<PAGE> 1
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF
CLASS A COMMON STOCK AND CLASS B COMMON STOCK
OF
CENTRAL NEWSPAPERS, INC.
AT
$64.00 NET PER SHARE OF CLASS A COMMON STOCK
$6.40 NET PER SHARE OF CLASS B COMMON STOCK
BY
PACIFIC AND SOUTHERN INDIANA CORP.
A SUBSIDIARY OF
GANNETT CO., INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, JULY 31, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO THE TERMS OF AN AGREEMENT AND PLAN OF
MERGER, DATED AS OF JUNE 28, 2000 (THE "MERGER AGREEMENT"), AMONG GANNETT CO.,
INC. ("PARENT" OR "GANNETT"), PACIFIC AND SOUTHERN INDIANA CORP. ("PURCHASER")
AND CENTRAL NEWSPAPERS, INC. (THE "COMPANY" OR "CENTRAL NEWSPAPERS"). THE OFFER
IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE HAVING BEEN VALIDLY TENDERED
AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST 45,815,000
SHARES OF THE COMPANY'S CLASS B STOCK (SUBJECT TO ADJUSTMENTS FOR STOCK SPLITS,
STOCK DIVIDENDS, RECAPITALIZATIONS AND SIMILAR EVENTS) (LESS ANY SHARES OF THE
COMPANY'S CLASS B STOCK OWNED BY PARENT OR PURCHASER OR ANY AFFILIATE OF PARENT
OR PURCHASER ON THE DATE SUCH SHARES ARE PURCHASED PURSUANT TO THE OFFER) (THE
"MINIMUM CONDITION") AND (II) THE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), HAVING EXPIRED
OR BEEN TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER (THE "HSR CONDITION").
THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS OFFER TO
PURCHASE. SEE SECTIONS 1 AND 14, WHICH SET FORTH IN FULL THE CONDITIONS TO THE
OFFER.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING EACH OF
THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN), ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND THE HOLDERS OF THE COMPANY'S CLASS A STOCK AND
CLASS B STOCK, HAS APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING EACH OF THE OFFER AND THE MERGER,
AND HAS RECOMMENDED THAT THE HOLDERS OF COMPANY STOCK ACCEPT THE OFFER AND
TENDER THEIR COMPANY STOCK PURSUANT TO THE OFFER.
AS A CONDITION TO PARENT'S AND PURCHASER'S EXECUTION AND DELIVERY OF THE
MERGER AGREEMENT, THE EUGENE C. PULLIAM TRUST (THE "TRUST"), WHICH IS THE OWNER
OF APPROXIMATELY 78% OF THE COMPANY'S VOTING POWER, ENTERED INTO A VOTING AND
TENDER AGREEMENT, DATED AS OF JUNE 28, 2000, AMONG THE TRUST, PARENT AND
PURCHASER (THE "VOTING AND TENDER AGREE-
<PAGE> 2
MENT") PURSUANT TO WHICH IT AGREED TO TENDER THE 45,815,000 SHARES OF CLASS B
STOCK OWNED BY IT IN THE OFFER AND TO VOTE SUCH SHARES IN FAVOR OF THE ADOPTION
OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT AND GRANTED PARENT AND PURCHASER AN IRREVOCABLE OPTION TO BUY SUCH
SHARES AT A PRICE EQUAL TO $6.40 PER SHARE OR ANY HIGHER PRICE PAID BY PARENT OR
PURCHASER FOR CLASS B STOCK PURSUANT TO THE OFFER OR THE MERGER, EXERCISABLE
UNDER CERTAIN CIRCUMSTANCES. SEE SECTION 10, WHICH DESCRIBES THE VOTING AND
TENDER AGREEMENT IN GREATER DETAIL.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Class A Stock and/or Class B Stock should either (i) complete and sign the
accompanying Letter of Transmittal (or a manually signed facsimile thereof) in
accordance with the instructions in the Letter of Transmittal and mail or
deliver it together with the certificate(s) evidencing tendered Class A Stock
and/or Class B Stock, and any other required documents, to the Depositary or
tender such Class A Stock pursuant to the procedure for book-entry transfer set
forth in Section 3 hereof or (ii) request such stockholder's broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
such stockholder. Any stockholder whose Class A Stock and/or Class B Stock is
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if such stockholder desires to tender such Class A Stock or
Class B Stock.
A stockholder who desires to tender Class A Stock and/or Class B Stock and
whose certificates evidencing such Class A Stock and/or Class B Stock are not
immediately available, or who cannot comply with the procedure for book-entry
transfer on a timely basis, may tender such Class A Stock and/or Class B Stock
by following the procedure for guaranteed delivery set forth in Section 3.
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent.
------------------------
July 3, 2000
2
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY TERM SHEET.......................................... 4
INTRODUCTION................................................ 8
1. Terms of the Offer; Expiration Date..................... 10
2. Acceptance for Payment and Payment for Company Stock.... 12
3. Procedures for Accepting the Offer and Tendering Company
Stock.................................................... 13
4. Withdrawal Rights....................................... 16
5. Certain Federal Income Tax Consequences................. 16
6. Price Range of Class A Stock; Dividends................. 18
7. Certain Information Concerning the Company.............. 19
8. Certain Information Concerning Purchaser and Parent..... 20
9. Financing of the Offer and the Merger................... 22
10. Background of the Offer; Contacts with the Company; the
Merger Agreement.......................................... 22
11. Purpose of the Offer; Plans for the Company after the
Offer and the Merger...................................... 33
12. Possible Effects of the Offer on the Market for the
Company Stock, NYSE Listing, Margin Regulations and
Exchange Act Registration............................... 35
13. Fees and Expenses....................................... 36
14. Certain Conditions of the Offer......................... 36
15. Certain Legal Matters and Regulatory Approvals.......... 38
16. Miscellaneous........................................... 40
</TABLE>
SCHEDULES
Schedule I -- Directors and Executive Officers of Parent, Purchaser and/or
Surviving Corporation
3
<PAGE> 4
SUMMARY TERM SHEET
This summary term sheet highlights some of the questions that you, as a
stockholder of Central Newspapers, may have and our answers to those questions.
To better understand our offer to you and for a complete description of the
terms of the offer, you should read this entire Offer to Purchase and the
accompanying Letter of Transmittal carefully. Questions or requests for
assistance may be directed to the Information Agent at its address and telephone
numbers on the back cover of this Offer to Purchase.
WHO IS OFFERING TO BUY MY SECURITIES?
- We are Pacific and Southern Indiana Corp., a newly formed Indiana corporation
and a subsidiary of Gannett Co., Inc. We have been organized in connection
with this offer and have not carried on any activities other than in
connection with this offer. Gannett is an international news and information
company that publishes newspapers, operates broadcasting stations and is
engaged in marketing, commercial printing, a news wire service, data services
and news programming. Gannett employs 45,800 people and had 1999 revenues of
$5.3 billion. The common stock of Gannett is listed on the New York Stock
Exchange, or the NYSE, under the symbol "GCI".
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THIS OFFER?
- We are seeking to purchase any and all of the issued and outstanding common
stock of Central Newspapers. See the "Introduction" and Section 1.
HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
- We are offering to pay $64.00 per share for Class A Stock and $6.40 per share
for Class B Stock, in each case net to you in cash and without interest. See
the "Introduction" and Section 1.
- If you tender your stock in the offer, you will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in Instruction
6 of the Letter of Transmittal, stock transfer taxes with respect to the sale
of your stock. See the "Introduction."
WHAT ARE THE MOST SIGNIFICANT CONDITIONS OF THE OFFER?
- We are not obligated to purchase any stock unless at least 45,815,000 shares
of the outstanding Class B Stock are validly tendered and not withdrawn prior
to the expiration of the offer. We call this condition the "minimum
condition." The Eugene C. Pulliam Trust owns 45,815,000 shares of Class B
Stock and has agreed to tender all of these shares to us. In addition, the
trust has granted to us an irrevocable option to purchase these shares.
Acquiring the trust's shares, which represent approximately 78% of the voting
power of the Company's stock, would allow us to approve a merger and acquire
any untendered shares as a result of the merger. See Sections 1 and 14.
- We are not obligated to purchase any stock that is validly tendered unless and
until the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act has expired or been terminated. See Section 15.
- We are not obligated to purchase any stock that is validly tendered if there
is a material adverse change in Central Newspapers or its business.
- These and other conditions to our obligation to purchase stock tendered in the
offer are described in greater detail in Sections 1 and 14. We can waive any
of the conditions to the offer without Central Newspapers' consent, other than
the minimum condition.
DO YOU HAVE FINANCIAL RESOURCES TO MAKE PAYMENT?
- Gannett, our parent company, will provide us with the funds necessary to
purchase all shares validly tendered and not withdrawn in the offer and to
provide funding for the merger which is expected to follow the successful
completion of the offer. We anticipate that all of these funds will be
obtained from
4
<PAGE> 5
existing resources and internally generated funds of Gannett, including the
issuance of commercial paper in the ordinary course of business. The offer is
not conditioned upon any financing arrangements. See Section 9.
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
- We do not think our financial condition is relevant to your decision whether
to tender in the offer because:
- The form of payment consists solely of cash.
- The offer is not subject to any financing conditions.
- If we consummate the merger, we will acquire all remaining shares of
stock in the merger for the same cash price per share.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
- You will have at least until 12:00 midnight, New York City time, on Monday,
July 31, 2000, to tender your stock in the offer. If you cannot deliver
everything that is required in order to make a valid tender by that time, you
may be able to use a guaranteed delivery procedure which is described in
Section 3 of this Offer to Purchase. See Section 3.
CAN THE OFFER BE EXTENDED, AND UNDER WHAT CIRCUMSTANCES?
- Subject to the terms of the merger agreement, we can extend the offer. We have
agreed in the merger agreement that we may extend the offer without Central
Newspapers' consent in the following circumstances:
- If any of the conditions to the offer, other than the minimum condition,
have not been satisfied or waived, we may extend the offer, but not
beyond September 29, 2000.
- If all of the conditions to the offer have been satisfied or waived
except for the minimum condition, we may extend the offer, but not beyond
September 12, 2000.
- If all conditions to the offer have been satisfied or waived but less
than 90% of the outstanding shares of each class of stock have been
validly tendered and not withdrawn, we may extend the offer, but not
beyond August 28, 2000, provided, among other things, that we purchase
all shares validly tendered and not withdrawn at the time of such
extension.
- In addition, either party may extend the offer, but not beyond March 31,
2001, if necessary to satisfy the condition that (i) any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, shall have expired or been terminated, (ii) no
government entity shall have commenced a lawsuit or issued an order,
ruling or regulation which challenges, restrains, or prohibits the
transaction, or (iii) the minimum condition be satisfied.
See Section 1 for more details on our ability to extend the offer.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
- If we decide to extend the offer, we will inform Norwest Bank Minnesota, N.A.,
the Depositary, of that fact, and will issue a press release giving the new
expiration date no later than 9:00 a.m., New York City time, on the next
business day after the day on which the offer was previously scheduled to
expire. See Section 1.
HOW DO I TENDER?
- To tender your stock in the offer, you must complete and sign the accompanying
Letter of Transmittal (or a manually signed facsimile of the Letter of
Transmittal) in accordance with the instructions in the
5
<PAGE> 6
Letter of Transmittal and mail or deliver it together with your share
certificates, and any other required documents, to the Depositary. You may
tender your Class A Stock by physical delivery of your share certificates or
pursuant to the procedure for book-entry transfer set forth in Section 3
(Class B Stock is not eligible for the book-entry tender procedures); or if
your share certificates are not immediately available or if you cannot deliver
your share certificates, and any other required documents, to Norwest Bank
Minnesota, N.A., prior to the expiration of the offer, or you cannot complete
the procedure for delivery of Class A Stock by book-entry transfer on a timely
basis, you may still tender your Company Stock if you comply with the
guaranteed delivery procedures described in Section 3.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED STOCK?
- You may withdraw previously tendered stock any time prior to the expiration of
the offer, and, unless we have accepted the stock pursuant to the offer, you
may also withdraw any tendered stock at any time after July 31, 2000. See
Section 4.
HOW DO I WITHDRAW PREVIOUSLY TENDERED COMPANY STOCK?
- To withdraw previously tendered stock, you must deliver a written or facsimile
notice of withdrawal with the required information to the Depositary, Norwest
Bank Minnesota, N.A., while you still have the right to withdraw. If you
tendered stock by giving instructions to a broker or bank, you must instruct
the broker or bank to arrange for the withdrawal of your stock. See Section 4.
WHAT DOES CENTRAL NEWSPAPERS' BOARD OF DIRECTORS THINK OF THE OFFER?
- The Board of Directors of Central Newspapers has unanimously determined that
the Merger Agreement and the transactions contemplated thereby, including each
of the offer and the merger, are fair to, and in the best interests of, the
holders of the Company's stock, has approved and adopted the Merger Agreement
and the transactions contemplated thereby, and has recommended that the
holders of the Company's stock accept the offer and tender their shares
pursuant to the offer.
WILL CENTRAL NEWSPAPERS CONTINUE AS A PUBLIC COMPANY?
- No. If the merger occurs, Central Newspapers will no longer be publicly owned.
Even if the merger does not occur, if we purchase all the tendered stock,
there may be so few remaining stockholders and publicly held stock that the
stock may no longer be eligible to be traded through the NYSE or any other
securities market, there may not be a public trading market for the stock and
Central Newspapers may cease making filings with the SEC or otherwise cease
being required to comply with SEC rules relating to publicly held companies.
See Section 12.
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF THE STOCK IS NOT
TENDERED?
- If we accept for payment at least 45,815,000 shares of the outstanding Class B
Stock, we will merge with and into Central Newspapers. If the merger occurs,
Central Newspapers will become a wholly owned subsidiary of Gannett, and each
share that remains outstanding (other than any stock held in the treasury of
Central Newspapers, or owned by us, Gannett or any subsidiaries of us or
Gannett, and any stock held by stockholders seeking appraisal for their stock)
will be canceled and converted automatically into the right to receive $64.00
per share of Class A Stock and $6.40 per share of Class B Stock in cash.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY COMPANY STOCK?
- If you decide not to tender your stock in the offer and the merger occurs, you
will receive in the merger the same amount of cash per share as if you would
have tendered your stock in the offer, subject to any dissenters' rights of
holders of Class B Stock properly exercised under Indiana law. Therefore, if
the merger takes place, the only difference between tendering your shares and
not tendering your shares is that you will be paid earlier and, if you are a
holder of Class B Stock, not have dissenters' rights if you
6
<PAGE> 7
tender your shares of Class B Stock. (Class A Stock has no dissenters'
rights.) If, however, for some reason the merger does not take place, the
number of stockholders and the number of shares that are still publicly held
may be so small that the stock may no longer be eligible to be traded through
NYSE or any other securities market, there may not be a public trading market
for the stock and Central Newspapers may cease making filings with the SEC or
otherwise cease being required to comply with SEC rules relating to publicly
held companies. See Section 12.
WHAT IS THE MARKET VALUE OF MY COMPANY STOCK AS OF A RECENT DATE?
- On June 28, 2000, the last full trading day before we announced our offer, the
closing price per share of the Class A Stock reported on the New York Stock
Exchange was $64.25. On June 8, 2000, the Company issued a press release
confirming that it had retained a financial advisor and was in preliminary
discussions regarding a possible sale or other business combination involving
the Company. On June 7, 2000, the last sale price of the Class A Stock as
reported on the NYSE was $31.50. See Section 7.
WHAT ARE CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF TENDERING
SHARES?
- The receipt of cash for shares pursuant to the tender offer or the merger will
be a taxable transaction for United States federal income tax purposes and
possibly for state, local and foreign income tax purposes as well. In general,
a stockholder who sells shares pursuant to the tender offer or receives cash
in exchange for shares pursuant to the merger will recognize gain or loss for
United States federal income tax purposes equal to the difference, if any,
between the amount of cash received and the stockholder's adjusted tax basis
in the shares sold pursuant to the tender offer or exchanged for cash pursuant
to the merger. If the shares exchanged constitute capital assets in the hands
of the stockholder, such gain or loss will be capital gain or loss. In
general, capital gains recognized by an individual will be subject to a
maximum United States federal income tax rate of 20% if the shares were held
for more than one year, and if held for one year or less they will be subject
to tax at ordinary income tax rates. See Section 5.
WITH WHOM MAY I TALK IF I HAVE QUESTIONS ABOUT THE OFFER?
- You can call Georgeson Shareholder Communications, Inc., the Information
Agent, at (212) 440-9800 or (800) 223-2064. See the back cover of this Offer
to Purchase.
7
<PAGE> 8
TO ALL HOLDERS OF CLASS A COMMON STOCK AND CLASS B COMMON STOCK OF CENTRAL
NEWSPAPERS, INC.
