<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. 20549
--------------------
SCHEDULE TO
(RULE 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
STERLING COMMERCE, INC.
(Name of Subject Company (Issuer))
SBC SILVER, INC.
SBC COMMUNICATIONS INC.
(Names of Filing Persons (Identifying Status as Offeror,
Issuer or Other Person))
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
859205106
(CUSIP Number of Class of Securities)
JUDITH M. SAHM
SBC COMMUNICATIONS INC.
175 E. HOUSTON, SAN ANTONIO, TEXAS 78205-2233
TELEPHONE: (210) 821-4105
FACSIMILE: (210) 351-3521
(Name, Address and Telephone Numbers of Person
Authorized to Receive Notices and Communications on Behalf of Filing Persons)
Copies to:
HOWARD CHATZINOFF, ESQ. WAYNE A. WIRTZ
WEIL, GOTSHAL & MANGES LLP SBC COMMUNICATIONS INC.
767 FIFTH AVENUE 175 E. HOUSTON
NEW YORK, NEW YORK 10153-0119 SAN ANTONIO, TEXAS 78205-2233
TELEPHONE: (212) 310-8000 TELEPHONE: (210) 821-4105
FACSIMILE: (212) 310-8007 FACSIMILE: (210) 351-3467
<TABLE>
<CAPTION>
CALCULATION OF FILING FEE
================================================================================
<S> <C>
Transaction Valuation* Amount of Filing Fee
---------------------- --------------------
$3,542,746,244 $708,549
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
* For purposes of calculating the filing fee only. The filing fee calculation
assumes the purchase of all outstanding shares of common stock, par value $0.01
per share, of Sterling Commerce, Inc. (the "Common Stock"), including the
related preferred share purchase rights (the "Rights" and, together with the
Common Stock, the "Shares") at a price of $44.25 per Share, without interest. As
of February 22, 2000, there were 80,062,062 shares issued and outstanding. Based
on the foregoing, the transaction value is equal to the product of 80,062,062
shares and $44.25 per share. Such number does not render any shares issuable
upon exercise of outstanding Company Stock Options. The amount of the filing fee
calculated in accordance with Rule 0-11 of the Securities Exchange Act
of 1934, as amended, equals 1/50th of one percent of the value of the
transaction.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: None Filing Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
[ ] Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer:
Check the appropriate boxes below to designate any transactions to
which the statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting
the results of the tender offer: [ ]
(Continued on following pages)
(Page 1 of 8 pages)
<PAGE> 2
SCHEDULE TO
This Tender Offer Statement on Schedule TO ("Schedule TO") relates
to the offer by SBC Silver, Inc., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of SBC Communications Inc., a Delaware corporation
("Parent"), to purchase all of the outstanding shares of common stock, par value
$0.01 per share (the "Common Stock"), of Sterling Commerce, Inc., a Delaware
corporation (the "Company"), and the related rights to purchase shares of the
Series A Junior Participating Preferred Stock of the Company (the "Rights and,
together with the Common Stock, the "Shares"), issued pursuant to the Rights
Agreement, dated as of December 18, 1996, by and between the Company and The
First National Bank of Boston, as Rights Agent, at a price of $44.25 per Share,
net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated February 25, 2000
and in the related Letter of Transmittal (which, together with any supplements
or amendments, collectively constitute the "Offer"), copies of which are
attached as Exhibits (a)(1)(A) and (a)(1)(B) hereto, respectively. The item
numbers and responses thereto below are in accordance with the requirements of
Schedule TO.
ITEM 1. SUMMARY TERM SHEET.
The information set forth in the Offer to Purchase under "Summary Term
Sheet" is incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) The name of the subject company is Sterling Commerce, Inc., a Delaware
corporation. The Company's principal executive offices are located at
300 Crescent Court, Suite 1200, Dallas, Texas 75201 and its phone
number is (214) 981-1100.
(b) The information set forth in the Offer to Purchase under
"Introduction," Section 1 ("Terms of the Offer; Expiration Date") and
Section 6 ("Price Range of Shares") is incorporated herein by
reference.
(c) The information set forth in the Offer to Purchase in Section 6 ("Price
Range of Shares") is incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
(a),(b),(c) This Statement is being filed by Purchaser and Parent. The
information set forth in the Offer to Purchase under "Introduction," in Section
9 ("Certain Information Concerning Purchaser and Parent") and in Schedule I to
the Offer to Purchase is incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a)(1)(i-viii,xii), The information set forth in the Offer to Purchase under
"Introduction," Section 1 ("Terms of the Offer; Expiration Date"), Section 2
("Acceptance for Payment and Payment"), Section 3 ("Procedures for Accepting the
Offer and Tendering Shares"), Section 4 ("Withdrawal Rights"), Section 5
("Certain Federal Income Tax Consequences"), Section 11 ("Purpose of the Offer;
Plans for the Company"), Section 14 ("Certain Conditions of the Offer") and
Section 15 ("Certain Legal Matters; Required Regulatory Approvals") is
incorporated herein by reference.
(a)(1)(ix) Not applicable.
(a)(1)(x) Not applicable.
(a)(1)(xi) Not applicable.
(a)(2)(i -iv, vii) Not applicable.
(a)(2)(v) Not applicable.
(a)(2)(vi) Not applicable.
4
<PAGE> 3
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(a) No transactions, other than those described in paragraph (b), have
occurred during the past two years between the filing person and the
Company or any of its affiliates that are not natural persons.
(b) The information set forth in the Offer to Purchase under
"Introduction," Section 9 ("Certain Information Concerning Purchaser
and Parent"), Section 10 ("Background of the Offer; Contacts with the
Company") and Section 11 ("Purpose of the Offer; Plans for the
Company") is incorporated herein by reference.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a) The information set forth in the Offer to Purchase under
"Introduction," Section 10 ("Background of the Offer; Contacts with the
Company") and Section 11 ("Purpose of the Offer; Plans for the
Company") is incorporated herein by reference.
(c) The information set forth in the Offer to Purchase under
"Introduction," Section 7 ("Effect of the Offer on the Market for the
Shares; Stock Exchange Listing; Exchange Act Registration; Margin
Regulations"), Section 10 ("Background of the Offer; Contacts with the
Company"), Section 11 ("Purpose of the Offer; Plans for the Company")
and Section 13 ("Dividends and Distributions") is incorporated herein
by reference.
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Offer to Purchase under Section 12
("Source and Amount of Funds") is incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)(b) The information set forth in the Offer to Purchase under "Introduction",
Section 9 ("Certain Information Concerning the Purchaser and Parent"), Section
10 ("Background of the Offer; Contacts with the Company") and Section 11
("Purpose of the Offer; Plans for the Company") is incorporated herein by
reference.
ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(a) The information set forth in the Offer to Purchase under "Introduction"
and Section 16 ("Certain Fees and Expenses") is incorporated herein by
reference.
ITEM 10. FINANCIAL STATEMENTS.
(a)(b) Because the consideration offered consists solely of cash, the offer is
not subject to any financing condition, Parent is a public reporting company
under Section 13(a) or 15(d) of the Exchange Act of 1934, as amended, and files
reports electronically with the Commission's Electronic Data Gathering, Analysis
and Retrieval (EDGAR) system and the Offer is for all outstanding Shares,
Purchaser believes the financial condition of Parent, Purchaser and their
affiliates is not material to a decision by a holder of Shares whether to sell,
tender or hold Shares pursuant to the Offer.
5
<PAGE> 4
ITEM 11. ADDITIONAL INFORMATION.
(a) The information set forth in the Offer to Purchase under
"Introduction," Section 1 ("Terms of the Offer; Expiration
Date") Section 11 ("Purpose of the Offer; Plans for the Company")
and Section 15 ("Certain Legal Matters; Required Regulatory
Approvals") is incorporated herein by reference.
(b) The information set forth in the Offer to Purchase and the related
Letter of Transmittal, copies of which are filed as Exhibits
(a)(1)(A) and (a)(1)(B) hereto, respectively, is incorporated
herein by reference
ITEM 12. EXHIBITS.
(a)(1)(A) Offer to Purchase, dated February 25, 2000.
(a)(1)(B) Letter of Transmittal.
(a)(1)(C) Notice of Guaranteed Delivery.
(a)(1)(D) Form of letter to clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees.
(a)(1)(E) Form of letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(1)(F) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(1)(G) Press release issued by Parent and Purchaser, dated February
25, 2000, announcing the commencement of the Offer.
(a)(1)(H) Summary Advertisement, dated February 25, 2000, appearing in the
Wall Street Journal.
(b) Not applicable.
(d)(1) Agreement and Plan of Merger, dated as of February 18, 2000, by
and among Parent, Purchaser and the Company.
(d)(2) Stockholder's Agreement, dated as of February 18, 2000, by and
among Parent, Purchaser and the holders of Shares parties thereto.
(d)(3) Confidentiality Agreement, dated November 19, 1999, by and between
Parent and the Company.
(g) Not applicable.
(h) Not applicable.
6
<PAGE> 5
SIGNATURE
After due inquiry and to the best of their knowledge and belief, the undersigned
hereby certify as of February 25, 2000 that the information set forth in this
statement is true, complete and correct.
SBC SILVER, INC.
By: /s/ James S. Kahan
------------------------------------------
Name: James S. Kahan
Title: Vice President
SBC COMMUNICATIONS INC.
By: /s/ James S. Kahan
------------------------------------------
Name: James S. Kahan
Title: Senior Executive Vice President --
Corporate Development
7
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
(a)(1)(A) Offer to Purchase, dated February 25, 2000.
(a)(1)(B) Letter of Transmittal.
(a)(1)(C) Notice of Guaranteed Delivery.
(a)(1)(D) Form of letter to clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees.
(a)(1)(E) Form of letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
(a)(1)(F) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(1)(G) Press release issued by Parent and Purchaser, dated
February 25, 2000, announcing the commencement of the Offer.
(a)(1)(H) Summary Advertisement, dated February 25, 2000, appearing in
the Wall Street Journal.
(d)(1) Agreement and Plan of Merger, dated as of February 18, 2000,
by and among Parent, Purchaser and the Company.
(d)(2) Stockholder's Agreement, dated as of February 18, 2000, by
and among Parent, Purchaser and the holders of Shares parties
thereto.
(d)(3) Confidentiality Agreement, dated November 19, 1999, by and
between Parent and the Company.
</TABLE>
8
<PAGE> 1
EXHIBIT (a)(1)(A)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE RELATED PREFERRED STOCK PURCHASE RIGHTS)
OF
STERLING COMMERCE, INC.
AT
$44.25 NET PER SHARE
BY
SBC SILVER, INC.
A WHOLLY-OWNED SUBSIDIARY OF
SBC COMMUNICATIONS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 23, 2000, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF STERLING COMMERCE, INC. (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT (AS DEFINED HEREIN) AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (EACH AS
DEFINED HEREIN), AND HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER
ARE ADVISABLE AND FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT THERETO.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED
HEREIN) THAT NUMBER OF SHARES WHICH WOULD REPRESENT AT LEAST A MAJORITY OF THE
SHARES OF THE COMPANY ON A FULLY DILUTED BASIS (PROVIDED THAT FOR THE PURPOSES
OF THE FOREGOING CALCULATION, OPTIONS TO PURCHASE SHARES THAT ARE OUTSTANDING
IMMEDIATELY PRIOR TO THE CONSUMMATION OF THE OFFER AND ARE NOT EXERCISABLE AT
SUCH TIME WILL NOT BE TAKEN INTO ACCOUNT). THE OFFER IS ALSO SUBJECT TO CERTAIN
OTHER CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE INTRODUCTION AND
SECTIONS 1 AND 14 HEREOF.
---------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY TERM SHEET.......................................... 2
INTRODUCTION................................................ 5
THE OFFER................................................... 7
1. Terms of the Offer; Expiration Date..................... 7
2. Acceptance for Payment and Payment...................... 10
3. Procedures for Accepting the Offer and Tendering
Shares.................................................. 11
4. Withdrawal Rights....................................... 13
5. Certain Federal Income Tax Consequences................. 14
6. Price Range of the Shares............................... 15
7. Effect of the Offer on the Market for the Shares; Stock
Exchange Listing; Exchange Act Registration; Margin
Regulations............................................. 15
8. Certain Information Concerning the Company.............. 16
9. Certain Information Concerning Purchaser and Parent..... 18
10. Background of the Offer; Contacts with the Company...... 20
11. Purpose of the Offer; Plans for the Company............. 21
12. Source and Amount of Funds.............................. 32
13. Dividends and Distributions............................. 32
14. Certain Conditions of the Offer......................... 33
15. Certain Legal Matters; Required Regulatory Approvals.... 34
16. Certain Fees and Expenses............................... 36
17. Miscellaneous........................................... 36
Schedule I. Directors and Executive Officers of Parent and
Purchaser................................................. 38
</TABLE>
i
<PAGE> 3
IMPORTANT
Any stockholder desiring to tender all or any portion of his Shares (as
defined herein) should either (a) complete and sign the Letter of Transmittal
(or a facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver it together with the certificate(s) representing
tendered Shares, and any other required documents, to the Depositary or tender
such Shares pursuant to the procedures for book-entry transfer set forth in
Section 3 or (b) request his broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for him. A stockholder whose Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if he desires to tender such Shares.
A stockholder who desires to tender his Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such Shares
by following the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent or from
brokers, dealers, commercial banks and trust companies.
THE DEALER MANAGER FOR THE OFFER IS:
LAZARD FRERES & CO. LLC
February 25, 2000
1
<PAGE> 4
SUMMARY TERM SHEET
This summary term sheet is a brief summary of the material provisions of
SBC Silver's offer, and is meant to help you understand the offer. This summary
term sheet is not meant to be a substitute for the information contained in the
remainder of this Offer to Purchase, and the information contained in this
summary is qualified in its entirety by the fuller descriptions and explanations
contained in the later pages of this Offer to Purchase. You are urged to
carefully read the entire Offer to Purchase and related Letter of Transmittal
prior to making any decision regarding your shares.
Q. WHO IS OFFERING TO PURCHASE MY SHARES OF COMMON STOCK OF STERLING COMMERCE?
A. SBC Silver, Inc., a Delaware corporation formed solely to make the offer,
is offering to purchase your Sterling Commerce shares. We are a
wholly-owned subsidiary of SBC Communications Inc. SBC Communications, a
Delaware corporation whose securities are traded on the New York Stock
Exchange, is a holding company with subsidiaries and affiliates that
provide local exchange services, wireless communications, long distance
services, Internet services, cable television services, security
monitoring, telecommunications equipment, messaging, paging, and directory
advertising and publishing. See "Introduction" and Section 9.
Q. WHAT IS SBC SILVER SEEKING TO PURCHASE, AT WHAT PRICE, AND DO I HAVE TO PAY
ANY BROKERAGE OR SIMILAR FEES TO TENDER?
A. SBC Silver is offering to purchase all of the outstanding shares of common
stock of Sterling Commerce, at a price of $44.25 per share, net to the
seller in cash, without interest. If you are the record owner of your
shares, you will not have to pay any brokerage or similar fees. However, if
you own your shares through a broker or other nominee, your broker or
nominee may charge you a fee to tender. You should consult your broker or
nominee to determine whether any charges will apply. See "Introduction" and
Section 9.
Q. WHY IS SBC SILVER MAKING THIS OFFER?
A. SBC Silver is making this offer to enable SBC Silver to acquire control of
Sterling Commerce. See "Introduction" and Section 11.
Q. HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
A. You have until 12:00 midnight, New York City time, on March 23, 2000. Under
certain circumstances, we may extend the offer. If the offer is extended,
we will issue a press release announcing the extension on the first
business morning following the date the offer was scheduled to expire. See
Section 1.
Q. WHAT ARE THE MOST IMPORTANT CONDITIONS TO THE OFFER?
A. The most important conditions to the offer are the following:
- that stockholders validly tender and do not withdraw before the
expiration of the offer at least a majority of the shares of Sterling
Commerce on a fully diluted basis. For the purposes of determining the
number of outstanding shares, options to purchase shares that are
outstanding immediately before the consummation of the offer and are not
exercisable at such time will not be taken into account.
- that there is no material adverse change to Sterling Commerce prior to
the expiration of the offer.
- the expiration or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and certain foreign
competition statutes.
A fuller discussion of the conditions to consummation of the offer may be
found in Section 14.
Q. DOES SBC SILVER HAVE THE FINANCIAL RESOURCES TO MAKE THE PAYMENT?
A. SBC Silver's parent corporation, SBC Communications, will provide SBC
Silver with sufficient funds to purchase all shares tendered in the offer.
The offer is not conditioned on any financing arrangements. See Section 12.
2
<PAGE> 5
Q. IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
A. SBC Silver does not think its financial condition is relevant to your
decision whether to tender shares and accept the offer because the offer is
being made for all outstanding shares solely for cash, the offer is not
subject to any financing condition and, upon consummation of the offer, SBC
Silver will acquire all shares that are not tendered for the same price in
the merger. See "Introduction" and Sections 1, 11 and 12.
Q. HOW DO I ACCEPT THE OFFER AND TENDER MY SHARES?
A. To tender your shares, you must completely fill out the enclosed Letter of
Transmittal and deliver it, along with your share certificates, to the
depositary prior to the expiration of the offer. If your shares are held in
street name (i.e., through a broker, dealer or other nominee), they can be
tendered by your nominee through The Depository Trust Company. If you
cannot deliver all necessary documents to The Depository Trust Company in
time, you might be able to complete and deliver to the depositary, in lieu
of the missing documents, the enclosed Notice of Guaranteed Delivery,
provided you are able to fully comply with its terms. See Section 3.
Q. IF I ACCEPT THE OFFER, WHEN WILL I GET PAID?
A. Provided the conditions to the offer are satisfied and SBC Silver
consummates the offer and accepts your shares for payment, you will receive
a check equal to the number of shares you tendered multiplied by $44.25 as
promptly as practicable following the expiration of the offer. SBC Silver
expects that checks will be mailed out promptly following expiration of the
offer. See Section 2.
Q. CAN I WITHDRAW MY PREVIOUSLY TENDERED SHARES?
A. You may withdraw a portion or all of your tendered shares by delivering
written, telegraphic or facsimile notice to the depositary prior to the
expiration of the offer. Further, if SBC Silver has not agreed to accept
your shares for payment within 60 days of the commencement of the offer,
you can withdraw them at any time after that 60-day period until SBC Silver
does accept your shares for payment. Once shares are accepted for payment,
they cannot be withdrawn. See Section 4.
Q. WHAT DOES THE BOARD OF DIRECTORS OF STERLING COMMERCE THINK OF THIS OFFER?
A. The Board of Directors of Sterling Commerce has unanimously approved the
merger agreement, and the transactions contemplated by the merger
agreement, including the offer and the merger, and has unanimously
determined that the offer and the merger are advisable and fair to and in
the best interests of, Sterling Commerce's stockholders.
The Board further recommends that stockholders of Sterling Commerce accept
the offer and tender their shares. See "Introduction."
Q. HAVE ANY STOCKHOLDERS ALREADY DECIDED TO TENDER THEIR SHARES?
A. Yes. Sterling L. Williams, Chairman of the Board and co-founder with Sam
Wyly of Sterling Commerce's former parent company, Sterling Software, Inc.;
Sam Wyly, director of and co-founder with Mr. Williams of Sterling
Commerce's former parent company; Charles J. Wyly, Jr., director of
Sterling Commerce and brother of Sam Wyly; and Warner C. Blow, Chief
Executive Officer and director of Sterling Commerce, have each agreed to
tender all of their outstanding shares of Sterling Commerce stock in the
offer. Their shares represent approximately 1.3 million shares of common
stock of Sterling Commerce as of January 31, 2000.
Q. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTION?
A. The receipt of cash by you in exchange for your Shares pursuant to the
offer, the merger or upon exercise of appraisal rights is taxable for
federal income tax purposes and may be taxable under applicable state,
local or foreign tax laws. In general, you will recognize capital gain or
loss equal to the difference between your adjusted tax basis in the shares
you tender and the amount of cash you receive for those shares. You should
consult your tax advisor about the particular effect tendering will have on
your shares. See Section 5.
3
<PAGE> 6
Q. WHAT WILL HAPPEN TO STERLING COMMERCE?
A. If the offer is consummated, under a merger agreement among SBC Silver,
Sterling Commerce and SBC Communications, SBC Silver will be merged with
and into Sterling Commerce, with Sterling Commerce surviving as a
subsidiary of SBC Communications.
Further, following the consummation of the offer, under the merger
agreement, Sterling Commerce is required to take certain actions so that
representatives of SBC Communications will constitute at least a majority
of the members of the Board of Directors of Sterling Commerce. See Section
11.
Q. IF I DO NOT TENDER BUT THE TENDER OFFER IS SUCCESSFUL, WHAT WILL HAPPEN TO
MY SHARES?
A. Even if you do not tender your shares, if the offer is consummated, SBC
Communications acquires control of Sterling Commerce and SBC Silver merges
with Sterling Commerce, all remaining stockholders of Sterling Commerce at
the time of the merger, other than those that properly assert appraisal
rights, will receive $44.25 per share in cash for each share of Sterling
Commerce common stock, without interest.
Even if SBC Silver does not merge with Sterling Commerce, the number of
stockholders of Sterling Commerce may be so small that they will no longer
be traded on the New York Stock Exchange or any other national exchange.
Also, Sterling Commerce may cease to comply with SEC rules governing
publicly-held companies. See Section 11.
Q. ARE DISSENTERS RIGHTS AVAILABLE IN EITHER THE OFFER OR THE MERGER?
A. Dissenters rights are not available in the offer. However, if you choose
not to tender, and the offer is consummated, dissenters rights will be
available in the merger of SBC Silver and Sterling Commerce. If you choose
to exercise your dissenters rights, and you comply with the applicable
legal requirements, you will be entitled to payment for your shares based
on a fair and independent appraisal of the market value of your shares.
This market value may be more or less than $44.25 per share.
Q. WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
A. On February 18, 2000, the last trading day before the public announcement
of the execution of the merger agreement, the shares of Sterling Commerce
closed on the New York Stock Exchange at $31.26 per share. On February 24,
2000, the last trading day before the commencement of the offer, the shares
of Sterling Commerce closed on the New York Stock Exchange at $43.56.
Please obtain a recent quotation for your shares prior to deciding whether
or not to tender. See Section 6.
Q. WHO CAN I CALL WITH QUESTIONS?
A. You can call Georgeson Shareholder Communications Inc. at 1-800-223-2064
with any questions you may have.
4
<PAGE> 7
To: All Holders of Shares of Common Stock (Including the Related Preferred Stock
Purchase Rights) of Sterling Commerce, Inc.:
INTRODUCTION
SBC Silver, Inc., a Delaware corporation ("Purchaser") and a wholly-owned
subsidiary of SBC Communications Inc., a Delaware corporation ("SBC
Communications" or "Parent"), hereby offers to purchase all outstanding shares
of common stock, par value $0.01 per share (the "Common Stock"), of Sterling
Commerce, Inc., a Delaware corporation ("Sterling Commerce" or the "Company"),
and the related rights to purchase shares of the Series A Junior Participating
Preferred Stock of the Company (the "Rights" and, together with the Common
Stock, the "Shares") issued pursuant to the Rights Agreement, dated as of
December 18, 1996, by and between the Company and The First National Bank of
Boston, as Rights Agent (as amended, the "Rights Agreement"), at a price of
$44.25 per Share, net to the seller in cash, without interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 18, 2000 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. Pursuant to the Merger Agreement and in accordance with the
Delaware General Corporation Law, (the "DGCL"), as soon as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions, including the purchase of Shares pursuant to the Offer and the
approval and adoption of the Merger Agreement by the stockholders of the Company
(if required by applicable law), Purchaser will be merged with and into the
Company (the "Merger"), and the Company will be the surviving corporation in the
Merger. At the effective time of the Merger (the "Effective Time"), each Share
then outstanding, other than Shares held by (i) the Company or any of its
subsidiaries, (ii) Parent, Purchaser or any of Parent's other subsidiaries and
(iii) stockholders who have properly exercised their dissenters' rights under
the DGCL, will be cancelled and converted automatically into the right to
receive the Offer Price, or any higher price per Share paid in the Offer,
without interest. The Merger Agreement is more fully described in Section 11.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, AND HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE ADVISABLE AND FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT THERETO.
GOLDMAN SACHS & CO., THE COMPANY'S FINANCIAL ADVISOR ("GOLDMAN SACHS"), HAS
DELIVERED TO THE COMPANY ITS WRITTEN OPINION, DATED FEBRUARY 18, 2000, THAT THE
OFFER PRICE AND THE MERGER CONSIDERATION (AS DEFINED IN THE MERGER AGREEMENT)
ARE FAIR TO STOCKHOLDERS OF THE COMPANY FROM A FINANCIAL POINT OF VIEW. A COPY
OF THE OPINION OF GOLDMAN SACHS IS CONTAINED IN THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9")
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IN
CONNECTION WITH THE OFFER, A COPY OF WHICH IS BEING FURNISHED TO STOCKHOLDERS
CONCURRENTLY HEREWITH.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
SECTION 1 BELOW) THAT NUMBER OF SHARES WHICH WOULD REPRESENT AT LEAST A MAJORITY
OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS (PROVIDED THAT FOR THE
PURPOSES OF THE FOREGOING CALCULATION, OPTIONS TO PURCHASE SHARES THAT ARE
OUTSTANDING IMMEDIATELY PRIOR TO THE CONSUMMATION OF THE OFFER AND ARE NOT
EXERCISABLE AT SUCH TIME WILL NOT BE TAKEN INTO ACCOUNT) (THE "MINIMUM
CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTIONS
1 AND 14.
The Company has informed Purchaser that, at the close of business on
January 31, 2000, (i) 80,040,334 shares were issued and outstanding (ii)
20,903,047 shares were reserved for issuance upon the exercise of outstanding
options to purchase Shares (each, a "Company Stock Option") pursuant to the
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Company's Amended and Restated 1996 Stock Option Plan, the Company's 1999 Stock
Option Plan, the XcelleNet, Inc. 1987 Stock Option Plan as amended, the
XcelleNet, Inc. 1996 Long Term Incentive Plan and the XcelleNet, Inc. Stock
Option Plan for Outside Directors (collectively, the "Company Stock Option
Plans"), of which 17,714,490 were subject to outstanding Company Stock Options
and (iii) 4,000,000 were reserved for issuance pursuant to the Company's
Employee Stock Purchase Plan, of which 280,661 have been purchased and issued as
of January 31, 2000. Accordingly, based on this information, there are
97,754,824 Shares outstanding, assuming (i) that no Shares were issued (other
than those reserved for issuance on January 31, 2000 for vested Company Stock
Options then outstanding) or acquired by the Company after January 31, 2000,
(ii) the exercise of all vested options outstanding as of January 31, 2000, and
(iii) there are no other obligations on the part of the Company to issue Shares.
