreement or any
attached Schedule has the meaning which is specified for such term in
the Appendix which is attached to this Agreement.
(2) KNOWLEDGE. As used in this Agreement, the term
"knowledge" of Sullivan will refer only to the actual knowledge,
without any particular inquiry (except as specified in this Agreement),
of the Corporate Personnel, Andrew Banks and Royce Yudkoff, after
inquiry of the general managers of the Stations; and the "knowledge" of
Sinclair or the Merger Sub will refer only to the actual knowledge,
without any particular inquiry (except as specified in this Agreement)
of David Smith and David Amy.
(3) INTERPRETATION. Words used in this Agreement,
regardless of the gender and number specifically used, will be deemed
and construed to include any other gender, masculine, feminine or
neuter, and any other number, singular or plural, as the context
requires. Whether or not used in conjunction with the words "without
limitation" or words of similar import, the term "including" as used in
this Agreement imports that the items referred to are illustrative only
and do not purport to be a complete listing of the items of the type in
question. The wording of the provisions of this Agreement is the result
of arms-length negotiations among the parties to this Agreement and was
selected by them to reflect their mutual intentions; therefore, no
party will be deemed the "drafter" of this Agreement and no rule of
strict construction will be applied against or in favor of any party to
this Agreement.
13.N ARBITRATION.
(1) GENERALLY. Except as expressly provided in the
Indemnity Escrow Agreement or for purposes of pursuing any remedy
pursuant to Section 12.B(3)(b), the arbitration procedures described in
this Section 13.N will be the sole and exclusive method of resolving
and remedying claims arising under this Agreement and the other
Transaction Documents ("Disputes"); provided that nothing in this
Section 13.N will prohibit a Party from instituting litigation to
enforce any Final Arbitration Award. Except as otherwise provided in
the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time (the "AAA Rules"), the
arbitration procedures described in this Section 13.N and any Final
Arbitration Award will be governed by, and will be enforceable pursuant
to, the Uniform Arbitration Act as in effect in the State of New York
from time to time. No Person will be entitled to claim or recover
punitive damages in any such proceeding.
29
(2) NOTICE OF ARBITRATION. If a Party asserts that
there exists a Dispute, then such Person (the "Disputing Person") will
give each other Person involved in such Dispute a written notice
setting forth the nature of the asserted Dispute. If all such Persons
do not resolve any such asserted Dispute prior to the tenth Business
Day after such notice is given, then the Disputing Person may commence
arbitration pursuant to this Section 13.N by giving each other Person
involved in such Dispute a written notice to that effect (an
"Arbitration Notice"), setting forth any matters which are required to
be set forth therein in accordance with the AAA Rules. Unless otherwise
notified, the Acquiring Parties are entitled to assume that the
Stockholder Representative is authorized to act on behalf of each Old
Sullivan Stockholder with respect to any Dispute.
(3) SELECTION OF ARBITRATOR. The Persons involved in
such Dispute will attempt to select a single arbitrator by mutual
agreement. If no such arbitrator is selected prior to the twentieth
Business Day after the related Arbitration Notice is given, then an
arbitrator which is experienced in matters of the type which are the
subject matter of the Dispute will be selected in accordance with the
AAA Rules.
(4) CONDUCT OF ARBITRATION. The arbitration will be
conducted under the AAA Rules, as modified by any written agreement
among the Persons involved in such Dispute. The arbitrator will conduct
the arbitration in a manner so that the final result, determination,
finding, judgment or award determined by the arbitrator (the "Final
Arbitration Award") is made or rendered as soon as practicable, and the
Persons involved in such Dispute will use reasonable efforts to cause a
Final Arbitration Award to occur not later than the sixtieth day after
the arbitrator is selected. Any Final Arbitration Award will be final
and binding upon the Persons involved in such Dispute, and there will
be no appeal from or reexamination of any Final Arbitration Award,
except as provided in the Uniform Arbitration Act, as in effect in the
State of New York from time to time.
(5) ENFORCEMENT. A Final Arbitration Award may be
enforced in any state or federal court having jurisdiction over the
subject matter of the related Dispute.
