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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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THE TIMES MIRROR COMPANY
(Name of Subject Company)
THE TIMES MIRROR COMPANY
(Names of Person(s) Filing Statement)
SERIES A COMMON STOCK, $1.00 PAR VALUE
AND
SERIES C COMMON STOCK, $1.00 PAR VALUE
(Title of Class of Securities)
887364 10 7
AND
887364 30 5
(CUSIP Number of Class of Securities)
MARK H. WILLES
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
THE TIMES MIRROR COMPANY
TIMES MIRROR SQUARE
LOS ANGELES, CALIFORNIA 90053
(213) 237-3700
(Name, address and telephone number of person authorized to receive notices and
communications
on behalf of the person(s) filing statement)
WITH A COPY TO:
PETER F. ZIEGLER, ESQ.
GIBSON, DUNN & CRUTCHER LLP
333 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071
(213) 229-7000
AND
JEROME L. COBEN, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 SOUTH GRAND AVENUE, SUITE 3400
LOS ANGELES, CALIFORNIA 90071
(213) 687-5000
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ITEM 1. SUBJECT COMPANY INFORMATION.
The name of the subject company to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") relates is The Times Mirror
Company, a Delaware corporation ("Times Mirror"). The address of the principal
executive offices of Times Mirror is Times Mirror Square, Los Angeles,
California 90053. The telephone number of the principal executive offices of
Times Mirror is (213) 237-3700. The titles of the classes of equity securities
to which this Schedule 14D-9 relates is Series A Common Stock, par value
$1.00 per share (the "Series A Common"), and Series C Common Stock, par value
$1.00 per share (the "Series C Common," and collectively with the Series A
Common, the "Times Mirror Common Stock" or the "Shares"), of Times Mirror. As
of March 13, 2000, there were 112,158,931 Shares outstanding, of which
93,962,134 are shares of Series A Common (of which 40,471,127 shares of Series
A Common are considered outstanding for financial reporting purposes) and
18,196,797 are shares of Series C Common (all of which are considered
outstanding for financial reporting purposes).
ITEM 2. THE IDENTITY AND BACKGROUND OF FILING PERSON.
The name, business address and business telephone number of Times Mirror,
which is the person filing this Schedule 14D-9, are set forth in Item 1 above.
This Schedule 14D-9 relates to the offer by Tribune Company, a Delaware
corporation ("Tribune"), disclosed in the Tender Offer Statement on Schedule
TO, dated March 21, 2000 (as amended or supplemented from time to time, the
"Schedule TO"), to purchase up to 28 million Shares at a price of $95 per
Share (or a higher price as may be paid, the "Per Share Cash Amount"), net to
the tendering stockholder in cash, subject to the terms and conditions set
forth in the Offer to Purchase, dated March 21, 2000 filed as Exhibit (a)(1)
to the Schedule TO (as amended or supplemented from time to time, the "Offer
to Purchase"), and the related Letter of Transmittal filed as Exhibit (a)(2)
to the Schedule TO (the "Letter of Transmittal" which, together with the Offer
to Purchase, constitute the "Offer"). The Offer is described in the Schedule
TO.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of March 13, 2000 (the "Merger Agreement"), between Tribune and Times
Mirror. The Merger Agreement provides that, among other things, as soon as
practicable following the satisfaction or waiver of the conditions set forth
in the Merger Agreement, Times Mirror will be merged with and into Tribune
(the "Merger"), and Tribune will continue as the surviving corporation (the
"Surviving Corporation").
At the effective time of the Merger (the "Effective Time"), subject to the
terms of the Merger Agreement, each Share then outstanding (other than Shares
held by Times Mirror, Tribune, any of Tribune's wholly-owned subsidiaries or
stockholders who perfect appraisal rights under Delaware law) will be
converted into the right to receive (a) the Per Share Cash Amount, without
interest or (b) 2.5 shares of Common Stock, no par value, of Tribune (the
"Tribune Common Shares" or "Tribune Common Stock") together with certain
associated rights to purchase Tribune's preferred shares or (c) a combination
of cash and Tribune Common Shares, together with certain associated rights to
purchase Tribune's preferred shares.
Because Tribune has offered to purchase only up to 28 million Shares for
cash, however, the Board of Directors of Times Mirror (the "Times Mirror
Board" or the "Times Mirror Board of Directors") recommends that holders of
Shares who desire cash for their Shares should tender their Shares in the
Offer.
Notwithstanding the foregoing and subject to the following paragraph, the
aggregate number of the Shares that may be converted into the right to receive
cash in the Merger (the "Cash Election Number") shall be no greater than (a)
28 million, minus (b) the number of the Shares purchased in the Offer, minus
(c) the number of shares held by any stockholders who perfect appraisal rights
under Delaware law, minus (d) any Shares acquired by Tribune or any of its
wholly-owned subsidiaries following consummation or expiration of the Offer
and prior to the Effective Time. If the aggregate number of the Shares covered
by cash elections (the "Cash Election Shares") exceeds the Cash Election
Number, each Cash Election Share shall be converted into (i) the right to
receive an amount in cash, without interest, equal to the product of (A) the
Per Share Cash Amount and (B) a
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fraction (the "Cash Fraction"), the numerator of which shall be the Cash
Election Number and the denominator of which shall be the total number of Cash
Election Shares, and (ii) a number of Tribune Common Shares equal to the
product of (A) 2.5 and (B) a fraction equal to one minus the Cash Fraction.
In addition to the foregoing adjustment, the Merger Agreement requires the
number of Shares converted into the right to receive Tribune Common Shares in
the Merger to be increased if such increase is necessary in order to preserve
the status of the Merger as a reorganization under Section 368 of the Internal
Revenue Code (the "Code"). In this regard, the Merger Agreement provides that
the number of Shares to be converted into the right to receive the Tribune
Common Shares in the Merger shall be not less than the number which would
cause the ratio of (a) the average price per Tribune Common Share on the New
York Stock Exchange at the Effective Time of the Merger times the aggregate
number of Tribune Common Shares to be paid as consideration with respect to
the Shares that are deemed outstanding for federal income tax purposes, to (b)
the sum of (i) the amount set forth in the preceding clause (a) plus (ii) the
aggregate Per Share Cash Amount to be paid pursuant to the prior two
paragraphs plus (iii) the number of Shares held by stockholders who perfect
appraisal rights under Delaware law times the Per Share Cash Amount plus (iv)
the aggregate amount of cash paid for the Shares purchased in the Offer plus
(v) the aggregate amount of cash paid by Tribune or any of its wholly-owned
subsidiaries to acquire the Shares following completion or expiration of the
Offer and prior to the Effective Time plus (vi) any other amounts paid by
Tribune or Times Mirror (or any person or entity related to Tribune or Times
Mirror within the meaning of Treasury Regulation Sections 1.368-1(e) and
1.368-1T(e)) to, or on behalf of, any stockholder of Times Mirror in
connection with the sale, redemption or other disposition of any Times Mirror
stock in connection with the Merger for purposes of Treasury Regulation
Sections 1.368-1(e) and 1.368-1T(e) plus (vii) any extraordinary dividend
distributed by Times Mirror prior to and in connection with the Merger for
purposes of Treasury Regulation Section 1.368-1T(e), to be 45%. To the extent
the application of these provisions results in the number of Shares to be
converted into the right to receive the Tribune Common Shares in the Merger
being increased, the number of the Shares to be converted into the right to
receive the Per Share Cash Amount (and, therefore, the Cash Election Number)
will be reduced accordingly.
Copies of the Offer to Purchase and the Letter of Transmittal are filed as
Exhibits (a)(1) and (a)(2), respectively, to the Schedule TO.
The Offer states that the principal executive offices of Tribune are located
at 435 North Michigan Avenue, Chicago, Illinois 60611.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
The information contained under the caption "Purpose of the Offer; the
Merger Agreement; the Voting Agreement; Statutory Requirements; Appraisal
Rights; Plans for Times Mirror" in the Offer to Purchase, and in the
Information Statement Pursuant to Section 14(f) of the Securities Exchange Act
of 1934 and Rule 14f-1 thereunder (the "Information Statement"), which is
attached as Schedule I to this Schedule 14D-9, is incorporated herein by
reference. Such information does not purport to be complete and is qualified
in its entirety by reference to the complete text of agreements referred to
therein.
Each material agreement, arrangement or understanding and any actual or
potential conflict of interest between Times Mirror or its affiliates and (i)
Times Mirror's executive officers, directors or affiliates or (ii) the Tribune
or their respective executive officers, directors or affiliates, is
incorporated herein by reference either as set forth above or described below.
The Merger Agreement
The following summary description of the Merger Agreement does not purport
to be complete and is qualified in its entirety by reference to the agreement
itself, which is filed as Exhibit 2.1 to the Form 8-K, filed on March 13,
2000, by Times Mirror.
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The Offer. The Merger Agreement provides for the commencement of the Offer
by Tribune. The obligation of Tribune to accept for payment and pay for Shares
validly tendered pursuant to the Offer is subject to the prior satisfaction or
waiver by Tribune of the conditions to the Offer. The Merger Agreement
provides that, without the prior written consent of Times Mirror, Tribune will
not (a) decrease the Offer Price, or change the form of consideration payable
in the Offer; (b) seek to purchase fewer than 28 million Shares; or (c) impose
additional conditions to the Offer or amend any other terms of the Offer in
any manner materially adverse to the holders of Shares.
Tribune has agreed with Times Mirror that Tribune will not terminate or
withdraw the Offer or extend the Expiration Date of the Offer, without the
consent of Times Mirror; provided, however, that without the consent of Times
Mirror, Tribune may terminate or withdraw the Offer or extend the Offer from
time to time, but in any event not more than 20 days, if at the then-scheduled
expiration date of the Offer, the conditions to the Offer, as set forth above,
have not been satisfied or earlier waived. In addition, Tribune may, without
the consent of Times Mirror, extend the expiration date of the Offer for any
period required by applicable rules, regulations, interpretations or positions
of the Securities and Exchange Commission (the "SEC") or its staff applicable
to the Offer or for any period required by applicable law.
The Merger Agreement provides that, upon the payment by Tribune for Shares
pursuant to the Offer, Tribune will be entitled to designate up to such number
of directors to the Times Mirror Board of Directors as will give Tribune (a)
in the event Tribune purchases at least 15 million Shares pursuant to the
Offer, representation on the Board of Directors of Times Mirror constituting a
majority of the total number of directors on the Board of Directors, and (b)
in the event Tribune purchases fewer than 15 million Shares pursuant to the
Offer, representation on the Board of Directors of Times Mirror in the same
proportion as the number of Shares purchased by Tribune pursuant to the Offer
bears to the total number of Shares deemed outstanding for financial reporting
purposes. Subject to any applicable legal limitations, Times Mirror has agreed
that it will, upon request of Tribune, promptly take all actions necessary to
cause Tribune's designees to be so elected or appointed. At such time, Times
Mirror will also cause, if requested by Tribune, (i) each committee of the
Board of Directors of Times Mirror, (ii) the board of each subsidiary of Times
Mirror and (iii) each committee of each such subsidiary board to include
designees of Tribune constituting up to the same percentage of each such
committee or board as Tribune designees constitute on the Times Mirror Board
of Directors. Following the time that directors designated by Tribune are
appointed or elected to Times Mirror's Board of Directors and prior to the
Effective Time, (i) any amendment or termination of the Merger Agreement by
Times Mirror, (ii) any exercise or waiver of any of Times Mirror's rights or
remedies under the Merger Agreement, (iii) any extension by Times Mirror of
the time for performance of any of the obligations of Tribune, (iv) any other
action by Times Mirror in connection with the Merger Agreement required to be
taken by the Times Mirror Board, and (v) any action on behalf of Times Mirror
with respect to certain employee benefits matters covered in the Merger
Agreement or any other action taken by Times Mirror in connection with the
transactions contemplated by the Merger Agreement, would require the approval
of a majority of the Independent Directors. Until the Effective Time, those
members of Times Mirror's Board of Directors who are neither officers of Times
Mirror, nor designees, affiliates or associates (within the meaning of the
federal securities laws) of Tribune shall be deemed "Independent Directors."
In the event the Merger Agreement is terminated after consummation of the
Offer, but without consummation of the Merger, Tribune will secure the
resignation from the Times Mirror Board of Directors of such number of
Tribune's designees, if any, as may be necessary to cause Tribune's
representation on Times Mirror's Board of Directors (and any committees
thereof) to be in the same proportion as the number of Shares then
beneficially owned by Tribune bears to the total number of Shares deemed
outstanding for financial reporting purposes.
The Merger. The Merger Agreement provides that Times Mirror will be merged
with and into Tribune on the earliest practicable date (but no later than the
fifth business day) following the satisfaction or waiver of the conditions to
the Merger contained in the Merger Agreement. As a result of the Merger, the
separate corporate existence of Times Mirror will cease and Tribune will
continue as the Surviving Corporation.
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Under the terms of the Merger Agreement, the officers of Tribune immediately
before the Effective Time will be the officers of Tribune upon the closing of
the Merger until their resignation or removal. The Merger Agreement provides
that, at the Effective Time, the certificate of incorporation of Tribune
immediately before the Effective Time, as amended as contemplated by the
Merger Agreement, will be the certificate of incorporation of the Surviving
Corporation. The Merger Agreement also provides that the bylaws of Tribune
immediately before the Effective Time, as amended as described below, will be
the bylaws of the Surviving Corporation.
Special Governance Matters. The Merger Agreement provides that Jeffrey
Chandler, Roger Goodan, William Stinehart, Jr. and Thomas Unterman will become
additional directors of Tribune upon the closing of the Merger. Messrs. Goodan
and Stinehart currently are directors of Times Mirror and Messrs. Stinehart
and Chandler are trustees of Chandler Trust No. 1 and Chandler Trust No. 2
(collectively, the "Chandler Trusts"), trusts established for the benefit of
certain members of the extended Chandler family. Messrs. Chandler and Goodan
are beneficiaries of the Chandler Trusts. Thomas Unterman, through Rustic
Canyon Management, LLC, an entity controlled by Mr. Unterman, advised the
Chandler Trusts with respect to the Offer and the Merger, and Rustic Canyon
Management, LLC will receive a fee of $7,000,000 from the Chandler Trusts in
connection therewith. Until December 27, 1999, Mr. Unterman was the Chief
Financial Officer of Times Mirror.
The proposed amendment to Tribune's bylaws sets forth a new Article VIII,
which, among other things, establishes a "CT Nominating Committee." Initially,
the members of the CT Nominating Committee will be Messrs. Chandler, Goodan
and Stinehart (or their successors, collectively, "CT Directors"). At each
meeting of the stockholders of Tribune at which directors are to be elected,
in addition to presenting nominees for other directorships, the officer of
Tribune presiding at such meeting will present for election any person or
persons nominated by the CT Nominating Committee and such nomination will be
deemed made at the direction of the Board of Directors of Tribune. The CT
Nominating Committee will have the exclusive authority to fill any vacancy
which results from the removal, resignation, retirement, death or inability of
a CT Director to serve as a member of the Board of Directors of Tribune.
Article VIII of the bylaws of Tribune automatically will terminate at the
earlier of the following events: (a) the end of the term provided in the
Chandler Trusts or (b) the sale, distribution or other disposition by the
Chandler Trusts of more than 15% of the aggregate number of Tribune Common
Shares issued to the Chandler Trusts in the Merger.
The Merger Agreement contemplates that Tribune will maintain its interest in
the Los Angeles Times in a separate subsidiary until the proposed Article VIII
of the bylaws of Tribune is terminated by its terms. The board of directors of
such subsidiary will be appointed as follows: 40% by the CT Nominating
Committee and 60% by the full Tribune Board of Directors. Approval of 75% of
the members of the board of such subsidiary, which approval shall not be
unreasonably withheld, will be required to approve the appointment of the
publisher of the Los Angeles Times or sell, transfer or otherwise dispose of
the Los Angeles Times other than (a) as part of a sale of all or substantially
all of Tribune's publishing group, (b) as a result of a change of control of
Tribune, or (c) as required by governmental or regulatory authorities.
Conversion of the Shares. Subject to the following sentence and subject to
certain tax considerations described in the Merger Agreement, at the Effective
Time: (a) Shares owned by Tribune, any wholly-owned subsidiary of Tribune, or
by Times Mirror, will be canceled and retired and will cease to exist and
(b) stockholders of Times Mirror (other than holders of shares of Series C
Common who perfect their appraisal rights under Delaware law) will have the
right to elect to have each of their Shares exchanged for (i) 2.5 shares of
Tribune Common Stock (together with the associated preferred stock purchase
rights), (ii) $95 in cash, without interest thereon, or (iii) a combination of
cash and Tribune Common Shares (together with the associated preferred stock
purchase rights). The number of Shares entitled to elect the cash
consideration will be limited to the Cash Election Number. In the event that
the number of Cash Election Shares exceeds the Cash Election Number, cash will
be allocated on a pro rata basis among the Cash Election Shares as follows:
each Cash Election Share will be converted into the right to receive (A) an
amount in cash (without interest), equal to the product of (1) $95 and (2) a
fraction (the "Cash Fraction"), the numerator of which will be the Cash
Election Number and the denominator of which will be the total number of Cash
Election Shares and (B) a number of Tribune Common Shares equal to the product
of (1) 2.5 and (2) a fraction equal to one minus the Cash Fraction. In the
event that a holder of Shares fails to make an election with respect to the
consideration to be received in the Merger, such holder's Shares will be
treated as Cash Election Shares.
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The Surviving Corporation or the designated paying agent will be entitled to
deduct and withhold from the consideration otherwise payable pursuant to the
Merger Agreement to any holder of Shares amounts that the Surviving
Corporation or the paying agent is required to deduct and withhold under the
Code, the rules and regulations promulgated thereunder or any provision of
state, local or foreign tax law.
Times Mirror has agreed to cause a Stock Election to be made with respect to
each Share owned by any subsidiary of or other affiliate controlled by Times
Mirror.
Notwithstanding the above, the number of Shares to be converted into the
right to receive shares of the Tribune Common Stock in the Merger will be not
less than the number which would cause the ratio of (a) the average price per
share of Tribune Common Stock on the NYSE on the closing date of the Merger
times the aggregate number of shares of Tribune Common Stock to be paid as
Merger consideration with respect to Shares that are deemed outstanding for
federal income tax purposes, to (b) the sum of (i) the amount set forth in the
preceding clause (a) plus (ii) the aggregate cash consideration to be paid in
the Merger plus (iii) the number of dissenting Shares times $95 plus (iv) the
aggregate amount of cash paid for Shares purchased in the Offer plus (v) the
aggregate amount of cash paid by Tribune or any of its wholly owned
subsidiaries to acquire Shares following completion or expiration of the Offer
and prior to the Effective Time plus (vi) any other amounts paid by Tribune or
Times Mirror (or any person related to Tribune or Times Mirror within the
meaning of Treasury Regulation Sections 1.368-1(e) and 1.368-1T(e)) to, or on
behalf of, any stockholder of Times Mirror in connection with the sale,
redemption or other disposition of any Times Mirror stock in connection with
the Merger for purposes of Treasury Regulation Sections 1.368-1(e) and 1.368-
1T(e) plus (vii) any extraordinary dividend distributed by Times Mirror prior
to and in connection with the Merger for purposes of Treasury Regulation
Section 1.368-1T(e), to be 45%. To the extent the application of the
provisions described in this paragraph result in the number of Shares to be
converted into the right to receive the shares of Tribune Common Stock in the
Merger being increased, the number of Shares to be converted into the right to
receive $95 in cash (and, therefore, the Cash Election Number) will be reduced
accordingly.
Conversion of Times Mirror Preferred Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of any holder of any capital
stock of Times Mirror, each share of each series of preferred stock, par value
$1.00 per share, of Times Mirror ("Times Mirror Preferred Stock") issued and
outstanding immediately prior to the Effective Time (and not owned by Times
Mirror or Tribune) will be converted, automatically and without the
requirement of any exchange of any certificate, into one share of preferred
stock of Tribune, which will have terms that are substantively identical to
the terms of the corresponding Times Mirror Preferred Stock, except that the
number of Tribune Common Shares into which each such share of preferred stock
of Tribune may be converted, under the terms thereof, will be calculated with
respect to the Common Share Value (as defined in the certificates of
designations of the Times Mirror Preferred Stock) of the Tribune Common
Shares.
Stock Options and Other Awards. Each of the stock options, if any, to
purchase Shares (each, a "Times Mirror Option") issued by Times Mirror which
are outstanding as of the Effective Time shall, whether or not then
exercisable and vested, become fully exercisable and vested immediately prior
to the Effective Time. Each holder of a Times Mirror Option may elect either
(a) to cause such Times Mirror Option (a "Stock Electing Option") to become
and represent an option to purchase Tribune Common Shares (a "Tribune
Option"), or (b) to cause such Times Mirror Option (a "Cash Electing Option")
to be cancelled in exchange for a single lump sum cash payment (less any
applicable income or employment or other tax withholding), without interest
(the "Option Cash Out Amount"), equal to the product of (i) the number of
Shares subject to such Times Mirror Option immediately prior to the Effective
Time and (ii) the excess, if any, of $95 over the exercise price per share of
such Times Mirror Option. To the extent any holder of a Times Mirror Option
does not make an election with respect to such Times Mirror Option prior to
the election deadline, such Times Mirror Option will be deemed to be a Cash
Electing Option.
Each Stock Electing Option will, by virtue of the Merger, be assumed by
Tribune and converted into a Tribune Option to purchase that number of Tribune
Common Shares determined by multiplying the number of
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Shares subject to such Times Mirror Option immediately prior to the Effective
Time by 2.5, at an exercise price per Tribune Common Share equal to the
exercise price per share of such Times Mirror Option immediately prior to the
Effective Time divided by 2.5, rounded down to the nearest whole cent. If the
foregoing calculation results in an assumed Times Mirror Option being
exercisable for a fraction of a Tribune Common Share, then the number of
Tribune Common Shares subject to such option will be rounded up to the nearest
whole number of shares. The terms and conditions of each Tribune Option will
otherwise remain as set forth in the Times Mirror Option converted into such
Tribune Option.
Each Cash Electing Option will, by virtue of the Merger, be cancelled in
exchange for a single lump sum cash payment (less any applicable income or
employment or other tax withholding), without interest, equal to the Option
Cash Out Amount.
All restricted Shares granted pursuant to any equity plan or arrangement of
Times Mirror, and all individual awards of restricted Shares not granted
pursuant to any such plan or arrangement, will become fully vested immediately
prior to the Effective Time and such Shares shall be freed of restrictions and
issued to the relevant participant.
For further information concerning the Times Mirror Options and other awards
held by the executive officers and directors of Times Mirror, see the
Information Statement which is attached as Schedule I to this Schedule 14D-9.
Debt Securities. Times Mirror's publicly traded debt securities outstanding
immediately prior to the Effective Time will be assumed by Tribune and remain
outstanding as an obligation of the Surviving Corporation in accordance with
their terms. After the Effective Time, the holder of each such security that,
prior to the Effective Time, was, under certain circumstances and at certain
times, convertible into Shares, will have the right, under the same
circumstances and at the same times, to convert such security into the number
of shares of Tribune Common Stock equal to the number of Shares into which
such security could have been converted (had it then been convertible)
immediately prior to the Merger multiplied by 2.5.