Based on the foregoing, the Purchaser believes the Minimum Condition will be
satisfied if 48,877,413 Shares are validly tendered pursuant to the Offer and
not withdrawn.
Certain other conditions to the consummation of the Offer are described in
Section 14. Purchaser expressly reserves the right to waive any one or more of
the conditions to the Offer, other than the Minimum Condition. See Sections 14
and 15.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. Stockholders who hold their Shares through a bank or
broker should check with such institution as to whether they charge any service
fees. Purchaser will pay all charges and expenses of BankBoston, N.A., as
Depositary (the "Depositary"), Lazard Freres & Co. LLC ("Lazard"), as Dealer
Manager (the "Dealer Manager") and Georgeson Shareholder Communications, Inc.,
as Information Agent (the "Information Agent"), incurred in connection with the
Offer. See Section 16.
Sterling L. Williams, Chairman of the Board and co-founder with Sam Wyly of
the Company's former parent company, Sterling Software, Inc.; Sam Wyly, Director
of the Company and co-founder with Mr. Williams of the Company's former parent
company; Charles J. Wyly, Jr., director of the Company and brother of Sam Wyly;
and Warner C. Blow, Chief Executive Officer and director of the Company, have
all executed a Stockholder's Agreement, pursuant to which each has agreed to
tender all Shares he owns, and in any event to vote in favor of the Merger
Agreement and the Merger and against certain competing proposals to purchase the
Company with respect to any Shares they may own as of the record date of a
stockholder's meeting at which such matters will be considered. As of the date
hereof, these persons own approximately 1.3 million outstanding Shares. See
Section 11.
All of the executive officers and directors of the Company who own Shares
have informed Parent that they intend to tender their Shares pursuant to the
Offer.
The Merger Agreement provides that, promptly upon the purchase and payment
by Purchaser or Parent of any Shares pursuant to the Offer, Parent will be
entitled to designate such number of directors, rounded up to the nearest whole
number, on the Company Board as is equal to the product of the total number of
directors on the Company Board (giving effect to the directors to be elected as
described in this sentence) multiplied by the percentage that the number of
Shares so accepted for payment bears to the total number of Shares then
outstanding. The Company has agreed to increase the size of the Company Board or
secure the resignations of incumbent directors or both in order to enable
Parent's designees to be so elected, provided that at least two current
directors will remain on the Company Board until the Merger is consummated. See
Section 11.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of stockholders of the Company of
the Merger Agreement and the Merger, if required by applicable law and the
Company's Certificate of Incorporation. See Section 11. Under the DGCL and
pursuant to the Company's Certificate of Incorporation, the affirmative vote of
the holders of a majority of outstanding Shares, voting together as a single
class, is the only vote of any class or series of the Company's capital stock
that would be necessary to approve the Merger Agreement and the Merger at a
meeting of the Company's stockholders. If the Minimum Condition is satisfied and
Purchaser purchases at least a majority of the Shares on a fully-diluted basis
entitled to vote on the approval of the Merger and the Merger Agreement,
Purchaser will be able to effect the Merger without the affirmative vote of any
other stockholder. Pursuant to
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the Merger Agreement, Parent has agreed to vote, or cause to be voted, all of
the Shares then owned by it, Purchaser or any of its other subsidiaries or
affiliates controlled by Parent in favor of the approval of the Merger and the
approval and adoption of the Merger Agreement. The Merger Agreement is more
fully described in Section 11.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary, without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a "Short-Form Merger"). If Purchaser
acquires an aggregate of at least 90% of the outstanding Shares pursuant to the
Offer or otherwise, then, at the election of Parent, a Short-Form Merger of
Purchaser with and into the Company could be effected without any further
approval of the Company Board or the stockholders of the Company. Even if
Purchaser does not own 90% of the outstanding Shares following consummation of
the Offer, Parent could seek to purchase additional Shares in the open market or
otherwise in order to reach the applicable 90% threshold and employ such a
Short-Form Merger. The per share consideration paid for any Shares so acquired
in open market purchases may be greater or less than the Offer Price. Parent
presently intends to effect a Short-Form Merger, if permitted to do so under the
DGCL, pursuant to which Purchaser will be merged with and into the Company. See
Section 11.
The Company has distributed one Right for each outstanding Share pursuant
to the Rights Agreement. The Company has represented in the Merger Agreement
that the Rights Agreement has been amended to (i) render the Rights Agreement
inapplicable to the Offer and the Merger and the other transactions contemplated
by the Merger Agreement and (ii) ensure that (a) neither Parent nor any of its
subsidiaries is an Acquiring Person (as defined in the Rights Agreement)
pursuant to the Rights Agreement and (b) a Share Acquisition Date, Distribution
Date or Triggering Event (each as defined in the Rights Agreement) does not
occur by reason of the approval, execution or delivery of the Merger Agreement,
the consummation of the Offer and the Merger or the consummation of the other
transactions contemplated thereby.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), Purchaser will accept
for payment and thereby purchase all Shares validly tendered and not withdrawn
in accordance with the procedures set forth in Section 4 on or prior to the
Expiration Date (as hereinafter defined). The term "Expiration Date" means 12:00
midnight, New York City time, on March 23, 2000, unless and until Purchaser, in
accordance with the terms of the Offer, but subject to the limitations set forth
in the Merger Agreement, extends the period of time for which the Offer is open,
in which event the term "Expiration Date" means the time and date at which the
Offer, as so extended by Purchaser, will expire.
Without the consent of the Company, Purchaser may not (i) reduce the number
of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) modify or add
to the offer conditions set forth in the Merger Agreement and described in
Section 14 below or otherwise amend conditions precedent to Purchaser's
obligation to consummate the Offer or otherwise amend the Offer in any manner
adverse to the holders of the Shares, (iv) except as provided in the next three
sentences, extend the Offer, (v) change the form of consideration payable in the
Offer or (vi) waive the Minimum Condition. Notwithstanding the foregoing,
Purchaser may, without the consent of the Company, (i) extend the Offer from
time to time if at the initial Expiration Date or any extension thereof (I) any
of the following conditions shall not be satisfied or waived, until such time as
such conditions are satisfied or waived but not beyond 60 days after the date of
the commencement of the Offer: (a) that the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and certain foreign competition statutes shall have expired or
terminated, or (b) that the Company take certain agreed upon actions to ensure
that it operates in a manner consistent with those provisions of the
Communications Act of 1934, as amended (the "Communications Act"), that are
applicable to a "Bell Operating Company" or its "affiliates" or (II) the Company
or any
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person that (directly or indirectly) is more than 10% owned by, or controlled by
or is under common control with, the Company, does not operate in a manner
consistent with the provisions of the Communications Act as applicable to a
"Bell Operating Company" or its "affiliates" that does not have authority to
provide non-incidental interLATA telecommunications services originating in any
state in which the Company or any such person does business as of such date
(provided, however, that this extension right may not be exercised by Parent or
Purchaser if the failure of the Company or any such person to be so operating
results from any failure by Parent or Purchaser to perform any of its
obligations under the Merger Agreement), until 15 days after the
previously-scheduled Expiration Date; provided, however, that Purchaser may,
without the consent of the Company, extend the Offer for not more than an
additional 60 days beyond such initial 60-day extension period if (a) the Offer
shall not have been consummated as a direct result of the failure of the
conditions set forth in clauses (I)(a) or (b) above to have been satisfied, (b)
with respect to the condition set forth in such clause (I)(a), Purchaser is
endeavoring in good faith to satisfy such condition and (c) the reason that such
conditions have not been satisfied is not due to a breach by Purchaser of its
obligations under the Merger Agreement and (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Commission
or the staff thereof applicable to the Offer but not beyond 60 days after the
date of the commencement of the Offer. The terms "affiliate," "own" and "Bell
Operating Company," have the meanings set forth in Sections 3(1) and 3(4),
respectively, of the Communications Act. In addition, Purchaser will at the
request of the Company extend the Offer from time to time if on the Expiration
Date any of the conditions to Purchaser's obligation to purchase Shares shall
not be satisfied; provided, however, that Purchaser will not be required to
extend the Offer beyond 60 days after the date of the commencement of the Offer;
provided further, however, that Purchaser will, at the Company's request, extend
the Offer for not more than an additional 60 days beyond such initial 60-day
extension period if (a) the Offer shall not have been consummated as a direct
result of the failure of the condition set forth in clause (I)(a) above to have
been satisfied, (b) the Company is cooperating in good faith to enable Purchaser
to satisfy such condition and (c) the reason that such condition has not been
satisfied is not due to a breach by the Company of its obligations under the
Merger Agreement. Further, if, immediately prior to the Expiration Date, the
Shares tendered and not withdrawn pursuant to the Offer equal less than 90% of
the outstanding Shares, Purchaser may (x) extend the Offer for a period not to
exceed five business days, notwithstanding that all conditions to the Offer are
satisfied as of such Expiration Date, provided that upon such extension Parent
and Purchaser shall be deemed to have waived all of the offer conditions set
forth in the Merger Agreement and described in Section 14 below (other than the
Minimum Condition) and (y) amend the Offer to include a Subsequent Offering
Period (as defined below) not to exceed ten business days to the extent
permitted under Rule 14d-11 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), if available.
Subject to the applicable regulations of the Commission, Purchaser shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
described below, pay for, and may delay the acceptance for payment of or,
subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate or amend the Offer as to any Shares not then paid for,
if any of the conditions referred to in Section 14 have not been satisfied or
upon the occurrence of any of the events specified in Section 14 and which
events continue in effect immediately prior to the expiration of the Offer, in
each case, by giving oral or written notice of such delay, termination, waiver
or amendment to the Depositary and by making a public announcement thereof.
Purchaser acknowledges (i) that Rule 14e-1(c) under the Exchange Act requires
Purchaser to pay the consideration offered or return the Shares tendered
promptly after the termination or withdrawal of the Offer and (ii) that
Purchaser may not delay acceptance for payment of, or payment for any Shares
upon the occurrence of any of the conditions specified in Section 14 without
extending the period of time during which the Offer is open.
If Purchaser extends the Offer or if Purchaser is delayed in its acceptance
for payment of or payment (whether before or after its acceptance for payment of
Shares) for Shares or it is unable to pay for Shares pursuant to the Offer for
any reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of Purchaser, and such Shares
may not be withdrawn except to the extent tendering stockholders are entitled to
withdrawal rights as described herein under Section 4. However, the ability of
Purchaser to delay the payment for Shares that Purchaser has accepted for
payment is
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limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder
pay the consideration offered or return the securities deposited by or on behalf
of stockholders promptly after the termination or withdrawal of such bidder's
offer, unless such bidder elects to offer a subsequent offering period (a
"Subsequent Offering Period") under Rule 14d-11 under the Exchange Act and pays
for Shares tendered during the Offer and the Subsequent Offering Period in
accordance with Rule 14d-11 and the terms of the Merger Agreement.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, and such
announcement in the case of an extension will be made no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Without limiting the manner in which Purchaser may choose to
make any public announcement, subject to applicable law (including Rules
14d-4(d) and 14e-1(e) under the Exchange Act, which require that material
changes be promptly disseminated to holders of Shares in a manner reasonably
designed to inform such holders of such change), Purchaser currently intends to
make announcements by issuing a press release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer, or if it
waives a material condition to the Offer, Purchaser will extend the Offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(d) and 14e-1 under the Exchange Act. The minimum period during which an
Offer must remain open following material changes in the terms of the Offer,
other than a change in price or a change in percentage of securities sought or a
change in any dealer's soliciting fee, will depend upon the facts and
circumstances, including the materiality, of the changes. With respect to a
change in price or, subject to certain limitations, a change in the percentage
of securities sought or a change in any dealer's soliciting fee, a minimum ten
business day period from the date of such change is generally required to allow
for adequate dissemination to stockholders. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or a Federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time.
Pursuant to Rule 14d-11 under the Exchange Act, Purchaser may, subject to
certain conditions, include a Subsequent Offering Period following the
expiration of the Offer on the Expiration Date. Rule 14d-11 provides that
Purchaser may include a Subsequent Offering Period so long as, among other
things, (1) the Offer remained open for a minimum of 20 business days and has
expired, (2) the Offer was for all outstanding Shares, (3) Purchaser accepts and
promptly pays for all Shares tendered during the Offer, (4) Purchaser announces
the results of the Offer, including the approximate number and percentage of
Shares deposited, no later than 9:00 a.m., New York City time, on the next
business day after the Expiration Date and immediately begins the Subsequent
Offering Period, (5) Purchaser immediately accepts and promptly pays for Shares
as they are tendered during the Subsequent Offering Period and (6) Purchaser
pays the Offer Price for all Shares tendered in the Subsequent Offering Period.
Purchaser will be able to include a Subsequent Offering Period if it satisfies
the conditions above. In a public release, the Commission expressed the view
that the inclusion of a Subsequent Offering Period would constitute a material
change to the terms of the Offer requiring Purchaser to disseminate new
information to stockholders in a manner reasonably calculated to inform them of
such change sufficiently in advance of the Expiration Date (generally five
business days). In the event Purchaser elects to include a Subsequent Offering
Period, it will notify stockholders of the Company consistent with the
requirements of the Commission.
A Subsequent Offering Period, if one is included, is not an extension of
the Offer. A Subsequent Offering Period would be an additional period of time,
following the expiration of the Offer, in which stockholders may tender Shares
not tendered during the Offer. Purchaser does not currently intend to include a
Subsequent Offering Period in the Offer, although it reserves the right to do so
in its sole discretion.
Pursuant to Rule 14d-7 under the Exchange Act, no withdrawal rights will
apply to Shares tendered in a Subsequent Offering Period and no withdrawal
rights apply during the Subsequent Offering Period with respect to Shares
tendered in the Offer and accepted for payment. The same consideration, the
Offer Price, will be paid to stockholders tendering Shares in the Offer or in a
Subsequent Offering Period, if one is included.
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The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, dealers,
banks and similar persons whose names, or the names of whose nominees, appear on
the stockholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares, or who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of the Offer as so extended or amended), Purchaser will
purchase, by accepting for payment, and will pay for all Shares validly tendered
and not withdrawn (as permitted by Section 4) prior to the Expiration Date
promptly after the later to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions to the Offer set forth in Section 14,
including without limitation the expiration or termination of the waiting period
applicable to the acquisition of Shares pursuant to the Offer under the HSR Act
and certain foreign competition statutes.
Purchaser and the Company have filed on February 25, 2000 with the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "Antitrust Division") Premerger Notification and Report Forms under
the HSR Act with respect to the Offer. Accordingly, the waiting period under the
HSR Act applicable to the Offer will expire at 11:59 p.m., New York City time,
on March 11, 2000, unless prior to the expiration or termination of the waiting
period the FTC or the Antitrust Division extends the waiting period by
requesting additional information from Parent or the Company. If such a request
is made, the waiting period applicable to the Offer will expire on the tenth
calendar day after the date of substantial compliance by Parent or the Company,
as applicable, with such request. Thereafter, the waiting period may only be
extended by court order. The waiting period under the HSR Act may be terminated
by the FTC and the Antitrust Division prior to its expiration. For information
with respect to approvals required to be obtained prior to the consummation of
the Offer, including under the HSR Act and other approvals, see Section 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates
representing such Shares or timely confirmation (a "Book-Entry Confirmation") of
the book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility"), pursuant to the
procedures set forth in Section 3, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer and (iii) any other documents required by the Letter
of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such agreement
against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary of Purchaser's
acceptance of such Shares for payment pursuant to the Offer. In all cases, upon
the terms and subject to the conditions of the Offer, payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from Purchaser and transmitting payment to
validly tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE
PURCHASE PRICE FOR SHARES BE PAID BY PURCHASER BY REASON OF ANY DELAY IN MAKING
SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates representing Shares are submitted representing more
Shares than are tendered, certificates representing unpurchased or untendered
Shares will be returned, without expense to the tendering stockholder (or, in
the
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case of Shares delivered by book-entry transfer into the Depositary's account at
the Book-Entry Transfer Facility pursuant to the procedures set forth in Section
3, such Shares will be credited to an account maintained within such Book-Entry
Transfer Facility), as promptly as practicable following the expiration,
termination or withdrawal of the Offer.
IF, PRIOR TO THE EXPIRATION DATE, PURCHASER INCREASES THE CONSIDERATION
OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER, SUCH INCREASED CONSIDERATION
WILL BE PAID TO ALL HOLDERS OF SHARES THAT ARE PURCHASED PURSUANT TO THE OFFER,
WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH INCREASE IN
CONSIDERATION.
Purchaser reserves the right to transfer or assign to one or more of
Purchaser's subsidiaries or affiliates, in whole or from time to time in part,
the right to purchase all or any portion of the Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer or prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
VALID TENDER OF SHARES
Except as set forth below, in order for Shares to be validly tendered
pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in connection with a book-entry delivery of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase on or prior to the Expiration Date and either (i)
certificates representing tendered Shares must be received by the Depositary, or
such Shares must be tendered pursuant to the procedure for book-entry transfer
set forth below and a Book-Entry Confirmation must be received by the
Depositary, in each case on or prior to the Expiration Date, or (ii) the
guaranteed delivery procedures set forth below must be complied with.
THE METHOD OF DELIVERY OF CERTIFICATES REPRESENTING TENDERED SHARES, THE
LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE
RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER
The Depositary will make a request to establish accounts with respect to
the Shares at the Book-Entry Transfer Facility for purposes of the Offer within
two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message in connection with a book-entry transfer, and any other
required documents must, in any case, be transmitted to and received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
SIGNATURE GUARANTEES
No signature guarantee is required on the Letter of Transmittal (i) if the
Letter of Transmittal is signed by the registered holder(s) (which term, for
purposes of this Section, includes any participant in the Book
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Entry Transfer Facility's systems whose name appears on a security position
listing as the owner of the Shares) of Shares tendered therewith and such
registered holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all other
cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If
the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instruction 5 to the Letter of Transmittal.
GUARANTEED DELIVERY
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's certificates for Shares are not immediately available or the
procedures for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Depositary prior to the
Expiration Date, such stockholder's tender may be effected if all the following
conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect
to) such Shares, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents, are received by the Depositary within
three (3) trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the New York Stock
Exchange (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mailed to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of certificates for, or of Book-Entry Confirmation
with respect to, such Shares, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message), and
any other documents required by the Letter of Transmittal. Accordingly, payment
might not be made to all tendering stockholders at the same time, and will
depend upon when certificates representing, or Book-Entry Confirmations of, such
Shares are received into the Depositary's account at a Book-Entry Transfer
Facility.
BACKUP FEDERAL TAX WITHHOLDING
Under the federal income tax laws, payments in connection with the Offer
and the Merger may be subject to "backup withholding" at a rate of 31% unless a
stockholder that holds Shares (i) provides a correct taxpayer identification
number (which, for an individual stockholder, is the stockholder's social
security number) and any other required information, or (ii) is a corporation or
comes within certain other exempt categories and, when required, demonstrates
this fact, and otherwise complies with applicable requirements of
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<PAGE> 15
the backup withholding rules. A stockholder that does not provide a correct
taxpayer identification number may be subject to penalties imposed by the
Internal Revenue Service. To prevent backup federal income tax withholding on
payments with respect to the purchase price of Shares purchased pursuant to the
Offer, each stockholder should provide the Depositary with his correct taxpayer
identification number and certify that he is not subject to backup federal
income tax withholding by completing the Substitute Form W-9 included in the
Letter of Transmittal. See Instruction 10 of the Letter of Transmittal.
APPOINTMENT AS PROXY
By executing the Letter of Transmittal, a tendering stockholder irrevocably
appoints designees of Purchaser, and each of them, as such stockholder's
attorneys-in-fact and proxies, with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment and paid for by Purchaser and with respect to any and all other Shares
and other securities or rights issued or issuable in respect of such Shares on
or after the date of this Offer to Purchase. All such powers of attorney and
proxies will be considered coupled with an interest in the tendered Shares. Such
appointment will be effective when, and only to the extent that, Purchaser pays
for such Shares by depositing the purchase price therefor with the Depositary.
Upon such payment, all prior powers of attorney and proxies given by such
stockholder with respect to such Shares, and such other securities or rights
granted prior to such payment will be revoked, without further action, and no
subsequent powers of attorney and proxies may be given by such stockholder (and,
if given, will not be deemed effective). The designees of Purchaser will, with
respect to the Shares for which such appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
stockholders, or any adjournment or postponement thereof. Purchaser requires
that, in order for Shares to be deemed validly tendered, immediately upon the
payment for such Shares, Purchaser or its designee must be able to exercise full
voting rights with respect to such Shares and other securities, including voting
at any meeting of stockholders.
DETERMINATION OF VALIDITY
All questions as to the form of documents and validity, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by Purchaser, in its sole discretion, whose determination
will be final and binding on all parties. Purchaser reserves the absolute right
to reject any or all tenders determined by it not to be in proper form or the
acceptance of or payment for which may, in the opinion of Purchaser's counsel,
be unlawful. Purchaser also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in any tender of Shares of
any particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. No tender of Shares will be deemed to have been validly made until
all defects and irregularities with respect to such tender have been cured or
waived. None of Purchaser, Parent or any of their affiliates or assigns, if any,
the Depositary, the Dealer Manager, the Information Agent or any other person
will be under any duty to give any notification of any defects or irregularities
in tenders or incur any liability for failure to give any such notification.
Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time on or prior to the Expiration
Date and, unless theretofore accepted for payment as provided herein, may also
be withdrawn at any time after April 25, 2000 (or such later date as may apply
in case the Offer is extended). A withdrawal of a share of Common Stock will
also constitute a withdrawal of the related Right. Rights may not be withdrawn
unless the related shares of Common Stock are also withdrawn.
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<PAGE> 16
If, for any reason whatsoever, acceptance for payment of any Shares
tendered pursuant to the Offer is delayed, or Purchaser is unable to accept for
payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares and such Shares may
not be withdrawn except to the extent that the tendering stockholder is entitled
to and duly exercises withdrawal rights as described in this Section 4. Any such
delay will be by an extension of the Offer to the extent required by law.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase. Any such notice of withdrawal
must specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of the
Shares to be withdrawn, if different from the name of the person who tendered
the Shares. If certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant to
the procedures for book-entry transfer as set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will be deemed not validly tendered for purposes of the Offer, but may be
retendered at any subsequent time prior to the Expiration Date by following any
of the procedures described in Section 3.
No withdrawal rights will apply to Shares tendered during any Subsequent
Offering Period and no withdrawal rights apply during any such Subsequent
Offering Period with respect to shares tendered in the Offer and accepted for
payment.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent or any
of their affiliates or assigns, if any, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash in exchange for Shares pursuant to the Offer, the
Merger or upon the exercise of appraisal rights will be taxable for federal
income tax purposes and may also be taxable under applicable state, local or
foreign tax laws. A stockholder who receives cash will generally recognize gain
or loss for federal income tax purposes in an amount equal to the difference, if
any, between the amount of cash received by the stockholder and the
stockholder's adjusted tax basis in the Shares exchanged therefor. Gain or loss
must be determined separately for each block of Shares exchanged (for example,
Shares acquired at the same cost in a single transaction). Such gain or loss
will be capital gain or loss (provided that the Shares are held as capital
assets) and any such capital gain or loss will be long term if, as of the date
of the exchange, the Shares were held for more than one year.
The foregoing discussion may not be applicable to certain types of
stockholders, including stockholders who acquired Shares pursuant to the
exercise of options or otherwise as compensation, individuals who are not
citizens or residents of the United States and foreign corporations, Shares held
as part of a straddle, hedge, conversion transaction, synthetic security or
other integrated investment, or entities that are otherwise subject to special
tax treatment under the Internal Revenue Code of 1986, as amended (such as
dealers in securities or foreign currency, insurance companies, regulated
investment companies, tax-exempt entities, financial institutions, and investors
in pass-through entities).
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. EACH STOCKHOLDER IS URGED TO CONSULT HIS OR HER TAX ADVISOR
WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER
14
<PAGE> 17
OF THE OFFER AND THE MERGER, INCLUDING FEDERAL, STATE, LOCAL, FOREIGN AND OTHER
TAX CONSEQUENCES.
