<PAGE> 1
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PRELIMINARY COPY
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
_________________
Filed by the Registrant /x/
File by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
_________________
SCRIPPS HOWARD BROADCASTING COMPANY
(Name of Registrant as Specified in Its Charter)
SCRIPPS HOWARD BROADCASTING COMPANY
(Name of Person(s) Filing Proxy Statement)
_________________
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/x/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
<PAGE> 2
(1) Title of each class of securities to which transaction applies:
Class A Common Stock, par value $.01 per share, of The E. W. Scripps
Company
(2) Aggregate number of securities to which transaction applies:
4,952,782
(3) Per share price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
$26.25 (based on average high and low prices on the New York Stock
Exchange Consolidated Transaction Tape of The E. W. Scripps
Company's Class A Common Stock on May 9, 1994)
(4) Proposed maximum aggregate value of transaction:
$130,010,527.50
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration No.:
(3) Filing Party:
(4) Date Filed:
____________________
1 Set forth the amount on which the filing fee is calculated
and state how it was determined.
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<PAGE> 3
PRELIMINARY COPY
[SCRIPPS HOWARD BROADCASTING COMPANY LETTERHEAD]
, 1994
TO OUR STOCKHOLDERS:
It is our pleasure to invite you to attend a Special Meeting of
Stockholders of Scripps Howard Broadcasting Company (the "COMPANY") to be held
on ________, 1994, commencing at __:___ [A.M./P.M.] local time, at 312 Walnut
Street, Cincinnati, Ohio 45202.
The purpose of the Special Meeting is to consider and vote upon a
proposal to adopt an Agreement and Plan of Merger dated as of May 4, 1994 (the
"MERGER AGREEMENT"), by and among the Company, The E. W. Scripps Company ("E.
W. SCRIPPS") and SHB Merger Corporation, a wholly owned subsidiary of E. W.
Scripps ("MERGERCO"), which provides for the merger (the "MERGER") of the
Company with and into Mergerco, with Mergerco being the surviving corporation.
The surviving corporation will be a wholly owned subsidiary of E. W. Scripps
with the same Articles of Incorporation, Code of Regulations, Board of
Directors and management as presently exist with respect to the Company.
In the Merger, holders of outstanding shares of the Company's Common
Stock (other than E. W. Scripps and its subsidiaries, and holders who have made
and not withdrawn or waived written demand for payment of fair cash value of
their shares) will receive 3.45 fully paid and nonassessable shares of E. W.
Scripps Class A Common Stock for each of their shares of the Company's Common
Stock.
A Special Committee of the Board of Directors of the Company (the
"SPECIAL COMMITTEE") has considered the fairness of the terms and conditions of
the Merger. In connection with such consideration, the Special Committee
retained Lehman Brothers Inc. ("LEHMAN BROTHERS") to act as its independent
financial advisor. A copy of Lehman Brothers' written opinion as to the
fairness, from a financial point of view, to the Company's stockholders (other
than E. W. Scripps and its subsidiaries) of the consideration to be received in
the Merger by such stockholders, is included as Annex III to the attached Proxy
Statement-Prospectus. The Special Committee has unanimously recommended to
your Board of Directors that it approve the Merger Agreement and your Board of
Directors has unanimously approved the Merger Agreement. The Special Committee
and your Board of Directors each recommends that you vote FOR adoption of the
Merger Agreement.
<PAGE> 4
The Attached Proxy Statement-Prospectus is a proxy statement for the
Special Meeting and a prospectus for the shares of E. W. Scripps Class A Common
Stock to be issued to holders of the Company's Common Stock in the Merger.
Please give these proxy materials your careful attention, as the
discussion included therein is important to your decision on the matters being
presented. Whether or not you plan to attend the Meeting in person, please
promptly mark, sign and date the enclosed proxy and return it in the enclosed
envelope to ensure that your shares will be represented at the Meeting. E. W.
Scripps beneficially owns approximately 86.1% of the outstanding shares of the
Company's Common Stock and will vote such shares in favor of the Merger. The
vote of such shares will be sufficient to approve the Merger as there is no
requirement pursuant to the Merger Agreement or otherwise that the holders of
the remaining outstanding shares of the Company's Common Stock approve the
Merger by a separate vote.
STOCKHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES WHEN
RETURNING THEIR PROXIES. IF THE MERGER IS CONSUMMATED, STOCKHOLDERS WILL BE
NOTIFIED.
Sincerely yours,
Lawrence A. Leser Paul F. Gardner
PRESIDENT AND CHIEF EXECUTIVE VICE
EXECUTIVE OFFICER PRESIDENT
<PAGE> 5
PRELIMINARY COPY
SCRIPPS HOWARD BROADCASTING COMPANY
312 WALNUT STREET
CINCINNATI, OHIO 45202
____________
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON _________, 1994
____________
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the
"SPECIAL MEETING") of Scripps Howard Broadcasting Company, an Ohio corporation
(the "COMPANY"), will be held on __________, 1994, commencing at ______
a.m./p.m. at 312 Walnut Street, Cincinnati, Ohio 45202 for the following
purposes:
1. to consider and vote upon a proposal to adopt the Agreement and
Plan of Merger, dated May 4, 1994 (the "MERGER AGREEMENT"), by and among the
Company, The E. W. Scripps Company and SHB Merger Corporation, a copy of which
is attached as Annex I to the accompanying Proxy Statement-Prospectus; and
2. to transact such other business as may properly come before the
Special Meeting or any adjournment or postponement thereof.
Only stockholders of record on ___________, 1994 are entitled to
receive notice of and to vote at the Special Meeting and any adjournment or
postponement thereof. See "The Special Meeting" in the accompanying Proxy
Statement-Prospectus.
Please promptly mark, sign and date the enclosed proxy and return it
in the enclosed envelope whether or not you plan to attend the Special Meeting.
Your proxy may be revoked at any time before it is voted by filing with the
Secretary of the Company a written revocation of proxy bearing a later date, or
by attending and voting in person at the Special Meeting.
By Order of the Board of Directors
M. Denise Kuprionis
SECRETARY
Cincinnati, Ohio
____________, 1994
<PAGE> 6
***************************************************************************
* WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE SPECIAL *
* MEETING, PLEASE MARK, SIGN AND DATE AND RETURN THE *
* ACCOMPANYING PROXY PROMPTLY. *
* *
* PROMPTLY. PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME. *
***************************************************************************
<PAGE> 7
PRELIMINARY COPY
PROXY STATEMENT
OF
SCRIPPS HOWARD BROADCASTING COMPANY
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON ___________, 1994
_____________
PROSPECTUS OF
THE E. W. SCRIPPS COMPANY
CLASS A COMMON STOCK
PAR VALUE $.01 PER SHARE
_____________
HOLDERS OF E. W. SCRIPPS CLASS A COMMON STOCK ARE ENTITLED TO ELECT THE GREATER
OF THREE OR ONE-THIRD OF THE DIRECTORS OF E. W. SCRIPPS, BUT ARE NOT ENTITLED
TO VOTE ON ANY OTHER MATTERS EXCEPT AS REQUIRED BY DELAWARE LAW. HOLDERS OF E.
W. SCRIPPS COMMON VOTING STOCK ARE ENTITLED TO ELECT ALL REMAINING DIRECTORS
AND TO VOTE ON ALL OTHER MATTERS REQUIRING A VOTE OF E. W. SCRIPPS
STOCKHOLDERS. SHARES OF E. W. SCRIPPS CLASS A COMMON STOCK AND COMMON VOTING
STOCK ARE ENTITLED TO THE SAME CASH DIVIDENDS AND TO SHARE EQUALLY IN
DISTRIBUTIONS ON LIQUIDATION OF E. W. SCRIPPS. EACH SHARE OF E. W. SCRIPPS
COMMON VOTING STOCK IS CONVERTIBLE INTO ONE SHARE OF E. W. SCRIPPS CLASS A
COMMON STOCK.
______________
THE SHARES OF E. W. SCRIPPS CLASS A COMMON STOCK HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS PROXY
STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE. ______________
THE DATE OF THIS PROXY STATEMENT-PROSPECTUS IS ____________, 1994.
<PAGE> 8
INTRODUCTION
This Proxy Statement-Prospectus is being furnished to stockholders of
Scripps Howard Broadcasting Company, an Ohio corporation ("SHB"), in connection
with the solicitation of proxies by the Board of Directors of SHB (the "SHB
BOARD") from holders of the outstanding shares of SHB common stock, par value
$.25 per share (the "SHB COMMON STOCK"), for use at a special meeting of
stockholders of SHB scheduled to be held on __________, 1994, commencing at
_____a.m./p.m. at 312 Walnut Street, Cincinnati, Ohio 45202, and at any
adjournment or postponement thereof (the "SPECIAL MEETING"). Only holders of
SHB Common Stock (each, an "SHB STOCKHOLDER") at the close of business on
_____________, 1994 (the "RECORD DATE"), are entitled to notice of and to vote
at the Special Meeting and any adjournment or postponement thereof. On the
Record Date, there were outstanding 10,325,788 shares of SHB Common Stock,
8,890,199 of which (constituting approximately 86.1% of such outstanding
shares) were held beneficially by The E. W. Scripps Company, a Delaware
corporation ("E. W. SCRIPPS").
This Proxy Statement-Prospectus and a form of proxy for use at the
Special Meeting are first being mailed on or about ____________, 1994, to
holders of record on the Record Date of shares of SHB Common Stock.
At the Special Meeting, stockholders will be asked to consider and
vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of May
4, 1994 (the "MERGER AGREEMENT"), by and among E. W. Scripps, SHB Merger
Corporation, an Ohio corporation and wholly owned subsidiary of E. W. Scripps
("MERGERCO"), and SHB. A copy of the Merger Agreement is attached as Annex I
to this Proxy Statement-Prospectus. The Merger Agreement provides that (A) SHB
will be merged with and into Mergerco (the "MERGER"), with Mergerco being the
surviving corporation (the "SURVIVING CORPORATION"), all of the stock of which
will be owned by E. W. Scripps, and (B) each share of SHB Common Stock
outstanding immediately prior to the time the Merger becomes effective (the
"EFFECTIVE TIME") (other than shares which are (I) held by E. W. Scripps or
Mergerco or a subsidiary of E. W. Scripps or in the treasury of SHB or by a
subsidiary of SHB (collectively, the "EXCLUDED SHARES") or (II) Dissenting
Shares (hereinafter defined)), will be converted into the right to receive 3.45
shares of E. W. Scripps Class A Common Stock, par value $.01 per share (the "E.
W. SCRIPPS CLASS A COMMON STOCK"), all as described below.
E. W. Scripps has filed with the Securities and Exchange Commission
(the "COMMISSION") a Registration Statement on Form S-4 (the "REGISTRATION
STATEMENT") pursuant to the Securities Act of 1933, as amended (the "SECURITIES
ACT"), for up to 4,952,782 shares of E. W. Scripps Class A Common Stock to be
issued in connection with the Merger. This Proxy Statement-Prospectus also
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<PAGE> 9
constitutes the Prospectus of E. W. Scripps, which is part of the Registration
Statement.
Holders as of the Record Date of shares of SHB Common Stock (other
than holders of the Excluded Shares) have the right to dissent from the Merger
and (in the event that the Merger Agreement is approved and the Merger is
consummated) demand in writing payment of the fair cash value of such shares in
compliance with and by following the procedures under Section 1701.85 ("SECTION
1701.85") of the Ohio Revised Code (the "ORC"). All shares that are subject to
such a written demand for payment of the fair cash value that has not been
withdrawn or waived are sometimes referred to herein as the "DISSENTING
SHARES". E. W. Scripps has agreed pursuant to the Merger Agreement to vote or
cause to be voted FOR adoption of the Merger Agreement all shares of SHB Common
Stock beneficially owned by it and therefore will not exercise or cause to be
exercised any of its rights under Section 1701.85.
E. W. Scripps Class A Common Stock is listed on the New York Stock
Exchange, Inc. (the "NYSE") under the symbol "SSP".
Approximately 4,952,782 shares of E. W. Scripps Class A Common Stock
will be issued by E. W. Scripps in the Merger. Such shares will represent
approximately 8.32% of the issued and outstanding shares of E. W. Scripps Class
A Common Stock immediately after the Merger.
Pursuant to the terms of the Merger Agreement, each holder
immediately prior to the Effective Time of shares of SHB Common Stock (other
than the Excluded Shares and Dissenting Shares) will receive (A) a number of
whole shares of E. W. Scripps Class A Common Stock determined by multiplying
the number of shares of SHB Common Stock owned by such stockholder immediately
prior to the Effective Time by 3.45 and (B) cash in lieu of any fractional
shares of E. W. Scripps Class A Common Stock which they would otherwise be
entitled to receive. The shares of E. W. Scripps Class A Common Stock, and
cash in lieu of fractional shares of E. W. Scripps Class A Common Stock, to be
received by holders of SHB Common Stock in the Merger are sometimes hereinafter
referred to as the "MERGER CONSIDERATION".
Approval of the proposal to adopt the Merger Agreement requires the
affirmative votes of the holders of at least a majority of the outstanding
shares of SHB Common Stock entitled to vote at the Special Meeting (the
foregoing votes being the "REQUIRED STOCKHOLDER VOTE"). E. W. Scripps
beneficially owns a sufficient number of shares of SHB Common Stock to cause
the Required Stockholder Vote to be obtained without the vote of any other SHB
Stockholder. E. W. Scripps has agreed pursuant to the Merger Agreement to vote
or cause to be voted all such shares FOR adoption of the Merger Agreement.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
INFORMATION INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
INDEX OF CERTAIN DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Comparison of Stockholder Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Voting at the Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Background and Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Purpose and Structure of the Merger and Certain Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Conduct of the Business of the Surviving Corporation After the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Recommendation of the SHB Special Committee and the SHB Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Rights of Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
THE MERGER AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Effective Time of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Conversion of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Payment for SHB Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Articles of Incorporation, Code of Regulations, Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Conditions to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Certain Agreements Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Certain Other Provisions of the Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
FINANCING OF THE MERGER AND RELATED TRANSACTIONS: SOURCE AND AMOUNT OF FUNDS . . . . . . . . . . . . . . . . . . . . . . . 58
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Certain Federal Income Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
COMPARISON OF RIGHTS OF HOLDERS OF SHB COMMON STOCK AND E. W. SCRIPPS CLASS A COMMON STOCK . . . . . . . . . . . . . . . . . 60
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Certain Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Special Meetings of Stockholders; Stockholder Action by Written Consent . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Amendment of Corporate Governing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
</TABLE>
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<PAGE> 11
<TABLE>
<S> <C>
Board-Approved Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Liability and Indemnification of Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Classification of Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Cumulative Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Number of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Dissenters' Rights in Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Repurchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Loans to Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Tender Offer Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Merger Moratorium Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Anti-Greenmail Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
MARKET FOR E. W. SCRIPPS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
MARKET FOR SHB COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
BUSINESS OF E. W. SCRIPPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Newspapers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Broadcast Television . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Cable Television . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Entertainment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
BUSINESS OF SHB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Broadcast Television . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Cable Television . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Entertainment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
INFORMATION RELATING TO MERGERCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Executive Officers and Directors of Mergerco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SUBMISSION OF STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
CERTAIN LEGAL MATTERS, EXPERTS AND REGULATORY APPROVALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Federal and State Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
LIST OF ANNEXES
ANNEX I AGREEMENT AND PLAN OF MERGER BY AND AMONG THE E. W. SCRIPPS COMPANY, SCRIPPS HOWARD BROADCASTING COMPANY, AND SHB MERGER
CORPORATION
ANNEX II LEHMAN BROTHERS FAIRNESS OPINION
ANNEX III OHIO REVISED CODE SECTION 1701.85 GOVERNING DISSENTER'S RIGHTS
</TABLE>
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<PAGE> 12
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT-
PROSPECTUS, IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON AS HAVING BEEN
AUTHORIZED. THIS PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES TO WHICH IT RELATES IN
ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE
SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT-PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF SHB, E. W. SCRIPPS OR
MERGERCO OR ANY OF THEIR AFFILIATES OR SUBSIDIARIES FROM THE DATE HEREOF.
AVAILABLE INFORMATION
E. W. Scripps will file with the Commission the Registration
Statement, of which this Proxy Statement-Prospectus will be a part, under the
Securities Act, with respect to the E. W. Scripps Class A Common Stock. As
permitted by the rules and regulations of the Commission, this Proxy
Statement-Prospectus omits certain information and exhibits contained in the
Registration Statement.
SHB and E. W. Scripps are subject to the information and reporting
requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), and in accordance therewith SHB and E. W. Scripps file periodic reports,
proxy statements and other information with the Commission. The Registration
Statement and the exhibits thereto, as well as such reports, proxy statements
and other information filed by SHB or E. W. Scripps with the Commission, can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Chicago Regional Offices at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and New York Regional Offices at 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
materials can be obtained from the public reference section of the Commission
at 450 Fifth Street, N.W. 20549 upon payment of the prescribed fee.
The SHB Common Stock is listed on the National Association of
Securities Dealers Automated Quotation System (the "NASDAQ"). Reports and
other information concerning SHB are available for inspection and copying at
the offices of the NASDAQ at 1735 K Street, N.W., Washington, D.C. 20006-1506.
If the Merger is consummated, the SHB Common Stock will be delisted
from the NASDAQ and SHB will take steps to terminate the registration of the
SHB Common Stock under Section 12 of the
- 6 -
<PAGE> 13
Exchange Act. See "Market For SHB Common Equity And Related Stockholder
Matters."
The E. W. Scripps Class A Common Stock is listed on the NYSE.
Application will be made to list the additional shares of E. W. Scripps Class
A Common Stock to be issued in connection with the Merger for trading on the
NYSE. Reports and other information concerning E. W. Scripps are available for
inspection and copying at the offices of the NYSE at 11 Wall Street, New York,
New York 10005. Such reports and other information may also be obtained from
E. W. Scripps in the manner specified in "Information Incorporated By
Reference."
INFORMATION INCORPORATED BY REFERENCE
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH
DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS THEY ARE SPECIFICALLY
INCORPORATED BY REFERENCE, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT-PROSPECTUS IS
DELIVERED UPON WRITTEN OR ORAL REQUEST TO: DIRECTOR OF INVESTOR RELATIONS, 312
WALNUT STREET, 28TH FLOOR, CINCINNATI, OHIO 45202 (TELEPHONE: (513) 977-3000).
IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE
BY ________, 1994 [FIVE DAYS PRIOR TO SPECIAL MEETING].
The following documents filed with the Commission pursuant to the
Exchange Act with respect to E. W. Scripps (File No. 1-10701) are hereby
incorporated by reference into this Proxy Statement-Prospectus:
1. E. W. Scripps' Annual Report on Form 10-K for the fiscal year ended
December 31, 1993;
2. E. W. Scripps' Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1994; and
3. The description of the E. W. Scripps Class A Common Stock contained
in E. W. Scripps' Registration Statement on Form 8-A, declared effective on
June 29, 1988, pursuant to Section 12 of the Exchange Act, including any
amendment or report filed for the purpose of updating such description.
The following documents filed with the Commission pursuant to the
Exchange Act with respect to SHB (File No. 0-300) are hereby incorporated by
reference into this Proxy Statement-Prospectus:
1. SHB's Annual Report on Form 10-K for the fiscal year ended December
31, 1993;
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<PAGE> 14
2. SHB's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1994; and
3. The description of the SHB Common Stock contained in SHB's
Registration Statement on Form S-1 (File No. 2-21144), declared effective on
April 3, 1963 pursuant to the Securities Act.
All documents filed by E. W. Scripps and SHB with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the
date hereof and prior to the date of the Special Meeting shall be deemed to be
incorporated by reference herein from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein) modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed to constitute a part
hereof except as so modified or superseded.
All information appearing in this Proxy Statement-Prospectus is
qualified in its entirety by the information and financial statements
(including notes thereto) appearing in the documents incorporated herein or
deemed to be incorporated herein by reference.
- 8 -
<PAGE> 15
<TABLE>
INDEX OF CERTAIN DEFINED TERMS
<CAPTION>
DEFINED TERMS PAGE
<S> <C>
Abbey Complaint
Cable Act
Certificate
Code
Commission
Common Pleas Court
Consents
Control Agreement
Current Annual Premiums
D & O Insurance Coverage
Demand
Discounted Cash Flow Analysis
Dissenter's Shares
Dissenting Stockholder
Dissenting Shares
E. W. Scripps Certificate
E. W. Scripps By-Laws
E. W. Scripps Class A Common Stock
E. W. Scripps
Effective Date
Effective Time
Exchange Agent
Exchange Act
Excluded Shares
FCC
Fiscal
Fractional Shares
Indemnified Parties
JOAs
J.P. Morgan
J.P. Morgan Report
Lehman Brothers
Merger Consideration
Merger
Merger Agreement
Mergerco
Mergerco Common Stock
NASDAQ
NYSE
ORC
Presentation Materials
Public Stockholder
Record Date
Registration Statement
Required Stockholder Vote
Section 1701.85
</TABLE>
- 9 -
<PAGE> 16
<TABLE>
<CAPTION>
DEFINED TERMS PAGE
<S> <C>
Securities Act
SHB
SHB Articles
SHB Board
SHB Common Stock
SHB Regulations
SHB Special Committee
SHB Stockholder
Special Meeting
stockholder
Surviving Corporation
Taft, Stettinius
</TABLE>
- 10 -
<PAGE> 17
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE MORE DETAILED INFORMATION AND THE FINANCIAL STATEMENTS (INCLUDING THE NOTES
THERETO) APPEARING ELSEWHERE IN THIS PROXY STATEMENT-PROSPECTUS OR INCORPORATED
BY REFERENCE HEREIN. SHB STOCKHOLDERS ARE URGED TO READ THIS PROXY
STATEMENT-PROSPECTUS AND THE ANNEXES HERETO IN THEIR ENTIRETY. UNLESS
OTHERWISE INDICATED, (I) REFERENCES HEREIN TO FINANCIAL INFORMATION OF E. W.
SCRIPPS' SUBSIDIARIES REFER TO SUCH FINANCIAL INFORMATION AS REFLECTED IN THE
CONSOLIDATED FINANCIAL STATEMENTS OF E. W. SCRIPPS AND SUBSIDIARIES INCLUDING
SHB AND (II) REFERENCES HEREIN TO A YEAR PRECEDED BY THE WORD "FISCAL" REFER TO
THE TWELVE MONTHS ENDED DECEMBER 31 OF SUCH YEAR.
PARTIES TO THE MERGER AGREEMENT
E. W. SCRIPPS
E. W. Scripps is a diversified media company operating principally in
four business segments: newspaper publishing, broadcast television, cable
television and entertainment.
E. W. Scripps publishes nineteen metropolitan and suburban daily
newspapers. From its Washington bureau E. W. Scripps operates the Scripps
Howard News Service, a supplemental wire service covering stories in the
capital, other parts of the United States and abroad.
E. W. Scripps' broadcast television operations are owned and operated
by SHB. See "Summary - Parties To The Merger Agreement - SHB."
E. W. Scripps' cable television system operations are conducted
through several subsidiaries. Its Lake County, Florida and Sacramento,
California systems and its Longmont, Colorado cluster are owned by SHB. See
"Summary - Parties To The Merger Agreement - SHB." Other wholly owned
subsidiaries of E. W. Scripps operate cable television systems in Florida,
Georgia, Indiana, Kentucky, South Carolina, Tennessee, Virginia and West
Virginia.
E. W. Scripps' entertainment division, newly created in 1994,
consists of its licensing and syndication operations under the trade-name
United Media, and three new television programming ventures. United Media is a
leading distributor of news columns, comics and other features for the
newspaper industry. United Media licenses worldwide copyrights relating to
"Peanuts" and other character properties for use on numerous products,
- 11 -
<PAGE> 18
including plush toys, greeting cards and apparel, and for exhibit on
television, video cassettes and other media. The Home & Garden Television
Network, a 24-hour cable channel, is scheduled to launch in late 1994. Scripps
Howard Productions produces news and entertainment programming for domestic and
international distribution. On March 31, 1994, E. W. Scripps acquired Cinetel
Productions, one of the largest independent producers of cable television
programming. The Home & Garden Television Network and Cinetel Productions are
operated through SHB.
E. W. Scripps, a Delaware corporation, maintains its principal
executive offices at 1105 N. Market Street, Wilmington, Delaware 19801, and its
telephone number is (302) 478-4141. See "Business of E. W. Scripps;" "Business
of SHB."
SHB
SHB operates nine broadcast television stations, cable television
systems with approximately 295,000 basic subscribers as of March 31, 1994, The
Home & Garden Television Network and Cinetel Productions.
E. W. Scripps beneficially owns approximately 86.1% of the
outstanding shares of SHB Common Stock. If the Merger is consummated, SHB's
business will become the business of the Surviving Corporation, a wholly owned
subsidiary of E. W. Scripps.
SHB, an Ohio corporation, maintains its principal executive offices
at 312 Walnut Street, Cincinnati, Ohio 45202, and its telephone number is (513)
977-3000. See "Business of SHB;" "Business of E. W. Scripps."
MERGERCO
Mergerco was organized by E. W. Scripps in March 1994 under Ohio law
in order to effect the Merger and is a wholly owned subsidiary of E. W.
Scripps. Mergerco has not engaged in any activities other than those incident
to its formation. If the Merger is consummated, SHB will be merged into
Mergerco and Mergerco will be the Surviving Corporation. Mergerco's principal
executive offices are located at 312 Walnut Street, Cincinnati, Ohio 45202 and
its telephone number is (513) 977-3000. See "Information Relating To
Mergerco."
THE SPECIAL MEETING
The Special Meeting will be held on ___________, 1994, commencing at
_____ a.m./p.m. local time, at 312 Walnut Street, Cincinnati, Ohio 45202.
Holders of record of shares of SHB Common Stock at the close of business on the
Record Date are entitled to notice of and to vote at the Special Meeting.
- 12 -
<PAGE> 19
Each outstanding share of SHB Common Stock entitles the holder
thereof to one vote. On the Record Date 10,325,788 shares of SHB Common Stock
were outstanding.
The affirmative vote of the holders of at least a majority of the
outstanding shares of SHB Common Stock entitled to vote at the Special Meeting
is required to adopt the Merger Agreement. Therefore, abstentions and broker
non-votes will have the same effect as votes against approval of the Merger.
E. W. Scripps beneficially owns a sufficient number of shares of SHB Common
Stock to cause the Merger Agreement to be adopted without the vote of any other
SHB Stockholder. The Merger Agreement requires E. W. Scripps to vote, or cause
to be voted, all of its SHB Common Stock in favor of the adoption of the Merger
Agreement. See "The Special Meeting."
THE MERGER
TERMS OF THE MERGER
The Merger Agreement provides for the merger of SHB into Mergerco
with Mergerco being the Surviving Corporation. The Surviving Corporation will
be a wholly owned subsidiary of E. W. Scripps.
At the Effective Time, (I) each outstanding share of SHB Common
Stock, other than the Excluded Shares and Dissenting Shares, will, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into the right to receive from E. W. Scripps 3.45 shares of E. W.
Scripps Class A Common Stock, (II) each of the Excluded Shares will be
cancelled, (III) the Surviving Corporation's name will be changed to "Scripps
Howard Broadcasting Company", (IV) the Articles of Incorporation and Code of
Regulations of SHB will become the Articles of Incorporation and Code of
Regulations of the Surviving Corporation, and (V) the Board of Directors and
management of the Surviving Corporation will be the same as the Board of
Directors and management of SHB.
Assuming the Merger is consummated, approximately 4,952,783 shares of
E. W. Scripps Class A Common Stock will be issued in the Merger. Such shares
will represent approximately 8.32% of the shares of E. W. Scripps Common Stock
issued and outstanding immediately after the Merger.
EXCHANGE OF SHB COMMON STOCK FOR MERGER CONSIDERATION
In order to receive the Merger Consideration following the Effective
Time, each holder of a certificate theretofore representing SHB Common Stock
will be required to surrender his or her stock certificate, together with a
duly executed and
- 13 -
<PAGE> 20
properly completed letter of transmittal and any other required documents, to
E. W. Scripps by following the procedures described under "The Merger Agreement
- - - - - - - - - - - Payment for SHB Common Stock."
Each holder of SHB Common Stock (other than holders of the Excluded
Shares and Dissenting Shares) will receive a number of whole shares of E. W.
Scripps Class A Common Stock determined by multiplying the number of shares of
SHB Common Stock owned by such stockholder at the Effective Time by 3.45. Such
holders will be paid cash in lieu of any fractional shares of E. W. Scripps
Class A Common Stock which they would otherwise be entitled to receive. See
"The Merger Agreement - Payment for SHB Common Stock."
SHB STOCKHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THE
ENCLOSED PROXY CARD.
RECOMMENDATION OF THE SHB BOARD
On February 17, 1994, the SHB Board created a special committee of
the SHB Board composed of directors Robert E. Stautberg and Gordon E. Heffern
(the "SHB SPECIAL COMMITTEE") for the purpose of reviewing the fairness of, and
reporting back to the full SHB Board as to its recommendation with respect to,
the merger transaction proposed by E. W. Scripps. Mr. Stautberg is a retired
partner and director of KPMG Peat Marwick. Mr. Heffern is a retired Chairman
and Chief Executive Officer of Society Corporation. The SHB Special Committee
was authorized to engage such legal, financial and other advisors as it deemed
appropriate in carrying out its assignment. Pursuant to such authority, the
SHB Special Committee retained Taft, Stettinius & Hollister ("TAFT,
STETTINIUS") to act as its legal counsel and Lehman Brothers Inc. ("LEHMAN
BROTHERS") to act as its financial advisor. See "The Merger - Recommendation
of the SHB Special Committee and the SHB Board."
After considering all relevant information, including the opinion of
Lehman Brothers to the effect that the Merger Consideration to be received by
the holders of SHB Common Stock (other than holders of the Excluded Shares)
(each, a "PUBLIC STOCKHOLDER") is fair, from a financial point of view, to each
Public Stockholder, the SHB Special Committee voted unanimously to recommend to
the SHB Board that it approve the terms of the Merger. Following the favorable
recommendation of the SHB Special Committee, the SHB Board unanimously approved
the Merger Agreement. The SHB Board and the SHB Special Committee recommend
that the SHB Stockholders vote FOR adoption of the Merger Agreement. See "The
Merger - Recommendation of the SHB Special Committee and the SHB Board."
In considering the recommendation of the SHB Board with respect to
the Merger, SHB stockholders should be aware that
- 14 -
<PAGE> 21
certain members of SHB's management and of the SHB Board have certain interests
which may present them with potential conflicts of interest in connection with
the Merger. See "The Merger - Interests of Certain Persons in the Merger."
THE SHB BOARD AND THE SPECIAL COMMITTEE UNANIMOUSLY RECOMMEND THAT
SHB STOCKHOLDERS VOTE FOR ADOPTION OF THE MERGER AGREEMENT.
OPINION OF FINANCIAL ADVISOR
On April 6, 1994, Lehman Brothers delivered to the SHB Special
Committee its oral opinion, confirmed by a written opinion dated May 4, 1994,
to the effect that, as of the respective dates and based upon and subject to
certain matters as stated in its written opinion, the Merger Consideration to
be received by the Public Stockholders in exchange of their shares of SHB
Common Stock in the Merger was fair, from a financial point of view, to such
holders. The full text of the May 4, 1994 Lehman Brothers written opinion
setting forth the assumptions made, matters considered and scope of review
undertaken in connection therewith is attached as Annex II to this Proxy
Statement-Prospectus and should be read in its entirety. See "The Merger -
Opinion of Financial Advisor".
DIRECTOR, EXECUTIVE OFFICER AND AFFILIATE VOTING RIGHTS WITH RESPECT TO THE
MERGER
Holders of E. W. Scripps Class A Common Stock are not required, nor
will they be requested, to act or vote on the proposed Merger.
With respect to SHB, certain SHB directors and executive officers are
directors of E. W. Scripps and as such share voting power with respect to the
shares of SHB Common Stock beneficially owned by E. W. Scripps. Such shares
constitute 86.1% of the outstanding shares of SHB and are sufficient to cause
the Merger to be approved.