INTRODUCTION
Pacific and Southern Indiana Corp., an Indiana corporation ("Purchaser")
and a subsidiary of Gannett Co., Inc., a Delaware corporation ("Parent"), hereby
offers to purchase any and all of the Class A Common Stock, no par value (the
"Class A Stock"), and any and all of the Class B Common Stock, no par value (the
"Class B Stock"), of Central Newspapers, Inc., an Indiana corporation (the
"Company"), that are issued and outstanding for $64.00 per share of Class A
Stock and $6.40 per share of Class B Stock, in each case, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in this Offer to Purchase and in the related Letter of Transmittal (which,
together with this Offer to Purchase and any amendments or supplements hereto or
thereto, collectively constitute the "Offer"). See Section 8 for additional
information concerning Parent and Purchaser.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Class A Stock
and Class B Stock by Purchaser pursuant to the Offer. However, any tendering
stockholder or other payee who fails to complete and sign the Substitute Form
W-9 that is included in the Letter of Transmittal may be subject to a required
backup U.S. federal income tax withholding of 31% of the gross proceeds payable
to such stockholder or other payee pursuant to the Offer. See Section 5.
Purchaser or Parent will pay all charges and expenses of Norwest Bank Minnesota,
N.A. (the "Depositary") and Georgeson Shareholder Communications, Inc. (the
"Information Agent") incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING EACH OF THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN), ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND THE HOLDERS OF COMPANY STOCK,
HAS APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING EACH OF THE OFFER AND THE MERGER, AND HAS RECOMMENDED THAT
THE HOLDERS OF COMPANY STOCK ACCEPT THE OFFER AND TENDER THEIR COMPANY STOCK
PURSUANT TO THE OFFER.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") has delivered
to the Board its written opinion dated June 28, 2000 to the effect that, based
upon and subject to various assumptions, limitations and qualifications set
forth in such opinion, the consideration to be received by the stockholders
pursuant to the Offer and the Merger is fair to such stockholders from a
financial point of view. A copy of the written opinion of DLJ is contained in
the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), which has been filed with the Securities and Exchange
Commission (the "SEC") in connection with the Offer and which is being mailed to
stockholders concurrently herewith, and stockholders are urged to read such
opinion carefully in its entirety for a description of the assumptions made,
matters considered and limitations of the review undertaken by DLJ.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
45,815,000 SHARES OF CLASS B STOCK (SUBJECT TO ADJUSTMENTS FOR STOCK SPLITS,
STOCK DIVIDENDS, RECAPITALIZATIONS AND SIMILAR EVENTS) (LESS ANY SHARES OWNED BY
PARENT OR PURCHASER OR ANY AFFILIATE OF PARENT OR PURCHASER ON THE DATE SUCH
SHARES ARE PURCHASED PURSUANT TO THE OFFER) (THE "MINIMUM CONDITION"), AND (II)
THE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF
1976, AS AMENDED (THE "HSR ACT"), HAVING EXPIRED OR BEEN TERMINATED, PRIOR TO
THE EXPIRATION OF THE OFFER (THE "HSR CONDITION"). THE OFFER IS ALSO
8
<PAGE> 9
SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE
SECTIONS 1 AND 14, WHICH SET FORTH IN FULL THE CONDITIONS TO THE OFFER.
AS A CONDITION TO PARENT'S AND PURCHASER'S EXECUTION AND DELIVERY OF THE
MERGER AGREEMENT, THE EUGENE C. PULLIAM TRUST (THE "TRUST"), WHICH IS THE OWNER
OF APPROXIMATELY 78% OF THE COMPANY'S VOTING POWER, ENTERED INTO A VOTING AND
TENDER AGREEMENT, DATED AS OF JUNE 28, 2000, AMONG THE TRUST, PARENT AND
PURCHASER (THE "VOTING AND TENDER AGREEMENT") PURSUANT TO WHICH IT AGREED TO
TENDER THE 45,815,000 SHARES OF CLASS B STOCK OWNED BY IT IN THE OFFER AND TO
VOTE SUCH SHARES IN FAVOR OF THE ADOPTION OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND GRANTED PARENT AND
PURCHASER AN IRREVOCABLE OPTION TO BUY SUCH SHARES AT A PRICE EQUAL TO $6.40 PER
SHARE OR ANY HIGHER PRICE PAID BY PARENT OR PURCHASER FOR CLASS B STOCK PURSUANT
TO THE OFFER OR THE MERGER, EXERCISABLE UNDER CERTAIN CIRCUMSTANCES. SEE SECTION
10, WHICH DESCRIBES THE VOTING AND TENDER AGREEMENT IN GREATER DETAIL.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 28, 2000 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, that as soon as
practicable after the purchase of Company Stock pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the Indiana Business Corporation Law
("Indiana law"), Purchaser will be merged with and into the Company (the
"Merger"). As a result of the Merger, the Company will continue as the surviving
corporation (the "Surviving Corporation") and will become a subsidiary of
Parent. At the effective time of the Merger (the "Effective Time"), each share
of Company Stock issued and outstanding immediately prior to the Effective Time
(other than Company Stock held in the treasury of the Company or Company Stock
owned by Purchaser, Parent or any direct or indirect wholly owned subsidiary of
Parent or of the Company, and other than Company Stock held by stockholders who
shall have demanded and perfected appraisal rights under Indiana law) shall be
canceled and converted automatically into the right to receive $64.00 per share
of Class A Stock and $6.40 per share of Class B Stock in cash, without interest
(the "Merger Consideration"). Stockholders who demand and fully perfect
appraisal rights under Indiana law will be entitled to receive, in connection
with the Merger, cash for the fair value of their Company Stock as determined
pursuant to the procedures prescribed by Indiana law. See Section 11. The Merger
Agreement is more fully described in Section 10. Certain federal income tax
consequences of the sale of Company Stock pursuant to the Offer and the Merger,
as the case may be, are described in Section 5.
The Merger Agreement provides that, promptly following the purchase of, and
payment for, Company Stock that satisfies the Minimum Condition pursuant to the
Offer and from time to time thereafter, Purchaser shall be entitled to designate
the number of directors, rounded up to the next whole number, on the Board that
equals the product of the total number of directors on the Board of the Company
(giving effect to the election of any additional directors pursuant to this
paragraph) and the percentage that the voting power of Company Stock
beneficially owned by Parent and Purchaser following such purchase bears to the
total voting power of Company Stock outstanding. In the Merger Agreement, the
Company has agreed, at such time, to promptly take all actions within its power
to cause Purchaser's designees to be elected or appointed to the Board of
Directors, including increasing the number of directors, and seeking and
accepting resignations of incumbent directors.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the consummation of the Offer, and, if required by
applicable law, the approval and adoption of the Merger Agreement by the
requisite vote of the stockholders of the Company in accordance with Indiana
law. For a more detailed description of the conditions to the Merger, see
Section 14 hereof. Under the Company's Articles of Incorporation and Indiana
law, the affirmative vote of the holders of a majority
9
<PAGE> 10
of the outstanding Company Stock, voting as a single class, is required to
approve and adopt the Merger Agreement. Consequently, if Purchaser acquires
(pursuant to the Offer or otherwise) a sufficient number of shares of Class B
Stock to satisfy the Minimum Condition, then Purchaser will have sufficient
voting power to approve and adopt the Merger Agreement without the vote of any
other stockholder. See Sections 10 and 11.
Under Indiana law, if Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Class A Stock and at least 90%
of the then outstanding Class B Stock, Purchaser will be able to approve and
adopt the Merger Agreement without a vote of the Company's stockholders. In such
event, Parent, Purchaser and the Company have agreed to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders. If, however, Purchaser does not acquire at least 90% of the then
outstanding Company Stock pursuant to the Offer or otherwise and a vote of the
Company's stockholders is required under Indiana law, a longer period of time
will be required to effect the Merger. See Section 11.
The Company has advised Purchaser that 32,724,324 shares of Class A Stock
and 55,356,010 shares of Class B Stock were issued and outstanding as of June
23, 2000. In addition, the Company has advised Parent that as of such date,
3,132,832 shares of Common Stock were reserved for issuance pursuant to employee
stock options. As a result, as of such date, the Minimum Condition would be
satisfied if Purchaser acquires 45,815,000 shares of Class B Stock for a
purchase price of $6.40 per share. Also, as of such date, Purchaser would have
the voting power necessary to cause the Merger to become effective in accordance
with Indiana law if Purchaser shall have acquired at least 29,470,864 shares of
the Class B Stock.
No appraisal rights are available in connection with the Offer; however,
holders of Class B Stock may have appraisal rights in connection with the Merger
regardless of whether the Merger is consummated with or without a vote of the
Company's stockholders. See Section 11.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Company Stock
validly tendered (and not withdrawn in accordance with the procedures set forth
in Section 4) on or prior to the Expiration Date. "Initial Expiration Date"
means 12:00 midnight, New York City time, on Monday, July 31, 2000, unless and
until Purchaser (subject to the terms and conditions of the Merger Agreement)
shall have extended the period during which the Offer is open, in which case
Expiration Date shall mean the latest time and date at which the Offer, as it
may be extended by Purchaser, shall expire.
The Offer is subject to the conditions set forth under Section 14,
including the satisfaction of the Minimum Condition and the HSR Condition.
Subject to the applicable rules and regulations of the SEC and subject to the
terms and conditions of the Merger Agreement, Purchaser expressly reserves the
right to waive any of the conditions to the Offer (other than the Minimum
Condition) and to make any change in the terms or conditions of the Offer, in
its sole discretion, except as provided in this paragraph. Notwithstanding the
foregoing, Purchaser may waive the Minimum Condition so long as (x) it has
irrevocably waived all other conditions to the Offer (and may, as a legal
matter, irrevocably waive such conditions and otherwise purchase Company Stock
pursuant to the Offer), (y) Parent has irrevocably exercised or irrevocably
committed to exercise the Option, and (z) the shares of Company Stock acquired
pursuant to the Offer and through such Option exercise would satisfy the Minimum
Condition (such event being referred to as a "Constructive Satisfaction of the
Minimum Condition"). Subject to the applicable rules and regulations of the SEC
and subject to the terms and conditions of the Merger Agreement, Purchaser
expressly reserves the right to increase the price per share payable in the
Offer and to make
10
<PAGE> 11
any other changes in the terms and conditions of the Offer; provided, however,
that neither Parent nor Purchaser may, without the prior written consent of the
Company, (i) decrease the price per share of Class A Stock or Class B Stock
payable in the Offer, (ii) decrease the number of shares of Class A Stock or
Class B Stock sought in the Offer, (iii) change the form of consideration
payable in the Offer, (iv) impose conditions to the Offer in addition to the
Minimum Condition and those described in Section 14 hereof, (v) except as
provided below or required by any rule, regulation, interpretation or position
of the SEC applicable to the Offer, change the expiration date of the Offer,
(vi) otherwise amend or change any term or condition of the Offer in a manner
adverse to the holders of shares of the Class A Stock or Class B Stock.
Notwithstanding anything in the Merger Agreement to the contrary, without the
consent of the Company, Purchaser shall have the right to extend the Offer
beyond the Initial Expiration Date in the following events: (i) from time to
time, but in no event later than the date which is 60 days from the Initial
Expiration Date, if, at the Initial Expiration Date (or extended expiration date
of the Offer, if applicable), any of the conditions to the Offer (other than the
Minimum Condition to which this clause does not apply) shall not have been
satisfied or waived, until such conditions are satisfied or waived; (ii) for any
period required by any rule, regulation, interpretation or position of the SEC
or the staff thereof applicable to the Offer or any period required by
applicable law; (iii) if all conditions to the Offer other than the Minimum
Condition are satisfied or waived, for one or more periods not to exceed 10
business days each (but no more than an aggregate of 30 business days for all
such extensions); or (iv) if all of the conditions to the Offer are satisfied or
waived but the number of shares of each class of Company Stock validly tendered
and not withdrawn is less than 90% of the then outstanding number of shares of
each class of Company Stock for an aggregate period not to exceed 20 business
days (for all such extensions), provided that Purchaser shall accept and
promptly pay for all securities tendered prior to the date of such extension and
shall waive any condition to the consummation of the Merger other than the
condition in Section 10.01(c) of the Merger Agreement that may fail to be
satisfied during such extension. Notwithstanding clause (iii) of the previous
sentence, Purchaser may, and if requested by the Company shall, from time to
time extend the Offer, if at the Initial Expiration Date (or any extended
expiration date of the Offer, including pursuant to this sentence, if
applicable), no conditions to the Offer other than the Minimum Condition, the
HSR Condition (as defined in Section 14 hereof) and/or the conditions set forth
in clause (a) or clause (b) of Section 14 hereof shall excuse performance by
Purchaser under the conditions described in Section 14 hereof until the earlier
of 10 business days after such previously scheduled expiration date or March 31,
2001; provided that the Company will not make such a request where a
Constructive Satisfaction of the Minimum Condition exists. Upon the prior
satisfaction or waiver of all the conditions to the Offer and subject to the
terms and conditions of the Merger Agreement, Purchaser will, and Parent will
cause Purchaser to, accept for payment, purchase and pay for, in accordance with
the terms of the Offer, all shares of the Company Stock validly tendered and not
withdrawn pursuant to the Offer as soon as reasonably practicable after the
expiration of the Offer. Parent shall provide or cause to be provided to
Purchaser on a timely basis the funds necessary to accept for payment, and pay
for, any shares of Company Stock that Purchaser becomes obligated to accept for
payment, and pay for, pursuant to the Offer.
Under no circumstances will interest be paid on the purchase price for
tendered Company Stock, whether or not the Offer is extended. Any extension of
the Offer may be effected by Purchaser giving oral or written notice of such
extension to the Depositary.
Purchaser shall pay for all Company Stock validly tendered and not
withdrawn promptly following the acceptance of Company Stock for payment
pursuant to the Offer. Notwithstanding the immediately preceding sentence and
subject to the applicable rules of the SEC and the terms and conditions of the
Offer and the Merger Agreement, Purchaser also expressly reserves the right (i)
to delay payment for Company Stock in order to comply in whole or in part with
applicable laws (any such delay shall be effected in compliance with Rule
14e-1(c) under the 1934 Act, which requires Purchaser to pay the consideration
offered or to return Company Stock deposited by or on behalf of stockholders
promptly after the termination or withdrawal of the Offer), (ii) to extend or
terminate the Offer and not to accept for payment or pay for any Company Stock
not theretofore accepted for payment or paid for, upon the occurrence of any of
the conditions to the Offer specified in Section 14, and (iii) to amend the
Offer or to
11
<PAGE> 12
waive any conditions to the Offer in any respect consistent with the provisions
of the Merger Agreement described above, in each case by giving oral or written
notice of such delay, termination, waiver or amendment to the Depositary and by
making public announcement thereof.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-1 under the 1934 Act, which require that material changes be promptly
disseminated to stockholders in a manner reasonably designed to inform them of
such changes) and without limiting the manner in which Purchaser may choose to
make any public announcement, Purchaser will have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release to the Dow Jones News Service or the Public Relations
Newswire.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules l4d-4(c),
l4d-6(d) and 14e-1 under the 1934 Act. Subject to the terms of the Merger
Agreement, if, prior to the Expiration Date, Purchaser should decide to increase
the consideration being offered in the Offer, such increase in the consideration
being offered will be applicable to all stockholders whose Class A Stock or
Class B Stock, as the case may be, is accepted for payment pursuant to the Offer
and, if at the time notice of any such increase in the consideration being
offered is first published, sent or given to holders of such Company Stock, the
Offer is scheduled to expire at any time earlier than the period ending on the
tenth business day from and including the date that such notice is first so
published, sent or given, the Offer will be extended at least until the
expiration of such ten business day period.
For purposes of the Offer, a "business day" means any day on which the
principal offices of the SEC in Washington, D.C. are open to accept filings, or,
in the case of determining a date when any payment is due, any day on which
banks are not required or authorized to close in the City of New York, and
consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time.
The Company has provided Purchaser with the Company's stockholder list and
security position listings, including the most recent list of names, addresses
and security positions of non-objecting beneficial owners in the possession of
the Company, for the purpose of disseminating the Offer to holders of Company
Stock. This Offer to Purchase and the related Letter of Transmittal will be
mailed by Purchaser to record holders of Company Stock whose names appear on the
Company's stockholder list and will be furnished, for subsequent transmittal to
beneficial owners of Company Stock, to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR COMPANY STOCK.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment all Company Stock validly
tendered (and not properly withdrawn in accordance with Section 4) prior to the
Expiration Date promptly. Purchaser shall pay for all Company Stock validly
tendered and not withdrawn promptly following the acceptance of Company Stock
for payment pursuant to the Offer. Notwithstanding the immediately preceding
sentence and subject to applicable rules and regulations of the SEC and the
terms of the Merger Agreement, Purchaser expressly reserves the right to delay
payment for Company Stock in order to comply in whole or in part with applicable
laws. See Sections 1 and 15.