6. PRICE RANGE OF THE SHARES. According to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1999 (the "1999 Annual
Report"), the Shares are listed and traded principally on the NYSE under the
symbol "SE." The following table sets forth, for the periods indicated, the
reported high and low sales prices for the Shares on the NYSE Composite Tape,
all as reported in published financial sources.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL YEAR ENDING SEPTEMBER 30, 2000
Second Quarter (through February 18)...................... $36.75 $25.00
First Quarter............................................. 36.50 17.94
FISCAL YEAR ENDING SEPTEMBER 30, 1999
Fourth Quarter............................................ $38.13 $18.50
Third Quarter............................................. 44.50 26.00
Second Quarter............................................ 46.44 24.13
First Quarter............................................. 46.00 20.13
FISCAL YEAR ENDING SEPTEMBER 30, 1998
Fourth Quarter............................................ $48.50 $30.00
Third Quarter............................................. 48.75 37.50
Second Quarter............................................ 50.25 33.50
</TABLE>
On February 18, 2000, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, the reported closing
price on the NYSE Composite Tape for the Shares was $31.56 per Share. On
February 24, 2000, the last full day of trading prior to the commencement of the
Offer, according to published sources, the reported closing price on the NYSE
Composite Tape for the Shares was $43.56 per Share. STOCKHOLDERS ARE URGED TO
OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company represented in the Merger Agreement that at the close of
business on January 31, 2000, there were 80,040,334 shares outstanding.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE
LISTING; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that trade publicly and, depending upon the number of Shares so
purchased, could adversely affect the liquidity and market value of the
remaining Shares held by the public.
STOCK EXCHANGE LISTING
According to the NYSE's published guidelines, the NYSE would consider
delisting the Shares if, among other things, the number of record holders of at
least 100 shares should fall below 400, the number of record holders of at least
100 shares should fall below 1,200 and the average monthly trading volume should
be less than 100,000 shares for the most recent 12 month period, the number of
publicly held Shares (exclusive of holdings of officers, directors, their
immediate families and other concentrated holdings of 10% or more ("NYSE
Excluded Holdings")) should fall below 600,000 or the aggregate market value of
publicly held Shares (exclusive of NYSE Excluded Holdings) should fall below
$5,000,000.
Depending upon the number of Shares acquired pursuant to the Offer, the
Shares may no longer meet the requirements for continued listing on the NYSE or
any other exchanges upon which the Shares are listed. If as a result of the
purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet
the requirements of the NYSE for continued listing and/or trading and such
trading of the Shares was discontinued, the market for the Shares could be
adversely affected.
15
<PAGE> 18
If the Shares were no longer listed or traded on the NYSE, it is possible
that the Shares would trade on another securities exchange or in the
over-the-counter market and that price quotations would be reported by such
exchange, through the Nasdaq or other sources. Such trading and the availability
of such quotations would, however, depend upon the number of stockholders and/or
the aggregate market value of the Shares remaining at such time, the interest in
maintaining a market in the Shares on the part of securities firms, the possible
termination of registration of the Shares under the Exchange Act as described
below and other factors.
EXCHANGE ACT REGISTRATION
The Shares are currently registered under the Exchange Act. The purchase of
the Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application by the Company to the Commission if the Shares are
not listed on a "national securities exchange" and there are fewer than 300
record holders of Shares. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be furnished
by the Company to its stockholders and the Commission and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b) and the requirements of furnishing a proxy statement
in connection with stockholders' meetings pursuant to Section 14(a), no longer
applicable to the Company. If the Shares are no longer registered under the
Exchange Act, the requirements of Rule 13e-3 under the Exchange Act with respect
to "going private" transactions would no longer be applicable to the Company.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended, may be
impaired or eliminated.
Purchaser currently intends to seek delisting of the Shares from the NYSE
and the termination of the registration of the Shares under the Exchange Act as
soon after the completion of the Offer as the requirements for such delisting
and termination are met. If the NYSE listing and the Exchange Act registration
of Shares are not terminated prior to the Merger, then it is anticipated that
the Shares will be delisted from the NYSE and the registration of the Shares
under the Exchange Act will be terminated following the consummation of the
Merger. See Section 11.
MARGIN REGULATIONS
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which have the effect, among other things, of allowing brokers to extend credit
on the collateral of such Shares for the purpose of buying, carrying or trading
in securities ("Purpose Loans"). Depending upon factors such as the number of
record holders of the Shares and the number and market value of publicly held
Shares, following the purchase of Shares pursuant to the Offer the Shares might
no longer constitute "margin securities" for purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as collateral
for Purpose Loans made by brokers. In addition, if registration of the Shares
under the Exchange Act were terminated, the Shares would no longer constitute
"margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY. According to the 1999 Annual
Report, the Company was incorporated in the State of Delaware in December 1995
as a wholly owned subsidiary of Sterling Software, Inc. ("Sterling Software").
On September 23, 1996, the Board of Directors of Sterling Software declared a
special dividend consisting of the distribution of all shares of common stock of
the Company held by Sterling Software on September 30, 1996, payable pro rata to
the holders of record of Sterling Software's common stock as of the close of
business on such date. As a result, effective September 30, 1996, the Company
ceased to be a subsidiary of Sterling Software.
The Company is a worldwide leader in providing E-Business integration
solutions for Global 5000 and other companies and their commerce communities.
The Company develops, markets and supports software products and provides
services and consulting that enable businesses to engage in E-Business
communications and transactions with their partners and other E-Community
constituents. The principal executive offices of
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<PAGE> 19
the Company are located at 300 Crescent Court, Suite 1200, Dallas, Texas 75201
and its telephone number is 214-981-1100.
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Such reports, proxy statements
and other information can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the Commission's regional offices located at
Seven World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Information regarding the public reference facilities may be obtained from the
Commission by telephoning 1-800-SEC-0330. The Company's filings are also
available to the public on the Commission's Internet site (http://www.sec.gov).
Copies of such materials may also be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Such material should also be available for inspection at the
offices of the New York Stock Exchange, 200 Broad Street, New York, New York
10005.
In connection with this transaction, the Company provided Parent with
certain financial information relating to the projected potential performance of
the Company over the next four years (the "Projections"). The Company does not
as a matter of course make public forecasts as to future operations.
PROJECTIONS OF THIS TYPE ARE BASED ON ESTIMATES AND ASSUMPTIONS THAT ARE
INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC, INDUSTRY AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY
OF WHICH ARE BEYOND THE COMPANY'S CONTROL. 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 PROJECTED. IN ADDITION,
THE PROJECTIONS WERE PREPARED BY THE COMPANY NOT WITH A VIEW TO PUBLIC
DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE
GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
REGARDING PROJECTIONS AND FORECASTS. THE INCLUSION OF THIS INFORMATION SHOULD
NOT BE REGARDED AS AN INDICATION THAT PARENT, PURCHASER, THE COMPANY OR ANY OF
THEIR RESPECTIVE ADVISORS OR ANYONE WHO RECEIVED THIS INFORMATION CONSIDERED IT
A RELIABLE PREDICTOR OF FUTURE OPERATING RESULTS AND THIS INFORMATION SHOULD NOT
BE RELIED UPON AS SUCH. THE PROJECTIONS ARE BASED UPON A VARIETY OF ASSUMPTIONS
RELATING TO THE BUSINESSES OF THE COMPANY WHICH, ALTHOUGH CONSIDERED REASONABLE
BY THE COMPANY, MAY NOT BE REALIZED, AND ARE SUBJECT TO SIGNIFICANT
UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE CONTROL OF THE
COMPANY. NONE OF THE PARENT, PURCHASER, THE COMPANY OR ANY OTHER PARTY ASSUMES
RESPONSIBILITY FOR THE ACCURACY OR VALIDITY OF THE FOLLOWING PROJECTIONS.
17
<PAGE> 20
<TABLE>
<CAPTION>
FOR THE YEARS ENDED SEPTEMBER 30, CAGR(%)
------------------------------------------------ 1999E-
2000E 2001E 2002E 2003E 2003E
-------- -------- ---------- ---------- -------
(DOLLARS IN MILLIONS EXCEPT FOR PER SHARE ITEMS)
<S> <C> <C> <C> <C> <C>
Sales........................................ 664.1 821.2 1,043.0 1,341.2 24.4
COGS......................................... 134.1 160.9 204.4 262.9 24.1
----- ----- ------- ------- ----
Gross Profit................................. 530.0 660.4 838.6 1,078.3 24.4
Product Dev./Enhan........................... 32.4 40.0 50.8 65.4 20.6
SG&A......................................... 280.4 347.9 440.8 565.0 25.5
----- ----- ------- ------- ----
EBIT(a)...................................... 217.3 272.4 347.0 447.9 23.8
Other Int/Exp(b)............................. 13.4 20.1 23.6 28.1 5.4
----- ----- ------- ------- ----
Income Before Tax............................ 230.7 292.5 370.6 476.0 21.7
Income Taxes................................. 83.0 103.8 129.7 166.6 21.1
----- ----- ------- ------- ----
Net Income................................... 147.7 188.7 240.9 309.4 22.0
Shares Outstanding........................... 81.9 84.0 86.0 88.0
EPS.......................................... 1.80 2.25 2.80 3.52 24.4
Sales Growth (%)............................. 18.5 23.7 27.0 28.6
Gross Margin (%)............................. 79.8 80.4 80.4 80.4
EBIT Margin (%).............................. 32.7 33.2 33.3 33.4
</TABLE>
- ---------------
(a) Reduced EBIT by projected EBIT from the Company's Managed Systems Division
("MSD"), but increased EBIT by current goodwill amortized with MSD.
(b) Adjusted for interest income anticipated from sale of MSD.
NONE OF THE COMPANY, PARENT, PURCHASER OR ANY OTHER PARTY INTENDS TO UPDATE
OR OTHERWISE REVISE THE FOREGOING PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING
AFTER THE DATE THE PROJECTIONS WERE PREPARED OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT. Parent ranks among
the largest providers of telecommunications services in the United States and
the world. Through its subsidiaries, Parent provides a comprehensive offering of
communications services and products in the United States and has investments in
23 other countries around the world. Parent offers its services and products to
businesses and consumers, as well as other providers of telecommunications
services.
The services and products that Parent offers vary by market, and include:
local exchange services, wireless communications, long distance services,
Internet services, cable television services, security monitoring,
telecommunications equipment, messaging, paging, and directory advertising and
publishing. Parent groups its operating subsidiaries as follows:
- wireline subsidiaries provide primarily land and wire based services,
- wireless subsidiaries provide primarily radio wave based services,
- information and entertainment subsidiaries provide services primarily
related to directory advertising and publishing, cable television, and
security monitoring services, and
- international subsidiaries hold investments in foreign entities outside
of the United States.
Parent's principal wireline subsidiaries provide telecommunications
services in California, Texas, Illinois, Michigan, Ohio, Missouri, Connecticut,
Indiana, Wisconsin, Oklahoma, Kansas, Arkansas, and Nevada (13-state area).
Certain wireline local exchange services offered in the 13-state area are
provided through regulated subsidiaries which operate within authorized regions
(in-region) subject to regulation by each state in which they operate and by the
Federal Communications Commission.
Parent is a holding company whose subsidiaries and affiliates operate
predominantly in the communications services industry. Parent's subsidiaries and
affiliates provide wireline and wireless telecommunications services and
equipment, directory advertising, publishing and cable television services.
Parent's principal
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<PAGE> 21
Wireline subsidiaries are Southwestern Bell Telephone Company, providing
telecommunications services over approximately 16 million access lines in Texas,
Missouri, Oklahoma, Kansas and Arkansas (five state area) and Pacific Bell,
providing telecommunications services over approximately 18 million access lines
in California. Parent also provides telecommunications services through The
Southern New England Telephone Company subsidiary over approximately 2 million
access lines in Connecticut, and over approximately 300,000 access lines in
Nevada through its Nevada Bell subsidiary. In addition, Parent recently
acquired, Ameritech Corporation, a holding company whose subsidiaries and
affiliates provide landline and wireless telecommunications and related services
in Illinois, Indiana, Michigan, Ohio and Wisconsin, wireless telecommunications
and related services in Missouri, Minnesota and Hawaii and security monitoring
services in most of the United States' largest metropolitan areas.
Parent was incorporated under the laws of the State of Delaware in 1983 and
has its principal executive offices at 175 E. Houston, San Antonio, Texas
78205-2233 and its telephone number is 210-821-4105.
Parent is subject to the informational filing requirements of the Exchange
Act and, in accordance therewith, is required to file periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Such reports, proxy statements and other
information may be obtained in the same manner as described in Section 8 above.
Purchaser was incorporated in February 2000 under the laws of the State of
Delaware for the purpose of acquiring the Company. Purchaser is a wholly owned
subsidiary of Parent. Purchaser has not, and is not expected to, engage in any
business other than in connection with its organization, the Offer and the
Merger. Its principal executive offices and telephone number are that of Parent.
Purchaser is not subject to the informational filing requirements of the
Exchange Act, and, accordingly, does not file reports or other information with
the Commission relating to its business, financial condition and other matters.
Because the consideration offered consists solely of cash, the Offer is not
subject to any financing condition, Parent is a public reporting company under
Section 13(a) or 15(d) of the Exchange Act and files reports electronically with
the Commission's Electronic Data Gathering, Analysis and Retrieval (EDGAR)
system and the offer is for all of the outstanding Shares, Purchaser believes
the financial condition of Parent, Purchaser and their affiliates is not
material to a decision by a holder of Shares whether to sell, tender or hold
Shares pursuant to the Offer. However, consolidated financial statements
(including notes thereto) of Parent are contained in Parent's Annual Report on
Form 10-K for the year ended December 31, 1998 and in Parent's Quarterly Reports
on Form 10-Q for the periods ended March 31, 1999, June 30, 1999 and September
30, 1999. Such reports and other documents may be examined and copies may be
obtained from the offices of the Commission in the manner described in Section 8
above.
The name, business address and telephone number, citizenship, present
principal occupation and employment history of each of the directors and
executive officers of Parent and Purchaser are set forth in Schedule I of this
Offer to Purchase.
Except as set forth elsewhere in this Offer to Purchase, (i) neither
Parent, Purchaser nor, to the best knowledge of Parent and Purchaser, any of the
persons listed in Schedule I hereto or any associate or majority-owned
subsidiary of Parent or any of the persons so listed, beneficially owns or has a
right to acquire any Shares or any other equity securities of the Company and
(ii) neither Parent, Purchaser nor, to the knowledge of either Parent or
Purchaser, any of the persons or entities referred to in clause (i) above or any
of their executive officers, directors or subsidiaries has effected any
transaction in the Shares or any other equity securities of the Company during
the past 60 days.
Except as set forth in this Offer to Purchase, none of Parent, Purchaser
nor, to the best knowledge of Parent and Purchaser, any of the persons listed on
Schedule I hereto, has had any business relationship or transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, there
have been no contracts, negotiations or transactions between Parent or any of
its subsidiaries or, to the best knowledge of Parent, any of the persons listed
in Schedule I to this Offer to
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Purchase, on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets. None of the persons listed in Schedule I have,
during the past five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors). None of the persons listed in
Schedule I have, during the past five years, been a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction of settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
On October 8, 1999, representatives of Goldman, Sachs & Co. ("Goldman,
Sachs"), the financial advisor to the Company, contacted representatives of
Parent regarding a potential business combination involving the Company. On
October 8, 1999, a representative of Goldman, Sachs sent preliminary information
regarding the Company and a draft confidentiality agreement to Steve McGaw,
Managing Director -- Corporate Development of Parent.
On November 17, 1999, Paul Driscoll, Director -- Corporate Development of
Parent, contacted representatives of Goldman, Sachs to inform them of Parent's
interest in participating in the process to review the Company. Between November
17 and November 19, 1999, representatives of Parent and Goldman, Sachs
negotiated and executed the confidentiality agreement.
On November 19, 1999, a representative of Goldman, Sachs sent to Parent a
description of the Company's business, certain financial information relating to
the Company and instructions for submitting a preliminary indication of
interest. On November 23, 1999, SBC executed the confidentiality agreement. On
November 23, 1999, representatives of Parent contacted representatives of Lazard
requesting that Lazard serve as investment banker to Parent in connection with
the potential acquisition of the Company.
In accordance with the instructions provided by Goldman, Sachs, on December
1, 1999, Parent submitted a non-binding proposal for the acquisition of all of
the Company's shares and share equivalents (the "Non-Binding Proposal"). In the
Non-Binding Proposal, Parent indicated that, based on a preliminary review of
information provided by the Company, it was interested in acquiring the Company
in a transaction where the Company's shareholders (and holders of share
equivalents) would receive cash in the range of $3.0 to $3.5 billion. Parent
further indicated that a final price would be determined after a comprehensive
financial and legal due diligence review.
On December 9 and 10, 1999, representatives of Parent, including attorneys
from Weil, Gotshal & Manges LLP, Parent's outside counsel ("Weil, Gotshal") and
representatives of Lazard, reviewed certain of the Company's financial and legal
documents in New York City. On December 13, 1999, representatives of the Company
met with, and made a presentation to, representatives of Parent, as well as
representatives of Lazard.
By letter, dated January 5, 1999 (the "January 5 Letter"), Goldman, Sachs,
on behalf of the Company, invited Parent to submit a final proposal to acquire
the Company. In the January 5 Letter, Goldman, Sachs stated that the specific
deadline for submission of proposals would be communicated to SBC by the middle
of January. Also provided with the January 5 Letter was a draft merger agreement
(the "Merger Agreement") for use in the submission of proposals.
Between January 8-9, 2000, representatives of Parent and Lazard met with
representatives of the Company at the Company's offices in Columbus, Ohio to
discuss certain financial and operational matters relating to the Company. On
January 21, 2000, representatives of Goldman, Sachs informed Parent that the
deadline for submission of proposals would be February 11, 2000. Additional
meetings between representatives of Parent and the Company were held in Dallas,
Texas on January 21, 2000 and Columbus, Ohio from February 1 to 2, 2000.
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On February 11, 2000, Parent submitted a proposal to the Company to
purchase all outstanding shares and options of the Company at a price of $44.25
per share, in cash, representing an equity value of approximately $3.9 billion
and also submitted a mark-up of the Merger Agreement. The proposal was not
subject to any financing contingencies.
On February 13, 2000, Representatives of Goldman, Sachs notified
representatives of Parent that the Company desired to proceed with negotiations
with Parent.
Beginning on February 14, 2000, representatives of Parent, Weil, Gotshal,
the Company and the Company's outside counsel, Skadden, Arps, Slate, Meagher &
Flom LLP, met in person and telephonically to negotiate the final form of Merger
Agreement. As a condition to entering into the Merger Agreement, Parent
requested that certain officers and directors of the Company enter into a
stockholder's agreement, whereby each such person would agree to tender their
shares of Company Common Stock in the tender offer, and also agreed to vote such
shares in favor of the merger and against any competing transaction. In
addition, during the week of February 14, 2000, Parent discussed the future
terms of employment for certain key employees of the Company.
On February 18, 2000, the Company's board of directors held a special
meeting to consider the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger. All of the Company's directors were
present at the meeting. At such meeting, the board (i) unanimously determined
that each of the Merger Agreement, the Offer and the Merger are advisable and
fair to and in the best interests of the stockholders of the Company, (ii)
unanimously approved the Merger Agreement and the transactions contemplated
thereby, including the Offer, the acquisition of Shares pursuant to the Offer
and the Merger, and (iii) resolved to recommend that the stockholders of the
Company accept the Offer, approve the Merger and approve and adopt the Merger
Agreement.
On February 18, 2000, the board of directors of Parent held a special
meeting to consider the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger. At such meeting, Parent's board
approved the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger.
The Merger Agreement and Stockholder's Agreement were finalized and
executed on February 18, 2000.
On the morning of February 22, 2000, before the opening of trading on the
New York Stock Exchange, Parent and the Company issued a joint press release
announcing that they had executed the Merger Agreement.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY.
The purpose of the Offer is to enable Parent and Purchaser to acquire
control of, and the entire equity interest in, the Company. The Offer is being
made pursuant to the Merger Agreement and is intended to increase the likelihood
that the Merger will be effected. The purpose of the Merger is to acquire all of
the outstanding Shares not purchased pursuant to the Offer. Purchaser intends to
consummate the Merger as soon as possible following the consummation of the
Offer.
Stockholders of the Company who tender and sell their Shares in the Offer
will cease to have any equity interest in the Company and any right to
participate in its earnings and future growth. If the Merger is consummated,
non-tendering stockholders will no longer have an equity interest in the Company
and instead will have only the right to receive cash consideration pursuant to
the Merger Agreement or to exercise statutory appraisal rights under Section 262
of the DGCL. Similarly, after selling their Shares in the Offer or the
subsequent Merger, stockholders of the Company will not bear the risk of any
decrease in the value of the Company.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary pursuant to a Short-Form Merger, without any action or vote on the
part of the board of directors or the stockholders of such other corporation. In
the event that Purchaser acquires in the aggregate at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, then, at the election of
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Parent, a Short-Form Merger of Purchaser with and into the Company could be
effected without any further approval of the Company Board or the stockholders
of the Company. Even if Purchaser does not own 90% of the outstanding Shares
following consummation of the Offer, Parent could seek to purchase additional
Shares in the open market or otherwise in order to reach the applicable 90%
threshold and employ such a Short-Form Merger. The per share consideration paid
for any Shares so acquired in open market purchases may be greater or less than
the Offer Price. Parent presently intends to effect a Short-Form Merger, if
permitted to do so under the DGCL, pursuant to which Purchaser will be merged
with and into the Company.
Except as described above or elsewhere in this Offer to Purchase, Purchaser
and Parent have no present plans that would relate to or result in an
extraordinary corporate transaction involving the Company or any of their
respective subsidiaries (such as a merger, reorganization, liquidation,
relocation of any operations or sale or other transfer of a material amount of
assets), any sale or transfer of a material amount of assets of the Company or
any of its subsidiaries, any change in the Company Board or management, any
material change in the Company's capitalization or dividend policy or any other
material change in the Company's corporate structure or business.
MERGER AGREEMENT
The following is a summary of material provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement filed with the Commission as an exhibit to the Schedule
TO and is incorporated herein by reference. Capitalized terms not otherwise
defined below will have the meanings set forth in the Merger Agreement. The
Merger Agreement may be examined, and copies obtained, as set forth in Section 8
of this Offer to Purchase.
The Merger. Upon the terms and subject to the conditions set forth in the
Merger Agreement, and, in accordance with the DGCL, at the Effective Time,
Purchaser will be merged with and into the Company and the separate corporate
existence of Purchaser will thereupon cease and the Company will continue as the
surviving corporation.
Further pursuant to the Merger Agreement, following the Merger, (x) the
Certificate of Incorporation of the Company as in effect immediately prior to
the Effective Time will be amended to read in its entirety like the Certificate
of Incorporation of Purchaser, provided that Article First of the Certificate of
Incorporation of Purchaser will be amended to read in its entirety as follows:
"FIRST: The name of the Corporation is "Sterling Commerce, Inc.," and, as so
amended, will be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by law and such Certificate of
Incorporation, and (y) the By-laws of Purchaser, as in effect immediately prior
to the Effective Time, will be the By-laws of the Surviving Corporation until
thereafter amended as provided by law, by such Certificate of Incorporation or
by such By-laws.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, organization, standing and corporate power;
subsidiaries; capital structure; authority to enter into the Merger Agreement;
the absence of conflicts between the Merger Agreement and the Company's
Certificate of Incorporation, By-laws, applicable laws and certain agreements to
which the Company or its assets may be subject; required consents; filings with
the Commission; financial statements; disclosures in any proxy statement
documents; the absence of certain changes or events; compliance of the Company
with applicable laws; litigation; benefit plans; labor and employment matters;
taxes; stockholder votes; applicability of state takeover statutes; brokers;
intellectual property; material contracts; real property and real property
leases; the opinion of Goldman Sachs; the Rights Plan; and Year 2000 issues.
In the Merger Agreement, Parent and Purchaser have made customary
representations and warranties to the Company with respect to, among other
things, organization, standing and corporate power; authority to enter into the
Merger Agreement; the absence of conflicts between the Merger Agreement and the
Certificate of Incorporation and By-laws of each of Parent and Purchaser,
applicable laws and certain agreements to
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which the Company or its assets may be subject; required consents; disclosures
in any proxy statement documents; ownership of Shares; financing; and the
Communications Act.
Conditions to the Merger. The Merger Agreement provides that the respective
obligation of each party to effect the Merger is subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions: (i) if
required by applicable law, the Company Stockholder Approval will have been
obtained; (ii) no judgment, order, decree, preliminary or permanent injunction,
statute, law, ordinance, rule or regulation, entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect preventing, enjoining or prohibiting the
consummation of the Merger; provided, however, that each of the parties shall
have used its reasonable best efforts to prevent the entry of any such
Restraints and to appeal as promptly as possible any such Restraints that may be
entered; and (iii) Parent, Purchaser or their affiliates shall have accepted for
payment and paid for all of the Shares tendered and not withdrawn pursuant to
the Offer, except that this condition will not apply if Parent, Purchaser or
their affiliates shall have failed to purchase Shares pursuant to the Offer in
breach of their obligations under the Merger Agreement; provided, however, that
none of Parent, Purchaser or the Company may rely on the failure of any
condition set forth in this paragraph to be satisfied if such failure was caused
by such party's failure to use reasonable best efforts to consummate the Offer,
the Merger and the other Transactions.