LEGAL PROCEEDINGS RELATED TO THE MERGER
On March 2, 1994, Diane Abbey, an alleged shareholder of SHB, filed a
purported class action complaint, individually and on behalf of others
similarly situated, against E. W. Scripps before the Court of Chancery for the
State of Delaware in and for New Castle County (Civ. Action No. 13397) (the
"ABBEY COMPLAINT"). The Abbey Complaint alleges that the Merger is not in the
best interests of the Public Stockholders and that E. W. Scripps is in breach
of its fiduciary duties which arise by virtue of its controlling interest in
SHB. The Abbey Complaint seeks, among other things, to enjoin the Merger and
any similar transaction proposed by E. W. Scripps with respect to SHB. On
- 15 -
<PAGE> 22
March 24, 1994, E. W. Scripps filed a motion to dismiss the Abbey Complaint.
The obligation of E. W. Scripps to consummate the Merger is subject
to a condition that there shall not be any judgment, order or injunction
entered by any court restraining or preventing the Merger or prohibiting or
imposing certain actions in connection therewith. If this condition is not
satisfied at the time that the parties are otherwise in a position to
consummate the Merger, E. W. Scripps will have the right to terminate the
Merger Agreement and will give serious consideration to doing so. In such
event, E. W. Scripps has the right under the Merger Agreement to terminate
unilaterally the Merger, whether or not SHB or Mergerco desires to do so.
RIGHTS OF DISSENTING STOCKHOLDERS
Holders of record of shares of SHB Common Stock have the right to
dissent from the Merger and receive the fair cash value of their shares
pursuant to Section 1701.85 of the ORC. See "The Merger - Rights of Dissenting
Stockholders." E. W. Scripps has agreed pursuant to the Merger Agreement to
cause all such shares beneficially owned by it to be voted FOR adoption of the
Merger Agreement and, therefore, will not exercise any of its rights under
Section 1701.85.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
SHB and E. W. Scripps will receive an opinion of Baker & Hostetler
that the merger of SHB with and into Mergerco pursuant to the Merger, with the
SHB Stockholders receiving E. W. Scripps Class A Common Stock, will be treated
as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "CODE"), and accordingly, for federal
income tax purposes, (I) no gain or loss will be recognized by either SHB,
Mergerco or E. W. Scripps as a result of the Merger and (II) SHB's shareholders
will not recognize gain or loss upon the receipt of E. W. Scripps Class A
Common Stock in exchange for SHB Common Stock in the Merger, except that gain
or loss will be recognized on receipt of any cash in lieu of fractional shares
or because of the exercise of dissenters' rights. See "Certain Federal Income
Tax Consequences of the Merger."
PURPOSE, STRUCTURE AND CERTAIN EFFECTS OF THE MERGER
The purpose of the Merger is for E. W. Scripps to acquire the shares
of SHB Common Stock that it does not beneficially own so that SHB will be a
wholly owned subsidiary of E. W. Scripps. The Merger is structured in order to
give the SHB Stockholders the opportunity to own, in a tax free exchange, a
stock with greater liquidity, as well as to share in the prospects of the
combined organization. As a result of the Merger, the SHB Common
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<PAGE> 23
Stock would be deleted from the NASDAQ, the registration of the SHB Common
Stock under the Exchange Act would terminate, and stockholders of SHB would
become stockholders of E. W. Scripps, SHB's parent. See "The Merger - Purpose
and Structure of the Merger and Certain Effects of the Merger."
COMPARISON OF STOCKHOLDER RIGHTS
As a result of the Merger, SHB Common Stock, the shares of which are
issued by an Ohio corporation, will be converted into the right to receive E.
W. Scripps Class A Common Stock, shares of which are issued by a Delaware
corporation. There are differences between the rights of SHB Stockholders and
the rights of E. W. Scripps Stockholders. These differences result from
differences between Delaware and Ohio law and between the governing instruments
of SHB and E. W. Scripps, including differences in terms of, and rights of
holders with respect to, SHB Common Stock and E. W. Scripps Class A Common
Stock. For discussion of the various differences between the rights of SHB
Stockholders and E. W. Scripps Stockholders, see "Comparison Of Stockholder
Rights".
CERTAIN BENEFITS OF THE MERGER
SHB.The Special Committee and the Board of Directors of SHB
identified a number of potential benefits of the Merger to SHB Stockholders.
See "The Merger - Recommendation of the SHB Special Committee and the SHB
Board; Background and Reasons for the Merger." These benefits include, among
others:
bullet The opportunity for SHB Stockholders to participate, as
holders of E. W. Scripps Class A Common Stock, in a larger,
more diversified company of which SHB will continue to be a
significant part;
bullet Increase in liquidity for SHB Stockholders;
bullet The terms and structure of the Merger, including its
structure as a tax-free exchange; and
bullet Certain strategic and business management benefits that the
Merger will provide E. W. Scripps and SHB with, including
elimination of potential conflicts of interest and potential
corporate governance and corporate opportunity issues and
enhancement of ability of the companies to explore strategic
opportunities in their businesses.
Furthermore, since SHB has been controlled by E. W. Scripps since
SHB's inception in 1935, the challenges and costs usually associated with a
merger of two large business entities, such as
- 17 -
<PAGE> 24
integration of management teams, retention and motivation of key personnel and
effective management of significantly larger organizations and business
operations, will not be presented by the Merger.
E. W. SCRIPPS. The E. W. Scripps Board of Directors identified a
number of potential benefits of the Merger to E. W. Scripps Stockholders. See
"The Merger - Background and Reasons for the Merger." These benefits include,
among others:
bullet Ending of the confusion in the marketplace between the two
publicly traded stocks;
bullet The increase in the "public float" of E. W. Scripps, i.e., the
number of shares of E. W. Scripps Class A Common Stock held
by the public stockholders and freely tradeable in the public
market; and
bullet The opportunity to realize certain strategic and business
management benefits, including the elimination of potential
conflicts of interest and potential corporate governance and
opportunity issues, and the additional flexibility to explore
strategic opportunities in each business, including the cable
businesses that each company owns.
To the extent that the current market price of E. W. Scripps Class A
Common Stock or SHB Common Stock reflects a premium attributable to the Merger,
the market price of either or both of such stocks may decline if the Merger is
not completed for any reason.
REGULATORY APPROVALS
No federal or state regulatory requirements remain to be complied
with in order to consummate the Merger. See "Certain Legal Matters, Experts
and Regulatory Approvals." However, the obligations of E. W. Scripps, Mergerco
and SHB to consummate the Merger are subject to satisfaction of a number of
other conditions. See "The Merger Agreement - Conditions to the Merger."
ACCOUNTING TREATMENT OF THE MERGER
The Merger will be accounted for as a purchase, and accordingly the
purchase price will be allocated to assets and liabilities based on estimated
fair values as of the date of the Merger.
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<PAGE> 25
<TABLE>
EWHIGHLT.XLS
<CAPTION>
THE E.W. SCRIPPS COMPANY
SELECTED FINANCIAL DATA
====================================================================================================
(IN MILLIONS, EXCEPT SHARE DATA) Quarter Ending March 31,
1994 1993
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
<S> <C> <C>
SUMMARY OF OPERATIONS
Operating Revenue:
Newspapers $ 142.0 $ 130.4
Broadcast television 60.4 54.9
Cable television 62.4 63.2
Entertainment 21.0 19.6
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Total on-going operations 285.8 268.1
Divested operations 15.5
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Total operating revenue $ 285.8 $ 283.6
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Operating Income:
Newspapers $ 28.0 $ 16.4
Broadcast television 15.8 11.2
Cable television 9.5 14.0
Entertainment 2.1 1.8
Corporate (3.3) (3.4)
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Total on-going operations 52.1 40.0
Divested operations 0.9
Unusual credits (charges) 4.3
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Total operating income 52.1 45.2
Interest expense (4.7) (7.9)
Unusual credits and net gains 23.2
Miscellaneous, net 0.1 0.8
Income taxes (20.3) (26.7)
Minority interests (2.1) (2.0)
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Income before cumulative effect of
accounting change 25.1 32.6
Cumulative effect of accounting change
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Net income $ 25.1 $ 32.6
====================================================================================================
SHARE DATA
Income before cumulative effect of
accounting change and unusual items $ 0.34 $ .22
Unusual credits (charges) and net gains .22
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Income before cumulative effect of
accounting change $ 0.34 $ .44
Cumulative effect of accounting change
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Net income $ 0.34 $ .44
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Dividends $ 0.11 $ .11
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Common stock price:
High $ 29.250 $ 29.125
Low 24.875 23.750
====================================================================================================
OTHER FINANCIAL DATA
Depreciation and amortization $ 29.0 $ 29.6
Net cash flow from operating activities 74.6 52.6
Investing Activity:
Capital expenditures (20.4) (25.4)
Other (investing)/divesting activity, net (15.4) 1.6
Total assets 1,639.2 1,670.9
Long-term debt (including current portion) 214.1 414.9
Stockholders' equity 868.9 757.7
Long-term debt % of total capitalization 20% 35%
====================================================================================================
<CAPTION>
===========================================================================================================================
(IN MILLIONS, EXCEPT SHARE DATA) Years Ending December 31,
1993 1992 1991 1990 1989
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Operating Revenue:
Newspapers $ 551.9 $ 508.7 $ 489.5 $ 503.3 $ 504.3
Broadcast television 255.0 247.3 216.4 205.2 191.0
Cable television 251.8 238.0 218.1 192.8 171.1
Entertainment 84.7 87.2 91.6 91.7 99.8
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
Total on-going operations 1,143.4 1,081.2 1,015.6 993.0 966.2
Divested operations 53.6 174.2 276.9 297.0 294.0
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
Total operating revenue $ 1,197.0 $ 1,255.4 $ 1,292.5 $ 1,290.0 $ 1,260.2
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
Operating Income:
Newspapers $ 71.8 $ 88.8 $ 70.7 $ 81.5 $ 103.1
Broadcast television 69.1 61.6 49.6 60.8 48.8
Cable television 45.2 43.7 35.7 26.8 22.2
Entertainment 8.0 7.7 9.6 9.9 18.2
Corporate (13.0) (14.6) (12.4) (14.5) (16.0)
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
Total on-going operations 181.1 187.2 153.2 164.5 176.3
Divested operations 7.6 (14.7) 33.1 31.6 34.7
Unusual credits (charges) (0.9) (12.0) (36.4)
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
Total operating income 187.8 172.5 174.3 159.7 211.0
Interest expense (27.3) (34.2) (38.7) (43.8) (42.9)
Unusual credits and net gains 94.4 74.5 3.9
Miscellaneous, net (2.5) (3.7) (0.5) (2.3) (0.6)
Income taxes (106.8) (92.6) (62.6) (56.2) (75.7)
Minority interests (16.9) (10.2) (5.9) (8.5) (7.5)
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of
accounting change 128.7 106.3 66.6 48.9 88.2
Cumulative effect of accounting change (22.4)
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
Net income $ 128.7 $ 83.9 $ 66.6 $ 48.9 $ 88.2
===========================================================================================================================
SHARE DATA
Income before cumulative effect of
accounting change and unusual items $ 1.06 $1.12 $0.97 $0.95 $1.09
Unusual credits (charges) and net gains 0.66 0.31 (0.08) (0.31) 0.03
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of
accounting change $1.72 $1.43 $0.89 $0.64 $1.12
Cumulative effect of accounting change (0.30)
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
Net income $1.72 $1.13 $0.89 $0.64 $1.12
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
Dividends $0.44 $0.40 $0.40 $0.40 $0.345
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
Common stock price:
High $30.875 $29.000 $24.500 $24.000 $27.000
Low 22.875 22.125 14.750 13.000 16.880
===========================================================================================================================
OTHER FINANCIAL DATA
Depreciation and amortization $ 120.9 $ 121.9 $ 112.1 $ 106.6 $ 102.1
Net cash flow from operating activities 226.8 204.8 210.6 199.1 221.1
Investing Activity:
Capital expenditures (103.9) (145.2) (151.0) (85.0) (86.7)
Other (investing)/divesting activity, net 108.5 19.1 (132.5) 11.0 (11.0)
Total assets 1,676.5 1,700.8 1,711.4 1,525.4 1,568.7
Long-term debt (including current portion) 247.9 441.9 491.8 367.6 421.0
Stockholders' equity 859.6 733.1 676.6 639.0 643.4
Long-term debt % of total capitalization 22% 38% 42% 37% 40%
===========================================================================================================================
</TABLE>
<PAGE> 26
THE E.W. SCRIPPS COMPANY
NOTES TO SELECTED FINANCIAL DATA
(a) For comparison purposes previously reported operating revenues, operating
expenses, and equity in income of certain joint ventures (see Note b)
have been reclassified to conform with 1994 classifications.
(b) Previously reported segment information has been restated to conform with
1994 segment classifications. The Entertainment segment includes United
Media licensing and syndication (previously included in the Publishing
segment), Scripps Howard Productions (a producer of television
programming), The Home & Garden Television Network (a 24-hour cable
channel scheduled for launch in late 1994), and the Company's equity
interest in The Food Network and SportSouth cable television networks
(previously reported in Miscellaneous, net).
(c) The Company acquired or divested the following operations during the
periods presented:
THREE MONTHS ENDING:
1994 - The Company acquired Cinetel Productions, a producer of programs
for cable television.
1993 - The Company acquired a cable television station and 589,000 shares
of Scripps Howard Broadcasting Company common stock (see below). The
Company sold Pharos Books and World Almanac Education. Included in first
quarter 1993 results are after-tax gains of $12.1 million, $.16 per
share.
YEARS ENDING DECEMBER 31:
1993 - The Company acquired 589,000 shares of Scripps Howard Broadcasting
Company common stock, increasing the Company's ownership percentage to
86.1%, and acquired the remaining 2.7% minority interest in the Knoxville
News-Sentinel. The Company also acquired several cable television
systems. The Company sold its book publishing operations, newspapers in
Tulare, California, and San Juan, its Memphis television station, and its
radio stations. The sales resulted in after-tax gains of $46.8 million,
$.63 per share.
1992 - The Company acquired three daily newspapers (including The Herald
in Monterey, California, in connection with the sale of The Pittsburgh
Press) and several cable television systems. The Company sold The
Pittsburgh Press, TV Data, and certain other investments. The sales
resulted in after-tax gains of $45.6 million, $.61 per share.
1991 - The Company acquired Baltimore television station WMAR and several
cable television systems. The Company sold George R. Hall Company. No
gain or loss was recognized on the sale.
1990 - The Company purchased several cable television systems.
1989 - The Company purchased certain book publishing operations and
several cable television systems. The Company sold its investment in
American City Business Journals. The sale resulted in an after-tax gain
of $2.3 million, $.03 per share.
<PAGE> 27
(d) In the first quarter of 1993 management changed the estimate of the
additional amount of copyright fees the Company would owe when a dispute
between the television industry and the American Society of Composers,
Authors and Publishers ("ASCAP") was resolved. The adjustment increased
1993 first quarter operating income $4.3 million and net income $2.3
million ($.03 per share).
(e) In the first quarter of 1993 the Company received a $2.5 million fee
associated with the change in ownership of the Ogden, Utah, Standard
Examiner. The fee increased 1993 first quarter net income $1.6 million,
$.02 per share.
(f) In the second quarter of 1993 the Company realized a gain of $1.1 million
on the sale of certain equipment. The gain increased 1993 net income
$0.7 million, $.01 per share.
(g) In the third quarter of 1993 management changed its estimate of the tax
basis and lives of certain assets. Also in August 1993 the federal
income tax rate was increased to 35%, retroactive to January 1, 1993.
The net effects of the change in the estimated tax liabilities for prior
years, the higher tax rate on 1993 income, and the higher rate on the
Company's deferred income tax liabilities increased 1993 net income $1.7
million, $.02 per share.
(h) In the fourth quarter of 1993 the Company recorded restructuring costs of
$6.3 million for the Rocky Mountain News and United Media. The costs
reduced 1993 net income $3.6 million, $.05 per share.
(i) The Pittsburgh Press was not published after May 17, 1992 due to a
strike. Reported 1992 results include operating losses of $32.7 million
and net losses of $20.2 million, $.27 per share, during the strike
period. The Company sold The Pittsburgh Press on December 31, 1992 (see
(c) above).
(j) In 1992 the Company reduced the carrying value of certain property and
investments to estimated realizable value. The resultant $3.5 million
charge reduced net income $2.3 million, $.03 per share.
(k) In 1991 the Company agreed to settle a lawsuit filed in 1988 by Pacific
West Cable Company that alleged violations of antitrust and unfair trade
practice laws. The resultant charge reduced operating income by $12.0
million and net income by $6.3 million, $.08 per share.
(l) In 1990 the Company accrued the costs associated with an agreement to
terminate the Knoxville joint operating agency. The resultant charge
reduced operating income $36.4 million and net income $23.7 million, $.31
per share.
(m) The Company adopted Financial Accounting Standard ("FAS") No. 106 -
Employers' Accounting for Post-Retirement Benefits Other Than Pensions
effective January 1, 1992. The cumulative effect of the accounting
change reduced net income $22.4 million, $.30 per share, of which $18.0
million, $.24 per share, was associated with The Pittsburgh Press (see
(c) above).
(n) The Company adopted Financial Accounting Standard ("FAS") No. 115 -
Accounting for Certain Investments in Debt and Equity Securities on
December 31, 1993. As a result of the change, total assets increased
$42.1 million and stockholders' equity increased $27.4 million. Adoption
of the new standard had no effect on results of operations.
<PAGE> 28
<TABLE>
SBHIGHLT.XLS
<CAPTION>
SCRIPPS HOWARD BROADCASTING COMPANY
SELECTED FINANCIAL DATA
====================================================================================================
(IN MILLIONS, EXCEPT SHARE DATA) Quarter Ending March 31,
1994 1993
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
<S> <C> <C>
SUMMARY OF OPERATIONS
Operating Revenue:
Broadcast television $ 60.4 $ 54.9
Cable television 28.0 28.5
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Total on-going operations 88.4 83.4
Divested operations 6.9
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Total operating revenue $ 88.4 $ 90.3
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Operating Income:
Broadcast television $ 15.9 $ 11.3
Cable television 4.1 6.7
Entertainment (0.2)
Corporate (0.9) (1.2)
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Total on-going operations 18.9 16.8
Divested operations 1.5
Unusual credits (charges) 4.3
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Total operating income 18.9 22.6
Interest expense (2.0) (4.6)
Net Gains
Miscellaneous, net 0.1
Income taxes (7.0) (7.8)
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Net income $ 9.9 $ 10.3
====================================================================================================
SHARE DATA
Income before cumulative effect of
accounting change and unusual items $ .96 $ .74
Unusual credits (charges) and net gains .26
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Net income $ .96 $ 1.00
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Dividends $ .30 $ .30
- - - - - - - - - - ----------------------------------------------------------------------------------------------------
Common stock price:
High $94.000 $58.000
Low 75.000 44.000
====================================================================================================
OTHER FINANCIAL DATA
Depreciation and amortization $ 10.5 $ 10.6
Net cash flow from operating activities 30.0 28.0
Investing Activity:
Capital expenditures (6.3) (6.4)
Other (investing)/divesting activity, net (17.7) 0.1
Total assets 616.2 632.1
Long-term debt and advances 97.2 219.9
Stockholders' equity 309.8 222.3
Long-term debt % of total capitalization 24% 50%
====================================================================================================
<CAPTION>
==================================================================================================================================
(IN MILLIONS, EXCEPT SHARE DATA) Years Ending December 31,
1993 1992 1991 1990 1989
- - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Operating Revenue:
Broadcast television $ 255.0 $ 247.3 $ 216.4 $ 205.2 $ 191.0
Cable television 113.1 109.0 99.5 86.7 74.5
- - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------------------
Total on-going operations 368.1 356.3 315.9 291.9 265.5
Divested operations 29.3 30.0 29.1 30.4 31.6
- - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------------------
Total operating revenue $ 397.4 $ 386.3 $ 345.0 $ 322.3 $ 297.1
- - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------------------
Operating Income:
Broadcast television $ 69.6 $ 61.9 $ 49.9 $ 61.1 $ 49.1
Cable television 20.0 23.5 15.4 14.3 11.7
Entertainment
Corporate (3.7) (3.6) (2.7) (3.1) (2.8)
- - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------------------
Total on-going operations 85.9 81.8 62.6 72.3 58.0
Divested operations 8.7 8.4 7.7 7.4 9.4
Unusual credits (charges) 4.3 (12.0)
- - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------------------
Total operating income 98.9 90.2 58.3 79.7 67.4
Interest expense (16.1) (22.7) (24.2) (23.4) (27.3)
Net Gains 84.5
Miscellaneous, net (0.3) 0.1 (0.1)
Income taxes (66.7) (30.8) (17.9) (26.3) (19.0)
- - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 100.3 $ 36.8 $ 16.2 $ 30.0 $ 21.0
==================================================================================================================================
SHARE DATA
Income before cumulative effect of
accounting change and unusual items $ 4.34 $ 3.56 $ 2.33 $ 2.91 $ 2.04
Unusual credits (charges) and net gains 5.38 (0.77)
- - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 9.72 $ 3.56 $ 1.56 $ 2.91 $ 2.04
- - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------------------
Dividends $ 1.20 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- - - - - - - - - - ----------------------------------------------------------------------------------------------------------------------------------
Common stock price:
High $84.000 $52.000 $58.000 $67.000 $81.000
Low 44.000 38.000 38.000 35.000 57.500
==================================================================================================================================
OTHER FINANCIAL DATA
Depreciation and amortization $ 44.4 $ 41.7 $ 38.9 $ 36.5 $ 37.1
Net cash flow from operating activities 88.4 92.3 60.3 82.9 82.7
Investing Activity:
Capital expenditures (30.9) (26.5) (22.3) (22.5) (19.8)
Other (investing)/divesting activity, net 94.3 (0.6) (129.2) (3.3) (2.0)
Total assets 621.9 653.6 682.2 554.0 575.2
Long-term debt and advances 99.9 238.8 294.0 193.3 238.5
Stockholders' equity 303.0 215.1 188.6 182.9 163.2
Long-term debt % of total capitalization 25% 53% 61% 51% 59%
==================================================================================================================================
</TABLE>
<PAGE> 29
SCRIPPS HOWARD BROADCASTING COMPANY
NOTES TO SELECTED FINANCIAL DATA
(a) For comparison purposes previously reported operating revenues, operating
expenses, and equity in income of certain joint ventures (see Note b)
have been reclassified to conform with 1994 classifications.
(b) The Company acquired or divested the following operations during the
periods presented:
THREE MONTHS ENDING MARCH 31:
1994 - The Company acquired Cinetel Productions, a producer of programs
for cable television.
1993 - The Company acquired a cable television system.
YEARS ENDING DECEMBER 31:
1993 - The Company also acquired several cable television systems. The
Company sold Memphis television station and its radio stations. The
sales resulted in after-tax gains of $53.0 million, $5.13 per share.
1992 - The Company acquired several cable television systems.
1991 - The Company acquired Baltimore television station WMAR and several
cable television systems.
1990 - The Company purchased several cable television systems.
1989 - The Company purchased several cable television systems.
(c) In the first quarter of 1993 management changed the estimate of the
additional amount of copyright fees the Company would owe when a dispute
between the television industry and the American Society of Composers,
Authors and Publishers ("ASCAP") was resolved. The adjustment increased
1993 first quarter operating income $4.3 million and net income $2.7
million, $.26 per share.
(d) In the third quarter of 1993 management changed its estimate of the tax
basis and lives of certain assets. Also in August 1993 the federal
income tax rate was increased to 35%, retroactive to January 1, 1993.
The net effects of the change in the estimated tax liabilities for prior
years, the higher tax rate on 1993 income, and the higher rate on the
Company's deferred income tax liabilities decreased 1993 net income $0.1
million, $.01 per share.
(e) In 1991 the Company agreed to settle a lawsuit filed in 1988 by Pacific
West Cable Company that alleged violations of antitrust and unfair trade
practice laws. The resultant charge reduced operating income by $12.0
million and net income by $7.9 million, $.77 per share.
<PAGE> 30
<TABLE>
PERSHARE. XLS
COMPARATIVE PER SHARE DATA
<CAPTION>
===========================================================================================================================
(IN MILLIONS, EXCEPT SHARE DATA) Quarter Ending March 31, Years Ending December 31,
1994 1993 1993 1992 1991
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THE E.W. SCRIPPS COMPANY - HISTORICAL:
Net income per share from continuing operations $0.34 $0.44 $1.72 $1.43 $0.89
Dividends declared per share $0.11 $0.11 $0.44 $0.40 $0.40
Book value per share $11.62 $10.15 $11.50 $9.07 $9.84
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
SCRIPPS HOWARD BROADCASTING COMPANY - HISTORICAL:
Net income per share from continuing operations $0.96 $1.00 $9.72 $3.56 $1.56
Dividends declared per share $0.30 $0.30 $1.20 $1.00 $1.00
Book value per share $30.00 $21.53 $29.34 $18.26 $20.83
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
EQUIVALENT PER SHARE BASIS (3.45 SHARES OF E.W. SCRIPPS COMPANY CLASS A COMMON STOCK):
Net income per share from continuing operations $1.17 $1.52 $5.93 $4.93 $3.07
Dividends declared per share $0.38 $0.38 $1.52 $1.38 $1.38
Book value per share $40.09 $35.02 $39.68 $31.29 $33.95
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1
<PAGE> 31
COMPARATIVE MARKET VALUES OF SHB COMMON STOCK
AND E. W. SCRIPPS CLASS A COMMON STOCK
The NASDAQ is the principal market on which SHB Common Stock is
traded (symbol: SCRP). The NYSE is the principal market on which E. W.
Scripps Class A Common Stock is traded (symbol: SSP).
Set forth below are the closing sale prices for a share of SHB Common
Stock (on an historical and equivalent per share basis) and for a share of E.
W. Scripps Class A Common Stock (on an historical per share basis), each as
reported by The Wall Street Journal, as of February 17, 1994, the last full
business day preceding the day on which E. W. Scripps and SHB first announced
that the Merger had been proposed, and as of April 6, 1994, the last full
business day preceding the day on which E. W. Scripps and SHB first announced
that their respective Boards of Directors had approved the Merger and the
exchange ratio of 3.45 to 1.
<TABLE>
<CAPTION>
CLOSING SALE PRICE
E. W. SCRIPPS
SHB CLASS A
COMMON STOCK COMMON STOCK
<S> <C> <C>
February 17, 1994 $ 75.00 $ 28.75
April 6, 1994 $ 82.00 $ 24.00
</TABLE>
____________________
For information relating to historical market prices of and dividends
on the SHB Common Stock and the E. W. Scripps Class A Common Stock, see "Market
For SHB Common Equity And Related Stockholder Matters" and "Market For E. W.
Scripps Common Equity And Related Stockholder Matters". Holders of SHB Common
Stock are urged to obtain current quotations for such securities.
- 22 -
<PAGE> 32
THE SPECIAL MEETING
GENERAL
This Proxy Statement-Prospectus and the accompanying notice of the
Special Meeting and form of proxy are being furnished to all holders of record
on the Record Date of shares of SHB Common Stock in connection with the
solicitation of proxies by the SHB Board for use at the Special Meeting to be
held on ___________, 1994, commencing at _____ a.m./p.m. at 312 Walnut Street,
Cincinnati, Ohio 45202, and any adjournment or postponement thereof. These
proxy materials are being mailed to the SHB Stockholders on or about
___________, 1994.
At the Special Meeting, the SHB Stockholders will be asked to
consider and vote upon a proposal to adopt the Merger Agreement, pursuant to
which (I) SHB will be merged with and into Mergerco, with Mergerco being the
Surviving Corporation, all of the stock of which will be owned by E. W.
Scripps, and (II) each share of SHB Common Stock outstanding immediately prior
to the Effective Time (other than the Excluded Shares and Dissenting Shares)
will be converted into the right to receive 3.45 shares of E. W. Scripps Class
A Common Stock. The full text of the Merger Agreement is attached as Annex I
hereto and is incorporated herein in its entirety. See "The Merger Agreement."
VOTING AT THE SPECIAL MEETING
RECORD DATE. The close of business on _______, 1994 has been fixed
as the Record Date for determining the SHB Stockholders entitled to notice of
and to vote at the Special Meeting. On the Record Date, there were 10,325,788
shares of SHB Common Stock outstanding and entitled to vote, held by
approximately 600 holders of record. SHB Stockholders may cast one vote per
share, either in person or by proxy, on each matter to be voted on at the
Special Meeting.
REQUIRED STOCKHOLDER VOTE. A majority of the outstanding shares of
SHB Common Stock, represented in person or by proxy, is required for a quorum
at the Special Meeting. The affirmative vote of the holders of a majority of
the outstanding shares of SHB Common Stock is required to adopt the Merger
Agreement. Abstentions and broker non-votes will have the same effect as votes
against adoption of the Merger Agreement. E. W. Scripps beneficially owns a
sufficient number of shares of SHB Common Stock to cause the Merger Agreement
to be adopted without the vote of any other SHB Stockholder. The Merger
Agreement requires E. W. Scripps to vote, or cause to be voted, all shares
beneficially owned by it in favor of adoption of the Merger Agreement.
- 23 -
<PAGE> 33
THE SHB BOARD AND THE SPECIAL COMMITTEE UNANIMOUSLY RECOMMEND THAT
SHB STOCKHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
PROXIES
All shares of SHB Voting Stock represented at the Special Meeting by
properly executed proxies received prior to or at the Special Meeting, unless
the proxies have previously been revoked, will be voted in accordance with the
instructions on such proxies. If no instructions are given, proxies will be
voted FOR approval and adoption of the Merger Agreement. If any other matters
are properly presented to the Special Meeting for action, the persons named in
the enclosed form of proxy as acting thereunder will have discretion to vote on
such matters in accordance with their best judgment. SHB does not know of any
matters other than adoption of the Merger Agreement and procedural matters
relating to the conduct of business at the Special Meeting that will be
presented at the Special Meeting.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by
delivery to the Secretary of SHB at 312 Walnut Street, Cincinnati, Ohio 45202,
of a written notice of revocation bearing a later date than the proxy, by duly
executing and delivering to the Secretary a subsequent proxy relating to the
same shares, or by attending the Special Meeting and voting in person (although
attendance at the Special Meeting will not in and of itself constitute
revocation of a proxy).
Proxies are being solicited by and on behalf of the SHB Board. In
addition to solicitation by mail, proxies may be solicited by directors and
authorized officers and employees of SHB in person or by telephone, telegram or
other means of communication. Such directors, officers and employees will not
be additionally compensated, but may be reimbursed for out-of-pocket expenses
in connection with such solicitation. Arrangements will also be made with
custodians, nominees and fiduciaries for forwarding of proxy solicitation
material to beneficial owners of shares of SHB Common Stock held of record by
such persons, and SHB may reimburse such custodians, nominees and fiduciaries
for reasonable expenses incurred in connection therewith.
All information in this Proxy Statement-Prospectus concerning E. W.
Scripps and its subsidiaries (other than SHB) Mergerco, the E. W. Scripps
Class A Common Stock has been provided by E. W. Scripps. Except as otherwise
indicated, all other information contained in this Proxy Statement-Prospectus
has been supplied by SHB.
- 24 -
<PAGE> 34
THE MERGER CONSTITUTES A MATTER OF GREAT IMPORTANCE TO SHB
STOCKHOLDERS. UPON ADOPTION OF THE MERGER AGREEMENT AND CONSUMMATION OF THE
MERGER, THE DIRECT EQUITY INVESTMENT IN SHB OF SHB'S STOCKHOLDERS WILL CEASE,
AND SUCH STOCKHOLDERS (OTHER THAN THE HOLDERS OF THE EXCLUDED SHARES AND
DISSENTING SHARES) WILL BE ENTITLED TO RECEIVE THE MERGER CONSIDERATION.
ACCORDINGLY, SHB STOCKHOLDERS ARE URGED TO READ AND CAREFULLY CONSIDER THE
INFORMATION PRESENTED IN THIS PROXY STATEMENT-PROSPECTUS.