In all cases, payment for Company Stock tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) the certificates evidencing such Company Stock (the "Share Certificates")
or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of
such Company Stock into the Depositary's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3, (ii) the Letter of
12
<PAGE> 13
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees or an Agent's Message (as
defined below), in connection with the book-entry transfer and (iii) any other
documents required under the Letter of Transmittal. The term "Agent's Message"
means a message, transmitted by the Book-Entry Transfer Facility to, and
received by, the Depositary and forming a part of the Book-Entry Confirmation
which states that the Book-Entry Transfer Facility has received an express
acknowledgment from the participant in the Book-Entry Transfer Facility
tendering Class A Stock that is the subject of such Book-Entry Confirmation,
that such participant has received and agrees to be bound by the Letter of
Transmittal and that Purchaser may enforce such agreement against such
participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Company Stock validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Company Stock pursuant
to the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Company Stock accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payments from
Purchaser and transmitting such payments to tendering stockholders whose Company
Stock have been accepted for payment.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR COMPANY
STOCK BE PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
If any shares of tendered Company Stock are not accepted for payment for
any reason pursuant to the terms and conditions of the Offer, or if Share
Certificates are submitted evidencing more Company Stock than are tendered,
Share Certificates evidencing unpurchased Company Stock will be returned,
without expense to the tendering stockholder (or, in the case of Company Stock
tendered by book-entry transfer into the Depositary's account at a Book-Entry
Transfer Facility pursuant to the procedure set forth in Section 3, such Company
Stock will be credited to an account maintained at such Book-Entry Transfer
Facility), as promptly as practicable following the expiration or termination of
the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING COMPANY STOCK.
Valid Tender of Company Stock. In order for a holder of Company Stock
validly to tender Company Stock pursuant to the Offer, the Letter of Transmittal
(or a manually signed facsimile thereof), properly completed and duly executed,
together with any required signature guarantees or, in the case of a book-entry
transfer by holders of Class A Stock, an Agent's Message, and any other
documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase and either (i) the Share Certificates evidencing tendered Company Stock
must be received by the Depositary at such address or such Company Stock must be
tendered pursuant to the procedure for book-entry transfer described below and a
Book-Entry Confirmation must be received by the Depositary (including an Agent's
Message if the tendering stockholder has not delivered a Letter of Transmittal),
in each case prior to the Expiration Date, or (ii) the tendering stockholder
must comply with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will establish accounts with respect
to the Class A Stock at the Book-Entry Transfer Facility for purposes of the
Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the system of the Book-Entry
Transfer
13
<PAGE> 14
Facility may make a book-entry delivery of Class A Stock by causing the
Book-Entry Transfer Facility to transfer such Class A Stock into the
Depositary's account at the Book-Entry Transfer Facility in accordance with the
Book-Entry Transfer Facility's procedures for such transfer. However, although
delivery of Class A Stock may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message, and any other required
documents, must, in any case, be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedure described below. Class B Stock is not eligible for book-entry
tender procedures.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY, IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES, DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Security Transfer Agent Medallion
Signature Program, or by any other "eligible guarantor institution", as such
term is defined in Rule 17Ad-15 under the 1934 Act (each of the foregoing being
referred to as an "Eligible Institution"), except in cases where Company Stock
is tendered (i) by a registered holder of Company Stock who has not completed
either the box entitled "Special Issuance and Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii)
for the account of an Eligible Institution. If a Share Certificate is registered
in the name of a person other than the signer of the Letter of Transmittal, or
if payment is to be made, or a Share Certificate not accepted for payment or not
tendered is to be returned, to a person other than the registered holder(s),
then the Share Certificate must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear on the Share Certificate, with the signature(s) on such Share Certificate
or stock powers guaranteed by an Eligible Institution. See Instructions 1 and 5
of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Company Stock
pursuant to the Offer and such stockholder's Share Certificates evidencing such
Company Stock are not immediately available or such stockholder cannot deliver
the Share Certificates and all other required documents to the Depositary prior
to the Initial Expiration Date, or such stockholder cannot complete the
procedure for delivery by book-entry transfer on a timely basis, such Company
Stock may nevertheless be tendered, provided that all the following conditions
are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Company Stock, in proper form for transfer, in each case
together with the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message,
and any other documents required by the Letter of Transmittal are received
by the Depositary within three New York Stock Exchange ("NYSE") trading
days after the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or by
facsimile transmission to the Depositary and must include a guarantee by an
Eligible Institution in the form set forth in the form of Notice of Guaranteed
Delivery made available by Purchaser.
In all cases, payment for Company Stock tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of the Share Certificates evidencing such Company Stock, or a Book-Entry
Confirmation of the delivery of such Company Stock, and the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any
14
<PAGE> 15
required signature guarantees or, in the case of a book-entry transfer, an
Agent's Message, and any other documents required by the Letter of Transmittal.
Determination of Validity. ALL QUESTIONS AS TO THE FORM OF DOCUMENTS AND
THE VALIDITY, FORM, ELIGIBILITY (INCLUDING TIME OF RECEIPT) AND ACCEPTANCE FOR
PAYMENT OF ANY TENDER OF COMPANY STOCK WILL BE DETERMINED BY PURCHASER, IN ITS
SOLE DISCRETION, WHICH DETERMINATION SHALL BE FINAL AND BINDING ON ALL PARTIES.
Purchaser reserves the absolute right to reject any and all tenders determined
by it not to be in proper form or the acceptance for payment of which may, in
the opinion of its counsel, be unlawful. Purchaser also reserves the absolute
right to waive any condition of the Offer to the extent permitted by applicable
law and the Merger Agreement or any defect or irregularity in the tender of any
Company Stock of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders.
NO TENDER OF COMPANY STOCK WILL BE DEEMED TO HAVE BEEN VALIDLY MADE UNTIL
ALL DEFECTS AND IRREGULARITIES HAVE BEEN CURED OR WAIVED. NONE OF PURCHASER,
PARENT OR ANY OF THEIR RESPECTIVE AFFILIATES OR ASSIGNS, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE
NOTIFICATION OF ANY DEFECTS OR IRREGULARITIES IN TENDERS OR INCUR ANY LIABILITY
FOR FAILURE TO GIVE ANY SUCH NOTIFICATION. Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
A tender of Company Stock pursuant to any of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer, as well as the tendering stockholder's representation
and warranty to Purchaser that (i) such stockholder has the full power and
authority to tender, sell, assign and transfer the tendered Company Stock (and
any and all other Company Stock or other securities issued or issuable in
respect of such Company Stock), and (ii) when the same are accepted for payment
by Purchaser, Purchaser will acquire good and unencumbered title thereto, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claims.
The acceptance for payment by Purchaser of Company Stock pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
Appointment as Proxy. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints Purchaser and Parent as such
stockholder's agents, attorneys-in-fact and proxies, each with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Company Stock tendered
by such stockholder and accepted for payment by Purchaser (and with respect to
any and all other Company Stock or other securities issued or issuable in
respect of such Company Stock on or after June 28, 2000). All such powers of
attorney and proxies shall be considered irrevocable and coupled with an
interest in the tendered Company Stock. Such appointment will be effective when,
and only to the extent that, Purchaser accepts such Company Stock for payment.
Upon such acceptance for payment, all prior powers of attorney and proxies given
by such stockholder with respect to such Company Stock (and such other Company
Stock and securities) will be revoked, without further action, and no subsequent
powers of attorney or proxies may be given nor any subsequent written consent
executed by such stockholder (and, if given or executed, will not be deemed to
be effective) with respect thereto. Purchaser and Parent will, with respect to
the Company Stock for which the appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. Purchaser reserves the right to require
that, in order for Company Stock to be deemed validly tendered, immediately upon
Purchaser's payment for such Company Stock, Purchaser must be able to exercise
full voting rights with respect to such Company Stock (and such other Company
Stock and securities).
15
<PAGE> 16
UNDER THE "BACKUP WITHHOLDING" PROVISIONS OF U.S. FEDERAL INCOME TAX LAW,
THE DEPOSITARY MAY BE REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS OF CASH PURSUANT
TO THE OFFER. TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO
PAYMENT TO CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF COMPANY STOCK PURCHASED
PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH
SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH
STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY
COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL. SEE INSTRUCTION
9 OF THE LETTER OF TRANSMITTAL.
4. WITHDRAWAL RIGHTS.
Tenders of Company Stock made pursuant to the Offer are irrevocable except
that such Company Stock may be withdrawn at any time prior to the Expiration
Date and, unless theretofore accepted for payment by Purchaser pursuant to the
Offer, may also be withdrawn at any time after July 31, 2000. If Purchaser
extends the Offer, is delayed in its acceptance for payment of Company Stock or
is unable to accept Company Stock for payment pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Company
Stock, and such Company Stock may not be withdrawn except to the extent that
tendering stockholders are entitled to withdrawal rights as described in Section
4, subject to Rule 14e-1(c) under the 1934 Act. Any such delay will be by an
extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover page of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the
Company Stock to be withdrawn, the number of shares of Company Stock to be
withdrawn and the name of the registered holder of such Company Stock, if
different from that of the person who tendered such Company Stock. If Share
Certificates evidencing Company Stock to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such Share Certificates, the serial numbers shown on such Share Certificates
must be submitted to the Depositary and the signature(s) on the notice of
withdrawal must be guaranteed by an Eligible Institution, unless such shares of
Company Stock have been tendered for the account of an Eligible Institution. If
shares of Company Stock have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Company Stock.
ALL QUESTIONS AS TO THE FORM AND VALIDITY (INCLUDING TIME OF RECEIPT) OF
ANY NOTICE OF WITHDRAWAL WILL BE DETERMINED BY PURCHASER, IN ITS SOLE
DISCRETION, WHOSE DETERMINATION WILL BE FINAL AND BINDING. NONE OF PURCHASER,
PARENT OR ANY OF THEIR RESPECTIVE AFFILIATES OR ASSIGNS, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE ANY
NOTIFICATION OF ANY DEFECTS OR IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL OR
INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION.
Withdrawals of Company Stock may not be rescinded. Any Company Stock
properly withdrawn will thereafter be deemed not to have been validly tendered
for purposes of the Offer. However, withdrawn Company Stock may be re-tendered
at any time prior to the Expiration Date by following one of the procedures
described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of certain U.S. federal income tax consequences
of the Offer and the Merger to holders whose Company Stock is purchased pursuant
to the Offer or whose Company Stock
16
<PAGE> 17
is converted into the right to receive cash in the Merger (whether upon receipt
of the Merger Consideration or, with respect to Class B Stock, pursuant to the
proper exercise of dissenters' rights). The discussion applies only to holders
of Company Stock in whose hands Company Stock are capital assets (generally
assets held for investment), and may not apply to Company Stock received
pursuant to the exercise of employee stock options or otherwise as compensation,
or to holders of Company Stock who are not citizens or residents of the United
States of America.
THE TAX DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL INFORMATION
PURPOSES ONLY AND IS BASED UPON PRESENT LAW (WHICH MAY BE SUBJECT TO CHANGE,
POSSIBLY ON A RETROACTIVE BASIS). BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER,
EACH HOLDER OF COMPANY STOCK SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER TO SUCH HOLDER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
The receipt of the offer price and the receipt of cash pursuant to the
Merger (whether as Merger Consideration or, with respect to Class B Stock,
pursuant to the proper exercise of dissenters' rights) will be a taxable
transaction for U.S. federal income tax purposes (and also may be a taxable
transaction under applicable state, local and other income tax laws). In
general, for U.S. federal income tax purposes, a holder of Company Stock will
recognize gain or loss equal to the difference between such holder's adjusted
tax basis in the Company Stock sold pursuant to the Offer or converted to cash
in the Merger and the amount of cash received therefor. Such gain or loss
generally will be capital gain or loss. Certain non-corporate holders (including
individuals) will be subject to tax on the net amount of such capital gain at a
maximum rate of 20%, provided that the shares of Company Stock were held for
more than 12 months. The deduction of capital losses is subject to certain
limitations under U.S. federal income tax law. Holders of Company Stock should
consult their own tax advisors in this regard.
Payments in connection with the Offer or the Merger may be subject to
backup withholding at a 31% rate. Backup withholding generally applies if a
holder (i) fails to furnish such holder's social security number or taxpayer
identification number ("TIN"), (ii) furnishes an incorrect TIN, (iii) fails
properly to report interest or dividends or (iv) under certain circumstances,
fails to provide a certified statement, signed under penalties of perjury, that
the TIN provided is such holder's correct number and that such holder is not
subject to backup withholding. Backup withholding is not an additional tax but
merely an advance payment, which may be refunded to the extent it results in an
overpayment of U.S. federal income tax, provided that certain information is
furnished to the Internal Revenue Service. Certain persons, including
corporations and financial institutions, generally are exempt from backup
withholding. Certain penalties apply for failure to furnish correct information
and for failure to include the reportable payments in income. Each holder of
Company Stock should consult with such holder's own tax advisor as to such
holder's qualifications for exemption from withholding and the procedure for
obtaining such exemption.
17
<PAGE> 18
6. PRICE RANGE OF CLASS A STOCK; DIVIDENDS.
The following table sets forth the quarterly dividends declared per share
of Class A Stock and the resulting dividend payable on Class B Stock.
COMPANY STOCK DIVIDENDS
<TABLE>
<CAPTION>
CLASS A STOCK CLASS B STOCK
------------- -------------
<S> <C> <C>
1998
1st Quarter............................................... $0.105 $0.0105
2nd Quarter............................................... 0.105 0.0105
3rd Quarter............................................... 0.120 0.0120
4th Quarter............................................... 0.120 0.0120
------ -------
$0.450 $0.0450
1999
1st Quarter............................................... $0.120 $0.0120
2nd Quarter............................................... 0.120 0.0120
3rd Quarter............................................... 0.130 0.0130
4th Quarter............................................... 0.130 0.0130
------ -------
$0.500 $0.0500
2000
1st Quarter............................................... $0.130 $0.0130
2nd Quarter............................................... 0.130 0.0130
</TABLE>
The Class A Stock is traded on the NYSE under the symbol "ECP." The
following table sets forth, for each of the fiscal quarters indicated, the high
and low sales price per share.
CLASS A STOCK SALES PRICES
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1998
1st Quarter............................................... $37.13 $31.03
2nd Quarter............................................... 37.47 30.81
3rd Quarter............................................... 35.06 28.50
4th Quarter............................................... 35.78 27.41
1999
1st Quarter............................................... $38.25 $30.38
2nd Quarter............................................... 39.31 29.88
3rd Quarter............................................... 45.63 38.00
4th Quarter............................................... 45.69 36.63
2000
1st Quarter............................................... $39.56 $27.25
2nd Quarter............................................... 60.25 28.13
3rd Quarter (through June 28, 2000)....................... 65.88 58.63
</TABLE>
On June 28, 2000, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the closing price per share of Class A Stock as reported on NYSE was
$64.25. On June 30, 2000, the last full trading day prior to the commencement of
the Offer, the closing price per share of Class A Stock as reported on NYSE was
18
<PAGE> 19
$63.25. On June 7, 2000, the day before the Company issued a press release
confirming that it had retained a financial advisor and was in preliminary
discussions concerning a possible sale or other business combination involving
the Company, the last sale price of Class A Stock as reported on the NYSE was
$31.50. As of June 23, 2000, the approximate number of holders of record of the
Class A Stock was 346 and the approximate number of holders of record of the
Class B Stock was 22.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMPANY
STOCK.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise set forth in this Offer to Purchase, all of the
information concerning the Company contained in this Offer to Purchase,
including financial information, has been furnished by the Company or has been
taken from or based upon publicly available documents and records on file with
the SEC and other public sources. Neither Purchaser nor Parent assumes any
responsibility for the accuracy or completeness of the information concerning
the Company furnished by the Company or contained in such documents and records
or for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to Purchaser or Parent.
General. The Company is an Indiana corporation that was incorporated in
1934 with its principal executive offices located at 200 E. Van Buren Street,
Phoenix, Arizona 85004, and its telephone number is (602) 444-1100. The company
publishes two flagship newspapers: The Arizona Republic and The Indianapolis
Star. It also publishes The Arizona Business Gazette, The Alexandria Daily Town
Talk, The Vincennes Sun - Commercial and The Daily Ledger as well as a host of
community newspapers in Indiana. In addition, CNI owns a direct marketing
company (Carantin & Co.) and 23% of BrassRing, Inc. (an online B2B recruitment
firm).
Available Information. The Company is subject to the informational filing
requirements of the 1934 Act and, in accordance therewith, is required to file
periodic reports, proxy statements and other information with the SEC relating
to its business, financial condition and other matters. Information as of
particular dates concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of such persons in transactions
with the Company is required to be disclosed in proxy statements distributed to
the Company's stockholders and filed with the SEC. You may read and copy such
reports, proxy statements and other information should be available for
inspection at the public reference facilities maintained by the SEC at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You can also obtain
copies of such materials by mail, upon payment of the SEC's customary fees, by
telephone at 1-800-SEC-0330, or electronically through the SEC's Web Site at
http://www.sec.gov that contains reports and other information regarding issuers
that file electronically with the SEC.
Certain Financial Projections. In the course of discussions between
representatives of the Company and Parent or Purchaser (collectively the
"Recipients"), the Company provided the Recipients' representatives with certain
projections of the future operating performance of the Company and its
subsidiaries prepared by the Company's management for fiscal year 2000 (the
"Plan Projections"). Relevant portions of such information have been set forth
below for the limited purpose of giving stockholders access to projections by
the Company's management that were available for review by the Recipients in
connection with the Offer.