The Company Board. The Merger Agreement provides that promptly upon the
purchase of and payment for any Shares by Parent or Purchaser pursuant to the
Offer, Parent will be entitled to designate such number of directors, rounded up
to the nearest whole number, on the Company Board as is equal to the product of
the total number of directors on the Company Board (giving effect to the
directors designated by Parent pursuant to this sentence) multiplied by the
percentage that the number of Shares so accepted for payment bears to the total
number of Shares then outstanding. In furtherance thereof, the Company will,
upon request of Purchaser, promptly either increase the size of the Company
Board or secure the resignations of such number of its incumbent directors, or
both, as is necessary to enable Parent's designees to be so elected to the
Company Board, and will cause Parent's designees to be so elected. At such time,
the Company will also cause persons designated by Parent to have proportionate
(but not less than majority) representation on (i) each committee of the Company
Board, (ii) each board of directors (or similar body) of each subsidiary (as
hereinafter defined) of the Company and (iii) each committee (or similar body)
of each such board.
The Merger Agreement further provides that in the event that Parent's
designees are elected to the Company Board, until the Effective Time, the
Company Board will have at least two directors who were directors on February
18, 2000 (the "Original Directors"); provided that, in such event, if the number
of Original Directors will be reduced below two for any reason whatsoever, any
remaining Original Directors (or Original Director, if there be only one
remaining) will be entitled to designate persons to fill such vacancies who will
be deemed to be Original Directors for purposes of the Merger Agreement or, if
no Original Director then remains, the other directors will designate two
persons to fill such vacancies who shall not be stockholders, affiliates or
associates of Parent or Purchaser, and such persons shall be deemed to be
Original Directors for purposes of the Merger Agreement. Notwithstanding
anything in the Merger Agreement to the contrary, in the event that Parent's
designees are elected to the Company Board prior to the Effective Time, the
affirmative vote of a majority of the Original Directors will be required for
the Company to (i) amend or terminate the Merger Agreement or agree or consent
to any amendment or termination of the Merger Agreement, (ii) exercise or waive
any of the Company's rights, benefits or remedies hereunder, (iii) extend the
time for performance of Parent's and Purchaser's respective obligations
hereunder or (iv) take any other action by the Company Board under or in
connection with the Merger Agreement other than the actions necessary to effect
the Company Stockholder Meeting (as defined below).
Company Stockholder Meeting. Pursuant to the Merger Agreement, if required
by applicable law in order to consummate the Merger, the Company, acting through
its Board of Directors, will, in accordance with applicable law: (i) duly call,
give notice of, convene and hold a special meeting of its stockholders (the
"Company Stockholders Meeting") as promptly as practicable following the
acceptance for payment and purchase of Shares by Purchaser pursuant to the Offer
for the purpose of considering and taking action upon the approval of the Merger
and the approval and adoption of the Merger Agreement; (ii) prepare and file
with
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the Commission a proxy statement and related proxy materials (the "Proxy
Statement") and will cause such Proxy Statement to be mailed to stockholders of
the Company at the earliest practicable date, provided that no amendment or
supplement to the Proxy Statement will be made by the Company without
consultation with Parent and its outside counsel; (iii) include in the Proxy
Statement the recommendation of the Company Board that stockholders of the
Company vote in favor of the approval of the Merger and the approval and
adoption of the Merger Agreement and (iv) use its reasonable best efforts to
solicit from holders of Shares proxies in favor of the Merger and will take all
other action reasonably necessary or advisable to secure any vote or consent of
stockholders required by Delaware law to effect the Merger. The Merger Agreement
provides that Parent will provide the Company with the information concerning
Parent and Purchaser required to be included in the Proxy Statement. Parent will
vote, or cause to be voted, all of the Shares then owned by it, Purchaser or any
of its other subsidiaries or affiliates controlled by Parent in favor of the
approval of the Merger and the approval and adoption of the Merger Agreement.
Company Stock Option Plans. The Merger Agreement provides that Parent and
the Company will take all actions necessary to provide that each outstanding
Company Stock Option granted under any Company Stock Option Plan which is
outstanding immediately prior to the consummation of the Offer, whether or not
such Company Stock Option is vested and exercisable immediately prior to the
consummation of the Offer, will be canceled as of the day immediately following
the consummation of the Offer and the holder thereof will be entitled to receive
an amount in cash payable at the time of cancellation equal to the excess of (i)
the product of (A) the excess, if any, of (x) the Offer Price over (y) the per
share exercise price of such Company Stock Option multiplied by (B) the number
of shares of Company Common Stock subject to such Company Stock Option over (ii)
any income tax or employment tax withholding required under the Code.
Conduct of Business. Pursuant to the Merger Agreement, the Company has
covenanted and agreed that, except as otherwise expressly permitted by the
Merger Agreement or except as consented to by Parent (in its sole discretion),
during the period from the date of the Merger Agreement to the earlier of the
Effective Time and the appointment or election of Parent's designees to the
Company Board (such earlier time, the "Control Time"), the Company will, and
will cause its subsidiaries to, carry on their respective businesses in the
ordinary course consistent with past practice and in compliance in all material
respects with all applicable laws and regulations and, to the extent consistent
therewith, use reasonable best efforts to preserve intact their current business
organizations (other than internal organizational realignments), to keep
available the services of their current officers and other key employees and to
preserve their relationships with those persons having business dealings with
them to the end that their goodwill and ongoing businesses will be unimpaired at
the Effective Time. Without limiting the generality of the foregoing (but
subject to the above exceptions), during the period from the date of the Merger
Agreement to the Control Time, the Company will not, and will not permit any of
its subsidiaries to: (i) other than dividends and distributions by a direct or
indirect wholly owned subsidiary if the Company to its parent, (I) declare, set
aside or pay any dividends on, or make any other distributions in respect of,
any of its capital stock, (II) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, except for
issuances of Company Common Stock upon the exercise of Company Stock Options
under the Company Stock Option Plans or in connection with other awards under
the Company Stock Option Plans outstanding as of February 18, 2000 in accordance
with their present terms or issued in accordance with the terms of the Merger
Agreement or the issuance of capital stock of the Company pursuant to the Rights
Plan, (III) except pursuant to agreements entered into with respect to the
Company Stock Option Plans, purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its subsidiaries or any other securities
thereof or any rights, warrants or options to acquire any such shares or other
securities or (IV) make any other actual, constructive or deemed distribution in
respect of any shares of its capital stock or otherwise make any payments to
stockholders in their capacity as such, other than dividends and distributions
by a direct or indirect wholly owned subsidiary of the Company to its parent;
(ii) issue, deliver, sell, pledge or otherwise encumber or subject to any Lien
any shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than Company Stock
Options granted under clause (II) below or the issuance of Company Common Stock
upon the exercise of Company Stock Options or in connection with other awards
under the Company Stock Option Plans (I) outstanding as of January 31, 2000 in
accordance with their
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present terms or (II) granted after January 31, 2000 in the ordinary course of
business consistent with past practice (so long as such additional amount of
Company Common Stock subject to Company Stock Options (A) does not exceed
250,000 shares of Company Common Stock in the aggregate, (B) does not vest,
either in full or part, solely as a result of the transactions contemplated by
the Merger Agreement, (C) is not granted to any Change in Control Individual and
(D) is not granted at an exercise price of less than the fair market value of
the Company Common Stock at the date of grant); (iii) amend its Certificate of
Incorporation, By-laws or other comparable organizational documents; (iv)
acquire or agree to acquire by merging or consolidating with, or by purchasing a
substantial portion of the stock or assets of, or by any other manner, any
business or any person; (v) sell, lease, license, mortgage or otherwise encumber
or subject to any Lien or otherwise dispose of any of its properties or assets
(including securitizations), other than the Company's Managed Systems Division
pursuant to the MSD Agreement, a true and complete copy, including all exhibits
and schedules, of which has been previously provided by the Company to Parent,
or in the ordinary course of business consistent with past practice; (vi) except
for borrowings under credit facilities or lines of credit existing on February
18, 2000, incur any indebtedness for borrowed money or issue any debt securities
or assume, guarantee or endorse, or otherwise become responsible for the
obligations of any person, or make any loans, advances or capital contributions
to, or investments in, any person other than its wholly owned subsidiaries,
except in the ordinary course of business consistent with past practice and in
amounts not material to the maker of such loan, advance, capital contribution or
investment; (vii) take, or agree to commit to take, any action that would or is
reasonably likely to result in any of the offer conditions or any of the
conditions precedent to the Merger set forth in the Merger Agreement not being
satisfied, or that would materially impair the ability of the Company, Parent,
Purchaser or the holders of Shares to consummate the Offer or the Merger in
accordance with the terms of the Merger Agreement or materially delay such
consummation; (viii) make any capital expenditure or expenditures which exceed
$25,000,000 in the aggregate; (ix) make or revoke any Tax election, settle or
compromise any Tax liability material to the Company or any of its subsidiaries,
or change (or make a request to any taxing authority to change) its Tax or
accounting methods, policies, practice or procedures, except in each case as
required by applicable law or generally accepted accounting principles; (x)
except as required under existing Company Benefit Plans, (a) grant any employee,
officer or director any increase in wages, bonus, severance, profit sharing,
retirement, insurance or other compensation or benefits (other than an increase
in wages in the ordinary course of business consistent with past practice for
any individual other than a Change in Control Individual), (b) amend or
terminate any Company Benefit Plan, (c) establish any new compensation or
benefit plan or arrangement, (d) enter into any employment, consulting,
retention, termination or severance agreement (other than in the ordinary course
of business consistent with past practice for any individual other than a Change
in Control Individual) or (e) enter into any change in control agreement; (xi)
revalue in any material respect any of its assets, including, without
limitation, writing down the value of inventory or writing-off notes or accounts
receivable other than in the ordinary and usual course of business consistent
with past practice or as required by generally accepted accounting principles;
(xii) (a) enter into any contract or agreement, other than in the ordinary
course of business consistent with past practice, or amend in any material
respect any of the Material Contracts or certain other specified agreements
other than in the ordinary course of business; or (b) enter into any contract,
agreement, commitment or arrangement providing for, or amend any contract,
agreement, commitment or arrangement to provide for, the taking of any action
that would be prohibited hereunder; (xiii) pay, discharge or satisfy any
material claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, dischar ge or
satisfaction in the ordinary course of business consistent with past practice of
liabilities reflected or reserved against in the consolidated financial
statements of the Company and its subsidiaries or incurred in the ordinary and
usual course of business consistent with past practice; (xiv) settle or
compromise any pending or threatened suit, action or claim relating to the
transactions contemplated hereby; (xv) enter into any agreement or arrangement
that would limit or restrict the Surviving Corporation and its affiliates
(including Parent) or any successor thereto, from engaging or competing in any
line of business or in any geographic area; or (xvi) authorize, or commit or
agree to take, any of the foregoing actions; provided that the limitations set
forth in this paragraph (other than clause (i)) will not apply to any
transaction between the Company and any wholly owned subsidiary or between any
wholly owned subsidiaries of the Company.
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Indemnification. The Merger Agreement provides that Parent agrees to
indemnify and hold harmless from liabilities for acts or omissions occurring at
or prior to the Effective Time those classes of persons currently entitled to
indemnification from the Company and its subsidiaries as provided in their
respective Certificates of Incorporation or By-laws (or comparable
organizational documents). Parent also agrees to advance expenses to any such
person promptly upon receipt of an undertaking from such person that such
expenses will be repaid should it be ultimately determined that such person is
not entitled to indemnification. In addition, from and after the Effective Time,
directors and officers of the Company who become directors or officers of Parent
or any of its subsidiaries will be entitled to indemnification under Parent's or
any of its subsidiaries' Certificates of Incorporation and By-laws, as the same
may be amended from time to time in accordance with their terms and applicable
law, and to all other indemnity rights and protections as are afforded to other
directors and officers of Parent or any of its subsidiaries;
The Merger Agreement further provides that for six years after the
Effective Time, Parent will maintain in effect the Company's current directors'
and officers' liability insurance covering acts or omissions occurring prior to
the Effective Time with respect to those persons who are currently covered by
the Company's directors' and officers' liability insurance policy on terms with
respect to such coverage and amount no less favorable than those of such policy
in effect on February 18, 2000; provided that Parent may substitute therefor
policies of Parent or its subsidiaries containing terms with respect to coverage
and amount no less favorable to such directors or officers; provided, further,
that in no event will Parent be required to pay aggregate premiums for insurance
in excess of 200% of the aggregate premiums paid by the Company in fiscal 1999
for such purpose.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that it and its subsidiaries and each of their respective affiliates, directors,
officers, employees, agents and representatives (including without limitation
any investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries) will immediately cease
any discussions or negotiations with any other parties that may be ongoing with
respect to any Company Takeover Proposal (as defined below). The Company will
not, nor will it authorize or permit any of its subsidiaries to, nor will it
authorize or permit any of its or its subsidiaries' affiliates, directors,
officers, employees, agents or representatives (including, without limitation,
any investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries) to, directly or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing
information or assistance), or take any other action designed to facilitate, any
inquiries, any expression of interest or the making of any proposal which
constitutes any Company Takeover Proposal or (ii) participate in any discussions
or negotiations regarding any Company Takeover Proposal; provided, however, that
if, during the Initial Period (as defined herein), the Board of Directors of the
Company (i) determines in good faith that such Company Takeover Proposal is a
Company Superior Proposal and (ii) determines in good faith, after receiving
advice of outside counsel, that such action is necessary for the Board of
Directors of the Company to comply with its fiduciary duties to stockholders
under the DGCL, and, prior to furnishing any non-public information to such
person, the Company receives from such person an executed confidentiality
agreement with provisions no less favorable to the Company (i.e., no less
restrictive with respect to the conduct of such person) than the Confidentiality
Agreement (as defined herein), the Company may, in response to a Company
Takeover Proposal not solicited in violation of this paragraph and subject to
providing prior written notice of its decision to take such action to Parent
(the "Company Notice") and compliance with this paragraph, following delivery of
the Company Notice (x) furnish information with respect to the Company and its
subsidiaries to any person making such a Company Takeover Proposal (provided
that such information has been previously delivered to Parent) and (y)
participate in discussions or negotiations regarding such a Company Takeover
Proposal. For purposes of the Merger Agreement, "Company Takeover Proposal"
means any inquiry, proposal or offer from any person relating to any (r) direct
or indirect acquisition or purchase (including by way of lease, exchange, sale,
mortgage, pledge or otherwise, in a single transaction or series of related
transactions) of substantial assets of the Company or any of its subsidiaries,
taken as a whole, (s) direct or indirect acquisition or purchase (including by
way of lease, exchange, sale, mortgage, pledge or otherwise, in a single
transaction or series of related transactions) of 20% or more of any class of
equity securities of the Company or any of its subsidiaries whose business
constitutes 20% or more of the net revenues, net income or assets of the Company
and its subsidiaries, taken as a whole,
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(t) tender offer or exchange offer that if consummated would result in any
person beneficially owning 20% or more of any class of equity securities of the
Company, (u) merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries whose business constitutes 20% or more of the
net revenues, net income or assets of the Company and its subsidiaries, taken as
a whole, (v) acquisition by any person, after February 18, 2000, of be neficial
ownership or the right to acquire beneficial ownership of, or the formation of
any "group" (as such term is defined under Section 13(d) of the Exchange Act),
that beneficially owns or has the right to acquire beneficial ownership of 20%
or more of any class of equity securities of the Company, (x) adoption by the
Company of a plan of liquidation, the declaration or payment by the Company of
an extraordinary dividend on any of its shares of capital stock or the
effectuation by the Company of a recapitalization or other type of transaction
that would involve either a change in the Company's outstanding capital stock or
a distribution of assets of any kind to the holders of such capital stock, (y)
repurchase by the Company or any of its subsidiaries of shares of Company Common
Stock, or (z) agreement to, or public announcement by the Company or any other
person, entity or group of a proposal, plan or intention to do any of the
foregoing, other than (i) the transactions contemplated by the Merger Agreement
or (ii) the sale of the Company's Managed Systems Division pursuant to the MSD
Agreement. For purposes of the Merger Agreement, the term "Initial Period" means
the period from February 18, 2000 and continuing until 20 business days
following the commencement of the Offer; provided, however, that if the Offer is
extended beyond such 20 business day period by the Purchaser, and as of the date
of such extension, the Company has not taken certain agreed upon actions to
ensure that it operates in a manner consistent with those provisions of the
Communications Act which are applicable to a "Bell Operating Company" or its
affiliates and the Minimum Condition has not been met, the Initial Period will
be extended until the earlier of (a) the time the Minimum Condition has been met
and (b) 60 days from the commencement of the Offer.
The Merger Agreement provides that except as expressly permitted by the
terms discussed below, neither the Board of Directors of the Company nor any
committee thereof will (i) withdraw or modify, or propose publicly to withdraw
or modify, in a manner adverse to Parent, the approval or recommendation by such
Board of Directors or such committee of the Merger or the Merger Agreement, (ii)
approve or recommend, or propose publicly to approve or recommend, any Company
Takeover Proposal or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
a "Company Acquisition Agreement") related to any Company Takeover Proposal.
Notwithstanding the foregoing, in the event that, during the Initial Period, the
Board of Directors of the Company determines in good faith, after receiving
advice from the Company's outside counsel that (i) the withdrawal, modification
or change of its recommendation is necessary for the Board of Directors of the
Company to comply with its fiduciary duties to the Company's stockholders under
the DGCL and (ii) the Company Takeover Proposal is a Company Superior Proposal,
the Board of Directors of the Company may (subject to this and the following
sentences) (x) withdraw or adversely modify its approval or recommendation of
the Transactions or the matters to be considered at the Company Stockholders
Meeting, (y) approve or recommend such Company Superior Proposal and/or (z)
simultaneously with the payment of the Termination Fee, terminate the Merger
Agreement and, if it so chooses, enter into a Company Acquisition Agreement with
respect to such Company Superior Proposal, but only after the third business day
following Parent's receipt of written notice advising Parent that the Board of
Directors of the Company is prepared to terminate the Merger Agreement and only
if, during such three-day period, the Company and its advisors shall have
negotiated in good faith with Parent to make such adjustments in the terms and
conditions of the Merger Agreement as would enable Parent to proceed with the
Transactions on such adjusted terms. For purposes of the Merger Agreement, a
"Company Superior Proposal" means any bona fide written proposal made by a third
party to acquire, directly or indirectly, including pursuant to a tender offer,
exchange offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, more than 50% of the combined
voting power of the shares of Company Common Stock then outstanding or all or
substantially all the assets of the Company (excluding the Company's Managed
Systems Division) and which the Board of Directors of the Company determines in
its good faith judgment (after receiving and consistent with a written opinion
from a financial advisor of nationally recognized reputation) to be more
financially favorable to the Company's stockholders
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<PAGE> 30
than the Offer and the Merger and for which financing, to the extent required,
is then committed and which is not subject to any financing commitment.
Pursuant to the Merger Agreement, the Company will promptly and in any
event within 24 hours advise Parent orally and in writing of any Company
Takeover Proposal or request for information relating to the Company or any of
its subsidiaries, or for access to the properties, books or records of the
Company or any of its subsidiaries by any person that is considering making, or
has made, a Company Takeover Proposal and will keep Parent reasonably informed,
on a current basis and in reasonable detail, of the status and details thereof
and, if in writing, promptly deliver or cause to be delivered to Parent a copy
of such proposal or request.
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether before or after the Company Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Offer shall have expired in accordance with the terms of
the Merger Agreement without any Shares being purchased therein;
provided, however, that the right to terminate the Merger Agreement
under this subparagraph (b)(i) will not be available to any party whose
failure to fulfill any obligation under the Merger Agreement has been
the cause of, or resulted in, the failure of Parent or Purchaser, as the
case may be, to purchase the Shares pursuant to the Offer on or prior to
such date;
(ii) if any Restraint which in effect prevents, enjoins or
prohibits the consummation of the Merger shall be in effect and shall
have become final and nonappealable; provided, that the party seeking to
terminate the Merger Agreement pursuant to this subparagraph (b)(ii)
shall have used reasonable best efforts to prevent the entry of and to
remove such Restraint;
(c) by the Company:
(i) if prior to the purchase of Shares pursuant to the Offer,
Parent or Purchaser shall have breached or failed to perform in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in the Merger Agreement or if
any representation or warranty of Parent or Purchaser shall have become
untrue, which breach or failure to perform cannot be or has not been
cured within 30 days after the giving of written notice to Parent or
Purchaser, as applicable, except, in any case, for such breaches,
untruths or failures to perform which are not, in the Company's opinion,
reasonably likely to adversely affect Parent's or Purchaser's ability to
complete the Offer or the Merger;
(ii) if the Board of Directors of the Company shall have exercised
its termination rights pursuant to the terms of the Merger Agreement and
in connection with the receipt of a Company Superior Proposal; provided
that, in order for the termination of the Merger Agreement pursuant to
this subparagraph (c)(ii) to be deemed effective, the Company shall have
complied with the provisions of the Merger Agreement relating to the
non-solicitation, including (A) the notice provisions therein and (B)
the obligation to simultaneously pay to Parent the Termination Fee
required; or
(iii) if Parent, Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer; provided, that
the Company may not terminate the Merger Agreement pursuant to this
subparagraph (c)(iii) if the cause of such failure was the Company's
material breach of its obligations under the Merger Agreement;
(d) by Parent or Purchaser:
(i) if prior to the purchase of Shares pursuant to the Offer, the
Company shall have breached or failed to perform any of its
representations, warranties, covenants or other agreements contained
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<PAGE> 31
in the Merger Agreement or if any representation or warranty of the
Company shall have become untrue (except where the breach or untruth of
such representations or warranties results from changes specifically
permitted by the Merger Agreement or from any transaction expressly
consented to in writing by Parent) which (A) would give rise to the
failure of the offer conditions set forth in the Merger Agreement and
described in Section 14 herein relating to Company representations and
warranties and material agreements and covenants and (B) cannot be or
has not been cured within 30 days after the giving of written notice to
the Company;
(ii) if, due to an occurrence not involving a breach by Parent or
Purchaser of their respective obligations hereunder, which makes it
impossible to satisfy any of the offer conditions set forth in the
Merger Agreement and described in Section 14 hereof, Parent, Purchaser,
or any of their affiliates shall have failed to commence the Offer on or
prior to five business days following the date of the initial public
announcement of the Offer;
(iii) if (a) the Board of Directors of the Company (or any
committee thereof) withdraws or modifies its approval or recommendation
of Merger or the Merger Agreement in a manner adverse to Parent, (b) the
Board of Directors of the Company (or any committee thereof) shall have
recommended to the stockholders of the Company any Company Takeover
Proposal, (c) the Company fails to call or hold the Company Stockholder
Meeting following the receipt by the Company of a Company Takeover
Proposal, (d) the Board of Directors of the Company (or any committee
thereof) shall have resolved to do any the foregoing, or (e) either
Parent or Purchaser is entitled to terminate the Offer because the
Company has entered into any Company Agreement with respect to any
Company Superior Proposal in accordance with the terms of the Merger
Agreement; or
(iv) any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any
group of which any of them is a member, shall have acquired beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the Shares.
Termination Fee. The Merger Agreement provides that in the event that (i)
the Merger Agreement is terminated by the Company pursuant to subparagraph
(c)(ii) of the immediately preceding paragraph, (ii) the Merger Agreement is
terminated by Parent pursuant to subparagraph (d)(iii) of the immediately
preceding paragraph, (iii) the Merger Agreement is terminated by Parent or the
Company pursuant to subparagraph (b)(i) of the immediately preceding paragraph
solely as a result of the failure of the Minimum Condition to be satisfied and
at or prior to such termination the Company has received one or more Company
Takeover Proposals which at the time of such termination has not been absolutely
and unconditionally withdrawn or abandoned or (iv) the Merger Agreement is
terminated by Parent pursuant to subparagraph (d)(i) of the immediately
preceding paragraph and such breach or failure to perform on the part of the
Company is willful and prior to such termination the Company has received a
Company Takeover Proposal, then promptly after such termination (and in any
event within one business day, except that any payment of a termination fee will
be paid simultaneously with, and be a necessary condition to, such termination),
the Company will pay Parent a fee of $125 million by wire transfer of same day
funds (the "Termination Fee").
Additional Agreements; Employee Benefit Matters. Pursuant to the Merger
Agreement, Parent agreed that individuals who are employed by the Company and
its subsidiaries as of the Closing will remain employees of the Surviving
Corporation and its subsidiaries immediately following the Closing. Parent also
agreed to honor, and agreed to cause the Surviving Corporation to honor, and to
make required payments when due under all Company Benefit Plans and all similar
types of contracts, agreements, arrangements, policies and plans identified as
"Other Benefit Plans" under the Merger Agreement, provided, that the Company
shall have the right at any time to amend or terminate any such Company Benefit
Plan or Other Benefit Plan in accordance with its terms. No section of the
Merger Agreement limits the ability or right of the Company and its subsidiaries
to terminate the employment of any of their respective employees after the
29
<PAGE> 32
Closing (subject to any rights of any such employee pursuant to any Company
Benefit Plan or any Other Benefit Plan).
Parent further agreed that for purposes of all the Company Benefit Plans,
the consummation of the transactions contemplated by the Merger Agreement will
constitute a "Change in Control" of the Company (as that term is defined in such
Company Benefit Plans). Parent therefore agreed (i) to cause the Company after
consummation of the transactions contemplated by the Merger Agreement to pay all
amounts provided under such Company Benefit Plans, as a result of a Change in
Control of the Company in accordance with their terms, and (ii) to cause the
Company to honor all rights, privileges and modifications to or with respect to
any such Company Benefit Plans which became effective as a result of such Change
in Control.