Proxy Statement and Registration Statement. Tribune and Times Mirror have
agreed in the Merger Agreement that they will as promptly as practicable (a)
prepare and file with the SEC a joint proxy statement (the "Joint Proxy
Statement") relating to the meeting of Tribune's stockholders to be held in
connection with the Merger and the meeting of Times Mirror's stockholders to
be held in connection with the Merger and (b) convene meetings of their
respective stockholders for the purpose of considering and taking action upon
the Merger Agreement.
In addition, Tribune has agreed in the Merger Agreement that it will as
promptly as practicable prepare and file with the SEC a registration statement
on Form S-4 (the "Registration Statement"), in which the Joint Proxy Statement
will be included as a prospectus, with respect to the shares of Tribune Common
Stock issuable to the Times Mirror stockholders in the Merger. Tribune and
Times Mirror have agreed to use all reasonable efforts to cause the
Registration Statement to become effective as promptly as practicable, and as
promptly as practicable after the Registration Statement shall have become
effective, Times Mirror and Tribune shall mail the Joint Proxy Statement to
their respective stockholders.
Representations and Warranties. Times Mirror has made customary
representations and warranties to Tribune in the Merger Agreement with respect
to, among other matters, its organization, subsidiaries, capitalization,
authority, consents and approvals, conflicts, reports and financial
statements, absence of certain changes or events, absence of undisclosed
liabilities, litigation, employee benefit plans, labor matters, contracts,
indebtedness, litigation, compliance with law, taxes, environmental matters,
intellectual property, the required stockholder vote to approve the Merger
Agreement, brokers, and the opinion of its financial advisor.
Tribune has made customary representations and warranties to Times Mirror
with respect to, among other matters, its organization, capitalization,
authority, consents and approvals, conflicts, reports and financial
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statements, absence of certain changes or events, absence of undisclosed
liabilities, litigation, compliance with law, taxes, intellectual property,
the required stockholder vote to approve the Merger Agreement and brokers.
Interim Business Operations. The Merger Agreement obligates Times Mirror and
its subsidiaries, from the date of the Merger Agreement until the Effective
Time, to conduct their businesses in all material respects in the ordinary
course of business consistent with past practice and obligates Times Mirror
and its subsidiaries to use all reasonable efforts to preserve intact their
business organizations, keep available the services of their present officers
and key employees, and preserve their relationships with customers, suppliers
and others with which they have business dealings. The Merger Agreement also
contains specific restrictive covenants as to certain activities of Times
Mirror and its subsidiaries prior to the Effective Time without the prior
written consent of Tribune relating to, among other things, dividends or other
distributions, changes in stock, repurchases or redemptions of securities,
issuances or sales of its securities, amendments to Times Mirror's certificate
of incorporation or by-laws, liquidation, merger, change of control
transactions, material acquisitions or dispositions, indebtedness, tax
matters, capital expenditures, discharge of liabilities, material contracts,
affiliate contracts, settlement of litigation and claims, employee matters,
changes in accounting methods, and certain other material events or
transactions.
The Merger Agreement also contains specific restrictive covenants as to
certain activities of Tribune and its subsidiaries prior to the Effective Time
without the prior written consent of Times Mirror relating to, among other
things, dividends or other distributions, changes in stock, amendments to
Tribune's certificate of incorporation or by-laws, changes in accounting
methods, new lines of business, certain business combinations or similar
transactions, and certain other material events or transactions.
No Solicitation. The Merger Agreement provides that until the Effective Time
or earlier termination of the Merger Agreement, Times Mirror will not, and
will not permit any of its affiliates to, and will not authorize or permit any
officer, director or employee or any investment banker, attorney, accountant,
agent or other advisor or representative of Times Mirror or any of its
respective affiliates (collectively, "Agents") to, (a) solicit, initiate or
encourage the submission of any Takeover Proposal, (b) enter into any contract
with respect to a Takeover Proposal or (c) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or could reasonably be expected to lead to, any
Takeover Proposal. The Merger Agreement requires Times Mirror to immediately
cease and terminate all existing discussions or negotiations with any persons
with respect to, or that could reasonably be expected to lead to, any Takeover
Proposal. "Takeover Proposal" means any proposal for a merger, consolidation,
share exchange, business combination or other similar transaction involving
Times Mirror or any of its subsidiaries, or any proposal or offer to acquire,
directly or indirectly, 20% or more of the voting securities or equity
interests of, or a substantial portion of the assets of, Times Mirror or any
of its subsidiaries, other than the transactions contemplated by the Merger
Agreement.
Times Mirror is required under the Merger Agreement to immediately advise
Tribune orally and in writing of any request for information or of any
Takeover Proposal, the material terms and conditions of such request or
Takeover Proposal and the identity of the person making such request or
Takeover Proposal. Times Mirror has agreed to keep Tribune fully and promptly
informed of the status and details of any such request or Takeover Proposal.
Times Mirror is permitted, under the Merger Agreement, to furnish
information concerning its business, properties or assets to any person in
response to a request for such information made after the date of the Merger
Agreement which was not solicited, initiated or encouraged, directly or
indirectly, by Times Mirror or any of its Agents, and may participate in
discussions and negotiations with such person concerning a Takeover Proposal,
in each case if and only to the extent that (a) such person has submitted a
written Takeover Proposal to the Times Mirror's Board of Directors which the
Board of Directors has determined in good faith, after consulting with and
receiving advice from Times Mirror's outside legal and financial advisors,
constitutes or would reasonably be expected to result in a Superior Proposal
and (b) such person has entered into a confidentiality agreement with Times
Mirror that is no less favorable to Times Mirror than the confidentiality
agreement between Tribune and Times Mirror. A "Superior Proposal" means a
Takeover Proposal (i) that is more favorable to Times Mirror
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and its stockholders than the Offer and the Merger after considering certain
factors and (ii) which is reasonably capable of being consummated by the
person making such Takeover Proposal, taking into account the legal,
financial, regulatory and other aspects of such Takeover Proposal. In
determining whether a Takeover Proposal constitutes a Superior Proposal, the
Times Mirror Board of Directors will consider (A) the impact that the
consummation of the Takeover Proposal would have on the editorial independence
and quality of the Company's properties and operations, (B) the ability of all
the Company's stockholders to receive stock consideration tax-free in exchange
for their Times Mirror Shares and (C) the factors set forth in Article XI of
the Times Mirror Charter.
Pursuant to the Merger Agreement, the Times Mirror Board of Directors may
withdraw or modify its approval or recommendation of the Offer and the Merger
in connection with a Superior Proposal if (a) the Times Mirror Board
determines in good faith, after receipt of advice from outside counsel to
Times Mirror, that failure to do so would be inconsistent with its fiduciary
duties to Times Mirror's stockholders under applicable law and (b) Times
Mirror notifies Tribune of any such withdrawal or modification prior to its
release to the public.
Times Mirror has agreed to submit the Merger Agreement and the Merger to its
stockholders for approval, regardless of any change in the recommendation of
Times Mirror's Board of Directors. Times Mirror has further agreed that it
will not take any action to make the restrictions on business combinations
contained in Section 203 of the Delaware General Corporation Law (the "DGCL")
or the business combination provisions currently contained in Article X of the
Amended and Restated Certificate of Incorporation of Times Mirror (the "Times
Mirror Charter") inapplicable to any Takeover Proposal (including any Superior
Proposal) prior to the termination of the Merger Agreement in accordance with
its terms.
Times Mirror has agreed that until the Effective Time or earlier termination
of the Merger Agreement, it will not terminate, amend, modify or waive any
provision of any confidentiality or standstill agreement to which it or any of
its subsidiaries is a party. During such period, Times Mirror will enforce, to
the fullest extent permitted under applicable law, the provisions of any such
agreements, including obtaining injunctions to prevent any breaches of such
agreements and to enforce specifically the terms and provisions thereof in any
court of the United States or any state thereof having jurisdiction.
Public Announcements. Tribune and Times Mirror have agreed to consult with
each other before issuing any press release or other public statements with
respect to the Offer or the Merger, and each has agreed not to issue any such
press release or make any such public statement without the prior written
consent of the other party, not to be unreasonably withheld or delayed, except
as may be required by law or in accordance with any listing agreement with any
national securities exchange.
Efforts. Times Mirror and Tribune have agreed to use reasonable best efforts
to take, or cause to be taken, all actions necessary to comply promptly with
all legal requirements that may be imposed on them with respect to the Offer
and the Merger, including furnishing all information required under the HSR
Act and in connection with approvals of or filings with any other governmental
entity. In addition, Times Mirror and Tribune have agreed to promptly
cooperate with and furnish information to each other in connection with any
such requirements imposed upon any of them or any of their subsidiaries in
connection with the Offer and the Merger. Furthermore, each of Times Mirror
and Tribune has agreed to use, and to cause its subsidiaries to use,
reasonable best efforts to take all actions necessary to obtain any
authorization, consent or approval of, or any exemption by, any governmental
entity or other public or private third party required to be obtained or made
by Tribune, Times Mirror or any of their subsidiaries in connection with the
Offer and the Merger; provided, that Tribune will not be required to agree,
and Times Mirror will not agree without Tribune's consent, to waive any
substantial rights or to accept any substantial limitation on its operations
or to dispose of any material assets in connection with obtaining any such
authorization, consent or approval unless such waiver, limitation or
disposition would not reasonably be expected to have a material adverse effect
on Times Mirror or on Tribune; and provided, further, that at Tribune's
written request, Times Mirror will agree to any such waiver, limitation or
disposal, which agreement may, at Times Mirror's option, be conditioned upon
and effective only as of the Effective Time.
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Employee Benefit Plans. Under the terms of the Merger Agreement, from the
Effective Time until the first anniversary thereof, Tribune will provide
coverage and benefits to employees and former employees of Times Mirror and
its subsidiaries ("Times Mirror Employees") that are no less favorable, in the
aggregate, than those provided to such Times Mirror Employees immediately
prior to the Effective Time. The Merger Agreement also specifies the treatment
of pre-existing conditions, deductibles and service credit with respect to
Times Mirror Employees who participate in any employee benefit plans of
Tribune following the Effective Time. In addition, Tribune has agreed to
assume, honor and perform, in accordance with their terms, all employment,
severance and change in control and other such agreements of Times Mirror and
its subsidiaries and affiliates.
Indemnification; Directors' and Officers' Insurance. Times Mirror will, to
the fullest extent permitted under applicable law, indemnify and hold harmless
and, after the Effective Time, Tribune will, to the fullest extent permitted
under applicable law, indemnify and hold harmless, each present and former
director and officer of Times Mirror and each subsidiary of Times Mirror and
each such individual who served at the request of Times Mirror or any
subsidiary of Times Mirror as a director, officer, trustee, partner,
fiduciary, employee or agent of another corporation, partnership, joint
venture, trust, pension or other employee benefit plan or enterprise
(collectively, the "Indemnified Parties") against all costs and expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), whether civil, administrative or investigative, arising out
of or pertaining to any action or omission in their capacity as an officer or
director of Times Mirror or subsidiary of Times Mirror, as applicable, in each
case occurring prior to the Effective Time (including the transactions
contemplated by the Merger Agreement).
For six years from the Effective Time, Tribune will use all reasonable
efforts to provide to Times Mirror's current directors and officers liability
insurance protection of the same kind and scope as that provided by Times
Mirror's directors' and officers' liability insurance policies in effect on
the date of the Merger Agreement. In no event will Tribune be required to
expend more than 200% of the current amount expended by Times Mirror as of the
date of the Merger Agreement (the "Insurance Amount") to maintain or procure
such insurance coverage. If Tribune is unable to maintain or obtain such
insurance, Tribune will use all reasonable efforts to obtain as much
comparable insurance as available for the Insurance Amount.
In addition to the terms of the Merger Agreement, under Article XII of the
Times Mirror Charter and Article VII of Times Mirror's Amended and Restated
Bylaws, as amended to date, Times Mirror must indemnify, to the fullest extent
permitted by the DGCL, any person or estate of any person who was or is a
party to, or is threatened by to made a party to, any threatened, pending or
completed action, suit or proceeding, whether or not by or in the right of
Times Mirror, and whether civil, criminal, administrative, investigative or
otherwise, by reason of the fact that such person is or was serving at the
request of Times Mirror as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise.
Notification of Certain Matters. Each of Times Mirror and Tribune has agreed
to promptly notify the other of (a) any notice or other communication from any
person alleging that the consent of such person is or may be required in
connection with the transactions contemplated by the Merger Agreement, (b) any
notice or other communication from any governmental entity in connection with
the transactions contemplated by the Merger Agreement, (c) the occurrence, or
non-occurrence, of any event, the occurrence, or non-occurrence, of which
would be reasonably expected to cause any representation or warranty contained
in the Merger Agreement to be untrue or inaccurate in any material respect and
(d) any failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under the Merger
Agreement.
Takeover Restrictions. In the Merger Agreement, Times Mirror has represented
that it has taken all appropriate actions so that the restrictions on business
combinations contained in Section 203 of the DGCL and in Article X of the
Times Mirror Charter will not apply with respect to or as a result of the
Merger Agreement, the Voting Agreement, or the transactions contemplated
thereby, including the Offer and the Merger. Times Mirror further has
represented that the execution and delivery of the Merger Agreement and/or the
Voting Agreement does not constitute an unpermitted transfer of any shares of
Series C Common under Article V of the
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Times Mirror Charter and that the Board of Directors of Times Mirror has not
elected to effect a conversion of the shares of Series C Common into shares of
Series A Common pursuant to Article V, Section 2.E.2.b of the Times Mirror
Charter or Section 5(A)(2)(b) of the Certificate of Designation of the
Series C Common.
Third Party Standstill Agreements. During the period from the date of the
Merger Agreement until the Effective Time or earlier termination of the Merger
Agreement, Times Mirror shall not terminate, amend, modify or waive any
provision of any confidentiality or standstill agreement to which it or any of
its subsidiaries is a party (other than any involving Tribune or its
subsidiaries). During such period, Times Mirror agrees to enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreements, including obtaining injunctions to prevent any breaches of such
agreements and to enforce specifically the terms and provisions thereof in any
court of the United States or any state thereof having jurisdiction.
Certain Litigation. Times Mirror agrees that, prior to the termination of
the Merger Agreement, it shall not settle any litigation commenced after the
date of the Merger Agreement against Times Mirror or any of its directors by
any stockholder of Times Mirror relating to the Offer, the Merger, the Merger
Agreement or the Voting Agreement, without the prior written consent of
Tribune. In addition, prior to the termination of this Agreement, Times Mirror
shall not voluntarily cooperate with any third party that may seek to restrain
or prohibit or otherwise oppose the Offer or the Merger and shall cooperate
with Tribune to resist any such effort to restrain or prohibit or otherwise
oppose the Offer or the Merger.
Listing of Tribune Common Stock. Tribune will use all reasonable efforts to
cause the shares of Tribune Common Stock to be issued in the Merger pursuant
to the Merger Agreement to be listed for trading on the NYSE, subject to
official notice of issuance, prior to the Effective Time.
Tax-Free Reorganization. Prior to the Effective Time, each of Tribune and
Times Mirror shall use its reasonable best efforts to cause the Merger to
qualify as a reorganization within the meaning of the provisions of Section
368 of the Code ("368 Reorganization"), and shall not knowingly take any
action that would cause the Merger not to so qualify. Tribune shall not
knowingly take any action after the Effective Time that would cause the Merger
not to qualify as a 368 Reorganization.
Charitable Contributions. For five years after the Effective Time, Tribune
will continue the existence and operation of the Times Mirror Foundation (the
"Foundation") and fund charitable contributions of the Foundation consistent
with past practice.
Conditions to Consummation of the Merger. Pursuant to the Merger Agreement,
the respective obligations of Tribune and Times Mirror to consummate the
Merger are subject to the satisfaction, at or before the Effective Time, of
each of the following conditions:
(a) the Times Mirror Stockholder Approval;
(b) the Tribune Stockholder Approval;
(c) expiration or termination of the waiting period (and any extension
thereof) applicable to the consummation of the Merger under the Hart-Scott-
Rodino Antitrust Improvements Act;
(d) the absence of any statute, rule, regulation, executive order,
decree, temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other
governmental entity or other legal restraint or prohibition preventing the
consummation of the Merger;
(e) the effectiveness of the Registration Statement and the absence of
any stop order suspending such effectiveness or any action, suit,
proceeding or investigation by the SEC to suspend such effectiveness and
the receipt of all necessary approvals under state securities laws or the
Securities Act of 1933 or the Securities Exchange Act of 1934 relating to
the issuance or trading of the Tribune Common Shares to be issued pursuant
to the Merger Agreement; and
(f) approval of the Tribune Common Shares to be issued in the Merger for
listing on the New York Stock Exchange, subject only to official notice of
issuance.
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Pursuant to the Merger Agreement, the obligation of Times Mirror to
consummate the Merger is subject to the satisfaction, at or before the
Effective Time, of each of the following additional conditions:
(a) Tribune shall have performed in all material respects each of its
agreements contained in the Merger Agreement required to be performed on or
prior to the Effective Time;
(b) each of the representations and warranties of Tribune contained in
the Merger Agreement that is qualified by materiality shall be true and
correct on and as of the Effective Time as if made on and as of such date
(other than to the extent that any such representation and warranty, by its
terms, is expressly limited to a specific date, in which case such
representation and warranty shall be true and correct as of such date) and
each of such representations and warranties that is not so qualified shall
be true and correct in all material respects on and as of the Effective
Time as if made on and as of such date (other than to the extent that any
such representation and warranty, by its terms, is expressly limited to a
specific date, in which case such representation and warranty shall be true
and correct in all material respects as of such date);
(c) Tribune shall have furnished to Times Mirror a certificate signed on
behalf of Tribune by an executive officer of Tribune, certifying to the
effect that conditions (a) and (b) above, to the extent applicable, have
been satisfied in full; and
(d) Times Mirror shall have received an opinion of Gibson, Dunn &
Crutcher LLP in form and substance reasonably satisfactory to Times Mirror,
dated the Effective Time, to the effect that the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of
Section 368 of the Code and that each of Tribune and Times Mirror will be a
party to the reorganization within the meaning of Section 368 of the Code.
In the event that at least 15 million Shares are purchased in the Offer, the
condition described in clause (b) above will no longer constitute a condition
to the obligation of Times Mirror to consummate the Merger.
Pursuant to the Merger Agreement, the obligation of Tribune to consummate
the Merger is subject to the satisfaction, at or before the Effective Time, of
each of the following additional conditions:
(a) Times Mirror shall have performed in all material respects each of
its agreements contained in the Merger Agreement required to be performed
at or prior to the Effective Time;
(b) each of the representations and warranties of Times Mirror contained
in the Merger Agreement that is qualified by materiality shall be true and
correct on and as of the Effective Time as if made on and as of such date
(other than to the extent that any such representation and warranty, by its
terms, is expressly limited to a specific date, in which case such
representation and warranty shall be true and correct as of such date) and
each of such representations and warranties that is not so qualified shall
be true and correct in all material respects on and as of the Effective
Time as if made on and as of such date (other than to the extent that any
such representation and warranty is, by its terms, expressly limited to a
specific date, in which case such representation and warranty shall be true
and correct in all material respects as of such date);
(c) Times Mirror shall have furnished to Tribune a certificate, dated the
Effective Time, signed on behalf of Times Mirror by an executive officer of
Times Mirror, certifying to the effect that conditions (a) and (b) above,
to the extent applicable, have been satisfied in full;
(d) Tribune shall have received an opinion of Wachtell, Lipton, Rosen &
Katz, in form and substance reasonably satisfactory to Tribune, dated the
Effective Time, to the effect that the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368
of the Code and that each of Tribune and Times Mirror will be a party to
the reorganization within the meaning of Section 368 of the Code; and
(e) all authorizations consents, approvals and exemptions required by any
governmental entity and other persons in connection with the Merger and the
transactions contemplated by the Merger Agreement and the Voting Agreement
shall have been obtained or made, except to the extent the failure to
obtain or
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make such authorizations consents, approvals or exemptions would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on Times Mirror or on Tribune.
In the event that at least 15 million Shares are purchased in the Offer, the
condition described in clause (b) above will no longer constitute a condition
to the obligation of Tribune to consummate the Merger.
Termination. The Merger Agreement may be terminated at any time prior to the
Effective Time, whether before or after the Times Mirror Stockholder Approval
or the Tribune Stockholder Approval:
(a) by mutual written consent of Tribune and Times Mirror;
(b) by either Tribune or Times Mirror:
(i) if any governmental entity of competent jurisdiction has issued
an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the consummation of the
Merger and such order, decree or ruling or other action has become
final and nonappealable;
(ii) (A) if, at the meeting of Times Mirror stockholders (including
any adjournment thereof), the Times Mirror Stockholder Approval is not
obtained or (B) if, at the meeting of Tribune stockholders (including
any adjournment thereof), the Tribune Stockholder Approval is not
obtained; or
(iii) if the Merger is not consummated by December 31, 2000, unless
the failure to consummate the Merger is the result of a breach of the
Merger Agreement by the party seeking to terminate the Merger
Agreement;
(c) by Tribune if Times Mirror has (i) failed to perform in any material
respect any material obligation or to comply in any material respect with
any material agreement or covenant of Times Mirror to be performed or
complied with by it under the Merger Agreement or (ii) breached in any
material respect any of its representations or warranties contained in the
Merger Agreement, which failure or breach cannot be cured on or prior to
December 31, 2000; provided, that, if Tribune purchases at least 15 million
Shares in the Offer, only the provision described in clause (i) of this
paragraph (c) will give rise to a right of termination;
(d) by Tribune if (i) the Board of Directors of Times Mirror or any
committee thereof has withdrawn or modified in a manner adverse to Tribune
its approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any Takeover Proposal, or (ii) the
Board of Directors of Times Mirror or any committee thereof has resolved to
do any of the foregoing; or
(e) by Times Mirror if Tribune has (i) failed to perform in any material
respect any material obligation or to comply in any material respect with
any material agreement or covenant of Tribune to be performed or complied
with by it under the Merger Agreement or (ii) breached in any material
respect any of its representations or warranties contained in the Merger
Agreement, which failure or breach cannot be cured on or prior to December
31, 2000; provided, that, if Tribune purchases at least 15 million Shares
in the Offer, only the provision described in clause (i) of this paragraph
(e) will give rise to a right of termination.
Fees and Expenses. Except as provided below, all costs and expenses incurred
in connection with the Merger, the Merger Agreement and the transactions
contemplated by the Merger Agreement will be paid by the party incurring such
fees or expenses, whether or not the Merger is consummated; provided, that
Times Mirror and Tribune will share equally all fees and expenses, other than
attorneys' and accounting fees and expenses, incurred in relation to the
printing, filing and mailing of the Registration Statement and the Joint Proxy
Statement.
Times Mirror will pay Tribune the sum of $250 million in cash (the "Fee") if
the Merger Agreement is terminated by Tribune pursuant to the provisions
described in paragraph (d) or paragraph (b)(ii)(A) of the foregoing section
entitled "Termination," at any time after Times Mirror's Board of Directors
has modified or withdrawn its approval or recommendation of the Offer, the
Merger or the Merger Agreement, or (a) prior to the time of the Times Mirror
stockholders' meeting a Takeover Proposal is made by a third party, (b) the
Times
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Mirror Stockholder Approval is not obtained and (c) on or prior to the 12-
month anniversary of the termination of the Merger Agreement a Takeover
Proposal is consummated or Times Mirror or any of its subsidiaries or
affiliates enters into an agreement or letter of intent (or resolves or
announces an intention to do so) with respect to a Takeover Proposal with a
third party. Payment of the Fee will not prevent Tribune from seeking any
remedies available to it against the parties to the Voting Agreement for any
breach thereof.