The projected financial information set forth below necessarily reflects
numerous assumptions with respect to general business and economic conditions
and other matters, many of which are inherently uncertain or beyond the
Company's or the Recipients' control, and does not take into account any changes
in the Company's operations or capital structure which may result from the Offer
and the Merger. It is not possible to predict whether the assumptions made in
preparing the projected financial information will be valid, and actual results
may prove to be materially higher or lower than those contained in the
projections. The inclusion of this information should not be regarded as an
indication that any Recipient or
19
<PAGE> 20
any other person who received this information considered it a reliable
predictor of future events, and this information should not be relied on as
such. None of the Company, the Recipients or any of their respective
representatives assumes any responsibility for the validity, reasonableness,
accuracy or completeness of the projected financial information.
CENTRAL NEWSPAPERS 2000 BUSINESS PLAN
<TABLE>
<CAPTION>
PLAN
2000*
--------------------
($ IN THOUSANDS,
OTHER THAN PER SHARE
AMOUNTS)
<S> <C>
Operating revenue........................................... $818,171
Operating expenses.......................................... 635,536
Operating income............................................ 182,635
Pretax income............................................... 175,276
Taxes....................................................... 68,359
Net income.................................................. 88,352
EBITDA...................................................... 233,416
Earnings per share (basic).................................. $ 2.30
Earnings per share (diluted)................................ $ 2.24
</TABLE>
---------------
* Excludes gain on sale of Career Services, Inc. and workforce reduction
charges.
Cautionary Statement Concerning Forward-looking Statements. Certain
matters discussed herein, including without limitation, the Plan Projections,
are forward-looking statements that involve risks and uncertainties. Such
information was prepared by the Company's management for internal use and not
with a view to publication. The foregoing Plan Projections were based on
assumptions concerning the Company's operations and business prospects in fiscal
year 2000 including the assumption that the Company would continue to operate
under the same ownership structure as then existed. The Plan Projections were
also based on other revenue, expense and operating assumptions. Information of
this type is based on estimates and assumptions that are inherently subject to
significant economic and competitive uncertainties and contingencies, all of
which are difficult to predict and many of which are beyond the Company's
control. Such uncertainties and contingencies include but are not limited to:
changes in the economic conditions in which the Company operates, greater than
anticipated competition or price pressures, new product offerings, better or
worse than expected customer growth resulting in the need to expand operations
and make capital investments, and the impact of investments required to enter
new markets. Accordingly, there can be no assurance that the projected results
would be realized or that actual results would not be significantly higher or
lower than those set forth above. In addition, the Plan Projections were not
prepared with a view to public disclosure or compliance with the published
guidelines of the SEC or the guidelines established by the American Institute of
Certified Public Accountants regarding projections and forecasts, and are
included in this Offer to Purchase only because such information was made
available to the Recipients by the Company. Neither the Recipients' nor the
Company's independent accountants have examined or applied any agreed upon
procedures to this information, and, accordingly, assume no responsibility for
this information. Neither the Recipients nor the Company nor any other party
assumes any responsibility for the accuracy or validity of the foregoing Plan
Projections. Neither the Recipients nor the Company intends to provide any
updated information with respect to any forward-looking statements.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT.
General. Purchaser is a newly incorporated Indiana corporation organized
in connection with the Offer and the Merger and has not carried on any
activities other than in connection with the Offer and the
20
<PAGE> 21
Merger. The principal offices of Purchaser are located at c/o Gannett Co., Inc.,
1100 Wilson Boulevard, Arlington, Virginia 22234 and its telephone number is
(703) 284-6000. Purchaser is a subsidiary of Parent.
Until immediately prior to the time that Purchaser will purchase Company
Stock pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available.
Parent is a corporation organized under the laws of Delaware. Its principal
offices are located at 1100 Wilson Boulevard, Arlington, VA 22234, and its
telephone number is (703) 284-6000. Gannett Co., Inc. is an international news
and information company that publishes 89 daily and numerous non-daily
newspapers worldwide, including USA TODAY, the nation's largest-selling daily
newspaper, and USA WEEKEND, a weekly newspaper magazine. Gannett also owns and
operates 22 television stations and is an Internet leader with sites sponsored
by most of its television stations and newspapers, including USATODAY.com, one
of the most popular news sites on the Web. On June 8, 2000, Gannett announced
that it had entered into a definitive agreement to purchase 21 daily newspapers
along with numerous weeklies and niche publications in Wisconsin, Ohio,
Louisiana, Maryland and Utah from Thomson Newspapers, Inc. in a series of
transactions for an aggregate purchase price of $1.125 billion. Gannett was
founded by Frank E. Gannett and associates in 1906 and incorporated in 1923. The
company went public in 1967. Its 278 million shares of common stock as of
December 26, 1999 were held by approximately 14,000 shareholders of record in
all 50 states and several foreign countries. Gannett has approximately 45,800
employees. The common stock of Gannett is listed on NYSE under the symbol "GCI".
The name, citizenship, business address, business telephone number,
principal occupation or employment, and five-year employment history for each of
the directors and executive officers of Purchaser and Parent and certain other
information are set forth in Schedule I hereto. Except as described in this
Offer to Purchase and in Schedule I hereto, none of Parent, Purchaser or, to the
best knowledge of such corporations, any of the persons listed on Schedule I to
the Offer of Purchase has during the last five years (i) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) been a party to any judicial or administrative proceeding that resulted in
a judgment, decree or final order enjoining the person from future violations
of, or prohibiting activities subject to, federal or state securities laws or
finding any violation of such laws.
Except as described in this Offer to Purchase, (i) none of Purchaser,
Parent or, to the best knowledge of Purchaser and Parent, any of the persons
listed in Schedule I to this Offer to Purchase or any associate or majority
owned subsidiary of Purchaser, Parent or any of the persons so listed,
beneficially owns or has any right to acquire any Company Stock and (ii) none of
Purchaser, Parent nor, to the best knowledge of Purchaser and Parent, any of the
persons or entities referred to above nor any director, executive officer or
subsidiary of any of the foregoing has effected any transaction in the Company
Stock during the past 60 days. Gannett owns two shares of the Company's Class A
Stock. On June 28, 2000, Carleton F. Rosenburgh, Senior Vice President, Gannett
Newspaper Division, and his spouse sold 400 shares of Class A Stock through
their broker for a price of $64.56 per share. Except as provided in the Merger
Agreement and as otherwise described in this Offer to Purchase, none of
Purchaser, Parent nor, to the best knowledge of Purchaser and Parent, any of the
persons listed in Schedule I to this Offer to Purchase, has any agreement,
arrangement, understanding, whether or not legally enforceable, with any other
person with respect to any securities of the Company, including, but not limited
to, the transfer or voting of such securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or the
giving or withholding of proxies, consents or authorizations. Each of Gannett
and the Company has invested in certain business opportunities in furtherance of
their individual business objectives. Gannett and the Company own 16.9% and
2.5%, respectively, of Classified Ventures Inc., an online classified
advertisement network. In addition, each of Gannett and the Company has invested
in Event411.com, an online service for event planning, and Newspapers First, an
advertising sales firm partially owned by newspaper companies. Except as set
forth in this Offer to Purchase, since January 1, 1998, neither Purchaser nor
Parent nor, to the best knowledge of Purchaser and Parent, any of the persons
listed on
21
<PAGE> 22
Schedule I hereto, has had any transaction with the Company or any of its
executive officers, directors or affiliates that is required to be reported
under the rules and regulations of the SEC applicable to the Offer. Except as
set forth in this Offer to Purchase, since January 1, 1998, there have been no
negotiations, transactions or material contacts between any of Purchaser,
Parent, or any of their respective subsidiaries or, to the best knowledge of
Purchaser and Parent, any of the persons listed in Schedule I to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer for or other
acquisition of any class of the Company's securities, an election of the
Company's directors or a sale or other transfer of a material amount of assets
of the Company.
9. FINANCING OF THE OFFER AND THE MERGER.
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required by Purchaser to consummate the Offer and the Merger and
to pay related fees and expenses is estimated to be approximately $2.6 billion.
Purchaser will obtain all of such funds from Parent or one of Parent's
subsidiaries. Parent and its subsidiaries will provide such funds from existing
resources and internally generated funds, including the issuance of commercial
paper in the ordinary course of business.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE MERGER AGREEMENT.
Gannett continually evaluates and considers other businesses of varying
sizes as potential strategic partners and candidates for acquisition.
On or about May 15, 2000, Gannett was approached by DLJ, the Company's
financial advisor, to determine whether Gannett had an interest in a strategic
transaction involving the Company. Following additional conversations between
Gannett and the Company's financial advisor, on May 26, 2000, Gannett executed a
confidentiality agreement with the Company, and Gannett subsequently received
certain information about the Company and its subsidiaries.
On June 2, 2000, Douglas H. McCorkindale, Gannett's President and Chief
Executive Officer, briefed the Gannett Board on the status of discussions
between Gannett and the Company's financial advisor.
During the period from June 7 through June 27, 2000, representatives of the
Company, the financial, legal and accounting personnel of and outside counsel to
Gannett conducted a due diligence review of the Company.
On June 8, 2000, the Company issued a press release confirming that it had
retained a financial advisor and was in preliminary discussions regarding a
possible sale or other business combination involving the Company. On June 7,
2000, the last sale price of the Class A Stock as reported on the NYSE was
$31.50.
On June 13, 2000, in response to a solicitation of bids by the Company, Mr.
McCorkindale, Larry F. Miller, Executive Vice President and Chief Financial
Officer of Gannett, Daniel S. Ehrman, Jr., Vice President, Planning and
Development of Gannett, Gary L. Watson, President, Gannett Newspaper Division,
and Susan Clark-Johnson, Senior Group President/Pacific Newspaper Group of
Gannett's Newspaper Division, met in Phoenix with members of the Company's
management, together with the Company's financial advisor, to conduct further
business due diligence. Also on June 13, 2000, Mark Mikolajczyk, Vice
President/Production of Gannett's Newspaper Division, toured the printing
facility of The Arizona Republic.
On June 23, 2000, in response to bids solicited by the Company, Gannett
submitted an offer to acquire the Company. Gannett's bid consisted of an all
cash bid for Class A Stock at $63.00 per share and Class B Stock at $6.30 per
share.
From June 24 through June 27, 2000, the parties, together with their
outside legal counsel and the Company's financial advisor, conducted
negotiations with respect to the Merger Agreement and the Voting and Tender
Agreement. On June 25, 2000, the Company's financial advisor advised Gannett
that the
22
<PAGE> 23
Company would be willing to pursue negotiations with Gannett on an exclusive
basis. In exchange for this exclusivity, Gannett stated that it would increase
its bid for Class A Stock to $64.00 per share and Class B Stock to $6.40 per
share.
On June 27, 2000, Mr. McCorkindale, Mr. Watson and Philip R. Currie, Senior
Vice President, News, Gannett Newspaper Division, met in Indianapolis, at the
home of Myrta J. Pulliam, a Director of the Company and trustee of the Eugene C.
Pulliam Trust, the Company's largest shareholder, with Ms. Pulliam and Russell
B. Pulliam, a columnist and member of the editorial board for The Indianapolis
Star, and a beneficiary of the trust, to discuss matters involving the
operations of Parent and the Company as well as the proposed transaction.
At a meeting of Gannett's Board held on June 28, 2000, Gannett's Board
(except for one member who was unable to attend) unanimously approved and
adopted the Merger Agreement and the Voting and Tender Agreement and the
transactions contemplated thereby, including the Offer and the Merger. On that
date, the Board of Purchaser also approved and adopted the Merger Agreement and
the Voting and Tender Agreement by unanimous written consent.
At a meeting of the Company's Board held on June 28, 2000, the Company's
Board unanimously determined that the terms of the Merger Agreement, including
the Offer and the Merger, are fair to and in the best interests of the holders
of the Company Stock, unanimously approved and adopted the Merger Agreement and
the transactions contemplated thereby, including the Offer and the Merger, and
unanimously recommended that stockholders of the Company accept the Offer and
tender their shares pursuant to the Offer. At the Company Board meeting, DLJ
delivered to the Company Board its oral opinion (confirmed by delivery of a
written opinion) to the effect that, as of such date and based upon and subject
to certain matters and assumptions stated therein, from a financial point of
view, the consideration to be received by the holders of Company Stock pursuant
to the Offer and the Merger is fair to such holders.
On June 28, 2000, the trustees of the Eugene C. Pulliam Trust unanimously
approved the Voting and Tender Agreement.
Following the approval of the Gannett Board, the Company Board and the
trustees of the Trust, on June 28, 2000, Gannett, Purchaser and the Company
executed and delivered the Merger Agreement and Gannett, Purchaser and the Trust
executed and delivered the Voting and Tender Agreement. Gannett and the Company
then issued a joint press release announcing the execution of the Merger
Agreement and the transactions contemplated thereby.
On July 3, 2000, Parent and Purchaser commenced the Offer.
THE MERGER AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE MERGER AGREEMENT.
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT,
WHICH IS INCORPORATED HEREIN BY REFERENCE, AND A COPY OF WHICH HAS BEEN FILED AS
AN EXHIBIT TO THE TENDER OFFER STATEMENT ON SCHEDULE TO (THE "SCHEDULE TO")
FILED BY PURCHASER AND PARENT WITH THE SEC IN CONNECTION WITH THE OFFER. THE
MERGER AGREEMENT MAY BE EXAMINED AND COPIES MAY BE OBTAINED AT THE PLACES SET
FORTH IN SECTION 7. DEFINED TERMS USED HEREIN AND NOT DEFINED HEREIN SHALL HAVE
THE RESPECTIVE MEANINGS ASSIGNED TO THOSE TERMS IN THE MERGER AGREEMENT.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as practicable, but in no event later than five business days after
the public announcement of the terms of the Merger Agreement. The obligation of
Purchaser to accept for payment Company Stock tendered pursuant to the Offer is
subject to the satisfaction of the Minimum Condition and certain other
conditions that are
23
<PAGE> 24
described in Section 14 hereof; provided, however, that Purchaser expressly
reserves the right to waive any of the conditions to the Offer (other than the
Minimum Condition) and to make any change in the terms or conditions of the
Offer (other than the Minimum Condition) in its sole discretion, subject to the
second paragraph of Section 1 hereof. Notwithstanding the previous sentence,
Purchaser may waive the Minimum Condition so long as (x) it has irrevocably
waived all other conditions to the Offer (and may, as a legal matter,
irrevocably waive such conditions and otherwise purchase shares of Company Stock
pursuant to the Offer), (y) Parent has irrevocably exercised or irrevocably
committed to exercise the Option and (z) the shares of Company Stock acquired
pursuant to the Offer and through such Option exercise would satisfy the Minimum
Condition. Purchaser and Parent have agreed that they shall not, without the
prior written consent of the Company, (i) decrease the price per share of Class
A Stock or Class B Stock payable in the Offer, (ii) decrease the number of
shares of Class A Stock or Class B Stock sought in the Offer, (iii) change the
form of consideration payable in the Offer, (iv) impose conditions to the Offer
in addition to those set forth in Section 14 hereof, (v) except as provided in
the Merger Agreement or required by any rule, regulation, interpretation or
position of the SEC applicable to the Offer, change the expiration date of the
Offer, or (vi) otherwise amend or change any term or condition of the Offer in a
manner adverse to the holders of Class A Stock or Class B Stock.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with Indiana law, Purchaser will be
merged with and into the Company. As a result of the Merger, the Company will
continue as the Surviving Corporation and will become a wholly owned subsidiary
of Parent, and the separate corporate existence of Purchaser will cease in
accordance with Indiana law. Upon consummation of the Merger, each issued and
outstanding share of Company Stock (other than any Company Stock held in the
treasury of the Company, or owned by Parent, Purchaser or any subsidiary of
Parent or of the Company and any Class B Stock which is held by stockholders who
have not voted in favor of the Merger or consented thereto in writing and who
shall have demanded properly in writing appraisal for such Class B Stock in
accordance with Indiana law) will convert into the right to receive the Merger
Consideration.
Pursuant to the Merger Agreement, each share of common stock of Purchaser
issued and outstanding immediately prior to the Effective Time will be converted
into and become one fully paid and non-assessable share of common stock, no par
value, of the Surviving Corporation.
The Merger Agreement provides that the directors of Purchaser at the
Effective Time will be the initial directors of the Surviving Corporation, and
that the officers of the Company as of the Effective Time will be the initial
officers of the Surviving Corporation. Subject to the Merger Agreement, the
Certificate of Incorporation and Bylaws of the Company in effect immediately
prior to the Effective Time will become the Certificate of Incorporation and
Bylaws of the Surviving Corporation.
Stockholders' Meeting. Pursuant to the Merger Agreement, the Company,
acting through the Board, shall, if required by applicable law to consummate the
Merger, duly call and hold a special meeting of its stockholders as soon as
practicable following the date on which Purchaser completes the purchase of
Company Stock pursuant to the Offer or the Option for the purpose of considering
and taking action upon the Merger Agreement (the "Stockholders' Meeting").