(6) EXPENSES. The prevailing Person(s) in any
arbitration proceeding in connection with this Agreement will be
entitled to recover from the non-prevailing Person(s) their reasonable
attorneys' fees and disbursements in addition to any damages or other
remedies awarded to such prevailing Person(s), and the non-prevailing
Person(s) will be required to pay all other costs and expenses
associated with the arbitration; provided that (i) if an arbitrator is
unable to determine that a Person is a prevailing Person in any such
arbitration proceeding, then such costs and expenses will be equitably
allocated by such arbitrator upon the basis of the outcome of such
arbitration proceeding, and (ii) if such arbitrator is unable to
allocate such costs and expenses in such a manner, then the costs and
expenses of such arbitration will be paid one-half by Sullivan and
one-half by Sinclair, and each Party will pay the out-of-pocket
expenses incurred by it. As part of any Final Arbitration Award, the
arbitrator may designate the prevailing Person(s) for purposes of this
Section 13.N(6). Except as provided in the preceding sentences, each
Person involved in a
30
Dispute will bear its own costs and expenses (including legal feesand
disbursements) in connection with any such proceeding or submission.
13.O STOCKHOLDER REPRESENTATIVE.
(1) APPOINTMENT; AUTHORITY GENERALLY. On behalf of
the Old Sullivan Stockholders, Sullivan hereby appoints ABRY Partners
as the initial Stockholder Representative under this Agreement, to
serve in accordance with the terms, conditions and provisions of this
Agreement, and ABRY Partners, by its execution of this Agreement,
hereby agrees to act as such, upon the terms, conditions and provisions
of this Agreement. From and after the Closing, the Stockholder
Representative will be authorized to act on behalf of the Old Sullivan
Stockholders in accordance with this Agreement.
(2) AUTHORIZATION. The Stockholder Representative, in
such capacity, will be entitled to take all actions on behalf of the
holders of Sullivan Shares or the Old Sullivan Stockholders, as the
case may be, with respect to this Agreement and the other agreements
contemplated hereby, and omit to take any action, each as directed by
(a) prior to the Effective Time, the holders
of capital stock of Sullivan having a majority of the voting
power represented by the outstanding capital stock of Sullivan
at the time in question, and
(b) after the Effective Time, Persons who
immediately prior to the Effective Time held Sullivan Shares
which represented a majority of the voting power of the
Sullivan Shares,
(in either case, the "Majority Sullivan Stockholders"). The Stockholder
Representative may be removed and replaced from time to time as the
representative of the holders of the Sullivan Shares or the Old
Sullivan Stockholders by written notice given by the Majority Sullivan
Stockholders to Sullivan (prior to the Effective Time) and the
Acquiring Parties.
(3) RESPONSIBILITY. The Stockholder Representative
will have no duties or responsibilities except those expressly set
forth in this Agreement or any other agreement which may be entered
into by it hereunder. The Stockholder Representative will have no
responsibility for the validity of this Agreement or any agreement
referred to in this Agreement or for the performance of any such
agreements by any party thereto or for the interpretation of any of the
provisions of any such agreements. The Stockholder Representative's
liability in fulfilling its duties will be limited to bad faith,
willful misconduct or gross negligence on its part. The Stockholder
Representative will be protected in acting upon any certificate, notice
or other instrument whatsoever received by the Stockholder
Representative as to its due execution, the validity and effectiveness
of its provisions, and the truth and accuracy of any information
therein contained that the Stockholder Representative in good faith
believes to be genuine and to have been signed or presented by a proper
Person or Persons. The Stockholder Representative may, in its sole
31
discretion, consult with and obtain advice from legal counsel and any
other Person in the event of any question as to any of the provisions
of this Agreement, any other agreement entered into in connection
herewith or its duties hereunder or thereunder. The reasonable cost of
such services, to the extent not borne by Sullivan, will be borne among
the Old Sullivan Stockholders who held Sullivan Shares immediately
prior to the Effective Time, pro rata in accordance with the respective
amounts of the Merger Consideration to be received by them in respect
of the Sullivan Shares.
(4) RESIGNATION; REPLACEMENT. The Stockholder
Representative will have the right, in its sole discretion, to resign
as the Stockholder Representative (in its capacity as the
representative of the holders of Sullivan Shares or the Old Sullivan
Stockholders) at any time by giving at least 30 days prior written
notice to Sullivan (prior to the Effective Time) and the Acquiring
Parties. In such event, Sullivan (prior to the Effective Time) or the
Majority Sullivan Stockholders (after the Effective Time) will promptly
appoint another Stockholder Representative to represent the holders of
Sullivan Shares and the Old Sullivan Stockholders and give notice of
such selection to the Acquiring Parties and the Old Sullivan
Stockholders (after the Effective Time). Such resignation of the
Stockholder Representative will be effective upon such notice being
given and such new Stockholder Representative's acceptance of such
appointment and will relieve the resigning Stockholder Representative
of all duties and responsibilities of the Stockholder Representative in
such capacity thereafter arising.