STOCKHOLDER'S AGREEMENT
The following is a summary of the material terms of a Stockholder's
Agreement (the "Stockholder's Agreement"), dated as of February 18, 2000, among
Parent, Purchaser, Sterling L. Williams, Sam Wyly, Charles J. Wyly, Jr. and
Warner C. Blow (each, a "Stockholder"). This summary is not a complete
description of the terms and conditions of the Stockholder's Agreement and is
qualified in its entirety by reference to the full text of the Stockholder's
Agreement , which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to Schedule TO. The Stockholder's
Agreement may be examined, and copies obtained, as set forth in Section 8
herein. Capitalized terms used in the summary below but not otherwise defined
below have the meaning set forth in the Stockholder's Agreement.
Voting Agreement. The Stockholder's Agreement provides that each
Stockholder, at any meeting of the stockholders of the Company, however called,
or in connection with any written consent of the holders of Company Common
Stock, will vote his or her Shares (a) in favor of the approval and adoption of
the Merger Agreement, the Merger and all the transactions contemplated by the
Merger Agreement and the Stockholder's Agreement and any other actions required
in furtherance of the Merger Agreement or the Stockholder's Agreement; and (b)
against any Company Takeover Proposal and any actions in furtherance thereof
(collectively, the "Voting Agreement Matters"). In connection therewith, each
Stockholder will provide an irrevocable proxy with respect to the Voting
Agreement Matters to Parent for the Shares which such Stockholder is entitled to
vote at any meeting of stockholders of the Company or consent in lieu of such
meeting.
Agreement to Tender. The Stockholder's Agreement further provides that, if
Parent or Purchaser commences the Offer, each Stockholder will validly tender,
or cause to be validly tendered, all of the Shares then beneficially owned by
such Stockholder to Parent or Purchaser, as applicable, as soon as practicable
(and in any event within five business days) after the commencement of the Offer
in accordance with the terms and conditions of the Offer. Each Stockholder
further agreed not to withdraw such tendered Shares unless the Offer is
terminated by Parent or Purchaser, as applicable. Each Stockholder will be
entitled, upon consummation of the Offer, subject to and in accordance with the
Offer's terms and conditions, to receive an amount equal to the Offer Price with
respect to the tendered Shares.
Covenants. The Stockholder's Agreement provides that each Stockholder will
immediately cease any discussions or negotiations relating to a Company Takeover
Proposal, other than with respect to the Transactions, with any parties
conducted prior to February 18, 2000. Each Stockholder will not, directly or
indirectly, and will instruct its Representatives not to, directly or indirectly
(i) solicit, initiate or encourage (including by way of furnishing information
or assistance), or take any other action to facilitate, any inquiries, any
expression of interest or the making of any proposals which constitutes any
Company Takeover Proposal or (ii) participate in any discussions or negotiations
regarding any Company Takeover Proposal.
Further, until and unless the Stockholder's Agreement has been terminated,
each Stockholder may not, except as expressly provided for in the Stockholder's
Agreement, (a) sell, exchange, pledge, encumber or otherwise transfer or dispose
of, or agree to sell, exchange, pledge, encumber or otherwise transfer or
dispose of, any of its Shares (which for avoidance of doubt will not include any
Company Stock Option), or any interest therein, (b) deposit its Shares into a
voting trust or enter into a voting agreement or arrangement with
30
<PAGE> 33
respect to such Shares or grant any proxy with respect thereto or (c) enter into
any agreement, arrangement, understanding, or undertaking to do any of the
foregoing. In addition, each Stockholder waived any appraisal or other rights to
dissent from the Merger that such Stockholder may have been entitled to. The
covenants and arrangements contained in the Stockholder's Agreement, and all
rights and obligations of the parties thereunder terminate upon the termination
of the Merger Agreement in accordance with its terms.
Share Ownership. The number of Shares (or shares of Common Stock underlying
Company Stock Options) subject to the terms and conditions of the Stockholder's
Agreement owned by each of the Stockholders is as follows:
<TABLE>
<CAPTION>
NAME SHARES
- ---- ---------
<S> <C>
Sterling L. Williams........................................ 3,755,776
Warner C. Blow.............................................. 1,609,031
Charles J. Wyly, Jr. ....................................... 988,366
Sam Wyly.................................................... 1,045,672
</TABLE>
CONFIDENTIALITY AGREEMENT
The following is a summary of the material provisions of a Confidentiality
Agreement, dated November 19, 1999, between Parent and the Company (the
"Confidentiality Agreement"). This summary is not a complete description of the
terms and conditions of the Confidentiality Agreement and is qualified in its
entirety by reference to the full text of the Confidentiality Agreement, which
is incorporated herein by reference and a copy of which has been filed with the
Commission as an exhibit to Schedule TO. The Confidentiality Agreement may be
examined, and copies obtained, as set forth in Section 8 herein. Capitalized
terms used in the summary below but not otherwise defined below have the
meanings set forth in the Confidentiality Agreement.
Pursuant to the terms of the Confidentiality Agreement, the Company and
Parent agreed to provide, among other things, for the confidential treatment of
their discussions regarding the Offer and the Merger and the exchange of certain
confidential information regarding the Company.
In addition, Parent has agreed that for a period of one year from the date
of the Confidentiality Agreement, without the prior written consent of the
Company, neither Parent nor its Representatives will (i) propose to the Company
or its Representatives, or propose to or discuss with any other person, or make
any public disclosure concerning, any transaction between Parent and the Company
or its security holders or involving any of its securities or security holders,
(ii) acquire or seek to acquire, or advise, assist or encourage any other person
in acquiring or seeking to acquire, directly or indirectly, control of the
Company or the Company Board or any securities, business or assets of the
Company or any of its subsidiaries or (iii) request that the Company or its
Representatives waive any of the restrictions described in this paragraph.
Further, Parent agreed that for a period of two years from the date of the
Confidentiality Agreement, without the prior written consent of the Company, (i)
neither Parent nor its Representatives who have knowledge of the Merger
Agreement, the Merger, the Offer or the other transactions contemplated thereby,
will, directly or indirectly, solicit for employment in any capacity any
employee of the Company or any of its subsidiaries and (ii) Parent will not,
directly or indirectly, employ in any such capacity any employee of the Company
or any of its subsidiaries with whom Parent has had contact or who became known
to Parent during its evaluations of or discussions with the Company.
Parent also agreed that it and its Representatives will not contact any
employee, customer, competitor, supplier or joint venturer of the Company or its
subsidiaries in connection with Parent's evaluation of the Company without the
prior written approval of the Company.
The Company agreed not to, directly or indirectly, employ in any capacity
any employee of Parent or its subsidiaries with whom the Company has had contact
or who became known to the Company during Parent's evaluation of or discussions
with the Company for a period of two years from the date of the Confidentiality
Agreement without the prior written consent of Parent.
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<PAGE> 34
APPRAISAL RIGHTS
Holders of Shares do not have appraisal rights in connection with the
Offer. However, if the Merger is consummated, holders of Shares at the Effective
Time will have certain rights pursuant to the provisions of Section 262 of the
DGCL, including the right to dissent and demand appraisal of, and to receive
payment in cash of the fair value of, their Shares. Under Section 262 of the
DGCL, dissenting stockholders of the Company who comply with the applicable
statutory procedures will be entitled to receive a judicial determination of the
fair value of their Shares (exclusive of any element of value arising from the
accomplishment or expectation of the Merger) and to receive payment of such fair
value in cash, together with a fair rate of interest thereon, if any. Any such
judicial determination of the fair value of the Shares could be based upon
factors other than, or in addition to, the price per Share to be paid in the
Merger or the market value of the Shares. The value so determined could be more
or less than the price per Share to be paid in the Merger. THE FOREGOING SUMMARY
OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE DGCL DOES NOT PURPORT TO BE A
COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING TO
EXERCISE ANY APPRAISAL RIGHTS AVAILABLE UNDER THE DGCL. THE PRESERVATION AND
EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE
PROVISIONS OF THE DGCL.
RULE 13e-3
The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which Purchaser seeks
to acquire the remaining Shares not held by it. Purchaser believes, however,
that Rule 13e-3 will not be applicable to the Merger because it is anticipated
that the Merger would be effected within one (1) year following consummation of
the Offer and in the Merger stockholders would receive the same price per Share
as paid in the Offer. If Rule 13e-3 were applicable to the Merger, it would
require, among other things, that certain financial information concerning the
Company, and certain information relating to the fairness of the proposed
transaction and the consideration offered to minority stockholders in such a
transaction, be filed with the Commission and disclosed to minority stockholders
prior to consummation of the transaction.
12. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by
Purchaser and Parent to consummate the Offer and to pay related fees and
expenses is estimated to be approximately $3,557,000,000; the total amount of
funds required by Purchaser and Parent pursuant to the Merger to pay for the
cash-out of all remaining Company Stock Options following the consummation of
the Offer is estimated to be approximately $314,134,998. Purchaser will obtain
the funds required to consummate such transactions with funds provided through
capital contributions or advances made by Parent. Parent expects to fund any
necessary capital contributions or advances to Purchaser through the use of cash
on hand, existing lines of credit and other internally generated funds.
The Offer is not subject to any financing arrangements.
13. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that the
Company will not, and will not permit any of its subsidiaries to, between the
date of the Merger Agreement and the earlier of the Effective Time and the
appointment or election of Parent's designees to the Company Board, without the
prior consent of Parent,
(a) other than dividends and distributions by a direct or indirect
wholly owned subsidiary of the Company to its parent, (I) declare, set
aside or pay any dividends on, or make any other distributions in respect
of, any of its capital stock, (II) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
except for issuances of Common Stock upon the exercise of Company Stock
Options under the Company Stock Option Plans or in connection with other
awards under the Company Stock Option Plans outstanding as of February 18,
2000 in accordance with their present terms or issued pursuant to paragraph
(b) below or the issuance of capital stock of the Company pursuant to the
Rights Plan,
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(III) except pursuant to agreements entered into with respect to the
Company Stock Option Plans, purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its subsidiaries or any
other securities thereof or any rights, warrants or options to acquire any
such shares or other securities or (IV) make any other actual, constructive
or deemed distribution in respect of any shares of its capital stock or
otherwise make any payments to stockholders in their capacity as such; or
(b) issue, deliver, sell, pledge or otherwise encumber or subject to
any Lien any shares of its capital stock, any other voting securities or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(other than Company Stock Options granted under clause (II) below or the
issuance of Common Stock upon the exercise of Company Stock Options or in
connection with other awards under the Company Stock Option Plans (I)
outstanding as of January 31, 2000 in accordance with their present terms
or (II) granted after January 31, 2000 in the ordinary course of business
consistent with past practice (so long as such additional amount of Common
Stock subject to Company Stock Options (A) does not exceed 250,000 shares
of Common Stock in the aggregate, (B) does not vest, either in full or
part, solely as a result of the transactions contemplated by the Merger
Agreement, (C) is not granted to any individuals directly or indirectly
receiving payments or otherwise benefiting under certain change of control
agreements of the Company and (D) is not granted at an exercise price of
less than the fair market value of the Common Stock at the date of grant).
14. CERTAIN CONDITIONS OF THE OFFER. For the purposes of this Section 14,
capitalized terms used but not defined herein will have the meanings set forth
in the Merger Agreement. Notwithstanding any other provisions of the Offer,
Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and may
delay the acceptance for payment of or, subject to the restriction referred to
above, the payment for, any tendered Shares, and may terminate or amend the
Offer as to any Shares not then paid for, if (i) any applicable waiting period
under the HSR Act, and certain foreign competition statutes has not expired or
terminated, (ii) the Minimum Condition has not been satisfied, (iii) the Company
has failed to take certain agreed-upon actions required to ensure compliance
with the Communications Act or (iv) at any time on or after the date of the
Merger Agreement and (except in the case of clause (b)) continuing in effect
immediately prior to the expiration of the Offer, any of the following events
will occur (other than as a result of any action or inaction of Parent or any of
its subsidiaries which constitutes a breach of the Merger Agreement):
(a) there shall be any statute, rule, regulation, judgment, order or
injunction issued, enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger or any other action shall be taken by
any Governmental Entity (other than actions taken by any Governmental
Entity pursuant to any state or federal antitrust law, including without
limitation the HSR Act, or the Communications Act) (i) prohibiting or
imposing any material limitations on Parent's or Purchaser's ability to
exercise ownership or operation (or that of any of their respective
subsidiaries or affiliates) of all or a material portion of their or the
Company's businesses or assets, (ii) challenging the acquisition by Parent
or Purchaser of any Shares under the Offer, or restraining or prohibiting
the making or consummation of the Offer, the Merger or the performance of
any of the other Transactions, (iii) imposing material limitations on the
ability of Purchaser, or rendering Purchaser unable, to accept for payment,
pay for or purchase some or all of the Shares pursuant to the Offer and the
Merger or (iv) imposing material limitations on the ability of Purchaser or
Parent effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it
on all matters properly presented to the Company's stockholders, including
without limitation the approval and adoption of the Merger Agreement and
the Transactions;
(b) the Company shall have entered into any Company Acquisition
Agreement with respect to any Company Superior Proposal;
(c) (i) any of the representations and warranties of the Company set
forth in the Merger Agreement (without giving effect to any materiality or
material adverse change or material adverse effect
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<PAGE> 36
qualification set forth therein) shall not be true and correct as of the
expiration of the Offer, except where the failure of such representations
and warranties to be so true and correct results from changes specifically
permitted by the Merger Agreement or from any transaction expressly
consented to in writing by Parent or, in the aggregate, does not have a
material adverse effect on the Company; or (ii) the representations and
warranties of the Company with respect to capital structure and the
declaration of dividends shall be untrue or incorrect in any material
respect, except where the failure of such representations and warranties to
be true and correct results from changes specifically permitted by the
Merger Agreement or from any transaction expressly consented to in writing
by Parent;
(d) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or covenant of the Company to be performed or complied
with by it under the Merger Agreement at or immediately prior to
consummation of the Offer;
(e) the Merger Agreement shall have been terminated in accordance with
its terms;
(f) there shall have occurred any material adverse effect on the
Company or there shall have occurred any change, condition, event or
development that would reasonably be expected to have a material adverse
effect on the Company;
(g) Parent and the Company shall have agreed (in their respective sole
discretion) that Purchaser shall terminate the Offer or postpone the
acceptance for payment of or payment for Shares thereunder; or
(h) there shall have occurred a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States which,
in either case, prohibits Parent's or Purchaser's bank lenders from
furnishing to them the funds necessary to pay for the Shares upon
consummation of the Offer,
which in the reasonable judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser other than any action or inaction by Parent or Purchaser which
constitutes a breach of the Merger Agreement) giving rise to such condition
makes it inadvisable to proceed with the Offer and/or with such acceptance for
payment of or payment for Shares.
Under the Merger Agreement, "material adverse change" or "material adverse
effect" means, when used in connection with the Company or Parent, any change,
effect, event, occurrence or state of facts that is materially adverse to the
business, financial condition or results of operations of such party and its
subsidiaries taken as a whole other than any change, effect, event or occurrence
relating to (i) the economy or securities markets of the United States or any
other region in general, (ii) the Merger Agreement or the transactions
contemplated thereby or the announcement thereof or (iii) the industry in which
the Company or Parent, as the case may be, operates in general, and not
specifically relating to the Company or Parent or their respective subsidiaries.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent or Purchaser regardless of the circumstances
giving rise to any such condition (other than as a result of any action or
inaction of Parent or any of its subsidiaries which constitutes a breach of the
Merger Agreement) or may be waived by Parent or Purchaser, in whole or in part,
at any time and from time to time in the sole discretion of Parent or Purchaser.
The failure by Parent or Purchaser at any time to exercise any of the foregoing
rights will not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and circumstances will not be deemed a
waiver with respect to any other facts and circumstances and each such right
will be deemed an ongoing right which may be asserted at any time and from time
to time.
15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS. Except as set
forth in this Offer to Purchase, based on its review of publicly available
filings by the Company with the Commission and other publicly available
information regarding the Company, Purchaser is not aware of any licenses or
regulatory permits that would be material to the business of the Company and its
subsidiaries, taken as a whole, and that might be adversely affected by
Purchaser's acquisition of Shares (and the indirect acquisition of the stock of
34
<PAGE> 37
the Company's subsidiaries) as contemplated herein, or, except to the extent
required by any foreign regulatory authorities, any filings, approvals or other
actions by or with any domestic, foreign or supranational governmental authority
or administrative or regulatory agency that would be required prior to the
acquisition of Shares (or the indirect acquisition of the stock of the Company's
subsidiaries) by Purchaser pursuant to the Offer as contemplated herein. Should
any such approval or other action be required, there can be no assurance that
any such additional approval or action, if needed, would be obtained without
substantial conditions or that adverse consequences might not result to the
Company's business, or that certain parts of the Company's or Purchaser's
business might not have to be disposed of or held separate or other substantial
conditions complied with in order to obtain such approval or action or in the
event that such approvals were not obtained or such actions were not taken.
Purchaser's obligation to purchase and pay for Shares is subject to certain
conditions, including conditions with respect to governmental actions. See the
Introduction and Section 14 for a description of certain conditions to the
Offer, including with respect to litigation and governmental actions.
State Takeover Laws. A number of states (including Delaware, where the
Company is incorporated) have adopted takeover laws and regulations which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, security holders, principal executive offices or principal places of
business therein. In Edgar v. MITE Corp., the Supreme Court of the United States
(the "Supreme Court") invalidated on constitutional grounds the Illinois
Business Takeover statute, which, as a matter of state securities law, made
certain corporate acquisitions more difficult. However, in 1987, in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana may,
as a matter of corporate law and, in particular, with respect to those aspects
of corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of stockholders in the state and were incorporated there.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of Delaware will by their terms
apply to the Offer, and except as described herein, Purchaser has not attempted
to comply with any state takeover statutes in connection with the Offer.
Purchaser reserves the right to challenge the validity or applicability of any
state law allegedly applicable to the Offer and nothing in this Offer to
Purchase nor any action taken in connection herewith is intended as a waiver of
that right. In the event that any state takeover statute is found applicable to
the Offer, Purchaser might be unable to accept for payment or purchase Shares
tendered pursuant to the Offer or might be delayed in continuing or consummating
the Offer. In such case, Purchaser may not be obligated to accept for purchase,
or pay for, any Shares tendered. See Section 14.
Antitrust. Under the HSR Act, and the rules and regulations that have been
promulgated thereunder by the FTC, certain acquisition transactions may not be
consummated until certain information and documentary material has been
furnished for review by the Antitrust Division and the FTC and certain waiting
period requirements have been satisfied. The acquisition of shares pursuant to
the Offer is subject to such requirements. On February 25, 2000, Purchaser filed
a Premerger Notification and Report Form with the Antitrust Division and the FTC
in connection with the purchase of Shares pursuant to the Offer.
Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares pursuant to the Offer may not be consummated until the expiration of a
15-calendar-day waiting period following the filing by Purchaser, unless such
waiting period is earlier terminated by the FTC and the Antitrust Division.
Accordingly, the waiting period under the HSR Act which is applicable to the
Offer will expire at 11:59 p.m., New York City time, on March 11, 2000, unless
earlier terminated by the Antitrust Division and the FTC or Purchaser receives a
request for additional information or documentary material from the Antitrust
Division or the FTC prior thereto. If either the FTC or the Antitrust Division
were to request additional information or documentary material from Purchaser,
the waiting period with respect to the Offer would expire at 11:59 p.m., New
York City time, on the tenth calendar day after the date of substantial
compliance with such request by Purchaser. Thereafter, the waiting period could
be extended only by court order or with the consent of Purchaser. The additional
10-calendar-day waiting period may be terminated sooner by the FTC and the
Antitrust Division. Although the Company is required to file certain information
and documentary material
35
<PAGE> 38
with the Antitrust Division and the FTC in connection with the Offer, neither
the Company's failure to make such filings nor a request made to the Company
from the Antitrust Division or the FTC for additional information or documentary
material will extend the waiting period with respect to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after Purchaser's
purchase of Shares, the Antitrust Division or the FTC could take such action
under the antitrust laws as either deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer, the divestiture of Shares purchased pursuant to the Offer or the
divestiture of substantial assets of the Company or Purchaser. Private parties
as well as state attorneys general may also bring legal actions under the
antitrust laws under certain circumstances. See Section 14. In addition, the
parties may also be subject to certain foreign competition statutes.
Based upon an examination of publicly available information provided by the
Company relating to the businesses in which the Company is engaged, Parent and
Purchaser believe the acquisition of Shares pursuant to the Offer will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made, or, if such
challenge is made, what the result will be. See Section 14.
16. CERTAIN FEES AND EXPENSES.
Lazard is acting as Dealer Manager in connection with the Offer, and served
as investment banker to Parent in connection with the proposed acquisition of
the Company under an agreement dated February 16, 2000. Parent has agreed to pay
Lazard a fee for its services of $10 million structured and payable as follows:
(i) $2.5 million upon announcement of the proposed transaction, and (ii) the
remaining $7.5 million upon the consummation of the Merger. In addition, Parent
has agreed to reimburse Lazard for all reasonable expenses incurred in
connection with such engagement, including fees of outside counsel and of other
professional advisors and to indemnify Lazard and certain related persons
against certain liabilities and expenses, including certain liabilities under
the federal securities laws. In the ordinary course or its business, Lazard and
its affiliates may actively trade in the Shares for its own account and for the
account of its customers, and accordingly, may at any time hold a long or short
positions in the Shares.
Georgeson Shareholder Communications Inc. has been retained by Purchaser as
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interview and may request brokers, dealers and other nominee stockholders to
forward material relating to the Offer to beneficial owners. Customary
compensation will be paid for all such services in addition to reimbursement of
reasonable out-of-pocket expenses. Purchaser has agreed to indemnify the
Information Agent against certain liabilities and expenses, including
liabilities under the federal securities laws.
In addition, BankBoston, N.A. has been retained as the Depositary. The
Depositary has not been retained to make solicitations or recommendations in its
role as Depositary. The Depositary will receive reasonable and customary
compensation for its services in connection with the Offer, will be reimbursed
for its reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith.
Except as set forth above, Purchaser will not pay any fees or commissions
to any broker, dealer or other person (other than the Information Agent and the
Dealer Manager for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies and other nominees will, upon
request, be reimbursed by Purchaser for customary clerical and mailing expenses
incurred by them in forwarding materials to their customers.
17. MISCELLANEOUS. The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares residing in any jurisdiction in
which the making of the Offer or the acceptance thereof would not be in
compliance with the securities, blue sky or other laws of such jurisdiction.
However, Purchaser may, in its discretion, take such action as it may deem
necessary to make the Offer in any jurisdiction and extend the Offer to holders
of Shares in such jurisdiction.
36
<PAGE> 39
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of Purchaser by the Dealer Manager or one or more registered
brokers or dealers that are licensed under the laws of such jurisdiction.
Purchaser has filed with the Commission the Schedule TO, together with
exhibits, pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, furnishing certain additional information with respect to the
Offer, and may file amendments thereto. Such Schedule TO and any amendments
thereto, including exhibits, may be examined and copies may be obtained from the
offices of the Commission in the same manner as described in Section 8 with
respect to information concerning the Company, except that they will not be
available at the regional offices of the Commission.
No person has been authorized to give any information or to make any
representation on behalf of Purchaser not contained in this Offer to Purchase or
in the Letter of Transmittal and, if given or made, any such information or
representation must not be relied upon as having been authorized. Neither the
delivery of the Offer to Purchase nor any purchase pursuant to the Offer will,
under any circumstances, create any implication that there has been no change in
the affairs of Purchaser or the Company since the date as of which information
is furnished or the date of this Offer to Purchase.
SBC SILVER, INC.
February 25, 2000
37
<PAGE> 40
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT.
The following table sets forth the name, present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years, of each director and executive officer of Parent. The business
address and telephone number of each such person is c/o SBC Communications Inc.,
175 E. Houston, San Antonio, Texas 78205-2233, (210) 821-4105. Except as
otherwise disclosed below, each person listed below is a citizen of the United
States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
CLARENCE C. BARKSDALE..................... Clarence C. Barksdale, age 67, is Vice Chairman, Board
Director since 1983 of Trustees, Washington University, St. Louis, Missouri.
Mr. Barksdale was Chairman of the Board and Chief
Executive Officer of Centerre Bancorporation from 1978
to 1988 and Chairman of the Board of Centerre Bank N.A.
from February 1985 through December 1988. Mr. Barksdale
was Vice Chairman of Boatmen's Bancshares, Inc., from
January through June 1989. Mr. Barksdale served as a
Director of Southwestern Bell Telephone Company from
1982 to 1983. He is a member of the Audit Committee and
the Corporate Public Policy and Environmental Affairs
Committee.
JAMES E. BARNES........................... Mr. Barnes, age 66, retired. Mr. Barnes was Chairman of
Director since 1990 the Board, President and Chief Executive Officer of
MAPCO Inc., Tulsa, Oklahoma from 1986 until 1999. Mr.
Barnes is a Director of BOK Financial Corporation;
Kansas City Southern Industries, Inc.; and Parker
Drilling Company. He is a member of the Audit Committee
and the Corporate Development Committee.
AUGUST A. BUSCH III....................... Mr. Busch, age 62, is Chairman of the Board and
Director since 1983 President of Anheuser-Busch Companies, Inc., St. Louis,
Missouri. He served as a Director of Southwestern Bell
Telephone Company from 1980 to 1983. Mr. Busch is a
Director of Anheuser-Busch Companies, Inc.; Emerson
Electric Co.; and General American Life Insurance
Company; and an Advisory Member of the Boards of
Directors of Grupo Modelo, S.A. de C.V. and Diblo, S.A.
de C.V. He is a member of the Corporate Development
Committee, the Executive Committee and the Human
Resources Committee.
ROYCE S. CALDWELL......................... Mr. Caldwell, age 61, is President -- SBC Operations,
Director since 1997 and has served in this capacity since July 1995. Mr.