Amendment. The Merger Agreement may be amended by Times Mirror and Tribune,
by action taken or authorized by their respective Boards of Directors at any
time before or after obtaining the Times Mirror Stockholder Approval or
Tribune Stockholder Approval, but, after any such approval, no amendment may
be made which by law requires further approval by the stockholders of Times
Mirror or Tribune, as applicable, without obtaining such further approval.
Extension; Waiver. At any time prior to the Effective Time, Times Mirror and
Tribune, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (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 in the Merger Agreement or in any document delivered pursuant to the
Merger Agreement or (c) waive compliance with any of the agreements or
conditions contained in the Merger Agreement.
Accounting Treatment. The acquisition of Times Mirror will be accounted for
by Tribune as a purchase.
The Voting Agreement
The following summary description of the Voting Agreement dated as of March
13, 2000 (the "Voting Agreement"), between Tribune and certain stockholders of
Times Mirror does not purport to be complete and is qualified in its entirety
by reference to the agreement itself, which is filed as Exhibit 2.2 to the
Form 8-K filed on March 13, 2000, by Times Mirror.
Concurrently with the execution of the Merger Agreement, Tribune entered
into the Voting Agreement with the Chandler Trusts. The Chandler Trusts hold
approximately 67% of the voting power of the outstanding Shares entitled to
vote on the Merger. TMCT, LLC, TMCT II, LLC, Eagle New Media Investments, LLC
and Chandis Acquisition Corporation, who are entities affiliated with Times
Mirror and own shares of Series A Common that are not outstanding for voting
purposes, also entered into the Voting Agreement with Tribune for the purpose
of agreeing to elect to receive Tribune Common Stock rather than cash in the
transaction and certain other matters. Each of the parties to the Voting
Agreement has agreed that it will not contract to sell, sell or otherwise
transfer or dispose of any of its Shares, or any interest therein, or
securities convertible into, or any voting rights with respect to, any of its
Shares, other than (a) pursuant to the Merger or (b) a transfer to a party who
executes a counterpart of the Voting Agreement, in form and substance
reasonably satisfactory to Tribune, agreeing to be bound by its terms and
provisions.
The Chandler Trusts have further agreed to vote, or cause to be voted, all
of the shares of capital stock of Times Mirror beneficially owned by them, or
with respect to which they have the right to vote, including the Shares, at
any meeting of stockholders of Times Mirror (including any adjournment or
postponement thereof), or pursuant to any action by written consent:
(a) in favor of the Merger Agreement, the Merger, the other transactions
contemplated by the Merger Agreement, and any actions required in
furtherance thereof;
(b) against any action or agreement that (i) could reasonably be expected
to result in a breach in any material respect of any covenant,
representation or warranty, or any other obligation of Times Mirror, under
the Merger Agreement or any related agreement or (ii) is intended, or could
reasonably be expected, to materially impede, interfere with, delay,
postpone or adversely affect the Merger or the other transactions
contemplated by the Merger Agreement; and
(c) against any Takeover Proposal;
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provided, that if the Board of Directors of Times Mirror modifies or withdraws
its approval or recommendation of the Offer and the Merger in connection with
a Superior Proposal pursuant to the Merger Agreement on or prior to April 2,
2000, the shares of capital stock of Times Mirror beneficially owned by the
Chandler Trusts, or with respect to which the Chandler Trusts have the right
to vote, which, in the aggregate, carry 40% of the total voting power of the
outstanding shares of the capital stock of Times Mirror, will be voted, or
will be caused to be voted, as described in clauses (a), (b) or (c) of this
paragraph, and the remaining portion of the voting power of the capital stock
of Times Mirror beneficially owned by the Chandler Trusts, or with respect to
which the Chandler Trusts have the right to vote, will be voted, or will be
caused to be voted, with respect to the matters described in clauses (a), (b)
and (c) of this paragraph in the same proportion, based on the actual votes
cast, as all shares of voting capital stock of Times Mirror (other than shares
owned by Chandler Trust No. 1 or Chandler Trust No. 2, or with respect to
which Chandler Trust No. 1 or Chandler Trust No. 2 has the right to vote, but
including shares owned by Tribune and any of its affiliates, or with respect
to which Tribune or any of its affiliates has the right to vote) are voted on
such matters.
In addition, under the terms of the Voting Agreement, each of the Chandler
Trusts has agreed that it will not, and it will not permit or authorize any of
its directors, managers, members, trustees, stockholders, officers, employees,
affiliates, agents or advisors to initiate, solicit or encourage any
discussions, inquiries or proposals with any third party that constitute or
may reasonably be expected to lead to a Takeover Proposal, or provide any such
Person with information or assistance or discuss or negotiate with any such
Person with respect to a possible Takeover Proposal. Each Chandler Trust will
notify Tribune as promptly as practicable of any inquiry, discussion or
proposal that constitutes or may reasonably be expected to lead to a Takeover
Proposal promptly after it becomes aware of such inquiry, discussion or
proposal.
Each of the parties to the Voting Agreement has agreed to waive any and all
appraisal, dissenters or similar rights that it may have with respect to the
Merger and the other transactions contemplated by the Merger Agreement
pursuant to the DGCL or other applicable law.
In the event that the Merger Agreement is terminated, the Voting Agreement
requires the Chandler Trusts to vigorously oppose and seek to prevent any
effort by Times Mirror and/or the Board of Directors of Times Mirror, prior to
the first anniversary of the termination of the Merger Agreement, to convert
any shares of Series C Common into shares of Series A Common in connection
with a Takeover Proposal (other than a conversion that would take effect
immediately prior to or contemporaneously with the consummation of the
transactions contemplated by such Takeover Proposal). The obligations of
Chandler Trust No. 1 and Chandler Trust No. 2 to vigorously oppose and seek to
prevent described in the immediately preceding sentence include, without
limitation, the obligation of the Chandler Trusts to commence and maintain
litigation contesting such conversion and pursue such litigation diligently
and in good faith.
The Voting Agreement may be terminated at the option of Tribune, on the one
hand, or any of the other parties, on the other hand, at any time after the
earlier of (a) the day following the Effective Time and (b) termination of the
Merger Agreement in accordance with its terms; provided, that the obligations
of the Chandler Trusts described in the immediately preceding paragraph will
survive until the earlier of (i) the day following the Effective Time and (ii)
the later of (A) the first anniversary of the termination of the Merger
Agreement in accordance with its terms and (B) the resolution of any
litigation brought pursuant to the provisions described in the immediately
preceding paragraph. The Voting Agreement may also be terminated, as to any of
the parties, by the mutual agreement of Tribune and such party; provided, that
the termination as to such party will not affect the obligations of any of the
other parties under the Voting Agreement. No termination of the Voting
Agreement will relieve any party from liability for any material breach of its
obligations under the Voting Agreement committed prior to such termination (or
committed during the time period set forth in the proviso to the first
sentence of this paragraph).
Letter to Chandler Trusts. Pursuant to a letter from Tribune to the Chandler
Trusts, which is filed as Exhibit (d)(3) to the Schedule TO, in connection
with the Merger Agreement, Tribune has agreed to pay or
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reimburse the fees and expenses of financial, legal and other advisers
(including Rustic Canyon Management, LLC, an entity controlled by Thomas
Unterman) to the Chandler Trusts in an aggregate amount not exceeding $25
million, incurred in connection with the transaction contemplated by the
Merger Agreement.
Effects of Inability to Consummate the Merger. Pursuant to the Merger
Agreement, following the consummation of the Offer and subject to certain
other conditions, Times Mirror will be merged with and into Tribune. Under the
terms of the Merger Agreement, each of Tribune and Times Mirror is required to
call and hold a meeting of its respective stockholders as promptly as
practicable for the purpose of voting upon the approval of the Merger
Agreement and the Merger. Consummation of the Merger is contingent upon, among
other things, the Times Mirror Stockholder Approval and the Tribune
Stockholder Approval.
If the Merger is consummated, stockholders of Times Mirror who elected not
to tender their Shares in the Offer, or had fewer Shares accepted than
tendered in the Offer as a result of proration, will have the ability to
exchange each of their Shares in the Merger for 2.5 shares of Tribune Common
Stock, or, if fewer than 28 million Shares were previously acquired by Tribune
for cash, to elect to receive $95 per share in cash or a combination of cash
and stock, subject to the restriction that the number of Shares entitled to
receive cash in the Merger will be limited to the Cash Election Number.
If, following the consummation of the Offer, the Merger is not consummated,
Tribune will control the number of Shares purchased by it in the Offer. Under
the Merger Agreement, Tribune will be entitled to representation on Times
Mirror's Board of Directors (and any committees therof) in the same proportion
as the number of Shares then beneficially owned by Tribune bears to the total
number of Shares deemed outstanding for financial reporting purposes. As a
result of its ownership of such Shares and its representation on the Times
Mirror Board and committees, Tribune may be able to influence decisions of the
Times Mirror Board.
If for any reason following completion of the Offer the Merger is not
consummated, Tribune reserves the right to acquire additional Shares through
private purchases, market transactions, tender or exchange offers or otherwise
on terms and at prices that may be more or less favorable than those of the
Offer or, subject to any applicable legal restrictions, to dispose of any of
all Shares acquired by Tribune.
Times Mirror Board Action Relating to Executive Officers
At a special meeting on March 2, 2000, the Executive Compensation
Subcommittee of the Compensation Committee (the "Executive Compensation
Subcommittee") of the Times Mirror Board adopted, among other things, certain
benefits, payments and arrangements for Times Mirror's executive officers and
directors upon a change of control of Times Mirror. On March 11, 2000, at a
special meeting, the Board of Directors of Times Mirror reviewed, ratified and
approved, among other things, the Executive Compensation Subcommittee's
actions with respect to the matters set forth below. Information regarding the
current salaries and bonuses of certain executive officers named in this
Section is contained under the caption "Executive Compensation" in the
Information Statement attached as Schedule I to this Schedule 14D-9.
Mark H. Willes, Chairman of the Board, President and Chief Executive
Officer. Prior to the approval of the terms set forth under this caption, the
Times Mirror Board reviewed reports from Times Mirror's compensation
consultants, which indicated that the level of benefits approved by the
Executive Compensation Subcommittee brings Mr. Willes' retirement benefits
into line with competitive practices for treatment of Chief Executive Officers
of comparable companies.
Mr. Willes will remain in his current position until the Effective Time, at
which time his employment will terminate. Until such time, his annual base
salary will remain at its current level of $1,000,000 and Mr. Willes will
continue to participate in the executive bonus incentive plan at his current
target level of $1,000,000. His bonus incentive award for the year 2000 will
be paid at the maximum level of $2,225,000, without any proration regardless
of when the Merger occurs. In the event that the Effective Time is in the year
2001, he will receive a bonus payment for the year 2001 equal to $2,225,000,
prorated to the Effective Time. Bonus payments will be
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paid or deferred in accordance with Mr. Willes' deferral election under the
Times Mirror Deferred Compensation Plan for Executives. Mr. Willes will
receive additional payments equal to one-quarter of the year 2000 bonus award
and the year 2001 bonus award, if any (which represents the value of an award
under the matching bonus restricted stock program of Times Mirror), without
the requirement to place on deposit any personally owned shares of Times
Mirror stock.
Mr. Willes will receive severance pay equal to three times his current
annual base salary plus three times his highest bonus payment in the last
three years in the amount of $9,243,750. This amount will be paid in the event
that Mr. Willes continues his employment with Times Mirror through the term of
the contract, in the event of his death or disability before the end of the
contract or in the event that Times Mirror terminates his employment before
the end of the contract. In the event that any portion of any change of
control, severance or any other payment to Mr. Willes is considered an excess
parachute payment subject to excise tax, Mr. Willes will receive an additional
payment that constitutes a full gross up for such excise tax.
The severance payments will be paid to Mr. Willes in approximately equal
payments over the three year period after the Effective Time. Mr. Willes will
not receive any additional stock option grants. During his employment with
Times Mirror, options will continue to vest in accordance with terms of the
grants. At the Effective Time, all stock options will become fully vested, and
Mr. Willes will receive the value of his outstanding stock options in
accordance with his elections under the terms of the Merger Agreement. While
an employee of Times Mirror during the term of his contract, restricted stock
will continue to vest in accordance with the terms of the grant until the
Effective Time, at which time the restricted stock award will be freed of
restrictions in accordance with the actions of the Times Mirror Board with
regard to the 1987 Restricted Stock Plan. Mr. Willes will also continue to be
eligible to participate in the matching bonus restricted stock program. During
the term of his employment, matching bonus restricted stock will continue to
vest in accordance with the terms of each grant, provided that personal shares
remain on deposit with Times Mirror. At the Effective Time, all shares of
restricted stock will be freed of restrictions. Mr. Willes will also continue
to participate in the Times Mirror Pension Plan and 401(k) Plan, as well as
the Supplemental Executive Retirement Plan (the "SERP"), including credit for
severance payments under the terms of those plans.
In the event Mr. Willes continues his employment through the Effective Time,
in the event of Mr. Willes' death or disability before the Effective Time, or
in the event that his employment is terminated by Times Mirror before the
Effective Time, Mr. Willes will receive the special retirement benefit
provided for in a retirement agreement with Times Mirror. Regardless of his
date of termination of employment under the terms of this employment
agreement, the enhanced benefit of $970,000 per year would commence on April
1, 2002 and would be payable as a 50% joint and survivor annuity with his wife
as the joint annuitant. This benefit equals the total pension benefit from
Times Mirror, including benefits earned under the Times Mirror Pension Plan
and the SERP. In the event that Mr. Willes voluntarily terminates his
employment prior to the Effective Time, he will receive a retirement benefit
determined under the terms of the SERP, based on his highest five year average
salary plus his highest five year average bonus, and benefit service earned
with Times Mirror plus 15 years of service, which benefit will be reduced by
Times Mirror early retirement factors and $204,332 per year and will be
payable as a subsidized 50% joint and survivor annuity. This payment may
commence as of any date that Mr. Willes selects. In accordance with Times
Mirror's practices, if Mr. Willes continues his employment through the
Effective Time or if his employment is terminated by Times Mirror before the
Effective Time, Mr. Willes will be provided with company-paid financial
counseling, furnished and functional office space and secretarial support for
seven years after the termination of his employment.
Other Executive Officers. The following benefits, payments and arrangements
were approved for other Times Mirror executive officers upon a change in
control of Times Mirror.
Base Salaries. Base salaries will continue at current levels until the
Effective Time, subject to review and adjustment under Times Mirror's regular
salary review procedures.
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Bonus Incentive Awards. Provided that an executive officer is an active
employee of Times Mirror as of the Effective Time, if the Merger occurs at any
time during the year 2000, the Executive Incentive Plan ("EIP") bonus
incentive award for the year 2000 will be paid at the maximum level of 225% of
the full-year bonus incentive target. Awards earned for the year 2000 will not
be prorated. If the Merger occurs during the year 2001, the bonus award for
2000 will be paid at the maximum level without any proration to any executive
who is an employee as of December 31, 2000. The awards will be paid or
deferred in accordance with the executive's deferral election under the Times
Mirror Deferred Compensation Plan regarding the year 2000 bonus. Bonus awards
will be paid at the earlier of the executive's termination of employment by
Tribune or December 31, 2000. Deferrals of the year 2000 bonus incentive award
will be credited to the deferred compensation plan as of the earlier of the
Effective Time or December 31, 2000. Provided an executive officer is an
active employee of Times Mirror as of the Effective Time, if the Merger occurs
in the year 2001, the EIP bonus incentive award for the year 2001 will be a
prorated amount of the year 2000 bonus award earned, and will be paid or
deferred as of the Effective Time.
Special Severance Payments. In the event that an executive officer is
terminated as of the Effective Time or within the severance protection period
(as described under the caption "Severance Protection Period"), and is
eligible for severance, the following severance amounts will be paid:
3 times the sum of current salary plus highest bonus within last three
years for Horst A. Bergmann, Kathryn M. Downing, Raymond A. Jansen, Jr. and
Efrem Zimbalist III;
2.5 times the sum of current salary plus highest bonus within last three
years for Roger H. Molvar and James R. Simpson; and
2 times the sum of current salary plus highest bonus within last three
years for Edward L. Blood, Rajender K. Chandhok, Debra A. Gastler and
William A. Niese.
Eligibility for Severance. For Kathryn M. Downing, special severance
payments will be paid if, during the severance protection period described
below, her employment is terminated by Tribune for any reason, or if she
chooses to leave the employment of Tribune voluntarily. For other executive
officers, special severance payments will be paid if, during the severance
protection period described below, the executive is involuntarily terminated
by Tribune for other than cause or voluntarily terminates employment for good
reason.
Severance Protection Period. For executive officers, the special severance
protection period will be the 24 month period after the Effective Time.
Excess Parachute Payments. In the event that any portion of any change of
control, severance or any other payment to an executive officer of Times
Mirror, including the payments to Mr. Willes described above, is considered an
excess parachute payment subject to excise tax, the executive officer will
receive an additional payment that constitutes a full gross up for such excise
tax.
Executive Perquisites. Executive officers who are currently eligible for
company-paid or reimbursed perquisites (including, without limitation,
financial counseling, executive physicals, club memberships) will have these
benefits extended during the severance protection period and the period of the
severance, if any.
Outplacement. Executives officers will receive outplacement services for a
period of one year after termination of employment, up to a maximum of $15,000
or may elect to receive the specified amount as a cash payment in lieu of
outplacement services.
Deferred Compensation Plan for Executives and Directors. The deferred
compensation plan currently provides that in the event of a change of control,
participants may elect to receive an immediate lump sum payment with a 10%
penalty for the unscheduled withdrawal.
Excess Pension Plan. Provided an executive officer is an employee at the
Effective Time, benefits earned under the Excess Pension Plan will be fully
vested at the Effective Time.
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Qualified Retirement Plans. Times Mirror's qualified retirement plans will
be amended to provide that benefits earned by participants who are employees
at the Effective Time will be fully vested at the Effective Time.
COBRA Reimbursement Payment. Executive officers whose employment is
terminated within the severance protection period will receive a payment equal
to the number of months of severance they are eligible to receive (up to a
maximum of 18 months) times the COBRA premium for the managed care program at
the time of their termination of employment.
SERP. The SERP provides that, upon the change of control, SERP benefits
accrued to the Effective Time will become fully vested. All SERP participants
who receive a year 2000 bonus incentive award will have such payment included
in the computation of their final average compensation under the SERP.
Further, all SERP participants will receive credit under SERP for any special
severance payments which may be paid as a result of the Merger.
Retiree Medical Benefits. Executive officers who have met the age and
service requirements for retiree medical benefits as of the date of the change
of control and who are terminated on account of the change of control will be
eligible for Times Mirror's pre- and post- age 65 retiree medical coverage or
an equivalent or better health care plan provided by Tribune.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
Board Recommendation
On March 12, 2000, the Board unanimously (a) determined that the Merger
Agreement and the transactions contemplated thereby, including the Offer and
the Merger, are advisable, fair to, and in the best interests of, the
stockholders of Times Mirror, (b) approved and adopted the Merger Agreement,
the Offer, the Merger and the other transactions contemplated thereby, and
(c) recommended that the holders of Shares who desire cash consideration for
their Shares accept the Offer and tender their Shares pursuant to the Offer,
and approve and adopt the Merger Agreement and the transactions contemplated
thereby. Copies of a press release announcing the Merger and the Offer and the
transactions contemplated thereby and a letter to the Times Mirror
stockholders relating to the Offer, the Merger and the transactions
contemplated thereby are filed as Exhibits 99 to the Form 8-K, filed on March
13, 2000, of Times Mirror, and Exhibit (a)(3) to this Schedule 14D-9,
respectively, and are incorporated herein by reference.
Background of the Offer
On April 25, 1999, John Madigan, Chief Executive Officer of Tribune, met
with Mark Willes, Chairman of the Board, President and Chief Executive Officer
of Times Mirror. At this meeting, Mr. Madigan proposed to Mr. Willes the
possibility of a business combination between Tribune and Times Mirror. At the
end of the meeting, Mr. Willes requested more detailed information about the
proposal.
On May 27, 1999, Mr. Madigan sent a letter to Mr. Willes describing
Tribune's view of the strategic benefits of the proposed combination. On June
8, 1999, Mr. Willes called Mr. Madigan to request financial projections
supporting the benefits of the combination. Mr. Madigan responded to Mr.
Willes' request with a letter dated June 9, 1999, which contained pro forma
projections for the combination. These projections were based on a merger
between Tribune and Times Mirror in which 50% of the consideration would be
paid in Tribune Common Stock and 50% of the consideration would be paid in
cash, at a price of $82.50 per Share.
Mr. Willes replied with a letter to Mr. Madigan dated June 17, 1999. Mr.
Willes' letter requested that correspondence regarding a business combination
between Tribune and Times Mirror cease, citing the perceived inability of the
Chandler Trusts to be able to agree to this type of transaction, but expressed
interest in a possible joint venture between Tribune's Los Angeles television
station and Times Mirror's Los Angeles newspaper. On June 21, 1999, Mr.
Madigan and Mr. Willes discussed by telephone the possibility of a Los Angeles
television/newspaper joint venture.
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On July 1, 1999, Mr. Willes sent Mr. Madigan a letter stating that, after
consulting with his associates, Times Mirror would decline Tribune's offer to
explore the possible joint venture. On July 15, 1999, Mr. Madigan responded
with a letter to Mr. Willes stating that he regretted Mr. Willes' decision to
abandon the discussions. There were no further discussions between Tribune and
Times Mirror on the subject of a business combination or joint venture until
November 1999.
On November 9, 1999, Jack Fuller, President of Tribune Publishing, and
Thomas Unterman, then Chief Financial Officer of Times Mirror and the Manager
of Rustic Canyon Partners, LLC, the general partner of TMCT Ventures, which is
a venture capital fund in which the Chandler Trusts have an 80% interest, met
at a regularly scheduled meeting of the board of another company on which they
both serve. During a break in the meeting, the participants engaged in a
general discussion of issues relating to Times Mirror. At the end of the
break, Messrs. Fuller and Unterman had a brief discussion regarding whether a
transaction between Times Mirror and Tribune could be feasible for the
Chandler Trusts. Mr. Unterman said he would be in Chicago over Thanksgiving
and said he might be available then to talk.
On November 11, 1999, Mr. Fuller spoke with Mr. Unterman by telephone to
arrange a meeting with Mr. Unterman on November 27. On November 27, 1999,
Messrs. Madigan and Fuller met with Mr. Unterman and told him that Tribune
would be interested in exploring the possibility of a combination. Mr.
Unterman explained his understanding of certain transaction parameters
resulting from certain requirements of the Chandler Trusts that might affect
the ability of the Chandler Trusts to engage in such a transaction. At the end
of this meeting, a meeting between Messrs. Madigan and Fuller and
representatives of the Chandler Trusts was suggested.