Subject to a provision of the Merger Agreement described below under "No
Solicitation; Other Offers," the Company has agreed that its Board of Directors
will recommend approval and adoption of the Merger Agreement and the Merger by
the Company's stockholders. If Purchaser acquires at least a majority in voting
power of the outstanding Company Stock, Purchaser will have sufficient voting
power to approve the Merger, even if no other stockholder votes in favor of the
Merger. The Merger Agreement provides also that, if Purchaser shall acquire at
least 90% of the outstanding shares of each class of Company Stock pursuant to
the Offer or otherwise, the parties will, subject to satisfaction or (to the
extent permitted thereunder) waiver of all conditions to the Merger, take all
necessary and appropriate action to cause the Merger to be effective as soon as
practicable after the acceptance for payment and purchase of shares of Company
Stock pursuant to the Offer without the stockholder meeting.
24
<PAGE> 25
Proxy Statement. The Merger Agreement provides that the Company shall, if
required by applicable law to consummate the Merger, prepare and file with the
SEC a proxy statement (the "Proxy Statement") relating to the Merger Agreement
and the Merger and shall use its best efforts to have the Proxy Statement
cleared with the SEC and thereafter mailed to its stockholders as promptly as
practicable and filed with the SEC.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto, including representations
by the Company as to, among other things, (1) organization, good standing and
subsidiaries, (2) capitalization, (3) authorization, validity of the Merger
Agreement and all required Company action taken with respect to the Offer and
the Merger, (4) vote required to approve the Merger, (5) required consents or
approvals, (6) no material misstatements in filings made with the SEC or
financial statements, (7) absence of material adverse changes, (8) no
undisclosed liabilities, (9) no misstatements or omissions of a material fact in
the proxy statement with respect to the Merger, (10) employee benefit plans and
ERISA, (11) litigation, (12) compliance with environmental laws and regulations,
(13) tax returns and tax liabilities, (14) labor relations, (15) compliance with
laws, (16) intellectual property, (17) finders' fees and (18) receipt of
fairness opinion from financial advisor. In addition, the Merger Agreement
contains representations by Parent and Purchaser as to, among other things, (1)
organization and good standing, (2) authorization, validity of the Merger
Agreement and all required Parent and Purchaser action taken with respect to the
Offer and the Merger, (3) required consents or approvals, (4) no misstatements
or omissions of a material fact in the proxy statement with respect to the
Merger and (5) financing the Offer and the Merger.
Conduct of Business by the Company Pending the Merger. Pursuant to the
Merger Agreement, the Company has covenanted and agreed that, from the date of
the Merger Agreement until the Effective Time, the Company and its Subsidiaries
shall conduct their business in the ordinary course consistent with past
practice and shall use their reasonable best efforts to preserve intact their
business organizations and relationships with third parties and to keep
available the services of their present officers and employees. The Merger
Agreement provides that, notwithstanding the foregoing, except with the prior
written consent of Parent or as contemplated by the Merger Agreement or as set
forth in a disclosure schedule provided by the Company, from the date of the
Merger Agreement until the Effective Time, the Company shall not, and shall not
permit any of its Subsidiaries to: (a) declare, set aside or pay any dividend or
other distribution with respect to any share of its capital stock, other than
(w) customary quarterly cash dividends on the shares of Company Stock, (x)
preferred quarterly dividends payable to preferred shareholders of Indiana
Newspapers, Inc. and (y) dividends and other distributions paid by any
Subsidiary of the Company to the Company or any wholly-owned Subsidiary of the
Company; (b) repurchase, redeem or otherwise acquire any shares of capital stock
or other securities of, or other ownership interests in, the Company or any of
its Subsidiaries; (c) issue, deliver or sell any shares of Company Stock, or any
securities convertible into shares of Company Stock, or any rights, warrants or
options to acquire any shares of Company Stock, other than (i) issuances
pursuant to stock-based awards or options that are outstanding on the date of
the Merger Agreement or are granted in accordance with the following clause
(ii), and (ii) additional options or stock-based awards to acquire shares of
Company Stock granted under the terms of the Company's stock plans as in effect
on the date of the Merger Agreement in the ordinary course consistent with past
practice; (d) amend its articles of incorporation or by-laws or other comparable
organizational documents or amend any material terms of the outstanding
securities of the Company or its subsidiaries; (e) merge or consolidate with any
other person or entity or acquire a material amount of stock or assets of any
other person or entity; (f) sell, lease, license or otherwise dispose of any
material subsidiary or material amount of assets, securities or property or make
any investments other than (i) pursuant to existing contracts or commitments or
(ii) transactions that are in the ordinary course consistent with past practice
and not material to the Company and its subsidiaries taken as a whole; (g) incur
any indebtedness for borrowed money, guarantee any such indebtedness, issue or
sell any debt securities or warrants or other rights to acquire any debt
securities or guarantee any debt securities, other than any indebtedness,
guarantee or issuance incurred in the ordinary course of business consistent
with past practice or incurred between the Company and any of its wholly-owned
subsidiaries or between any of such wholly-owned subsidiaries; (h) except as
required under any existing collective bargaining agreement
25
<PAGE> 26
or under the section of the Merger Agreement concerning the treatment of stock
options in the Merger or as may be mutually agreed upon between Parent and the
Company, enter into or adopt any new, or amend or renew any existing, Employee
Plan or Benefit Arrangement or any collective bargaining agreement, other than
as required by law; (i) except (x) as permitted under clause (h) above or (y) to
the extent required by any existing collective bargaining agreement or by
written employment agreements existing on the date of the Merger Agreement,
increase the compensation payable or to become payable to its officers or
employees, except for increases in the ordinary course of business consistent
with past practice in salaries or wages of employees of the Company or any of
its subsidiaries; (j) adopt any changes, other than in the ordinary course of
business consistent with past practice or as required by the SEC, GAAP or by
law, in its accounting policies, procedures or practices; (k) take any action
that would, or that would reasonably be expected to, result in any of the
representations and warranties of the Company set forth in the Merger Agreement
becoming untrue; (l) enter into any contract or agreement involving annual
consideration in excess of $200,000 and/or renewing any such existing contracts
or agreements except, in each case, in the ordinary course of business; (m)
enter into any contracts of employment (other than contracts terminable by the
Company without liability immediately following the Closing) or any severance,
retention of similar agreement; or (n) agree or commit to do any of the
foregoing.
Directors. The Merger Agreement provides that promptly following the
purchase of, and payment for a number of shares of Company Stock that satisfies
the Minimum Condition, and from time to time thereafter, Purchaser shall be
entitled to designate the number of directors, rounded up to the next whole
number, on the Board of Directors that equals the product of (i) the total
number of directors on the Board of Directors (giving effect to the election of
any additional directors pursuant to the Merger Agreement), and (ii) the
percentage that the voting power of shares of Company Stock beneficially owned
by Parent and Purchaser (including shares of Company Stock paid for pursuant to
the Offer or the Option), upon such acceptance for payment, bears to the total
voting power of shares of Company Stock outstanding, and the Company shall take
all action within its power to cause Purchaser's designees to be elected or
appointed to the Board of Directors, including, without limitation, increasing
the number of directors, and seeking and accepting resignations of incumbent
directors. At such time, the Company will also, upon request of Parent or
Purchaser, use its best efforts to cause individual directors designated by
Purchaser to constitute the number of members, rounded up to the next whole
number, on (i) each committee of the Board of Directors other than any such
committee of such Board of Directors established to take action under the Merger
Agreement, and (ii) each Board of Directors of each Subsidiary of the Company,
and each committee thereof, that represents the same percentage as such
individuals represented on the Board of Directors. Notwithstanding the
foregoing, in the event that Purchaser's designees are to be appointed or
elected to the Board of Directors, until the Effective Time (as defined below),
such Board of Directors shall have at least two directors (x) who are directors
on the date of the Merger Agreement or otherwise not Affiliates of Parent and
(y) who are not officers of the Company (the "Continuing Directors"); provided
that in the event that the number of Continuing Directors shall be reduced below
two for any reason whatsoever, any remaining Continuing Directors (or Continuing
Director, if there shall be only one remaining) shall be entitled to designate
persons to fill such vacancies who shall be deemed to be Continuing Directors
for purposes of the Merger Agreement. Information with respect to the Parent's
designees to be elected or appointed to the Board of Directors of the Company is
set forth on Schedule I attached hereto (the "Parent Board Designees").
The Parent Board Designees will not receive any remuneration for serving on
the Company's Board. Information with respect to compensation received by the
Parent Board Designees from Gannett is incorporated by reference from Gannett's
proxy statement. The Parent Board Designees do not own any capital stock of the
Company, except that the spouse of Mr. Larry F. Miller owns 1,000 shares of
Class A Stock (less than 1% of the Company's outstanding Class A Stock), the
beneficial ownership of which is disclaimed by Mr. Miller.
Access to Information. From the date of the Merger Agreement until the
Effective Time and subject to applicable law and the Confidentiality Agreement
dated as of May 26, 2000 between the Company and Parent (the "Confidentiality
Agreement"), the Company shall give Parent, its counsel, financial advisors,
26
<PAGE> 27
auditors and other authorized representatives reasonable access to the offices,
properties, books and records of the Company and its subsidiaries, furnish to
Parent, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
persons or entities may reasonably request. Company shall also instruct the
employees, counsel, financial advisors, auditors and other authorized
representatives of the Company and its subsidiaries to cooperate with Parent in
its investigation of the Company and its subsidiaries. Any investigation shall
be conducted in such manner as not to interfere unreasonably with the conduct of
the business of the Company and its subsidiaries. No information or knowledge
obtained by Parent in any investigation shall affect or be deemed to modify any
representation or warranty made by the Company in the Merger Agreement.
No Solicitation; Other Offers. The Company has agreed that from the date
of the Merger Agreement until the earlier of the Effective Time and the
termination of the Merger Agreement, neither the Company nor any of its
subsidiaries nor any of the officers, directors, employees, investment bankers,
consultants or other agents of the Company and its subsidiaries will, directly
or indirectly, (i) solicit, initiate, encourage, induce or knowingly facilitate
(including, without limitation by way of furnishing information) the submission
of any Acquisition Proposal (as defined below) or any inquiries with respect
thereto, (ii) engage in discussions or negotiations with any person or entity
concerning an Acquisition Proposal or knowingly facilitate any effort or attempt
to make an Acquisition Proposal or accept an Acquisition Proposal or (iii)
disclose any nonpublic information relating to the Company or any of its
subsidiaries to any person or entity who, to the knowledge of the Company, is
making or considering making, or who has made, an Acquisition Proposal. The
Company will notify Parent as promptly as practicable (but in no event later
than 24 hours) after receipt by the Company of any Acquisition Proposal or any
request for nonpublic information relating to the Company or any of its
subsidiaries by any person or entity who, to the knowledge of the Company, is
making or considering making or who has made, an Acquisition Proposal. The
Company shall provide such notice orally and in writing and shall identify the
person or entity making, and the terms and conditions of, any such Acquisition
Proposal or request. The Company shall keep Parent informed of the status and
details (including, without limitation, amendments or proposed amendments) of
any such Acquisition Proposal or request. The Company shall, and shall cause its
subsidiaries and the directors, employees and other agents of the Company and
its subsidiaries to, cease immediately and cause to be terminated all
activities, discussions and negotiations, if any, with any persons or entities
conducted prior to the date of the Merger Agreement with respect to any
Acquisition Proposal and, to the extent within its power, to recover or cause to
be destroyed all information concerning the Company and its subsidiaries in the
possession of such persons or entities and their affiliates, representatives and
advisors. Nothing contained in the Merger Agreement shall prevent the Board of
Directors of the Company from complying with Rule 14d-9 or Rule 14c-2 under the
1934 Act with respect to any Acquisition Proposal.
Notwithstanding the first sentence of the preceding paragraph, the Company
may, until the earliest to occur of the Offer Completion Date, a purchase of
Company Stock pursuant to the Option, and the Company's Stockholders' Meeting
(such earliest date the "Cutoff Date"), negotiate or otherwise engage in
substantive discussions with, and furnish nonpublic information to, any person
or entity in response to an unsolicited Acquisition Proposal by such person or
entity if (i) the Company has complied with the terms of the provision described
under the caption "No Solicitation; Other Offers," (ii) the Board of Directors
of the Company determines in good faith that such Acquisition Proposal could
reasonably be expected to result in a Superior Proposal (as defined below) and,
after consultation with and receipt of advice from outside legal counsel, that
the failure to take such action could reasonably be deemed to constitute a
breach of its fiduciary duties under applicable law, (iii) such person or entity
executes a confidentiality agreement with terms no less favorable to the Company
than those contained in the confidentiality agreement between Parent and the
Company (including the standstill provisions unless the Company shall have
amended the Confidentiality Agreement to modify the standstill provisions
therein to be no more restrictive of Parent than such person or entity is
restricted pursuant to such confidentiality agreement) and (iv) the Company
shall have delivered to Parent prior written notice advising Parent that its
intends to take such action. The Company shall provide Parent any information
regarding the Company or its
27
<PAGE> 28
subsidiaries provided to any person or entity making an Acquisition Proposal
which was not previously provided to Parent.
Except as described in this paragraph, neither the Board of Directors of
the Company nor any committee thereof shall (i) withdraw or modify, or publicly
propose to withdraw or modify, in a manner adverse to Parent, or take any action
not explicitly permitted by the Merger Agreement that would be inconsistent with
its approval of the Offer and the Merger or with the recommendation to
stockholders referred to under the caption "Stockholders' Meeting," (ii) approve
or recommend any Acquisition Proposal or (iii) cause the Company to enter into
any letter of intent, agreement in principle, acquisition agreement or similar
agreement related to any Acquisition Proposal. Notwithstanding the foregoing,
prior to the Cutoff Date, the Board of Directors of the Company shall be
permitted not to recommend to its stockholders' acceptance of the Offer and/or
approval and adoption of the Merger Agreement and the Merger, or to withdraw, or
modify in a manner adverse to Parent, its recommendation to its stockholders
described under the caption "No Solicitation; Other Offers," but only if (i) the
Company has complied with the terms of the provision described under the caption
"No Solicitation; Other Offers," (ii) the Company has received an unsolicited
Acquisition Proposal which the Board of Directors determines in good faith
constitutes a Superior Proposal, (iii) the Board of Directors of the Company
determines in good faith, after consultation with and receipt of advice from
outside legal counsel, that the failure to take such action could reasonably be
deemed to be inconsistent with its fiduciary duties under applicable law and
(iv) the Company shall have delivered to Parent a prior written notice advising
Parent that it intends to take such action.
For purposes of the Merger Agreement:
"Acquisition Proposal" means any offer or proposal for a merger,
reorganization, consolidation, share exchange, business combination, or
other similar transaction involving the Company or any of its subsidiaries
of any proposal or offer to acquire, directly or indirectly, securities
representing more than 50% of the voting power of the Company, or a
substantial portion of the assets of the Company and its subsidiaries taken
as a whole, other than the Offer and the Merger contemplated by the Merger
Agreement.
"Superior Proposal" means any bona fide written Acquisition Proposal
which (i) the Board of Directors of the Company determines in good faith
(after consultation with a financial advisor of nationally recognized
reputation and taking into account all the terms and conditions of the
Acquisition Proposal) is (a) more favorable to the Company and its
stockholders (in their capacities as stockholders) from a financial point
of view than the transaction contemplated under the Merger Agreement, and
(b) reasonably capable of being completed, including a conclusion that its
financing, to the extent required, is then committed or is in the good
faith judgment of the Board of Directors of the Company, reasonably capable
of being financed by the person or entity making such Acquisition Proposal.
During the period from the date of the Merger Agreement until the Effective
Time or earlier termination of the Merger Agreement, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it or any of its subsidiaries is a party (other
than any involving Parent or its subsidiaries). During such period, the Company
agrees to enforce to the fullest extent permitted under applicable law, the
provisions of any such agreement, including obtaining injunctions to prevent any
breaches of such agreements and to enforce specifically the terms and provisions
thereof in any court of the United States or any state thereof having
jurisdiction.
Employee Stock Options and Other Employee Benefits. The Merger Agreement
also provides that, prior to the Effective Time, the Company will take all
actions necessary and appropriate to provide that, upon the Effective Time, each
outstanding Company Stock Option granted under any Company stock plan or
arrangement (collectively, the "Company Stock Option Plans"), whether or not
then exercisable or vested, shall be canceled and each holder of an Option shall
receive an amount in cash determined by multiplying (i) the excess, if any, of
the Merger Consideration over the per share exercise price thereof
28
<PAGE> 29
and (ii) the number of shares of Company Stock such holder could have purchased
(assuming full vesting of all Options) had such holder exercised such Option in
full immediately prior to the Effective Time.