Caldwell was President and Chief Executive Officer of
Southwestern Bell Telephone Company from April 1994 to
June 1995. He was President -- Customer Services,
Southwestern Bell Telephone Company, from July 1992 to
March 1994. He is a Director of Cullen/Frost Bankers,
Inc.; Pacific Bell; and Southwestern Bell Telephone
Company. Mr. Caldwell is also a member of the
Telecommunications Board of Advisors of Compaq Computer
Corporation. He is a member of the Executive Committee
and the Finance/Pension Committee.
</TABLE>
38
<PAGE> 41
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
JAMES W. CALLAWAY......................... Mr. Callaway, age 53, has held high-level managerial
positions with Parent or its subsidiaries for more than
the past five years, most recently as Group
President -- SBC Services since November 1999.
RUBEN R. CARDENAS......................... Mr. Cardenas, age 68, is a partner in the law firm of
Director since 1983 Cardenas, Whitis & Stephen, L.L.P., McAllen, Texas. He
served as a Director of Southwestern Bell Telephone
Company from 1975 to 1983. Mr. Cardenas is a Director of
Cullen/Frost Bankers, Inc. He is the Chairman of the
Audit Committee and a member of the Corporate Public
Policy and Environmental Affairs Committee.
CASSANDRA C. CARR......................... Ms. Carr, age 55, has held high-level managerial
positions with Parent or its subsidiaries for more than
the past five years, most recently as Senior Executive
Vice President -- External Affairs since October 1998.
WILLIAM P. CLARK.......................... Mr. Clark, age 68, is Chief Executive Officer of Clark
Director since 1997 Company, Paso Robles, California, and since December
1996 has been Senior Counsel to the law firm of Clark,
Cali and Negranti. He is a retired California Supreme
Court Justice and former Secretary of the United States
Department of the Interior. He served as a Director of
Pacific Telesis Group from 1985 to 1997. He is a
Director of the Irish Investment Fund and Lawter
International Inc. He is a member of the Corporate
Development Committee and the Corporate Public Policy
and Environmental Affairs Committee.
MARTIN K. EBY, JR. ....................... Mr. Eby, age 65, is Chairman of the Board and Chief
Director since 1992 Executive Officer of The Eby Corporation, Wichita,
Kansas. He is a Director of Intrust Bank, N.A. and
Intrust Financial Corporation. He is a member of the
Audit Committee and the Finance/Pension Committee.
JAMES D. ELLIS............................ Mr. Ellis, age 56, has served as Senior Executive Vice
President and General Counsel since March 1989.
CHARLES E. FOSTER......................... Mr. Foster, age 63, has held high-level managerial
positions with Parent or its subsidiaries for more than
the past five years, most recently as Group
President -- SBC since July 1995.
HERMAN E. GALLEGOS........................ Mr. Gallegos, age 69, is an independent management
Director since 1997 consultant. Mr. Gallegos was a Director of Gallegos
Institutional Investors Corporation from 1990 to August
1994. He served as an alternate U.S. Public Delegate to
the 49th United Nations General Assembly from 1994 to
1995. He served as a Director of Pacific Telesis Group
from 1983 to 1997. He is a Director of UnionBanCal
Corporation. He is a member of the Audit Committee and
the Corporate Public Policy and Environmental Affairs
Committee.
</TABLE>
39
<PAGE> 42
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
JESS T. HAY............................... Mr. Hay, age 69, is Chairman of the Texas Foundation for
Director since 1986 Higher Education and Chairman of HCB Enterprises Inc. (a
private investment firm), Dallas, Texas. Mr. Hay was
Chairman and Chief Executive Officer of Lomas Financial
Group from 1969 until December 1994. He is a Director of
Exxon Corporation; Trinity Industries, Inc.; and Viad
Corp. He is a member of the Audit Committee and Chairman
of the Human Resources Committee.
CARLOS SLIM HELU.......................... Mr. Helu, age 60, is Chairman of the Board of Telefonos
Director since 1993 de Mexico, S.A. de C.V. and Chairman of the Board of
Carson Global Telecom, S.A. de C.V., Mexico. He is also
Chairman Emeritus of Grupo Carso, S.A. de C.V., having
served as Chairman of the Board from October 1990 to
October 1998. He is a Director of Carso Global Telecom,
S.A. de C.V.; Grupo Financiero Inbursa, S.A. de C.V.;
Philip Morris Companies Inc.; and Telefonos de Mexico,
S.A. de C.V. He is a member of the Corporate Public
Policy and Environmental Affairs Committee and the
Finance/Pension Committee. Mr. Helu is a citizen of
Mexico.
JAMES A. HENDERSON........................ Mr. Henderson, age 65, was Chairman of the Board from
Director since 1999 1995 and Chief Executive Officer from 1994 of Cummins
Engine Company, Inc., Columbus, Indiana, until his
retirement in December 1999. He served as a Director of
Ameritech Corporation from 1983 to 1999. He is a
Director of International Paper Company; Rohm and Haas
Company; and Ryerson Tull, Inc. He is a member of the
Audit Committee and the Finance/ Pension Committee.
BOBBY R. INMAN............................ Mr. Inman, age 68, Admiral, United States Navy, Retired.
Director since 1985 Admiral Inman served as Vice Admiral, United States
Navy, and Director, National Security Agency, from 1977
to 1981, and as Admiral, United States Navy, and Deputy
Director, Central Intelligence Agency, from 1981 to
1982. Admiral Inman is a Director of Fluor Corporation;
Science Applications International Corporation;
Temple-Inland Inc.; and Xerox Corporation. He is the
Chairman of the Finance/Pension Committee and a member
of the Human Resources Committee.
KAREN E. JENNINGS......................... Ms. Jennings, age 49, has served as Senior Executive
Vice President -- Human Resources since October 1998.
Prior to that, she held responsible managerial positions
with Parent.
JAMES S. KAHAN............................ Mr. Kahan, age 52, has served as Senior Executive Vice
President -- Corporate Development since July 1993.
DONALD E. KIERNAN......................... Mr. Kiernan, age 59, has serve as Senior Executive Vice
President, Chief Financial Officer and Treasurer since
July 1993.
</TABLE>
40
<PAGE> 43
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
CHARLES F. KNIGHT......................... Mr. Knight, age 64, is Chairman and Chief Executive
Director since 1983 Officer of Emerson Electric Co., St. Louis, Missouri. He
served as a Director of Southwestern Bell Telephone
Company from 1974 to 1983. Mr. Knight is a Director of
Anheuser-Busch Companies, Inc.; BP Amoco p.l.c., London,
England; Emerson Electric Co.; International Business
Machines Corporation; and Morgan Stanley Dean Witter &
Co. He is the Chairman of the Corporate Development
Committee and a member of the Executive Committee and
the Finance/Pension Committee.
LYNN M. MARTIN............................ Ms. Martin, age 60, is Chair of the Council for the
Director since 1999 Advancement of Women and Advisor to the firm of Deloitte
& Touche LLP, Chicago, Illinois, and is a professor at
the J.L. Kellogg Graduate School of Management,
Northwestern University. Ms. Martin served as U.S.
Secretary of Labor from 1991 to 1993, and as a member of
the U.S. House of Representatives from Illinois from
1981 to 1991. She served as a Director of Ameritech
Corporation from 1993 to 1999. She is a Director of
certain Dreyfus Funds; Harcourt General, Inc.; The
Proctor and Gamble Company; Ryder System, Inc.; and TRW
Inc. She is a member of the Corporate Public Policy and
Environmental Affairs Committee and the Finance/Pension
Committee.
JOHN B. MCCOY............................. Mr. McCoy, age 56, was Chairman from November 1999 and
Director since 1999 Chief Executive Officer from October 1998 of BANK ONE
CORPORATION, Chicago, Illinois, until his retirement in
December 1999. Mr. McCoy served as Chairman and Chief
Executive Officer of BANC ONE CORPORATION from 1987 to
1998. He served as a Director of Ameritech Corporation
from 1991 to 1999. He is a Director of Cardinal Health,
Inc. and Federal Home Loan Mortgage Corporation. He is a
member of the Corporate Development Committee and the
Human Resources Committee.
MARY S. METZ.............................. Dr. Metz, age 62, is President of S. H. Cowell
Director since 1997 Foundation, San Francisco, California, and has served in
this capacity since January 1999. Dr. Metz was Dean of
University Extension of the University of California,
Berkeley, from July 1991 until August 1998, and is
President Emerita of Mills College. She served as a
Director of Pacific Telesis Group from 1986 to 1997. She
is a Director of Longs Drug Stores Corporation; Pacific
Gas and Electric Company; and UnionBanCal Corporation.
She is a member of the Audit Committee.
EDWARD A. MUELLER......................... Mr. Mueller, age 52, has held high-level managerial
positions with Parent or its subsidiaries for more than
the past five years, most recently as President -- SBC
International Operations since November 1999.
</TABLE>
41
<PAGE> 44
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
TONI REMBE................................ Ms. Rembe, age 63, is a partner in the law firm of
Director since 1998 Pillsbury Madison & Sutro LLP, San Francisco,
California. Ms. Rembe had served as an Advisory Director
of Parent from April 1997 to January 1998. She served as
a Director of Pacific Telesis Group from 1991 to 1997.
She is a Director of Potlatch Corporation and
Transamerica Corporation. She is a member of the
Corporate Public Policy and Environmental Affairs
Committee.
S. DONLEY RITCHEY......................... Mr. Ritchey, age 66, is Managing Partner of Alpine
Director since 1997 Partners, Danville, California. Mr. Ritchey was Chief
Executive Officer and Chairman of the Board of Lucky
Stores, Inc. from 1980 to 1986. He served as a Director
of Pacific Telesis Group from 1984 to 1997. He is a
Director of The McClatchy Company. He is a member of the
Finance/Pension Committee and the Human Resources
Committee.
JOYCE M. ROCHE............................ Ms. Roche, age 52, is an independent consultant. Ms.
Director since 1998 Roche was President and Chief Operating Officer of
Carson, Inc. from 1996 to 1998. Ms. Roche was Executive
Vice President of Global Marketing of Carson, Inc. from
1995 to 1996 and Vice President -- Global Marketing of
Avon Products, Inc. from 1993 to 1994. She served as a
Director of Southern New England Telecommunications
Corporation from May 1997 to October 1998. She is a
Director of Anheuser-Busch Companies, Inc. and
Tupperware Corporation. She is a member of the Audit
Committee and the Corporate Public Policy and
Environmental Affairs Committee.
RICHARD M. ROSENBERG...................... Mr. Rosenberg, age 69, retired. Mr. Rosenberg was
Director since 1997 Chairman of the Board of BankAmerica Corporation from
January 1996 to May 1996 and was Chairman of the Board
and Chief Executive Officer from May 1990 to December
1995. He served as a Director of Pacific Telesis Group
from 1994 to 1997. He is a Director of Airborne Freight
Corporation; BankAmerica Corporation; Northrop Grumman
Corporation; and Potlatch Corporation. He is a member of
the Corporate Development Committee and the
Finance/Pension Committee.
STANLEY T. SIGMAN......................... Mr. Sigman, age 52, has held high-level managerial
positions with Parent or its subsidiaries for more than
the past five years, most recently as Group
President -- SBC National Operations since November
1999.
</TABLE>
42
<PAGE> 45
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
LAURA D'ANDREA TYSON...................... Dr. Tyson, age 52, is Dean of the Walter A. Haas School
Director since 1999 of Business at the University of California at Berkeley,
and has served in this capacity since 1998. Dr. Tyson
has also served as Director of LECG-Navigant Consulting,
Inc., Emeryville, California, since 1997. Dr. Tyson
served as Professor of Economics at the University of
California at Berkeley from 1997 to 1998. She served as
National Economic Adviser to the President of the United
States from 1995 to 1996 and as Chair of the White House
Council of Economic Advisers from 1993 to 1995. She
served as a Director of Ameritech Corporation from 1997
to 1999. She is a Director of Eastman Kodak Company; Fox
Entertainment Group, Inc.; Human Genome Sciences, Inc.;
and Morgan Stanley Dean Witter & Co. She is a member of
the Audit Committee and the Finance/Pension Committee.
PATRICIA P. UPTON......................... Mrs. Upton, age 61, is President and Chief Executive
Director since 1993 Officer of Aromatique, Inc., Heber Springs, Arkansas.
She is a member of the Audit Committee and the Corporate
Public Policy and Environmental Affairs Committee.
EDWARD E. WHITACRE, JR. .................. Mr. Whitacre, age 58, is Chairman of the Board and Chief
Director since 1986 Chairman since 1990 Executive Officer and has served in this capacity since
January 1990. He is a Director of Anheuser-Busch
Companies, Inc.; Burlington Northern Santa Fe
Corporation; Emerson Electric Co.; and The May
Department Stores Company. He is the Chairman of the
Executive Committee and a member of the Corporate
Development Committee and the Finance/Pension Committee.
</TABLE>
In addition, Gilbert F. Amelio, age 57, has served as an Advisory Director
since 1997. Dr. Amelio is a Partner and Director of The Parkside Group, LLC, and
Principal of Aircraft Ventures, LLC. He has served as a Director of Pacific
Telesis Group from 1995 to 1997. He is a Director of Phase Metrics, Inc.
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER.
The following table sets forth the name, present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years, of each director and executive officer of Purchaser. The
business address of each such person is c/o SBC Communications Inc., 175 E.
Houston, San Antonio, Texas 78205-2233, (210) 821-4105. Each of the persons
listed below are citizens of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
RICHARD C. DIETZ.......................... Mr. Dietz, age 53, is President and has been a Director
since February 2000. He has held high-level managerial
positions with SBC Communications for more than the
past five years. He has served as President of SBC
Global Markets since December 1999.
JAMES S. KAHAN............................ Vice President and Director. See Part I of this
Schedule I.
</TABLE>
43
<PAGE> 46
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
STEVEN McGAW.............................. Mr. McGaw, age 38, is a Vice President of SBC Silver.
He is also Managing Director -- Corporate Development
of SBC Communications since December 1998. Previously,
he was Vice President -- Business Marketing of SBC
Operations from August 1997 to December 1998 and
Regional Vice President - Major Accounts of SWBT,
Dallas from August 1996 to August 1997. Mr. McGaw also
served a Director -- Corporate Development for SBC
Communications from January 1991 to August 1996.
MICHAEL D. WAGNER......................... Mr. Wagner, age 54, is Vice President and Treasurer. He
also Executive Director -- Corp. Finance of SBC
Communications since May 1998. Previously, he was Chief
Financial Officer, SBC International, Inc. from
December 1997 to April 1998; Director -- Services
Implementation, SBC Services, Inc. from June 1996 to
November 1997; and Director -- Investor Relations of
SBC Communications from January 1991 to May 1996.
</TABLE>
44
<PAGE> 47
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
BANKBOSTON, N.A.
<TABLE>
<S> <C>
By Mail: By Hand/Overnight Delivery:
BankBoston, N.A. Securities Transfer & Reporting Services, Inc.
Corporate Actions c/o Boston Equiserve, LP
P.O. Box 8029 100 William St./Galleria
Boston, MA 02266-8029 New York, NY 10038
</TABLE>
By Facsimile Transmissions:
(for Eligible Institutions only)
781-575-2232
For Information (call collect):
781-575-3120
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
Georgeson Shareholder Communications Inc.
17 State Street
New York, NY 10004
Bankers and Brokers Call Collect: (212) 440-9800
Call Toll Free: (800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10020
(212)632-6717 (call collect)
<PAGE> 1
EXHIBIT (a)(1)(B)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF
COMMON STOCK
(INCLUDING THE RELATED PREFERRED STOCK PURCHASE RIGHTS)
OF
STERLING COMMERCE, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED FEBRUARY 25, 2000
OF
SBC SILVER, INC.
A WHOLLY-OWNED SUBSIDIARY
OF
SBC COMMUNICATIONS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 23, 2000, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
BANKBOSTON, N.A.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
BankBoston, N.A. Securities Transfer & Reporting BankBoston, N.A.
Corporate Actions Services Corporate Actions
P.O. Box 8029 c/o Boston Equiserve, LP 150 Royall Street
Boston, MA 02266-8029 100 William St./Galleria Canton, MA 02021
(registered or certified mail New York, NY 10038
recommended)
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(781) 575-2232 or 2233
Confirm Facsimile By Telephone
(781) 575-3120
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of Sterling
Commerce, Inc. if certificates for Shares (as such term is defined below) are to
be forwarded herewith or, unless an Agent's Message (as defined in Instruction 2
below) is utilized, if delivery of Shares is to be made by book-entry transfer
to an account maintained by the Depositary at the Book-Entry Transfer Facility
(as defined in and pursuant to the procedures set forth in the Offer to
Purchase). Stockholders who deliver Shares by book-entry transfer are referred
to herein as "Book-Entry Stockholders" and other stockholders who deliver shares
are referred to herein as "Certificate Stockholders."
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation (as
defined in Section 2 of the Offer to Purchase) with respect to, their Shares and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to
<PAGE> 2
Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER
FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: -----------------------------------------------
Account Number: Transaction Code Number:
--------------- ----------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s):
-----------------------------------------------
Window Ticket No. (if any):
-----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------------
Name of Institution which Guaranteed Delivery:
--------------------------
If delivered by Book-Entry Transfer, check box: [ ]
Account Number: Transaction Code Number:
--------------- ----------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Shares
- ------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares represented by Share certificates delivered to the
Depositary are being tendered hereby. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS SET FORTH
IN THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to SBC Silver, Inc., a Delaware corporation
("Purchaser") and a wholly-owned subsidiary of SBC Communications Inc., a
Delaware corporation ("Parent"), the above-described shares of common stock, par
value $0.01 per share (the "Common Stock"), including the related preferred
stock purchase rights issued pursuant to the Rights Agreement (as defined in the
Offer of Purchase) (the "Rights" and, together with the Common Stock, the
"Shares"), of Sterling Commerce, Inc., a Delaware corporation (the "Company"),
pursuant to Purchaser's offer to purchase all outstanding Shares at a price of
$44.25 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
February 25, 2000, and in this Letter of Transmittal (which, together with any
amendments or supplements thereto or hereto, collectively constitute the
"Offer"). The undersigned understands that Purchaser reserves the right to
transfer or assign, in whole at any time, or in part from time to time, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer, but any such transfer or assignment will
not relieve Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer. Receipt of the
Offer is hereby acknowledged.
The Offer is being made pursuant to a Merger Agreement, dated February 18,
2000 (the "Merger Agreement"), among Parent, Purchaser and the Company.
The Company has distributed one Right for each outstanding Share pursuant
to the Rights Agreement. The Rights are currently evidenced by and trade with
certificates evidencing the Common Stock. The Company has taken such action so
as to make the Rights Agreement inapplicable to Purchaser and its affiliates and
associates in connection with the Merger Agreement and the transactions
contemplated thereby.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to, and any and all claims in respect of or
arising or having arisen as a result of the undersigned's status as a holder of,
all the Shares that are being tendered hereby (and any and all non-cash
dividends, distributions, rights, other Shares or other securities issued or
issuable in respect thereof on or after February 25, 2000 (collectively,
"Distributions")) and irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares (and all Distributions), with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver certificates for such Shares (and any and all Distributions), or
transfer ownership of such Shares (and any and all Distributions) on the account
books maintained by the Book-Entry Transfer Facility, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of Purchaser, (ii) present such Shares (and any and all Distributions)
for transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Wayne A. Wirtz and Thomas Giltner in their respective capacities as
officers of Purchaser, and any individual who will thereafter succeed to any
such office of Purchaser, and each of them, the attorneys-in-fact and proxies of
the undersigned, each with full power of substitution, to vote at any annual or
special meeting of the Company's stockholders or any adjournment or postponement
thereof or otherwise in such manner as each such attorney-in-fact and proxy or
his substitute will in his sole discretion deem proper with respect to, to
execute any written consent concerning any matter as each such attorney-in-fact
and proxy or his substitute will in his sole discretion deem proper with respect
to, and to otherwise act as each such attorney-in-fact and proxy or his
substitute will in his sole discretion deem proper with respect to, all of the
Shares (and any and all Distributions) tendered hereby and accepted for payment
by Purchaser. This appointment will be effective if and when, and only to the
extent that, Purchaser accepts such Shares for payment pursuant to the Offer.
This power of attorney and proxy are irrevocable and are granted in
consideration of the acceptance for payment of such Shares in accordance with
the terms of the Offer. Such acceptance for payment will, without further
action, revoke any prior powers
<PAGE> 4
of attorney and proxies granted by the undersigned at any time with respect to
such Shares (and any and all Distributions), and no subsequent powers of
attorney, proxies, consents or revocations may be given by the undersigned with
respect thereto (and, if given, will not be deemed effective). Purchaser
reserves the right to require that, in order for Shares or other securities to
be deemed validly tendered, immediately upon Purchaser's acceptance for payment
of such Shares, Purchaser must be able to exercise full voting, consent and
other rights with respect to such Shares (and any and all Distributions),
including voting at any meeting of the Company's stockholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that the undersigned owns the Shares
tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that the
tender of the tendered Shares complies with Rule 14e-4 under the Exchange Act,
and that when the same are accepted for payment by Purchaser, Purchaser will
acquire good, marketable and unencumbered title thereto and to all
Distributions, free and clear of all liens, restrictions, charges and
encumbrances and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby and all
Distributions. In addition, the undersigned will remit and transfer promptly to
the Depositary for the account of Purchaser all Distributions in respect of the
Shares tendered hereby, accompanied by appropriate documentation of transfer,
and, pending such remittance and transfer or appropriate assurance thereof,
Purchaser will be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire purchase price of the Shares tendered
hereby or deduct from such purchase price, the amount or value of such
Distribution as determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred will survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder will be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer (and if
the Offer is extended or amended, the terms or conditions of any such extension
or amendment). Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the terms of the Merger Agreement, the price
to be paid to the undersigned will be the amended price notwithstanding the fact
that a different price is stated in this Letter of Transmittal. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
Purchaser may not be required to accept for payment any of the Shares tendered
hereby.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased and/or return any certificates for Shares not tendered or accepted for
payment in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated under
"Special Delivery Instructions," please mail the check for the purchase price of
all Shares purchased and/or return any certificates for Shares not tendered or
not accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and/or return any
certificates evidencing Shares not tendered or not accepted for payment (and any
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and/or return any such certificates (and any accompanying documents, as
appropriate) to, the person(s) so indicated. Unless otherwise indicated herein
in the box entitled "Special Payment Instructions," please credit any Shares
tendered herewith by book-entry transfer that are not accepted for payment by
crediting the account at the Book-Entry Transfer Facility designated above. The
undersigned recognizes that Purchaser has no obligation, pursuant to the
"Special Payment Instructions," to transfer any Shares from the name of the
registered holder thereof if Purchaser does not accept for payment any of the
Shares so tendered.
<PAGE> 5
[ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN
HAVE BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES:
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares accepted for
payment (less the amount of any federal income and backup withholding tax
required to be withheld) is to be issued in the name of someone other than the
undersigned, if certificates for Shares not tendered or not accepted for payment
are to be issued in the name of someone other than the undersigned or if Shares
tendered hereby and delivered by book-entry transfer that are not accepted for
payment are to be returned by credit to an account maintained at a Book-Entry
Transfer Facility other than the account indicated above.
Issue check and/or Share certificate(s) to:
Name:
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address:
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
Credit Shares delivered by book-entry transfer and not purchased to the
Book-Entry Transfer Facility account.
- --------------------------------------------------------------------------------
(ACCOUNT NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed, ONLY if certificates for Shares not tendered or not accepted
for payment and/or the check for the purchase price of Shares accepted for
payment (less the amount of any federal income and backup withholding tax
required to be withheld) is to be sent to someone other than the undersigned or
to the undersigned at an address other than that shown under "Description of
Shares Tendered."
Mail check and/or Share certificates to:
Name:
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address:
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
<PAGE> 6
IMPORTANT -- SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: , 2000
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm:
-------------------------------------------------------------------
Capacity (Full Title):
----------------------------------------------------------
(SEE INSTRUCTION 5)
Address:
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-------------------------------------------------
Taxpayer Identification or Social Security Number:
------------------------------
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
-----------------------------------------------------------
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Title:
--------------------------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
Address:
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-------------------------------------------------
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has(have) completed either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a participant
in the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on this
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by stockholders of the
Company either if Share certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if delivery of Shares is to be made by book-entry
transfer pursuant to the procedures set forth herein and in Section 3 of the
Offer to Purchase. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees or an
Agent's Message (in connection with book-entry transfer) and any other required
documents, must be received by the Depositary at one of its addresses set forth
herein prior to the Expiration Date and either (i) certificates for tendered
Shares must be received by the Depositary at one of such addresses prior to the
Expiration Date or (ii) Shares must be delivered pursuant to the procedures for
book-entry transfer set forth herein and in Section 3 of the Offer to Purchase
and a Book-Entry Confirmation must be received by the Depositary prior to the
Expiration Date or (b) the tendering stockholder must comply with the guaranteed
delivery procedures set forth herein and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-entry
transfer procedures on a timely basis may tender their Shares by properly
completing and duly executing the Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth herein and in Section 3 of the Offer to
Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Shares, in proper form for transfer (or
a Book-Entry Confirmation with respect to all tendered Shares), together with a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other required documents must
be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the New York Stock Exchange is open for business.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
<PAGE> 8
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by
book-entry transfer). If fewer than all the Shares evidenced by any Share
certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares that are to be tendered in the box entitled "Number of
Shares Tendered." In any such case, new certificate(s) for the remainder of the
Shares that were evidenced by the old certificates will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date or the
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of the authority of such person so to act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share certificates or
separate stock powers are required unless payment or certificates for Shares not
tendered or not accepted for payment are to be issued in the name of a person
other than the registered holder(s). Signatures on any such Share certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s) or such other person or
otherwise) payable on account of the transfer to such other person will be
deducted from the purchase price of such Shares purchased unless evidence
satisfactory to Purchaser of the payment of such taxes, or exemption therefrom
is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares accepted for payment is to be issued in the name of, and/or
Share certificates for Shares not accepted for payment or not tendered are to be
issued in the name of and/or returned to, a person other than the signer of this
Letter of Transmittal or if a check is to be sent, and/or such certificates are
to be returned, to a person other than the signer of this Letter of Transmittal,
or to an address other than that shown above, the appropriate boxes on this
Letter of Transmittal should be completed. Any
<PAGE> 9
stockholder(s) delivering Shares by book-entry transfer may request that Shares
not purchased be credited to such account maintained at the Book-Entry Transfer
Facility as such stockholder(s) may designate in the box entitled "Special
Payment Instructions." If no such instructions are given, any such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facility designated above as the account from which such Shares were delivered.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to Georgeson Shareholder Communications Inc., the Information Agent for
the Offer (the "Information Agent"), at its address and phone number set forth
below, or from brokers, dealers, commercial banks or trust companies.