On January 5, 2000, Messrs. Madigan and Fuller met with representatives of
the Chandler Trusts to discuss the possibility of a business combination
between Tribune and Times Mirror. At the conclusion of this meeting, it was
agreed that discussions should continue and that representatives of the
Chandler Trusts would visit Tribune management in Chicago in February. On
February 9, 2000, members of Tribune's senior management made a presentation
to representatives of the Chandler Trusts regarding the strategic and
financial rationale supporting a transaction between the companies.
On February 14, 2000, Tribune's Board of Directors met at a regularly
scheduled meeting and discussed the possible combination. The Tribune Board
authorized continued discussions with the Chandler Trusts and discussions with
Times Mirror. Thereafter, representatives of Tribune and representatives of
the Chandler Trusts continued their discussions. This included discussion of
the structure of the proposed transaction because of the desire of the
Chandler Trusts to engage in a tax-free transaction and discussion of possible
participation in governance by some persons associated with the Chandler
Trusts. The governance participation discussed was with respect to the Tribune
Board and a separate board that would be created to oversee the Los Angeles
Times.
On February 29, 2000, representatives of the Chandler Trusts met with Mr.
Willes to inform him of their intention to pursue a transaction with Tribune
and to propose that the Times Mirror Board of Directors approve such a
transaction. Times Mirror contacted Goldman, Sachs & Co. ("Goldman Sachs") and
engaged Goldman Sachs as its financial advisor in connection with the possible
sale of all or a portion of Times Mirror.
On March 1, 2000, representatives of the Chandler Trusts met with members of
the senior management of Times Mirror and representatives from Times Mirror's
regular outside corporate counsel, Gibson, Dunn & Crutcher LLP ("Gibson,
Dunn") and Goldman Sachs to describe the status of the discussions between the
Chandler Trusts and Tribune, the requirements of the Chandler Trusts in order
to proceed with a transaction and their interest in addressing the Times
Mirror Board of Directors on the transaction and in moving forward with a
transaction promptly. Representatives of the Chandler Trusts indicated that
they expected that Times Mirror would receive a proposal from Tribune shortly,
possibly as early as March 3, 2000, following a scheduled meeting of the
Tribune Board of Directors.
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On March 2, 2000, during an executive session of a regularly scheduled
meeting of the Times Mirror Board of Directors, Mr. Willes advised the non-
Chandler Trust members of the Times Mirror Board of Directors of the status of
developments and Gibson, Dunn and Times Mirror's financial advisors addressed
various aspects of the proposed transaction. The directors approved the
retention of Goldman Sachs as Times Mirror's financial advisor with respect to
the proposed transaction, and decided to retain Skadden, Arps, Slate, Meagher
& Flom LLP ("Skadden Arps") as special counsel to the non-Chandler Trust
members of the Times Mirror Board of Directors, with Gibson, Dunn continuing
to represent Times Mirror. The Chandler Trust directors and the legal advisors
(Munger, Tolles & Olson LLP) and financial advisors (Morgan Stanley & Co.,
Incorporated) to the Chandler Trusts then joined the meeting and made a
presentation regarding the background of their discussions with Tribune, the
specific requirements of a transaction that were necessary for the Chandler
Trusts to proceed, the strategic advantages of a combination with Tribune and
the desire of the Chandler Trusts to move forward with a transaction. The
representatives of the Chandler Trusts indicated that there had been no
detailed discussions about price.
On March 3, 2000, the Tribune Board of Directors met and approved an offer
to acquire Times Mirror through a merger at $90 per Share, on the terms
described below, subject to the offer not being disclosed to the public or any
third party. Mr. Madigan then sent a letter to the Times Mirror Board of
Directors and the trustees of the Chandler Trusts setting forth Tribune's
offer. The offer provided for a 50% cash/50% stock election merger, at a price
of $90 per Share in cash or its equivalent in shares of Tribune Common Stock.
The offer also contemplated participation in governance by some persons
associated with the Chandler Trusts, both with respect to the Tribune Board
and a separate Los Angeles Times board. The offer was conditioned on the
agreement of the Chandler Trusts to commit to vote all of their Shares in
favor of the proposed merger and against any competing transactions, and on
the merger agreement not being terminable if a competing proposal was made to
Times Mirror unless the stockholders of Times Mirror failed to approve the
transaction at a meeting of such stockholders.
On March 6, 2000, counsel for Tribune provided Gibson, Dunn and Skadden Arps
and counsel for the Chandler Trusts with a proposed form of merger agreement
and voting agreement reflecting the terms of Tribune's offer. On March 8,
2000, the non-Chandler Trust members of the Times Mirror Board of Directors
convened with their financial and legal advisors to review the Tribune offer.
Representatives of Skadden Arps reviewed with the directors their duties in
the context of the proposal as well as the impact of the provision of Times
Mirror's Charter that would permit the directors in their sole discretion in
connection with their approval of a merger to convert the high voting Series C
Common (including Shares held by the Chandler Trusts) to low voting Series A
Common. Goldman Sachs reviewed Times Mirror's current and projected financial
performance, Tribune's business, strategy, financial performance and
reputation in the market, and various valuation models for Times Mirror and
other newspaper acquisitions which had been recently completed. Goldman Sachs
also addressed the potential interest of other acquirors. After an extended
discussion, these directors directed their advisors to indicate to Tribune and
the Chandler Trusts that the $90 per Share price was too low and would need to
be increased before Times Mirror was prepared to pursue a transaction with
Tribune. These directors further indicated that they had significant
reservations about the scope of the voting agreement required by Tribune,
particularly in light of the Times Mirror Charter provisions permitting the
conversion of the shares of Series C Common to shares of Series A Common in
certain circumstances.
On March 9, 2000, representatives of Times Mirror met with representatives
of the Chandler Trusts and reviewed the Times Mirror Board's reaction to the
proposal, the need for an increased price and the Board's resistance to the
scope of the voting agreement. In the course of those discussions the Times
Mirror Charter provision providing for conversion of the shares of Series C
Common was discussed. The representatives of the Chandler Trusts forcefully
objected to the non-Chandler Trust directors' view of the availability of that
provision, indicating their belief that any conversion pursuant to such
provision was intended to be effective only upon consummation of a transaction
and not in advance of such consummation, and stated that any attempt to
utilize the provision would be litigated by the Chandler Trusts. The parties
discussed possible alternative structures for the transaction that might
ensure that the public stockholders were treated at least as favorably as the
Chandler Trusts and would permit another potential acquiror to make a
competing proposal.
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On March 10, 2000, representatives of Tribune, Times Mirror and the Chandler
Trusts met to discuss the terms of the proposed merger and to commence
management interviews and due diligence. The representatives of Times Mirror
told the representatives of Tribune that, while the Times Mirror Board of
Directors had not yet authorized any transaction, they believed that any
transaction would need to be at a higher price than $90 per Share, and with a
structure that would ensure that the public stockholders had the opportunity
to receive all stock for their shares of Times Mirror if they so desired. The
Times Mirror representatives also suggested the possibility of a cash tender
offer as a first step in a two-step acquisition, in order to allow Times
Mirror stockholders the opportunity to receive cash for their Shares
significantly earlier than they would in a one-step merger. The
representatives of the Chandler Trusts told the Tribune representatives that
the Chandler Trusts agreed with the foregoing Times Mirror position and
further required a structure that would guarantee that the Chandler Trusts
could elect to receive all stock in the transaction. Finally, the Times Mirror
representatives also objected to Tribune's requirement that the Chandler
Trusts enter into the proposed voting agreement unconditionally obligating
them to vote their shares of Series C Common representing approximately 67% of
the Times Mirror voting power in favor of the merger.
On March 11, 2000, the Tribune Board of Directors met to approve increasing
the price of the cash portion of its offer to $92.50 per Share (leaving the
stock portion at $90 per Share), to provide for a tender offer preceding the
merger for up to 28 million Shares, and to provide for an unlimited stock
election in the merger, subject to the Chandler Trusts entering into a voting
agreement requiring the Chandler Trusts to vote their shares of Series C
Common in favor of the merger. Following this meeting, representatives of
Tribune informed representatives of Times Mirror and of the Chandler Trusts of
these revisions to Tribune's proposal.
In the afternoon of March 11, the non-Chandler Trust members of the Times
Mirror Board met with their legal and financial advisors to consider the
status of the discussions with representatives of the Tribune and the Chandler
Trusts as well as the terms of the revised proposal from the Tribune.
Representatives from Goldman Sachs and Skadden Arps advised these directors
that, while the revised Tribune proposal now provided all Times Mirror
stockholders who desired to receive all Tribune Common Stock for their Shares
of Times Mirror Common Stock with the opportunity to do so, the proposal still
did not permit termination of the merger agreement by Times Mirror in the
event of a proposal from a third party and continued to be conditioned upon
the Chandler Trusts entering into a voting agreement at the time of execution
of any merger agreement requiring the Chandler Trusts to vote their shares of
Series C Common at their full voting power in favor of the merger, thus
assuring stockholder approval of the transaction proposed by Tribune. The
advisors also conveyed to these directors the views of the representatives of
the Chandler Trusts that the Times Mirror Board did not have the right to
convert the Series C Common into Series A Common in a manner that would
prevent the Series C Common from voting on the proposed merger at its full
voting power, and that any attempt to do so would be vigorously resisted by
the Chandler Trusts. At the end of the meeting, these directors instructed
their advisors to continue to seek to improve the economic terms of the
proposed transaction and to seek to modify the terms of the voting agreement.
The directors who are associated with the Chandler Trusts then joined the
meeting and the full Times Mirror Board reviewed and approved various actions
taken by the Executive Compensation Subcommittee on March 2, 2000 with respect
to severance and other employee benefits upon a change of control of Times
Mirror. For a discussion of the actions taken, see "Times Mirror Board Action
Relating to Executive Officers." Following that portion of the meeting, Mr.
Madigan and other Tribune executives made a presentation to the full Times
Mirror Board of Directors, joined by certain trustees of the Chandler Trusts,
regarding the financial performance and future prospects of Tribune and the
perceived benefits of the Tribune-Times Mirror combination.
In the evening of March 11, representatives of Times Mirror and
representatives of the Chandler Trusts informed the Tribune representatives
that Times Mirror and the Chandler Trusts would be willing to agree to a
transaction at $95 per Share in cash for up to 28 million Shares and an
exchange ratio of 2.5 shares of Tribune Common Stock for each Share that did
not elect cash (representing a value of $93 in Tribune Common Stock for each
Share electing Tribune Common Stock based on the closing price of the Tribune
Common Stock on March 10, 2000). The representatives of Times Mirror and of
the Chandler Trusts also said that they would agree to the proposed voting
agreement; provided, however, that, in the event a third party were to submit
a competing
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bid prior to completion of the Tribune tender offer that caused the Times
Mirror Board to change its recommendation, the Chandler Trusts' commitment to
vote in favor of the transactions with Tribune would apply only to 28% of the
total voting power of Times Mirror, with the remaining Shares held by the
Chandler Trusts voted in proportion to the vote of the Shares not held by the
Chandler Trusts. The representatives of Tribune informed the Times Mirror
representatives and the Chandler Trusts' representatives that they would be
willing to recommend that the Tribune Board approve these economic terms, but
only if the Chandler Trusts agreed unconditionally to vote all of their Shares
in favor of the transaction and the Board did not take any action to convert
the Series C Common into Series A Common. Tribune also indicated that its
proposal, by its terms, would expire on March 13 if it was not accepted by
that time.
On March 12, 2000, counsel for Tribune met with Skadden Arps to discuss
possible means of resolving the parties' disagreement with respect to the
terms of the voting agreement with the Chandler Trusts. Following these
meetings, the Tribune representatives informed the Times Mirror
representatives and the Chandler Trusts' representatives that they would be
willing to recommend to the Tribune Board that it approve a voting agreement
providing that the Chandler Trusts' commitment to vote in favor of the
transactions with Tribune would be reduced to 40% of the total voting power of
Times Mirror (with the remaining Shares held by the Chandler Trusts voted in
proportion to the vote of the Shares not held by the Chandler Trusts) in the
event a competing offer were made that caused the Times Mirror Board to change
its recommendation of the Tribune offer within 20 days of the announcement of
the execution of the merger agreement, but only in the event that the exchange
ratio was 2.35 shares of Tribune Common Stock for each Share that did not
elect cash. The representatives of Times Mirror responded that, based upon the
overall terms of the proposed transaction, they would be willing to support
these terms in their presentation to the Times Mirror Board if the exchange
ratio remained at the previously proposed 2.5. The representatives of Times
Mirror and of the Chandler Trusts also provided the Tribune representatives
with their other comments on the proposed forms of merger agreement and voting
agreement.
In the evening of March 12, 2000, the Board of Directors of Tribune met,
approved the revisions to the Tribune proposal described above but with an
exchange ratio of 2.5, authorized Tribune to enter into the Merger Agreement
and the Voting Agreement on these terms, and resolved to recommend approval of
the transaction to Tribune stockholders. Following the meeting of the Tribune
Board, the Board of Directors of Times Mirror met, and after reviewing all
aspects of the proposed transaction, approved the transaction on these revised
terms, authorized Times Mirror to enter into the Merger Agreement, and
resolved to recommend approval of the transaction to Times Mirror
stockholders. On March 13, 2000, following finalization of the Merger
Agreement and the Voting Agreement on these terms, Tribune and Times Mirror
executed the Merger Agreement, and Tribune, the Chandler Trusts and the other
parties to the Voting Agreement executed the Voting Agreement.
Reasons For Recommendation
In making the determinations and recommendations set forth in this Item 4,
the Board considered a number of factors, including, without limitation, the
factors mentioned in the section entitled "Background" above and the
following:
(1) The financial and other terms of the Offer, the Merger, the Merger
Agreement and the related transaction agreements.
(2) The historical and recent market prices for the Shares, and that the
$95 per Share cash consideration to be paid in the Offer and the 2.5 Shares
of Tribune Common Stock to be exchanged in the Merger, on a blended basis,
represented a significant premium of approximately 100% over the closing
price on the New York Stock Exchange of Series A Common ($47.94 per share
of Series A Common) on the last trading day prior to the announcement of
the execution of the Merger Agreement.
(3) The oral opinion of Goldman Sachs, received by the Times Mirror Board
on March 12, 2000, which was subsequently confirmed by its written opinion,
that as of the date of the opinion, the stock consideration and cash
consideration to be received by the holders of Shares, in the aggregate is
fair from a financial point of view to the holders of Shares receiving such
consideration. A copy of Goldman Sachs'
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written opinion, dated March 13, 2000, which sets forth the procedures
followed, the matters reviewed and the assumptions made by Goldman Sachs,
is attached as Schedule III to this Schedule 14D-9, and is incorporated
herein by reference. Times Mirror's stockholders are urged to read Goldman
Sachs' opinion in its entirety.
(4) The terms and conditions of the Merger Agreement and the Offer and,
in particular, the structure of the transaction providing Times Mirror
stockholders with the option of receiving (i) cash for their Shares
pursuant to the Offer, subject to certain conditions, (ii) shares of
Tribune Common Stock on a tax-free basis or (iii) a combination of cash and
shares of Tribune Common Stock.
(5) The fact that the Times Mirror stockholders will have the opportunity
to hold equity in Tribune, a corporation with significant and diverse
businesses and moreover, that stockholders electing to receive shares of
Tribune Common Stock will continue to have the opportunity to obtain a
control premium in a future transaction involving Tribune.
(6) The fact that Tribune's editorial independence and journalism quality
is consistent with Times Mirror's traditions and integrity in the media
field.
(7) The fact that Chandler Trust No. 1 and Chandler Trust No. 2, who are
parties to the Voting Agreement and hold approximately 32% of the
outstanding Shares (including their interests in TMCT, LLC and TMCT II,
LLC) and control approximately 67% of the voting power of Times Mirror,
were in favor of the Merger, the Offer and the transactions contemplated
thereby.
(8) The high likelihood that the transactions contemplated by the Merger
Agreement and the Offer would be consummated, particularly in light of
Tribune's reputation, ability to finance the transactions, lack of any
financing condition in the Merger Agreement and ability to terminate the
Offer and the Merger Agreement only in limited circumstances.
(9) Times Mirror's future prospects, financial resources and condition,
ability to access the capital markets, as well as the increased competition
in all segments of Times Mirror's business from other companies and the
significant challenges that Times Mirror would face if it did not proceed
with the proposed transaction with Tribune.
(10) The belief by the Times Mirror Board that, after review by
independent members of the Times Mirror Board, the transactions were fair
and equitable to, and presented an attractive valuation, for Times Mirror
stockholders.
The Times Mirror Board additionally considered potential detriments involved
in the Offer and the Merger, which include, but are not limited to, the
following:
(1) Provisions of Times Mirror's Charter discussed above under the
caption "Background of the Offer;" relating to and affected by the
conversion of shares of Series C Common into shares of Series A Common in
conjunction with the Merger and the views of the Chandler Trusts with
respect to such conversion.
(2) The conditions imposed during the negotiation of the Merger and the
terms of the Merger Agreement limiting Times Mirror's ability to consider
other proposals by third parties and requiring Times Mirror to pay a $250
million termination fee under certain circumstances, which make it more
difficult for Times Mirror to engage in a transaction superior to that
contemplated by the Merger Agreement.
The Times Mirror Board, however, determined that the foregoing detriments were
outweighed by the potential benefits of the transactions described above.
The foregoing discussion of the information and factors considered and given
weight by the Times Mirror Board is not intended to be exhaustive. In view of
the variety of factors considered in connection with its evaluation and
approval of the Offer, the Merger, the Merger Agreement and the transactions
contemplated
24
<PAGE>
thereby, the Times Mirror Board did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors
considered in reaching its determination. In addition, individual members of
the Times Mirror Board may have assigned different weights to different
factors.
Intent To Tender
Pursuant to the Voting Agreement, Chandler Trust No. 1 and Chandler Trust
No. 2, who are signatories to the Voting Agreement and who hold approximately
67% of the voting power of the outstanding Shares, as well as certain other
affiliates of Times Mirror who hold shares of Series A Common or shares of
Series C Common that under Delaware law are not outstanding for voting
purposes, agreed not to tender their Shares in the Offer. Such stockholders
further agreed (a) not to contract to sell, sell or otherwise transfer or
dispose of any of their Shares other than pursuant to the Merger or through
transfer to a party who executes the Voting Agreement, (b) to vote all, or
part if a Superior Proposal is involved, of the Shares which they beneficially
own (i) in favor of the Merger Agreement, the Merger and the other
transactions contemplated thereby, (ii) against any action or agreement that
could reasonably be expected to result in a breach by Times Mirror under the
Merger Agreement or a related agreement or to materially impede or otherwise
adversely affect the Merger or the other transactions contemplated thereby,
and (iii) against any Takeover Proposal. The Voting Agreement additionally
provides that certain stockholders who are signatories thereto will receive
Tribune Common Stock in the Merger in respect of the Shares owned beneficially
by each of them.
Although each of Times Mirror's directors and executive officers will make
his or her own determination, based on individual and personal financial and
other circumstances, at the present time Times Mirror is aware that certain of
such directors and executive officers presently do not intend to tender all of
their Shares pursuant to the Offer, but instead intend to elect to receive
shares of Tribune Common Stock pursuant to the Merger.
ITEM 5. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.
By letter agreement dated as of March 3, 2000, Times Mirror engaged Goldman
Sachs as financial advisor in connection with the possible sale of all or a
portion of Times Mirror. Pursuant to the letter agreement, Goldman Sachs
agreed to provide Times Mirror with financial assistance and investment
banking services in connection with the potential transaction, including, at
Times Mirror's request, the rendering of an opinion as to the fairness from a
financial point of view of the financial consideration to be received by
stockholders of Times Mirror in connection with the sale of 50% or more of the
outstanding common stock of Times Mirror.
In exchange for Goldman Sachs' services, Times Mirror agreed to pay to
Goldman Sachs the following fees: (a) a retention fee of $2 million in cash,
(b) a transaction fee of 0.35% of the aggregate consideration paid for the
purchase of 50% or more of the outstanding common stock or the assets (based
on the book value thereof) of Times Mirror, less any fees already paid
pursuant to (a) above, and (c) any reasonable out-of-pocket expenses,
including attorneys' fees and taxes, arising in connection with Goldman Sachs'
services. Times Mirror additionally agreed to indemnify Goldman Sachs and
related persons against certain liabilities in connection with Goldman Sachs'
engagement.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Except as set forth in Schedule II, no transactions in the Shares have been
effected during the past 60 days by Times Mirror or any of its executive
officers, directors, affiliates or subsidiaries.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a) Except as indicated in Items 3 and 4 above, no negotiations are being
undertaken or are underway by Times Mirror in response to the Offer which
relate to a tender offer or other acquisition of the Times Mirror's securities
by Times Mirror, any subsidiary of Times Mirror or any other person.
25
<PAGE>
(b) Except as indicated in Items 3 and 4 above, no negotiations are being
undertaken or are underway by Times Mirror in response to the Offer which
relate to, or would result in, (i) an extraordinary transaction, such as a
merger, reorganization or liquidation, involving Times Mirror or any
subsidiary of Times Mirror, (ii) a purchase, sale or transfer of a material
amount of assets of Times Mirror or any subsidiary of Times Mirror, or (iii)
any material change in the present dividend rate or policy, or indebtedness or
capitalization of Times Mirror.
(c) Except as indicated in Items 3 and 4 above, there are no transactions,
Board of Directors resolutions, agreements in principle or signed contracts
entered into in response to the Offer that relate to one or more of the
matters referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Information Provided Pursuant to Rule 14f-1 Under the Exchange Act. The
Information Statement attached hereto as Schedule I is being furnished to the
stockholders of Times Mirror in connection with the possible designation by
the Tribune, pursuant to the Merger Agreement, of certain persons to be
appointed to the Times Mirror Board other than at a meeting of Times Mirror's
stockholders, and such information is incorporated herein by reference.
Certain Financial Projections (Unaudited). In the course of discussions
between representatives of Times Mirror and Tribune, Times Mirror provided
Tribune's representatives with certain projections of future operating
performance of Times Mirror prepared by Times Mirror's management for fiscal
years 2000, 2001 and 2002 (the "Plan Projections"). Such information has been
set forth below for the limited purpose of giving stockholders access to
projections by Times Mirror's management that were available for review by
Tribune in connection with the Offer.
26
<PAGE>
The projected financial information set forth below necessarily reflects
numerous assumptions with respect to general business and economic conditions
and other matters, many of which are inherently uncertain or beyond Times
Mirror's or Tribune's control, and does not take into account any changes in
Times Mirror's operations or capital structure which may result from the Offer
and the Merger. It is not possible to predict whether the assumptions made in
preparing the projected financial information will be valid, and actual
results may prove to be materially higher or lower than those contained in the
projections. The inclusion of this information should not be regarded as an
indication that Times Mirror or any other person who received this information
considered it a reliable predictor of future events, and this information
should not be relied on as such. None of Tribune, Times Mirror or any of their
respective representatives assumes any responsibility for the validity,
reasonableness, accuracy or completeness of the projected financial
information, and Times Mirror has made no representations to Tribune regarding
such information.