THE MERGER
BACKGROUND AND REASONS FOR THE MERGER
E. W. Scripps formed SHB in 1935 in connection with the acquisition
of its first radio stations. In 1963, E. W. Scripps and certain affiliated
stockholders of SHB sold approximately 15% of SHB's outstanding shares in an
initial public offering, following which E. W. Scripps retained control of SHB
with approximately 67% of the outstanding SHB Common Stock. Over the years
after SHB's initial public offering, E. W. Scripps repurchased shares of SHB
Common Stock in public and private transactions from time to time, including a
tender offer in 1984 pursuant to which it increased its percentage ownership to
80% for tax consolidation purposes. At present, E. W. Scripps beneficially
owns 86.1% of the outstanding shares of SHB Common Stock.
From its inception SHB has operated in the broadcast media industry,
starting with its first radio stations in 1935, its first television station in
1947 and its first cable system in 1980. SHB today operates nine broadcast
television stations, all of which are network affiliated, and cable systems
with approximately 295,000 subscribers in Colorado, Florida and California as
of March 31, 1994. SHB's largest cable franchise is in Sacramento, California,
where SHB has approximately 212,000 subscribers as of March 31, 1994. In 1993,
SHB divested all of its radio stations and a television station in Memphis,
Tennessee.
E. W. Scripps, which traces its beginnings to 1878, became a publicly
held company in 1988 with an initial public offering of its Class A Common
Stock. In addition to operating in the broadcast media industry historically
through its control of SHB, E. W. Scripps has been engaged in the publishing
and cable television industries through various operating subsidiaries. E. W.
Scripps acquired its first cable television system in 1980 and today operates
cable systems in California, Colorado, Florida, Georgia, Indiana, Kentucky,
South Carolina, Tennessee, Virginia and West Virginia with approximately
701,000 subscribers as of March 31, 1994.
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The operation of two public companies each of which owns significant
cable television properties has presented the Boards of Directors and
management of these companies with potential conflicts of interest and
potential corporate governance and opportunity issues. Furthermore, since the
initial public offering of E. W. Scripps Class A Common Stock in 1988, the
operation of two public companies associated with the Scripps and Howard names
has, in the view of the Boards of Directors of both companies, engendered
confusion in the marketplace between the two publicly traded stocks.
Historically, the SHB Common Stock has been a relatively illiquid stock
characterized by generally thin volume and significant price volatility.
In light of the foregoing and in the belief that there were a number
of potential benefits to both companies and their stockholders that could be
realized if E. W. Scripps acquired all of the outstanding shares of SHB Common
Stock that it does not presently own, management of E. W. Scripps engaged J.P.
Morgan Securities, Inc. ("J.P. MORGAN") in January 1994 to prepare a report for
the Board of Directors of E. W. Scripps to assist the Board in evaluating a
possible merger involving the companies. J.P. Morgan completed its report (the
"J.P. MORGAN REPORT") in February 1994 and at the E. W. Scripps Board of
Directors meeting on February 17, 1994 delivered the report and discussed it
with the directors of E. W. Scripps. The J.P. Morgan Report focused on a
variety of matters appropriate to an analysis of the proposed merger, including
an overview of the stock ownership of SHB, the operations of E. W. Scripps and
SHB, the advantages of the proposed merger for each company and its
stockholders, the dilution that would occur as a result of the issuance of a
substantial number of shares of E. W. Scripps Class A Common Stock in
connection with the proposed merger, and the illiquidity and volatility of the
SHB Common Stock. Additionally, the J.P. Morgan Report analyzed a proposed
exchange ratio of three shares of E. W. Scripps Class A Common Stock for each
share of SHB Common Stock from a number of perspectives, including premium to
average market price of SHB Common Stock, cash flow multiples of a group of
companies comparable to SHB, and trading multiples and other indicia such as
liquidity, volatility and trading volume of the stock of such companies in
SHB's peer group.
Following presentation of the J.P. Morgan Report and discussion
thereof and related matters at its February 17, 1994 meeting, the Board of
Directors of E. W. Scripps unanimously approved an offer to acquire pursuant to
merger all outstanding shares of SHB Common Stock not beneficially owned by E.
W. Scripps. At this meeting, the E. W. Scripps Board of Directors authorized
an exchange ratio of three shares of E. W. Scripps Class A Common Stock for
each outstanding share of SHB Common Stock owned by the Public Stockholders.
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Following the aforesaid meeting of the E. W. Scripps Board of
Directors, the President of E. W. Scripps delivered to the Board of Directors
of SHB a letter setting forth the terms of the aforesaid merger proposal at a
regularly scheduled meeting of the SHB Board of Directors held on February 17,
1994. Upon delivery of the letter to the SHB Board of Directors, it was
decided that there would be no discussion of the proposal because several
members of the SHB Board of Directors were also members of the E. W. Scripps
Board of Directors. The only action taken at the meeting with respect to the
proposal was the formation of the SHB Special Committee. See "Summary -
Recommendation of the SHB Board." The SHB Special Committee was authorized to
consider the merger proposal, to determine the fairness of the proposal to
Public Stockholders and to recommend to the SHB Board of Directors and to the
SHB Stockholders whether they should approve the merger.
At the SHB meeting on February 17, 1994, the SHB Special Committee
was also authorized to employ investment bankers and legal counsel as it deemed
appropriate to assist in the analysis of the proposal. It was also decided
that each member of the SHB Special Committee would receive a special fee in
the amount of $25,000 in recognition of the work that would be involved in
discharging their responsibilities.
On February 17, 1994, prior to the announcement of the proposed
merger, the SHB Common Stock closed at $75 per share on NASDAQ and the E. W.
Scripps Class A Common Stock closed at $28.75 per share on the NYSE.
Following its formation the SHB Special Committee met on February 22,
1994. At that meeting the SHB Special Committee retained Taft, Stettinius as
its legal counsel and agreed that it would interview nationally recognized
investment banking firms for the possible retention of a financial advisor.
On March 1, 1994, Lehman Brothers and two other nationally recognized
investment banking firms were interviewed by the SHB Special Committee.
Following these interviews and subsequent discussions, the SHB Special
Committee selected Lehman Brothers to assist the SHB Special Committee in
determining whether the proposed merger was fair from a financial point of view
to the Public Stockholders, perform such other financial advisory services as
the SHB Special Committee might request and provide a formal written opinion as
to fairness, from a financial point of view, of the exchange ratio to be
offered to the Public Stockholders in the proposed merger. See "The Merger -
Opinion of Financial Advisor."
On March 7, 1994, Mr. Stautberg, on behalf of the SHB Special
Committee, and representatives of Lehman Brothers and Taft, Stettinius met with
representatives of J.P. Morgan and members of upper-level management of E. W.
Scripps and SHB in
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order to gather information about various aspects of the companies' businesses,
including the newspaper publishing, broadcast television, cable television and
entertainment segments. For the three-week period following the March 7
meeting, Lehman Brothers and Taft, Stettinius continued to gather information
through numerous conference calls with members of the managements of SHB and E.
W. Scripps.
After its advisors had devoted more than two weeks to the due
diligence process, the SHB Special Committee held a meeting on March 25, 1994.
At this meeting the SHB Special Committee reviewed with its legal counsel due
diligence sessions which had been held with managements of SHB and E. W.
Scripps, and information gleaned by its legal counsel from a review of various
documents relating to E. W. Scripps and SHB. A proposed form of merger
agreement which had been prepared by E. W. Scripps was provided to members of
the SHB Special Committee and to Lehman Brothers. Lehman Brothers reported
that because under the proposed transaction the Public Stockholders were to
receive shares of E. W. Scripps Class A Common Stock, it was necessary for
Lehman Brothers to evaluate both E. W. Scripps and SHB to determine whether the
consideration to be received by the Public Stockholders was fair from a
financial point of view. Lehman Brothers then described the various analyses
that it anticipated it would use in its valuations of E. W. Scripps and SHB.
These would involve four different methodologies, including three comparative
analyses and a discounted cash flow analysis. Specifically, Lehman Brothers
indicated that it would compare trading multiples of SHB and E. W. Scripps, both
pre- and post-announcement of the proposed merger, to comparable public
companies; would derive theoretical public values for SHB and E. W. Scripps on
a segment-by-segment basis based on the public trading ranges of comparable
companies; and would derive private market values for SHB and E. W. Scripps on
a segment-by-segment basis based on transaction multiples of recently announced
cable, newspaper and television station sales. Lehman Brothers added that its
discounted cash flow analysis would involve values derived by Lehman Brothers
based on management's projections--extrapolated by Lehman Brothers when
necessary to have a minimum of five-year projections--using separate discount
rates and terminal multiples of both companies. Lehman Brothers also noted
that it would present various sensitivity analyses, which would show the
effects of different assumptions as to the success of certain divisions' future
operations.
On March 29, 1994, the SHB Special Committee reviewed with its legal
counsel and financial advisor the proposed merger agreement. Following this
review the SHB Special Committee agreed to propose to E. W. Scripps certain
additions and changes to the proposed merger agreement, including a condition
that the proposed merger be approved by the favorable vote of a majority of the
votes cast by the Public Stockholders, a condition that
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<PAGE> 38
the opinion received by the SHB Special Committee from Lehman Brothers be
updated at the time of the consummation of the proposed merger and a provision
giving members of the SHB Special Committee the ability to terminate the
proposed merger agreement if they believed such action was warranted in the
exercise of their fiduciary duties.
While the companies evaluated and negotiated the proposed merger
during late March and early April, 1994, legal counsel for the SHB Special
Committee and E. W. Scripps exchanged comments and held several discussions
regarding various provisions of the proposed merger agreement. In response to
comments of the SHB Special Committee, the proposed merger agreement was
revised ultimately to include, among other things, a condition that the opinion
as to fairness provided by Lehman Brothers be updated as of the date of closing
and the right on the part of the SHB Special Committee to terminate the merger
agreement if it determined that such action was in accord with its fiduciary
duties to the SHB Stockholders. Additionally, a similar right to terminate on
the basis of fiduciary duty was reserved by the E. W. Scripps Board of
Directors. E. W. Scripps did not agree to SHB Special Committee's other
request that a condition be added to the proposed merger agreement to the
effect that the proposed merger would have to be approved by a majority of the
Public Stockholders who actually vote on the proposed merger. The decision of
E. W. Scripps not to agree to this request was based on the following factors:
(I) E. W. Scripps increased the exchange ratio from 3 to 1 to 3.45 to 1, a 15%
increase; (II) E. W. Scripps and SHB are not required by Ohio law, which
governs the merger, to seek approval by a majority of the Public Stockholders
who vote on the merger; and (III) E. W. Scripps does not believe it to be in
the best interests of its stockholders to invest substantial funds and
significant Board and management time if the merger can be disapproved by a
vote of Public Stockholders that is not required by law.
During the March 29 meeting, Lehman Brothers also reviewed with the
SHB Special Committee its preliminary report on the valuations of E. W. Scripps
and SHB. Lehman Brothers described the various meetings which its
representatives had held with the managements of E. W. Scripps and SHB, and the
nature of the information made available to them by both companies. Lehman
Brothers then summarized the information received and the reviews which Lehman
Brothers carried out in order to be in a position to provide its report to the
SHB Special Committee.
Lehman Brothers reviewed with the SHB Special Committee an overview
of each of SHB and E. W. Scripps. These overviews consisted of breakdowns of
historical and projected revenues and operating cash flow by various business
segments of each company and a discussion of Lehman Brothers' understanding of
the nature and prospects of the businesses in each segment of the two
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<PAGE> 39
companies.
Lehman Brothers and the SHB Special Committee then reviewed together
the various analyses, which were consistent with the descriptions provided at
the March 25 meeting. Lehman Brothers noted that it had determined that the
first proposed analysis described at the March 25, 1994 meeting, I.E., trading
multiples of comparable companies, was of limited use because of the lack of
any companies actually comparable to SHB in terms of the combination of
businesses conducted by SHB. In the other analyses, Lehman Brothers calculated
a range of exchange ratios derived from the relative values of the securities
of the two companies. Lehman Brothers' report was preliminary in nature and
contained necessarily incomplete versions of the analyses described in "The
Merger - Opinion of Financial Advisor." Following the review of Lehman
Brothers' preliminary report, it was the view of Lehman Brothers that the
proposed exchange ratio of three shares of E. W. Scripps Class A Common Stock
for each share of SHB Common Stock appeared to be below the range of exchange
ratios suggested by the various analyses and the view of the SHB Special
Committee that the proposed exchange ratio was not sufficient. The SHB Special
Committee authorized Lehman Brothers and the Committee's counsel to meet with
the representatives of E. W. Scripps to explore the possibility of increasing
the exchange ratio above that initially proposed.
On March 31, 1994, E. W. Scripps' and the SHB Committee's respective
legal and financial advisors held a meeting at which the SHB advisors reported
to the E. W. Scripps advisors that the exchange ratio of 3 to 1 proposed by E.
W. Scripps was not sufficient. The E. W. Scripps advisors indicated that E.
W. Scripps might be willing to increase the exchange ratio.
At a meeting held on April 1, 1994, Lehman Brothers presented to and
discussed with the SHB Special Committee various analyses of SHB and E. W.
Scripps based on the same methodologies considered at the March 29 meeting and
which reflected points raised at the March 29 and 31 meetings. Lehman Brothers
divided each of SHB and E. W. Scripps into their component parts of cable,
television, newspaper and entertainment, and developed different valuation
scenarios, assuming high or low values for each component part. Lehman
Brothers also performed a variety of sensitivity analyses which factored in
varying assumptions as to the success of certain divisions' future operations.
A summary of the exchange ratio analyses was also provided. Lehman Brothers'
analyses were consistent with, and essentially refinements of, those discussed
at the March 29 meeting.
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<PAGE> 40
Following its review of these analyses, the SHB Special Committee concluded
that these analyses offered continued support for its determination that an
increase in the exchange ratio was appropriate, and further concluded that the
SHB Special Committee would not be in a position to determine that the proposed
merger was fair to the Public Stockholders without an increase in the exchange
ratio. The SHB Special Committee authorized Lehman Brothers and its counsel to
advise E. W. Scripps of these decisions of the SHB Special Committee.
On April 1 and 3, 1994, representatives of J.P. Morgan and Lehman
Brothers had several telephone discussions concerning the proposed merger and
exchange ratio. On April 5, 1994 representatives of both financial advisors
met to discuss these matters further.
On April 4, 5 and 6, 1994, the SHB Special Committee and its legal
and financial advisors had ongoing discussions with representatives of both
E.W. Scripps and SHB concerning possible increases in the exchange ratio.
Following the aforesaid discussions, the President of E. W. Scripps convened a
special telephonic meeting of the E. W. Scripps Board of Directors on April 6,
1994.
At that meeting, E. W. Scripps' President reviewed the E. W. Scripps
Board's earlier discussions relating to the merger proposal, including the
initial offer of an exchange ratio of three shares of E. W. Scripps Class A
Common Stock for each outstanding share of SHB Common Stock. The President
then reviewed events since those discussions, including advising the Board of
the declines in the stock market in general and in the per share price of E. W.
Scripps Class A Common Stock from approximately $28 to approximately $24 since
the initial proposal had been made. The President also informed the Board that
he expected earnings during the first quarter of 1994 for both companies to be
good. He reminded the Board that he had recommended the initial exchange ratio
of 3 to 1 because it was nondilutive to E. W. Scripps.
Following the President's comments, a representative of J.P. Morgan
reported to the E. W. Scripps Board on his discussions with members of the SHB
Special Committee and its financial and legal advisors. He indicated that
after review of the situation and advice from Lehman Brothers, the SHB Special
Committee stated that the exchange ratio of 3 to 1 proposed by E. W. Scripps
was not sufficient. The J.P. Morgan representative reported that, following
these discussions with the SHB Special Committee, he and the President
discussed a possible increase in the exchange ratio from 3 to 1 to 3.45 to 1.
The J.P. Morgan representative then stated that a 3.45 to 1 exchange ratio was
expected to cause minimal dilution to E. W. Scripps. He also indicated that,
based on his discussions with the Special Committee, its legal counsel
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<PAGE> 41
and investment bankers, he believed that this offer might be acceptable to the
SHB Special Committee.
The J.P. Morgan representative then reviewed some of the benefits to
E. W. Scripps in consummating the proposed merger, including the following:
(I) the opportunity to realize certain strategic and business management
benefits, including the elimination of potential conflicts of interest and
potential corporate governance and opportunity issues; (II) ending the
confusion in the marketplace between the two publicly traded stocks; and (III)
additional flexibility to explore strategic opportunities in each company's
businesses, including the cable businesses that each company owns.
Following the comments of the J.P. Morgan representative, the
President of E. W. Scripps indicated that he concurred with the benefits
described above and stated that an additional benefit to E. W. Scripps was that
there would be an increase in the number of shares of E. W. Scripps Class A
Common Stock held by public stockholders and freely tradeable in the public
market following the proposed merger. The President then recommended that the
Board approve a new proposed exchange ratio of 3.45 to 1. Following discussion
by the Board, the new proposed exchange ratio was approved and the President
was authorized to inform the SHB Special Committee and the SHB Board of the new
exchange ratio and its approval by the E. W. Scripps Board of Directors.
Following the meeting of the E. W. Scripps Board of Directors on
April 6, 1994, the President of E. W. Scripps advised the SHB Special Committee
on that date that E.W. Scripps was willing to increase the exchange ratio to
3.45 shares of E. W. Scripps Class A Common Stock for each share of SHB Common
Stock. The SHB Special Committee then reconvened to consider E. W. Scripps's
proposal. At this meeting, the SHB Special Committee reviewed their previous
discussions with legal counsel and Lehman Brothers. Lehman Brothers reviewed
its final report with the SHB Special Committee, noting that it was consistent
with its previous reports. See "The Merger - Opinion of Financial Advisor."
Lehman Brothers then stated that it was of the opinion that the proposed
exchange ratio of 3.45 shares of E. W. Scripps Class A Common Stock for each
share of SHB Common Stock was fair, from a financial point of view, to the
Public Stockholders, and that it was prepared to deliver its written opinion to
such effect at the time of mailing the Proxy Statement-Prospectus to the SHB
Stockholders (and an update at the Effective Time), subject to material changes
in such companies' businesses prior to the time of rendering such written
opinion. The SHB Special Committee then agreed unanimously to adopt
resolutions (I) finding that the proposed merger, as set forth in the merger
agreement revised to reflect an exchange ratio of 3.45 shares of E. W. Scripps
Class A Common Stock for each share of SHB Common Stock, was fair to the Public
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Stockholders (II) recommending that the SHB Board approve the proposed merger.
After this meeting, the SHB Special Committee informed the President
of E. W. Scripps of its decision, and a special telephonic meeting of the SHB
Board of Directors was called to receive the recommendation of the SHB Special
Committee and approve the new proposed exchange ratio.
A special meeting of the SHB Board of Directors was then convened late
in the afternoon on April 6, 1994. At the meeting, the SHB Special Committee
delivered its report to the SHB Board. Mr. Stautberg, reporting for the SHB
Special Committee, stated that the SHB Special Committee, along with its legal
and financial advisors, had completed appropriate due diligence and analysis of
the merger proposal and had received a report from Lehman Brothers with respect
to the fairness of the consideration in the proposed merger. Mr. Stautberg
then informed the SHB Board that following negotiations between the SHB Special
Committee and its advisors and E. W. Scripps and its advisors, E. W. Scripps
had increased the exchange ratio of its original merger proposal from 3 to 3.45
shares of E. W. Scripps Class A Common Stock for each share of SHB Common Stock
owned by the Public Stockholders. The SHB Board was also informed by Mr.
Stautberg that Lehman Brothers had confirmed that it was prepared to deliver a
fairness opinion with respect to the revised exchange ratio. Mr. Stautberg
then stated that on the basis of the foregoing, the SHB Special Committee was
unanimously recommending that the SHB Board approve the revised merger
proposal. Following a discussion, the SHB Board unanimously approved the
revised exchange ratio and merger proposal.
On April 7, 1994, E. W. Scripps and SHB issued press releases
announcing the new exchange ratio and revised merger proposal and its approval
by their respective Boards of Directors. Following that date, certain terms
and conditions of the Merger Agreement were negotiated by legal counsel for the
companies. On the morning of May 4, 1994, the SHB Special Committee met and,
after discussion and final review of the proposed merger agreement, recommended
approval thereof by the SHB Board and the SHB Stockholders. Later that day,
the Merger Agreement was approved in final form by the Executive Committee of
E. W. Scripps and, on the basis of the SHB Special Committee's recommendation,
by the SHB Board. Following such approval, the Merger Agreement was executed
by E. W. Scripps, Mergerco and SHB on May 4, 1994.
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PURPOSE AND STRUCTURE OF THE MERGER AND CERTAIN EFFECTS OF THE MERGER
The purpose of the Merger is for E. W. Scripps to acquire all of the
shares of SHB Common Stock that it does not beneficially own so that SHB will
be a wholly owned subsidiary of E. W. Scripps. The merger is structured in
order to give the SHB Stockholders the opportunity to own, in a tax free
exchange, a stock with greater liquidity, as well as to share in the prospects
of the combined organization.
Following the consummation of the Merger, the SHB Common Stock will
be delisted from the NASDAQ and the registration of the SHB Common Stock under
the Exchange Act will be terminated. The termination of the registration of
the SHB Common Stock under the Exchange Act would make certain of the
provisions of the Exchange Act, such as the requirement of furnishing a proxy
statement in connection with certain meetings of stockholders, no longer
applicable with respect to the SHB Common Stock. See "Business of SHB" and
"The Merger - Conduct of the Business of the Surviving Corporation After the
Merger."
CONDUCT OF THE BUSINESS OF THE SURVIVING CORPORATION AFTER THE MERGER
Following the Merger, the Surviving Corporation will be a wholly
owned subsidiary of E. W. Scripps. The Surviving Corporation will exist and
operate under the name "Scripps Howard Broadcasting Company". The Surviving
Corporation's Articles of Incorporation and Code of Regulations will be the
same as the SHB Articles of Incorporation and SHB Code of Regulations as in
effect immediately prior to the Effective Time, except that the number of
authorized shares of common stock of the Surviving Corporation will be 850
shares instead of 25,000,000 shares. The Surviving Corporation's Board of
Directors and management will be the same as that of SHB as in effect
immediately prior to the Effective Time.
RECOMMENDATION OF THE SHB SPECIAL COMMITTEE AND THE SHB BOARD
On February 17, 1994, E. W. Scripps proposed to the SHB Board that
SHB enter into a transaction in which SHB would be merged into Mergerco and the
Public Stockholders would receive three shares of E. W. Scripps Class A Common
Stock for each share of SHB Common Stock. At this time the SHB Board created
the SHB Special Committee to consider the merger proposal, to determine the
fairness of the merger proposal to the Public Stockholders and to recommend to
the SHB Board and SHB Stockholders whether they should approve the proposed
merger. See "The Merger - Background and Reasons for the Merger."
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On February 22, 1994, the SHB Special Committee retained Taft,
Stettinius to act as its legal counsel in connection with the merger proposal.
On March 1, 1994, Lehman Brothers and two other nationally recognized
investment banking firms were interviewed by the SHB Special Committee. The
SHB Special Committee selected Lehman Brothers to assist the SHB Special
Committee in determining whether the proposed merger was fair from a financial
point of view to the Public Stockholders, to perform such other financial
advisory services as the SHB Special Committee might request and to provide a
formal written opinion as to the fairness, from a financial point of view,
of the exchange ratio to the Public Stockholders. See "The Merger -
Background and Reasons for the Merger; Opinion of Financial Advisor."
From February 17, 1994 through April 6, 1994, the SHB Special
Committee and its legal and financial advisors took certain actions to carry
out the purposes for which the SHB Special Committee was formed, some of which
are described under "The Merger - Background and Reasons for the Merger."
In reaching its conclusion, and in making its recommendations
to the SHB Board, the SHB Special Committee determined that the proposed merger
was fair and in the best interests of the Public Stockholders for the following
reasons:
bullet Lehman Brothers indicated that, subject to certain assumptions
and conditions described under the heading "The Merger - Opinion of
Financial Advisor," the exchange ratio of 3.45 shares of E. W.
Scripps Class A Common Stock for each share of SHB Common Stock was
fair, from a financial point of view, to the Public Stockholders, and
that it was prepared to deliver its written opinion to such effect at
the time of mailing the Proxy Statement-Prospectus to the SHB
Stockholders (and an update at the Effective Time), subject to
changes in such companies' businesses prior to the time of rendering
such written opinion.
bullet The fact that in the twelve months preceding the first
announcement of the proposed merger, SHB Common Stock traded 110 of
256 trading days on NASDAQ with an average daily volume of 709
shares. Lehman Brothers compared this to E. W. Scripps Class A
Common Stock, which traded 254 of 256 trading days on the NYSE with
an average daily volume of 30,037 shares.
bullet The exchange ratio of 3.45 shares of E. W. Scripps Class A
Common Stock for each share of SHB Common Stock exceeds the range
calculated by Lehman Brothers under its comparable publicly traded
companies analysis as described under "The Merger - Opinion of
Financial Advisor."
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<PAGE> 45
bullet The exchange ratio of 3.45 shares of E. W. Scripps Class A
Common Stock for each share of SHB Common Stock exceeds the range
calculated by Lehman Brothers under its comparable transactions
analysis described under "The Merger - Opinion of Financial Advisor."
bullet The exchange ratio of 3.45 shares of E. W. Scripps Class A
Common Stock for each share of SHB Common Stock is within the range
calculated by Lehman Brothers in its discounted cash flow analysis as
described under "The Merger - Opinion of Financial Advisor."
bullet The SHB Special Committee was advised by Lehman Brothers that,
historically, the average weekly trading volume of E. W. Scripps
Class A Common Stock has been greater than that of SHB Common Stock.
bullet It is anticipated that the Merger will be tax free to
shareholders of SHB.
bullet The SHB Special Committee successfully negotiated a number of
changes in the Merger Agreement, including specifically a provision
which allows for termination of the Merger Agreement by SHB if the
SHB Special Committee, in the exercise of its fiduciary duties,
determines it should be terminated.
The SHB Board met on April 6, 1994, and received a report and
recommendation to approve the exchange ratio and the merger proposal from the
SHB Special Committee. The SHB Board then unanimously approved the exchange
ratio of 3.45 shares of E. W. Scripps Class A Common Stock for each share of
SHB Common Stock.
OPINION OF FINANCIAL ADVISOR
Lehman Brothers was retained by the SHB Special Committee to act as
its financial advisor in connection with the Merger. Pursuant to such
engagement, the Special Committee requested that Lehman Brothers evaluate the
fairness, from a financial point of view, to the Public Stockholders of the
consideration to be received in the Merger by such stockholders. On April 6,
1994, Lehman Brothers delivered to the SHB Special Committee its oral opinion,
confirmed by a written opinion dated May 4, 1994, to the effect that, as of the
respective dates and based upon and subject to certain matters as stated in its
written opinion, the exchange ratio to be received by the Public
Stockholders in the Merger was fair, from a financial point of view, to such
stockholders.
THE FULL TEXT OF THE WRITTEN OPINION OF LEHMAN BROTHERS DATED MAY 4,
1994, WHICH SETS FORTH ASSUMPTIONS MADE, FACTORS CONSIDERED AND LIMITATIONS ON
THE REVIEW UNDERTAKEN BY LEHMAN
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<PAGE> 46
BROTHERS, IS ATTACHED TO AND MADE PART OF THIS PROXY STATEMENT-PROSPECTUS AS
ANNEX II. SHB STOCKHOLDERS ARE URGED TO READ SUCH OPINION CAREFULLY AND IN ITS
ENTIRETY.
No limitations were imposed by the SHB Special Committee on the scope
of Lehman Brothers' investigation or the procedures to be followed by Lehman
Brothers in rendering its opinion, except that the SHB Special Committee did
not authorize Lehman Brothers to solicit, and Lehman Brothers did not solicit,
any indications of interest from any third party with respect to the purchase
of all or a part of SHB's business. Lehman Brothers was not requested to and
did not make any recommendations to the SHB Special Committee as to the form or
amount of the consideration to be paid by E. W. Scripps in the proposed merger
transactions, which was determined through arm's-length negotiations between
the parties. In arriving at its opinion, Lehman Brothers did not ascribe a
specific range of value to SHB but made its determination as to the fairness,
from a financial point of view, of the exchange ratio to be offered to the
Public Stockholders by E.W. Scripps, on the basis of a financial and
comparative analysis described below. Lehman Brothers' opinion is directed to
the SHB Special Committee only and does not constitute a recommendation to any
SHB Stockholder as to how such stockholder should vote at the Special Meeting.
Lehman Brothers was not requested to opine as to, and its opinion does not
address, the underlying business decision to proceed with or the effect the
proposed merger.
In arriving at its opinion, Lehman Brothers reviewed the following
financial and other information, including but not limited to: the Merger
Agreement; publicly available information concerning E. W. Scripps and SHB
which it believed to be relevant to its inquiry, including but not limited to,
the December 31, 1993 annual reports and Form 10-K's and 1993 proxy materials
of E. W. Scripps and SHB which include, among other things, discussion of the
inter-relationships between E. W. Scripps and SHB managements; financial and
operating information with respect to the businesses, operations and prospects
of E. W. Scripps and SHB and their respective business segments furnished to
Lehman Brothers by E. W. Scripps and SHB, including but not limited to, the
strategic plans and operating projections of E. W. Scripps and SHB; a trading
history of the common stock of E. W. Scripps and SHB and a comparison of that
trading history with those of other companies which it deemed relevant as well
as the trading relationship of the common stock of E. W. Scripps to that of
SHB; a comparison of the historical financial results, present financial
condition of E. W Scripps and SHB and their respective business segments with
those of other companies which it deemed relevant; a comparison of the
financial terms of the proposed merger with the financial terms of certain
other transactions which it deemed relevant; the pro forma effects of the
proposed merger on the business, operations and financial condition of E.
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W. Scripps and the ownership profile and relative liquidity of the outstanding
shares of E. W. Scripps Class A Common Stock and SHB Common Stock and the pro
forma ownership of E. W. Scripps following the proposed merger and the voting
characteristics of the shares of E. W. Scripps Class A Common Stock to be
received as consideration by the SHB Stockholders in the proposed merger, and
the voting control position by the majority stockholders of E. W. Scripps and
the restrictions on transfer of that control.
In addition, Lehman Brothers had discussions with the managements of
E. W. Scripps and SHB concerning their respective businesses, operations,
assets, financial condition and prospects including the potential cost savings
and strategic benefits of the proposed merger and undertook such other studies,
analyses and investigations as it deemed appropriate.
In rendering its opinion, Lehman Brothers assumed and relied upon the
accuracy and completeness of the financial and other information used by it in
arriving at its opinion without independent verification and further relied
upon the assurances of management of E. W. Scripps and SHB that they were not
aware of any facts that would make such information inaccurate or misleading.
With respect to the projections of E. W. Scripps and SHB, upon advice of E. W.
Scripps and SHB, Lehman Brothers assumed that such projections were reasonably
prepared on the basis of reflecting the best currently available estimates and
judgments of the management of E. W. Scripps and SHB as to the future financial
performance of E. W. Scripps and SHB, and that E. W. Scripps and SHB would
perform substantially in accordance with such projections. In arriving at its
opinion, Lehman Brothers did not conduct a physical inspection of the
properties and facilities of E. W. Scripps or SHB and did not make nor obtain
any evaluations or appraisals of the assets or liabilities of E. W. Scripps or
SHB. In addition, Lehman Brothers was not authorized to solicit, and did not
solicit, any indications of interest from any third party with respect to the
purchase of all or a part of SHB's business. Upon advice of SHB and its legal
and accounting advisors, Lehman Brothers assumed that the proposed merger would
be tax free to the Public Stockholders. Lehman Brothers' opinion is
necessarily based upon market, economic and other conditions as they existed
on, and could be evaluated as of, the date thereof.
Lehman Brothers did not express an opinion as to the prices at which
the shares of E. W. Scripps Class A Common Stock will actually trade at any
time.