For a period of one year after the Effective Time, Parent has agreed to
provide or cause the Surviving Corporation to provide employee compensation
(consisting of base pay, commission rates and bonuses) and benefits (consisting
of benefits similar to those under the employee plans and benefit arrangements
of the Company) to current and former employees of the Company and its
subsidiaries who are not included in any collective bargaining unit ("Non-Union
Company Employees") that are in the aggregate not less favorable to such
employees than such compensation provided to such employees as of the date
hereof and the benefits provided to such employees under such employee plans and
benefit arrangements as of the date hereof. The foregoing notwithstanding, in
the event the employment of any Company employee is terminated other than for
cause during the one-year period beginning at the Effective Time, such employee
shall receive severance or separation benefits in an aggregate amount no more
favorable than the severance or separation benefits such employee would have
been entitled to receive under plans or arrangements provided by Parent or its
affiliates to similarly situated employees. With respect to employees of the
Company and its subsidiaries who are included in any collective bargaining unit
("Union Employees"), Parent shall provide or cause the Surviving Corporation to
provide the Union Employees compensation and benefits required by their current
collective bargaining agreement as the same may be in effect from time to time.
The Merger Agreement also provides that Company employees will be given full
credit for prior service with the Company under certain benefit plans and
arrangements maintained by the Parent or the Surviving Corporation.
Director and Officer Liability. The Merger Agreement provides that the
Parent shall cause the Surviving Corporation, and the Surviving Corporation
agrees that for six years after the Effective Time, the Surviving Corporation
shall indemnify and hold harmless each present and former officer and director
of the Company (each an "Indemnified Person") in respect of acts or omissions in
his or her capacity as an officer or director of the Company or one or more of
its subsidiaries occurring at or prior to the Effective Time to the fullest
extent permitted by Indiana law or any other applicable laws or provided under
the Company's articles of incorporation and bylaws in effect on the date of the
Merger Agreement, provided that such indemnification shall be subject to any
limitation imposed from time to time under applicable law. The Merger Agreement
also provides that the Surviving Corporation shall pay all expenses, including
reasonable fees and expenses of counsel, that an Indemnified Person may incur in
enforcing the indemnity obligations. The Indemnified Person shall be entitled to
control the defense of any action, suit, investigation or proceeding with
counsel of its own choosing reasonably acceptable to the Surviving Corporation
and the Surviving Corporation shall cooperate in the defense thereof, provided
that the Surviving Corporation shall not be liable for the fees of more than one
counsel for all Indemnified Persons, other than local counsel, unless a conflict
of interest shall be caused thereby, and provided further that the Surviving
Corporation shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld). For six years after
the Effective Time, the Surviving Corporation shall provide officers' and
directors' liability insurance in respect of acts or omissions occurring prior
to the Effective Time covering each such Indemnified Person currently covered by
the Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount no less favorable than those of such policy in
effect on the date of the Merger Agreement; provided if the aggregate annual
premiums for such insurance at any time during such period shall exceed 200% of
the per annum rate of premium paid by the Company and its subsidiaries as of the
date hereof for such insurance then Company shall, or shall cause its
subsidiaries to, provide only such coverage as shall then be available at an
annual premium equal to 200% of such rate.
Best Efforts. The Merger Agreement provides that, subject to its terms and
conditions, the Company and Parent will use their best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate the
transactions contemplated by the Merger Agreement. In furtherance and not in
limitation of the foregoing, Parent and Company have also agreed that each of
them will make an appropriate filing of a Notification and Report Form pursuant
to the HSR Act with respect to the transactions contemplated by the Merger
Agreement as promptly as practicable and in any event within five Business Days
of the date thereof and
29
<PAGE> 30
to supply as promptly as practicable any additional information and documentary
material that may be requested pursuant to the HSR Act and to take all other
actions necessary to cause the expiration or termination of the applicable
waiting periods under the HSR Act. Notwithstanding the foregoing, Parent shall
not be required to agree, and the Company shall not agree without Parent's
consent, to waive any substantial rights or to accept any substantial limitation
on its operations, in each case, in respect of any assets constituting a
material portion of the assets of the Parent and its subsidiaries, taken as a
whole ("Material Assets") or to dispose of any Material Assets in connection
with obtaining any such expiration or termination of the applicable waiting
periods under the HSR Act.
Conditions to Obligations of Each Party. The obligations of the Company,
Parent and Purchaser to consummate the Merger are subject to the satisfaction of
the following conditions:
(a) Purchaser shall have purchased shares of Company Stock pursuant to
the Offer or the Option; provided, that this condition shall be deemed to
have been satisfied with respect to the obligation of Parent and Purchaser
to effect the Merger if Purchaser fails to accept for payment or pay for
shares of Company Stock pursuant to the Offer in violation of the terms of
the Offer, the Voting and Tender Agreement, or of the Merger Agreement;
(b) if required by applicable law, the Merger Agreement shall have
been approved and adopted by the stockholders of the Company in accordance
with Indiana law; and
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prevent or prohibit the consummation of
the Merger.
Termination. The Merger Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if any of the following
conditions exists:
(i) without material breach by the terminating party of its
obligations under the Merger Agreement or (in the case of termination by
Parent) the Offer, the purchase of shares of Company Stock pursuant to
the Offer or the Option shall not have occurred on or before November
30, 2000; provided that if the HSR Condition (as defined in Section 14
hereof) and/or the conditions in paragraphs (a) and (b) of Section 14
hereof shall not have been satisfied, such date shall be March 31, 2001;
(ii) there shall be any law or regulation that makes consummation
of the Merger illegal or otherwise prohibited or any judgment,
injunction, order or decree of any court or governmental body having
competent jurisdiction enjoining the Company or Parent from consummating
the Merger is entered and such judgment, injunction or order shall have
become final and nonappealable; or
(iii) upon final adjournment of the Company Stockholder Meeting,
the Merger Agreement shall not have been approved and adopted in
accordance with Indiana law by the Company's stockholders at the Company
Stockholder Meeting (or any adjournment thereof), if required;
(c) by Parent, if the Board of Directors of the Company shall have
failed to recommend or withdrawn, or modified in a manner adverse to
Parent, its approval or recommendation of the Merger Agreement, the Offer
or the Merger or shall have approved or recommended a Superior Proposal.
Effect of Termination. If the Merger Agreement is terminated as described
above, the Merger Agreement shall become void and of no effect with no liability
on the part of any party (or any stockholder, director, officer, employee,
agent, consultant or representative of such party) to the other party hereto,
provided that, if such termination shall result from the willful (i) failure of
either party to fulfill a condition to the performance of the obligations of the
other party or (ii) failure of either party to perform a covenant under the
Merger Agreement, such party shall be fully liable for any and all liabilities
and damages incurred or suffered by the other party as a result of such failure.
The provisions of the Merger
30
<PAGE> 31
Agreement concerning confidentiality, expenses, governing law, jurisdiction, and
waiver of jury trial shall survive any termination of the Merger Agreement.
Expenses. The Merger Agreement provides that all costs and expenses
incurred in connection with the Merger Agreement shall be paid by the party
incurring such costs and expenses, whether or not the Merger is consummated. If
(x) Parent shall terminate the Merger Agreement as described under paragraph (c)
under the caption "Termination," or (y) either the Company or Parent shall
terminate the Merger Agreement as described under paragraph (b)(i) or (iii) as
described under the caption "Termination," and (1) prior to the termination or
expiration of the Offer (in the case of paragraph (b)(i)) and the final
adjournment of the Company Stockholders' Meeting (in the case of (b)(iii)) an
Acquisition Proposal is made by any person or entity and (2) the Company enters
into a definitive agreement in connection with an Acquisition Proposal or an
Acquisition Proposal is consummated, in either case, within 12 months after
termination of the Merger Agreement, then in any case as described in clause (x)
above, the Company shall pay to Parent (by wire transfer of immediately
available funds not later than the date of termination of the Merger Agreement
or, in the case of clause (y) above, the earlier of the date of such definitive
agreement and the date of consummation of such Acquisition Proposal) an amount
equal to $97,000,000 (the "Termination Fee"); provided, however, that payment of
the Termination Fee shall not prevent Parent or Purchaser from seeking specific
performance against the Trust based on any breach of the Voting and Tender
Agreement by the Trust.
VOTING AND TENDER AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE VOTING AND TENDER
AGREEMENT, DATED AS OF JUNE 28, 2000, AMONG THE TRUST, PARENT AND PURCHASER.
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE VOTING AND TENDER
AGREEMENT, WHICH IS INCORPORATED HEREIN BY REFERENCE, AND A COPY OF WHICH HAS
BEEN FILED WITH THE SEC AS AN EXHIBIT TO THE SCHEDULE TO FILED BY PURCHASER AND
PARENT. THE VOTING AND TENDER AGREEMENT MAY BE EXAMINED AND COPIES MAY BE
OBTAINED AT THE PLACES SET FORTH IN SECTION 7.
Tender of Shares. In connection with the execution of the Merger
Agreement, Parent, Purchaser and the Eugene C. Pulliam Trust (the "Trust") have
entered into the Voting and Tender Agreement. The Trust agrees to tender (or
cause the holder to tender), pursuant to this Offer, all 45,815,000 of the
Company's Class B Common Stock owned of record or beneficially held by it (the
"Subject Shares") to Purchaser at the Class B Offer Price. The Trust has agreed,
subject to applicable law and SEC regulations, not to withdraw shares tendered
by it pursuant to the Offer.
Grant of Option. Pursuant to the Voting and Tender Agreement, the Trust
has also granted Parent and Purchaser an irrevocable option (the "Option") to
purchase the Subject Shares at a price in cash per share ("the "Option Price")
equal to the Class B Offer Price or any higher price paid by Parent or Purchaser
for Company Class B Stock pursuant to the Offer or the Merger (but excluding any
price paid to any shareholder who exercises dissenters', appraisal or similar
rights in connection with the Merger). The Voting and Tender Agreement provides
that the Option (i) shall become exercisable, in whole but not in part, for all
Subject Shares (less any Subject Shares which Purchaser has accepted for payment
or paid for in the Offer) immediately after the expiration of the Offer or, if
later, the date on which (x) all waiting periods under the HSR Act or other
applicable law shall have expired or been waived and (y) there shall not be in
effect any preliminary or final injunction or other order issued by any court or
governmental, administrative, or regulatory agency or authority prohibiting the
exercise of the Option, if, but only if, Purchaser has accepted for payment all
shares of Company Stock tendered and not withdrawn in the Offer, and (ii) shall
remain exercisable for a period of 30 days after the first such date on which
the Option becomes exercisable. If the Option does not become exercisable due to
(a) the withdrawal of the Offer prior to the Expiration Date, or (b) the failure
of Purchaser to accept for payment all shares of Company Stock tendered and not
withdrawn in the Offer, it shall be deemed to have expired. In the event that
Parent or Purchaser wishes to exercise the Option, Parent or Purchaser, prior to
the expiration of the
31
<PAGE> 32
Option, shall send a written notice to the Trust identifying the time and place
for the closing of such purchase at least three business days prior to such
closing, which notice may be given prior to the Option becoming exercisable and
shall be considered irrevocable.
Agreement to Vote. The Trust agrees to vote all the Subject Shares that
the Trust beneficially owns at any meeting of stockholders of the Company (a) in
favor of the adoption of the Merger Agreement and the transactions contemplated
by the Merger Agreement and (b) against (i) any proposal made in opposition to
or in competition with the Merger and the transactions contemplated by the
Merger Agreement (ii) any merger, reorganization, consolidation, share exchange,
business combination, sale of assets or other similar transaction with or
involving the Company and any party other than Parent and Purchaser or (iii) any
other action the consummation of which would reasonably be expected to prevent
or delay consummation of the transactions contemplated by the Merger Agreement.
Covenants. During the period commencing on the date of the Voting and
Tender Agreement and continuing until the earlier of (x) the consummation of the
Merger and (y) the termination of the Voting and Tender Agreement, the Trust
agrees that: (i) the Trust will not convert its Subject Shares into Class A
Common Stock, and will agree to the placement of a restrictive legend on
certificates for, and will request the imposition of stop transfer instructions
with respect to, the Subject Shares; (ii) the Trust will cooperate fully with
Parent and Purchaser in connection with the Merger Agreement and the Voting and
Tender Agreement; (iii) the Trust will use its best efforts to consummate the
transactions contemplated by the Voting and Tender Agreement; (iv) the Trust
waives all appraisal, dissenters or similar rights in connection with the
Merger; and (v) any and all Company shares issuable as dividends on or upon
stock splits, recapitalization or any other similar events involving the Shares
shall hereby automatically become subject to the Voting and Tender Agreement.
No Proxies; Restrictions on Transfer. The Voting and Tender Agreement
provides that, except pursuant to the terms of the Voting and Tender Agreement
and the Merger Agreement, the Trust shall not, without the prior written consent
of Parent, directly or indirectly (i) grant any proxies or enter into any voting
trust or other agreement or arrangement with respect to the voting of any
Subject Shares or deposit Subject Shares in a voting trust or (ii) give, offer,
sell, assign, transfer, pledge, encumber or otherwise dispose of the record or
beneficial ownership of, or enter into any contract, option, commitment or other
arrangement (including any profit sharing arrangement) or understanding for the
direct or indirect sale, assignment, transfer, encumbrance or other disposition
of the record or beneficial ownership of, any Subject Shares during the term of
the Voting and Tender Agreement, other than to a person or entity who becomes
subject to and bound by the terms of the Voting and Tender Agreement.
No Solicitation. Pursuant to the Voting and Tender Agreement, the Trust
has agreed that, from the date thereof, the Trust will not, and the Trust will
cause the trustees, employees, investment bankers, consultants or other agents
of the Trust not to, directly or indirectly, (i) solicit, initiate or encourage
the submission of any Acquisition Proposal, (ii) engage in discussions or
negotiations with any person or entity concerning an Acquisition Proposal, or
(iii) disclose any nonpublic information relating to the Trust, the Company or
any of its subsidiaries to any person or entity who, to the knowledge of the
Trust, is considering making, or has made, an Acquisition Proposal. The Trust is
required to notify Parent as promptly as practicable (but in no event later than
24 hours) after receipt by the Trust of any Acquisition Proposal or any request
for nonpublic information relating to the Trust, the Company or any of its
subsidiaries by any person or entity who, to the knowledge of the Trust, is
making, or has made, an Acquisition Proposal. The Trust shall provide such
notice orally and in writing and shall identify the person or entity making, and
the terms and conditions of, any such Acquisition Proposal. The Trust shall keep
Parent informed of the status and details of any such Acquisition Proposal. The
Trust shall, and the Trust shall cause the trustees, employees and other agents
of the Trust to, cease immediately and cause to be terminated all activities,
discussions and negotiations, if any, with any persons or entities other than
Parent conducted prior to the date hereof with respect to any Acquisition
Proposal.
Ongoing Editorial Participation. The Voting and Tender Agreement provides
that Parent shall make appropriate provision for Russell B. Pulliam to continue
in his role as Associate Editor (unless appointed
32
<PAGE> 33
to a more senior editorial position) and a member of the Editorial Board of and
a weekly columnist for The Indianapolis Star until his departure by reason of
retirement, death, or disability. Following Mr. Pulliam's departure, the
trustees of the Trust may designate a successor to Mr. Pulliam with respect to
the Editorial Board and columnist roles played by him, provided that such
successor must be qualified by journalistic experience (which shall be presumed
if such person is then a member of the Editorial Board of The Indianapolis Star)
and is acceptable to Parent (with Parent's acceptance not to be unreasonably
withheld). Parent's obligation with respect to Mr. Pulliam shall not extend
after his 70th birthday, and it shall have no obligations under this provision
after the expiration of 25 years from the Effective Time. Notwithstanding the
foregoing, columns published pursuant to this provision shall be subject to the
newspaper's normal and generally applicable editorial standards.
CONFIDENTIALITY AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE CONFIDENTIALITY
AGREEMENT, DATED MAY 26, 2000, BETWEEN THE COMPANY AND PARENT (THE
"CONFIDENTIALITY AGREEMENT"). THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE CONFIDENTIALITY AGREEMENT, WHICH IS INCORPORATED HEREIN BY
REFERENCE, AND A COPY OF WHICH HAS BEEN FILED WITH THE SEC AS AN EXHIBIT TO THE
SCHEDULE TO FILED BY PURCHASER AND PARENT. THE CONFIDENTIALITY AGREEMENT MAY BE
EXAMINED AND COPIES MAY BE OBTAINED AT THE PLACES SET FORTH IN SECTION 7.
On May 26, 2000, the Company and Parent executed the Confidentiality
Agreement. Pursuant to the terms of the Confidentiality Agreement, each party
agreed to provide to the other party certain non-public information concerning
such party (the "Evaluation Material").