2000-2002 Business Plan
($ in millions)
<TABLE>
<CAPTION>
Plan Plan Plan
2000 2001 2002
------ ------ ------
<S> <C> <C> <C>
Total Revenue.......................................... $3,215 $3,385 $3,574
Operating Profit....................................... $ 535 $ 592 $ 643
Margin................................................. 16.7% 17.5% 18.0%
Interest Expense (Net)................................. (122) (123) (127)
Other Income........................................... 22 7 6
------ ------ ------
Pretax Earnings........................................ $ 435 $ 476 $ 522
Taxes.................................................. (187) (205) (224)
------ ------ ------
Net Income............................................. $ 248 $ 271 $ 298
Preferred Dividends.................................... (8) (8) (8)
------ ------ ------
Net to Common Shares................................... $ 240 $ 263 $ 290
Earnings Per Share..................................... $ 3.70 $ 4.05 $ 4.45
Diluted Shares......................................... 66.6 66.6 66.6
</TABLE>
Cautionary Statement Concerning Forward-Looking Statements. Certain matters
discussed herein, including without limitation, the Plan Projections, are
forward-looking statements that involve risks and uncertainties. Such
information has been included in this Schedule 14D-9 for the limited purpose
of giving stockholders access to projections by Times Mirror's management that
were made available to Tribune. Information was prepared by Times Mirror's
management for internal use and not with a view to publication. The foregoing
Plan Projections were based on assumptions concerning Times Mirror's
operations and business prospects in 2000 through 2002, including the
assumption that Times Mirror would continue to operate under the same
ownership structure as then existed. The Plan Projections were also based on
other revenue, expense and operating assumptions. Information of this type is
based on estimates and assumptions that are inherently subject to significant
economic and competitive uncertainties and contingencies, all of which are
difficult to predict and many of which are beyond Times Mirror's control. Such
uncertainties and contingencies include, but are not limited to: changes in
the economic conditions in which Times Mirror operates; greater than
anticipated competition or price pressures; new product offerings; better or
worse than expected customer growth resulting in the need to expand operations
and make capital investments; and the impact of investments required to enter
new markets. Accordingly, there can be no assurance that the projected results
would be realized or that actual results would not be significantly higher or
lower than those set forth above. In addition, the Plan Projections were not
prepared with a view to public disclosure or compliance with the published
guidelines of the SEC or the guidelines established by the American Institute
of Certified Public Accountants regarding projections and forecasts, and are
included in this Offer to Purchase only because such information was made
available to Tribune by Times Mirror. Neither Tribune's nor Times Mirror's
independent accountants have examined or applied any agreed upon procedures to
this information, and, accordingly, assume no responsibility for this
information. Neither Tribune nor Times Mirror nor any other party assumes any
responsibility for the accuracy
27
<PAGE>
or validity of the foregoing Plan Projections. Neither Tribune nor Times Mirror
intends to provide any updated information with respect to any forward-looking
statements.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
(a)(1) Offer to Purchase, dated March 21, 2000 (incorporated by reference to
Exhibit (a)(1) to the Schedule TO, filed on March 21, 2000, of
Tribune Company).
(a)(2) Letter of Transmittal (incorporated herein by reference to Exhibit
(a)(2) to the Schedule TO, filed on March 21, 2000, of Tribune
Company).
(a)(3) Letter to holders of The Times Mirror Company common stock, dated
March 21, 2000 (included with Schedule 14D-9 mailed to stockholders).
(a)(4) Fairness Opinion of Goldman, Sachs & Co. dated March 13, 2000
(included as Schedule III hereto).
(a)(5) Joint Press Release of The Times Mirror Company and Tribune Company,
dated March 13, 2000 (incorporated by reference to Exhibit 99 to the
Form 8-K, filed on March 13, 2000, of The Times Mirror Company).
(e)(1) Agreement and Plan of Merger, dated as of March 13, 2000, between
Tribune Company and The Times Mirror Company, including Conditions to
the Offer (incorporated by reference to Exhibit 2.1 to the Form 8-K,
filed on March 13, 2000, of The Times Mirror Company).
(e)(2) Voting Agreement, dated as of March 13, 2000, among Tribune Company
and certain stockholders of The Times Mirror Company (incorporated by
reference to Exhibit 2.2 to the Form 8-K, filed on March 13, 2000, of
The Times Mirror Company).
(e)(3) Letter, dated March 13, 2000, from Tribune Company to Chandler Trust
No. 1 and Chandler Trust No. 2 (incorporated by reference to Exhibit
(d)(3) to the Schedule TO, filed on March 21, 2000, of Tribune
Company).
(g) None.
</TABLE>
28
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 21, 2000
THE TIMES MIRROR COMPANY
/s/ MARK H. WILLES
By: _________________________________
Mark H. Willes
Chairman of the Board, President
and Chief Executive Officer
29
<PAGE>
SCHEDULE I
THE TIMES MIRROR COMPANY
TIMES MIRROR SQUARE
LOS ANGELES, CALIFORNIA 90053
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
This information statement ("Information Statement") is being mailed on or
about March 21, 2000 as part of the Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") to holders of record of shares of Series
A Common Stock, par value $1.00 per share, and Series C Common Stock, par
value $1.00 per share (collectively, the "Common Stock" or the "Shares"), of
The Times Mirror Company, a Delaware corporation ("Times Mirror"). It is being
furnished pursuant to that certain Agreement and Plan of Merger, dated as of
March 13, 2000 (the "Merger Agreement"), between Times Mirror and Tribune
Company, a Delaware corporation ("Tribune"). Pursuant to the terms of the
Merger Agreement, Tribune will make an offer to purchase the Shares tendered
by Times Mirror's stockholders (the "Offer"). Following completion of the
Offer, Times Mirror will merge (the "Merger") with and into Tribune, and
Tribune shall be the surviving corporation (the "Surviving Corporation").
Tribune commenced the Offer on Tuesday, March 21, 2000. The Offer is
scheduled to expire at 12:00 midnight, New York City time, on Monday, April
17, 2000, unless it is extended by Tribune in accordance with the Merger
Agreement.
The Merger Agreement provides that, upon the consummation of the Offer,
Times Mirror shall cause certain designees of Tribune (the "Tribune
Designees") to be elected to the Board of Directors of Times Mirror (the
"Board"). If, however, the Merger Agreement is terminated or if Tribune does
not accept the Shares tendered for exchange, then Tribune will not have any
right to designate directors for election to the Board.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") and Rule 14f-1
promulgated thereunder. You are urged to read this Information Statement
carefully. You are not, however, required to take any action in connection
with this Information Statement.
OWNERSHIP OF VOTING SECURITIES
As of March 8, 2000, Times Mirror had, for voting purposes, 36,286,678
shares of Series A Common Stock issued and outstanding and 18,196,797 shares
of Series C Common Stock issued and outstanding. Each share of Series A Common
Stock is entitled to one vote and each share of Series C Common Stock is
entitled to ten votes on all matters. The stockholders have the right to elect
directors by cumulative voting, with each share allocated a number of votes
equal to the votes to which the share is entitled times the number of
directors to be elected, which votes may be cast for one candidate or
distributed among any two or more candidates.
30
<PAGE>
Beneficial Ownership of Certain Stockholders
The following table sets forth the ownership of the outstanding shares of
the voting securities of Times Mirror as of March 8, 2000 (except as otherwise
noted), held by persons known to Times Mirror to beneficially own more than 5%
of the outstanding shares of a class of voting securities of Times Mirror and
by certain employee benefit plan trusts maintained by Times Mirror for various
qualified retirement plans for employees of Times Mirror and its subsidiaries.
Unless otherwise indicated, beneficial ownership numbers represent shares over
which the beneficial owner has sole voting and dispositive power.
<TABLE>
<CAPTION>
Series A Series C
Name and Address of Beneficial Common Percent of Common Percent of
Owner Stock Series(1) Stock Series(1)
- ------------------------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
The Trustees of the Chandler
Trusts(2)(3)...................... -- -- 14,521,654 79.80%
350 West Colorado Boulevard
Suite 230
Pasadena, CA 91105
The Times Mirror Employee Stock
Ownership Trust(4)................ 2,864,934 7.90% 1,356,244 7.45%
Times Mirror Square
Los Angeles, CA 90053
Times Mirror Savings Plus Plan
Trust(5).......................... 2,057,887 5.67% 137,092 *
Times Mirror Square
Los Angeles, CA 90053
Putnam Investments, Inc.(6)........ 4,932,511 13.59% -- --
Marsh & McLennan Companies, Inc.
Putnam Investment Management, Inc.
The Putnam Advisory Company, Inc.
One Post Office Square Boston, MA
02109
FMR Corp.(7)....................... 4,227,771 11.65% -- --
82 Devonshire Street
Boston, MA 02109
</TABLE>
- --------
* Less than one percent
(1) The percentages are based on the number of shares outstanding for voting
purposes of each class of voting securities as of March 8, 2000, as
reflected in the records of Times Mirror. Shares of Series C Common Stock
automatically convert into shares of Series A Common Stock upon being
transferred, other than transfers to certain permitted transferees as
specified in Times Mirror's Amended and Restated Certificate of
Incorporation.
(2) On March 8, 2000, the Chandler Trusts owned in the aggregate 14,521,654
shares of Series C Common Stock. In addition to her interests in shares
held by the Chandler Trusts, Gwendolyn Garland Babcock, a trustee of the
Chandler Trusts, holds 23,800 shares of Series A Common Stock (over all
of which Mrs. Babcock has sole voting and dispositive power), including
20,000 shares of Series A Common Stock which she may acquire upon
exercise of outstanding stock options and 2,057 stock units deferred
under The Times Mirror Non-Employee Directors Stock Plan. Her husband
holds 900 shares of Series A Common Stock and 448 shares of Series C
Common Stock. In addition to Mrs. Babcock, four other trustees of the
Chandler Trusts own Series A Common Stock individually or as trustee as
follows: 113,801 shares of Series A Common Stock and 57,264 shares of
Series C Common Stock owned by Camilla Chandler Frost plus 106,650 shares
of Series A Common Stock held by a foundation controlled by her, her son,
and William Stinehart, Jr.; 9,330 shares by William Stinehart, Jr. (of
which he has sole voting and dispositive power over 8,587 shares),
including 5,000 shares of Series A Common Stock which he may acquire upon
the exercise of outstanding stock options, 3,587 stock units deferred
under The Times Mirror Non-Employee Directors Stock Plan and 1,243 shares
held as co-trustee, of which he disclaims beneficial ownership; and
24,865 shares by Warren B. Williamson (over all of which Mr. Williamson
has sole voting and dispositive power), including 20,000 shares of Series
A Common Stock which he may acquire upon the exercise of outstanding
stock options and 4,582 stock units deferred under The Times Mirror Non-
Employee Directors Stock Plan. On March 8, 2000, the individuals who act
as trustees of the Chandler Trusts (see "Certain Relationships and
Related Party Transactions") beneficially owned, or indirectly, in their
31
<PAGE>
capacities as individuals and as trustees of the Chandler and other trusts
an aggregate of 279,346 shares of Series A Common Stock and 14,579,366
shares of Series C Common Stock constituting 0.77% of the shares of Series A
Common Stock and 80.12% of the shares of Series C Common Stock outstanding
on that date, representing 66.93% of the total voting interests of all
outstanding shares of Series A and Series C Common Stock. Unless otherwise
indicated, all beneficial ownership figures reported in this footnote
represent shares over which the beneficial owner shares voting and
dispositive power with others.
(3) The number of shares indicated above excludes 5,001,334 shares of Series A
Common Stock held by TMCT, LLC and 15,541,216 shares of Series A Common
Stock held by TMCT II, LLC. Such shares may be deemed to be beneficially
owned by the Chandler Trusts under Section 13(d) of the Exchange Act. The
Chandler Trusts and their respective trustees, however, disclaim
beneficial ownership of such shares. In addition, TMCT, LLC holds 411,784
shares of Series A Preferred Stock and TMCT II, LLC holds 380,972 shares
of Series D-1 Preferred Stock and 245,100 shares of Series D-2 Preferred
Stock. The Chandler Trusts and their respective trustees disclaim
beneficial ownership of such shares.
(4) Based on holdings as of January 31, 2000, shares of Times Mirror stock
allocated to participants' accounts in The Times Mirror Employee Stock
Ownership Plan ("ESOP") are voted by the participants themselves on
matters presented at meetings of stockholders. Shares with respect to
which no participant directions are received are customarily voted by
Fidelity Management Trust Company ("Fidelity"), as the trustee of the
ESOP. Effective for purposes of the Times Mirror Stockholder Approval of
the Merger, however, Times Mirror has exercised its authority under the
trust agreement with Fidelity ("ESOP Trust Agreement") to appoint LaSalle
Bank, N.A. ("LaSalle"), in the capacity of a fiduciary independent of
Times Mirror and Fidelity ("Independent Fiduciary"), to vote the shares
held in the ESOP with respect to which no participant directions are
received. Under the ESOP Trust Agreement, the decision of whether to
tender the shares of Times Mirror stock allocated to participants'
accounts in the ESOP pursuant to the Offer is made by the participants
themselves, and accordingly, participant directions on whether to tender
such shares will be solicited. Notwithstanding the directions of
participants, however, Times Mirror has exercised its authority under the
ESOP Trust Agreement to appoint LaSalle as an Independent Fiduciary to
determine whether the exercise of the tender rights as directed by
participants is consistent with the provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). LaSalle, as Independent
Fiduciary will also exercise the tender rights pertaining to the shares
with respect to which no participant directions are received. The Plan
Administration Committee, which is appointed by the Board of Directors of
Times Mirror, also has authority and responsibility for the disposition of
the investment of the assets held in the ESOP, including the stock. This
Committee consists of four officers of Times Mirror, three of whom are
Mark H. Willes, Kathryn M. Downing and Efrem Zimbalist III.
(5) Based on holdings as of January 31, 2000, shares of Times Mirror stock
held in the Times Mirror Savings Plus Plan accounts or allocated to
participants' Payroll-Based Stock Ownership Plan ("PAYSOP") accounts are
voted by the participants themselves on matters presented at meetings of
stockholders. Shares allocated to the Times Mirror Savings Plus Plan
accounts with respect to which no participant directions are received will
remain unvoted. Shares allocated to the PAYSOP accounts with respect to
which no participant directions are received are customarily voted by
Fidelity Management Trust Company, as trustee of the Times Mirror Savings
Plus Plan. Effective for purposes of the Times Mirror Stockholder Approval
of the Merger, however, Times Mirror has exercised its authority under the
trust agreement with Fidelity ("Savings Plus Plan Trust Agreement") to
appoint LaSalle as Independent Fiduciary, to vote the shares allocated to
the PAYSOP accounts with respect to which no participant directions are
received. The decision of whether to tender the shares of Times Mirror
stock held in the Times Mirror Savings Plus Plan accounts pursuant to the
Offer is made by the participants themselves, and, accordingly,
participant directions on whether to tender such shares will be solicited.
Fidelity will tender such shares pursuant to participants' directions.
With respect to any such shares for which no directions are received,
Fidelity will not tender such shares. Times Mirror has appointed LaSalle
as Independent Fiduciary to determine whether to tender shares of Times
Mirror stock held in participants' PAYSOP accounts pursuant to the Offer.
(6) This information is based solely on a Schedule 13G, dated March 6, 2000
filed with the Securities and Exchange Commission by Putnam Investments,
Inc. ("PI"). PI, a wholly owned subsidiary of Marsh & McLennan Companies,
Inc., wholly owns Putnam Investment Management, Inc. ("PIM"), which is the
32
<PAGE>
investment adviser to the Putnam family of mutual funds, and The Putnam
Advisory Company, Inc. ("TPAC"), which is the investment adviser to Putnam's
institutional clients. PIM and TPAC both have dispositive power over the
shares as investment managers, but each of the mutual fund's trustees have
voting power over the shares held by each fund, and TPAC has shared voting
power over the shares held by the institutional clients.
(7) This information is based solely on a Schedule 13G dated February 14, 2000
filed with the Securities and Exchange Commission by FMR Corp. as a parent
holding company on behalf of certain stockholders of FMR Corp. and its
investment advisory subsidiary Fidelity Management & Research Company
("FMRC"). FMRC is the beneficial owner of 2,152,017 shares of Series A
Common Stock as a result of acting as investment advisor to various
registered investment companies. Edward C. Johnson 3d, Chairman of FMR
Corp., FMR Corp., through its control of FMRC, and the investment
companies, each has sole power to dispose of the 2,152,017 shares owned by
the investment companies. Neither Mr. Johnson nor FMR Corp. has the sole
power to vote the 2,152,017 shares owned directly by the investment
companies, which power resides in the board of trustees of the investment
companies. Fidelity Management Trust Company ("FMTC"), a subsidiary of FMR
Corp., is the beneficial owner of 2,075,754 shares of Series A Common
Stock as a result of it serving as investment manager of institutional
accounts. Mr. Johnson and FMR Corp., through its control of FMTC, each has
sole dispositive power over 2,075,754 shares and sole power to vote
2,075,754 shares of Class A Common Stock owned by the institutional
accounts. Strategic Advisers, Inc. ("SAI"), a subsidiary of FMR Corp. and
a registered investment adviser, does not have sole power to vote or
direct the voting of shares of certain securities held for clients and has
sole dispositive power over such securities. As such, FMR Corp.'s
beneficial ownership may include shares beneficially owned through SAI.
See also Notes 4 and 5 above.
33
<PAGE>
Beneficial Ownership of Management
The following table shows the beneficial ownership as of March 8, 2000
(except as otherwise noted) of Times Mirror's common stock, including shares
as to which a right to acquire ownership exists within the meaning of Rule
13d-3(d)(1) under the Securities Exchange Act of 1934, of each director, each
person listed in the Summary Compensation Table on page 43, and a group of
such persons and other executive officers. For this purpose, the rules of the
Securities and Exchange Commission require that every person who has or shares
the power to vote or dispose of shares of stock be reported as a "beneficial
owner" of all shares as to which such power exists. As a consequence, many
persons may be deemed to be the "beneficial owners" of the same securities and
for this reason all shares of Series C Common Stock held by the trustees of
the Chandler Trusts (see Notes (2) and (3) beginning on page 31) are included
in the shares reported in the table below as "beneficially owned" by each
director who is also a trustee of the Chandler Trusts. None of the persons
listed below beneficially owns any shares of Times Mirror's Cumulative
Redeemable Preferred Stock, Series A, Series D-1 Preferred Stock or Series D-2
Preferred Stock (see Note 3 on page 32). Unless otherwise indicated,
beneficial ownership numbers represent shares over which the beneficial owner
has sole voting and dispositive power.
Table of Beneficial Ownership of Management
<TABLE>
<CAPTION>
Series A Common Stock Series C Common Stock
--------------------------- ------------------------
Percent of Percent of
Name Total(1)(2) Series(3) Total(1) Series(3)
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Susan Babcock............. 6,356 * 152 *
Donald R. Beall........... 25,334(4)(5) * -- --
Horst A. Bergmann......... 140,496(6) * 1,890 *
John E. Bryson............ 26,970(4) * -- --
Bruce Chandler............ 22,248 * 14,521,654(7) 79.80%
Kathryn M. Downing........ 129,234(6) * -- --
Clayton W. Frye, Jr. ..... 28,453 * 190 *
Roger Goodan.............. 12,590(5) * -- --
Raymond A. Jansen, Jr. ... 117,761(6) * -- --
Sherry L. Lansing......... 11,440 * -- --
Dawn Gould Lepore......... 12,503(4) * -- --
Dr. Alfred E. Osborne,
Jr. ..................... 25,787(4) * 385 *
Robert W. Schult.......... 13,973 * -- --
William Stinehart, Jr. ... 9,330(4)(5) * 14,521,654(7) 79.80%
Thomas Unterman(10)....... 196,184(6) * 258 *
Mark H. Willes............ 694,815(6) 1.88% -- --
Warren B. Williamson...... 24,865(4) * 14,521,654(7) 79.80%
Dr. Edward Zapanta........ 20,278(4)(8) * -- --
Efrem Zimbalist III....... 47,426(6) * 219 *
All directors and
executive officers as a
group (25 persons,
including those named
above)................... 1,827,373(9) 4.83% 14,535,128 79.88%
</TABLE>
- --------
* Less than 1%
(1) Includes shares held under Times Mirror's Savings Plus Plan (including the
PAYSOP) and Employee Stock Ownership Plan and allocated to the accounts of
the executive officers as of February 8, 2000. Also includes shares held
in Times Mirror's Dividend Reinvestment Plan as of December 31, 1999.
Shares of Series C Common Stock automatically convert into shares of
Series A Common Stock upon being transferred, other than transfers to
certain permitted transferees as specified in Times Mirror's Amended and
Restated Certificate of Incorporation.
(2) Includes shares which may be acquired upon the exercise of outstanding
stock options and that are currently exercisable within 60 days of March
8, 2000 as follows: 4,170 by Ms. Babcock; 20,000 by Mr. Beall;
34
<PAGE>
128,592 by Mr. Bergmann; 23,653 by Mr. Bryson; 20,000 by Mr. Chandler;
110,850 by Ms. Downing; 20,000 by Mr. Frye; 10,400 by Mr. Goodan; 94,900 by
Mr. Jansen; 10,400 by Ms. Lansing; 10,400 by Ms. Lepore; 20,000 by Dr.
Osborne; 12,700 by Mr. Schult; 5,000 by Mr. Stinehart; 174,065 by
Mr. Unterman; 588,200 by Mr. Willes; 20,000 by Mr. Williamson; 15,000 by
Dr. Zapanta; and 37,450 by Mr. Zimbalist.
(3) The percentages are based upon the numbers of shares outstanding for
voting purposes for each class of voting securities as of March 8, 2000,
as reflected in the records of Times Mirror.
(4) Includes shares deferred under The Times Mirror Company Non-Employee
Directors Stock Plan.
(5) Includes shares held in trust, or other capacities, as to which
beneficial ownership is disclaimed. Mr. Beall shares voting and
dispositive power with respect to 1,243 shares. Includes 150 shares owned
by Mr. Goodan's daughter, who lives in his household. See Note (2)
beginning on page 31 for voting and dispositive power of other persons
indicated.
(6) Includes shares of restricted stock, including shares granted under the
matching restricted stock program of The Times Mirror Company 1996
Management Incentive Plan.
(7) Includes shares held in the Chandler Trusts. See Notes (2) and (3)
beginning on page 31 and "Certain Relationships and Related Party
Transactions".
(8) Includes shares held in an Individual Retirement Account.
(9) Includes options that are currently exercisable within 60 days. As a
result of the Offer and the Merger, an aggregate 1,285,000 additional
options granted to executive officers may become exercisable at an
average exercise price of $56.30 and the restrictions on 87,283 shares of
restricted stock may lapse at such time.
(10) On terminal leave of absence pursuant to the severance agreement dated as
of December 27, 1999.
Changes in Control. In connection with the Merger Agreement, certain
significant Times Mirror stockholders have entered into a voting agreement
that may result in a change in control over Times Mirror. See "Voting
Agreement" in the attached Schedule 14D-9.
THE BOARD OF DIRECTORS
The information contained in this Information Statement concerning Tribune
Designees has been furnished to Times Mirror by Tribune and its designees.
Accordingly, Times Mirror assumes no responsibility for the accuracy or
completeness of this information.