13.P COMPLETION OF SULLIVAN'S SCHEDULES. The Acquiring Parties
acknowledge that Sullivan has executed this Agreement without having the
opportunity to request of personnel of the Stations information which may be
material to the preparation of the attached Schedules referred to in Article IV
(and that, therefore, some or all of such attached Schedules may not be correct
and complete and, as a result, some or all of the representations and warranties
set forth in Article IV which refer to such attached Schedules may not be true
and correct). On or prior to March 9, 1998, Sullivan may deliver to Sinclair an
amendment and restatement of any such attached Schedule, or any portion thereof,
or a supplement to any such attached Schedule or any portion thereof, which may
be required in order to accurately depict facts and circumstances which exist on
the date of this Agreement (or any other applicable date referred to in any such
representation or warranty), and the attached Schedule or portion thereof in
question will be deemed to have been so amended and restated or modified, as the
case may be, as of the time of the execution and delivery of this Agreement.
32
13.Q TREATMENT OF STATION KOKH. Each Acquiring Party
acknowledges that, notwithstanding any language to the contrary in this
Agreement, Sullivan has made and will make no representation, warranty or
certification of any kind with respect to Station KOKH (including with respect
to the assets, liabilities and operations related to Station KOKH), and no
representation or warranty set forth in Article IV, and no certification
relating thereto delivered pursuant to Section 3.C, will be deemed to apply to
Station KOKH (including to any related asset, liability or operations).
[SIGNATURE PAGES TO FOLLOW
--REST OF PAGE LEFT INTENTIONALLY BLANK]
33
IN WITNESS WHEREOF, the parties have caused this Agreement and
Plan of Merger to be duly executed by their duly authorized officers, all as of
the day and year first above written.
SULLIVAN BROADCASTING COMPANY II, INC.
By:
-----------------------------------------------
Its:
----------------------------------------------
SINCLAIR BROADCAST GROUP, INC.,
in its own right and on behalf of a Subsidiary
to be formed by it
By:
-----------------------------------------------
Its:
----------------------------------------------
ABRY PARTNERS, INC.
By:
-----------------------------------------------
Its:
----------------------------------------------
34
APPENDIX
ADDITIONAL DEFINED TERMS. The following capitalized terms have
the following meanings when used in this Agreement and the Schedules attached to
this Agreement:
"ABRY FUND" means ABRY Broadcast Partners II, L.P., a Delaware
limited partnership.
"ACQUIRING PARTIES" means Sinclair, the Merger Sub and
Post-Merger Sullivan.
"ACQUIRING PARTY CONSENTS" means all Consents other than the
Required FCC Consent, any Consent required under the Hart-Scott-Rodino
Act, or any Sullivan Consent.
"AFFILIATE" of any Person means any other Person which is
controlled by, controls, or is under common control with, such first
Person.
"AFFILIATED GROUP" means an affiliated group of corporations,
as that term is defined in Section 1504(a) of the Tax Code (or in any
analogous combined, consolidated or unitary group defined under state,
local or foreign income Tax law).
"APPROVAL DATE" means the first day upon which the Required
FCC Consent has been Granted and the requisite waiting period under the
Hart-Scott-Rodino Act for the consummation of the Merger has expired or
been terminated.
A "BUSINESS DAY" means any day other than a Saturday, a Sunday
or another day upon which banks in New York, New York generally are not
open for business.
"CLOSING DATE" means the date upon which the Closing occurs.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as
amended and as in effect from time to time.
"CONSENT" means any consent, order, approval, authorization or
other action of, or any filing with or notice to or other action by or
with respect to, any Person which is required for any of the execution,
delivery or performance of this Agreement, the consummation of the
Spin-Off, the Merger, or the conduct of the business of Sullivan or
Post-Merger Sullivan or the holding or utilization of any Station Asset
thereafter, whether such requirement arises pursuant to any Legal
Requirement, Contract, a Person's organizational documents or
otherwise, including any of the foregoing which is required in order to
prevent a breach of or a default under or a termination or modification
of any Contract.