9. WAIVER OF CONDITIONS. Subject to the Merger Agreement, Purchaser
reserves the absolute right in its sole discretion to waive, at any time or from
time to time, any of the specified conditions of the Offer, other than the
Minimum Condition (as defined in the Offer to Purchase), in whole or in part, in
the case of any Shares tendered.
10. BACKUP WITHHOLDING. In order to avoid "backup withholding" of federal
income tax on payments pursuant to the Offer, a stockholder surrendering Shares
in the Offer must, unless an exemption applies, provide the Depositary with such
stockholder's correct taxpayer identification number ("TIN") on Substitute Form
W-9 in this Letter of Transmittal and certify, under penalties of perjury, that
such TIN is correct and that such stockholder is not subject to backup
withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund may be obtained by the stockholder upon filing an income tax
return.
The stockholder is generally required to give the Depositary the TIN (i.e.,
social security number or employer identification number) of the record owner of
the Shares. If the Shares are held in more than one name or are not in the name
of the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, most corporations and
certain foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any certificate(s)
representing Shares has (have) been lost, destroyed or stolen, the stockholder
should promptly notify the Depositary by checking the box immediately preceding
the special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION
DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR
GUARANTEED DELIVERY.
<PAGE> 10
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is generally required to provide the Depositary (as payer)
with such stockholder's correct taxpayer identification number on Substitute
Form W-9 below. If such stockholder is an individual, the taxpayer
identification number is his social security number. If a tendering stockholder
is subject to backup withholding, such stockholder must cross out item (2) of
Part 2 (the Certification box) on the Substitute Form W-9. If the Depositary is
not provided with the correct taxpayer identification number, the stockholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, most corporations, and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that stockholder must submit a statement, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. Exempt stockholders, other than
foreign individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such stockholder is awaiting a taxpayer identification number).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional guidance on which number to
report. If the tendering stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future, such
stockholder should write "Applied For" in the space provided for in the TIN in
Part 1, and sign and date the Substitute Form W-9. If "Applied For" is written
in Part 1 and the Depositary is not provided with a TIN within sixty (60) days,
the Depositary will withhold 31% on all payments of the purchase price until a
TIN is provided to the Depositary.
<PAGE> 11
PAYER'S NAME: BANKBOSTON, N.A.
<TABLE>
<C> <S>
- ----------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE
BOX AT RIGHT AND CERTIFY BY SIGNING AND
FORM W-9 DATING BELOW ---------------------------------------
Social Security Number
(If awaiting TIN write
"Applied For")
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE OR
PAYER'S REQUEST FOR TAXPAYER ---------------------------------------
IDENTIFICATION NUMBER (TIN) Employer Identification Number
(If awaiting TIN write
"Applied For")
-------------------------------------------------------------------------------------------
PART 2 -- Certificate -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued for me), and
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
-------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because of
under-reporting interest or dividends on your tax returns. However, if after being
notified by the IRS that you are subject to backup withholding, you receive another
notification from the IRS that you are no longer subject to backup withholding, do not
cross out such item (2). (Also see instructions in the enclosed Guidelines).
-------------------------------------------------------------------------------------------
Signature --------------------- Date ------------ , 2000 PART 3 -- Awaiting TIN [ ]
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Officer or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a Taxpayer Identification Number to the Depositary by the time of
payment, 31% of all reportable payments made to me thereafter will be withheld,
but that such amounts will be refunded to me if I provide a certified Taxpayer
Identification Number to the Depositary within sixty (60) days.
Signature Date , 2000
------------------------------ ---------------------------
<PAGE> 12
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent at its address and telephone number set forth
below:
THE INFORMATION AGENT FOR THE OFFER IS:
Georgeson Shareholder Communications Inc.
17 State Street
New York, New York 10004
Bankers and Bankers Call Collect: (212) 440-9800
Call Toll-Free: (800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10020
(212) 632-6717 (call collect)
<PAGE> 1
EXHIBIT (a)(1)(C)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE RELATED PREFERRED STOCK PURCHASE RIGHTS)
OF
STERLING COMMERCE, INC.
TO
SBC SILVER, INC.,
A WHOLLY-OWNED SUBSIDIARY
OF
SBC COMMUNICATIONS INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MARCH 23, 2000, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
representing shares of common stock, par value $0.01 per share (the "Common
Stock"), including the related preferred stock purchase rights (the "Rights"
and, together with the Common Stock, the "Shares"), issued pursuant to the
Rights Agreement (as defined in the Offer to Purchase) of Sterling Commerce,
Inc., a Delaware corporation (the "Company"), are not immediately available, if
the procedure for book-entry transfer cannot be completed prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or if time
will not permit all required documents to reach the Depositary prior to the
Expiration Date. Such form may be delivered by hand, transmitted by facsimile
transmission or mailed to the Depositary. See Section 3 of the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
BANKBOSTON, N.A.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
BankBoston, N.A. Securities Transfer & Reporting Services Bank Boston, N.A.
Corporate Actions c/o Boston Equiserve, LP Corporate Actions
P.O. Box 8029 100 William St./Galleria 150 Royall Street
Boston, MA 02266-8029 New York, NY 10038 Canton, MA 02021
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(781) 575-2232 or 2233
Confirm Facsimile By Telephone
(781) 575-3120
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to SBC Silver, Inc., a Delaware corporation
("Purchaser") and a wholly-owned subsidiary of SBC Communications Inc., a
Delaware corporation ("Parent"), upon the terms and subject to the conditions
set forth in Purchaser's Offer to Purchase, dated February 25, 2000 (the "Offer
to Purchase"), and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, constitute the "Offer"), receipt of which is
hereby acknowledged, the number of shares set forth below of common stock, par
value $0.01 per share (the "Common Stock"), including the related preferred
stock purchase rights issued pursuant to the Rights Agreement (as defined in the
Offer to Purchase) (the "Rights" and, together with the Common Stock, the
"Shares"), of Sterling Commerce, Inc., a Delaware corporation (the "Company"),
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
Number of Shares:
--------------------------------------------------------------
Certificate Nos. (if available):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Check box if Shares will be tendered by book-entry transfer: [ ]
Account Number:
----------------------------------------------------------------
Dated: , 2000
---------------------------------------
Name(s) of Record Holder(s):
--------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT
Address(es):
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ZIP CODE
Area Code and Tel. No.:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s):------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, guarantees to deliver to the Depositary
either certificates representing the Shares tendered hereby, in proper form for
transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, in each case with delivery
of a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message, and any
other documents required by the Letter of Transmittal, within three trading days
(as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the same time period herein.
Failure to do so could result in a financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm:
------------------------------------------------- --------------------------------------------------------------
AUTHORIZED SIGNATURE
Address: Name:
------------------------------------------------------ ---------------------------------------------------------
PLEASE PRINT
- -------------------------------------------------------------- Title:
ZIP CODE --------------------------------------------------------
Area Code and Tel. No: Date: , 2000
---------------------------------------- ---------------------------------------------------
</TABLE>
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD BE
SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
EXHIBIT (a)(1)(D)
OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE RELATED PREFERRED STOCK PURCHASE RIGHTS)
OF
STERLING COMMERCE, INC.
AT
$44.25 NET PER SHARE IN CASH
BY
SBC SILVER, INC.,
A WHOLLY-OWNED SUBSIDIARY
OF
SBC COMMUNICATIONS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 23, 2000, UNLESS THE OFFER IS EXTENDED.
February 25, 2000
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated February
25, 2000 (the "Offer to Purchase"), and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") in connection with the offer by SBC Silver, Inc., a
Delaware corporation ("Purchaser") and wholly-owned subsidiary of SBC
Communications Inc., a Delaware corporation ("Parent"), to purchase all
outstanding shares of common stock, par value $0.01 per share (the "Common
Stock"), including the related preferred stock purchase rights issued pursuant
to the Rights Agreement (as defined in the Offer to Purchase) (the "Rights" and,
together with the Common Stock, the "Shares") of Sterling Commerce, Inc., a
Delaware corporation (the "Company"), at a purchase price of $44.25 per Share,
net to you in cash, without interest thereon. WE ARE THE HOLDER OF RECORD OF
SHARES HELD FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS
THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE ENCLOSED LETTER OF
TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY
YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is invited to the following:
1. The offer price is $44.25 per Share, net to you in cash, without
interest.
2. The Offer is being made for all outstanding Shares
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement (as defined in the Offer to Purchase) and the transactions
contemplated thereby, including the Offer and the Merger (each as defined
in the Offer to Purchase), and has unanimously determined that the Offer
and the Merger are advisable and fair to and in the best interests of, the
Company's stockholders and unanimously recommends that the stockholders
accept the Offer and tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on Thursday, March 23, 2000, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date (as defined
in the Offer to Purchase) that number of Shares which would represent at
least a majority of the Shares on a fully diluted basis (provided that for
the purposes of the foregoing calculation, options to purchase Shares that
are outstanding immediately prior to the consummation of the Offer and are
not exercisable at
<PAGE> 2
such time will not be taken into account). The Offer is also subject to
certain other conditions set forth in the Offer to Purchase. See the
Introduction and Sections 1 and 14 of the Offer to Purchase.
6. Any stock transfer taxes applicable to the sale of Shares to
Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Except as disclosed in the Offer to Purchase, Purchaser is not aware of any
state in which the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute In any jurisdiction in which
the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
Purchaser by the Dealer Manager or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares will
be tendered unless otherwise specified on the reverse side of this letter. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf prior to the expiration of the Offer.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE RELATED PREFERRED STOCK PURCHASE RIGHTS)
OF
STERLING COMMERCE, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated February 25, 2000 (the "Offer to Purchase") and the
related Letter of Transmittal in connection with the Offer by SBC Silver, Inc.,
a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of SBC
Communications Inc., a Delaware corporation ("Parent"), to purchase all
outstanding shares of common stock, par value $0.01 per share (the "Common
Stock"), including the related preferred stock purchase rights (the "Rights"
and, together with the Common Stock, the "Shares") issued pursuant to the Rights
Agreement (as defined in the Offer to Purchase), of Sterling Commerce, Inc., a
Delaware corporation, at a price of $44.25 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase and related Letter of Transmittal.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of shares of Common Stock to Be Tendered*
- ------------------------------
Dated: , 2000
--------------------------------------
--------------------------------------
Signature(s)
--------------------------------------
Print Name(s)
--------------------------------------
--------------------------------------
Address(es)
--------------------------------------
Area Code and Telephone Number
--------------------------------------
Tax ID or Social Security Number
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE> 1
EXHIBIT(a)(1)(E)
OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE RELATED PREFERRED STOCK PURCHASE RIGHTS)
OF
STERLING COMMERCE, INC.
AT
$44.25 NET PER SHARE IN CASH
BY
SBC SILVER, INC.,
A WHOLLY-OWNED SUBSIDIARY
OF
SBC COMMUNICATIONS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 23, 2000, UNLESS THE OFFER IS EXTENDED.
February 25, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by SBC Silver, Inc., a Delaware corporation
("Purchaser") and wholly-owned subsidiary of SBC Communications Inc., a Delaware
corporation ("Parent"), to act as Dealer Manager in connection with Purchaser's
offer to purchase all outstanding shares of common stock, par value $0.01 per
share (the "Common Stock"), including the related preferred stock purchase
rights issued pursuant to the Rights Agreement (as defined in the Offer to
Purchase) (the "Rights" and, together with the Common Stock, the "Shares"), of
Sterling Commerce, Inc., a Delaware corporation (the "Company"), at a price of
$44.25 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
February 25, 2000 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
constitute the "Offer") enclosed herewith. Please furnish copies of the enclosed
materials to those of your clients for whose accounts you hold Shares registered
in your name or in the name of your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the Offer
to Purchase) that number of Shares which would represent at least a majority of
the Shares on a fully diluted basis (provided that for the purposes of the
foregoing calculation, options to purchase Shares that are outstanding
immediately prior to the consummation of the Offer and are not exercisable at
such time will not be taken into account). The Offer is also subject to the
other conditions set forth in the Offer to Purchase. See the Introduction and
Sections 1 and 14 of the Offer to Purchase.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated February 25, 2000;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be
delivered to the Depositary, or if the procedures for book-entry transfer
cannot be completed, by the Expiration Date;
<PAGE> 2
4. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. A return envelope addressed to BankBoston, N.A. (the "Depositary").
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for Shares which are
validly tendered prior to the Expiration Date and not theretofore properly
withdrawn when, as and if Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. Payment for Shares purchased pursuant to the Offer will in all cases be
made only after timely receipt by the Depositary of (i) certificates for such
Shares, or timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, pursuant to the procedures
described in Section 2 of the Offer to Purchase, (ii) a properly completed and
duly executed Letter of Transmittal (or a properly completed and manually signed
facsimile thereof) or an Agent's Message (as defined in the Offer to Purchase)
in connection with a book-entry transfer and (iii) all other documents required
by the Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary, the Dealer Manager and the Information
Agent, as described in the Offer to Purchase) for soliciting tenders of Shares
pursuant to the Offer. Purchaser will, however, upon request, reimburse brokers,
dealers, commercial banks and trust companies for customary mailing and handling
costs incurred by them in forwarding the enclosed materials to their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MARCH 23, 2000, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of Shares, and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the instructions set forth in the Letter of Transmittal and in
the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Dealer Manager or the Information Agent at their respective addresses and
telephone numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
Lazard Freres & Co. LLC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS WILL CONSTITUTE YOU
THE AGENT OF PURCHASER, PARENT, THE COMPANY, THE INFORMATION AGENT, THE DEALER
MANAGER, THE DEPOSITARY, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF
ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED
HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
EXHIBIT (a)(1)(F)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
(SECTION REFERENCES ARE TO THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED)
GUIDELINES FOR DETERMINING THE PROPER TAXPAYER IDENTIFICATION NUMBER ("TIN") TO
GIVE THE PAYER -- Social security numbers ("SSNs") have nine digits separated by
two hyphens: i.e. 000-00-0000. Employer identification numbers ("EINs") have
nine digits separated by only one hyphen: i.e. 00-0000000. The table below will
help determine the number to give the payer.
You must enter your TIN in the appropriate box. If you are a resident alien
and you do not have and are not eligible to get an SSN, your TIN is your IRS
individual taxpayer identification number ("ITIN"). Enter it in the social
security number box. If you do not have an ITIN, see HOW TO GET A TIN below.
If you are a sole proprietor and you have an EIN, you may enter either your
SSN or EIN. However, using your EIN may result in unnecessary notices to the
person requesting your TIN.
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE
NAME AND
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- ------------------------------------------------------------
<C> <S> <C>
1. Individual The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-
trust (grantor) is also trustee trustee(1)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under state law
5. Sole proprietorship The owner(3)
6. Sole proprietorship The owner(3)
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE
NAME AND
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- ------------------------------------------------------------
<C> <S> <C>
7. A valid trust, estate, or pension Legal entity(4)
trust
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or other
tax-exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or
nominee
12. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state or
local government, school district,
or prison) that receives
agricultural program payments
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
<C> <S> <C>
</TABLE>
(1) List above the signature line and circle the name of the person whose number
you furnish.
(2) List minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use your social security number or
employer identification number.
(4) List the name of the legal trust, estate, or pension trust. (Do not furnish
the TIN of the personal representative or trustee unless the legal entity
itself is not designated in the account title).
NOTE: If no name above the signature line is listed when more than one name
appears in the registration, the number will be considered to be that of
the first name appearing in the registration.
<PAGE> 2
PURPOSE OF FORM. -- A person who is required to file an information return with
the IRS must get your correct TIN to report, for example, income paid to you,
real estate transactions, mortgage interest you paid, the acquisition or
abandonment of secured property, cancellation of debt, or contributions you made
to an IRA. Use Form W-9 to give your correct TIN to the person requesting your
TIN and, when applicable, (1) to certify the TIN you are giving is correct (or
you are waiting for a number to be issued), (2) to certify you are not subject
to backup withholding, or (3) to claim exemption from backup withholding if you
are an exempt payee.
NOTE: If a requester gives you a form other than a W-9 to request your TIN, you
must use the requester's form if it is substantially similar to Form W-9.
WHAT IS BACKUP WITHHOLDING? -- Persons making certain payments to you must
withhold and pay to the IRS 31% of such payments under certain conditions. This
is called "backup withholding." Payments that could be subject to backup
withholding include interest, dividends, broker and barter exchange
transactions, rents, royalties, nonemployee pay, and certain payments from
fishing boat operators. Real estate transactions are not subject to backup
withholding.
If you give the requester your correct TIN, make the proper certifications, and
report all your taxable interest and dividends on your tax return, payments you
receive will not be subject to backup withholding. Payments you receive will be
subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS tells the requester that you furnished an incorrect TIN, or
3. The IRS tells you that you are subject to backup withholding because
you did not report all your interest and dividends on your tax return (for
reportable interest and dividends only), or
4. You do not certify to the requester that you are not subject to backup
withholding under 3 above (for reportable interest and dividend accounts
opened after 1983 only), or
5. You do not certify your TIN.
Certain payees and payments are exempt from backup withholding and information
reporting. See below.
HOW TO GET A TIN: If you do not have a TIN, apply for one immediately. To apply
for an SSN, get FORM SS-5 from your local Social Security Administration office.
Get FORM W-7 to apply for an ITIN or FORM SS-4 to apply for an EIN. You can get
Forms W-7 and SS-4 from the IRS by calling 1-800-TAX-FORM (1-800-829-3676).
If you do not have a TIN, check the box titled "Applied For" in the space for
the TIN, sign and date the form, and give it to the requester. Generally, you
will then have 60 days to get a TIN and give it to the requester. If the
requester does not receive your TIN within 60 days, backup withholding, if
applicable, will begin and continue until you furnish your TIN.
NOTE: Checking the box titled "Applied For" on the form means that you have
already applied for a TIN OR that you intend to apply for one soon.
As soon as you receive your TIN, complete another Form W-9, include your TIN,
sign and date the form, and give it to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Individuals (including sole proprietors) are NOT exempt from backup withholding.
Corporations are exempt from backup withholding for certain payments, such as
interest and dividends.
If you are exempt from backup withholding, you should still complete this form
to avoid possible erroneous backup withholding. Enter your correct TIN in Part
I, write "Exempt" in Part II, and sign and date the form. If you are a
nonresident alien or a foreign entity not subject to backup withholding, give
the requester a completed FORM W-8, Certificate of Foreign Status.
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except the payee listed in item (9). For broker transactions,
payees listed in (1) through (13) and a person registered under the Investment
Advisers Act of 1940 who regularly acts as a broker are exempt. Payments subject
to reporting under sections 6041 and 6041A are generally exempt from backup
withholding only if made to payees described in items (1) through (7). However,
a corporation (other than certain hospitals or extended care facilities) that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions and patronage dividends.
(1) A corporation. (2) An organization exempt from tax under section 501(a), or
an IRA, or a custodial account under section 403(b)(7) if the account satisfies
the requirements of section 401(f)(2). (3) The United States or any of its
agencies or instrumentalities. (4) A state, the District of Columbia, a
possession of the United States, or any of their political subdivisions or
instrumentalities. (5) A foreign government or any of its political
subdivisions, agencies, or instrumentalities. (6) An international organization
or any of its agencies or instrumentalities. (7) A foreign central bank of
issue. (8) A dealer in securities or commodities required to register in the
United States, the District of Columbia or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission. (10) A real estate investment trust. (11) An entity registered at
all times during the tax year under the Investment Company Act of 1940. (12) A
common trust fund operated by a bank under section 584(a). (13) A financial
institution. (14) A middleman known in the investment community as a nominee or
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List. (15) A trust exempt from tax under section 664
or described in section 4947.
PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
Payments of dividends and patronage dividends that generally are exempt from
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by an ESOP.
Payments of interest that generally are exempt from backup withholding include
the following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct TIN to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid to you.
Other types of payments that generally are exempt from backup withholding
include:
- Wages.
- Distributions from a pension, annuity, profit-sharing or stock bonus plan,
any IRA, or an owner-employee plan.
- Certain surrenders of life insurance contracts.
- Gambling winnings if withholding is required under section 3402(q).
However, if withholding is not required under section 3402(q), backup
withholding applies if the payee fails to furnish a TIN.
- Real estate transactions reportable under section 6045(e).
- Cancelled debts reportable under section 6050P.
- Distributions from a medical savings account and long-term care benefits.
- Fish purchases for cash reportable under section 6050R.
Payments that are not subject to information reporting also are not subject to
backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A, and 6050N, and their regulations.
PRIVACY ACT NOTICE. -- Section 6109 requires you to give your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. The IRS may also
provide this information to the Department of Justice for civil and criminal
litigation and to cities, states, and the District of Columbia to carry out
their tax laws.
You must provide your TIN whether or not you are required to file a tax return.
Payers must generally withhold 31% of taxable interest, dividend, and certain
other payments to a payee who does not give a TIN to a payer. Certain penalties
may also apply.
PENALTIES
(1) FAILURE TO FURNISH TIN. -- If you fail to furnish your TIN to a requester,
you are subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) MISUSE OF TINS. -- If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE> 1
EXHIBIT (A)(1)(G)
For Immediate Release
SBC COMMUNICATIONS COMMENCES TENDER OFFER FOR
STERLING COMMERCE COMMON STOCK
San Antonio, Texas, February 25, 2000 -- SBC Communications Inc. (NYSE:SBC)
announced today that SBC Silver, Inc., its wholly-owned subsidiary, has
commenced a cash tender offer to purchase all outstanding shares of common stock
of Sterling Commerce, Inc. at a price of $44.25 per share, net to the seller in
cash, without interest thereon.
The offer is being made pursuant to the previously announced merger
agreement among SBC Communications Inc., SBC Silver, Inc. and Sterling Commerce,
Inc., and is conditioned upon, among other things, the tender of that number of
shares of common stock which represents at least a majority of the outstanding
shares on a fully diluted basis and the expiration or termination of any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended and the receipt of certain foreign competition act
clearances. The offer and withdrawal rights are scheduled to expire at 12:00
midnight, New York City time, on March 23, 2000, unless the offer is extended.
Lazard Freres & Co. LLC is acting as the dealer manager for the offer and
Georgeson Shareholder Communications Inc. is acting as Information Agent for the
offer. Questions and requests for assistance or additional copies of the Offer
to Purchase, Letter of Transmittal and other tender offer documents may be
directed to Georgeson at (800) 223-2064 or Lazard at (212) 632-6717.
SBC Communications Inc. (www.sbc.com) is a global communications leader. Through
its subsidiaries -- Southwestern Bell, Ameritech, Pacific Bell, SBC Telecom,
Nevada Bell, SNET and Cellular One -- and world-class network. SBC provides
local and long-distance phone service, wireless and data communications, paging,
high-speed Internet access and messaging, cable and satellite television,
security services and telecommunications equipment, as well as directory
advertising and publishing. In the United States, the company currently has 90.4
million voice grade equivalent lines, 11.2 million wireless customers and is
undertaking a national expansion program that will bring SBC service to an
additional 30 markets outside its traditional service territory.
Internationally, SBC has telecommunications investments in 23 countries. With
more than 204,000 employees, SBC is the 13th largest employer in the U.S., with
annual revenues that rank it among the largest Fortune 500 companies.
This press release is neither an offer to purchase nor a solicitation of an
offer to sell securities. The tender offer is made only through the Offer to
Purchase and the related Letter of Transmittal which is being mailed to
stockholders today. We urge investors and security holders to read the following
documents regarding the tender offer and merger because they contain important
information: (i) SBC's Tender Offer Statement on Schedule TO, including the
Offer to Purchase, Letter of Transmittal and Notice of Guaranteed Delivery and
(ii) Sterling Commerce's Solicitation/Recommendation Statement on Schedule
14D-9. These documents and any amendments to these documents will be filed with
the United States Securities and Exchange Commission, and may be obtained free
at the SEC's website (www.sec.gov). You may also obtain for free each of these
documents from Georgeson at (800) 223-2064 and 17 State Street, New York, New
York 10004.
<PAGE> 1
EXHIBIT (a)(1)(H)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated
February 25, 2000 (the "Offer to Purchase"), and the related Letter of
Transmittal, and is being made to all holders of Shares. The Offer is not being
made to (nor will tenders be accepted from or on behalf of) holders of Shares in
any jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction or any
administrative or judicial action pursuant thereto.