THE TRIBUNE DESIGNEES
Effective upon the acceptance for exchange by Tribune of a number of the
Shares that satisfies the Minimum Condition (as defined in the Merger
Agreement), Tribune will be entitled to designate such number of directors on
the Board of Directors of Times Mirror as will give Tribune, subject to
compliance with Section 14(f) of the Exchange Act: (a) in the event Tribune
purchases at least 15 million of the Shares pursuant to the Offer,
representation on the Board of Directors of Times Mirror constituting a
majority of the total number of directors on the Board of Directors or (b) in
the event Tribune purchases fewer than 15 million Shares pursuant to the
Offer, representation on the Board of Directors of Times Mirror in the same
proportion as the number of the Shares purchased by Tribune pursuant to the
Offer bears to the total number of the Shares deemed outstanding for financial
reporting purposes. The Tribune Designees shall serve as evenly as possible
among the classes of Times Mirror's Board of Directors.
Additionally, Tribune may appoint its nominees to any committee of the Times
Mirror board, any board of directors of a Times Mirror subsidiary, and any
committee of a subsidiary board of directors. In the event that the Tribune
Designees are appointed or elected to Times Mirror's Board of Directors, until
the effective time of the Merger (the "Effective Time"), those continuing
members of Times Mirror's Board of Directors who are directors on the date of
the Merger Agreement and who are neither officers of Times Mirror nor
designees,
35
<PAGE>
affiliates or associates (within the meaning of the federal securities laws)
of Tribune will be deemed the "Independent Directors" for purposes of the
Merger Agreement. Notwithstanding anything in this Agreement to the contrary,
following the time the Tribune Designees are appointed or elected to Times
Mirror's Board of Directors and prior to the Effective Time, the affirmative
vote of a majority of the Independent Directors will be required to do any of
the following:
. amend or terminate the Merger Agreement on behalf of Times Mirror;
. exercise or waive any of Times Mirror's rights or remedies under the
Merger Agreement;
. extend the time for performance of Tribune's obligations under the
Merger Agreement;
. take any other action by Times Mirror in connection with the Merger
Agreement required to be taken by Times Mirror's Board of Directors; or
. take any action on behalf of Times Mirror with respect to the matters
related to any other action taken by Times Mirror in connection with the
transactions contemplated by the Merger Agreement, and such affirmative
majority vote shall be sufficient to take any such action.
In the event the Merger Agreement is terminated after consummation of the
Offer, but without consummation of the Merger, Tribune will secure the
resignation from Times Mirror's Board of Directors of a number of the Tribune
Designees, if any, as may be necessary to cause Tribune's representation on
Times Mirror's Board of Directors (and any board committees) to be in the same
proportion as the number of the Shares then beneficially owned by Tribune
bears to the total number of the Shares deemed outstanding for financial
reporting purposes.
The directors of Tribune at the Effective Time will be the directors of the
Surviving Corporation, until the earlier of their resignation or removal or
until their successors are duly elected and qualified.
Tribune has informed Times Mirror that it will choose the Tribune Designees
to the Times Mirror Board of Directors from the individuals listed below,
provided, however, that under certain circumstances described in the Merger
Agreement, all of such individuals will serve on the Times Mirror Board of
Directors. Tribune has informed Times Mirror that each of the individuals
listed below has consented to act as a director of Times Mirror, if so
designated. It is expected that the relevant Tribune Designees may assume
office following the acceptance by Tribune of Shares pursuant to the Offer,
which cannot be earlier than April 17, 2000.
<TABLE>
<CAPTION>
Principal Occupation and
Name Five-Year Employment History
-------------------- ---------------------------------------------------------
<C> <S>
Philip B. Doherty Vice President/Finance of Tribune Publishing Company, a
subsidiary of Tribune, since May 1997; Director/Finance
of Tribune Publishing Company from 1994 to 1997. Age: 44.
Dennis J. FitzSimons Executive Vice President/Media Operations of Tribune
since January 2000; President of Tribune Broadcasting
Company, a subsidiary of Tribune, since May 1997;
Executive Vice President, Tribune Broadcasting Company,
until May 1997. Age: 49.
Jack W. Fuller President of Tribune Publishing Company, a subsidiary of
Tribune, since May 1997; President and Publisher of
Chicago Tribune Company, a subsidiary of Tribune, until
May 1997. Age: 53.
David J. Granat Vice President/Treasurer of Tribune since 1991. Age: 53.
Donald C. Grenesko Senior Vice President/Finance and Administration of
Tribune since August 1996; Senior Vice President of
Tribune from March 1993 until August 1996 and Chief
Financial Officer from 1991 to August 1996. Age: 51.
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation and
Name Five-Year Employment History
-------------------- ---------------------------------------------------------
<C> <S>
David D. Hiller Senior Vice President/Development of Tribune since
November 1993; Director of The Lightspan Partnership,
Inc. Age: 46.
Crane H. Kenney Vice President, General Counsel and Secretary of Tribune
since August 1996; Vice President/Chief Legal Officer
from February 1996 to August 1996; Senior Counsel until
January 1996. Age: 37
Timothy J. Landon Vice President of Tribune Interactive, a subsidiary of
Tribune, since 1999; Vice President/General Manager of
Sun Sentinel Company, a subsidiary of Tribune, from
August 1998 until July 1999; Vice President/Strategy and
Development for Tribune Publishing Company and acting
Chief Executive Officer of Classified Ventures, a
partnership between Tribune and seven other leading media
companies, from May 1997 to August 1998. Age: 37.
Luis E. Lewin Vice President/Human Resources of Tribune since October
1996; Director/Human Resources of Tribune until October
1996; Acting Publisher of Exito! in Chicago from
December 1995 to September 1996. Age: 51.
John W. Madigan Chairman of Tribune since January 1996; Chief Executive
Officer of Tribune since May 1995; President of Tribune
since May 1994; President of Tribune Publishing Company,
a subsidiary of Tribune, until May 1994; Publisher,
Chicago Tribune, until May 1994. Age 62.
R. Mark Mallory Vice President/Controller of Tribune since 1991. Age: 49.
Ruthellyn Musil Vice President/Corporate Relations of Tribune since March
1995. Age: 48.
James E. O'Dell Vice President/Operations and Systems of Tribune
Publishing Company, a subsidiary of Tribune since 1997;
Vice President and Director of Manufacturing and
Distribution for the Chicago Tribune, since April 1996;
Vice President of Operations and Technology for Tribune
Publishing Company since 1993. Age: 53.
Andrew J. Oleszcuzuk President of Tribune Ventures, a division of Tribune,
since August 1998; Vice President/Development of Tribune
from 1993 to 1998; Director of VarsityBooks.com, Inc.
Age: 43.
Jeff R. Scherb Chief Technology Officer of Tribune since August 1996;
Chief Technology Officer and Senior Vice President for
Research and Development at Dun & Bradstreet Software
until August 1996. Age: 42.
</TABLE>
37
<PAGE>
CURRENT DIRECTORS OF TIMES MIRROR
CLASS II
Serving until the 2000 annual meeting and
until their respective successors are elected and qualified.
John E. Bryson, 56, has been a director of Times Mirror since 1991 and is a
member of the Nominating Committee and the Audit Committee. He is Chairman of
the Board and Chief Executive Officer of Edison International Company and its
largest subsidiary, Southern California Edison Company, a public utility. He
has held those positions since October 1990. Mr. Bryson holds a B.A. degree
from Stanford University and a J.D. degree from Yale Law School. Mr. Bryson is
also a director of The Boeing Co. and the W.M. Keck Foundation and a trustee
of Stanford University.
Bruce Chandler, 63, has been a director of Times Mirror since 1975 and is a
member of the Finance Committee. He has decided not to stand for reelection at
the 2000 annual meeting of stockholders. He has been a private investor since
1989. From 1968 to 1989, he practiced law in the State of California. Mr.
Chandler is a graduate of the University of Southern California and holds a
J.D. degree from the University of San Diego School of Law. He is also related
to three of the Times Mirror directors (Susan Babcock, Roger Goodan and
Warren B. Williamson) and is a beneficiary of Times Mirror largest
stockholders, the Chandler Trusts. See "Certain Relationships and Related
Party Transactions".
Roger Goodan, 53, has been a director of Times Mirror since December 1998
and is a member of the Finance Committee. He is Vice President of Marketing
for Schlumberger GeoQuest. He has held this position since February 1999.
Prior to that, Mr. Goodan has held management positions throughout
Schlumberger including positions in operations, engineering and finance since
1973. Mr. Goodan holds B.A. degrees from the University of California at
Berkeley and Stanford University. Mr. Goodan is also a director of the
Stanford University Department of Athletics. He is also related to three of
Times Mirror continuing directors (Susan Babcock, Bruce Chandler and Warren B.
Williamson) and is a beneficiary of the Company's largest stockholders, the
Chandler Trusts. See "Certain Relationships and Related Party Transactions".
Dr. Alfred E. Osborne, Jr., 55, has been a director of Times Mirror since
1980 and is Chairman of the Audit Committee and a member of the Compensation
Committee, the Executive Compensation Subcommittee of the Compensation
Committee and the Nominating Committee. He is Director of the Harold Price
Center for Entrepreneurial Studies and Associate Professor of Business
Economics at the John E. Anderson Graduate School of Management at the
University of California, at Los Angeles. He has been with UCLA since 1972.
From August 1977 to July 1979, Dr. Osborne served as a Brookings Institution
Economic Policy Fellow at the Securities and Exchange Commission. He holds a
Bachelor's Degree in Electrical Engineering, a Master's Degree in Economics, a
Master of Business Administration in Finance and a Doctorate in Business--
Economics, all from Stanford University. He is also a director of Greyhound
Lines, Inc., Nordstrom, Inc. and United States Filter Corporation. He is a
trustee of WM Group of Funds and an independent general partner of Technology
Funding Venture Partners V, both of which are 1940 Investment Company Act
companies.
Dr. Edward Zapanta, 61, has been a director of Times Mirror since 1988 and
is Chairman of the Nominating Committee and a member of the Audit Committee,
the Compensation Committee and the Executive Compensation Subcommittee of the
Compensation Committee. He is a practicing physician providing neurosurgical
care in the Los Angeles area. He has been in private practice since 1970. Dr.
Zapanta attended UCLA, received his M.D. degree from the University of
Southern California School of Medicine, and currently serves as a trustee of
the University of Southern California. He is a clinical professor of surgery,
department of Neurological Surgery, at the University of Southern California.
Dr. Zapanta is also Senior Medical Director of HealthCare Partners Medical
Group and a director of Edison International, East-West Bancorp, Inc. and the
Irvine Foundation.
38
<PAGE>
CLASS III
Serving until the 2001 Annual Meeting and
until their respective successors are elected and qualified.
Susan Babcock, 34, has been a director of Times Mirror since March 2000. She
currently holds a position at Sameday.com, a distribution and fulfillment
company serving e-commerce enterprises. Prior to that, Ms. Babcock served at
the Los Angeles Times in a variety of operations management positions from
1988 to 1995 and again from 1998 to 1999. Ms. Babcock is a graduate of Trinity
College and received an M.B.A. from the Stanford Graduate School of Business
and an M.A. degree from Stanford University School of Education. She is a
trustee of the National Parks Conservation Association. She is also related to
three of Times Mirror's directors (Bruce Chandler, Roger Goodan and Warren B.
Williamson) and is a beneficiary of Times Mirror's largest stockholders, the
Chandler Trusts. See "Certain Relationships and Related Party Transactions".
Clayton W. Frye, Jr., 69, has been a director of Times Mirror since 1988 and
is Chairman of the Compensation Committee and the Executive Compensation
Subcommittee of the Compensation Committee. He is the Senior Associate of
Laurance S. Rockefeller. He has served in that capacity since 1973 and is
responsible for overseeing and directing Mr. Rockefeller's business, real
estate and investment interests as well as managing his own business and real
estate interests. Mr. Frye is a graduate of Stanford University where he
received both a B.A. degree and an M.B.A. degree. He is a partner in
Rockefeller and Associates Realty, and several privately-held companies
including King Ranch, Inc. Mr. Frye is a Trustee of The White House Historical
Association, Historic Hudson Valley, Inc., and is Chairman of The Woodstock
Foundation and Jackson Hole Preserve, Inc.
William Stinehart, Jr., 56, has been a director of Times Mirror since 1991
and is a member of the Nominating Committee and the Finance Committee. He is a
partner in the law firm of Gibson, Dunn & Crutcher LLP where he has practiced
law since 1969. Gibson, Dunn & Crutcher LLP has provided legal services to the
Company and its subsidiaries for many years and is expected to do so in the
future. Mr. Stinehart holds a B.A. degree from Stanford University and a J.D.
degree from UCLA Law School, and is a member of the Board of Trustees of the
Harvey and Mildred Mudd Foundation. He is also a trustee of Times Mirror's
largest stockholders, the Chandler Trusts. See "Certain Relationships and
Related Party Transactions".
Mark H. Willes, 58, is Chairman of the Board, President and Chief Executive
Officer of Times Mirror. A director of Times Mirror since June 1, 1995, Mr.
Willes was also elected President and Chief Executive Officer of Times Mirror
at that time. He was elected Chairman of the Board effective January 1, 1996.
In addition, he served as Publisher of the Los Angeles Times from October 1997
to June 1999. Prior to joining Times Mirror, Mr. Willes was employed by
General Mills, Inc., commencing in 1980, where he held a variety of positions
including Chief Financial Officer, President and Chief Operating Officer and,
at the time of his departure, Vice Chairman of the Board of Directors. He was
also a director of that company. Mr. Willes was President of the Federal
Reserve Bank of Minneapolis from 1977 to 1980. In 1971, Mr. Willes joined the
Philadelphia Reserve Bank where he held a number of positions including
Director of Research and First Vice President. He was Assistant Professor of
Finance and Commerce at the University of Pennsylvania from 1967 to 1971. Mr.
Willes received an undergraduate degree from Columbia College and a doctorate
from Columbia Graduate School of Business. He is also a director of The Black
& Decker Corporation and The Talbots, Inc.
CLASS I
Serving until the 2002 Annual Meeting and
until their respective successors are elected and qualified.
Donald R. Beall, 61, has been a director of Times Mirror since 1990 and is a
member of the Compensation Committee, the Executive Compensation Subcommittee
of the Compensation Committee and the Nominating Committee. He is Chairman of
the Executive Committee and Retired Chairman of the Board and Chief Executive
Officer of Rockwell International Corporation, a leader in industrial
automation, avionics and communications
39
<PAGE>
systems markets. Prior to assuming his positions as Chairman of the Board and
Chief Executive Officer in February 1988, Mr. Beall served as President and
Chief Operating Officer of Rockwell International for ten years. Mr. Beall
received a B.S. degree from San Jose State University and a M.B.A. degree from
the University of Pittsburgh. Currently, he is a director of Rockwell
International Corporation, Procter & Gamble Company, Meritor Automotive, Inc.
and Conexant Systems, Inc. Mr. Beall is an active investor, director and/or
advisor with several venture capital firms, individual companies and
investment partnerships. Mr. Beall is also active in a diverse group of
business, professional, educational, public service and philanthropic
activities.
Sherry L. Lansing, 55, has been a director of Times Mirror since December
1998 and is a member of the Compensation Committee. She is Chairman and Chief
Executive Officer of the Motion Picture Group of Paramount Pictures, a leading
global entertainment company. She is responsible for overseeing all aspects of
motion picture operations of Paramount Picture's Motion Picture Group. Prior
to being named Chairman in 1992, Ms. Lansing headed her own independent
production company. Ms. Lansing received a B.S. degree from Northwestern
University.
Dawn Gould Lepore, 46, has been a director of Times Mirror since December
1998 and is a member of the Finance Committee. She is Vice Chairman and Chief
Information Officer of the Charles Schwab Corporation, one of the nation's
largest financial service firms. She is responsible for the Charles Schwab
Corporation's worldwide use of information technology, including all
telecommunications, operations and customer and business applications. Prior
to assuming her position in 1993, Ms. Lepore was Senior Vice President of
Information Technology for the Charles Schwab Corporation and had held other
positions since joining the Company in 1983. Ms. Lepore received a B.A. degree
from Smith College. She is also a director of eBay, Inc. and Viador, Inc.
Robert W. Schult, 50, has been a director of Times Mirror since July 1998
and is a member of the Audit Committee and the Finance Committee. He was
President and Chief Operating Officer of Nestle USA, Inc., a subsidiary of
Nestle S.A., a food company from July 1996 until January 2000. Prior to that,
Mr. Schult served as President of the Nestle Food Company, an operating
company of Nestle USA, for 6 years. Mr. Schult received a B.A. degree from the
University of North Carolina.
Warren B. Williamson, 71, has been a director of Times Mirror since 1977 and
is Chairman of the Finance Committee and a member of the Compensation
Committee. He is related to three of the Company's directors (Susan Babcock,
Bruce Chandler and Roger Goodan) and is Chairman of the Board of Trustees and
a beneficiary of the Company's largest stockholders, the Chandler Trusts. See
"Certain Relationships and Related Party Transactions". In 1989, Mr.
Williamson retired from Crowell, Weedon and Co., a stock brokerage firm with
which he had been associated since 1970. Mr. Williamson is a graduate of
Claremont Men's College. He is a director of Hollywood Park, Inc. and Chairman
Emeritus of the Trustees of the Art Center College of Design.
COMPENSATION OF DIRECTORS
The Board of Directors presently has fourteen directors, one of whom is a
salaried employee of Times Mirror. Salaried employees receive no additional
compensation or benefits for their service as directors. Except as noted
below, during 1999, each non-employee director received an annual retainer of
500 shares of Series A Common Stock. In addition, each of them received a cash
payment equal to the value of 500 shares of such stock, based on an average of
the prevailing market prices at the time. Non-employee chairpersons of
committees of the Board also received an annual retainer of 60 shares of
Series A Common and a cash payment equal to the value of 60 shares of such
stock. A director may also elect to receive the cash portion of the annual
retainer or the chairperson retainer in the form of Series A Common.
Non-employee directors also receive annually an option grant for 5,000
shares of Series A Common under Times Mirror's 1997 Directors Stock Option
Plan. These stock options are immediately exercisable at a price equal to the
fair market value of the Series A Common on the date of grant and have a term
of ten years.
40
<PAGE>
Non-employee directors may elect to defer the receipt of any part of their
retainer. If a director defers receipt of the cash portion and/or stock
portion of the retainer, an amount valued with reference to shares of Series A
Common Stock will be credited to an unfunded stock unit account. During the
deferral period, this account will be credited with additional stock units
equal to the value of dividends declared on the Series A Common Stock
represented by stock units in the account. The aggregate value of the stock
units will be distributed in shares of Series A Common Stock under The Times
Mirror Non-Employee Directors Stock Plan at the end of the deferral period and
over the payment period selected by the director.
Prior to December 31, 1996, non-employee directors participated in Times
Mirror's Pension Plan for Directors, which provided for the payment after
retirement from the Board of an annual benefit equal to the sum of the amount
of the annual retainer at the time of retirement plus the amount of the Board
and committee attendance fees paid or payable for the calendar year preceding
retirement. The duration of the payment equaled the number of years of service
as an outside director.
In January 1997, the Board determined that benefit accruals under the
Pension Plan for Directors would cease effective December 31, 1996, and that
no future directors would be entitled to participate in the plan. Directors
who retired prior to 1997 will continue to receive benefits previously earned
under that pension plan and directors who were on the Board as of January 1,
1997 have received or will receive (either in a lump sum payment or in
installments) an amount in lieu of benefits accrued under the pension plan as
of December 31, 1996. For each director who elected to receive a future
payment of such amount, Times Mirror entered into an agreement with that
director specifying Times Mirror's obligation to accumulate amounts at 9%
compounded annually and to make payments at the date and over the period
specified by the director.
For each non-employee director, Times Mirror provides $150,000 life
insurance coverage and $100,000 travel accident insurance for travel on Times
Mirror business.
COMMITTEES OF THE BOARD OF DIRECTORS
The standing committees of the Board are the Audit Committee, Compensation
Committee, Executive Compensation Subcommittee of the Compensation Committee,
Finance Committee and Nominating Committee. The functions of each of these
five committees are described and the members of each are listed below.
Each year, the Audit Committee reviews Times Mirror's audit plan, the scope
of activities of the independent auditors and of the internal auditors, the
results of the audit after completion, and the fees for services performed
during the year, and recommends to the Board of Directors the firm to be
appointed as independent auditors. During a portion of each meeting, this
Committee meets with representatives of the independent auditors without
officers or employees of Times Mirror present. The Committee also reviews and
evaluates policies and practices of Times Mirror to assure that they are
consistent with high standards of responsible corporate conduct, as well as
with Times Mirror's legal and other obligations to its employees, consumers,
communities and society as a whole. The members of the Audit Committee are Dr.
Alfred E. Osborne, Jr. (Chairman), John E. Bryson, Robert W. Schult and Dr.
Edward Zapanta, none of whom is either an officer or employee of Times Mirror.
Times Mirror deems these members of the Audit Committee to be "independent" as
defined in the New York Stock Exchange Listed Company Manual. The Audit
Committee met three times in 1999. The Audit Committee has adopted a written
charter, a copy of which is attached to this Information Statement as Exhibit
1.
The Compensation Committee administers Times Mirror's employee and
management compensation and stock plans, determines the compensation of
officers of Times Mirror, authorizes and approves bonus-incentive compensation
and stock programs for personnel of Times Mirror and considers and discusses
other matters relating to key executive personnel, including management
succession and promotions. Clayton W. Frye, Jr. (Chairman), Donald R. Beall,
Sherry L. Lansing, Dr. Alfred E. Osborne, Jr., Warren B. Williamson and
Dr. Edward Zapanta, none of whom is either an officer or employee of Times
Mirror, are the members of the Compensation Committee. The Compensation
Committee met four times in 1999.
41
<PAGE>
The Executive Compensation Subcommittee of the Compensation Committee
determines the compensation of and approves stock and stock option grants to
executive officers of Times Mirror. Clayton W. Frye, Jr. (Chairman), Donald R.
Beall, Dr. Alfred E. Osborne, Jr. and Dr. Edward Zapanta, none of whom is
either an officer or employee of Times Mirror, are the members of this
Subcommittee, which met three times in 1999.
The Finance Committee reviews financial policies and performance objectives
as developed by Times Mirror's management. Warren B. Williamson (Chairman),
Bruce Chandler, Roger Goodan, Dawn Gould Lepore, Robert W. Schult and William
Stinehart, Jr. are the members of the Finance Committee, which met twice in
1999.
The Nominating Committee considers and recommends to the Board nominees for
possible election to the Board of Directors and considers other matters
pertaining to the size and composition of the Board of Directors and its
committees. The members of the Nominating Committee are Dr. Edward Zapanta
(Chairman), Susan Babcock, Donald R. Beall, John E. Bryson, and William
Stinehart, Jr. The Nominating Committee recommended the nomination of all of
the nominees to Class II for election at the 2000 Annual Meeting. The
Nominating Committee will give appropriate consideration to qualified persons
recommended by stockholders as possible nominees, if such recommendations are
accompanied by information sufficient to enable the Nominating Committee to
evaluate the qualifications of the persons recommended and such persons
consent to be considered. Such recommendations must be submitted in writing to
the Secretary of Times Mirror by no later than December 31 preceding the
annual meeting of stockholders at which directors are to be elected. The
Nominating Committee did not meet in 1999.
In 1999, there were 12 meetings of the Board of Directors. During the year,
each of the incumbent directors attended at least 75% of the aggregate number
of meetings of the Board and the committees on which he or she sits.