"CONTRACT" means any agreement, lease, arrangement,
commitment, or understanding to which Sullivan, with respect to the
Stations, is a party.
35
"CONTRACTS SCHEDULE" means the attached Exhibit C.
"CORPORATE PERSONNEL" means J. Daniel Sullivan, David Pulido,
Patrick Bratton, Richard Montgomery, Barry Charbonneau and any
successor to any of them in his
capacity as an employee and/or officer of Sullivan.
"EFFECTIVE TIME" means the time of the filing of the
Certificate of Merger described in Article II.
"EXPIRATION DATE" means the earlier of (a) the last to occur
of the 15th day after the date upon which the Required FCC Consent is
Granted and the last day of the calendar month during which the
Required FCC Consent is Granted, and (b) December 31, 2008.
"FCC" means the Federal Communications Commission or any
successor thereto.
"FCC AUTHORIZATIONS" means the authorizations issued by the
FCC and described on the attached Schedule 4C.
A "FINAL ORDER" means the Required FCC Consent if (a) the
Required FCC Consent has been Granted and has not been reversed,
stayed, set aside, enjoined, annulled or suspended (whether under
Section 402 or 405 of the Communications Act or otherwise) and (b) (i)
no request has been filed for administrative or judicial review,
reconsideration, appeal, certiorari or stay and the time for filing any
such request and for the FCC to review the Required FCC Consent on its
own motion has expired, or (2) if such a review, reconsideration or
appeal has occurred, such review, reconsideration or appeal has been
denied and the time for further review, reconsideration or appeal has
expired.
"GAAP" means United States generally accepted accounting
principles, as in effect from time to time, as applied by Sullivan and
its Subsidiaries from time to time.
The Required FCC Consent is "GRANTED" on the effective date,
as determined under the FCC's rules, regulations and policies, of the
grant thereof by the FCC or its staff.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as in effect from time to time.
"HEADQUARTERS ASSETS" means the assets of Sullivan Holdings
and its Subsidiaries located in the offices of Sullivan Holdings and
its Subsidiaries located in Franklin, Tennessee, and Boston,
Massachusetts, and any so-called "personal seat license" or other right
of Sullivan Holdings or any of its Subsidiaries to subscribe for
tickets to events at the stadium presently being constructed or
proposed to be constructed in the Nashville, Tennessee, metropolitan
area.
"INDEMNITY AGREEMENT" means the Indemnity Agreement entered
into among
36
Sullivan, Sinclair and certain other Persons dated as of the date of
this Agreement, as such agreement is in effect from time to time.
"INDEMNITY ESCROW AGREEMENT" means the Indemnity Escrow
Agreement entered into among the Stockholder Representative, Sinclair
and certain other Persons dated as of the date of this Agreement, as
such agreement is in effect from time to time.
"LEGAL REQUIREMENTS" means the Communications Act, the rules,
regulations and published policies of the FCC, and all other federal,
state and local laws, rules, regulations, ordinances, judgments, orders
and decrees.
"LIEN" means any mortgage, pledge, hypothecation, encumbrance,
lien (statutory or otherwise), preference, priority or other security
agreement of any kind or nature whatsoever (including any conditional
sale or other title retention agreement and any lease having
substantially the same effect as any of the foregoing and any
assignment or deposit arrangement in the nature of a security device).
"MARKET CABLE SYSTEM" means, with respect to any Station, any
cable television system located within such Station's television
market, as that term is defined in Section 76.55(e) of the rules of the
FCC.
"MISSION GUARANTEES" means the (i) Guaranty of Sullivan
Broadcasting dated as of July 11, 1996 in favor of NationsBank of
Texas, N.A., and any other lenders referred to therein relating to
certain indebtedness of Mission Broadcasting I, Inc., a Delaware
corporation, and (ii) the Guaranty of Sullivan Broadcasting dated as of
July 29, 1996 in favor of NationsBank of Texas, N.A., and any other
lenders referred to therein relating to certain indebtedness of Mission
Broadcasting II, Inc., a Delaware corporation, in each case as in
effect from time to time.
"OLD SULLIVAN STOCKHOLDER" means any holder of record of any
Sullivan Share immediately prior to the Effective Time.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of the
conduct of business by Sullivan Holdings and is Subsidiaries,
substantially consistent with their respective past practices.