The following paragraphs summarize the material financial and
comparative analyses performed by Lehman Brothers in arriving at its opinion as
to the fairness, from a financial point of view, to the Public Stockholders of
the proposed merger. Lehman Brothers described these analyses to the SHB
Special Committee on
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April 6, 1994, and in preliminary form at earlier meetings, and delivered its
written opinion on May 4, 1994. For a description of other meetings and
discussions that occurred see "The Merger - Background and Reasons for the
Merger; Recommendation and the SHB Special Committee to the SHB Board." The
following does not purport to be a complete description of the analyses
performed, or the matters considered, by Lehman Brothers in arriving at its
opinion. The preparation of a fairness opinion involves determinations as to
the most appropriate and relevant methods of financial analyses and the
application of those methods to the particular circumstances, and therefore
such an opinion is not readily susceptible to summary description.
Furthermore, in arriving at its fairness opinion, Lehman Brothers did not
attribute any particular weight to any analysis or factor considered by it, but
rather made qualitative judgments as to the significance and relevance of each
analysis and factor. Accordingly, Lehman Brothers believes that its analyses
must be considered as a whole and that considering any portion of such analysis
without considering all analyses and factors, could create a misleading or
incomplete view of the process underlying the opinion. In its analyses, Lehman
Brothers made numerous assumptions with respect to industry performance,
general business and economic conditions, discount rates and other matters,
many of which are beyond the control of SHB. Any estimates contained in these
analyses are not necessarily indicative of actual values or predictive of
future results or values, which may be significantly more or less favorable
than as set forth therein. In addition, analyses relating to the value of
businesses do not purport to be appraisals or to reflect the prices at which
businesses actually may be sold.
1. STOCK PRICE, VOLUME AND LIQUIDITY STUDY. Lehman Brothers reviewed
and analyzed the performance of the per share market prices and trading volume
of SHB Common Stock and E. W. Scripps Class A Common Stock since June 30, 1988.
Lehman Brothers reviewed and analyzed the historical ratio of the per share
market price of E. W. Scripps Class A Common Stock to the per share market
price of SHB Common Stock since June 30, 1988, as well as impact on the public
float and liquidity of E. W. Scripps Class A Common Stock pro forma the
proposed transaction. Lehman Brothers calculated the exchange ratio from June
30, 1988 to February 17, 1994, the last full trading day prior to the
announcement of the proposed merger. Lehman Brothers noted that in the twelve
months preceding the first announcement of the proposed merger, SHB Common
Stock traded 110 of 256 trading days on NASDAQ with an average daily volume of
709 shares. Lehman Brothers compared this to E. W. Scripps Class A Common
Stock, which traded 254 of 256 trading days on the NYSE with an average daily
volume of 30,037 shares.
2. ANALYSIS OF CERTAIN OTHER PUBLICLY TRADED COMPANIES. Lehman
Brothers reviewed the historical revenues, operating cash
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flow, net income and book value for certain publicly traded newspaper
publishing, cable television, broadcast television and entertainment companies,
as well as the trading valuations of these companies expressed as aggregate
market value as a multiple of operating cash flow or, where appropriate,
multiples of earnings, subscribers and circulation. Lehman Brothers then
performed valuations on a segment-by-segment basis for both SHB and E. W.
Scripps based on several factors including the trading valuations as expressed
primarily through multiples of operating cash flow of other public companies
that operate in these segments and Lehman Brothers' experience in securities
valuation generally. The proposed exchange ratio of 3.45 shares of E. W.
Scripps Class A Common Stock for each share of SHB Common Stock exceeded the
range calculated by this analysis.
In addition, Lehman Brothers performed a variety of sensitivity
analyses that factored in varying assumptions as to the success of certain
divisions' future operations. The exchange ratio of 3.45 shares of E. W.
Scripps Class A Common Stock for each share of SHB Common Stock was within the
range calculated by Lehman Brothers based on these analyses.
Because of the lack of a sufficient number of independent comparable
companies and the inherent differences between the businesses, operations and
prospects of E. W. Scripps and SHB and the businesses, operations and prospects
of the companies included in the comparable universe, Lehman Brothers believed
that it was inappropriate to, and therefore did not place significant emphasis
on the results of the analysis.
3. ANALYSIS OF SELECTED ACQUISITION TRANSACTIONS. Lehman Brothers
reviewed the prices paid, to the extent publicly available, of selected
acquisition transactions in the newspaper, publishing, television broadcasting,
cable television and entertainment industries. Lehman Brothers reviewed the
prices paid in such transactions in terms of the aggregate value of such
transactions as a multiple of revenues, operating cash flow and to the extent
appropriate, net income, subscribers and circulation. In certain situations
Lehman Brothers utilized its industry expertise derived from working with
buyers and sellers of media and entertainment companies over time to determine
values for certain transactions. Lehman Brothers' analysis included deriving a
valuation for SHB and E. W. Scripps on a segment-by-segment basis. The
valuation of each of the divisions in both E. W. Scripps and SHB was based on
several factors including the valuation of recent transactions in the newspaper
publishing, broadcast television, cable television and entertainment
industries, and Lehman Brothers' experience in valuing companies
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in these industries generally. The proposed exchange ratio of 3.45 shares of
E. W. Scripps Class A Common Stock for each share of SHB Common Stock exceeded
the range based on this analysis.
Because the reasons for and the circumstances surrounding each of the
transactions analyzed were specific to each transaction and because of the
inherent differences between the businesses, operations and prospects of E. W.
Scripps and the businesses, operations and prospects of the selected acquired
companies analyzed, Lehman Brothers believed that it was inappropriate to, and
therefore did not, rely solely on the quantitative results of the analysis, and
accordingly also made qualitative judgments concerning differences between the
characteristics of these transactions and the proposed merger that would affect
the acquisition values of SHB, E. W. Scripps and such acquired companies.
4. DISCOUNTED CASH FLOW ANALYSIS. Lehman Brothers conducted a
discounted cash flow analysis for the purpose of determining the stand alone
fully diluted equity value per share of SHB and E. W. Scripps (the "DISCOUNTED
CASH FLOW ANALYSIS"). Using the information contained in projections prepared
by SHB's and E. W. Scripps' management and extrapolated where necessary in
order to have a five year projection period, Lehman Brothers calculated the
operating cash flow that SHB and E. W. Scripps was projected to generate for
the period beginning January 1, 1995 and ending December 31, 1999 and, with
respect to certain portions of SHB's and E. W. Scripps operations, for the
period beginning January 1, 1994 and ending December 31, 2000. Lehman Brothers
then calculated terminal values for the different segments of SHB and E. W.
Scripps' individual business segments business at the end of the projection
periods based on various multiples of operating cash flow. The multiples used
by Lehman Brothers varied by business segment and ranged from 5 to 13, and the
resulting terminal values and annual free cash flow amounts were then
discounted to calculate a present value using discount rates ranging from 11.0
percent to 17.5 percent. The range of discount rates selected was based upon
the following factors: (I) the interest rate environment at the time of the
opinion, (II) the rate of return required by investors in the common stock of
similar companies (as estimated based on the experience of Lehman Brothers in
working with buyers and sellers of media and entertainment companies over
time), (III) the risk associated with an investment in the stock of similar
companies, (IV) the expected probability of achieving projected results by
business segment, (V) the weighted average costs of capital of SHB, E. W.
Scripps and other companies that operate in the companies' individual business
segments and (VI) Lehman Brothers' experience in securities valuation
generally. The range of terminal values was based upon the above factors as
well as the expected sustainable growth prospects for each business segment
beyond the projection period. Based on these assumptions as to multiples
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and discount rates, the proposed exchange ratio of 3.45 shares of E. W. Scripps
Class A Common Stock for each share of SHB Common Stock was within the range
indicated by the Discounted Cash Flow Analysis.
5. OTHER FACTORS. Lehman Brothers also considered certain other
factors in its analysis including, but not limited to, synergies that may be
realized from the transaction, and other benefits to E. W. Scripps, including
cost savings, the dividend yield differential resulting from the transaction,
potential dilution or accretion of the earnings and cash flow of E. W. Scripps,
the relative illiquidity of SHB Common Stock, as compared to that of E. W.
Scripps Class A Common Stock, the percentage that SHB comprises of E. W.
Scripps total revenues, cash flow and asset value, whether any other natural
buyer for the shares may exist and the history of and outlook for the newspaper
publishing, broadcast television, cable television and entertainment industries
in general.
The SHB Special Committee selected Lehman Brothers as its financial
advisor because Lehman Brothers is a nationally recognized investment banking
firm with substantial experience in transactions similar to the Merger. As
part of its investment banking business, Lehman Brothers regularly engages in
the valuation of businesses and securities in connection with mergers,
acquisitions, underwriting, sales and distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes.
Pursuant to an engagement letter dated March 9, 1994, a fee of
$400,000 has been paid to Lehman Brothers for its services as financial advisor
to the SHB Special Committee in connection with the Merger. SHB has also
agreed to reimburse Lehman Brothers for its out-of-pocket expenses, including
the reasonable fees and expenses of its legal counsel, up to a maximum of
$25,000, and to indemnify Lehman Brothers against certain liabilities arising
out of or in connection with the services rendered by Lehman Brothers which may
arise under the engagement letter. Lehman Brothers has not performed any
investment banking or other services for SHB or E. W. Scripps in the past.
RIGHTS OF DISSENTING STOCKHOLDERS
Section 1701.84 of the ORC provides that any holder of SHB Common
Stock (a "STOCKHOLDER") who so desires is entitled to relief as a dissenting
stockholder ("DISSENTING STOCKHOLDER") and as such may exercise dissenters'
rights with respect to the Merger.
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<PAGE> 52
The following is a summary of the principal steps a stockholder must
take to perfect dissenters' rights under Section 1701.85 of the ORC. This
summary does not purport to be complete and is qualified in its entirety by
reference to Section 1701.85, a copy of which is contained herein as Annex III.
Any stockholder contemplating the exercise of dissenters' rights is urged to
review carefully such provisions and to consult an attorney, since dissenters'
rights will be lost if the procedural requirements under Section 1701.85 are
not fully and precisely satisfied. To perfect dissenters' rights with respect
to any shares of SHB Common Stock so that they become Dissenting Shares as
described in this Proxy Statement-Prospectus, a Dissenting Stockholder must
satisfy each of the following conditions:
1. NO VOTE IN FAVOR OF THE MERGER. SHB Common Stock ("DISSENTER'S
SHARES") held by the Dissenting Stockholder must not be voted at the Meeting in
favor of the Merger. This requirement will be satisfied if a proxy is signed
and returned with instructions to vote against the Merger or to abstain from
such vote, if no proxy is returned and no vote is cast at the Meeting in favor
of the Merger, or if the Dissenting Stockholder revokes a proxy and thereafter
abstains from voting with respect to the Merger or votes against the Merger at
the Meeting. A vote in favor of the Merger at the Meeting constitutes a waiver
of dissenters' rights. A proxy that is returned signed but on which no voting
preference is indicated will be voted in favor of the Merger and will
constitute a waiver of dissenters' rights. A Dissenting Stockholder may revoke
his proxy at any time before its exercise by filing with SHB an instrument
revoking it or a duly executed proxy bearing a later date, or by attending and
giving notice of the revocation of the proxy in open meeting (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy).
2. FILING WRITTEN DEMAND. Not later than ten days after the taking of
the vote on the Merger, a Dissenting Stockholder must deliver to SHB a written
demand (the "DEMAND") for payment of the fair cash value of the Dissenter's
Shares. The Demand should be delivered to SHB at 312 Walnut Street,
Cincinnati, Ohio 45202, Attention: Secretary. It is recommended, although not
required, that the Demand be sent by registered or certified mail, return
receipt requested. Voting against the Merger will not itself constitute a
Demand. SHB will not send any further notice to SHB Stockholders as to the
date on which such ten-day period expires.
The Demand must identify the name and address of the holder of record
of the Dissenter's Shares, the number and class of Dissenter's Shares and the
amount claimed as the fair cash value thereof. A beneficial owner must, in all
cases, have the record holder submit the Demand in respect of the Dissenter's
Shares. The Demand must be signed by the stockholder of record (or by the
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duly authorized representative of such stockholder) exactly as the
stockholder's name appears on the stockholder records of SHB. A Demand with
respect to shares owned jointly by more than one person must identify and be
signed by all of the holders of record. Any person signing a Demand on behalf
of a partnership or corporation or in any other representative capacity (such
as an attorney-in-fact, executor, administrator, trustee or guardian) must
indicate the nature of the representative capacity and, if requested, must
furnish written proof of his capacity and his authority to sign the demand.
Because only SHB Stockholders of record at the close of business on
the Record Date may exercise dissenters' rights, any person who beneficially
owns shares that are held of record by a broker, fiduciary, nominee, or other
holder and who wishes to exercise dissenters' rights must instruct the record
holder of the shares to satisfy the conditions outlined above. If a record
holder does not satisfy, in a timely manner, all of the conditions outlined in
this section, the dissenters' rights for all of the shares held by that
stockholder will be lost.
From the time the Demand is given until either the termination of the
rights and obligations arising from such Demand or the purchase of the
Dissenter's Shares related thereto by SHB, all rights accruing to the holder of
the Dissenter's Shares, including voting and dividend or distribution rights,
will be suspended. If any dividend or distribution is paid on SHB Common
Stock, during the suspension, an amount equal to the dividend or distribution
which would have been payable on the Dissenter's Shares, but for such
suspension, shall be paid to the holder of record of the Dissenter's Shares as
a credit upon the fair cash value of the Dissenter's Shares. If the right to
receive the fair cash value is terminated otherwise than by the purchase of the
Dissenter's Shares by SHB, all rights will be restored to the Dissenting
Stockholder and any distribution that would have been made to the holder of
record of the Dissenter's Shares, but for the suspension, will be made at the
time of the termination.
If SHB sends to a Dissenting Stockholder, at the address specified in
the Demand, a request for the certificates representing the Dissenting Shares,
the Dissenting Stockholder, within fifteen days from the date of sending such
request, shall deliver to SHB the certificates requested. SHB will then
endorse the certificates with a legend to the effect that a demand for the fair
cash value of such shares has been made, and return such endorsed certificates
to the Dissenting Stockholder. Failure on the part of the Dissenting
Stockholder to deliver such certificates terminates his rights as a Dissenting
Stockholder at the option of SHB, exercised by written notice to the Dissenting
Stockholder within twenty days after the lapse of the fifteen-day period,
unless a court, for good cause shown, otherwise directs.
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3. PETITIONS TO BE FILED IN COURT. Within three months after the
service of the Demand, if SHB and the Dissenting Stockholder do not reach an
agreement on the fair cash value of the Dissenter's Shares, the Dissenting
Stockholder or SHB may file a complaint in the appropriate Court of Common
Pleas in Hamilton County, Ohio (the "COMMON PLEAS COURT"), or join or be joined
in an action similarly brought by another Dissenting Stockholder, for a
judicial determination of the fair cash value of the Dissenter's Shares. SHB
does not intend to file any complaint for a judicial determination of the fair
cash value of any Dissenter's Shares.
Upon motion of the complainant, the Common Pleas Court will hold a
hearing to determine whether the Dissenting Stockholder is entitled to be paid
the fair cash value of the Dissenter's Shares. If the Common Pleas Court finds
that the Dissenting Stockholder is so entitled, it may appoint one or more
appraisers to receive evidence and to recommend a decision on the amount of
such value. The Common Pleas Court is required to make a finding as to the
fair cash value of the Dissenter's Shares and to render a judgment against SHB
for the payment thereof, with interest at such rate and from such date as the
Common Pleas Court considers equitable. Costs of the proceedings, including
reasonable compensation to the appraiser or appraisers to be fixed by the
Common Pleas Court, are to be apportioned or assessed as the Common Pleas Court
considers equitable. Payment of the fair cash value of the Dissenter's Shares
is required to be made within 30 days after the date of final determination of
such value or the effective time of the Merger, whichever is later, only upon
surrender to SHB of the certificates representing the Dissenter's Shares for
which payment is made.
Fair cash value is the amount which a willing seller, under no
compulsion to sell, would be willing to accept, and which a willing buyer,
under no compulsion to purchase, would be willing to pay, but in no event may
the fair cash value exceed the amount specified in the Demand. The fair cash
value is to be determined as of the day prior to the day of the Meeting. In
computing this value, any appreciation or depreciation in the market value of
the Dissenter's Shares resulting from the Merger is excluded.
The dissenters' rights of any Dissenting Stockholder will terminate
if, among other things, (A) he has not complied with Section 1701.85 of the
Ohio Revised Code (unless the Board of Directors of SHB waives compliance), (B)
the Merger is abandoned or otherwise not carried out or such Dissenting
Stockholder withdraws his Demand with the consent of the Board of Directors of
SHB, or (C) no agreement has been reached between SHB and the Dissenting
Stockholder with respect to the fair cash value of the Dissenter's Shares and
neither the Dissenting Stockholder nor SHB shall have timely filed or joined in
a complaint in the Common Pleas Court. For a discussion of the tax
consequences to a
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stockholder exercising dissenters' rights; see "Certain Federal Income Tax
Consequences."
If the holders of more than 140,000 of the outstanding shares of SHB
Common Stock perfect their rights as Dissenting Stockholders, the Board of
Directors of E. W. Scripps has the right to abandon the Merger.
BECAUSE A PROXY CARD WHICH DOES NOT CONTAIN VOTING INSTRUCTIONS WILL,
UNLESS REVOKED, BE VOTED IN FAVOR OF THE MERGER, A STOCKHOLDER OF SHB COMMON
STOCK WHO WISHES TO EXERCISE HIS DISSENTERS' RIGHTS MUST EITHER NOT SIGN AND
RETURN HIS PROXY CARD OR, IF HE SIGNS AND RETURNS HIS PROXY CARD, VOTE AGAINST
OR ABSTAIN FROM VOTING ON THE MERGER.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the SHB Board with respect to
the Merger, SHB Stockholders should be aware that certain members of SHB's
management and of the SHB Board have certain interests that may present them
with potential conflicts of interest in connection with the Merger. Lawrence
A. Leser is President and Chief Executive Officer and a director of each of
SHB, E. W. Scripps and Mergerco. Daniel J. Castellini is Treasurer of SHB and
Mergerco, Senior Vice President, Finance and Administration of E. W. Scripps,
and a director of SHB and Mergerco. Charles E. Scripps and John H. Burlingame
are directors of each of SHB, E. W. Scripps and Mergerco. Charles E. Scripps
also owns 500 shares of SHB Common Stock, which holdings represent less than
one percent of the outstanding shares of SHB Common Stock.
THE MERGER AGREEMENT
GENERAL
THE TERMS OF THE MERGER ARE CONTAINED IN THE MERGER AGREEMENT, A COPY
OF WHICH IS ATTACHED AS ANNEX I TO THIS PROXY STATEMENT-PROSPECTUS AND
INCORPORATED HEREIN BY REFERENCE. STATEMENTS IN THIS PROXY
STATEMENT-PROSPECTUS WITH RESPECT TO THE TERMS OF THE MERGER ARE QUALIFIED IN
THEIR ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT. SHB STOCKHOLDERS ARE
URGED TO READ THE FULL TEXT OF THE MERGER AGREEMENT.
Under the Merger Agreement, if the Merger is approved by SHB
Stockholders and becomes effective, SHB will merge with and into Mergerco, and
Mergerco, as the Surviving Corporation in the Merger, will continue its
corporate existence under the laws of Ohio under the name "Scripps Howard
Broadcasting Company". The
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Surviving Corporation will be a wholly owned subsidiary of E. W. Scripps.
EFFECTIVE TIME OF MERGER
The Effective Time of the Merger will be at the time of filing of a
Certificate of Merger with the Secretary of State of the State of Ohio in
accordance with applicable Ohio law. It is presently anticipated that the
filing of the Certificate of Merger will be made as soon as practicable after
the conclusion of the Special Meeting. Such filing will be made, however, only
upon satisfaction or waiver, where permissible, of the conditions set forth in
the Merger Agreement. See "The Merger Agreement - Conditions to the Merger."
CONVERSION OF STOCK
At the Effective Time, each outstanding share of SHB Common Stock
(other than shares of SHB Common Stock owned by E. W. Scripps or a subsidiary
of E. W. Scripps, which will be cancelled) automatically will be converted into
the right to receive 3.45 shares of E. W. Scripps Class A Common Stock.
Upon the Effective Time, holders of shares of SHB Common Stock will
have no continuing interests in or rights as stockholders of SHB.
Each share of Mergerco's common stock, without par value ("MERGERCO
COMMON STOCK"), issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of E. W.
Scripps, be converted into and become one share of Common Stock, par value $.25
per share, of the Surviving Corporation.
Holders of shares of SHB Common Stock have the right under Section
1701.84 of the ORC to dissent from the Merger and obtain an appraisal of the
fair value of such shares pursuant to Section 1701.85 of the ORC if the Merger
is consummated.
PAYMENT FOR SHB COMMON STOCK
In order to receive the Merger Consideration, each holder of
certificates (each, a "CERTIFICATE") theretofore representing shares of SHB
Common Stock will be required to surrender his or her Certificate or
Certificates, together with a duly executed and properly completed letter of
transmittal and any other required documents, to Fifth Third Bank, Cincinnati,
Ohio, which has been appointed by E. W. Scripps as its exchange agent for the
Merger (the "EXCHANGE AGENT"). The Exchange Agent will provide each Public
Stockholder with the requisite forms of the letter of transmittal and other
documents referred to above, together with instructions for their use. Upon
receipt of such Certificate or
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Certificates, together with a duly executed and properly completed letter of
transmittal and any other required documents from a holder of SHB Common Stock,
the Exchange Agent will arrange for the issuance and delivery to the person or
persons entitled thereto of a certificate or certificates representing that
number of whole shares of E. W. Scripps Class A Common Stock equal to 3.45
multiplied by the number of shares of SHB Common Stock represented by the
surrendered Certificate or Certificates. Shares of E. W. Scripps Class A
Common Stock will be issued only in whole shares. Former holders of shares of
SHB Common Stock will not be entitled to receive fractions of shares of E. W.
Scripps Class A Common Stock ("FRACTIONAL SHARES") but, instead, will be
entitled to receive promptly from the Exchange Agent a cash payment in lieu of
Fractional Shares in an amount equal to the "Fair Market Value" (as defined in
the Merger Agreement) of one share of E. W. Scripps Class A Common Stock
multiplied by the Fractional Share in question.
No dividends or other distributions that are otherwise payable on the
shares of E. W. Scripps Class A Common Stock issued in connection with the
Merger will be paid to the holder of any unsurrendered Certificate until such
Certificate is properly surrendered to the Exchange Agent. However, upon the
proper surrender of such Certificate to the Exchange Agent (I) there shall be
paid to the person in whose name the shares of E. W. Scripps Class A Common
Stock constituting Merger consideration are issued the amount of any dividends
that shall have become payable with respect to such shares of E. W. Scripps
Class A Common Stock between the Effective Time of the Merger and the time of
such surrender and (II) at the appropriate payment date or as soon thereafter
as practicable, there shall be paid to such person the amount of any dividends
on such shares of E. W. Scripps Class A Common Stock that shall have a record
or due date prior to such surrender and a payment date after such surrender,
subject in each such case to (X) deduction therefrom of any amount required by
applicable law to be withheld, and (Y) any applicable escheat laws or unclaimed
property laws. On proper surrender of a Certificate, no interest shall be
payable with respect to the payment of such dividends and no interest shall be
payable with respect to the amount of any cash payable in lieu of a fractional
share of E. W. Scripps Class A Common Stock.
If the Merger Consideration is to be paid to a person other than the
registered holder of the Certificates surrendered, it is a condition of such
issuance that the Certificate or Certificates so surrendered be properly
endorsed or otherwise be in proper form for transfer and that the person
requesting such payment or issuance either pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance to a person other
than the registered owner of the Certificate or Certificates
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surrendered or shall establish to the satisfaction of E. W. Scripps that such
tax has been paid or is not applicable.
The Exchange Agent will send instructions to holders of SHB Common
Stock with regard to the procedure for surrendering Certificates in exchange
for the Merger Consideration, together with a letter of transmittal to be used
for this purpose, as promptly as practicable after the Effective Time. Holders
of SHB Common Stock should surrender Certificates only with a letter of
transmittal.
SHB STOCKHOLDERS SHOULD NOT SEND ANY CERTIFICATES WITH THE ENCLOSED
PROXY CARD.
ARTICLES OF INCORPORATION, CODE OF REGULATIONS, OFFICERS AND DIRECTORS
The Merger Agreement provides that, at the Effective Time, the
Articles of Incorporation of SHB, and Code of Regulations of SHB, each as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation and Code of Regulations of the Surviving Corporation, except that
at the Effective Time Article Fourth of the Articles of Incorporation of the
Surviving Corporation shall be amended to read as follows: "The total number
of shares of stock of all classes which the Corporation has authority to issue
is 850 shares of Common Stock, par value $.25 per share." The Merger Agreement
also provides that the officers and directors of SHB at the Effective Time
shall be the initial officers and directors of the Surviving Corporation and
shall serve until their respective successors are duly elected or appointed and
qualify in the manner provided in the Articles of Incorporation and Code of
Regulations of the Surviving Corporation, or as otherwise provided by law.
CONDITIONS TO THE MERGER
The obligations of each of E. W. Scripps, Mergerco and SHB to
consummate the Merger are subject to fulfillment of the following conditions at
or prior to the Effective Time: (I) the Merger Agreement shall have been
adopted by the Required Stockholder Vote; (II) the Registration Statement shall
have become effective under the Securities Act and no stop order suspending
such effectiveness shall have been issued or proceeding for such purpose
instituted or threatened; (III) all authorizations, consents, orders or
approvals of, and all expirations of waiting periods imposed by, any
"Governmental Entity" (as defined in the Merger Agreement) (collectively, the
"CONSENTS") which are necessary for the consummation of the Merger (other than
immaterial Consents) shall have been obtained or shall have occurred and shall
be in full force and effect at the Effective Time; provided however, that no
such authorization, consent, order or approval shall be deemed to have been
received
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<PAGE> 59
if it shall include any conditions or requirements which would so reduce the
economic or business benefits of the transactions contemplated by the Merger
Agreement so as to render inadvisable in the reasonable opinion of the Board of
Directors of either SHB or E. W. Scripps the consummation of the Merger; (IV)
no order, statute, rule, regulation, executive order, stay, decree, judgment or
injunction shall have been enacted, entered, promulgated or enforced by any
court or governmental authority which prevents or materially restricts
consummation of the Merger; (V) the shares of E. W. Scripps Class A Common
Stock to be issued as Merger Consideration shall have been approved for listing
on the New York Stock Exchange, subject to official notice of issuance; (VI)
SHB and the SHB Special Committee shall have received written confirmation from
Lehman Brothers dated the date of the Effective Time, in customary form, to the
effect that the opinions expressed by them remain valid, and in full force
without material amendment, as of such date; and (VII) Baker & Hostetler,
counsel to E. W. Scripps, shall have delivered its opinion, dated the date of
the Effective Time, substantially to the effect summarized herein under
"Certain Federal Income Tax Considerations."
The obligation of SHB to effect the Merger is subject to fulfillment
of the following additional conditions at or prior to the Effective Time: (I)
E. W. Scripps and Mergerco shall have performed their agreements contained in
the Merger Agreement in all material respects and (II) except as contemplated
by the Merger Agreement, the representations and warranties of E. W. Scripps
and Mergerco set forth in the Merger Agreement shall be true and correct in all
material respects at and as of the Effective Time as if made at and as of such
date, unless stated in the Merger Agreement to be true on and as of another
date, in which case such representation and warranty shall have been true in
all material respects on and as of another date.
The obligations of E. W. Scripps and Mergerco to effect the Merger
are subject to fulfillment of the following additional conditions at or prior
to the Effective Time: (I) subject to the Control Agreement (hereinafter
defined), SHB shall have performed its agreements under the Merger Agreement in
all material respects; (II) except as contemplated by the Merger Agreement, the
representations and warranties of SHB shall be true and correct in all material
respects at and as of the Effective Time as if made at and as of such date,
unless stated in the Merger Agreement to be true on and as of such date, in
which event such representation and warranty shall have been true in all
material respects on and as of such date; (III) there shall not have been any
action taken, or any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction enacted, entered, enforced, promulgated, amended,
issued or deemed applicable to the Merger by any Governmental Entity (as
defined in the Merger Agreement) (A) restraining or preventing the carrying out
of the
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transactions contemplated by the Merger Agreement; (B) prohibiting ownership or
operation by E. W. Scripps of all or any material portion of its or SHB's
businesses or assets, or compelling it to dispose of or hold separate all or
any material portion of its or SHB's businesses or assets as a result of the
transactions contemplated by the Merger Agreement; (C) making acquisition of
the shares of SHB Common Stock pursuant to the Merger illegal; (D) prohibiting
E. W. Scripps effectively from acquiring or holding or exercising full rights
of ownership of the shares of SHB Common Stock, including, without limitation,
the right to vote the shares of SHB Common Stock acquired by it pursuant to the
Merger, on all matters properly presented to the stockholders of SHB; (E)
prohibiting E. W. Scripps or any of its subsidiaries or affiliates from
effectively controlling in any material respect the businesses or operations of
SHB, E. W. Scripps or their respective subsidiaries; or (F) which would impose
any condition which would materially adversely affect the business of SHB; and
its subsidiaries or the business of E. W. Scripps and its subsidiaries; (IV)
the SHB Board shall not have withdrawn or modified its position with respect to
the Merger; and (V) Dissenting Shares shall not exceed 140,000 of the
outstanding shares of SHB Common Stock.
CERTAIN AGREEMENTS PENDING THE MERGER
AGREEMENTS OF SHB. In the Merger Agreement, SHB has agreed that,
prior to the Effective Time, unless E. W. Scripps otherwise agrees, or as
otherwise contemplated by the Merger Agreement, neither SHB nor any subsidiary
thereof shall (I) amend its articles or certificate of incorporation or code of
regulations or by-laws; (II) change the number of authorized or outstanding
shares of its capital stock, from the number authorized and outstanding on the
date of the Merger Agreement; (III) declare, set aside or pay any dividend or
other distribution, or make any payment in cash, stock or property, in respect
of any shares of its capital stock, except for regular dividends and/or
distributions declared and/or paid by any subsidiary of SHB to SHB or to any
other subsidiary of SHB or on presently outstanding SHB Common Stock; (IV)
authorize for issuance, issue, grant, sell, pledge or dispose of, or propose to
issue, grant, sell, pledge or dispose of any shares of, or warrants, options,
commitments, subscriptions or rights of any kind to acquire any shares of, the
capital stock of SHB or such subsidiary or any securities convertible into or
exchangeable for shares of any such capital stock; (V) incur any material
indebtedness for borrowed money other than in the ordinary and usual course of
business, consistent with past practice; (VI) acquire directly or indirectly by
redemption or otherwise any shares of the capital stock of SHB or any
subsidiary of SHB; or (VII) enter into any agreement or take any other action
to do any of the things described above or which would make any representation
or warranty of SHB set forth in the Merger Agreement that is
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<PAGE> 61
qualified as to materiality untrue or incorrect and any such representation or
warranty which is not so qualified materially untrue or incorrect.
AGREEMENTS OF E. W. SCRIPPS. E. W. Scripps either in its capacity as
a SHB Stockholder or through its representatives on the SHB Board (which for
purposes of the Merger Agreement mean each SHB director who is either an
executive officer or director of E. W. Scripps), in each case subject to the
exercise of their respective fiduciary duties, if any, to the SHB Stockholders,
has agreed not to take or fail to take, as the case may be, any action, the
taking or failure of which to take, as the case may be, would be likely to
cause any representation or warranty of SHB contained in the Merger Agreement
to cease to be accurate in any material respect or that would be reasonably
likely to prevent the performance in all material respects by SHB of any
covenant or the satisfaction by SHB of any condition contained in the Merger
Agreement (the foregoing agreement being referred to as the "CONTROL
AGREEMENT").