42
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation of
the chief executive officer of the Company, each of the four most highly
compensated executive officers of the Company (other than the chief executive
officer) serving in such capacity at December 31, 1999. It also includes
information with respect to a former Chief Financial Officer, Thomas Unterman,
who resigned as such effective December 27, 1999. This table includes
information for each individual for services in all capacities to the Company
for the fiscal years ended December 31, 1999, 1998 and 1997, unless otherwise
noted. Additionally the Times Mirror Board has adopted compensation and
severance payments for certain executive officers upon a change of control.
See "Times Mirror Board Action Relating to Executive Officers" in the attached
Schedule 14D-9. See also "Source and Amount of Funds" in the Offer to Purchase
attached as Exhibit (a)(1) to the Schedule TO, filed on March 21, 2000, of
Tribune.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------
Annual Compensation Awards Payouts
------------------------------ --------------------- -------
Securities
Restricted Underlying
Other Annual Stock Stock LTIP All Other
Name and Principal Salary Bonus Compensation Awards Options Payouts Compensation
Position Year ($) ($)(1) ($)(2) ($)(3) (#)(4) ($) ($)(5)
- ------------------ ---- ------- --------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mark H. Willes.......... 1999 924,519 2,081,250 69,936 522,827 200,000 -- 8,825
Chairman of the Board,
President 1998 900,000 2,025,000 37,642 508,002 200,000 -- 9,015
and Chief Executive
Officer 1997 905,770 1,968,750 9,700 494,606 200,000 -- 69,972
Kathryn M. Downing...... 1999 499,039 534,750 12,737 134,351 40,000 -- 56,978
Executive Vice
President, 1998 448,923 712,501 7,076 112,914 40,000 -- 143,471
and Publisher, Los
Angeles Times 1997 389,808 325,277 1,536 81,754 30,000 -- 6,694
Raymond A. Jansen, Jr... 1999 441,519 506,250 1,351 127,211 40,000 -- 6,707
Executive Vice
President, 1998 390,000 402,750 0 101,074 30,000 -- 6,625
President Eastern
Newspapers 1997 374,808 360,000 0 90,443 36,000 -- 6,507
Horst A. Bergmann....... 1999 447,307 372,938 17,427 93,713 40,000 -- 6,757
Executive Vice
President, 1998 427,885 195,000 14,425 48,948 30,000 -- 6,731
President and Chief 1997 369,617 354,375 5,853 89,043 30,000 -- 6,505
Executive Officer,
Jeppesen Sanderson
Efrem Zimbalist III..... 1999 399,327 318,750 0 80,087 40,000 -- 6,503
Executive Vice
President, 1998 361,923 389,375 0 97,731 30,000 -- 6,319
and Chief Financial
Officer 1997 301,654 315,000 0 0 25,000 -- 3,781
Thomas Unterman(6)...... 1999 599,038 -- 21,028 169,575 50,000 -- 682,413
1998 549,999 1,562,500 12,226 141,142 65,000 -- 11,124
1997 517,308 506,250 3,621 127,179 65,000 -- 7,084
</TABLE>
- --------
(1) An officer may elect to take his or her bonus award in the form of cash or
deferred cash. An officer may also elect to take 25% of such bonus award
in shares of Series A Common Stock. The amounts shown in this column for
1998 include special bonus payments of $1,000,000 for Mr. Unterman and
$450,000 for Ms. Downing in recognition of the successful completion of
the divestitures of Matthew Bender & Company, Incorporated, Shepard's
Company and Mosby, Inc. The amounts include bonuses earned in the
indicated year and paid in the subsequent year and exclude bonuses paid in
the indicated year but earned in the preceding year.
(2) Represents amounts paid in cash as allowances for certain perquisites or
to reimburse the named officers for the tax impact of certain perquisites.
Also represents amounts credited on deferred compensation at above-market
interest rates. None of the named executive officers received perquisites
or other personal benefits in an amount sufficient to require inclusion in
this column.
(3) Restricted stock grants relate to Times Mirror's Series A Common Stock.
Dollar amounts shown in this column equal the number of shares of
restricted stock awarded multiplied by the closing market price of Times
Mirror's Series A Common Stock on the grant date, net of any consideration
paid. The restricted shares granted for special restricted stock awards
vest 25% commencing on the second anniversary of the
43
<PAGE>
date of award and 25% on each successive anniversary of the award date.
Under Times Mirror's matching bonus restricted stock program under The
Times Mirror Company 1996 Management Incentive Plan, certain officers of
Times Mirror can elect to place shares of Series A Common Stock on deposit
with Times Mirror in an amount equal to 25% of their bonus, which Times
Mirror then matches with the same number of restricted shares. The
restricted shares granted on February 5, 1998 for 1997 compensation,
February 4, 1999 for 1998 compensation and on February 3, 2000 for 1999
compensation, under the matching restricted stock program will vest 100%
after four years or upon a change of control, provided that the officer
does not terminate employment with Times Mirror prior to that time or
withdraw the shares deposited with Times Mirror for the match. An amount
equal to regular dividends is paid on restricted shares. As of December 31,
1999, the number and value of restricted stock award holdings, which do not
include the restricted shares granted on February 3, 2000 for 1999
compensation were as follows: 33,729 ($2,259,843) for Mr. Willes, 7,908
($529,836) for Ms. Downing, 5,082 ($340,494) for Mr. Jansen, 3,264
($218,688) for Mr. Bergmann, 1,783 ($119,461) for Mr. Zimbalist and 13,175
($882,725) for Mr. Unterman.
(4) Options reported for Mr. Unterman for 1997 and 1998 include a special
performance award of 15,000 stock options. Options reported for Messrs.
Jansen and Zimbalist for 1999 include a promotional award of 10,000 stock
options granted on March 5, 1999. Options reported for Mr. Jansen for 1997
include a special performance award of 6,000 stock options.
(5) The amounts shown in this column for 1999 consist of the following: (i)
Mr. Willes, $4,025 of term life insurance premiums paid and $4,800 for
matching Company contributions under the Times Mirror Saving's Plus Plan
(the "Savings Plan"); (ii) Ms. Downing, $50,000 housing differential
payment (see page 50), $2,178 of term life insurance premiums paid and
$4,800 for matching Company contributions under the Savings Plan; (iii)
Mr. Jansen, $1,907 of term life insurance premiums paid and $4,800 for
matching Company contributions under the Savings Plan; (iv) Mr. Bergmann,
$1,957 of term life insurance premiums paid and $4,800 for matching
Company contributions under the Savings Plan; (v) Mr. Zimbalist, $1,703 of
term life insurance premiums paid and $4,800 for matching Company
contributions under the Savings Plan; and (vi) Mr. Unterman, $675,000 as a
special payment (as described below under the caption "Certain
Relationships and Related Party Transactions") $2,613 of term life
insurance premiums paid and $4,800 for matching Company contributions
under the Savings Plan. The amounts shown in this column for 1998 consist
of the following: (i) Mr. Willes, $4,215 of term life insurance premiums
paid and $4,800 for matching Company contributions under the Savings Plan;
(ii) Ms. Downing, $50,000 housing differential payment (see page 49),
$86,595 for relocation assistance, $2,106 of term life insurance premiums
paid and $4,800 for matching Company contributions under the Savings Plan;
(iii) Mr. Jansen, $1,825 of term life insurance premiums paid and $4,800
for matching Company contributions under the Savings Plan; (iv) Mr.
Bergmann, $1,931 of term life insurance premiums paid and $4,800 for
matching Company contributions under the Savings Plan; (v) Mr. Zimbalist,
$1,638 of term life insurance premiums paid and $4,681 for matching
Company contributions under the Savings Plan; and (vi) Mr. Unterman,
$2,574 of term life insurance premiums paid, $4,800 for matching Company
contributions under the Savings Plan and $3,750 as a special payment. The
amounts shown under this column for 1997 consist of the following: (i) Mr.
Willes, $62,102 for relocation assistance (see page 49), $3,120 of term
life insurance premiums paid and $4,750 for matching Company contributions
under the Savings Plan; (ii) Ms. Downing, $1,944 for term life insurance
premiums paid and $4,750 for matching Company contributions under the
Savings Plan; (iii) Mr. Jansen, $1,757 of term life insurance premiums
paid and $4,750 for matching Company contributions under the Savings Plan;
(iv) Mr. Bergmann, $1,755 of term life insurance premiums paid and $4,750
for matching Company contributions under the Savings Plan; (v) Mr.
Zimbalist, $1,451 of term life insurance premiums paid and $2,330 for
matching Company contributions under the Savings Plan; and (vi) Mr.
Unterman, $2,334 of term life insurance premiums paid and $4,750 for
matching Company contributions under the Savings Plan.
(6) Mr. Unterman was Executive Vice President and Chief Financial Officer
until December 27, 1999, at which time he resigned from his positions and
terminated active employment with Times Mirror. Mr. Unterman remains,
however, an employee of Times Mirror on terminal leave of absence pursuant
to the terms of a severance agreement. In lieu of his 1999 bonus incentive
award, Mr. Unterman received a special severance payment (reflected in the
last column) of $675,000. See also "Certain Relationships and Related
Party Transactions".
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<PAGE>
OPTION GRANTS TABLE
The following table sets forth all grants of stock options with respect to
shares of Series A Common Stock for 1999 to the named executive officers of
the Company under the Company's 1996 Management Incentive Plan.
Option Grants for Fiscal Year 1999
Individual Grants
<TABLE>
<CAPTION>
Number of
Securities % of Total
Underlying Options Exercise
Options Granted to or Base Grant Date
Granted Employees Price Expiration Present
Name (#)(1) for 1999 ($/Sh) Date Value($)(2)
- ---- ---------- ---------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Mark H. Willes.......... 200,000 4.532 54.6250 2/4/09 2,490,000
Kathryn M. Downing...... 40,000 0.906 54.6250 2/4/09 498,000
Raymond A. Jansen, Jr.
....................... 30,000 0.680 54.6250 2/4/09 373,500
10,000(3) 0.227 55.9688 3/5/09 132,800
Horst A. Bergmann....... 40,000 0.906 54.6250 2/4/09 498,000
Efrem Zimbalist III..... 30,000 0.680 54.6250 2/4/09 373,500
10,000(3) 0.227 55.9688 3/5/09 132,800
Thomas Unterman......... 50,000 1.133 54.6250 2/4/09 622,500
</TABLE>
- --------
(1) These options were granted at fair market value on February 4, 1999
(unless otherwise indicated) and related to compensation for 1999. These
options were granted under Times Mirror's 1996 Management Incentive Plan
("MIP"), have a ten-year term and may be initially exercised as to 25% of
the underlying shares on the first anniversary of the grant date, an
additional 25% becoming exercisable on each successive anniversary date,
with full vesting on the fourth anniversary date. Upon a change in control
as described under the MIP, any previously unexercisable portion of the
options becomes exercisable.
(2) Present value determinations were made using the Black-Scholes option
pricing model. There is no assurance that any value realized by optionees
will be at or near the value estimated by that model. The ultimate values
of the options will depend on the future market price of the Series A
Common Stock, which cannot be forecast with reasonable accuracy. The
actual value, if any, an optionee will realize upon exercise of an option
will depend upon the excess, if any, of the market value of the Series A
Common Stock on the date the option is exercised over the exercise price
of the option. For the options granted on February 4, 1999, the model
assumes (a) volatility of .23 derived by averaging the weekly historical
volatility of Times Mirror over the 52 week period prior to February 4,
1999; (b) a risk-free rate of return based on the rate (4.87%) available
on the grant date on zero-coupon U.S. Government issues with a remaining
term equal to the expected life of the options (5 years); and (c) a
dividend yield of 2.33% derived by taking Times Mirror's target payout
ratio divided by Times Mirror's static price to earnings ratio. The Black-
Scholes ratio for the options granted on February 4, 1999 was applied to
the average of the closing prices for the most recent 20 trading days
ending February 4, 1999. For the options granted on March 5, 1999, the
model assumes (a) volatility of .23 derived by averaging the weekly
historical volatility of Times Mirror over the 52 week period prior to
March 5, 1999; (b) a risk-free rate of return based on the rate (5.34%)
available on the grant date on zero-coupon U.S. Government issues with a
remaining term equal to the expected life of the options (5 years); and
(c) a dividend yield of 2.33% derived by taking Times Mirror's target
payout ratio divided by Times Mirror's static price to earnings ratio. The
Black-Scholes ratio for the options granted on March 5, 1999 was applied
to the average of the closing prices for the most recent 20 trading days
ending March 5, 1999.
(3) These options were granted at fair market value on March 5, 1999.
45
<PAGE>
AGGREGATED OPTION EXERCISES IN 1999 AND
OPTION VALUES AS OF DECEMBER 31, 1999
The following table sets forth certain information with respect to exercises
by the named executive officers of stock options with respect to shares of
Series A Common Stock during 1999, the number of securities underlying
unexercised options held by the named executive officers at December 31, 1999
and the value of unexercised in-the-money options as of December 31, 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Shares Options as of Options as of
Acquired on December 31, 1999 (#) December 31, 1999 ($)(1)
Exercise Value ------------------------- -------------------------
Name (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark H. Willes.......... -- -- 438,200 450,000 13,711,540 5,851,570
Kathryn M. Downing...... -- -- 83,350 91,250 2,278,910 1,228,517
Raymond A. Jansen,
Jr. ................... 24,211 862,042 68,400 85,500 1,737,029 1,176,798
Horst A. Bergmann....... -- -- 103,592 83,750 3,492,166 1,161,252
Efrem Zimbalist III..... 12,450 365,402 13,700 75,000 271,866 937,266
Thomas Unterman......... -- -- 129,065 131,250 3,927,173 1,716,135
</TABLE>
- --------
(1) Represents the difference between the closing price of the Company's
Series A Common Stock on December 31, 1999 ($67.00) and the option price
on the date of grant.
RETIREMENT PLANS
The following table illustrates the maximum annual benefits payable as a
single life annuity under the basic benefit formula in the Pension Plan (see
below) to an officer or employee retiring at age 65 with the specified
combination of final average salary and years of credited service.
Pension Plan Table
<TABLE>
<CAPTION>
Years of Credited Service at Retirement
------------------------------------------------
Final Average Salary 5 10 15 20 25
-------------------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 300,000................ $ 26,250 $ 52,500 $ 78,750 $ 105,000 $ 131,250
400,000................ 35,000 70,000 105,000 140,000 175,000
500,000................ 43,750 87,500 131,250 175,000 218,750
600,000................ 52,500 105,000 157,500 210,000 262,500
700,000................ 61,250 122,500 183,750 245,000 306,250
800,000................ 70,000 140,000 210,000 280,000 350,000
900,000................ 78,750 157,500 236,250 315,000 393,750
1,000,000................ 87,500 175,000 262,500 350,000 437,500
1,250,000................ 109,375 218,750 328,125 437,500 546,875
1,500,000................ 131,250 262,500 393,750 525,000 656,250
1,750,000................ 153,125 306,250 459,375 612,500 765,625
2,000,000................ 175,000 350,000 525,000 700,000 875,000
2,250,000................ 196,875 393,750 590,625 787,500 984,375
2,500,000................ 218,750 437,500 656,250 875,000 1,093,750
2,750,000................ 240,625 481,250 721,875 962,500 1,203,125
3,000,000................ 262,500 525,000 787,500 1,050,000 1,312,500
</TABLE>
The Company maintains a retirement income plan (the "Pension Plan") which is
a funded, qualified, non-contributory, defined benefit plan that covers most
employees including executive officers. The Pension Plan provides benefits
based on the participant's highest average salary for five consecutive years
within the ten years prior to retirement and the participant's length of
service, which is generally up to a maximum of 30 years beginning in 2006.
Benefit amounts will be offset by a portion of the primary Social Security
benefit to be received by the participant. A survivor's annuity for the
beneficiary of a vested participant is also provided.
46
<PAGE>
In general, compensation covered by the Pension Plan includes salary and
wages, but does not include bonuses, overtime pay, income from exercises of
stock options or other unusual or extraordinary compensation. For the persons
whose compensation is shown in the Summary Compensation Table on page 43, up
to $160,000 paid in 1999 and designated as salary in that table is covered by
the Pension Plan. Credited years of service under the Pension Plan as of
December 31, 1999 were approximately 5 years for Mr. Willes, 4 years for
Ms. Downing, 28 years for Mr. Jansen, 36 years for Mr. Bergmann, 8 years for
Mr. Zimbalist and 7 years for Mr. Unterman.
The amounts shown in the Pension Plan Table above have been calculated
without adjustment for Social Security benefits, and thus may be subject to
reduction to recognize primary Social Security benefits to be received by the
participant. The amounts shown in the Table above have also been calculated
without reference to the maximum limitations ($130,000 in 1999) imposed by the
Internal Revenue Code on benefits which may be paid under a qualified defined
benefit plan. Optional forms of payment available under the Pension Plan may
result in substantially reduced payments to an employee electing such an
option.
In addition to the amounts shown in the above Pension Plan Table, certain
active participants employed on March 29, 1985 were eligible for a past
service benefit improvement as a single sum equal to 2% of their 1984 base
salary (for participants in the Supplemental Executive Retirement Plan (the
"SERP"), 2% of their aggregated 1984 base salary and 1984 annual bonus)
multiplied by the years of credited service before 1985. This amount will be
increased by an amount equal to interest, currently at 7 % per annum, until
termination or retirement and then may be paid as a single sum or converted
into an equivalent annuity commencing at retirement. The estimated annual past
service improvement benefit from the pension plan and the SERP for the persons
named in the summary compensation table and employed by the Company on March
29, 1985 is $8,304 for Mr. Jansen.
The Company also maintains an Employee Stock Ownership Plan (the "ESOP").
Benefits provided by the ESOP are coordinated with benefits provided under the
Pension Plan so that benefits payable under the ESOP will be offset against
benefits otherwise payable under the Pension Plan. Effective January 1, 1995,
the Company discontinued its contributions to the ESOP for plan years after
1994. Certain officers of the Company were eligible to participate in the ESOP
and, subject to applicable limitations imposed by the Internal Revenue Code
and by the Employee Retirement Income Security Act of 1974 ("ERISA"), will be
entitled to receive shares which have been allocated to their accounts and
other benefits provided by the ESOP. Estimated individual account balances of
Series A and Series C Common Stock (aggregated for each individual) as of
December 31, 1999 were as follows: 616 shares for Mr. Zimbalist and 726 shares
for Mr. Unterman.
The Company also maintains the SERP to provide retirement benefits for
certain officers of the Company designated by the Compensation Committee of
the Board of Directors. Participants in the SERP will be entitled to receive
vested benefits under the SERP in addition to benefits payable under all other
employee benefit plans. Prior to 1999, the Compensation Committee designated
all the persons named in the Summary Compensation Table as participants in the
SERP.
Benefits payable under the SERP will be determined in substantially the same
manner as under the Pension Plan except that (a) covered compensation includes
both base salary and awards under the bonus-incentive program, and (b) the
amount payable will be calculated without regard to the provisions of Section
415 of the Internal Revenue Code or other legal limits on benefits under a
qualified pension plan. The SERP provides that each participant will receive
benefits under the SERP at least equal to the difference between the amount he
or she would have been entitled to receive without regard to the maximum
limitations imposed by the Internal Revenue Code and the amount such
participant is entitled to receive under the Pension Plan. If a participant
dies, his or her beneficiary will be entitled to receive a lifetime annuity
equal to approximately one-half the amount the participating officer would
have been entitled to receive under the SERP as of the date of the
participant's death.
The SERP is unfunded. Participants become vested under the same schedule as
in the Pension Plan or upon a change in control and each such participant will
be entitled to receive his or her benefits under the SERP
47
<PAGE>
commencing upon retirement, provided that any such benefit commencing prior to
age 65 will be actuarially reduced to reflect its commencement prior to age
65.
The Company has established an ERISA excess retirement plan (the "Excess
Plan") to provide pension benefits for certain employees including officers of
the Company but excluding participants in the SERP. The Excess Plan provides
that each participant will receive benefits under the Excess Plan equal to the
difference between the amount he or she would have been entitled to receive
without regard to the maximum limitations imposed by the Internal Revenue Code
and the amount such participant is entitled to receive under the Pension Plan.
Participants will be vested under the Excess Plan under the same vesting
provisions as the Pension Plan. The Excess Plan is unfunded.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Four of Times Mirror's present directors (Susan Babcock, Bruce Chandler,
Roger Goodan and Warren B. Williamson) are cousins. Gwendolyn Garland Babcock,
Jeffrey Chandler, Camilla Chandler Frost, Douglas Goodan, William Stinehart,
Jr., Judy C. Webb and Warren B. Williamson are the trustees of two trusts
known as the "Chandler Trusts." Jeffrey Chandler is the brother of Bruce
Chandler and is the cousin of the other directors named above (other than Mr.
Stinehart). Camilla Chandler Frost and Judy C. Webb are cousins of each of the
directors named above (other than Mr. Stinehart). Douglas Goodan is the uncle
of Roger Goodan and is the cousin of the other directors named above (other
than Mr. Stinehart and Roger Goodan). Gwendolyn Garland Babcock is mother of
Susan Babcock and is the cousin of the other directors named above (other than
Mr. Stinehart and Susan Babcock). The trustees (other than Mr. Stinehart) and
others of their relatives are beneficiaries of the Chandler Trusts. The
Chandler Trusts, their trustees and the general family group of which they are
members may be deemed to be "parents" of Times Mirror within the meaning of
the Securities Act of 1933, as amended.
In September 1999, Times Mirror, including certain of its affiliates, and
the Chandler Trusts completed a recapitalization transaction pursuant to which
each contributed assets worth $1.24 billion to TMCT II, LLC, a newly formed
limited liability company ("TMCT II"). Times Mirror contributed preferred
units issued by the operating partnerships of eight unrelated real estate
investment trusts and $2,000,000 in cash and certain of its affiliates
contributed a total of $633,300,000 million in cash or cash equivalents. The
Chandler Trusts contributed 9,305,624 shares of Series A Common Stock,
6,235,592 shares of Series C Common Stock, 380,972 shares of the Series C-1
Preferred Stock and 245,100 shares of Series C-2 Preferred Stock. In
connection with the recapitalization, Times Mirror replaced the Series C-1 and
C-2 Preferred Stock with Series D-1 and D-2 Preferred Stock effective January
1, 2000. The Series D-1 and D-2 Preferred Stock are identical to the Series C-
1 and C-2 Preferred Stock except that the increases in the dividend rate on
the Series D-1 and D-2 Preferred Stock are pursuant to a fixed and certain
schedule. Pursuant to the allocations of TMCT II approximately $1,530,000 of
dividends received on Times Mirror's stock by TMCT II in 1999 were allocated
to the Chandler Trusts.