"PARTIES" means the parties to this Agreement.
"PERMITTED ENCUMBRANCES" means (i) Liens arising by operation
of law and securing the payment of Taxes which are not yet due and
payable, (ii) with respect to any property leased by Sullivan as
lessee, the interest of the lessor in such property, (iii) easements,
rights-of-way, reservations of rights, conditions or covenants, zoning,
building or similar restrictions or other non-monetary Liens or defects
that do not, individually or in the aggregate, materially interfere
with the use of the affected property in the operation of
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the Stations as currently conducted or as presently proposed by
Sullivan Holdings and its Subsidiaries to be conducted, (iv)
restrictions on transfer imposed under state or federal securities laws
or pursuant to the Communications Act or the FCC Regulations, and (v)
Liens securing indebtedness under the Sullivan Senior Debt
Arrangements, other indebtedness and the Mission Guarantees.
A "PERSON" means any individual, partnership, limited
liability company, joint venture, corporation, trust, unincorporated
association or government or department thereof.
"REQUIRED FCC CONSENT" means the action(s) or order(s) by the
FCC granting its Consent to the transfer of control of Sullivan by
reason of the Merger, without any condition which in the reasonable
judgment of the Sullivan and the Acquiring Parties is adverse to such
Person (or, in Sullivan's or the Stockholder Representative's
reasonable judgment, adverse to any of the Old Sullivan Stockholders),
as the case may be, in any material respect.
"SINCLAIR-RELATED ENTITY" means Sinclair, the Merger Sub, any
direct or indirect assignee or proposed assignee (by operation of law
or otherwise) of any of the rights of any of them pursuant to this
Agreement or any other agreement contemplated hereby, any direct or
indirect successor or proposed successor to Post-Merger Sullivan's
business or operation with respect to any Station, or any Affiliate or
any of them.
"SPIN-OFF" means the transfer of the assets described on the
attached Exhibit D to Sullivan by Sullivan Holdings and its
Subsidiaries.
"STATION ASSETS" means all of Sullivan's rights in, to and
under the assets and properties of the Stations, real and personal,
tangible and intangible, of every kind and description which are owned
and used by Sullivan in connection with the business and operations of
the Stations, including rights under contracts and leases, real and
personal property, plant and equipment, inventories, intangibles,
licenses and goodwill, and all other assets and properties of Sullivan
used solely in connection with the operation of any Station; provided
that the Station Assets will not include the Headquarters Assets.
"STATION KOKH" means broadcast television station KOKH-TV,
Oklahoma City, Oklahoma, together with all related translator stations
(if any) owned by Sullivan.
"STATIONS" means broadcast television station WZTV, Nashville,
TN; broadcast television station WUTV, Buffalo, New York; broadcast
television station WXLV-TV, Winston-Salem, North Carolina; broadcast
television station WRLH-TV, Richmond, Virginia; broadcast television
station WUHF, Rochester, New York; and broadcast television station
WMSN-TV, Madison, Wisconsin; in each case together with all associated
translator stations (if any) owned by Sullivan Holdings or any of its
Subsidiaries immediately prior to the Spin-Off.
"STOCKHOLDER REPRESENTATIVE" means ABRY Partners, Inc., a
Delaware corporation,
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or any successor thereto as the Stockholder Representative designated
pursuant to Section 13.O.
With respect to any Person, a "SUBSIDIARY" means any
corporation, partnership, limited liability company, association or
other business entity of which, at the time of such reference, (i) if a
corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof, or a
majority economic interest, is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a
partnership, limited liability company, association or other business
entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person or
a combination thereof. For purposes hereof, a Person or Persons will be
deemed to have a majority ownership interest in a partnership, limited
liability company, association or other business entity if such Person
or Persons will be allocated a majority of partnership, company,
association or other business entity gains or losses or will be or
control the managing director or general partner of such partnership,
company, association or other business entity.
"SULLIVAN BROADCASTING" means Sullivan Broadcasting Company,
Inc., a Delaware corporation.
"SULLIVAN COMMON STOCK" means Sullivan Shares which are common
stock.
"SULLIVAN CONSENTS" means all Consents of the board of
directors or stockholders of Sullivan.
"SULLIVAN HOLDINGS" means Sullivan Broadcast Holdings, Inc., a
Delaware corporation.