AGREEMENTS OF SHB, E. W. SCRIPPS AND MERGERCO. In the Merger
Agreement, each party agrees to use its best efforts to take, or cause to be
taken, all lawful action, to do, or cause to be done, and to assist and
cooperate with the other parties thereto in doing, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated by
the Merger Agreement, including (I) the Merger; (II) the obtaining of consents,
amendments to or waivers under the terms of any material borrowing arrangements
or other material contractual arrangements required by the transactions
contemplated by the Merger Agreement; and (III) the defending of any lawsuits
or other legal proceedings, whether judicial or administrative, challenging the
Merger Agreement or the consummation of the transactions contemplated thereby.
Each of the parties to the Merger Agreement also agreed not to take or to fail
to take, as the case may be, any action, the taking of which or the failure of
which to take, as the case may be, would be likely to cause any representation
or warranty contained in the Merger Agreement to cease to be true or accurate
in any material respect or that would be reasonably likely to prevent the
performance in all material respects of any covenant or the satisfaction of any
condition contained in the Merger Agreement.
In the Merger Agreement, each of the parties agrees promptly to
notify each other party of any claims, actions, proceedings or investigations
commenced or, to the best of its knowledge, threatened, and any material
developments relating to any such pending claim, action, proceeding or
investigation involving or affecting the parties, or any of their respective
properties or assets, or, to the best of its knowledge, any employee or
consultant of the parties, in his or her capacity as such, or
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director or officer, in his or her capacity as such, of E. W. Scripps or SHB
disclosed in writing pursuant to or which, if pending on the date, would have
been required to have been disclosed in writing pursuant to, the Merger
Agreement, or which relate to the consummation of the Merger.
The Merger Agreement also provides that each party promptly shall
notify the others of: (I) any notice of, or other communication relating to, a
default or event that, with notice or lapse of time or both, would become a
default, received by such party or any of its subsidiaries subsequent to the
date of the Merger Agreement and prior to the Effective Time, under any
agreement, indenture or instrument material to the financial condition,
properties, business or results of operations of such party and its
subsidiaries taken as a whole to which such party or any of its subsidiaries is
a party or is subject; (II) any notice or other communication from any third
party alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by the Merger Agreement; (III)
any notice or other communication from any regulatory authority in connection
with the transactions contemplated by the Merger Agreement; (IV) any material
adverse change in the financial condition, properties, businesses or results of
operations of such party and its subsidiaries taken as a whole, or the
occurrence of an event which, so far as reasonably can be foreseen at the time
of its occurrence, would result in any such change; or (V) any matter arising
after the date of the Merger Agreement which, if existing, occurring or known
at the date of the Merger Agreement, would have been required to be disclosed
to such other parties.
In the Merger Agreement, each party agrees that it shall, and shall
cause its subsidiaries, officers, directors, employees and agents to, afford to
each other party and such party's accountants, counsel, financial advisors,
investment bankers and other agents and representatives, full access at all
reasonable times throughout the period prior to the Effective Time to all of
the officers, employees, agents, properties, books, contracts, commitments and
records (including but not limited to tax returns) of such party and its
subsidiaries.
TERMINATION
The Merger Agreement may be terminated notwithstanding the approval
by SHB Stockholders or the shareholder of Mergerco (I) at any time prior to the
Effective Time, by mutual consent of the boards of directors of each of the
respective parties to the Merger Agreement; (II) by either E. W. Scripps and
Mergerco or SHB if the Merger is not consummated on or before December 31, 1994
(or such later date as the parties may agree to in writing) unless the failure
to consummate the Merger on or prior to such date resulted from the failure of
the party seeking to terminate
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<PAGE> 63
the Merger Agreement to satisfy any of the closing conditions set forth in the
Merger Agreement; (III) by SHB if either E. W. Scripps or Mergerco fails to
perform in any material respect any of its material obligations under the
Merger Agreement; (IV) by E. W. Scripps or Mergerco if SHB fails to perform in
any material respect any of its material obligations under the Merger
Agreement; (V) by SHB if certain conditions specified in the Merger Agreement
have not been met or waived by SHB at such time as such conditions can no
longer be satisfied; or (VI) by E. W. Scripps or Mergerco if certain conditions
specified in the Merger Agreement have not been met or waived by them at such
time as such conditions can no longer be satisfied; or (VII) by either E. W.
Scripps and Mergerco or SHB if (A) in the case of E. W. Scripps and Mergerco,
their respective Boards of Directors conclude prior to the Effective Time,
after consultation with legal counsel, that as a result of an event or
condition not directly caused by either E. W. Scripps or Mergerco, pursuant to
their fiduciary duties in accordance with applicable law, the Merger Agreement
should be terminated and (B) in the case of SHB the Special Committee advises
SHB's Board of Directors prior to the Effective Time that it has concluded,
after consultation with legal counsel, that as a result of an event or
condition not directly caused by SHB, pursuant to the Special Committee's
fiduciary duties in accordance with applicable law, the Merger Agreement should
be terminated; provided that, in the event of a failure to perform under
clauses (iii) or (iv) above, if such failure is curable, notice of such failure
shall have been given to the defaulting party and the failure shall not have
been cured within 30 days of such notice.
CERTAIN OTHER PROVISIONS OF THE MERGER AGREEMENT
In the Merger Agreement, E. W. Scripps has agreed that all rights to
indemnification existing as of the date of the Merger Agreement in favor of the
employees, agents, directors or officers of SHB and its subsidiaries
(collectively, the "INDEMNIFIED PARTIES") as provided in their respective
charters, codes of regulations, or by-laws, by agreement or otherwise in effect
on the date of the Merger Agreement shall survive the Merger and shall, with
respect to any action or omission occurring prior to the Effective Time,
continue in full force and effect in accordance with their terms. In addition,
the Merger Agreement provides that if any Indemnified Party becomes involved in
any capacity in any action, proceeding or investigation in connection with any
matter, including the transactions contemplated by the Merger Agreement,
occurring prior to, and including, the Effective Time, SHB will periodically
advance to such Indemnified Party its legal and other expenses incurred in
connection therewith. Furthermore, E. W. Scripps has agreed in the Merger
Agreement that subsequent to the Effective Time it shall also indemnify the
Indemnified Parties to the fullest extent permitted by applicable law and shall
guarantee the timely
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payment of any amounts owed to each member of the SHB Special Committee
pursuant to his indemnity agreement with SHB dated as of February 17, 1994. E.
W. Scripps has also agreed to cause to be maintained in effect for a period of
two years from the Effective Time the current policies of the directors' and
officers' liability insurance maintained by or for the benefit of SHB (the "D&O
INSURANCE COVERAGE") (provided that E. W. Scripps may substitute therefor
policies of at least the same coverage containing terms and conditions which
are no less advantageous) with respect to matters occurring prior to the
Effective Time; PROVIDED, HOWEVER, that its obligation to maintain such D&O
Insurance Coverage shall be subject to SHB's being able to maintain or obtain
insurance at an annual cost not greater than 150% of the annual premiums
currently paid (the annual premiums currently being paid being the "CURRENT
ANNUAL PREMIUMS") by SHB with respect to its D&O Insurance Coverage and if such
D&O Insurance Coverage is not available at such cost, then E. W. Scripps has
agreed to cause to be maintained the highest level of D&O Insurance Coverage
that can be purchased against payment of annual premiums equal to 150% of the
Current Annual Premiums.
The Merger Agreement provides that it may be amended by the parties
thereto, by action taken by their respective Boards of Directors, at any time
prior to the Effective Time; provided, however, that after approval of the
Merger Agreement by the SHB Stockholders, no amendment or modification shall
(A) alter or change the amount or kind of shares, securities, cash, property
and/or rights to be received in exchange for or on conversion of all or any of
the shares of any class or series thereof of SHB, or (B) alter or change any of
the terms and conditions of the Merger Agreement if such alteration or change
would adversely affect the holders of any class or series of capital stock of
SHB. In addition, at any time prior to the Effective Time, the parties to the
Merger Agreement by action taken by their respective Board of Directors may (A)
extend the time for the performance of any of the obligations or other acts of
the other parties to the Merger Agreement, (B) waive any inaccuracies in the
representations and warranties contained in the Merger Agreement or in any
document delivered pursuant thereto, and (C) waive compliance with any of the
agreements or conditions contained in the Merger Agreement; PROVIDED that any
action taken by the SHB Board to enforce SHB's rights under the Merger
Agreement may only be taken following the recommendation thereof by the
Special Committee.
The Merger Agreement also provides that (I) subject to applicable law
and fiduciary duties, including the duties of loyalty and care, the SHB Board
shall recommend that SHB Stockholders vote in favor of the Merger and adoption
of the Merger Agreement and (II) all SHB Stock owned by E. W. Scripps or
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any subsidiary thereof will be voted in favor of the Merger and adoption of the
Merger Agreement.
FINANCING OF THE MERGER AND RELATED
TRANSACTIONS: SOURCE AND AMOUNT OF FUNDS
Out-of-pocket costs and expenses incurred by E. W. Scripps and SHB in
connection with the Merger will be paid by the party incurring such costs and
expenses.
The approximate fees and expenses expected to be incurred by E. W.
Scripps and SHB in connection with the Merger are as set forth below:
<TABLE>
<CAPTION>
E. W. SCRIPPS SHB
------------- ---
<S> <C> <C>
Investment Bankers' Fees and Expenses $ $
Attorneys' Fees and Expenses
Accountants' Fees and Expenses
Exchange Agent's Fees and Expenses
Printing Costs
NYSE Listing Fee
Fee for Filing with the SEC
Blue Sky Fees and Expenses
Miscellaneous ------------- -------------
TOTAL $ $
============= =============
</TABLE>
Expenses incurred by E. W. Scripps and SHB in connection with the
Merger are expected to be paid out of available funds.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The federal income tax discussion set forth below is included for
general information only. In certain situations, it may not be applicable to
certain classes of taxpayers, including insurance companies, securities
dealers, financial institutions, foreign persons and persons who acquired
shares of SHB Common Stock pursuant to the exercise of employee stock options
or rights or otherwise as compensation. BECAUSE EACH STOCKHOLDER'S TAX
CIRCUMSTANCES MAY DIFFER, EACH SHB STOCKHOLDER IS URGED TO CONSULT HIS OWN TAX
ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO HIM OF THE MERGER, INCLUDING THE
APPLICABILITY AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS AND ANY PROPOSED
CHANGES IN SUCH LAWS.
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<PAGE> 66
GENERAL. SHB and E. W. Scripps will receive an opinion of Baker &
Hostetler that the merger of SHB into Mergerco pursuant to the Merger will be
treated as a reorganization within the meaning of Code Section 368(a) and that,
accordingly, for federal income tax purposes: (I) no gain or loss will be
recognized by any of SHB, Mergerco or E. W. Scripps as a result of the Merger;
(II) no gain or loss will be recognized by a holder of SHB Common Stock upon
the receipt of E. W. Scripps Class A Common Stock in exchange for SHB Common
Stock in the Merger, except as discussed below with respect to cash received in
lieu of a fractional share interest in E. W. Scripps Class A Common Stock;
(III) the aggregate adjusted tax basis of the shares of E. W. Scripps Class A
Common Stock to be received by a holder of SHB Common Stock in the Merger will
be the same as the aggregate adjusted tax basis in the shares of SHB Common
Stock surrendered in exchange therefor (reduced by any amount allocable to
fractional share interests for which cash is to be received); and (IV) the
holding period of the shares of E. W. Scripps Class A Common Stock to be
received by the holders of SHB Common Stock in the Merger will include the
holding period of the shares of SHB Common Stock surrendered in exchange
therefor, provided that such shares of SHB Common Stock are held as capital
assets at the Effective Time. Consummation of the Merger is conditioned upon
receipt by each of E. W. Scripps and SHB of such opinion, dated as of the
Effective Date.
The opinion of Baker & Hostetler to be delivered on the Effective
Date relating to the Merger will be conditioned on certain representations and
assumptions, including an assumption that there is no plan or intention by the
SHB Stockholders to sell or exchange or otherwise dispose of a number of shares
of E. W. Scripps Class A Common Stock received that would reduce the ownership
of E. W. Scripps Class A Common Stock by SHB stockholders (other than E. W.
Scripps or its subsidiaries) to a number of shares having a value, as of the
Effective Date, of less than 50% of the value of all of the shares of SHB
Common Stock (other than those held by E. W. Scripps or its subsidiaries) as of
the Effective Date.
CONSEQUENCES OF RECEIPT OF CASH IN LIEU OF FRACTIONAL SHARES. A
holder of shares of SHB Common Stock who receives cash in the Merger in lieu of
a fractional share interest in E. W. Scripps Class A Common Stock will be
treated for federal income tax purposes as having received cash in redemption
of such fractional share interest. The receipt of such cash generally should
result in capital gain or loss in an amount equal to the difference between the
amount of cash received and the portion of such shareholder's adjusted tax
basis in the shares of SHB Common Stock allocable to the fractional share
interest. Such capital gain or loss will be long-term capital gain or loss if
the holder holds the shares as capital assets and the holding period for the
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fractional shares of E. W. Scripps Class A Common Stock deemed to be received
and then redeemed is more than one year.
CASH RECEIVED BY HOLDERS OF SHB COMMON STOCK WHO DISSENT. A holder
of shares of SHB Common Stock who perfects dissenters' rights under the laws of
the State of Ohio and who receives cash payment of the fair value of his shares
of SHB Common Stock will be treated as having received such payment in
redemption of such shares. Such redemption will be subject to the conditions
and limitations of Code Section 302, including the attribution rules of Code
Section 318. In general, if the shares of SHB Common Stock are held by the
holder as a capital asset at the Effective Time, a dissenting holder will
recognize capital gain or loss measured by the difference between the amount of
cash received by such holder and the basis for such shares. If, however, such
holder owns, either actually or constructively, any SHB Common Stock that is
exchanged in the Merger for E. W. Scripps Class A Common Stock, the payment
made to such holder could be treated as dividend income. In general, under the
constructive ownership rules of the Code, a holder may be considered to own
stock that is owned, and in some cases constructively owned, by certain related
individuals or entities, as well as stock that such holder (or related
individuals or entities) has the right to acquire by exercising an option or
converting a convertible security. Each holder of SHB Common Stock who
contemplates exercising his dissenters' rights should consult his own tax
advisor as to the possibility that the payment to him will be treated as
dividend income.
COMPARISON OF RIGHTS OF HOLDERS OF SHB COMMON STOCK
AND E. W. SCRIPPS CLASS A COMMON STOCK
INTRODUCTION
E. W. Scripps is incorporated under the laws of the State of
Delaware, and SHB is incorporated under the laws of the State of Ohio. SHB's
Stockholders, whose rights as stockholders are currently governed by Ohio law
and SHB's Articles of Incorporation, as amended (the "SHB ARTICLES") and Code
of Regulations (the "SHB REGULATIONS"), will, upon the exchange of their shares
for shares of E. W. Scripps Class A Common Stock pursuant to the Merger, become
shareholders of E. W. Scripps, and their rights as such will be governed by
Delaware law, E. W. Scripps's Certificate of Incorporation, as amended (the "E.
W. SCRIPPS CERTIFICATE") and the By-Laws of E. W. Scripps (the "E. W. SCRIPPS
BY-LAWS"). Certain differences between the rights of holders of E. W. Scripps
Class A Common Stock and the rights of holders of SHB Common Stock resulting
from such differences in governing law and documents are summarized below.
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<PAGE> 68
The following summary does not purport to be a complete statement of
the rights of E. W. Scripps Stockholders under applicable Delaware laws, the E.
W. Scripps Certificate and the E. W. Scripps By-Laws as compared with the
rights of SHB Stockholders under applicable Ohio laws, the SHB Articles and the
SHB Regulations, or a complete description of the specific provisions referred
to herein. The identification of specific differences is not meant to indicate
that other equally or more significant differences do not exist. This summary
is qualified in its entirety by reference to the Delaware General Corporation
Law and the Ohio General Corporation Law (as well as Chapters 1704 and 1707 of
the ORC) and the governing corporate instruments of E. W. Scripps and SHB, to
which the holders of shares of SHB Common Stock are referred.
Certain provisions contained in the Delaware laws may discourage
certain transactions involving an actual or threatened change in control of E.
W. Scripps. To the extent any of such provisions has such an effect,
stockholders might be deprived of an opportunity to sell their shares of E. W.
Scripps at a premium above the market price.
CERTAIN VOTING RIGHTS
Delaware law generally requires approval of any merger, consolidation
or sale of substantially all assets of a corporation at a meeting of
stockholders by vote of the holders of a majority of all outstanding shares of
the corporation entitled to vote thereon. While a certificate of incorporation
of a Delaware corporation may provide for a greater vote, the E. W. Scripps'
Certificate of Incorporation does not so provide.
Under Ohio law, unless otherwise provided in the corporation's
articles of incorporation, mergers and other such matters require the approval
of the holders of shares entitling such holders to exercise at least two-thirds
of the voting power of the corporation. The articles of incorporation of an
Ohio corporation may provide for a greater or lesser vote or a vote by separate
classes of stock so long as the vote provided for is not less than a majority
of the voting power of the corporation. The SHB Articles provide for the
approval of such matters by the holders of shares entitling such holders to
exercise a majority of the voting power of the corporation.
If a proposed amendment to the certificate of incorporation of a
Delaware corporation affects adversely the rights, preferences or powers of a
class of stock without voting rights in certain specified matters, such
amendment must also be approved by a majority of the holders of that class of
stock. Unless otherwise provided by an Ohio corporation's articles of
incorporation, Ohio law requires that, among certain other amendments, an
amendment that would change the express terms of a
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class of shares without voting rights in any substantially prejudicial manner
must be approved by the holders of two-thirds of such class.
Both Ohio law and Delaware law permit mergers without approval by
stockholders of the surviving corporation if, among other things, no charter
amendment is involved and issuances of common stock and securities convertible
into common stock to stockholders of the non-surviving corporation pursuant to
the merger will result in no more than a specified maximum increase in
outstanding common stock. Under Delaware law, the maximum permitted increase
is 20% of the corporation's common stock outstanding immediately prior to the
merger. Under Ohio law, the maximum permitted increase is any amount less than
16 2/3% of a corporation's resulting shares possessing the voting power of that
corporation in the election of directors.
The rules of the NYSE, on which E. W. Scripps Class A Common Stock is
listed, require E. W. Scripps stockholder approval prior to the issuance by E.
W. Scripps of any E. W. Scripps Class A Common Stock, or any securities
convertible into E. W. Scripps Class A Common Stock, if such shares are to be
issued in connection with any transaction or series of related transactions,
other than a public offering for cash, if (I) the voting power of such E. W.
Scripps Class A Common Stock would be equal to at least 20% of the voting power
of the shares outstanding prior to the issuance of such shares, or (II) the
number of such shares would be equal to at least 20% of the number of shares of
E. W. Scripps Class A Common Stock outstanding prior to the issuance of such
shares. The NYSE rules also require stockholder approval for certain
transactions in which shares of E. W. Scripps Class A Common Stock, or
securities convertible into E. W. Scripps Class A Common Stock, are to be
issued to a E. W. Scripps director, officer, substantial shareholder, or an
entity in which any such person holds a substantial interest, if the number of
shares of E. W. Scripps Class A Common Stock so issued or into which the
securities so issued are convertible exceeds one percent of the number of
shares of E. W. Scripps Class A Common Stock outstanding prior to such issuance
or one percent of the outstanding voting power prior to such issuance. The
NYSE also requires stockholder approval for any issuance of securities by E. W.
Scripps that will result in a change of control of E. W. Scripps.
SPECIAL MEETINGS OF STOCKHOLDERS; STOCKHOLDER ACTION BY WRITTEN CONSENT
Under Delaware law, special stockholder meetings may be called by the
board of directors and by any person or persons authorized by the certificate
of incorporation or the by-laws. Under the E. W. Scripps By-Laws, special
meetings of stockholders may be called at any time by the chairman of the board
of
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directors or the president or by a majority of the directors acting at a
meeting or by written consent, or by the holders of record of a majority of the
outstanding shares of Common Voting Stock acting at a meeting or by written
consent.
Under Ohio law, a special meeting of shareholders may be called by
the chairman of the board of directors, the president, a majority of the
directors acting without a meeting, persons owning 25% of the outstanding
shares entitled to vote at such meeting (or a lesser or greater proportion as
specified in the articles or regulations but not greater than 50%) or the
person or persons authorized to do so by the articles of incorporation or the
corporation's regulations. The SHB Code of Regulations does not authorize any
additional persons to call a meeting and allows shareholders holding at least
50% of all shares outstanding to call a special meeting. The SHB Code of
Regulations further provides that business transacted at any special meeting of
shareholders shall be confined to the purpose stated in the notice for such
special meeting.
Under Delaware law, any action by stockholders must be taken at a
meeting of stockholders, unless a consent in writing setting forth the action
so taken is signed by the stockholders having not less than the minimum number
of votes necessary to take such action at a meeting at which all shares
entitled to vote were present and voted.
Under Ohio law, any action by shareholders generally must be taken at
a meeting of shareholders, unless a consent in writing setting forth the action
so taken is signed by all of the shareholders who would be entitled to notice
of the meeting held to consider the subject matter thereof.
AMENDMENT OF CORPORATE GOVERNING DOCUMENTS
Delaware law allows amendments of the certificate of incorporation if
the board of directors adopts a resolution setting forth the amendment proposed
and declaring its advisability, and the stockholders thereafter approve such
proposed amendment either at a special meeting called by the board for the
purpose of approval of such amendment by the stockholders or, if so directed by
the board, at the next annual stockholders' meeting. At any such meeting, the
proposed amendment generally must be approved by a majority of the outstanding
shares entitled to vote.
Ohio law permits the adoption of amendments to articles of
incorporation if such amendments are approved at a meeting held for such
purpose by the holders of shares entitling them to exercise two-thirds of the
voting power of the corporation, or such lesser, but not less than a majority,
or greater vote as
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specified in the corporation's articles of incorporation. The SHB Articles
require a majority vote for amendment thereof.
Under Delaware law, the power to adopt, amend or repeal by-laws
resides with the stockholders entitled to vote thereon, and with the directors
if such power is conferred upon the board of directors by the certificate of
incorporation. The E. W. Scripps Certificate so provides.
Under Ohio law, regulations may be adopted, amended or repealed only
by approval of the shareholders. They may be adopted or amended at a meeting
of shareholders by the affirmative vote of the holders of shares entitling them
to exercise a majority of the voting power on such proposal or by written
consent signed by holders of shares entitling them to exercise two-thirds of
the voting power on such proposed amendment (or such lesser, but not less than
a majority, or greater vote as specified in the regulations). The SHB
Regulations provide for a majority vote or consent to amend the SHB
Regulations.
BOARD-APPROVED PREFERRED STOCK
Both Delaware law and Ohio law permit a corporation's certificate of
incorporation or articles of incorporation, respectively, to allow the board of
directors to issue, without shareholder approval, a series of preferred stock
and to designate the powers, rights, preferences and privileges thereof and
restrictions thereon (except that Ohio law does not permit the board of
directors to fix the voting rights of any such series of preferred stock). The
SHB Articles do not authorize any preferred stock. The E. W. Scripps
Certificate authorizes preferred stock and grants power to the E. W. Scripps
Board with respect to the issuance and terms of one or more series of such
stock.
LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
Delaware law and Ohio law have provisions and limitations regarding
directors' liability and regarding indemnification by a corporation of its
officers, directors and employees.
A director of an Ohio corporation shall not be found to have violated
his fiduciary duties to the corporation or its shareholders unless there is
proof by clear and convincing evidence that the director has not acted in good
faith, in a manner he reasonably believes to be in or not opposed to the best
interests of the corporation, or with the care that an ordinarily prudent
person in a like position would use under similar circumstances. In addition,
under Ohio law a director is liable in damages for any action or failure to act
as a director only if it is proved by clear and convincing evidence that such
act or
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omission was undertaken either with deliberate intent to cause injury to the
corporation or with reckless disregard for the best interests of the
corporation, unless the corporation's articles or regulations make this
provision inapplicable by specific reference. The SHB Articles do not make
this provision inapplicable.
Ohio law does not, however, require proof of intent to cause injury
or reckless disregard as a condition to the availability of injunctions,
recovery on principles of restitution or other relief which is essentially
equitable in nature. The Ohio law limits a director's liability for breaches
of the fiduciary duties of care and loyalty. This standard does not apply,
however, where the director has acted either outside his capacity as a director
or with respect to certain dividends, distributions, purchases or redemptions
of corporation shares or loans, in the case of a corporation that does not have
actively traded shares, a change in control in which a majority of the
shareholders receive a greater consideration for their shares than other
shareholders. Ohio law further requires all expense, including attorneys'
fees, incurred by a director in defending any action, suit or proceeding (other
than one asserting only liability for unlawful dividends, distributions or
redemptions) to be paid by the corporation as they are incurred in advance of
the final disposition of the action, suit or proceeding if it receives an
undertaking from or on behalf of the director in which he agrees to repay such
amounts if it is proved by clear and convincing evidence that his action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the corporation or undertaken with reckless disregard for the
best interests of the corporation and if the director reasonably cooperates
with the corporation concerning the action, suit or proceeding. These
provisions are automatically applicable to an Ohio corporation unless the
corporation opts out from their application. SHB has not opted out.
Delaware law permits a Delaware corporation to include in its
certificate of incorporation a provision which eliminates or limits the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duties as a director. However, no
such provision may eliminate or limit the liability of a director (I) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (II) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (III) for illegal
redemptions and stock repurchases, or (IV) for any transaction from which the
director derived an improper personal benefit. The E. W. Scripps Certificate
includes such a provision.
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The E. W. Scripps By-Laws require E. W. Scripps to indemnify any
person who is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that he is or was a director, officer, employee or agent of E. W. Scripps,
or is or was serving at the request of E. W. Scripps as a director, officer,
employee or agent of another enterprise, against expenses (including attorneys'
fees) and, if the action, suit or proceeding is one which is other than by or
in the right of E. W. Scripps to procure a judgment in its favor, against
judgments, fines, amounts paid in settlement, actually and reasonably incurred
by such person in connection with any such action, suit or proceeding to the
fullest extent permitted by Delaware law. Under Delaware law, a director or
officer may, in general, be indemnified by the corporation if he has acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
CLASSIFICATION OF BOARD OF DIRECTORS
Both Delaware law and Ohio law permit, but do not require, the
adoption of a "classified" board of directors with staggered terms under which
a part of the board of directors is elected each year for a maximum term of
three years. Neither SHB nor E. W. Scripps has a classified board of
directors, and all directors of each Company stand for election on an annual
basis.
CUMULATIVE VOTING OF SHARES
Under Delaware law, stockholders of a corporation cannot elect
directors by cumulative voting unless the certificate of incorporation so
provides. The E. W. Scripps Certificate does not provide for cumulative
voting. As a result, the holder or holders of a majority of the voting power
of each class of common stock of E. W. Scripps are able to elect all directors
then being elected by such class.
In accordance with Ohio law, cumulative voting (unless eliminated by
amendment of the articles of incorporation) is required to be available for the
election of directors if notice to such effect is given by a shareholder prior
to a shareholders' meeting and an announcement to such effect is made at such
meeting. The SHB Articles have been amended to provide for the elimination of
cumulative voting rights.
NUMBER OF DIRECTORS
Under Delaware law, unless the certificate of incorporation specifies
the number of directors, a board of directors may change the authorized number
of directors by an amendment to the
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corporation's by-laws if fixed therein, or in such manner as provided therein.
If the certificate of incorporation specifies the number of directors, the
number of directors can only be changed by amending the certificate of
incorporation. The E. W. Scripps By-Laws provide that the number of directors
of E. W. Scripps shall be fixed and may be altered from time to time by the
vote of a majority of directors. The number of directors is currently fixed at
nine and may not exceed twelve.
Under Ohio law, the number of directors of a corporation may be fixed
or changed by the shareholders or by the board of directors if so authorized by
the corporation's articles of incorporation or regulations. SHB's Code of
Regulations provides that the number of directors which shall constitute the
whole board of directors shall be seven persons unless changed by a vote of the
holders of a majority of shares entitled to vote thereon at a meeting of
shareholders called for the purpose of electing directors.
REMOVAL OF DIRECTORS
In general, under both Delaware law and Ohio law, any or all of the
directors of a corporation may be removed, with or without cause, by vote of
the holders of a majority of the shares then entitled to vote at an election of
directors, except that Delaware law authorizes removal by the shareholders of a
member of a classified board only for cause.
DISSENTERS' RIGHTS IN MERGERS
Under both Delaware law and Ohio law, a shareholder of a corporation
participating in certain merger transactions may, under certain circumstances,
receive cash in the amount of the fair market value of his shares (as
determined by a court) in lieu of the consideration he would otherwise receive
in the merger. Unless a corporation's certificate of incorporation provides
otherwise, Delaware law does not require that such dissenters' rights of
appraisal be afforded to stockholders with respect to (I) a merger or
consolidation of a corporation with a surviving corporation the shares of which
are either listed on a national securities exchange designated as a national
market security or on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or widely held (by more than 2,000
shareholders), if the stockholders of such corporation receive only shares of
the surviving corporation or of such a listed or widely held corporation; or
(II) those stockholders who are the stockholders of a corporation surviving a
merger if no vote of such stockholders is required because, among other things,
the number of shares to be issued in the merger does not exceed 20% of the
shares of the surviving corporation outstanding immediately prior to the merger
(if certain other conditions are met).
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Ohio law does not provide exclusions from dissenters' rights similar
to those described above with respect to Delaware law. However, under Ohio
law, in mergers and certain other transactions (e.g., acquisitions of assets or
of a majority of stock interests in exchange for stock) in which, after giving
effect to the transaction, the original shareholders of the acquiring
corporation retain more than five-sixths of the voting power of such
corporation, such shareholders are denied dissenters' rights.
PAYMENT OF DIVIDENDS
Both Delaware law and Ohio law permit the payment of dividends out of
paid-in, earned or other surplus. However, under Ohio law, if a dividend is
paid out of capital surplus, shareholders must be so notified. Under Delaware
law, no such notice is required and dividends may also be paid out of net
profits for the fiscal year in which declared or out of net profits for the
preceding fiscal year, even if the corporation has no surplus.
REPURCHASE OF SHARES
Under Ohio law, a corporation by act of its directors may repurchase
shares only in certain specified instances, the most significant of which are
when the articles authorize the redemption of such shares, when the articles in
substance provide that the corporation shall have the right to repurchase, and
when authorized by the shareholders at a meeting called for such purpose by the
affirmative vote of the holders of two-thirds of the shares of each class or,
if the articles so provide, by a greater or lesser proportion but not less than
a majority.
Delaware law vests discretion in the board of directors to authorize
the repurchase of shares.
Both Delaware and Ohio law permit the redemption of shares out of
paid-in, earned or other surplus.
LOANS TO DIRECTORS AND OFFICERS
Under Delaware law, a corporation may make loans to, guarantee the
obligations of or otherwise assist its officers or other employees and those of
its subsidiaries when the transaction, in the judgment of the corporation's
board of directors, may reasonably be expected to benefit the corporation.
Under Ohio law, a corporation generally may make a loan to or a guaranty of the
obligations of officers, directors or shareholders only if such loan or
guaranty is approved by a majority of the disinterested members of its board of
directors. The disinterested directors, taking into account the terms and
provisions of the loan and other relevant factors, must determine
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that the making of the loan could reasonably be expected to benefit the
corporation. Under Ohio law, directors who authorize unlawful loans are
jointly and severally liable for the loan together with interest. The standard
of conduct which is a precondition to the imposition of monetary damages
discussed under "Liability and Indemnification of Officers and Directors" above
is not applicable to directors authorizing unlawful loans.
TENDER OFFER STATUTE
The Ohio tender offer statute requires any person making a tender
offer for a corporation incorporated in Ohio to comply with certain filing,
disclosure and procedural requirements. Delaware has no tender offer statute.
The Ohio tender offer statute imposes certain filing and disclosure
requirements. The disclosure requirements include a statement of any plans or
proposals that the offeror, upon gaining control, may have to liquidate the
subject company, sell its assets, effect a merger or consolidation of it,
establish, terminate, convert, or amend employee benefit plans, close any plant
or facility of the subject company or of any of its subsidiaries or affiliates,
change or reduce the work force of the subject company or any of its
subsidiaries or affiliates, or make any other major change in its business,
corporate structure, management personnel, or policies of employment.