In connection with that transaction, in September 1999, TMCT II invested
$500,000,000 in a newly formed investment fund, TMCT Ventures, L.P., the
general partner of which is Rustic Canyon Partners LLC ("Rustic Canyon
Partners"). Rustic Canyon Partners, LCC is entitled to receive 20% of the
profits generated by TMCT Ventures, as calculated in accordance with the
limited partnership agreement of TMCT Ventures. Rustic Canyon Partners did not
earn any amount under this provision during 1999. Another entity, Rustic
Canyon Management, LLC ("Rustic Canyon Management"), will earn a management
fee of $7,500,000 per year for managing TMCT Ventures for the next several
years. For the period from September to December 1999, Rustic Canyon
Management earned $2,445,000 in such fees. Mr. Unterman, who resigned from his
positions with Times Mirror in December 1999, founded, and owns approximately
two-thirds of the equity of, Rustic Canyon Partners and Rustic Canyon
Management. During the period from September 4, 1997 through December 27, 1999
Mr. Unterman worked primarily on matters related to TMCT Ventures. Rustic
Canyon Management reimbursed Times Mirror for a portion of Mr. Unterman's 1999
compensation and for all the compensation of certain Rustic
48
<PAGE>
Canyon Management employees as well as for facilities costs and costs of
administrative support for the period from September 4, 1999 to the end of the
year. In connection with Mr. Unterman's resignation, he entered into a
severance agreement with Times Mirror. This severance agreement provides for a
one-time payment of $675,000 and annual payments of $50,000 until December 31,
2004 in exchange for Mr. Unterman"s availability to provide consulting
services to Times Mirror. Stock options granted to Mr. Unterman continue to
vest under this severance agreement and restrictions on restricted stock
previously granted to Mr. Unterman will continue to lapse in accordance with
the terms of the grant. The agreement further provides for certain continuing
employee benefits. The agreement recognizes that during the term of the leave
of abesence that Mr. Unterman will be providing services to TMCT, LLC, TMCT
II, LLC and the Chandler Trusts.
In August 1997, Times Mirror and the Chandler Trusts consummated a
transaction that consisted of two parts. First, Times Mirror and the Chandler
Trusts made contributions of assets to a new limited liability company, TMCT,
LLC. Second, Chandis Securities Company, a company principally owned by one of
the Chandler Trusts, was merged into a subsidiary of Times Mirror. In forming
TMCT, LLC, Times Mirror contributed real property having an appraised value of
$226,000,000 and $249,000,000 in cash. The Chandler Trusts contributed
approximately 5 million shares of Series A Common Stock, valued at
$254,000,000, and $221,000,000 stated value of 8% Series A Preferred Stock.
The real property was leased back to Times Mirror under long-term leases and
the cash was invested in a portfolio of securities of unrelated issuers.
Pursuant to the allocations of TMCT, LLC, approximately $20,333,000 of the
lease payments and $4,341,000 of dividends received on Times Mirror's stock by
TMCT, LLC in 1999 were allocated to the Chandler Trusts.
Times Mirror entered into an agreement with Mr. Willes when he joined Times
Mirror in 1995 relating to the terms of his employment with Times Mirror.
Under that agreement, Mr. Willes was to serve as President and Chief Executive
Officer until January 1, 1996 and also as Chairman of the Board after that
date. The agreement specified his initial salary, target annual incentive
bonus and long-term incentive award and provided for Times Mirror to assume
various costs and obligations in connection with Mr. Willes' relocation to Los
Angeles. Mr. Willes is entitled to participate in retirement, deferred
compensation, insurance and other employee benefit programs. The agreement
defined a special supplemental retirement benefit to compensate Mr. Willes for
the potential future loss of retirement benefits resulting from his
termination of employment with his former employer. During the past few years,
the Compensation Committee has reviewed the level of benefits provided to Mr.
Willes under this agreement and has periodically made changes to the special
retirement benefits to be provided to Mr. Willes upon his retirement from
Times Mirror to bring Mr. Willes' retirement benefits into line with
competitive practices for treatment of Chief Executive Officers of comparable
companies.
The latest of these amendments was approved by the Executive Compensation
Subcommittee of the Compensation Committee of the Times Mirror Board (the
"Executive Compensation Subcommittee") at its special meeting on March 2, 2000
and later reviewed, ratified and approved by the Times Mirror Board at its
special March 11, 2000 meeting. Under the March 2000 amendment, in the event
that Mr. Willes remains in his current position through the term of his
contract (which date was initially to be March 31, 2002, and was then changed
to be the earlier of the Effective Time or March 31, 2002), in the event of
Mr. Willes' death or disability before the end of the term of the contract, or
in the event that his employment is terminated by Times Mirror before the term
of the contract, Mr. Willes will receive a special retirement benefit of
$970,000 per year commencing on April 1, 2002 and payable as a 50% joint and
survivor annuity with his wife as the joint annuitant. This benefit equals the
total pension benefit from Times Mirror, including benefits earned under the
Times Mirror Pension Plan and the SERP. In the event that Mr. Willes
voluntarily terminates his employment prior the term of his contract, he will
receive a retirement benefit determined under the terms of the SERP, based on
the highest 5 year average salary plus the highest 5 year average bonus, and
the aggregate of his benefit service earned with Times Mirror and his former
employer (which would increase his benefit service by 15 years of service, for
a total of approximately 20 years), offset by $204,332, the benefit he earned
under the pension plans maintained by his former employer.
49
<PAGE>
The original employment agreement further provides that if Mr. Willes
terminates employment with Times Mirror prior to age 60 for "good reason" or
if his employment is terminated other than for "cause" or disability (as those
terms are defined in the agreement), Times Mirror will (a) pay two years'
salary and target bonus, (b) pay Mr. Willes' target annual bonus incentive
award for the year of termination, pro rated for the number of months of
active employment in such year, (c) treat such termination as an early
termination for purposes of determining benefits under various benefit plans,
(d) seek to have the restrictions on his restricted stock treated according to
the terms applicable in situations of early retirement, (e) provide for
continued participation and service credit under various retirement, deferred
compensation, insurance and other employee benefit programs, and (f) provide
such other benefits as are offered to retiring officers. In actions taken in
March 2000 by the Executive Committee Subcommittee, and later reviewed,
ratified and approved by the Times Mirror Board, the term of Mr. Willes'
contract was amended to cease on the earlier of March 31, 2002 or the
Effective Time. The severance payable to Mr. Willes in the event of his
termination of employment at the Effective Time is described in greater detail
on page 16 in the attached Schedule 14D-9. Further, in accordance with Times
Mirror's practices established by the Compensation Committee in July 1997, if
Mr. Willes continues his employment through the term of his contract or if his
employment is terminated by Times Mirror before the term of his contract,
Mr. Willes will be provided with company-paid furnished and functional office
space and secretarial support for seven years after the termination of his
employment.
On July 15, 1998, Times Mirror entered into an agreement with Ms. Downing
that after she transferred to the Los Angeles Times, Times Mirror would pay
her $50,000 per year, less appropriate withholding, to assist in her
relocation to Southern California. This amount is to be paid to her in an
annual lump sum payment for each of the next five years. The first payment was
made as of July 1, 1998, and future payments will be made as of the next four
anniversaries from that date. These payments will be reduced for appropriate
tax withholding but will not be grossed up for taxes. These payments will
cease in the event that her employment with Times Mirror terminates during the
five-year period.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Times Mirror's executive officers
and directors, and persons who beneficially own more than 10% of Times
Mirror's Common Stock, to file initial reports of ownership and changes in
ownership with the Securities and Exchange Commission. Based on a review of
the copies of such forms furnished to Times Mirror and written representations
from Times Mirror's executive officers and directors, Times Mirror believes
that all forms were filed in a timely manner during fiscal 1999, except a Form
3 for Raymond Jansen, an Executive Vice President, that was filed late.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
1 Audit Committee Charter of the Audit Committee of the Board of
Directors of The Times Mirror Company.
</TABLE>
50
<PAGE>
Exhibit 1
Audit Committee Charter
The scope of the Charter of the Audit Committee shall include, to the extent
its members consider appropriate:
1. Selecting and monitoring the independence of the independent public
accountants for the Company and reviewing the compensation to be paid to
such accountants;
2. Meeting with the Company's independent public accountants and financial
management to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, at the conclusion thereof,
reviewing the results of such audit, including any comments or
recommendations of the independent public accountants and, if requested by
the Board of Directors, inviting the independent public accountants to
attend a full Board of Directors' meeting to assist in reporting the
results of the audit;
3. Reviewing the Company's financial statements and reviewing with the
Company's independent public accountants the results of their audit and
their report, including any changes in accounting principles and any
significant amendments to accounting principles; also reviewing with
financial management and the independent public accountants their
qualitative judgments about the appropriateness, and not just the
acceptability, of accounting principles and financial disclosure practices
used or proposed to be used, and particularly, the degree of aggressiveness
or conservatism of the Company's accounting principles and underlying
estimates;
4. Evaluating, and reviewing with the Company's senior management, the control
environment, including quality, integrity, ethical values and competence,
and the extent to which it is communicated and understood throughout the
Company;
5. Reviewing with the Company's financial management, internal auditors and
independent public accountants the adequacy and effectiveness of the
Company's accounting and financial controls and eliciting any
recommendations for their improvement;
6. Reviewing the internal audit function of the Company, including the
independence and authority of its reporting obligations, and the
qualifications of the Company's internal audit staff and meeting with the
Company's internal audit department representative to review the plan and
scope of work of the internal audit staff and to monitor the progress of
the plan;
7. Meeting with the Company's independent public accountants and a
representative of the internal audit department without members of
management present to discuss the evaluation of the Company's financial,
accounting and auditing personnel and the cooperation that the independent
public accountants received during all audits; and
8. Considering such other matters as the Chairman of the Board or the Board of
Directors may request.
51
<PAGE>
SCHEDULE II
INFORMATION REGARDING TRANSACTIONS
IN TIMES MIRROR COMMON STOCK
The following table sets forth transactions in the Shares by certain of the
Company's executive officers, directors, affiliates and subsidiaries as listed
below during the 60 days prior to the date of the Schedule 14D-9.
TRANSACTIONS BY EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Number
Date of Type of of
Name Transaction Transaction Shares Price
- ---- ----------- ----------- ------- -----
<S> <C> <C> <C> <C>
Mark H. Willes.................... 2/3/2000 Stock Award 8,787 N/A
Mark H. Willes.................... 2/3/2000 Option Grant 225,000 $59.2188
Thomas Unterman................... 2/3/2000 Stock Award 2,850 N/A
Kathryn M. Downing................ 2/3/2000 Stock Award 2,258 N/A
Kathryn M. Downing................ 2/3/2000 Option Grant 50,000 $59.2188
Horst A Bergmann.................. 2/3/2000 Stock Award 1,575 N/A
Horst A Bergmann.................. 2/3/2000 Option Grant 50,000 $59.2188
Raymond A. Jansen, Jr. ........... 2/3/2000 Stock Award 2,138 N/A
Raymond A. Jansen, Jr. ........... 2/3/2000 Option Grant 50,000 $59.2188
Efrem Zimbalist III............... 2/3/2000 Stock Award 1,346 N/A
Efrem Zimbalist III............... 2/3/2000 Option Grant 50,000 $59.2188
James R. Simpson.................. 2/3/2000 Stock Award 1,235 N/A
James R. Simpson.................. 2/3/2000 Option Grant 25,000 $59.2188
Roger H. Molvar................... 2/3/2000 Stock Award 950 N/A
Roger H. Molvar................... 2/3/2000 Option Grant 20,000 $59.2188
Rajender K. Chandhok.............. 2/3/2000 Stock Award 570 N/A
Rajender K. Chandhok.............. 2/3/2000 Option Grant 10,000 $59.2188
William A Niese................... 2/3/2000 Stock Award 1,045 N/A
William A Niese................... 2/3/2000 Option Grant 13,500 $59.2188
Debra A. Gastler.................. 2/3/2000 Stock Award 713 N/A
Debra A. Gastler.................. 2/3/2000 Option Grant 15,000 $59.2188
Debra A. Gastler.................. 2/29/2000 Option Exercise 1,592 $ 34.00
Debra A. Gastler.................. 2/29/2000 Sale 5,715 $ 51.127
Debra A. Gastler.................. 2/29/2000 Option Exercise 4,753 $ 46.68
Edward L. Blood................... 2/3/2000 Stock Award 713 N/A
Edward L. Blood................... 2/3/2000 Option Grant 15,000 $59.2188
Edward L. Blood................... 2/28/2000 Stock Purchase 700 $ 51.375
</TABLE>
52
<PAGE>
TRANSACTIONS BY DIRECTORS
<TABLE>
<CAPTION>
Number
Date of Type of of
Name Transaction Transaction Shares Price
- ---- ----------- ------------ ------ ---------------
<S> <C> <C> <C> <C>
Gwendolyn Garland Babcock...... 2/3/2000 Stock Award 500 Received shares
Gwendolyn Garland Babcock...... 2/3/2000 Option Grant 5,000 $59.2188
Susan Babcock.................. 2/3/2000 Stock Award 840 Received shares
Susan Babcock.................. 2/3/2000 Option Grant 4,170 $50.9688
Donald R. Beall................ 2/3/2000 Stock Award 1,000 Deferred shares
Donald R. Beall................ 2/3/2000 Option Grant 5,000 $59.2188
John E. Bryson................. 2/3/2000 Stock Award 500 Deferred shares
John E. Bryson................. 2/3/2000 Option Grant 5,000 $59.2188
Bruce Chandler................. 2/3/2000 Stock Award 500 Received shares
Bruce Chandler................. 2/3/2000 Option Grant 5,000 $59.2188
Clayton W. Frye, Jr............ 2/3/2000 Stock Award 560 Received shares
Clayton W. Frye, Jr............ 2/3/2000 Option Grant 5,000 $59.2188
Roger Goodan................... 2/3/2000 Stock Award 500 Received shares
Roger Goodan................... 2/3/2000 Option Grant 5,000 $59.2188
Sherry Lansing................. 2/3/2000 Stock Award 500 Received shares
Sherry Lansing................. 2/3/2000 Option Grant 5,000 $59.2188
Dawn Gould Lepore.............. 2/3/2000 Stock Award 1,000 Deferred shares
Dawn Gould Lepore.............. 2/3/2000 Option Grant 5,000 $59.2188
Dr. Alfred W. Osborne, Jr...... 2/3/2000 Stock Award 1,120 Deferred shares
Dr. Alfred W. Osborne, Jr...... 2/3/2000 Option Grant 5,000 $59.2188
Robert W. Schult............... 2/3/2000 Stock Award 500 Received shares
Robert W. Schult............... 2/3/2000 Option Grant 5,000 $59.2188
William Stinehart, Jr.......... 2/3/2000 Stock Award 500 Received shares
William Stinehart, Jr.......... 2/3/2000 Option Grant 5,000 $59.2188
Warren B. Williamson........... 2/3/2000 Stock Award 1,120 Deferred shares
Warren B. Williamson........... 2/3/2000 Option Grant 5,000 $59.2188
Dr. Edward Zapanta............. 2/3/2000 Stock Award 560 Deferred shares
Dr. Edward Zapanta............. 2/3/2000 Option Grant 5,000 $59.2188
</TABLE>
TRANSACTIONS BY AFFILIATES AND SUBSIDIARIES
<TABLE>
<CAPTION>
Date of Type of Number
Name Transaction Transaction of Shares Price
- ---- ----------- -------------- --------- --------
<S> <C> <C> <C> <C>
Eagle New Media................... 2/7/2000 Stock Purchase 50,000 $56.9100
Times Mirror...................... 2/8/2000 Put Settlement 100,000 $69.6860
Eagle New Media................... 2/9/2000 Stock Purchase 40,000 $58.1094
Eagle New Media................... 2/10/2000 Stock Purchase 75,000 $56.6417
Eagle New Media................... 2/11/2000 Stock Purchase 90,000 $56.5150
Eagle New Media................... 2/14/2000 Stock Purchase 25,500 $56.3532
Eagle New Media................... 2/15/2000 Stock Purchase 85,000 $55.8720
Eagle New Media................... 2/16/2000 Stock Purchase 70,200 $54.9618
Eagle New Media................... 2/17/2000 Stock Purchase 36,300 $55.3154
Eagle New Media................... 2/18/2000 Stock Purchase 30,400 $53.7368
Eagle New Media................... 2/22/2000 Stock Purchase 30,000 $54.0921
Eagle New Media................... 2/23/2000 Stock Purchase 15,000 $54.3950
Eagle New Media................... 2/24/2000 Stock Purchase 91,000 $52.2515
Times Mirror...................... 2/25/2000 Put Settlement 100,000 $68.0000
Eagle New Media................... 2/28/2000 Stock Purchase 276,000 $51.4312
</TABLE>
53
<PAGE>
SCHEDULE III
OPINION OF GOLDMAN, SACHS & CO.
PERSONAL AND CONFIDENTIAL
March 13, 2000
Board of Directors
The Times Mirror Company
Times Mirror Square
Los Angeles, CA 90053
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of Series A Common Stock, par
value $1.00 per share (the "Series A Shares"), and the outstanding shares of
Series C Common Stock, par value $1.00 per share (the "Series C Shares", and,
together with the Series A Shares, the "Shares"), of The Times Mirror Company
(the "Company") of the Stock Consideration (as defined below) and the Cash
Consideration (as defined below), in the aggregate, proposed to be paid in the
Tender Offer (as defined below) and the Merger (as defined below) pursuant to
the Agreement and Plan of Merger, dated as of March 13, 2000, between Tribune
Company ("Tribune") and the Company (the "Agreement"). The Agreement provides
for a tender offer for up to 28,000,000 Shares (the "Tender Offer") pursuant
to which Tribune will pay $95 per Share in cash for each Share accepted (the
"Cash Consideration"). The Agreement further provides that following
completion of the Tender Offer, the Company will be merged with and into
Tribune (the "Merger") and each outstanding share not owned by Tribune will be
converted into 2.5 shares of Common Stock, without par value, of Tribune (the
"Tribune Shares"), as more fully set forth in the Agreement (the "Stock
Consideration"). Holders of Shares may elect, with respect to all or a portion
of their Shares, to convert such Shares into the right to receive the same
Cash Consideration paid for Shares tendered pursuant to the Tender Offer,
subject to certain procedures and limitations contained in the Agreement, as
to which procedures and limitations we are expressing no opinion. We
understand that there are no restrictions in the Agreement limiting the
ability of any holder of Shares to receive the Stock Consideration, if such
holder decides to elect to receive the Stock Consideration.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. We are familiar with the Company having provided certain investment
banking services to the Company from time to time, including having acted as
financial advisor to the Company in connection with the indirect purchase of a
securities investment portfolio and real estate investment trust interests
with the Chandler Trusts in August 1997 and a similar transaction in September
1999, the disposition of Matthew Bender and Company, Inc., and fifty percent
of Shepard's Company in July 1998 and of Mosby, Inc. in October 1998, and the
disposition of Allen Communication in February 2000, and having acted as its
financial advisor in connection with, and having participated in certain of
the negotiations leading to, the Agreement. We also have acted as financial
advisor to the Chandler Trusts in connection with the stock exchange involving
Cox Cable Communication, Inc., the Company and the Chandler Trusts in July
1994, and may provide investment banking services to the Chandler Trusts in
the future. We also have provided certain investment banking services to
Tribune from time to time, including in connection with various commercial
paper and medium-term note financings and may provide investment banking
services to Tribune and its subsidiaries in the future. Goldman, Sachs & Co.
provides a full range of financial advisory and securities services and, in
the course of its normal trading activities, may from time to time effect
transactions and hold securities, including derivative securities, of the
Company or Tribune for its own account and for the accounts of customers.
54
<PAGE>
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Restated Certificate of Incorporation of the Company dated
January 20, 1995, as amended on January 31, 1995; Annual Reports to
Stockholders and Annual Reports on Form 10-K of the Company and Tribune for
the five years ended December 31, 1998 and the five fiscal years ended
December 27, 1998, respectively, and, in addition, the draft Annual Reports to
Stockholders and Annual Reports on Form 10-K of the Company and Tribune for
the year ended December 31, 1999 and the fiscal year ended December 27, 1999,
respectively; certain interim reports to stockholders and Quarterly Reports on
Form 10-Q of the Company and Tribune; certain other communications from the
Company and Tribune to their respective stockholders; and certain internal
financial analyses and forecasts for the Company and Tribune prepared by their
respective managements. We also have held discussions with members of the
senior management of the Company and Tribune regarding their assessment of the
strategic rationale for, and the potential benefits of, the transaction
contemplated by the Agreement and the past and current business operations,
financial condition and future prospects of their respective companies. In
addition, we have reviewed the reported price and trading activity for the
Shares and the Tribune Shares, compared certain financial and stock market
information for the Company and Tribune with similar information for certain
other companies the securities of which are publicly traded, reviewed the
financial terms of certain recent business combinations in the newspaper
industry specifically and in other industries generally and performed such
other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information discussed with or reviewed by us and have assumed such
accuracy and completeness for purposes of rendering this opinion. In addition,
we have not made an independent evaluation or appraisal of the assets and
liabilities of the Company or Tribune or any of their subsidiaries and we have
not been furnished with any such evaluation or appraisal. Our advisory
services and the opinion expressed herein are provided for the information and
assistance of the Board of Directors of the Company in connection with its
consideration of the transaction contemplated by the Agreement and such
opinion does not constitute a recommendation as to how any holder of Shares
should vote with respect to such transaction or whether or not any holder of
Shares should tender such Shares in connection with such transaction or elect
to receive the Stock Consideration or Cash Consideration.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the Stock
Consideration and Cash Consideration to be received by the holders of Shares,
in the aggregate, are fair from a financial point of view to the holders of
Shares receiving such Consideration.
Very truly yours,
/s/ Goldman, Sachs & Co.
______________________
(GOLDMAN, SACHS & CO.)
55
<PAGE>
EXHIBIT (a)(3)
March 21, 2000
Dear Stockholder:
I am pleased to inform you that on March 13, 2000, The Times Mirror Company
(the "Company") entered into a merger agreement with Tribune Company
("Tribune") that provides for the acquisition of the Company by Tribune. Under
the terms of the merger agreement, Tribune has commenced a tender offer for up
to 28 million shares of the Company's common stock at $95 per share in cash.
Following completion of the tender offer, in the second-step merger,
outstanding shares of the Company not held by the Company or Tribune will be
converted into the right to receive $95 per share in cash, or 2.5 shares of
Tribune common stock, or a combination of both at the election of the
stockholders. However, because Tribune has only offered to purchase up to 28
million shares of the Company's common stock for cash, if the tender offer is
fully subscribed, only shares of Tribune common stock will be exchanged in the
merger. Therefore, stockholders who desire cash for their shares should tender
their shares in the offer.
YOUR BOARD OF DIRECTORS HAS APPROVED THE OFFER AND THE MERGER AND HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE ADVISABLE, FAIR TO,
AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS. ACCORDINGLY, THE
BOARD OF DIRECTORS RECOMMENDS THAT ALL STOCKHOLDERS OF THE COMPANY WHO DESIRE
TO RECEIVE CASH FOR THEIR SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors. These factors included, among other
things, the opinion dated as of March 13, 2000, of Goldman, Sachs & Co.
("Goldman"), financial advisor to the Company, that, as of such date, the
stock and cash consideration to be received by the holders of shares of the
Company's common stock, in the aggregate, is fair from a financial point of
view to the holders of shares receiving such consideration. The full text of
this opinion, which sets forth the procedures followed, matters reviewed and
assumptions made by Goldman and presented by Goldman to the Board of
Directors, is included in the Company's Solicitation/Recommendation Statement
on Schedule 14D-9 that is included with this letter and should be read in its
entirety.
Also enclosed from Tribune is its Offer to Purchase, together with related
materials to be used for tendering your shares. These documents provide
instructions on how to tender your shares and set forth the terms and
conditions of the offer and other important information. We encourage you to
read the enclosed materials carefully.
Thank you for the support you have given to the Company over the years.
Sincerely,
/s/ Mark H. Willes
Mark H. Willes
Chairman of the Board, President and
Chief Executive Officer