"SULLIVAN HOLDINGS FINANCIAL STATEMENTS" means the Financial
Statements attached to this Agreement as Exhibit E.
"SULLIVAN-RELATED ENTITY" means any Affiliate of ABRY Partners
Inc. or ABRY Broadcast Partners II, L.P., including Sullivan, prior to
the Effective Time.
"SULLIVAN SENIOR DEBT ARRANGEMENTS" means the Credit Agreement
dated as of January 4, 1996 among Sullivan Holdings, Sullivan
Broadcasting, the various Agents and co-Agents referred to therein, and
the several Lenders from time to time parties thereto, together with
all "Loan Documents" and other documents and instruments relating to
the "Obligations" referred to therein, in each case as in effect from
time to time.
"SULLIVAN SHARE" means any share of capital stock of Sullivan
which is outstanding immediately prior to the Effective Time.
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"SULLIVAN STATION ASSETS" means all of Sullivan Holdings', its
Subsidiaries, Sullivan's and Sullivan Three's rights in, to and under
the assets and properties of the Sullivan Stations, real and personal,
tangible and intangible, of every kind and description which are owned
and used by Sullivan Holdings, its Subsidiaries, Sullivan or Sullivan
Three in connection with the business and operations of the Sullivan
Stations, including rights under contracts and leases, real and
personal property, plant and equipment, inventories, intangibles,
licenses and goodwill, and all other assets and properties of Sullivan,
its Subsidiaries, Sullivan and Sullivan Three used solely in connection
with the operation of any Sullivan Station; provided that the Sullivan
Station Assets will not include the Headquarters Assets.
"SULLIVAN STATIONS" means broadcast television station WZTV,
Nashville, TN; broadcast television station WUTV, Buffalo, New York;
broadcast television station WXLV-TV, Winston-Salem, North Carolina;
broadcast television station WRGT-TV, Dayton, Ohio; broadcast
television station WRLH-TV, Richmond, Virginia; broadcast television
station WVAH-TV, Charleston, West Virginia; broadcast television
station WUHF, Rochester, New York; broadcast television station
WTAT-TV, Charleston, South Carolina; broadcast television station WFXV,
Utica, New York; low-power television station WPNY-LP, Rome, New York;
broadcast television station WMSN-TV, Madison, Wisconsin; Station KOKH;
broadcast television station WUXP, Nashville, Tennessee; and broadcast
television station WUPN-TV, Greensboro, North Carolina; in each case
together with all associated translator stations (if any).
"SULLIVAN THREE" means Sullivan Broadcasting Company III,
Inc., a Delaware corporation.
"TAX" (and, with correlative meaning, "Taxes", "Taxable" and
"Taxing") means any (A) federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall profits,
environmental (including under Section 59A of the Tax Code), customs,
duties, real property, real property gains, personal property, capital
stock, social security, unemployment, disability, payroll, license,
employee or other withholding, or other tax of any kind whatsoever,
including any interest, penalties or additions to tax or additional
amounts in respect of the foregoing; (B) liability of any corporation
for the payment of any amounts of the type described in clause (A)
arising as a result of being (or ceasing to be) a member of any
Affiliated Group (or being included in any Tax Return relating
thereto); and (C) liability for the payment of any amounts of the type
described in clause (A) or (B) as a result of any express or implied
obligation to indemnify or otherwise assume or succeed to the liability
of any other Person.
"TAX CODE" means the Internal Revenue Code of 1986, as amended
(including, where applicable, the Internal Revenue Code of 1954, as
amended).
"TRANSACTION DOCUMENTS" means this Agreement and all
agreements between or
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among any or all of the Sullivan-Related Entities and the
Sinclair-Related Entities relating thereto, in each case as in effect
from time to time.
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LIST OF SCHEDULES
Schedule 4C FCC Matters
Schedule 4D Certain Asset-Related Matters
Schedule 4F Litigation
Schedule 4H Conflicts
Schedule 4J Tax Matters
Schedule 4N Employee Benefit Matters
LIST OF EXHIBITS
Exhibit A Opinions of Sullivan's Counsel
Exhibit B Opinions of Sinclair's and the Merger Sub's Counsel
Exhibit C Contracts Schedule
Exhibit D Spin-Off Assets
Exhibit E Sullivan Holdings Financial Statements
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