Until the issue of constitutionality is decided by clearly
controlling appellate court decisions or clarifying legislation is adopted, the
enforceability of the Ohio statute as a protection against board-opposed
takeover attempts is uncertain.
In addition, Ohio has a "Control Share Acquisition" statute which
requires shareholder approval for the acquisition of voting power for certain
ranges of stock ownership. This statute was declared unconstitutional in 1986
by the United States District Court for the Southern District of Ohio in FLEET
AEROSPACE CORP. V. HOLDERMAN, which holding was affirmed by the United States
Court of Appeals for the Sixth Circuit. On April 27, 1987, however, the United
States Supreme Court vacated and remanded the Sixth Circuit's decision in light
of the Supreme Court's recent holding in CTS CORPORATION V. DYNAMICS
CORPORATION OF AMERICA, which held that Indiana's Control Share Acquisition
Act, a law similar in some respects to the Ohio Control Share Acquisition Act,
is constitutional. Ohio law permits a corporation to opt out of the Control
Share Acquisition Statute. SHB has opted out of this statute.
MERGER MORATORIUM STATUTES
Both Ohio and Delaware have "merger moratorium" statutes which are
designed to encourage potential acquirors of publicly
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traded corporations such as E. W. Scripps and SHB to obtain the consent and
approval of the proposed target's board of directors prior to commencing a
tender offer for the target company's shares. This encouragement is
accomplished by prohibiting or restricting acquirors from undertaking many
post-acquisition financial restructuring alternatives.
Both the Ohio and Delaware statutes permit a corporation to opt out
of the operation of the merger moratorium provisions. Neither E. W. Scripps
nor SHB has opted out.
The Ohio law becomes applicable (with certain exceptions) when a
person (a potential acquiror and all of that acquiror's affiliates) can vote or
direct the vote of 10% or more of the voting shares. In Delaware, the law is
applicable when a person acquires more than 15% of the voting stock.
Under Ohio law (with minor exceptions), there is an absolute
prohibition on mergers and dissolutions and restrictions on asset sales and
purchases and other transactions that would give the acquiror significant funds
or assets of the target during the three-year period after the acquiror becomes
a greater than 10% shareholder. Following the three-year period, in Ohio, the
acquiror can engage in these transactions only if a fair price as defined in
the statute is provided to the minority shareholders or the acquiror obtains
the consent of the shareholders holding a majority of the disinterested shares.
In Delaware, the restriction on such transactions lasts for three
years. The restrictions are not applicable if at the time the acquiror became
subject to the statute it held more than 85% of such stock or if during the
three year period the transaction is approved by two-thirds of the
disinterested stockholders.
ANTI-GREENMAIL STATUTE
"Greenmail" is the practice whereby a corporation purchases the
shares of a substantial minority shareholder at a premium to avoid the future
potential takeover of the corporation by that minority shareholder. Ohio
recently enacted an anti-greenmail statute which would cause the forfeiture of
any premium received by the minority shareholder. Ohio law permits a
corporation to opt out of the anti-greenmail statute, but SHB has not opted
out.
MARKET FOR E. W. SCRIPPS' COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
E. W. Scripps Class A Common Stock is traded on the NYSE under the
symbol SSP. The following table sets forth, for the periods indicated, the
high and low market prices for E. W.
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Scripps Class A Common Stock on the New York Stock Exchange, as reported by THE
WALL STREET JOURNAL, and the cash dividends declared per share on E. W. Scripps
Class A Common Stock for the periods indicated.
<TABLE>
<CAPTION>
MARKET PRICE
--------------- CASH DIVIDEND
CALENDAR QUARTERS HIGH LOW DECLARED
- - - - - - - - - - ----------------- ---- --- -------------
<S> <C> <C> <C>
Fiscal 1992
First Quarter $26 3/4 $22 1/8 $.10
Second Quarter 29 23 1/2 .10
Third Quarter 26 7/8 24 .10
Fourth Quarter 26 1/8 23 .10
Fiscal 1993
First Quarter $29 1/8 $23 3/4 $.11
Second Quarter 28 1/2 24 3/4 .11
Third Quarter 26 5/8 22 7/8 .11
Fourth Quarter 30 7/8 25 1/4 .11
Fiscal 1994
First Quarter $28 7/8 $25 $.11
Second Quarter 26 3/4 23 .11
Third Quarter
(through _____, 1994)
1994 Merger Period
February 17, 1994 $28 7/8 $23 N/A
through April 6, 1994
April 7, 1994 through 26 3/4 23 7/8 N/A
May 4, 1994
May 5, 1994 through
_______, 1994
</TABLE>
At _____________, 1994 [LATEST PRACTICABLE DATE], there were
approximately 4,500 holders of E. W. Scripps Class A Common Stock and 27 owners
of E. W. Scripps Common Voting Stock, which does not have a public market,
based on security position listings.
The Company has declared cash dividends in every year since its
incorporation in 1922. Future dividends are subject to, among other things,
the Company's earnings, financial condition and capital requirements. Certain
long-term debt agreements contain restrictions on dividends.
Because E. W. Scripps is a holding company, holders of its debt and
equity securities, including holders of the E. W. Scripps Class A Common Stock,
are dependent primarily upon the cash flow from E. W. Scripps subsidiaries for
payment of principal, interest and dividends. Potential dividends and other
advances and transfers from E. W. Scripps' subsidiaries represent its most
significant sources of cash flow. Applicable state laws
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and the provisions of the debt instruments by which E. W. Scripps' principal
subsidiaries are bound limit the ability of such companies to dividend or
otherwise provide funds to E. W. Scripps.
MARKET FOR SHB COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
SHB Common Stock is traded in the over-the-counter market on the
NASDAQ under the symbol SCRP. The following table sets forth, for the periods
indicated, the high and low market prices of the SHB Common Stock, as reported
by THE WALL STREET JOURNAL, and the cash dividends declared per share on the
SHB Common Stock for the periods indicated.
<TABLE>
<CAPTION>
MARKET PRICE CASH
---------------- DIVIDEND
CALENDAR QUARTERS HIGH LOW DECLARED
----------------- ---- --- --------
<S> <C> <C> <C>
Fiscal 1992
First Quarter $48 $38 .25
Second Quarter 46 39 .25
Third Quarter 52 38 .25
Fourth Quarter 52 40 .25
Fiscal 1993
First Quarter $58 $44 .30
Second Quarter 73 60 .30
Third Quarter 75 67 .30
Fourth Quarter 84 70 .30
Fiscal 1994
First Quarter $94 $75 .30
Second Quarter 90 1/2 82 .30
Third Quarter
(through _____, 1994)
1994 Merger Period
February 17, 1994 $94 $75 N/A
through April 6, 1994
April 7, 1994 through 90 1/2 82 N/A
May 4, 1994
May 5, 1994 though
________, 1994
</TABLE>
At ____________, 1994 [LATEST PRACTICABLE DATE], there were
approximately [600] record holders of SHB Common Stock, based on security
position listings.
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BUSINESS OF E. W. SCRIPPS
E. W. Scripps is a diversified media company operating principally in
four segments: newspaper publishing, broadcast television, cable television
and entertainment. E. W. Scripps' broadcast television operations and certain
of its cable television systems and entertainment businesses are operated
through SHB.
NEWSPAPERS
E. W. Scripps publishes nineteen metropolitan and suburban daily
newspapers. From its Washington bureau, E. W. Scripps operates the Scripps
Howard News Service, a supplemental wire service covering stories in the
capital, other parts of the United States and abroad.
Substantially all of E. W. Scripps' newspaper publishing operating
revenues are derived from advertising and circulation. Advertising rates and
volume are highest on Sundays, primarily because circulation and readership is
greatest on Sundays. Competition for advertising revenues is based upon
circulation levels, demographics, price and effectiveness.
E. W. Scripps is currently a party to newspaper joint operating
agencies ("JOAS") in five markets. JOAs combine all but the editorial
operations of two competing newspapers in a market in order to reduce aggregate
expenses and take advantage of economies of scale, thereby allowing the
continuing operation of both newspapers in that market. JOA revenues less JOA
expenses, as defined in each JOA, equals JOA profits, which are split between
the parties to the JOA. In each case JOA expenses exclude editorial expenses.
E. W. Scripps manages its JOA in Evansville, Indiana and receives approximately
80% of the JOA profits in such JOA. Each of E. W. Scripps' other four JOAs are
managed by the other party to the JOA. E. W. Scripps receives approximately
20% to 40% of JOA profits of those JOAs.
BROADCAST TELEVISION
E. W. Scripps' broadcast television operations consist of six
network-affiliated VHF television stations and three Fox-affiliated UHF
television stations. All of E. W. Scripps' broadcast television operations are
owned and operated directly or through subsidiaries by SHB. See "Business of
SHB."
CABLE TELEVISION
E. W. Scripps' cable television system operations are conducted
through several subsidiaries. Its Lake County, Florida and Sacramento,
California systems and its Longmont, Colorado
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cluster are owned by SHB. Other wholly-owned subsidiaries of E. W. Scripps
operate cable television systems in Florida, Georgia, Indiana, Kentucky, South
Carolina, Tennessee, Virginia and West Virginia. Basic subscribers to E. W.
Scripps' systems totaled approximately 711,300 at March 31, 1994, of which
approximately 295,000 subscribed to systems owned by SHB.
Substantially all of E. W. Scripps' cable television operating
revenues are derived from entertainment and information services provided to
subscribers of E. W. Scripps' systems.
E. W. Scripps' cable television systems compete for subscribers with
other cable television systems in certain of its franchise areas. E. W.
Scripps' cable television systems compete for subscribers with other methods of
delivering entertainment and information programming to the subscriber's home,
such as broadcast television, multi-point distribution systems, master and
satellite antenna systems, television receive-only satellite dishes and home
systems such as videocassette and laser disk players. In the future E. W.
Scripps' cable television systems may compete with new technologies such as
more advanced "wireless cable systems" and broadcast satellite delivery
services, as well as "video dial tone" services whereby the local telephone
company leases video distribution lines to programmers on a common carrier
basis. Direct competition from local telephone companies is now prohibited by
law, but these provisions of law are subject to change.
Cable television systems are regulated by federal, local and in some
instances, state authorities. Certain powers of regulatory agencies and
officials, as well as various rights and obligations of cable television
operators, are specified under the Cable Communications Policy Act of 1984 and
the Cable Television Consumer Protection and Competition Act of 1992, as
amended (the "CABLE ACT"). Among other things, the Cable Act (I) empowers
local franchising authorities and the FCC jointly to regulate rates for certain
cable television services and (II) establishes ownership rules with respect to
cable television systems and other media.
In April 1993 the FCC issued rules that established allowable rates
for cable television services (other than programming offered on a per-channel
or per-program basis) and for cable equipment based on benchmarks established
by the FCC. The rules require rates for equipment to be cost-based, and
require reasonable rates for regulated cable television services based upon, at
the election of the cable television system operator, application of the
benchmarks established by the FCC or a cost-of-service showing based upon
standards established by the FCC. The rules became effective in September 1993
and were recently revised to further reduce regulated rates. The revised rules
became effective in May 1994.
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ENTERTAINMENT
E. W. Scripps, under the trade name United Media, is a leading
distributor of news columns, comics and other features for the newspaper
industry. United Media licenses worldwide copyrights relating to "Peanuts" and
other character properties for use on numerous products, including plush toys,
greeting cards and apparel, and for exhibit on television, videocassettes and
other media.
In September 1993 E. W. Scripps established Scripps Howard
Productions to acquire, create, develop, produce and own programming products
for domestic and international television. E. W. Scripps, through SHB,
acquired Cinetel Productions in Knoxville, Tennessee, on March 31, 1994, and
also plans to introduce The Home & Garden Television Network in late 1994. See
"Business of SHB."
BUSINESS OF SHB
SHB is a diversified media company operating principally in three
segments: broadcast television, cable television and entertainment.
BROADCAST TELEVISION
SHB's broadcast television operations consist of six
network-affiliated VHF television stations and three Fox-affiliated UHF
television stations. Substantially all of SHB's broadcast television operating
revenues are derived from advertising. Competition for advertising revenues is
based upon audience levels, demographics, price and effectiveness.
SHB's television stations are affiliated with national television
networks under standard two-year affiliation agreements. In addition to
network programs, SHB's television stations broadcast locally produced
programs, syndicated programs, sports events, movies and public service
programs. Local news is the focus of SHB's network-affiliated stations'
locally produced programming and is an integral factor in developing each
station's ties to its community and viewer loyalty. Advertising relating to
local news and information programs generally represent more than 30% of a
station's revenues.
Broadcast television is subject to the jurisdiction of the FCC
pursuant to the Communications Act of 1934, as amended, which, among other
things, empowers the FCC to regulate the issuance and renewal of broadcast
television licenses and to regulate the ownership of broadcast television
stations.
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<PAGE> 83
CABLE TELEVISION
Substantially all of SHB's cable television operating revenues are
derived from entertainment and information services provided to subscribers of
SHB's systems. Basic subscribers to SHB's systems totaled approximately
295,000 at March 31, 1994.
SHB's cable television systems compete for subscribers with other
cable television systems in certain of its franchise areas. SHB's cable
television systems compete for subscribers with other methods of delivering
entertainment and information programming to the subscriber's home, such as
broadcast television, multi-point distribution systems, master and satellite
antenna systems, television receive-only satellite dishes and home systems such
as videocassette and laser disk players. In the future the Company's cable
television systems may compete with new technologies such as more advanced
"wireless cable systems" and broadcast satellite delivery services, as well as
"video dial tone" services whereby the local telephone company leases video
distribution lines to programmers on a common carrier basis.
Cable television systems are regulated by federal, local and in some
instances, state authorities. Certain powers of regulatory agencies and
officials, as well as various rights and obligations of cable television
operators, are specified under the Cable Act. Among other things, the Cable
Act (I) empowers local franchising authorities and the FCC jointly to regulate
rates for certain cable television services and (II) establishes ownership
rules with respect to cable television systems and other media.
In April 1993 the FCC issued rules that established allowable rates
for cable television services (other than programming offered on a per-channel
or per-program basis) and for cable equipment based on benchmarks established
by the FCC. The rules require rates for equipment to be cost-based, and
require reasonable rates for regulated cable television services based upon, at
the election of the cable television system operator, application of the
benchmarks established by the FCC or a cost-of-service showing based upon
standards established by FCC. The rules became effective in September 1993 and
were recently revised to further reduce regulated rates. The revised rules
became effective in May 1994.
ENTERTAINMENT
SHB plans to introduce The Home & Garden Television Network in late
1994. This network will feature 24 hours of daily programming focused on home
repair and remodeling, gardening, decorating and home electronics. SHB
acquired Cinetel Productions in Knoxville, Tennessee, on March 31, 1994.
Cinetel is one of the largest independent producers of cable television
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<PAGE> 84
programming. Cinetel's production facility will also be the primary production
facility for The Home & Garden Television Network.
INFORMATION RELATING TO MERGERCO
GENERAL
Mergerco was organized by E. W. Scripps in March 1994 under Ohio law
in order to effect the Merger. Mergerco is a wholly owned subsidiary of E. W.
Scripps. Mergerco has not engaged in any activities other than those incident
to its formation. If the Merger is consummated, SHB will be merged into
Mergerco and Mergerco will be the Surviving Corporation. Mergerco's principal
executive offices are located at 312 Walnut Street, Cincinnati, Ohio 45202 and
its telephone number is (513) 977-3000. See "Information Relating to
Mergerco."
The directors and the sole stockholder of Mergerco have approved the
Merger Agreement. Mergerco will not have any assets or liabilities (other than
those arising under the Merger Agreement) or engage in any activities other
than those incident to its formation and capitalization and the Merger. As of
the date of this Proxy Statement-Prospectus, the authorized capital stock of
Mergerco consists of 850 shares of common stock without par value, all of which
are issued and outstanding and owned by E. W. Scripps. In the Merger, SHB will
merge with and into Mergerco, with Mergerco being the Surviving Corporation.
EXECUTIVE OFFICERS AND DIRECTORS OF MERGERCO
The following table sets forth certain information regarding the
directors and executive officers of Mergerco. All of such individuals are U.S.
citizens.
<TABLE>
<CAPTION>
NAME AGE POSITION
- - - - - - - - - - ---- --- --------
<S> <C> <C>
Charles E. Scripps 74 Director
Donald L. Perris 71 Director
Gordon E. Heffern 70 Director
Robert E. Stautberg 59 Director
John H. Burlingame 61 Director
Lawrence A. Leser 59 President and Chief Executive
Officer and Director
Paul F. Gardner 51 Executive Vice President and
Director
Daniel J. Castellini 54 Treasurer and Director
M. Denise Kuprionis 38 Secretary
E. John Wolfzorn 48 Assistant Treasurer
</TABLE>
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<PAGE> 85
Each director has been elected to serve until the next annual meeting
of Mergerco stockholders and until his successor is duly chosen and qualified
or until his prior death, resignation or removal.
The term of office of each executive officer is until the
organizational meeting of the Mergerco Board of Directors following the next
annual meeting of Mergerco stockholders and until his successor is elected and
qualified or until his prior death, resignation or removal.
SUBMISSION OF STOCKHOLDER PROPOSALS
In the event the Merger is not consummated for any reason, SHB will
hold an annual meeting of its stockholders. In accordance with the rules of
the Commission, certain stockholder proposals that are received by the
Secretary of SHB at SHB's corporate headquarters a reasonable time before
proxies are solicited by the SHB Board for such meeting must be included in the
proxy statement and proxy relating to such meeting.
CERTAIN LEGAL MATTERS, EXPERTS AND REGULATORY APPROVALS
FEDERAL AND STATE APPROVALS
No federal or state regulatory requirements remain to be complied
with in order to consummate the Merger. See "Certain Legal Matters, Experts
and Regulatory Approvals." However, the obligations of E. W. Scripps, Mergerco
and SHB to consummate the Merger are subject to satisfaction of a number of
other conditions. See "The Merger Agreement - Conditions to the Merger."
LEGAL OPINIONS
The validity of the shares of E. W. Scripps Class A Common Stock to
be issued in the Merger will be passed upon for E. W. Scripps by Baker &
Hostetler, Cleveland, Ohio. John H. Burlingame, a director and a member of the
Executive Committee of the Board of Directors of E. W. Scripps and a Trustee
of The Edward W. Scripps Trust, is the Executive Partner of Baker & Hostetler.
EXPERTS
The consolidated financial statements and the related consolidated
financial statement schedules incorporated in this Proxy Statement-Prospectus
by reference from E. W. Scripps and subsidiary companies' Annual Report on Form
10-K for the year
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<PAGE> 86
ended December 31, 1993 have been audited by Deloitte & Touche, independent
auditors, as stated in their report, which is incorporated herein by reference
(which expresses an unqualified opinion and includes explanatory paragraphs
relating to the changes in accounting for certain investments and for post
retirement benefits other than pensions), and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The consolidated financial statements and the related consolidated
financial statement schedules incorporated in this Proxy Statement-Prospectus
by reference from SHB and subsidiary companies' Annual Report on Form 10-K for
the year ended December 31, 1993 have been audited by Deloitte & Touche,
independent auditors, as stated in their report, which is incorporated herein
by reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
MISCELLANEOUS
It is expected that representatives of Deloitte & Touche, E. W.
Scripps' and SHB's independent public accountants, will be present at the
Special Meeting to respond to appropriate questions and to make a statement if
they so desire.
SHB knows of no matters to be presented at the Special Meeting other
than the matters set forth in the attached Notice and this Proxy
Statement-Prospectus. However, if any other matters come before the Special
Meeting, it is intended that the holder of the proxies will vote thereon in
their discretion.
No person has been authorized to give any information or make any
representation on behalf of E. W. Scripps, SHB or Mergerco not contained in
this Proxy Statement-Prospectus, and if given or made, such information or
representation must not be relied upon as having been authorized.
By order of the Board of Directors
M. Denise Kuprionis
Secretary
312 Walnut Street
Cincinnati, Ohio 45202
______________, 1994
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<PAGE> 87
THE FOLLOWING DOCUMENTS, OR PORTIONS OF DOCUMENTS, ARE INCORPORATED
BY REFERENCE INTO THIS PROXY STATEMENT-PROSPECTUS.
1. E. W. Scripps' Annual Report on Form 10-K for the fiscal year ended
December 31, 1993;
2. E. W. Scripps' Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1994;
3. The description of the E. W. Scripps Class A Common Stock contained
in E. W. Scripps' Registration Statement on Form 8-A, declared effective on
June 29, 1988, pursuant to Section 12 of the Exchange Act, including any
amendment or report filed for the purpose of updating such description;
4. SHB's Annual Report on Form 10-K for the fiscal year ended December
31, 1993;
5. SHB's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1994; and
6. The description of the SHB Common Stock contained in SHB's
Registration Statement on Form S-1 (File No. 2-21144), declared effective on
April 3, 1963 pursuant to the Securities Act.
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<PAGE> 88
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SCRIPPS HOWARD BROADCASTING COMPANY,
SHB MERGER CORPORATION AND
THE E.W. SCRIPPS COMPANY
DATED AS OF MAY 4, 1994
<PAGE> 89
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 The Merger. . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Articles of Incorporation . . . . . . . . . . . 2
SECTION 1.3 Code of Regulations . . . . . . . . . . . . . . 2
SECTION 1.4 Board of Directors and Officers . . . . . . . . 2
SECTION 1.5 Meeting of Company Shareholders . . . . . . . . 2
SECTION 1.6 SEC Filings . . . . . . . . . . . . . . . . . . 2
SECTION 1.7 Effective Time of the Merger. . . . . . . . . . 3
ARTICLE II CONVERSION OF SHARES . . . . . . . . . . . . . . . . 4
SECTION 2.1 Conversion of Shares . . . . . . . . . . . . . 4
SECTION 2.2 Exchange of Company Common Shares . . . . . . . 4
SECTION 2.3 No Further Transfers. . . . . . . . . . . . . . 7
ARTICLE III ADDITIONAL AGREEMENTS IN CONNECTION WITH THE MERGER 7
SECTION 3.1 Best Efforts. . . . . . . . . . . . . . . . . . 7
SECTION 3.2 Conduct of Business by the Company Pending
the Merger. . . . . . . . . . . . . . . . . . . 8
SECTION 3.3 Notice of Actions and Proceedings . . . . . . . 9
SECTION 3.4 Access and Information. . . . . . . . . . . . . 9
SECTION 3.5 Notification of Certain Other Matters . . . . . 9
SECTION 3.6 Certain Filings, Consents and Arrangements. . . 10
SECTION 3.7 Stock Exchange Listing. . . . . . . . . . . . . 10
SECTION 3.8 Tax-Free Reorganization Treatment . . . . . . .
SECTION 3.9 FCC Compliance. . . . . . . . . . . . . . . . . 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . 10
SECTION 4.1 Organization and Good Standing. . . . . . . . . 10
SECTION 4.2 Authorization; Binding Agreement. . . . . . . . 11
SECTION 4.3 Capitalization. . . . . . . . . . . . . . . . . 11
SECTION 4.4 Reports and Financial Statements . . . . . . . 12
SECTION 4.5 Litigation. . . . . . . . . . . . . . . . . . . 12
SECTION 4.6 Governmental Approvals and Compliance with Law. 12
SECTION 4.7 Absence of Breach . . . . . . . . . . . . . . . 13
SECTION 4.8 Proxy Statement; Registration Statement . . . . 13
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGERCO . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.1 Organization and Good Standing. . . . . . . . . 14
SECTION 5.2 Authorization; Binding Agreement. . . . . . . . 14
SECTION 5.3 Capitalization. . . . . . . . . . . . . . . . . 14
SECTION 5.4 Reports and Financial Statements. . . . . . . . 15
SECTION 5.5 Litigation. . . . . . . . . . . . . . . . . . . 15
SECTION 5.6 Governmental Approvals. . . . . . . . . . . . . 15
SECTION 5.7 Absence of Breach . . . . . . . . . . . . . . . 16
SECTION 5.8 Proxy Statement; Registration Statement . . . . 16
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<PAGE> 90
Page
ARTICLE VI COVENANTS FOLLOWING THE MERGER . . . . . . . . . . 17
SECTION 6.1 Indemnification. . . . . . . . . . . . . . . . 17
SECTION 6.2 Further Action. . . . . . . . . . . . . . . . 17
ARTICLE VII CONDITIONS . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.1 Conditions to Each Party's Obligation to
Effect the Merger. . . . . . . . . . . . . . . 18
SECTION 7.2 Conditions to Obligation of the Company to
Effect the Merger. . . . . . . . . . . . . . . 19
SECTION 7.3 Conditions to Obligations of Parent and
Mergerco to Effect the Merger. . . . . . . . . 20
ARTICLE VIII CLOSING; TERMINATION . . . . . . . . . . . . . . . 21
SECTION 8.1 The Closing . . . . . . . . . . . . . . . . . 21
SECTION 8.2 Documents and Certificates . . . . . . . . . . 21
SECTION 8.3 Termination. . . . . . . . . . . . . . . . . . 21
SECTION 8.4 Effect of Termination. . . . . . . . . . . . . 22
ARTICLE IX GENERAL AGREEMENTS . . . . . . . . . . . . . . . . 22
SECTION 9.1 Non-Survival of Representations, Warranties
and Agreements . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.2 Entire Agreement . . . . . . . . . . . . . . . 22
SECTION 9.3 Expenses . . . . . . . . . . . . . . . . . . . 23
SECTION 9.4 Notice . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.5 Amendments . . . . . . . . . . . . . . . . . . 24
SECTION 9.6 Waiver. . . . . . . . . . . . . . . . . . . . 24
SECTION 9.7 Brokers. . . . . . . . . . . . . . . . . . . . 24
SECTION 9.8 Publicity. . . . . . . . . . . . . . . . . . . 24
SECTION 9.9 Subsidiaries. . . . . . . . . . . . . . . . . 25
SECTION 9.10 Headings. . . . . . . . . . . . . . . . . . . 25
SECTION 9.11 Non-Assignability . . . . . . . . . . . . . . 25
SECTION 9.12 Counterparts. . . . . . . . . . . . . . . . . 25
SECTION 9.13 Governing Law . . . . . . . . . . . . . . . . 25
SECTION 9.14 Severability . . . . . . . . . . . . . . . . 25
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<PAGE> 91
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 4, 1994 (this "Merger
Agreement"), by and among Scripps Howard Broadcasting Company, an Ohio
corporation (the "Company"), The E.W. Scripps Company, a Delaware corporation
("Parent"), and SHB Merger Corporation, an Ohio corporation and a wholly owned
subsidiary of Parent ("Mergerco"). Mergerco and the Company are hereinafter
sometimes collectively referred to as the "Constituent Corporations."
WHEREAS, following the favorable recommendation of the Special
Committee of the Board of Directors of the Company (the "Special Committee"),
the Board of Directors or Executive Committee of each of Parent, Mergerco and
the Company has approved the merger of the Company with and into Mergerco (the
"Merger") pursuant to the terms and subject to the conditions of this Merger
Agreement whereby (i) each of the issued and outstanding common shares, par
value $.25 per share, of the Company ("Company Common Shares"), other than
Company Common Shares held by Parent and its subsidiaries (as defined in
Section 9.9 hereof), shares held in the treasury of the Company and by any of
its subsidiaries and shares with respect to which a written demand for payment
of fair cash value has been made pursuant to Section 2.2(e) of this Merger
Agreement and not withdrawn or waived (the "Dissenting Shares"), will be
converted into the right to receive the Merger Consideration set forth in
Section 2.1(b) hereof and (ii) the Company will become a wholly owned
subsidiary of Parent; and
WHEREAS, for federal income tax purposes it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Subject to the terms and conditions hereof,
the Merger shall be consummated in accordance with the Ohio General Corporation
Law (Title XVII, Chapter 1701 of the Ohio Revised Code) (the "ORC") as soon as
practicable following the satisfaction or waiver of the conditions set forth in
Article VII hereof. Upon the terms and subject to the conditions hereof, at
the Effective Time (as defined in Section 1.7 hereof), the Company shall be
merged with and into Mergerco in accordance with the applicable provisions of
the ORC and the separate existence of the Company shall thereupon cease, and
Mergerco, as the surviving corporation in the Merger (the "Surviving
Corporation"), shall
<PAGE> 92
continue its corporate existence under the laws of the State of Ohio under the
name "Scripps Howard Broadcasting Company". The Merger shall have the effects
set forth in Section 1701.82 of the ORC.
SECTION 1.2 Articles of Incorporation. The Articles of Incorporation
of the Company as in effect immediately prior to the Effective Time shall be
the Articles of Incorporation of the Surviving Corporation, until such Articles
of Incorporation are thereafter further changed or amended as provided therein
or by law, except that at the Effective Time paragraph (a) of Article Fourth of
the Articles of Incorporation of the Surviving Corporation shall be amended to
read as follows: "The total number of shares of stock of all classes which the
Corporation has authority to issue is 850 Common Shares, par value $.25 per
share."
SECTION 1.3 Code of Regulations. The Code of Regulations of the
Company as in effect immediately prior to the Effective Time shall be the Code
of Regulations of the Surviving Corporation until thereafter changed or amended
as provided therein or as otherwise permitted or required by law or by the
Surviving Corporation's Articles of Incorporation.
SECTION 1.4 Board of Directors and Officers. The directors of the
Company at the Effective Time shall be the initial directors of the Surviving
Corporation and shall serve until their respective successors are duly elected
or appointed and qualify in the manner provided in the Articles of
Incorporation and Code of Regulations of the Surviving Corporation or as
otherwise provided by law. The officers of the Company at the Effective Time
shall be the officers of the Surviving Corporation and shall serve until their
respective successors are duly elected or appointed and qualify in the manner
provided in the Articles of Incorporation and Code of Regulations of the
Surviving Corporation, or as otherwise provided by law.
SECTION 1.5 Meeting of Company Shareholders. The Company shall take
all necessary action in accordance with applicable law to convene a meeting of
its shareholders (a "Meeting") to consider and vote upon the Merger and this
Merger Agreement and shall use its best efforts to hold such Meeting as
promptly as practicable after the date hereof. Subject to applicable law and
fiduciary duties, including the duties of loyalty and care, the Board of
Directors of the Company shall recommend that the Company's shareholders vote
in favor of the Merger and the adoption of this Agreement. Parent agrees that
it shall vote, or cause to be voted, in favor of the Merger and the adoption
and approval of the Merger Agreement each Company Common Share held by it or by
any of its subsidiaries on the record date set by the Company for determining
Company Common Shares entitled to vote at the Meeting.
SECTION 1.6 SEC Filings. (a) The Company shall file with the
Securities and Exchange Commission (the "SEC") as promptly as practicable after
the date hereof, pursuant to the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), a proxy statement and form of proxy with respect
to the Meeting (the "Proxy
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<PAGE> 93
Statement"). Parent and Mergerco shall provide the Company with the
information concerning Parent and Mergerco required to be included in the Proxy
Statement.
(b) As soon as practicable after the date hereof, Parent
shall file with the SEC a registration statement on Form S-4 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), which registers the shares of Class A Common Stock, par value $.01 per
share ("Parent Class A Common Stock"), of Parent to be issued to the Company's
shareholders pursuant to the Merger. The Company and Mergerco shall provide
Parent with the information concerning the Company and Mergerco required to be
included in the Registration Statement.
(c) The Company and Parent shall (i) provide such
cooperation as may be necessary or useful to cause the Registration Statement
to incorporate the Proxy Statement, (ii) use all reasonable efforts to have the
Registration Statement declared effective under the Securities Act and the
Proxy Statement cleared by the SEC as promptly as practicable, and (iii)
promptly thereafter mail the Proxy Statement to shareholders of the Company.
Parent shall take any action required to be taken under state Blue Sky or
securities laws in connection with the Merger and the issuance of the Merger
Consideration in connection therewith. The term "Registration Statement" shall
mean such Registration Statement at the time it becomes effective and all
amendments thereto duly filed.