As a condition for the disclosure of the Evaluation Material to each other,
the Company and Parent each agreed, among other things: (1) to treat
confidentially the Evaluation Material, (2) to use the Evaluation Material only
for the purposes of evaluation of a possible business transaction with each
other, (3) to disclose Evaluation Material to its directors, officers,
employees, affiliates, prospective capital or financing sources, advisors or
other representatives (collectively, a party's "Representatives") on a need-to-
know basis only, (4) not to disclose the fact that the parties had discussions
concerning a transaction, or that any of the parties are considering a possible
transaction, (5) to promptly notify the other party of the receipt of any
request or requirement (by deposition, interrogatories, requests for information
or documents in legal proceedings, subpoenas, civil investigative demand or
similar process), in connection with any proceeding, to disclose any Evaluation
Material, so that the Company may seek an appropriate protective order or other
remedy and/or waive compliance with the provisions of the Confidentiality
Agreement, and (6) in the event Parent decides not to proceed with a
termination, to promptly return all Evaluation Material. In addition, pursuant
to the Confidentiality Agreement, Parent agreed that until May 26, 2001 it and
its affiliates will not without the Company's prior consent knowingly, as a
result of knowledge or information obtained from the Evaluation Material or
otherwise in connection with a possible transaction, solicit for employment an
employee of the Company or any of its affiliates of whom Parent learns or comes
into contact with due to its evaluation of a possible transaction and who earns
in excess of $50,000 annually.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE MERGER.
Purpose of the Offer. The Offer is being made pursuant to the Merger
Agreement. The purpose of the Offer and the Merger is for Parent to acquire
control of the entire equity interest in the Company. The purpose of the Merger
is for Parent to acquire all Company Stock not purchased pursuant to the Offer
or the Option. Upon consummation of the Merger, the Company will become a wholly
owned subsidiary of Parent.
Under the Indiana Business Corporation Law, the approval of the Board and
the affirmative vote of the holders of a majority of the voting power of the
outstanding Company Stock voting as a single class is required to approve and
adopt the Merger Agreement and the transactions contemplated thereby, including
33
<PAGE> 34
the Merger. The Board of Directors of the Company has unanimously (i) determined
that the Merger Agreement and its contemplated transactions, including the
Offer, the Merger, and the purchase of shares of Company Stock contemplated by
the Offer (the "Transactions"), are advisable and fair to and in the best
interests of the Company and the Company's shareholders, (ii) approved and
adopted the Merger Agreement and the Transactions, including the Offer, the
Merger, and the purchase of shares of Company Stock contemplated by the Offer,
in accordance with the requirements of the Indiana Business Corporation Law,
which approval satisfies in full the requirements of prior approval contained in
Sections 23-1-40-1, 23-1-43-18 and 23-1-43-19(1) of the Indiana Business
Corporation Law, (iii) taken all requisite action to amend, and has duly and
validly amended, the Company's bylaws to provide that Chapter 42 of the Indiana
Business Corporation Law does not apply to control share acquisitions of shares
of Company Stock (including, without limitation, by Parent or Purchaser pursuant
to the Voting and Tender Agreement, the Offer or the Merger) and (iv) resolved,
subject to the provision of the Merger Agreement described under the caption "No
Solicitation; Other Offers," to recommend that the shareholders of the Company
accept the Offer, tender their shares of Company Stock pursuant to the Offer and
approve and adopt the Merger Agreement and the Merger. Unless the Merger is
consummated pursuant to the short-form merger provisions under the Indiana
Business Corporation Law described below, the only remaining required corporate
action of the Company is the approval and adoption of the Merger Agreement and
the Merger by the affirmative vote of the holders of a majority in voting power
of the Class A Stock and Class B Stock voting as a single class. Accordingly, if
the Minimum Condition is satisfied, Purchaser will have sufficient voting power
to cause the approval and adoption of the Merger Agreement and the Merger
without the affirmative vote of any other stockholder.
In the Merger Agreement, the Company has agreed to duly call and hold a
special meeting of its stockholders as promptly as practicable following
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement and the Merger, if such action is required by applicable
law to consummate the Merger. Parent and Purchaser have agreed that all Company
Stock owned by them and their subsidiaries will be voted in favor of the Merger.
The Merger Agreement provides that, promptly following the purchase by
Purchaser of a number of shares of Company Stock that satisfies the Minimum
Condition, Purchaser will be entitled to designate representatives to serve on
the Board in proportion to Purchaser's ownership of the voting power of the
outstanding Company Stock following such purchase. Purchaser expects that such
representation would permit Purchaser to exert substantial influence over the
Company's conduct of its business and operations.
Short-Form Merger. Under the Indiana Business Corporation Law, if
Purchaser acquires, pursuant to the Offer or otherwise, at least 90% of each
class of Company Stock, Purchaser will be able to approve the Merger without a
vote of the Company's stockholders. In such event, Parent, Purchaser and the
Company have agreed, subject to satisfaction or (to the extent permitted
hereunder) waiver of all conditions to the Merger, to take all necessary and
appropriate action to cause the Merger to be effective as soon as practicable
after the acceptance for payment and purchase of shares of Company Stock
pursuant to the Offer without the Company's Stockholders' Meeting. If, however,
Purchaser does not acquire at least 90% of each class of Company Stock pursuant
to the Offer or otherwise and a vote of each class of the Company's stockholders
is required under the Indiana Business Corporation Law, a longer period of time
would be required to effect the Merger.
Appraisal Rights. No appraisal rights are available in connection with the
Offer, and no appraisal rights are available to holders of Class A Stock in
connection with the Merger. However, if the Merger is consummated, holders of
Class B Stock who have not tendered their Class B Stock will have certain rights
under the Indiana Business Corporation Law to dissent from the Merger and demand
appraisal of, and to receive payment in cash of the fair value of, their Class B
Stock. Stockholders who perfect such rights by complying with the procedures set
forth in Chapter 44 of the Indiana Business Corporation Law ("Chapter 44") will
be entitled to receive a cash payment equal to the "fair value" of their Class B
Stock as estimated by the Company. Dissenting holders of Class B Stock would be
entitled to notify the Company of their estimate of the fair value of the Class
B Stock and demand payment of the dissenters' estimate (less any payment made by
the Company) of the fair value of the Class B Stock and demand
34
<PAGE> 35
payment thereof. The Company may elect to withhold payment of the fair value of
Class B Stock from a dissenter unless the dissenter was the beneficial owner of
the shares before June 28, 2000. If a demand for payment of fair value remains
unsettled between the Company and a dissenter, the Company would be required to
petition the court to determine the fair value of the shares.
Parent does not intend to object, assuming the proper procedures are
followed, to the exercise of appraisal rights by any holder of Class B Stock and
the demand for appraisal of, and payment in cash for the fair value of, the
Class B Stock. Parent intends, however, to cause the Company to argue in an
appraisal proceeding that, for purposes of such proceeding, the fair value of
each share of Class B Stock is less than or equal to the Merger Consideration
for Class B Stock. In this regard, stockholders should be aware that opinions of
investment banking firms as to the fairness from a financial point of view
(including DLJ) are not necessarily opinions as to "fair value" under Chapter
44.
The foregoing summary of the rights of dissenting stockholders under the
Indiana Business Corporation Law does not purport to be a complete statement of
the procedures to be followed by stockholders desiring to exercise any
dissenters' rights under the Indiana Business Corporation Law. The preservation
and exercise of dissenters' rights require strict adherence to the applicable
provisions of the Indiana Business Corporation Law.
Plans for the Company. It is expected that, initially following the
Merger, the business and operations of the Company will, except as set forth in
this Offer to Purchase, be continued by the Company substantially as they are
currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it deems
appropriate under the circumstances then existing. It is expected that the
business and operations of the Company would form an important part of Parent's
future business plans. Except as indicated in this Offer to Purchase, Parent
does not have any present plans or proposals which relate to or would result in
(i) any extraordinary corporate transaction, such as a merger, reorganization or
liquidation of the Company or any of its subsidiaries or (ii) any purchase, sale
or transfer of a material amount of assets, involving the Company or any of its
subsidiaries. There can be no assurance, however, that these plans will not
change or be modified, and such change or modification could be material. As a
result of the consummation of the Offer and the Merger, indebtedness of the
Company will be repaid or refinanced, the Company will become an operating
subsidiary of Gannett and will cease paying regular dividends.
12. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE COMPANY STOCK, NYSE
LISTING, MARGIN REGULATIONS AND EXCHANGE ACT REGISTRATION.
Possible Effects of the Offer on the Market for the Company Stock. The
purchase of Company Stock by Purchaser pursuant to the Offer will reduce the
number of shares of Class A Stock that might otherwise trade publicly and will
reduce the number of holders of Class A Stock, which could adversely affect the
liquidity and market value of the remaining shares of Class A Stock held by the
public.
Parent intends to cause the delisting of the Class A Stock by NYSE
following consummation of the Offer.
NYSE Listing. Depending upon the number of shares of Class A Stock
purchased pursuant to the Offer, the Class A Stock may no longer meet the
standards for continued listing on the NYSE. If, as a result of the purchase of
Class A Stock pursuant to the Offer, the Merger or otherwise, the Class A Stock
no longer meets the requirements of the NYSE for continued listing, the listing
of the Class A Stock will be discontinued. In such event, the market for the
Class A Stock would be adversely affected. In the event that the Class A Stock
were no longer eligible for listing on the NYSE, quotations might still be
available from other sources. The extent of the public market for the Class A
Stock and the availability of such quotations would, however, depend upon the
number of holders of such stock remaining at such time, the interest in
maintaining a market in such stock on the part of securities firms, the possible
termination of registration of such stock under the 1934 Act, as described
below, and other factors.
35
<PAGE> 36
1934 Act Registration. The Class A Stock is currently registered under the
1934 Act. Such registration may be terminated upon application by the Company to
the SEC if the Class A Stock is not listed on a "national securities exchange"
and there are fewer than 300 record holders. The termination of the registration
of the Class A Stock under the 1934 Act would substantially reduce the
information required to be furnished by the Company to holders of Class A Stock
and to the SEC and would make certain provisions of the 1934 Act, such as the
short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy statement in connection with stockholders' meetings pursuant
to Section 14(a) or 14(c) of the 1934 Act and the related requirements of an
annual report, and the requirements of Rule 13e-3 under the 1934 Act with
respect to "going private" transactions, no longer applicable to the stock. In
addition, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended (the "Securities Act"). If registration of the Class A Stock under the
1934 Act were terminated, the Class A Stock would no longer be eligible for NYSE
reporting. Purchaser currently intends to seek to cause the Company to terminate
the registration of the Class A Stock under the 1934 Act after consummation of
the Merger.
Margin Regulations. The outstanding shares of Class A Stock are currently
"margin securities", as such term is defined under the rules of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), which has
the effect, among other things, of allowing brokers to extend credit on the
collateral of such securities. Depending upon factors similar to those described
above regarding listing and market quotations, following the Offer, it is
possible that the Class A Stock might no longer constitute "margin securities"
for purposes of the margin regulations of the Federal Reserve Board, in which
event such Class A Stock could no longer be used as collateral for loans made by
brokers. In addition, if registration of the Class A Stock under the 1934 Act
were terminated, the stock would no longer constitute "margin securities."
13. FEES AND EXPENSES.
Except as set forth below, Purchaser will not pay any fees or commissions
to any broker, dealer or other person for soliciting tenders of Company Stock
pursuant to the Offer.
Purchaser and Parent have retained Georgeson Shareholder Communications,
Inc. as the Information Agent, and Norwest Bank Minnesota, N.A., as the
Depositary, in connection with the Offer. The Information Agent may contact
holders of Company Stock by mail, telephone, telecopy and personal interview and
may request banks, brokers, dealers and other nominee stockholders to forward
materials relating to the Offer to beneficial owners. As compensation for acting
as Information Agent in connection with the Offer, Georgeson will be paid a fee
of $10,000 and will also be reimbursed for certain out-of-pocket expenses and
may be indemnified against certain liabilities and expenses in connection with
the Offer, including certain liabilities under the federal securities laws.
Purchaser will pay the Depositary reasonable and customary compensation for
its services in connection with the Offer, plus reimbursement for out-of-pocket
expenses, and will indemnify the Depositary against certain liabilities and
expenses in connection therewith, including under federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
Purchaser for customary handling and mailing expenses incurred by them in
forwarding material to their customers.
14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) promulgated under the 1934 Act
(relating to the obligation of Purchaser to pay for or return tendered Company
Stock promptly after termination or withdrawal of the Offer), pay for, and
(subject to any such rules or regulations) may delay the acceptance for payment
of or the payment for any tendered shares of Company Stock and (except as
provided in the Merger Agreement) amend or terminate the Offer as to any Company
Stock not then paid for if (i) there are not validly tendered (and not
withdrawn) prior to
36
<PAGE> 37
the expiration date for the Offer that number of shares of Class B Stock which,
when added to any such shares owned by Parent or any of its Affiliates, will at
least satisfy the Minimum Condition, (ii) any applicable waiting period under
the HSR Act shall not have expired or been terminated prior to expiration of the
Offer (the "HSR Condition") or (iii) at any time on or after the date of the
Agreement and before the expiration date of the Offer, any of the following
events shall have occurred and be continuing:
(a) there shall have been instituted or be pending any action, suit or
proceeding by or on behalf of any governmental entity (i) challenging or
seeking to make illegal, materially delay, or otherwise, directly or
indirectly, restrain or prohibit the making of the Offer, the acceptance
for payment of any Company Stock by Parent or Purchaser, or the
consummation of the Merger, or seeking to obtain material damages in
connection with the Offer or the Merger; (ii) subject to Section 9.01 of
the Merger Agreement, seeking to prohibit or limit materially the ownership
or operation by the Company, Parent or any of their subsidiaries of all or
any of the business or assets of the Company, Parent or any of their
subsidiaries that is material to either Parent and its subsidiaries or the
Company and its subsidiaries, in either case, taken as a whole, or, to
compel the Company, Parent or any of their subsidiaries as a result of the
Offer or the Merger, to dispose of or to hold separate all or any portion
of the business or assets of the Company, Parent or any of their
subsidiaries that is material to either Parent and its subsidiaries or the
Company and its subsidiaries, in each case, taken as a whole; (iii) subject
to Section 9.01 of the Merger Agreement, seeking to impose or confirm any
limitation on the ability of Parent or Purchaser to exercise effectively
full rights of ownership of any Company Stock, including, without
limitation, the right to vote any Company Stock acquired by Purchaser
pursuant to the Offer or otherwise on all matters properly presented to the
Company's shareholders including, without limitation, the approval and
adoption of this Agreement and the Merger; (iv) seeking to require
divestiture by Parent or Purchaser of any Company Stock; or (v) which
otherwise would have a Material Adverse Effect on the Company; or
(b) there shall be in effect an injunction or other order, decree,
judgment or ruling by a governmental entity of competent jurisdiction or a
law, rule or regulation shall have been promulgated, or enacted by a
governmental entity of competent jurisdiction which in any such case,
subject to Section 9.01 of the Merger Agreement, (i) restrains, prevents or
prohibits the making or consummation of the Offer or the consummation of
the Merger or would make such consummation illegal, or (ii) prevents,
prohibits or restricts the ownership by Parent (or any of its affiliates or
subsidiaries) of any material portion of the Company's business or assets
or which would substantially deprive Parent and/or its affiliates or
subsidiaries of the benefit of ownership of the Company's business or
assets, or (iii) imposes material limitations on the ability of Purchaser
or Parent effectively to acquire the shares of Company Stock; or
(c) the Merger Agreement or the Voting and Tender Agreement shall have
been terminated in accordance with its terms or any event shall have
occurred which gives the Parent or Purchaser the right to terminate either
the Merger Agreement or the Voting and Tender Agreement or not consummate
the Merger; or
(d) any of the representations and warranties of the Company contained
in the Merger Agreement or any of the representations and warranties of the
Trust in the Voting and Tender Agreement, in each case, disregarding all
qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect or any similar standard or qualification, shall not
be true and correct in all respects as of the date of determination, as if
made at and as of such time, except (i) to the extent that any such
representation or warranty, by its terms, is expressly limited to a
specific date, in which case such representation or warranty shall not be
true and correct as of such date, or (ii) where the failure of such
representations and warranties to be true and correct would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company; or
37
<PAGE> 38
(e) the Company shall have failed to perform in all material respects
any of its agreements contained in the Merger Agreement required to be
performed at or prior to the date of determination; or
(f) since the date of the Merger Agreement there shall have occurred
any event, change, effect or development that, individually or in the
aggregate with any other event, change, effect or development, has had or
would reasonably be expected to have a Material Adverse Effect on the
Company; or
(g) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States (other than
a shortening of trading hours or any coordinated trading halt triggered
solely as a result of a specified increase or decrease in a market index),
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any limitation (whether or not
mandatory) by any governmental entity on, or other event that materially
and adversely affects, the extension of credit by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the
Untied States or (v) in the case of any of the foregoing existing at the
time of the execution of the Merger Agreement, a material acceleration or
worsening thereof; or
(h) the Board of Directors of the Company, or any committee thereof,
(i) shall have withdrawn or modified in a manner adverse to Purchaser
(including by amendment of the Schedule 14D-9) its approval or
recommendation of the Offer, the Merger or the Merger Agreement or
recommended or approved any Acquisition Proposal or (ii) shall have
resolved to do any of the foregoing; which in the good faith judgment of
Purchaser, in any such case, and regardless of the circumstances giving
rise to such condition makes it inadvisable to proceed with the Offer or
the acceptance for payment of or payment for the Company Stock.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent and Purchaser, and, except for the Minimum
Condition and otherwise subject to the terms of the Merger Agreement, may be
waived by Parent and Purchaser, in whole or in part, at any time and from time
to time, in the sole discretion of Parent and Purchaser. The determination as to
whether any condition has been satisfied shall be deemed a continuing right
which may be asserted at any time and from time to time. Notwithstanding the
fact that the Parent and Purchaser reserve the right to assert the failure of a
condition following acceptance for payment but prior to payment in order to
delay payment or cancel their obligation to pay for properly tendered shares of
Company Stock, the Parent and Purchaser will either promptly pay for such
Company Stock or promptly return such Company Stock. Should the Offer be
terminated pursuant to the foregoing provisions, all tendered shares of Company
Stock not theretofore accepted for payment pursuant thereto shall forthwith be
returned to the tendering shareholders.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. Based upon its examination of publicly available information with
respect to the Company and the review of certain information furnished by the
Company to Parent and discussions between representatives of Parent with
representatives of the Company during Parent's investigation of the Company (see
Section 10), neither Purchaser nor Parent is aware (i) of any license or other
regulatory permit that appears to be material to the business of the Company or
any of its subsidiaries, taken as a whole, that might be adversely affected by
the acquisition of Company Stock by Purchaser pursuant to the Offer or (ii)
except as set forth below, of any approval or other action by any domestic
(federal or state) or foreign governmental entity which would be required prior
to the acquisition of Company Stock by Purchaser pursuant to the Offer. Should
any such approval or other action be required, it is Purchaser's present
intention to seek such approval or action. Purchaser does not currently intend,
however, to delay the purchase of Company Stock tendered pursuant to the Offer,
pending the outcome of any such action or the receipt of any such approval
(subject to Purchaser's right to decline to purchase Company Stock if any of the
conditions in Section 14 shall have occurred). There can be no assurance that
any such approval or other action, if needed, would be obtained without
substantial conditions or adverse
38
<PAGE> 39
consequences. Purchaser's obligation under the Offer to accept for payment and
pay for Company Stock is subject to certain conditions, including conditions
relating to the legal matters discussed in this Section 15. See Section 14 for
certain conditions of the Offer.