(d) The information provided and to be provided by the
Company (with respect to itself and its subsidiaries), Parent (with respect to
itself and its subsidiaries) and Mergerco, respectively, for use in the
Registration Statement and the Proxy Statement shall, at the time the
Registration Statement becomes effective, on the date the Proxy Statement is
first mailed to the Company's shareholders, on the date of the meeting of the
Company's shareholders referred to in Section 1.5 hereof and at the Effective
Time, be true and correct in all material respects and shall not omit to state
any material fact required to be set forth therein or necessary in order to
make the information set forth therein not misleading. The Company, Parent and
Mergerco each agree to correct any information provided by it for use in the
Registration Statement or the Proxy Statement which shall have become false and
misleading. The Registration Statement and the Proxy Statement shall comply as
to form in all material respects with all applicable requirements of federal
securities laws.
SECTION 1.7 Effective Time of the Merger. As soon as practicable
following the satisfaction or waiver of the conditions set forth in Article VII
hereof at the Closing (as defined in Section 8.1 hereof), a Certificate of
Merger shall be duly executed by Mergerco and the Company and shall be duly
filed with the Secretary of State of Ohio in accordance with the ORC. The
Merger shall become effective when such Certificate of Merger is so filed with
the Secretary of State of Ohio. When used in this Agreement,
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<PAGE> 94
the term "Effective Time" shall mean the time and date at which such
Certificate of Merger is so filed.
ARTICLE II
CONVERSION OF SHARES
SECTION 2.1 Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof:
(a) Each Company Common Share then owned by Parent or
Mergerco or by any other direct or indirect subsidiary of Parent and
shares held in the treasury of the Company or by any direct or
indirect subsidiary of the Company (each of the foregoing shares being
"Excluded Shares") shall, by virtue of the Merger, and without any
action on the part of the Company or the holder thereof, be cancelled.
(b) Each then remaining issued and outstanding Company Common
Share not cancelled pursuant to Section 2.1(a) (excluding Dissenting
Shares) shall be by virtue of the Merger, and without any action on
the part of the holder thereof, cancelled and converted solely into
the right to receive, upon the surrender of the certificate formerly
representing such Company Common Share in accordance with Section 2.3
hereof, three and forty-five hundredths (3.45) fully paid and
nonassessable shares of Parent Class A Common Stock, without interest
thereon. The shares of Parent Class A Common Stock to be issued in
the Merger in exchange for certificates which immediately prior to the
Effective Time represented Company Common Shares, together with any
cash to be received pursuant to Paragraph (e) of Section 2.2 in lieu
of issuing fractional shares of Parent Class A Common Stock, are
referred to herein as the "Merger Consideration."
(c) Each then issued and outstanding Common Share, without
par value ("Mergerco Common"), of Mergerco shall be converted into one
fully paid and nonassessable common share, par value $.25 per share,
of the Surviving Corporation.
SECTION 2.2 Exchange of Company Common Shares. (a) Prior to the
Effective Time, Parent shall designate a bank or trust company to act as
exchange agent (the "Exchange Agent") for the Merger. Immediately prior to the
Effective Time, Parent will instruct the transfer agent of the shares of Parent
Class A Common Stock to countersign and deliver to the Exchange Agent a
sufficient number of certificates representing shares of Parent Class A Common
Stock, all so as to allow for the issuance and delivery of the Merger
Consideration on a timely basis. Parent shall pay all reasonable charges or
expenses, including those of the Exchange Agent, in connection with the
exchange of Company Common Shares for the Merger Consideration.
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<PAGE> 95
(b) As soon as practicable after the Effective Time, Parent shall
cause the Exchange Agent to mail or make available to each holder of a
certificate theretofore representing Company Common Shares (a "Certificate")
(other than holders of certificates theretofore representing Excluded Shares) a
notice and letter of transmittal advising such holder of the effectiveness of
the Merger and the procedure for surrendering to the Exchange Agent such
Certificate or Certificates for exchange for the Merger Consideration
multiplied by the number of Company Common Shares represented by such
Certificate or Certificates. Upon the surrender to the Exchange Agent of such
Certificate or Certificates, together with a letter of transmittal, duly
executed and completed in accordance with the instructions thereon, the holder
of such Certificate or Certificates shall be entitled to receive the Merger
Consideration. From and after the Effective Time, until surrendered in
accordance with the provisions of this Section 2.2, each Certificate evidencing
Company Common Shares (other than Certificates representing Excluded Shares and
Dissenting Shares) shall represent for all purposes only the right to receive
the Merger Consideration, without any interest thereon. Any portion of the
Merger Consideration that shall not have been paid to shareholders of the
Company pursuant to this Section 2.2 prior to the first anniversary of the
Effective Time shall be paid to the Parent, and any shareholders of the Company
who have not theretofore complied with this Section 2.2 thereafter shall look,
subject to escheat and other similar laws, solely to the Parent for payment of
the Merger Consideration to which they are entitled under this Agreement.
Holders of unsurrendered Certificates shall not be entitled to vote the shares
of Parent Class A Common Stock represented by such Certificates or exercise
their other rights as a shareholder of Parent unless and until the holder of
such Certificates has surrendered such Certificate in accordance herewith.
(c) No dividends or other distributions that are otherwise payable on
the shares of Parent Class A Common Stock constituting any of the Merger
Consideration will be paid to the holder of any unsurrendered Certificate until
such Certificate is properly surrendered as provided herein, but (i) upon such
surrender, there shall be paid to the person in whose name the shares of Parent
Class A Common Stock constituting any of the Merger Consideration shall be
issued the amount of any dividends which shall have become payable with respect
to such shares between the Effective Time and the time of such surrender and
(ii) at the appropriate payment date or as soon thereafter as practicable,
there shall be paid to such person the amount of any dividends on such shares
of Parent Class A Common Stock which shall have a record or due date prior to
such surrender and a payment date after such surrender, subject in each such
case to (x) deduction therefrom of any amount required by applicable law to be
withheld, and (y) any applicable escheat laws or unclaimed property laws. On
surrender of a Certificate, no interest shall be payable with respect to the
payment of such dividends and no interest shall be payable with respect to the
amount of any cash payable in lieu of a fractional share of Parent Class A
Common Stock pursuant to paragraph (e) of this Section 2.2.
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<PAGE> 96
(d) If any cash is to be paid pursuant to Section 2.2(e) to, or
certificates representing shares of Parent Class A Common Stock are to be
issued to, a person other than the person in whose name the Certificate so
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates representing the shares of Parent Class A Common Stock
in any name other than that of the registered holder of the Certificate
surrendered or otherwise required, or shall establish to the satisfaction of
the Exchange Agent that such taxes have been paid or are not applicable.
(e) Shares of Parent Class A Common Stock shall be issued only in
whole shares. Former holders of Company Common Shares will not be entitled to
receive fractional shares of Parent Class A Common Stock ("Fractional Shares")
but, instead, will be entitled to receive promptly from the Exchange Agent a
cash payment in lieu of Fractional Shares in an amount equal to the Fractional
Share to which said holder would otherwise be entitled multiplied by the per
share closing sale price on the New York Stock Exchange of Parent Class A
Common Stock on the Closing Date. No dividends or distributions of Parent
shall be payable on or with respect to any Fractional Share and any such
Fractional Share will not entitle the owner thereof to vote or to any rights of
stockholders of Parent. Such cash payments will be made to each such former
holder only upon proper surrender of such former holder's Certificates,
together with a properly completed and duly executed transmittal form and any
other required documents.
(f) Each holder of one or more Company Common Shares who shall have
been a record holder of such shares as of the date fixed for the determination
of shareholders entitled to notice of and to vote at the meeting of
shareholders of the Company called to approve the Merger and adopt this Merger
Agreement and who shall have filed with Company, not later than ten (10) days
after such meeting, a written demand for payment to him of the fair cash value
of such shares in compliance with Section 1701.85 of the ORC, and whose such
shares shall not have been voted in favor of the Merger or adoption of this
Merger Agreement, shall cease to have any of the rights of a shareholder in
respect of such shares except the right to be paid the fair cash value of such
shares and any other rights bestowed under Sections 1701.84 and 1701.85 of the
ORC. Any holder of Company Common Shares who (i) surrenders his certificates
representing Company Common Shares for exchange pursuant hereto or (ii) validly
withdraws his written demand for payment of fair cash value of such share
pursuant to Sections 1701.84 and 1702.85 of the ORC will thereupon be
reinstated to all his rights as a shareholder in respect of such shares as of
the filing of his written withdrawal, subject to the provisions of Section 2.1
of this Merger Agreement, and will be entitled to receive the Merger
Consideration as of the Effective Time pursuant to this Merger Agreement. The
Company shall give Parent prompt notice of any demands received by the Company
for appraisal of Company Common Shares, and Parent
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shall have the right to participate in all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of Parent, make any payment with respect to, or settle or offer to
settle, any such demands.
SECTION 2.3 No Further Transfers. The stock transfer books of the
Company shall be closed at the close of business on the business day
immediately preceding the date of the Effective Time. In the event of a
transfer of ownership of Company Common Shares which is not registered in the
transfer records of the Company, the Merger Consideration to be distributed
pursuant to this Merger Agreement may be delivered to a transferee, if a
Certificate is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by payment of any applicable
stock transfer taxes. Parent and the Exchange Agent shall be entitled to rely
upon the stock transfer books of the Company to establish the identity of those
persons entitled to receive the Merger Consideration for their Company Common
Shares, which books shall be conclusive with respect to the ownership of such
shares. In the event of a dispute with respect to the ownership of any such
shares, the Surviving Corporation and the Exchange Agent shall be entitled to
deposit any Merger Consideration represented thereby in escrow with an
independent party and thereafter be relieved with respect to any claims to such
Merger Consideration. If, after the Effective Time, any certificate previously
representing Company Common Shares is presented for transfer, it shall be
forwarded to the Exchange Agent for cancellation and exchange in accordance
with Section 2.2 hereof.
ARTICLE III
ADDITIONAL AGREEMENTS IN CONNECTION WITH THE MERGER
SECTION 3.1 Best Efforts. Upon the terms and subject to the
conditions herein provided, each of the parties hereto agrees to use its best
efforts to take, or cause to be taken, all lawful action, to do, or cause to be
done, and to assist and cooperate with the other parties hereto in doing, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective, as soon as reasonably practicable, the
transactions contemplated by this Merger Agreement, including (i) the Merger,
(ii) the obtaining of consents, amendments to or waivers under the terms of any
material borrowing arrangements or other material contractual arrangements
required by the transactions contemplated by this Merger Agreement, and (iii)
the defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby. Each of the parties hereto agrees not to
take or to fail to take, as the case may be, any action, the taking of which or
the failure of which to take, as the case may be, would be likely to cause any
representation or warranty contained in this Merger Agreement to cease to be
true or accurate in any material respect or that would
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be reasonably likely to prevent the performance in all material respects of any
covenant or the satisfaction of any condition contained in this Merger
Agreement. In addition, Parent, either in its capacity as a shareholder,
directly or indirectly, of the Company or through its representatives on the
Company's Board of Directors (which shall be understood to mean those directors
of the Company who are executive officers or directors of the Parent), in each
case subjec t to the exercise of their respective fiduciary duties, if any, to
the Company's shareholders, agrees not to take or fail to take, as the case may
be, any action, the taking or failure of which to take, as the case may be,
would be likely to cause any representation or warranty of the Company
contained in this Merger Agreement to cease to be true or accurate in any
material respect or that would be reasonably likely to prevent the performance
in all material respects by the Company of any covenant or the satisfaction by
the Company of any condition contained in this Merger Agreement.
SECTION 3.2 Conduct of Business by the Company Pending the Merger.
Subject to the last sentence of Section 3.1 hereof, the Company covenants and
agrees that, prior to the Effective Time, unless Parent shall otherwise agree
in writing, or except as otherwise contemplated by this Agreement:
(a) neither the Company nor any subsidiary of the Company
shall (i) amend its articles or certificate of incorporation or code
of regulations or by-laws, (ii) change the number of authorized or
outstanding shares of its capital stock, as set forth in Section 4.3
hereof, or (iii) declare, set aside or pay any dividend or other
distribution, or make any payment in cash, stock or property, in
respect of any shares of its capital stock, except for regular
dividends or distributions declared or paid (x) by any subsidiary of
the Company to the Company or any other subsidiary of the Company, or
(y) on presently outstanding Company Common Shares;
(b) neither the Company nor any subsidiary of the Company
shall (i) authorize for issuance, issue, grant, sell, pledge or
dispose of or propose to issue, grant, sell, pledge or dispose of any
shares of, or warrants, options, commitments, subscriptions or rights
of any kind to acquire any shares of, the capital stock of the Company
or such subsidiary or any securities convertible into or exchangeable
for shares of any such capital stock, (ii) incur any material
indebtedness for borrowed money other than in the ordinary and usual
course of business, consistent with past practice, or (iii) acquire
directly or indirectly by redemption or otherwise any shares of the
capital stock of the Company or any subsidiary of the Company; and
(c) neither the Company nor any subsidiary of the Company
shall enter into any agreement or take any other action to do any of
the things described in paragraphs (a) or (b) of this Section 3.2 or
which would make any representation or warranty of the Company set
forth in this Agreement which is qualified
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as to materiality untrue or incorrect and any such representation or
warranty which is not so qualified materially untrue or incorrect.
SECTION 3.3 Notice of Actions and Proceedings. Each party promptly
shall notify the others of any claims, actions, proceedings or investigations
commenced or, to the best of its knowledge, threatened, and any material
developments relating to any such pending claim, action, proceeding or
investigation involving or affecting the parties, or any of their respective
properties or assets, or, to the best of its knowledge, any employee or
consultant of the parties, in his or her capacity as such, or director or
officer, in his or her capacity as such, of the Company or the Parent disclosed
in writing pursuant to Section 4.5 or 5.5 hereof, as the case may be, or which,
if pending on the date hereof, would have been required to have been disclosed
in writing pursuant to Section 4.5 or 5.5 hereof, as the case may be, or which
relate to the consummation of the Merger.
SECTION 3.4 Access and Information. Each party shall, and shall cause
its subsidiaries, officers, directors, employees and agents to, afford to each
other party and such party's accountants, counsel, financial advisors,
investment bankers and other agents and representatives, and its banks and
other financial institutions, full access at all reasonable times throughout
the period prior to the Effective Time to all of the officers, employees,
agents, properties, books, contracts, commitments and records (including but
not limited to tax returns) of such party and its subsidiaries and, during such
period, such party shall furnish promptly to each other party (i) a copy of
each report, schedule and other document filed by it or any of its subsidiaries
pursuant to the requirements of federal or state securities laws, and (ii) all
other financial, operating and other information concerning the business,
properties and personnel of such party and its subsidiaries as each other party
may reasonably request.
SECTION 3.5 Notification of Certain Other Matters. Each party
promptly shall notify the others of: (i) any notice of, or other communication
relating to, a default or event which, with notice or lapse of time or both,
would become a default, received by such party or any of its subsidiaries
subsequent to the date of this Merger Agreement and prior to the Effective
Time, under any agreement, indenture or instrument material to the financial
condition, properties, business or results of operations of such party and its
subsidiaries taken as a whole to which such party or any of its subsidiaries is
a party or is subject; (ii) any notice or other communication from any third
party alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Merger Agreement; (iii)
any notice or other communication from any regulatory authority in connection
with the transactions contemplated hereby; (iv) any material adverse change in
the financial condition, properties, businesses or results of operations of
such party and its subsidiaries taken as a whole, or the occurrence of an event
which, so far as reasonably can be foreseen at the time of its occurrence,
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would result in any such change; or (v) any matter hereafter arising which, if
existing, occurring or known at the date of this Merger Agreement, would have
been required to be disclosed to such other party.
SECTION 3.6 Certain Filings, Consents and Arrangements. Parent,
Mergerco and Company shall (a) as soon as practicable make any filings required
to be filed with any court, government, legislative body, governmental
authority or other regulatory or administrative agency or commission, domestic
or foreign, including, without limitation, any cable television commission or
authority ("Governmental Entity") between the date of this Agreement and the
Effective Time, (b) cooperate with one another (i) in promptly determining
whether any other filings are required to be made or consents, approvals,
permits or authorizations are required to be obtained under any other relevant
federal, state or foreign law or regulation and (ii) in promptly making any
such filings, furnishing information required in connection therewith and
timely seeking to obtain any such consents, approvals, permits or
authorizations and (c) deliver to the other parties to this Agreement copies of
the publicly available portions of all such reports promptly after they are
filed.
SECTION 3.7 Stock Exchange Listing. Parent shall use its best efforts
to list on the New York Stock Exchange, upon official notice of issuance, the
Parent Class A Common Stock to be issued pursuant to the Merger.
SECTION 3.8 Tax-Free Reorganization Treatment. Neither Parent,
Mergerco, nor Company shall intentionally take or cause to be taken any action,
whether before or after the Effective Time, which would disqualify the Merger
as a "reorganization" within the meaning of Section 368(a) of the Code.
SECTION 3.9 FCC Compliance. Company shall retain no right of
reversion or reassignment of the broadcast licenses and shall not reserve the
right to use the facilities of the broadcast stations in question for any
period whatsoever.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Mergerco as follows:
SECTION 4.1 Organization and Good Standing. Each of the Company and
its subsidiaries is a duly incorporated and validly existing corporation in
good standing under the laws of the state of its incorporation, with all
requisite corporate power and authority to own its properties and conduct its
business, and is duly qualified and in good standing as a foreign corporation
authorized to do business in each of the jurisdictions in which the character
of the properties owned or leased by it or the nature of
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the business transacted by it makes such qualification necessary, except where
the failure to be so qualified would not in the aggregate have a material
adverse effect on the business, assets, properties, financial condition or
results of operations of the Company and its subsidiaries taken as a whole (in
respect of either the Company and its subsidiaries taken as a whole or Parent
and its subsidiaries taken as a whole, as the case may be, a "Material Adverse
Effect"). The Company has heretofore delivered to the Parent true and correct
copies of its articles of incorporation and code of regulations as currently in
effect.
SECTION 4.2 Authorization; Binding Agreement. The Company has all
requisite corporate power and authority to execute and deliver this Merger
Agreement and to consummate the transactions contemplated hereby, subject only
to approval of the Merger Agreement by the affirmative vote of holders of a
majority of the outstanding Company Common Shares. The Company's Board of
Directors (at a meeting duly called and held) has (a) duly approved the Merger
Agreement and determined that the Merger is fair to and in the best interests
of the Company's shareholders (other than Parent and its subsidiaries) and (b)
adopted resolutions recommending approval of the Merger by the Company's
shareholders. Lehman Brothers Inc. has delivered to the Special Committee of
the Board of Directors of the Company its written opinion in the form of
Exhibit A hereto (the "Fairness Opinion"). The execution and delivery of this
Merger Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Company's Board of Directors and,
except for the adoption of this Merger Agreement by the shareholders of the
Company holding at least a majority of the outstanding Company Common Shares
(the "Required Shareholder Vote"), no other corporate proceedings on the part
of the Company are necessary to authorize this Merger Agreement and the
transactions contemplated hereby. This Merger Agreement has been duly and
validly executed and delivered by the Company, and constitutes a legal, valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms (except as enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights generally or by the principles governing the availability of equitable
remedies).
SECTION 4.3 Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of 25,000,000 Company Common Shares. As
of the date hereof, 10,325,788 Company Common Shares are issued and
outstanding, all of which are validly issued, fully paid and nonassessable.
There is not now, and at the Effective Time there will not be, any existing
option, warrant, subscription or other right, agreement or commitment to which
the Company or any of its subsidiaries is a party which either obligates the
Company or any of its subsidiaries to issue, sell or transfer any shares of its
capital stock or restricts the transfer of or otherwise relates to the capital
stock of the Company or any of its subsidiaries.
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SECTION 4.4 Reports and Financial Statements. The Company has
delivered to Parent true and complete copies of (i) the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993, as filed with the SEC
(the "Company 1993 10-K"), (ii) all other reports, statements and registration
statements (including quarterly reports on Form 10-Q and current reports on
Form 8-K) filed by it with the SEC since the filing of the Company 1993 10-K
(collectively, the "SEC Filings"). Except as expressly amended by a subsequent
SEC Filing, as of their respective dates the SEC Filings did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The historical
consolidated financial statements of the Company included in the SEC Filings
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as otherwise noted in such historical
financial statements) and present fairly the consolidated financial position,
results of operations and changes in financial position of the Company and its
consolidated subsidiaries as of the dates and for the periods indicated
(subject, in the case of any unaudited interim financial statements, to normal
year-end adjustments), except that the footnotes to any quarterly financial
statements do not contain all of the disclosures required by generally accepted
accounting principles.
SECTION 4.5 Litigation. Except as may be disclosed in the SEC Filings
or has been disclosed to Parent in writing on or prior to the date hereof, as
of the date hereof there are no claims, actions, proceedings or investigations
pending or, to the best knowledge of the Company, threatened, involving or
affecting the Company or any of its subsidiaries or any of their properties or
assets or, to the best of the Company's knowledge, any employee, consultant,
director or officer in his or her capacity as such, of the Company or any of
its subsidiaries before any court or governmental or regulatory authority or
body which, if adversely decided, could have a Material Adverse Effect. As of
the date hereof, neither the Company nor any of its subsidiaries nor any
property or assets of any of them is subject to any order, judgment, injunction
or decree that singly or in the aggregate has a Material Adverse Effect.
SECTION 4.6 Governmental Approvals and Compliance with Law. No
consent, license, approval, qualification or form of exemption from or
authorization of or declaration, registration or filing with any Governmental
Entity on the part of the Company or any subsidiary of the Company which has
not been made is required in connection with the execution or delivery by the
Company of this Merger Agreement, the consummation by the Company of the
transactions contemplated hereby or the performance by the Company of its
obligations hereunder other than (a) the filing of a Certificate of Merger with
the Secretary of State of Ohio in accordance with the ORC, (b) filings with the
SEC and any applicable national securities exchanges, (c) filings under state
securities, "Blue Sky" or anti-takeover laws, (d) any applicable
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filings required under the laws of foreign jurisdictions, (e) filings with and
approvals of the Federal Communications Commission ("FCC") ("FCC Filings and
Approvals") and any applicable filings and approvals with respect to the
Company's cable franchises (the "Cable Filings and Approvals"), and (f)
filings, authorizations, consents or approvals relating to matters which, in
the aggregate, are not material to the Company and its subsidiaries taken as a
whole.
SECTION 4.7 Absence of Breach. Except as has been disclosed to Parent
in writing on or prior to the date hereof, the execution and delivery by the
Company of this Merger Agreement, the consummation of the transactions
contemplated hereby and the performance by the Company of its obligations
hereunder, will not (a) subject to obtaining the required approval of the
Company's shareholders, conflict with or result in a breach of any of the
provisions of its Articles of Incorporation or Code of Regulations, (b) subject
to the obtaining of the governmental approvals and consents referred to in
Section 4.6 hereof, contravene any law, rule or regulation of any state or of
the United States or any political subdivision thereof or therein, or any
order, writ, judgment, injunction, decree, determination or award currently in
effect, or (c) require any consent, approval or notice under or result in a
violation or breach of or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, agreement or other instrument
to which the Company or any of its subsidiaries is a party or by which any of
their other assets are bound, the failure of which to obtain, in each such
case, would have a Material Adverse Effect.
SECTION 4.8 Proxy Statement; Registration Statement. None of the
information included in the Proxy Statement filed by the Company (excluding
information therein provided by Parent, as to which the Company makes no
representation), or provided by the Company for inclusion in the Registration
Statement filed by the Parent, will be false or misleading with respect to any
material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Except for
information supplied or to be supplied by Parent and Mergerco for inclusion
therein, including all information concerning subsidiaries of Parent other than
the Company and its subsidiaries, as to which the Company makes no
representation, the Proxy Statement, including any amendments thereto, will
comply in all material respects with the Exchange Act and the rules and
regulations thereunder.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO
Parent and Mergerco, jointly and severally, represent and warrant to
the Company as follows:
SECTION 5.1 Organization and Good Standing. Each of Parent and its
subsidiaries (including Mergerco) is a duly incorporated and validly existing
corporation in good standing under the laws of the state of its incorporation,
with all requisite corporate power and authority to own its properties and
conduct its business, and is duly qualified and in good standing as a foreign
corporation authorized to do business in each of the jurisdictions in which the
character of the properties owned or leased by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure
to be so qualified would not have a Material Adverse Effect. Parent and
Mergerco have heretofore delivered to the Company accurate and complete copies
of their respective corporate charters and by-laws or regulations as currently
in effect.
SECTION 5.2 Authorization; Binding Agreement. Each of Parent and
Mergerco has the requisite corporate power and authority to execute and deliver
this Merger Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Merger Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of each of Parent and Mergerco and by Parent as the sole
shareholder of Mergerco and no other corporate proceedings on the part of
Parent or Mergerco are necessary to authorize this Merger Agreement and the
transactions contemplated hereby. The Merger Agreement has been duly and
validly executed and delivered by Parent and Mergerco and constitutes a legal,
valid and binding agreement of Parent and Mergerco, enforceable against each of
them in accordance with its terms (except as enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights generally or by the principles governing the availability of equitable
remedies).
SECTION 5.3 Capitalization. As of the date of this Merger Agreement,
the authorized capital stock of Parent consists of, and as of the Effective
Time such stock will consist of, 120,000,000 shares of Parent Class A Common
Stock, 30,000,000 shares of Common Voting Stock, par value $.01 per share
("Parent Voting Stock" and together with Parent Class A Common Stock, "Parent
Common Stock"), and 25,000,000 shares of Serial Preferred Stock, par value $.01
per share ("Preferred Stock"). As of the date hereof, 54,471,733 shares of
Parent Class A Common Stock, no shares of Preferred Stock, and 20,174,833
shares of Parent Voting Stock were outstanding, and 1,739,500 shares of Parent
Class A Common Stock were reserved for issuance upon conversion of outstanding
options. As of the Effective Time, there will have been no change in the
number of shares of capital stock of the Parent outstanding or reserved as
aforesaid, except for shares of Parent Class A Common
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Stock issued pursuant to this Merger Agreement and shares of Parent Class A
Common Stock issued or reserved for issuance pursuant to the Parent's 1987
Amended and Restated Long-Term Incentive Plan (the "Long-Term Incentive Plan").
The Long-Term Incentive Plan provides for a maximum of 2,500,000 shares of (and
as of the Effective Time will provide for a maximum of 3,250,000 shares of)
Parent Class A Common Stock to be granted to officers, directors and key
employees of Parent and its subsidiaries, as restricted stock or issued on the
exercise of options or stock appreciation rights. The authorized capital stock
of Mergerco consists solely of 1,000 shares of Mergerco Common, all of which,
as of the date hereof, are issued and outstanding and held by Parent. As of
the Effective Time, the authorized capital stock of the Surviving Corporation
shall consist solely of 850 Common Shares, $.25 par value, all of which, as of
the Effective Time, will be issued and outstanding and held by Parent. All of
the outstanding shares of capital stock of Parent and its subsidiaries
(including Mergerco) have been duly authorized and validly issued and are fully
paid and nonassessable and, in the case of Parent's capital stock, free of
preemptive rights. Upon consummation of the Merger, each share of Parent Class
A Common Stock issued as part of the Merger Consideration will be duly
authorized, validly issued, fully paid and nonassessable.
SECTION 5.4 Reports and Financial Statements. Parent has delivered to
the Company true and complete copies of (i) Parent's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993, as filed with the SEC (the "Parent
1993 10-K"), and (ii) all other reports, statements and registration statements
(including quarterly reports on Form 10-Q and current reports on Form 8-K)
filed by it with the SEC since the filing of the Parent 1993 10-K
(collectively, the "Parent SEC Filings"). Except as expressly amended by
subsequent Parent SEC Filings, as of their respective dates the Parent SEC
Filings did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The historical consolidated financial statements of Parent
included in the Parent SEC Filings were prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as
otherwise noted in such historical financial statements) and present fairly the
consolidated financial position, results of operations and changes in financial
position of Parent and its consolidated subsidiaries as of the dates and for
the periods indicated (subject, in the case of any unaudited interim financial
statements, to normal year-end adjustments), except that the footnotes to any
quarterly financial statements do not contain all of the disclosures required
by generally accepted accounting principles.
SECTION 5.5 Litigation. Except as may be disclosed in the Parent SEC
Filings or has been disclosed to the Company in writing on or prior to the date
hereof, as of the date hereof there are no claims, actions, proceedings or
investigations pending or, to the best knowledge of Parent, threatened,
involving or affecting Parent
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or any of its subsidiaries or any of their properties or assets before any
court or governmental or regulatory authority or body which, if adversely
decided, could have a Material Adverse Effect. As of the date hereof, neither
Parent nor any of its subsidiaries nor any properties or assets of any of them
is subject to any order, judgment, injunction or decree that singly or in the
aggregate has a Material Adverse Effect.
SECTION 5.6 Governmental Approvals. No consent, license, approval or
authorization of or declaration, regulation or filing with any Governmental
Entity on the part of Parent or Mergerco which has not been made is required in
connection with the execution or delivery by Parent or Mergerco of this Merger
Agreement, the consummation by Parent and Mergerco of the transactions
contemplated hereby or the performance by each of Parent and Mergerco of its
respective obligations hereunder other than (i) the filing of a Certificate of
Merger with the Secretary of State of Ohio in accordance with the ORC, (ii)
filings with the SEC and any applicable national securities exchanges, (iii)
filings under state securities, "Blue Sky" or antitakeover laws, (iv) any
applicable filings required under the laws of foreign jurisdictions, and (v)
filings, authorizations, consents or approvals relating to matters which, in
the aggregate, are not material to Parent and its subsidiaries taken as a
whole.
SECTION 5.7 Absence of Breach. Except as has been disclosed to the
Company in writing on or prior to the date hereof, the execution and delivery
by Parent and Mergerco of this Merger Agreement, the consummation by Parent and
Mergerco of the transactions contemplated hereby and the performance by Parent
and Mergerco of their respective obligations hereunder, will not (a) require
the approval of Parent's shareholders, (b) conflict with or result in a breach
of any of the provisions of their respective charters, code of regulations or
by-laws, (c) subject to the obtaining of the governmental and other consents
referred to in Section 5.6 hereof, contravene any law, rule or regulation of
any state or of the United States or any political subdivision thereof or
therein, or any order, writ, judgment, injunction, decree, determination or
award currently in effect, or (d) require any consent, approval or notice under
or result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default or give rise to any right of
termination, cancellation or acceleration under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, agreement or other
instrument to which Parent or any of its subsidiaries (including Mergerco but
excluding the Company and its subsidiaries) is a party or by which any of them
or their assets are bound, the failure of which to obtain could have a Material
Adverse Effect.
SECTION 5.8 Proxy Statement; Registration Statement. None of the
information included in the Registration Statement filed by Parent, or provided
by Parent or Mergerco for inclusion in the Proxy Statement filed by the
Company, will be false or misleading with respect to any material fact or will
omit to state any material fact required to be stated therein or necessary in
order
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to make the statements therein, in light of the circumstances under which they
are made, not misleading. The Registration Statement, including any amendments
thereto, will comply in all material respects with the Exchange Act and the
rules and regulations thereunder.
ARTICLE VI
COVENANTS FOLLOWING THE MERGER
SECTION 6.1 Indemnification. Parent agrees that all rights to
indemnification now existing in favor of the employees, agents, directors or
officers of the Company and its subsidiaries (collectively, the "Indemnified
Parties") as provided in their respective charters, code of regulations or
by-laws, by agreement or otherwise in effect on the date hereof shall survive
the Merger and shall, with respect to any action or omission occurring prior to
the Effective Time, continue in full force and effect in accordance with their
terms. Without limiting the foregoing, in the event that any Indemnified Party
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter for which such party is entitled to be indemnified
hereunder, including the transactions contemplated hereby, occurring prior to,
and including, the Effective Time, the Company will periodically advance to
such Indemnified Party its legal and other expenses incurred in connection
therewith to the extent permitted by applicable law. Parent will indemnify the
Indemnified Parties to the fullest extent permitted by applicable law and shall
guarantee the timely payment of any amounts owed to each member of the Special
Committee pursuant to his Indemnity Agreement with the Company dated as of
February 17, 1994 (collectively, the "Indemnity Agreements"). Parent shall
cause to be maintained in effect for a period of two (2) years from the
Effective Time the current policies of the directors' and officers' liability
insurance maintained by or for the benefit of the Company (the "D&O Insurance
Coverage") (provided that Parent may substitute therefor policies of at least
the same coverage containing terms and conditions which are no less
advantageous) with respect to matters occurring prior to the Effective Time,
provided, however, that Parent's obligation to maintain such D&O Insurance
Coverage shall be subject to the Company's being able to maintain or obtain
insurance at an annual cost not greater than 150% of the annual premiums
currently paid (the annual premiums currently paid being the "Current Annual
Premiums") by the Company with respect to its D&O Insurance Coverage and if
such D&O Insurance Coverage is not available at such cost, then Parent shall
cause to be maintained the highest level of D&O Insurance Coverage that can be
purchased against payment of annual premiums equal to 150% of the Current
Annual Premiums.
SECTION 6.2 Further Action. In case at any time after the Effective
Time, Parent or the Surviving Corporation or their successors or assigns, shall
determine that any further conveyance, assignment or other document or any
further action is reasonably
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necessary or desirable in connection with the matters specified in this Merger
Agreement, then the parties hereto, with the Surviving Corporation acting on
behalf of the Company, shall cause to be executed and delivered, all such
deeds, endorsements, assignments and other good and sufficient instruments of
conveyance and transfer, including appropriate form endorsements to all title
and other insurance policies, as shall be valid, operative and effective to
vest in the Surviving Corporation good title to all of the property, assets and
business to be conveyed, transferred, assigned and delivered hereunder, and
will take or cause to be taken such further or other action as Parent or the
Surviving Corporation may deem necessary or desirable in order to vest in and
confirm the title to and possession of all of the property, rights, privileges,
powers and franchises of the Company and otherwise to carry out the intent and
purposes of this Merger Agreement.
ARTICLE VII
CONDITIONS
SECTION 7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) this Merger Agreement and the Merger shall have been
approved and adopted at or prior to the Effective Time by the Required
Shareholder Vote;
(b) the Registration Statement shall have become effective
under the Securities Act and no stop order suspending such
effectiveness shall have been issued nor shall any proceeding for such
purpose have been instituted or threatened;
(c) All authorizations, consents, orders or approvals of, and
all expirations of waiting periods imposed by, any Governmental Entity
(collectively, the "Consents") which are necessary for the
consummation of the Merger (other than immaterial Consents, the
failure to obtain which would not be materially adverse to the Company
and its subsidiaries taken as a whole) shall have been obtained or
shall have occurred and shall be in full force and effect at the
Effective Time; provided however, that no such authorization, consent,
order or approval shall be deemed to have been received if it shall
include any conditions or requirements which would so reduce the
economic or business benefits of the transactions contemplated by this
Agreement so as to render inadvisable in the reasonable opinion of the
Board of Directors of either Parent or the Company the consummation of
the Merger;
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(d) no order, statute, rule, regulation, executive order,
stay, decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which
prevents or materially restricts the consummation of the Merger;
(e) the shares of Parent Class A Common Stock to be issued as
the Merger Consideration pursuant to the Merger Agreement shall have
been approved for listing on the New York Stock Exchange, subject to
official notice of issuance;
(f) the Company and the Special Committee shall have received
written confirmation from Lehman Brothers Inc. dated the date of the
Effective Time, in customary form, to the effect that the opinions
expressed by them in the Fairness Opinion remain valid, and in full
force without material amendment, as of such date; and
(g) Baker & Hostetler, counsel to Parent, shall have delivered
to Parent and the Company their opinion, dated the date of the day of
the Effective Time, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion which
are consistent with the state of facts existing at the Effective Time,
the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and
that, accordingly: (i) no gain or loss will be recognized by Parent
or Company as a result of the Merger; (ii) no gain or loss will be
recognized by the shareholders of Company who exchange their Company
Common Shares for shares of Parent Class A Common Stock pursuant to
the Merger (except with respect to cash received in lieu of a
Fractional Share); (iii) the tax basis of the shares of Parent Class A
Common Stock received by shareholders of the Company will be the same
as the tax basis of the Company Common Shares surrendered in exchange
therefor (reduced by any amount allocable to a Fractional Share for
which cash is received); and (iv) the holding period of the shares of
Parent Class A Common Stock received in the Merger will include the
period during which the Company Common Shares surrendered in exchange
therefor were held, provided such Company Common Shares were held as
capital assets at the Effective Time. In rendering such opinion,
counsel may require and rely upon representations contained in
certificates of officers of the Company and Parent.
SECTION 7.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Parent and Mergerco shall have performed in all material
respects their agreements contained in this Merger Agreement required
to be performed at or prior to the Effective Time; and
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(b) except as contemplated or permitted by this Merger
Agreement, the representations and warranties of Parent and Mergerco
set forth in this Merger Agreement shall be true and correct in all
material respects at and as of the Effective Time as if made at and as
of such date, unless stated in this Merger Agreement to be true on and
as of another date, in which case such representation and warranty
shall have been true in all material respects on and as of such date.
SECTION 7.3 Conditions to Obligations of Parent and Mergerco to Effect
the Merger. The obligations of Parent and Mergerco to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the
following additional conditions:
(a) subject to the last sentence of Section 3.1 hereof, the
Company shall have performed in all material respects its agreements
contained in this Merger Agreement required to be performed at or
prior to the Effective Time;
(b) except as contemplated or permitted by the Merger
Agreement, the representations and warranties of the Company set forth
in this Merger Agreement shall be true and correct in all material
respects at and as of the Effective Time as if made at and as of such
date unless stated in this Merger Agreement to be true on and as of
another date, in which case such representation and warranty shall
have been true in all material respects on and as of such date;
(c) there shall not have been any action taken, or any
statute, rule, regulation, legislation, interpretation, judgment,
order or injunction enacted, entered, enforced, promulgated, amended,
issued or deemed applicable to the Merger by any Governmental Entity
(i) restraining or preventing the carrying out of the transactions
contemplated hereby, (ii) prohibiting Parent's ownership or operation
of all or any material portion of its or the Company's or any of the
Company's subsidiaries' businesses or assets, or compelling Parent to
dispose of or hold separate all or any material portion of Parent's or
the Company's or any of the Company's subsidiaries' businesses or
assets as a result of the transactions contemplated by this Merger
Agreement, (iii) making acquisition of the Company Common Shares
pursuant to the Merger illegal, (iv) prohibiting Parent effectively
from acquiring or holding or exercising full rights of ownership of
Company Common Shares, including, without limitation, the right to
vote Company Common Shares acquired by it pursuant to the Merger, on
all matters properly presented to the shareholders of the Company, (v)
prohibiting Parent or any of its subsidiaries or affiliates from
effectively controlling in any material respect the businesses or
operations of the Company, Parent or their respective subsidiaries, or
(vi) which would impose any condition which would materially adversely
affect the business of the Company and its subsidiaries taken as a
whole or the business of Parent and its subsidiaries taken as a whole;
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(d) the Company's Board of Directors shall not have withdrawn
or modified its position with respect to the Merger; and
(e) Dissenting Shares shall not exceed 140,000 of the
outstanding Company Common Shares.
ARTICLE VIII
CLOSING; TERMINATION
SECTION 8.1 The Closing. Subject to satisfaction or waiver of all
conditions precedent set forth in Article VII of this Merger Agreement, the
closing ("the Closing") shall take place at the Company's corporate offices in
Cincinnati, Ohio or at such other location as is mutually agreeable to the
parties and on a date ("the Closing Date") which is the first business day
after the later of (a) the first date on which the Merger may be consummated in
accordance with the approvals, if any, of Governmental Entities and (b) the
date the Required Shareholder Vote has been obtained.
If all conditions are determined to be satisfied in all material
respects (or are duly waived) at the Closing, the Closing shall be consummated
by the filing of the Certificate of Merger with the Secretary of State of the
State of Ohio.
SECTION 8.2 Documents and Certificates. Parent, Mergerco and Company
shall use their respective best efforts, on or prior to Closing, to execute and
deliver all such instruments, documents or certificates as may be necessary or
advisable, on the advice of counsel, for the consummation at the Closing of the
transactions contemplated by this Merger Agreement or to cause the Effective
Time, subject to the consummation at the Closing, to occur as soon as
practicable.
SECTION 8.3 Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding the approval by the shareholders
of any or all of Parent, Mergerco or the Company, (a) by mutual consent of the
Boards of Directors of Parent, Mergerco and the Company; (b) by either Parent
and Mergerco or the Company if the Merger shall not have been consummated on or
before December 31, 1994 (or such later date as may be agreed to by Parent,
Mergerco and the Company in writing) unless the failure to consummate the
Merger on or before such date shall have resulted from the failure of the party
seeking to terminate the Merger Agreement to satisfy any of the closing
conditions which are set forth in Section 7.2 or 7.3 hereof, as the case may
be; (c) by the Company if Parent or Mergerco fails to perform in any material
respect any of their material obligations under this Merger Agreement; or (d)
by the Company if the conditions specified in Section 7.1 and 7.2 hereof have
not been met or waived by the Company at such time as such conditions can no
longer be satisfied; or (e) by Parent or Mergerco if the Company fails to
perform in any material respect any of its material obligations under this
Merger
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Agreement; or (f) by Parent or Mergerco if the conditions specified in Section
7.1 and 7.3 hereof have not been met or waived by Parent and Mergerco at such
time as such conditions can no longer be satisfied; (g) by Parent if the
Company has not received approval, satisfactory to Parent, of the Sacramento
Metropolitan Cable Television Commission by May 5, 1994; or (h) by either
Parent and Mergerco or the Company if (i) in the case of Parent and Mergerco,
their respective Boards of Directors conclude prior to the Effective Time,
after consultation with legal counsel, that as a result of an event or
condition not directly caused by either Parent or Mergerco, pursuant to their
fiduciary duties in accordance with applicable law, this Agreement should be
terminated and (ii) in the case of the Company the Special Committee advises
the Company's Board of Directors prior to the Effective Time that it has
concluded, after consultation with legal counsel, that as a result of an event
or condition not directly caused by the Company, pursuant to the Special
Committee's fiduciary duties in accordance with applicable law, this Agreement
should be terminated; provided that in the case of either clause (c) or (e), if
such failure is curable, notice of such failure shall have been given to the
defaulting party and such defaulting party shall have failed to cure such
failure within 30 days of notice thereof.
SECTION 8.4 Effect of Termination. In the event of the termination of
this Agreement by either Parent or Mergerco or by the Company, as provided in
Section 8.3 hereof, this Agreement shall thereafter become void and have no
effect and no party hereto shall have any liability to any other party hereto
or its shareholders or directors or officers in respect thereof (except as set
forth in Section 6.1 and Section 9.3 hereof).
ARTICLE IX
GENERAL AGREEMENTS
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements. All representations, warranties and agreements in this Merger
Agreement or in any instrument delivered pursuant to this Merger Agreement
shall not survive the Effective Time, except for the agreements set forth in
Article VI hereof, Section 9.3 of Article IX hereof and the Indemnity
Agreements.
SECTION 9.2 Entire Agreement. This Merger Agreement contains the
entire agreement among the parties hereto with respect to the Merger and the
other transactions contemplated hereby and thereby, and supersedes all prior
agreements among the parties with respect to such matters other than the
Indemnity Agreements.
SECTION 9.3 Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
costs and expenses.
SECTION 9.4 Notice. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly
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given if delivered by messenger, transmitted by telecopier, telex or telegram
or mailed by registered or certified mail, postage prepaid, as follows:
If to Parent or Mergerco, to:
The E.W. Scripps Company
1105 N. Market Street
Wilmington, Delaware 19801
Attn: Daniel J. Castellini, Senior Vice President-
Finance and Administration
with a copy to:
John H. Burlingame, Esq.
Baker & Hostetler
3200 National City Center
Cleveland, Ohio 44114
If to the Company, to:
Scripps Howard Broadcasting Company
312 Walnut Street
28th Floor
Cincinnati, Ohio 45202
Attn: P. Frank Gardner, Executive Vice President
with copies to:
Scripps Howard Broadcasting Company
Special Committee of the Board
c/o Robert E. Stautberg and Gordon E. Heffern
312 Walnut Street
28th Floor
Cincinnati, Ohio 45202
James M. Anderson, Esq.
Taft, Stettinius & Hollister
1800 Star Bank Center
425 Walnut Street
Cincinnati, Ohio 45202-3957
Except as otherwise specified herein, all notices and other
communications shall be deemed to have been duly given on the first to occur of
(a) the date of delivery if delivered personally on a business day during
normal business hours, and, if not, on the next occurring business day, (b)
five days following posting if transmitted by mail, (c) the date of
transmission with confirmed answer-back if transmitted by telex on a business
day during normal business hours, and, if not, on the next occurring business
day, or (d) the date of receipt if transmitted by telecopier or facsimile on a
business day during normal business hours, and, if not, on the next occurring
business day. Any party may change his or its
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<PAGE> 114
address for purposes hereof by notice to the other party given as provided in
this Section 9.4.
SECTION 9.5 Amendments. This Merger Agreement may be amended by the
parties hereto, by action taken by their respective Boards of Directors, at any
time prior to the Effective Time; provided, however, that after approval of
this Agreement by the shareholders of the Company, no amendment or modification
shall (a) alter or change the amount or kind of shares, securities, cash,
property or rights to be received in exchange for or on conversion of all or
any of the shares of any class or series thereof of the Company, or (b) alter
or change any of the terms and conditions of this Agreement if such alteration
or change would adversely affect the holders of any class or series of capital
stock of the Company. This Merger Agreement may not be amended, modified or
supplemented except by written agreement of the parties hereto.
SECTION 9.6 Waiver. At any time prior to the Effective Time, the
parties hereto by action taken by their respective Boards of Directors may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, and
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf
of such party. The Company shall only take actions with respect to the
enforcement of its rights under this Merger Agreement, including, without
limitation, the granting of any waivers or the approval of any amendments, if
such actions are recommended by the members of the Special Committee.
SECTION 9.7 Brokers. The Company represents and warrants that except
for fees payable to Lehman Brothers Inc. as financial advisor to the Special
Committee, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger based upon
arrangements made by or on behalf of the Company. Parent and Mergerco
represent and warrant that no broker, finder or investment banker other than J.
P. Morgan Securities Inc. is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger based upon arrangements made by or
on behalf of Parent and Mergerco.
SECTION 9.8 Publicity. So long as this Agreement is in effect, the
parties hereto shall not, and shall cause their affiliates not to, issue or
cause the publication of any press release or other announcement with respect
to the Merger or this Merger Agreement without the consent of the other party,
which consent shall not be withheld or delayed where such release or
announcement is required by applicable law or any listing agreement with a
national securities exchange.
SECTION 9.9 Subsidiaries. When a reference is made in this Agreement
to subsidiaries of Parent or the Company, the word
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"subsidiaries" means any corporation more than 50% of whose outstanding voting
securities are directly or indirectly owned by Parent or the Company, as the
case may be.
SECTION 9.10 Headings. The headings contained in this Merger
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Merger Agreement.
SECTION 9.11 Non-Assignability. This Merger Agreement shall not be
assigned by operation of law or otherwise, except that at the election of
Parent, any direct or indirect wholly owned subsidiary of Parent may be
substituted for Mergerco as a Constituent Corporation in the Merger for all
purposes of this Merger Agreement.
SECTION 9.12 Counterparts. This Merger Agreement may be executed in
two or more counterparts, each of which shall be deemed to constitute an
original, and shall become effective when one or more counterparts have been
signed by each of the parties hereto and delivered to the other parties.
SECTION 9.13 Governing Law. This Merger Agreement shall be governed
by and construed in accordance with the laws of the State of Ohio applicable to
contracts made and to be performed wholly within such state.
SECTION 9.14 Severability. If any term or other provision of this
Merger Agreement is invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other terms and provisions of this Merger
Agreement will nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party hereto. Upon any such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto will negotiate in good faith to modify
this Merger Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Merger Agreement are consummated to the extent possible.
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<PAGE> 116
IN WITNESS WHEREOF, the parties have caused this Agreement to
be signed by their respective duly authorized officers as of the date first
above written.
SCRIPPS HOWARD BROADCASTING COMPANY
By:/s/ P. Frank Gardner
--------------------------------
Title: P. Frank Gardner,
Executive Vice President
Attest:
/s/ M. Denise Kuprionis
- - - - - - - - - - ------------------------------
M. Denise Kuprionis, Secretary
THE E.W. SCRIPPS COMPANY
By:/s/ Lawrence A. Leser
--------------------------------
Title: Lawrence A. Leser,
President and Chief
Executive Officer
Attest:
/s/ M. Denise Kuprionis
- - - - - - - - - - ------------------------------
M. Denise Kuprionis, Secretary
SHB MERGER CORPORATION
By:/s/ Lawrence A. Leser
--------------------------------
Title: Lawrence A. Leser,
President
Attest:
/s/ M. Denise Kuprionis
- - - - - - - - - - ------------------------------
M. Denise Kuprionis, Secretary
WA0232:09900:00010:WA-54.DUP
to'k 4/22/94
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<PAGE> 117
LEHMAN BROTHERS ANNEX II
May 4, 1994
Special Committee of the Board of Directors
Scripps Howard Broadcasting Company
312 Walnut Street
Cincinnati, Ohio 45202
Members of the Special Committee of the Board of Directors:
We understand that E.W. Scripps ("EWS") has proposed to purchase the 13.9% of
the outstanding common stock of Scripps Howard Broadcasting (the "Company") it
does not currently own pursuant to a merger of the Company with and into a
wholly owned subsidiary of EWS whereby each issued and outstanding share of
common stock of the Company not currently owned by EWS would be converted into
3.45 shares (the "Exchange Ratio") of Class A Common Stock of EWS ("the
Proposed Transaction"). The terms and conditions of the Proposed Transaction
are set forth in more detail in the Merger Agreement dated May 4, 1994 between
EWS and the Company (the "Agreement").
We have been requested by the Special Committee of the Board of Directors of
the Company to render our opinion with respect to the fairness, from a
financial point of view, to the stockholders of the Company other than EWS of
the Exchange Ratio to be offered in the Proposed Transaction. We have not been
requested to opine as to, and our opinion does not in any manner address, the
Company's underlying business decision to proceed with or effect the Proposed
Transaction.
In arriving at our opinion, we reviewed and analyzed:
(1) the Agreement,
(2) publicly available information concerning EWS and the Company which we
believe to be relevant to our inquiry, including but not limited to,
the December 31, 1993, annual reports and Form 10Ks, and 1993 proxy
materials of EWS and the Company, which, among other things, details
the interrelationship of the companies and their two managements;
(3) financial and operating information with respect to the businesses,
operations and prospects of EWS and the Company and their respective
business segments furnished to us by EWS and the Company,
<PAGE> 118
Special Committee of the Board of Directors
Scripps Howard Broadcasting Company
May 4, 1994
Page 2
including but not limited to, the strategic plans and operating
projections of EWS and the Company;
(4) a trading history of the common stock of EWS and the Company and a
comparison of that trading history with those of other companies which
we deemed relevant as well as the trading relationship of the common
stock of EWS to that of the Company;
(5) a comparison of the historical financial results, present financial
condition of EWS and the Company and their respective business
segments with those of other companies which we deemed relevant;
(6) a comparison of the financial terms of the Proposed Transaction with
the financial terms of certain other transactions which we deemed
relevant;
(7) the pro forma effects of the Proposed Transaction on the business,
operations and financial condition of EWS;
(8) the ownership profile and relative liquidity of the outstanding shares
of EWS and the Company, and the pro forma ownership of EWS following
the proposed transaction; and
(9) the voting characteristics of the E.W. Scripps shares to be received
as consideration by the Scripps Howard Broadcasting shareholders in
the Transaction, and the voting control position by the majority
shareholders of E.W. Scripps and the restrictions on transfer of that
control.
In addition, we have had discussions with the management of the Company and EWS
concerning their respective businesses, operations, assets, financial condition
and prospects, including the potential cost savings and strategic benefits of
the Proposed Transaction and undertook such other studies, analyses and
investigations as we deemed appropriate.
We have assumed and relied upon the accuracy and completeness of the financial
and other information used by us in arriving at our opinion without independent
verification and have further relied
<PAGE> 119
Special Committee of the Board of Directors
Scripps Howard Broadcasting Company
May 4, 1994
Page 3
upon the assurances of management of EWS and the Company that they are not
aware of any facts that would make such information inaccurate or misleading.
With respect to the projections of EWS and the Company, upon advice of EWS and
the Company, we have assumed that such projections have been reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the management of EWS and the Company as to the future financial
performance of EWS and the Company, and that EWS and the Company will perform
substantially in accordance with such projections. In arriving at our opinion,
we have not conducted a physical inspection of the properties and facilities of
EWS or the Company and have not made or obtained any evaluations or appraisals
of the assets or liabilities of EWS or the Company. In addition, you have not
authorized us to solicit, and we have not solicited, any indications of
interest from any third party with respect to the purchase of all or a part of
the Company's business. Upon advice of the Company and its legal and
accounting advisors, we have assumed that the Proposed Transaction will be
tax-free to the public stockholders of the Company. Our opinion is necessarily
based upon market, economic and other conditions as they exist on, and can be
evaluated as of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion as of the date
hereof that, from a financial point of view, the Exchange Ratio to be offered
to stockholders of the Company other than EWS in the Proposed Transaction is
fair to such stockholders.
We have acted as financial advisor to the Special Committee of the Board of
Directors of the Company in connection with the Proposed Transaction and the
Company has agreed to indemnify us for certain liabilities which may arise out
of the rendering of this opinion.
This opinion is solely for the use and benefit of the Special Committee of the
Board of Directors of the Company and shall not be disclosed publicly or made
available to, or relied upon by, any third party without our prior approval.
This opinion is not
<PAGE> 120
Special Committee of the Board of Directors
Scripps Howard Broadcasting Company
May 4, 1994
Page 4
intended to be and does not constitute a recommendation to any stockholder of
the Company as to how such stockholder would vote with respect to the Proposed
Transaction.
Very truly yours,
LEHMAN BROTHERS
By:/s/ Jill A. Greenthal
--------------------------------
Jill A. Greenthal
Managing Director
WA0232:99163:94001:WA-02.LTR
to'k 5/12/94
<PAGE> 121
Annex III
Sec. 1701.85. PROCEDURE IN CASE OF DISSENTS.
(A)(1) A shareholder of a domestic corporation is entitled to relief
as a dissenting shareholder in respect of the proposals in sections 1701.74,
1701.76, and 1701.84 of the Revised Code, only in compliance with this section.
(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of
the shares of the corporation as to which he seeks relief as of the date fixed
for the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall
not have been voted in favor of the proposal. Not later than ten days after
the date on which the vote of such proposal was taken at the meeting of the
shareholders, the shareholder shall deliver to the corporation a written demand
for payment to him of the fair cash value of the shares as to which he seeks
relief, stating his address, the number and class of such shares, and the
amount claimed by him as the fair cash value of the shares.
(3) The dissenting shareholder entitled to relief under division
(C) of section 1701.84 of the Revised Code in the case of a merger pursuant to
section 1701.80 of the Revised Code and a dissenting shareholder entitled to
relief under division (E) of section 1701.84 of the Revised Code in the case of
a merger pursuant to section 1701.801 of the Revised Code shall be record
holder of the shares of the corporation as to which he seeks relief as of the
date on which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
section 1701.80 or 1701.801 of the Revised Code, the shareholder shall deliver
to the corporation a written demand for payment with the same information as
that provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the
new corporation, whether served before, on, or after the effective date of the
merger or consolidation.
<PAGE> 122
(5) If the corporation sends to the dissenting shareholder, at the
address specified in his demand, a request for the certificate representing the
shares as to which he seeks relief, he, within fifteen days from the date of
the sending of such request, shall deliver to the corporation the certificates
requested, in order that the corporation may forthwith endorse on them a legend
to the effect that demand for the fair cash value of such shares has been made.
The corporation promptly shall return such endorsed certificates to the
shareholder. Failure on the part of the shareholder to deliver such
certificates terminates his rights as a dissenting shareholder, at the option
of the corporation, exercised by written notice sent to him within twenty days
after the lapse of the fifteen-day period, unless a court for good cause shown
otherwise directs. If shares represented by a certificate on which such a
legend has been endorsed are transferred, each new certificate issued for them
shall bear a similar legend, together with the name of the original dissenting
holder of such shares. Upon receiving a demand for payment from a dissenting
shareholder who is the record holder of uncertificated securities, the
corporation shall make an appropriate notation of the demand for payment in its
shareholder records. If uncertificated shares for which payment has been
demanded are to be transferred, any new certificate issued for the shares shall
bear the legend required for certificated securities as provided in this
paragraph. A transferee of the shares so endorsed, or of uncertificated
securities where such notation has been made, acquires only such rights in the
corporation as the original dissenting holder of such shares had immediately
after the service of a demand for payment of the fair cash value of the shares.
Such request by the corporation is not an admission by the corporation that the
shareholder is entitled to relief under this section.
<PAGE> 123
(B) Unless the corporation and the dissenting shareholder shall have
come to an agreement on the fair cash value per share of the shares as to which
he seeks relief, the shareholder or the corporation, which in case of a merger
or consolidation may be the surviving or the new corporation, within three
months after the service of the demand by the shareholder, may file a complaint
in the court of common pleas of the county in which the principal office of the
corporation [that] issued such shares is located, or was located at the time
when the proposal was adopted by the shareholders of the corporation, or, if
the proposal was not required to be submitted to the shareholders, was approved
by the directors. Other dissenting shareholders, within the period of three
months, may join as plaintiffs, or may be joined as defendants in any such
proceeding, and any two or more such proceedings may be consolidated. The
complaint shall contain a brief statement of the facts, including the vote and
the facts entitling the dissenting shareholder to the relief demanded. No
answer to such complaint is required. Upon the filing of the complaint, the
court, on motion of the petitioner, shall enter an order fixing a date for a
hearing on the complaint, and requiring that a copy of the complaint and a
notice of the filing and of the date for hearing be given to the respondent or
defendant in the manner in which summons is required to be served or substitute
service is required to be made in other cases. On the day fixed for hearing on
the complaint or any adjournment of it, the court shall determine from the
complaint and from such evidence as is submitted by either party whether the
shareholder is entitled to be paid the fair cash value of any shares and, if
so, the number and class of such shares. If the court finds that the
shareholder is so entitled, the court may appoint one or more persons as
appraisers to receive evidence and to recommend a decision on the amount of the
fair cash value. The appraisers have such power and authority as is specified
in the order of their appointment. The court thereupon shall make a finding as
to the fair cash value of a share, and shall render judgment against the
corporation for the payment of it, with interest at such rate and from such
date as the court considers equitable. The costs of the proceeding, including
reasonable compensation to the appraisers to be fixed by the court, shall be
assessed or apportioned as the court considers equitable. The proceeding is a
special proceeding, and final orders in it may be vacated, modified, or
reversed on appeal pursuant to the Rules of Appellate Procedure and, to the
extent not in conflict with those rules, Chapter 2505 of the Revised Code. If,
during the pendency of any proceeding instituted under this section, a suit or
proceeding is or has been instituted to enjoin or otherwise to prevent the
carrying out of the action as to which the shareholder has dissented, the
proceeding instituted under this section shall be stayed until the final
determination of the other suit or proceeding. Unless any provision in
division (D) of this section is applicable, the fair cash value of the shares
as agreed upon by the parties or as fixed under this section shall be paid
within thirty days after the date of final determination of such value under
this division, the effective date of the amendment to the articles, or the
consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event, payment shall be made immediately to a
holder of uncertificated securities entitled to such payment. In the case of
holders of shares represented by certificates, payment shall be made only upon
and simultaneously with the surrender to the corporation of the certificates
representing the shares for which such payment is made.
(C) If the proposal was required to be submitted to the
shareholders of the corporation, fair cash value as to those shareholders shall
be determined as of the day prior to that on which the vote by the shareholders
was taken, and, in the case of a merger pursuant to section 1701.80 or 1701.801
of the Revised Code, fair cash value as to shareholders of a constituent
subsidiary corporation shall be determined as of the day before the adoption of
the agreement of merger by the directors of the particular subsidiary
corporation. The fair cash value of a share for the purposes of this section
is the amount that a willing seller, under no compulsion to sell, would be
willing to accept, and that a willing buyer, under no compulsion to purchase,
would be willing to pay, but in no event shall the fair cash value exceed the
amount specified in the demand of the particular shareholder. In computing
such fair cash value, any appreciation or depreciation in market value
resulting from the proposal submitted to the directors or to the shareholders
shall be excluded.
(D) The right and obligation of a dissenting shareholder to
receive such fair cash value and to sell such shares as to which he seek relief
and the right and obligation of the corporation to purchase such shares and to
pay the fair cash value of them if:
(1) Such shareholder has not complied with this section, unless
the corporation by its directors waives such failure;
(2) The corporation abandons or is finally enjoined or prevented from
carrying out or the shareholders rescind their adoption of the action involved;
<PAGE> 124
(3) The shareholder withdraws his demand, with the consent of the
corporation by its directors;
(4) The corporation and the dissenting shareholder shall not have
come to an agreement as to fair cash value per share, and neither the
shareholder nor the corporation shall have filed or joined in a complaint under
division (B) of this section within the period provided.
(E) From the time of giving the demand until either the
termination of the rights and obligations arising from it or the purchase of
the shares by the corporation, all other rights accruing from such shares,
including voting and dividend or distribution rights, are suspended. If during
the suspension, any dividend or distribution is paid in money upon shares of
such class, or any dividend, distribution, or interest is paid in money upon
any securities issued in extinguishment of or in substitution for such shares,
an amount equal to the dividend, distribution, or interest that, except for the
suspension, would have been payable upon such shares or securities shall be
paid to the holder of record as a credit upon the fair cash value of the
shares. If the right to receive fair cash value is terminated otherwise than
by the purchase of the shares by the corporation, all rights of the holder
shall be restored and all distributions that, except for the suspension, would
have been made shall be made to the holder of record of the shares at the time
of termination.
WA0232:30645:94002:WA-12
<PAGE> 125
PRELIMINARY COPY
[FORM OF PROXY]
SCRIPPS HOWARD BROADCASTING COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ____________ and ____________ and each of them,
with power of substitution, attorneys and proxies to represent and to vote all
shares of Common Stock of Scripps Howard Broadcasting Company (the "Company")
which the undersigned is entitled to vote at the Special Meeting of
Stockholders of the Company to be held at _______________ on
_______________________________, 1994, at _____ a.m./p.m. local time, and at
any adjournment or postponement thereof:
1. To adopt the Agreement and Plan of Merger dated as of ___________,
1994 (the "Merger Agreement"), by and among the Company, SHB Merger
Corporation and The E. W. Scripps Company.
___ FOR___ AGAINST____ ABSTAIN
2. In their discretion with respect to such other matters as may
properly come before the Special Meeting or any adjournment or
postponement thereof.
PLEASE MARK, SIGN AND DATE AND RETURN
THIS PROXY TODAY IN THE ENCLOSED ENVELOPE.
<PAGE> 126
The Board of Directors recommends a vote FOR adoption of the Merger Agreement.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this Proxy will be
voted FOR adoption of the Merger Agreement. Under the Company's Code of
Regulations, business transacted at the Special Meeting of Stockholders is
confined to the purposes stated in the Notice of Special Meeting. THIS PROXY
WILL, HOWEVER, CONVEY DISCRETIONARY AUTHORITY TO THE PERSONS NAME HEREIN AS
PROXIES TO VOTE ON MATTERS INCIDENT TO THE CONDUCT OF THE SPECIAL MEETING.
_______________________________ [Seal]
_______________________________ [Seal]
This Proxy should bear your signature(s) exactly as your name(s)
appear in the stencil to the left. When signing as attorney,
executor, administrator, personal representative, trustee, guardian
or corporate officer, please give full title. For joint accounts,
each joint owner should sign.
Dated __________________________, 1994