State Takeover Laws. The Company is incorporated under the laws of the
State of Indiana. In general, Section 23-1-43-18 of Indiana law prevents an
"interested shareholder" (generally, as defined by Section 23-1-43-10 of Indiana
law, a person who owns or has the right to acquire 10% or more of a
corporation's outstanding voting stock, or an affiliate or associate thereof)
from engaging in a "business combination" (defined to include mergers and
certain other transactions) with an Indiana corporation for a period of five
years following the date such person became an interested shareholder unless,
among other things, prior to such date the board of directors of the corporation
approved either the business combination or the transaction in which the
interested stockholder became an interested shareholder. On June 28, 2000, prior
to the execution of the Voting and Tender Agreement and the Merger Agreement,
the Board of Directors of the Company, by unanimous vote of all directors
present at a meeting held on such date, approved the Merger Agreement and
determined that each of the Offer and the Merger is fair to, and in the best
interest of, the stockholders of the Company. Accordingly, Section 23-1-43-18 is
inapplicable to the Voting and Tender Agreement, the Offer and the Merger.
In addition, Chapter 42 of the Indiana Business Corporation Law provides
that, unless otherwise provided in an Indiana corporation's articles of
incorporation or bylaws before a control share acquisition occurs (described
below), persons acquiring specified percentages of a corporation's voting power
(any such acquisition being referred to as a "control share acquisition") have
only such voting rights as may be granted in a resolution approved by
shareholders of that corporation other than the person or entity holding the
control shares (the "other holders") and that the other holders would be
entitled to special dissenters' rights granted by Chapter 42. Prior to adopting
resolutions approving the Offer and the Merger, and prior to the execution and
delivery of the Voting and Tender Agreement and the Merger Agreement, the Board
of Directors of the Company amended the Company's Bylaws to provide that Chapter
42 of the Indiana Business Corporation Law shall not apply to control share
acquisitions of shares of any class of stock of the Company on or after June 28,
2000. Accordingly, those provisions are no longer applicable to the Company.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987, in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there. The Company, directly or through its subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Purchaser does not know whether any of these laws will, by their
terms, apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, Purchaser will take such
action as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities or the Company's shareholders. In addition, if enjoined, Purchaser
might be unable to accept for payment any Company Stock tendered pursuant to the
Offer, or be delayed in continuing or consummating the Offer and the Merger. In
such case, Purchaser may not be obligated to accept for payment any Company
Stock tendered. See Section 14.
39
<PAGE> 40
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and to
the FTC and certain waiting period requirements have been satisfied. The
acquisition of Company Stock by Purchaser pursuant to the Offer is subject to
such requirements. See Section 2. Pursuant to the HSR Act, Parent expects to
file a Premerger Notification and Report Form in connection with the purchase of
Company Stock pursuant to the Offer with the Antitrust Division and the FTC on
or about July 6, 2000. Under the provisions of the HSR Act applicable to the
Offer, the purchase of Company Stock pursuant to the Offer may not be
consummated until the expiration of a 15-calendar day waiting period following
the filing by Parent, unless such waiting period is earlier terminated by the
FTC and the Antitrust Division. Such waiting period may be extended by a request
from the FTC or the Antitrust Division for additional information or documentary
material prior to the expiration of the waiting period. Pursuant to the HSR Act,
Parent will request early termination of the waiting period applicable to the
Offer. There can be no assurance, however, that the 15-day HSR Act waiting
period will be terminated early. If either the FTC or the Antitrust Division
were to request additional information or documentary material from Parent with
respect to the Offer, the waiting period with respect to the Offer would expire
at 11:59 p.m., New York City time, on the tenth calendar day after the date of
substantial compliance with such request. Thereafter, the waiting period could
be extended only by court order. If the acquisition of Company Stock is delayed
pursuant to a request by the FTC or the Antitrust Division for additional
information or documentary material pursuant to the HSR Act, the Offer may, but
need not, be extended and, in any event, the purchase of and payment for Company
Stock will be deferred until ten days after the request is substantially
complied with, unless the waiting period is sooner terminated by the FTC and the
Antitrust Division. Only one extension of such waiting period pursuant to a
request for additional information is authorized by the HSR Act and the rules
promulgated thereunder, except by court order. Any such extension of the waiting
period will not give rise to any withdrawal rights not otherwise provided for by
applicable law. See Section 4. It is a condition to the Offer that the waiting
period applicable under the HSR Act to the Offer expire or be terminated. See
Sections 1 and 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Company
Stock by Purchaser pursuant to the Offer. At any time before or after the
purchase of Company Stock pursuant to the Offer by Purchaser, the FTC or the
Antitrust Division could take such action under the antitrust laws as it deems
necessary or desirable, including seeking to enjoin the purchase of Company
Stock pursuant to the Offer or seeking the divestiture of Company Stock
purchased by Purchaser or the divestiture of substantial assets of Parent, the
Company or their respective subsidiaries. Private parties and state attorneys
general also may bring legal action under federal or state antitrust laws under
certain circumstances. Based upon an examination of information available to
Parent relating to the businesses in which Parent, the Company and their
respective subsidiaries are engaged, Parent and Purchaser believe that the Offer
will not violate the antitrust laws. Nevertheless, there can be no assurance
that a challenge to the Offer on antitrust grounds will not be made or, if such
a challenge is made, what the result would be. See Section 14 for certain
conditions to the Offer, including conditions with respect to litigation.
16. MISCELLANEOUS.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to holders of Company Stock. Purchaser
is not aware of any jurisdiction where the making of the Offer is prohibited by
any administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Company Stock pursuant thereto, Purchaser will make a
good faith effort to comply with any such state statute. If, after such good
faith effort, Purchaser cannot comply with any such state statute, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
holders of Company Stock in such state. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
40
<PAGE> 41
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PARENT, PURCHASER OR THE COMPANY NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the 1934
Act, Parent and Purchaser have filed with the SEC the Schedule TO, together with
exhibits, furnishing certain additional information with respect to the Offer.
The Schedule TO and any amendments thereto, including exhibits, may be inspected
at, and copies may be obtained from, the same places and in the same manner as
set forth in Section 7 (except that they will not be available at the regional
offices of the SEC).
PACIFIC AND SOUTHERN INDIANA CORP.
Dated: July 3, 2000
41
<PAGE> 42
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF PARENT, PURCHASER
AND COMPANY AND/OR SURVIVING CORPORATION
1. Directors of Parent. The following table sets forth the name, current
business address, citizenship and current principal occupation or employment,
and material occupations, positions, offices or employment and business
addresses thereof for the past five years of each director of Parent. Unless
otherwise indicated, the current business address of each person is Gannett Co.,
Inc., 1100 Wilson Boulevard, Arlington, VA 22234.
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL POSITIONS HELD
NAME DURING THE PAST FIVE YEARS AND BUSINESS ADDRESSES THEREOF CITIZENSHIP
---- ------------------------------------------------------------------- -----------
<S> <C> <C>
BOARD OF DIRECTORS:
John J. Curley........... Mr. Curley, 61, is Chairman of Gannett. He was Chairman and Chief U.S.
Executive Officer from 1997 to 2000, Chairman, President and Chief
Executive Officer from 1989 to 1997, President and Chief Executive
Officer of the Company from 1986 to 1989 and President and Chief
Operating Officer from 1984 to 1986. He has served the Company in
various other executive capacities since 1983 and has been a
director since 1983.
Douglas H. McCorkindale.. Mr. McCorkindale, 61, is Vice Chairman, President and Chief U.S.
Executive Officer of Gannett. He was Vice Chairman and President
from 1997 to 2000, and Vice Chairman and Chief Financial and
Administrative Officer from 1985 to 1997. He has served the Company
in various other executive capacities since 1971. He is a director
of Continental Airlines, Inc. and Global Crossing Ltd. and a
director or trustee of a number of investment companies in the
family of Prudential Mutual Funds. He has been a director of
Gannett since 1977.
H. Jesse Arnelle......... Mr. Arnelle, 66, is of counsel to Womble, Carlyle, Sandridge & U.S.
Rice, Winston-Salem, North Carolina. He was senior partner at the
law firm of Arnelle, Hastie, McGee, Willis & Greene from 1985 to
1995, and was of counsel to the firm from 1995 to 1997. He is the
Immediate Past Chairman of the Board of Trustees of Pennsylvania
State University and is a director of FPL Group, Inc., Textron
Corporation, Eastman Chemical Co., Armstrong World Industries,
Waste Management, Inc. and Union Pacific Resources Group, Inc. He
has been a director since 1999.
Meredith A. Brokaw....... Mrs. Brokaw, 59, is the founder of Penny Whistle Toys, Inc., in New U.S.
York City, and is the author of children's books. She is a director
of Conservation International, Washington, D.C. and Women's First
Health Care. She has been a director of Gannett since 1983.
Stuart T.K. Ho........... Mr. Ho, 64, is Chairman of the Board and President of Capital U.S.
Investment of Hawaii, Inc. Mr. Ho is a director of Aloha Airgroup,
Inc. and Pacific Century Financial Corporation. He is also a
trustee of the College Retirement Equities Fund and a trustee of a
number of mutual funds in the family of TIAA-CREF Institutional
Mutual Funds. He has been a director of the Company since 1984.
Drew Lewis............... Mr. Lewis, 68, is the former Chairman and Chief Executive Officer U.S.
of Union Pacific Corporation. He served as the United States
Secretary of Transportation from 1981 to 1983. He is a director of
Union Pacific Resources Group Inc., American Express Company,
Millenium Bank, and the FPL Group, Inc. He has been a director of
Gannett since 1995.
</TABLE>
42
<PAGE> 43
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL POSITIONS HELD
NAME DURING THE PAST FIVE YEARS AND BUSINESS ADDRESSES THEREOF CITIZENSHIP
---- ------------------------------------------------------------------- -----------
<S> <C> <C>
Samuel J. Palmisano...... Mr. Palmisano, 48, is Senior Vice President and Group Executive for U.S.
IBM Enterprise Systems Group and serves on IBM's Corporate
Executive Committee. He was Senior Vice President and Group
Executive for IBM's Personal Computer Company from 1997 to 1998. He
held various other senior executive positions since 1994 with
responsibility for IBM's worldwide strategic outsourcing business.
He has been a director of Gannett since 1998.
Karen Hastie Williams.... Ms. Williams, 55, is a Partner at the law firm of Crowell & Moring, U.S.
Washington, D.C. Ms. Williams is a director of Crestar Financial
Services Corporation, Continential Airlines, Inc., Fannie Mae, and
Washington Gas Light Company. She has been a director of Gannett
since 1997.
</TABLE>
2. Directors of Purchaser. The following table sets forth the name,
current business address, citizenship and current principal occupation or
employment, and material occupations, positions, offices or employment and
business addresses thereof for the past five years of each director of
Purchaser. Unless otherwise indicated, the current business address of each
person is 1100 Wilson Boulevard, Arlington, VA 22234.
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL
POSITIONS HELD DURING THE PAST FIVE YEARS AND BUSINESS
NAME ADDRESSES THEREOF CITIZENSHIP
---- ------------------------------------------------------ -----------
<S> <C> <C>
DIRECTORS:
John J. Curley............ Same positions with Parent as above. U.S.
Douglas H. McCorkindale... President of Purchaser. Same positions with Parent as U.S.
above.
OFFICERS:
Douglas H. McCorkindale... President of Purchaser. Same positions with Parent as U.S.
above.
Larry F. Miller........... Vice president of Purchaser. Executive vice president U.S.
and chief financial officer of Parent. Formerly:
senior vice president, financial planning and
controller of Parent (1991-1997). Age 62.
Thomas L. Chapple......... Vice president and secretary of Purchaser. Senior vice U.S.
president, general counsel and secretary of Parent.
Formerly: vice president, general counsel and
secretary of Parent (1991-1995). Age 52.
Gracia C. Martore......... Treasurer of Purchaser. Treasurer and vice president, U.S.
investor relations of Parent. Formerly: vice
president, treasury services and investor relations
(1996-1998); vice president, treasury services of
Parent (1993-1996). Age 48.
Christopher W. Baldwin.... Assistant treasurer of Purchaser. Age 56. U.S.
Tara L. Witmer............ Assistant secretary of Purchaser. Age 37. U.S.
</TABLE>
3. Directors of Company and/or Surviving Corporation. The following table
sets forth the name, current business address, citizenship and current principal
occupation or employment, and material occupations, positions, offices or
employment and business addresses thereof for the past five years of each person
who has been designated by Parent to serve as a director of the Company after
the purchase of
43
<PAGE> 44
Company Stock pursuant to the Offer. Unless otherwise indicated, the current
business address of each person is 1100 Wilson Boulevard, Arlington, VA 22234.
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL
POSITIONS HELD DURING THE PAST FIVE YEARS AND BUSINESS
NAME ADDRESSES THEREOF CITIZENSHIP
---- ------------------------------------------------------ -----------
<S> <C> <C>
DIRECTORS:
John J. Curley............ Same positions with Parent as above. U.S.
Douglas H. McCorkindale... Same positions with Parent as above. U.S.
Larry F. Miller........... Same positions with Parent as above. U.S.
Thomas L. Chapple......... Same positions with Parent as above. U.S.
Gary L. Watson............ President, Gannett Newspaper Division of Parent. Age U.S.
54.
</TABLE>
44
<PAGE> 45
[This page intentionally left blank.]
<PAGE> 46
Manually signed facsimiles of the Letter of Transmittal, properly
completed, will be accepted. The Letter of Transmittal and certificates
evidencing Company Stock and any other required documents should be sent or
delivered by each stockholder or his or her broker, dealer, commercial bank,
trust company or other nominee to the Depositary at one of its addresses set
forth below:
The Depositary for the Offer is:
NORWEST BANK MINNESOTA, N.A.
By Facsimile Transmission
(for Eligible Institutions only):
(651) 450-4163
Confirm by Telephone:
(651) 450-4110
<TABLE>
<S> <C> <C>
By Overnight Courier By Mail By Hand
Norwest Shareowner Services Norwest Shareowner Services Norwest Shareowner Services
161 Concord Exchange P.O. Box 64858 161 Concord Exchange
South St. Paul, MN St. Paul, MN 55164-0858 South St. Paul, MN
55075-1139 Attn: Reorganization 55075-1139
Department Attn: Reorganization
Department
</TABLE>
OTHER INFORMATION:
Questions or requests for assistance may be directed to the Information
Agent at one of its respective addresses and telephone numbers listed below.
Additional copies of this Offer to Purchase, the Letter of Transmittal and the
Notice of Guaranteed Delivery may be obtained from the Information Agent. A
stockholder also may contact brokers, dealers, commercial banks or trust
companies for assistance concerning the Offer.
The Information Agent for the Offer is:
GEORGESON SHAREHOLDER COMMUNICATIONS, INC.
17 State Street, 10th Floor
New York, New York 10004
(212) 440-9800
(800) 223-2064
Bankers and Brokers Call Collect
All Others Call Toll Free