NOTICE OF OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE RELATED PREFERRED STOCK PURCHASE RIGHTS)
OF
STERLING COMMERCE, INC.
AT
$44.25 NET PER SHARE IN CASH
BY
SBC SILVER, INC.
A WHOLLY-OWNED SUBSIDIARY OF
SBC COMMUNICATIONS INC.
SBC Silver, Inc., a Delaware corporation ("Purchaser") and a
wholly-owned subsidiary of SBC Communications Inc., a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $0.01 per share (the "Common Stock"), of Sterling Commerce, Inc., a
Delaware corporation (the "Company"), and the related rights to purchase shares
of the Series A Junior Participating Preferred Stock of the Company (the
"Rights" and, together with the Common Stock, the "Shares") issued pursuant to
the Rights Agreement, dated as of December 18, 1996, by and between the Company
and The First National Bank of Boston, as Rights Agent, as amended, at a price
of $44.25 per Share, net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the Offer to Purchase and
in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 23, 2000, UNLESS THE OFFER IS EXTENDED.
<PAGE> 2
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED
BELOW) THAT NUMBER OF SHARES WHICH WOULD REPRESENT AT LEAST A MAJORITY OF THE
SHARES ON A FULLY DILUTED BASIS (PROVIDED THAT FOR THE PURPOSES OF THE FOREGOING
CALCULATION, OPTIONS TO PURCHASE SHARES THAT ARE OUTSTANDING IMMEDIATELY PRIOR
TO THE CONSUMMATION OF THE OFFER AND ARE NOT EXERCISABLE AT SUCH TIME WILL NOT
BE TAKEN INTO ACCOUNT).
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated February 18, 2000 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. Pursuant to the Merger Agreement and in accordance with the
Delaware General Corporation Law (the "DGCL"), as soon as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions, including the purchase of Shares pursuant to the Offer and the
approval and adoption of the Merger Agreement by the stockholders of the Company
(if required by applicable law), Purchaser will be merged with and into the
Company (the "Merger"), with the Company as the surviving corporation. At the
effective time of the Merger, each Share then outstanding, other than Shares
held by (i) the Company or any of its subsidiaries, (ii) Parent, Purchaser or
any of its subsidiaries and (iii) stockholders who have properly exercised their
dissenters' rights under the DGCL, will be cancelled and converted automatically
into the right to receive $44.25 in cash, or any higher price per Share paid in
the Offer, without interest.
In connection with the Merger Agreement, certain of the officers and
directors of the Company who own Shares have executed a Stockholder's Agreement,
pursuant to which each such person has agreed to tender all Shares he owns
pursuant to the Offer, and in any event to vote in favor of the Merger Agreement
and the Merger and against certain competing proposals to purchase the Company
with respect to any Shares such officer or director may own as of the record
date of a stockholder's meeting at which such matters will be considered.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER
AND THE MERGER, AND HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE
ADVISABLE AND FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS
AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT THERETO.
For purposes of the Offer, Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not withdrawn
as, if and when Purchaser gives oral or written notice to BankBoston, N.A., as
Depositary (the "Depositary"), of Purchaser's acceptance of such Shares for
payment pursuant to the Offer. In all cases, upon the terms and subject to the
conditions of the Offer, payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price therefor with the Depositary, which
will act as agent for tendering stockholders for the
2
<PAGE> 3
purpose of receiving payment from Purchaser and transmitting payment to validly
tendering stockholders.
In all cases, payment for Shares purchased pursuant to the Offer will
be made only after timely receipt by the Depositary of (i) certificates
representing such Shares or timely confirmation of the book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility"), pursuant to the procedures set forth in the
Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry transfer and (iii) any other documents required by the Letter of
Transmittal.
If, prior to the Expiration Date, Purchaser increases the consideration
offered to holders of Shares pursuant to the Offer, such increased consideration
will be paid to all holders of Shares that are purchased pursuant to the Offer,
whether or not such Shares were tendered prior to such increase in
consideration. Under no circumstances will interest on the purchase price for
Shares be paid by Purchaser by reason of any delay in making such payment.
The term "Expiration Date" means 12:00 midnight, New York City time, on
March 23, 2000, unless and until Purchaser, in accordance with the terms of the
Offer and subject to the limitations in the Merger Agreement, shall have
extended the period of time for which the Offer is open, in which event the term
"Expiration Date" will mean the time and date at which the Offer, as so extended
by Purchaser, will expire (provided, however, that without the Company's
consent, the Expiration Date will not be extended beyond June 23, 2000). Any
such extension will be followed by a public announcement thereof by no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the right of a tendering stockholder to withdraw such Shares. Without
limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser currently intends to make announcements by issuing a
press release to the Dow Jones News Service.
Pursuant to Rule 14d-11 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), Purchaser may, subject to certain conditions,
include a subsequent offering period following the expiration of the Offer. A
subsequent offering period, if one is included, is not an extension of the
Offer. A subsequent offering period would be an additional period of time,
following the expiration of the Offer, within which stockholders may tender
Shares not tendered in the Offer. Purchaser does not currently intend to include
a subsequent offering period in the Offer, although it reserves the right to do
so in its sole discretion.
Except as otherwise provided below or as provided by applicable law,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time on or prior to the Expiration
Date and, unless theretofore
3
<PAGE> 4
accepted for payment as provided herein, may also be withdrawn at any time after
April 25, 2000 (or such later date as may apply in case the Offer is extended).
A withdrawal of a share of Common Stock will also constitute a withdrawal of the
related Right. Rights may not be withdrawn unless the related shares of Common
Stock are also withdrawn.
To be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of the Offer to Purchase. Any such notice
of withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of the Shares to be withdrawn, if different from the name of the person
who tendered the Shares. If certificates evidencing Shares to be withdrawn have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution (as defined in the Offer to Purchase),
the signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been delivered pursuant to the procedures for
book-entry transfer as set forth in the Offer, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with such
Book-Entry Transfer Facility's procedures.
Withdrawals of Shares may not be rescinded. Any Shares properly
withdrawn will be deemed not validly tendered for purposes of the Offer, but may
be retendered at any subsequent time prior to the Expiration Date by following
any of the procedures described in Offer. No withdrawal rights will apply to
Shares tendered during any subsequent offering period and no withdrawal rights
apply during any such subsequent offering period with respect to shares tendered
in the Offer and accepted for payment.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding.
The receipt of cash in exchange for Shares pursuant to the Offer (or
the Merger) will be a taxable transaction for federal income tax purposes and
may also be a taxable transaction under applicable state, local or foreign tax
laws. Generally, a stockholder who receives cash in exchange for Shares pursuant
to the Offer (or the Merger) will recognize gain or loss for federal income tax
purposes equal to the difference (if any) between the amount of cash received
and such stockholder's adjusted tax basis in the Shares exchanged therefor.
Provided that such Shares constitute capital assets in the hands of the
stockholder, such gain or loss will be capital gain or loss and will be
long-term capital gain or loss if the holder has held the Shares for more than
one year at the time of the exchange. All stockholders should consult with their
tax advisors as to the particular tax consequences of the Offer and the Merger
to them, including the applicability and effect of the alternative minimum tax
and any state, local or foreign income and other tax laws and of changes in such
tax laws. For a more complete
4
<PAGE> 5
description of certain U.S. federal income tax consequences of the Offer and the
Merger, see Section 5 of the Offer to Purchase.
The information required to be disclosed by paragraph (d)(1) of Rule
14d-6 under the Exchange Act is contained in the Offer to Purchase and is
incorporated herein by reference.
The Company has provided Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal and
other materials will be mailed to record holders of Shares and will be furnished
to brokers, dealers, banks and similar persons whose names, or the names of
whose nominees, appear on the stockholder lists or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance or additional copies of the Offer
to Purchase, Letter of Transmittal and other tender offer documents may be
directed to the Information Agent or the Dealer Manager, at their respective
addresses and telephone numbers set forth below, and copies will be furnished
promptly at Purchaser's expense. Purchaser will not pay any fees or commissions
to any broker or dealer or other person other than the Depositary, the Dealer
Manager and the Information Agent for soliciting tenders of Shares pursuant to
the Offer.
The Information Agent for the Offer is:
Georgeson Shareholder Communications Inc.
17 State Street
New York, New York 10004
Bankers and Brokers Call Collect: (212) 440-9800
Call Toll Free: (800) 223-2064
The Dealer Manager for the Offer is:
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10020
(212) 632-6717 (call collect)
February 18, 2000
5
<PAGE> 1
EXHIBIT (d)(1)
[CONFORMED COPY]
AGREEMENT AND PLAN OF MERGER
by and among
SBC COMMUNICATIONS, INC.,
SBC SILVER, INC.
and
STERLING COMMERCE, INC.
Dated as of February 18, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
THE OFFER AND THE MERGER
Section 1.01 The Offer......................................................................... 2
Section 1.02 Company Actions................................................................... 5
Section 1.03 Directors......................................................................... 7
Section 1.04 The Merger........................................................................ 8
Section 1.05 Closing........................................................................... 8
Section 1.06 Effective Time.................................................................... 9
Section 1.07 Directors and Officers............................................................ 9
Section 1.08 Stockholders' Meeting............................................................. 9
Section 1.09 Merger Without Meeting of Stockholders............................................ 10
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.01 Effect on Capital Stock........................................................... 10
Section 2.02 Exchange of Certificates.......................................................... 11
Section 2.03 Dissenting Shares................................................................. 13
Section 2.04 Company Stock Option Plans........................................................ 14
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Company..................................... 14
Section 3.02 Representations and Warranties of Parent.......................................... 31
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.01 Conduct of Business of the Company................................................ 34
Section 4.02 No Solicitation by the Company.................................................... 37
</TABLE>
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ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01 Access to Information; Confidentiality............................................ 41
Section 5.02 Reasonable Best Efforts; Cooperation.............................................. 41
Section 5.03 Indemnification, Exculpation and Insurance........................................ 42
Section 5.04 Fees and Expenses................................................................. 43
Section 5.05 Public Announcements.............................................................. 43
Section 5.06 Employee Benefit Plans............................................................ 44
Section 5.07 Purchaser Compliance.............................................................. 45
Section 5.08 NYSE Listing...................................................................... 45
Section 5.09 MSD Agreement..................................................................... 45
Section 5.10 Telecommunications Act of 1996.................................................... 46
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Conditions to Each Party's Obligation to Effect the Merger........................ 46
Section 6.02 Frustration of Closing Conditions................................................. 46
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.01 Termination....................................................................... 47
Section 7.02 Effect of Termination............................................................. 49
Section 7.03 Amendment......................................................................... 49
Section 7.04 Extension; Waiver................................................................. 49
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Nonsurvival of Representations and Warranties..................................... 50
Section 8.02 Notices........................................................................... 50
Section 8.03 Definitions....................................................................... 52
Section 8.04 Interpretation.................................................................... 52
Section 8.05 Counterparts...................................................................... 53
Section 8.06 Entire Agreement; No Third-Party Beneficiaries.................................... 53
Section 8.07 Governing Law..................................................................... 53
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Section 8.08 Assignment........................................................................ 53
Section 8.09 Consent to Jurisdiction........................................................... 54
Section 8.10 Headings.......................................................................... 54
Section 8.11 Severability...................................................................... 54
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INDEX OF TERMS
<TABLE>
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affiliate........................................................................................... 52
Agreement........................................................................................... 1
Certificate of Merger............................................................................... 9
Certificates........................................................................................ 12
Change in Control................................................................................... 45
Change in Control Individuals....................................................................... 24
Closing............................................................................................. 8
Closing Date........................................................................................ 8
Code................................................................................................ 13
Communications Act.................................................................................. 3
Company............................................................................................. 1
Company Acquisition Agreement....................................................................... 39
Company Authorized Preferred Stock.................................................................. 15
Company Benefit Plans............................................................................... 21
Company Board....................................................................................... 5
Company Common Stock................................................................................ 2
Company Disclosure Schedule......................................................................... 14
Company Employee.................................................................................... 44
Company Filed SEC Documents......................................................................... 20
Company Junior Preferred Stock...................................................................... 2
Company Notice...................................................................................... 38
Company Permits..................................................................................... 21
Company Preferred Stock............................................................................. 15
Company Rights...................................................................................... 2
Company Rights Plan................................................................................. 2
Company SEC Documents............................................................................... 18
Company Stock Option................................................................................ 14
Company Stock Option Plans.......................................................................... 16
Company Stockholder Approval........................................................................ 26
Company Stockholders Meeting........................................................................ 9
Company Superior Proposal........................................................................... 40
Company Takeover Proposal........................................................................... 38
Company Treasury Stock.............................................................................. 16
Confidentiality Agreement........................................................................... 41
control............................................................................................. 52
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Control Time........................................................................................ 34
DGCL................................................................................................ 8
Dissenting Shares................................................................................... 13
Effective Time...................................................................................... 9
Employed Intellectual Property...................................................................... 27
ERISA............................................................................................... 22
ERISA Affiliate..................................................................................... 23
Exchange Act........................................................................................ 2
Exchange Agent...................................................................................... 11
Governmental Entity................................................................................. 18
HSR Act............................................................................................. 18
Intellectual Property............................................................................... 27
knowledge........................................................................................... 52
Liens............................................................................................... 15
material adverse change............................................................................. 52
material adverse effect............................................................................. 52
Material Contracts.................................................................................. 29
Merger.............................................................................................. 8
Merger Consideration................................................................................ 11
Minimum Condition................................................................................... 2
MSD Agreement....................................................................................... 45
Offer............................................................................................... 2
Offer Documents..................................................................................... 4
Offer Price......................................................................................... 2
Offer to Purchase................................................................................... 2
Original Directors.................................................................................. 7
Other Benefit Plans................................................................................. 44
Parent.............................................................................................. 1
Parent Disclosure Schedule.......................................................................... 31
person.............................................................................................. 52
Proxy Statement..................................................................................... 10
Purchase Date....................................................................................... 4
Purchaser........................................................................................... 1
Purchaser Common Stock.............................................................................. 11
Real Property Leases................................................................................ 30
Restraints.......................................................................................... 46
Schedule 14D-9...................................................................................... 5
Schedule TO......................................................................................... 4
</TABLE>
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SEC................................................................................................. 3
Securities Act...................................................................................... 18
Shares.............................................................................................. 2
Stockholders........................................................................................ 1
subsidiary.......................................................................................... 52
Surviving Corporation............................................................................... 8
Taxes............................................................................................... 26
Transactions........................................................................................ 5
Year 2000 Compliant................................................................................. 31
</TABLE>
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<PAGE> 8
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of February
18, 2000, by and among SBC Communications, Inc., a Delaware corporation
("Parent"), SBC Silver, Inc., a Delaware corporation and a wholly owned
subsidiary of Parent ("Purchaser"), and Sterling Commerce, Inc., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Purchaser and
the Company have approved, and each deems it advisable and in the best interests
of its stockholders to consummate, the acquisition of the Company by Parent upon
the terms and subject to the conditions set forth herein;
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Transactions (as
defined in Section 1.02(a)) and also to prescribe various conditions to the
Transactions; and
WHEREAS, as a condition and inducement to Parent's and Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement, Parent and
Purchaser are entering into one or more stockholder agreements with each of the
individuals listed on Schedule I hereto (the "Stockholders"), pursuant to which,
among other things, each Stockholder has agreed to vote the Shares (as such term
is hereinafter defined) then owned by such Stockholder in favor of the Merger,
to grant Parent an irrevocable proxy to vote such Shares and to tender all
Shares then owned by such Stockholder to Parent or Purchaser, as applicable, in
accordance with the Offer.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
<PAGE> 9
ARTICLE I
THE OFFER AND THE MERGER
Section 1.01 The Offer.
(a) As promptly as practicable (but in no event later than five
business days after the public announcement of the execution hereof), Purchaser
shall commence (within the meaning of Rule 14d-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) a tender offer (the "Offer") for
all of the outstanding shares of Common Stock, par value $.01 per share (the
"Shares"), of the Company ("Company Common Stock") (including the related rights
(the "Company Rights") to purchase the Company's Series A Junior Participating
Preferred Stock, par value $.01 per share ("Company Junior Preferred Stock"),
pursuant to the Rights Agreement, dated as of December 18, 1996 (as amended, the
"Company Rights Plan"), between the Company and the First National Bank of
Boston, as rights agent), at a price of $44.25 per Share, net to the seller in
cash (such price, or such higher price per Share as may be paid in the Offer,
being referred to herein as the "Offer Price"), subject to the conditions set
forth in Annex A hereto. The obligations of Purchaser to commence the Offer and
to accept for payment and to pay for any Shares validly tendered on or prior to
the expiration of the Offer and not withdrawn shall be subject only to there
being validly tendered and not withdrawn immediately prior to the expiration of
the Offer that number of Shares which represents at least a majority of the
shares of Company Common Stock on a fully-diluted basis (provided that for the
purposes of the foregoing calculation, Company Stock Options (as hereinafter
defined) that are outstanding immediately prior to consummation of the Offer and
are not exercisable at such time shall not be taken into account) (the "Minimum
Condition") and to the other conditions set forth in Annex A hereto. The Offer
shall be made by means of an offer to purchase (the "Offer to Purchase")
containing the terms set forth in this Agreement and the conditions set forth in
Annex A hereto. Without the consent of the Company, Purchaser shall not (i)
reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price,
(iii) modify or add to the conditions set forth in Annex A hereto or otherwise
amend the Offer in any manner adverse to the holders of the Shares, (iv) except
as provided in the next three sentences, extend the Offer, (v) change the form
of consideration payable in the Offer or (vi) waive the Minimum Condition.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the Offer from time to time if at the initial expiration
date of the Offer (which initial expiration date shall be 20 business days
following commencement of the Offer) or any extension thereof (I) any of the
conditions to Purchaser's
2
<PAGE> 10
obligation to purchase Shares set forth in clauses (i) or (iii) of the first
paragraph of Annex A or paragraph (a) of Annex A shall not be satisfied or
waived, until such time as such conditions are satisfied or waived but not
beyond 60 days after the date of the commencement of the Offer or (II) the
Company or any person that (directly or indirectly) is more than 10% owned by,
or controlled by or is under common control with, the Company does not operate
in a manner consistent with the provisions of the Communications Act of 1934, as
amended (the "Communications Act"), applicable to a "Bell Operating Company" or
its "affiliates" that does not have authority to provide non-incidental
interLATA telecommunications services originating in any state in which the
Company or any such person does business as of such date (provided, however,
that this extension right may not be exercised by Parent or Purchaser if the
failure of the Company or any such person to be so operating results from any
failure by Parent or Purchaser to perform any of its obligations under this
Agreement), until 15 days after the previously-scheduled expiration date;
provided, however, that Purchaser may, without the consent of the Company,
extend the Offer for not more than an additional 60 days beyond such initial
60-day extension period if (a) the Offer shall not have been consummated as a
direct result of the failure of the conditions set forth in clauses (i) or (iii)
of the first paragraph of Annex A to have been satisfied, (b) with respect to
the condition set forth in such clause (i), Purchaser is endeavoring in good
faith to satisfy such conditions and (c) the reason that such conditions have
not been satisfied is not due to a breach by Purchaser of its obligations under
this Agreement, and (ii) extend the Offer for any period required by any rule,
regulation, interpretation or positions of the Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Offer but not
beyond 60 days after the date of the commencement of the Offer. The terms
"affiliate," "own" and "Bell Operating Company," have the meanings set forth in
Sections 3(1) and 3(4), respectively, of the Communications Act. In addition,
Purchaser shall at the request of the Company extend the Offer from time to time
if at any scheduled expiration date of the Offer any of the conditions to
Purchaser's obligation to purchase Shares shall not be satisfied; provided,
however, that Purchaser shall not be required to extend the Offer beyond 60 days
after the date of the commencement of the Offer; provided further, however, that
Purchaser shall, at the Company's request, extend the Offer for not more than an
additional 60 days beyond such initial 60-day extension period if (a) the Offer
shall not have been consummated as a direct result of the failure of the
condition set forth in clause (i) of the first paragraph of Annex A to have been
satisfied, (b) the Company is cooperating in good faith to enable Purchaser to
satisfy such condition and (c) the reason that such condition has not been
satisfied is not due to a breach by the Company of its obligations under this
Agreement. On the terms and subject to the conditions of the Offer and this
Agreement, Purchaser shall, and Parent shall cause Pur-
3
<PAGE> 11
chaser to, pay for all Shares validly tendered and not withdrawn pursuant to the
Offer that Purchaser becomes obligated to purchase pursuant to the Offer as soon
as practicable after the expiration of the Offer; provided, however, that if,
immediately prior to the expiration date of the Offer (as it may be extended),
the Shares tendered and not withdrawn pursuant to the Offer equal less than 90%
of the outstanding Shares, Purchaser may (x) extend the Offer for a period not
to exceed five business days, notwithstanding that all conditions to the Offer
are satisfied as of such expiration date of the Offer, provided that upon such
extension Parent and Purchaser shall be deemed to have waived all of the
conditions set forth in Annex A other than the Minimum Condition and (y) amend
the Offer to include a "subsequent offering period" not to exceed ten business
days to the extent permitted under Rule 14d-11 under the Exchange Act, if
available. The date on which Purchaser shall purchase and pay for Shares
tendered pursuant to the Offer shall hereinafter be referred to as the "Purchase
Date."
(b) As soon as practicable on the date the Offer is commenced, Parent
and Purchaser shall file with the SEC a Tender Offer Statement on Schedule TO
with respect to the Offer (together with all amendments and supplements thereto
and including the exhibits thereto, the "Schedule TO"). The Schedule TO will
include, as exhibits, the Offer to Purchase and a form of letter of transmittal
and summary advertisement (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). Parent and Purchaser jointly and
severally represent and warrant to the Company that the Offer Documents will
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by Parent or Purchaser with respect to
information furnished by the Company for inclusion in the Offer Documents. The
Company represents and warrants to Parent and Purchaser that the information
supplied in writing by the Company for inclusion in the Offer Documents will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of Parent and Purchaser agrees to take all steps necessary to
cause the Offer Documents to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
federal securities laws. Each of Parent and Purchaser, on the one hand, and the
Company, on the other hand, agrees to promptly correct any information provided
4
<PAGE> 12
by it for use in the Offer Documents if and to the extent that it shall have
become false and misleading in any material respect and Parent and Purchaser
further agree to take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its outside counsel shall be given the
opportunity to review the Schedule TO before it is filed with the SEC. In
addition, Parent and Purchaser will provide the Company and its outside counsel
with any comments, whether written or oral, Parent, Purchaser or their outside
counsel may receive from time to time from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments.
Section 1.02 Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company (the "Company Board"), at
a meeting duly called and held, has (i) unanimously determined that each of the
Agreement, the Offer and the Merger (as defined in Section 1.04) are advisable
and are fair to and in the best interests of the stockholders of the Company,
(ii) unanimously approved this Agreement and the transactions contemplated
hereby, including the Offer, the acquisition of Shares pursuant to the Offer and
the Merger (collectively, the "Transactions"), and (iii) resolved to recommend
that the stockholders of the Company accept the Offer, approve the Merger and
approve and adopt this Agreement; provided, that such recommendation may be
withdrawn, modified or amended only in accordance with the provisions of
Section 4.02. The Company has been advised by each of its directors and by each
executive officer of the Company who as of the date hereof is actually aware (to
the knowledge of the Company) of the Transactions that each such person either
intends to tender pursuant to the Offer all Shares owned by such person or vote
all Shares owned by such person in favor of the Merger.
(b) Concurrently with the commencement of the Offer, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall, subject to the provisions
of Section 4.02, contain the recommendation referred to in clause (iii) of
Section 1.02(a) hereof. The Company represents and warrants to Parent and
Purchaser that the Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated
5
<PAGE> 13
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information furnished by
Parent or Purchaser for inclusion in the Schedule 14D-9. Parent and Purchaser
jointly and severally represent and warrant to the Company that the information
supplied in writing by Parent and Purchaser for inclusion in the Schedule 14D-9
will not contain any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which such statement was
made, not misleading. The Company further agrees to take all steps necessary to
cause the Schedule 14D-9 to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
federal securities laws. Each of the Company, on the one hand, and Parent and
Purchaser, on the other hand, agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false and misleading in any material respect and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and to be disseminated to holders of the Shares, in
each case as and to the extent required by applicable federal securities laws.
Parent and its outside counsel shall be given the opportunity to review the
Schedule 14D-9 before it is filed with the SEC. In addition, the Company will
provide Parent, Purchaser and their outside counsel with any comments, whether
written or oral, that the Company or its outside counsel may receive from time
to time from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments.
(c) In connection with the Offer, the Company will promptly furnish
or cause to be furnished to Purchaser mailing labels, security position listings
and any available listing or computer file containing the names and addresses of
all record holders of the Shares as of a recent date, and shall furnish
Purchaser with such additional information (including, but not limited to,
updated lists of holders of the Shares and their addresses, mailing labels and
lists of security positions) and assistance as Purchaser or its agents may
reasonably request in connection with the Offer, including for communicating the
Offer to the record and beneficial holders of the Shares. Except for such steps
as are necessary to consummate the Offer, Parent and Purchaser shall hold in
confidence the information contained in any of such labels and lists and the
additional information referred to in the preceding sentence, will use such
information only in connection with the Offer, and, if this Agreement is
terminated, will upon request of the Company deliver or cause to be delivered to
the Company all copies of such information then in its possession or the
possession of its agents or representatives.
6
<PAGE> 14
Section 1.03 Directors.
(a) Promptly upon the purchase of and payment for any Shares by
Parent or Purchaser pursuant to the Offer, Parent shall be entitled to designate
such number of directors, rounded up to the nearest whole number, on the Company
Board as is equal to the product of the total number of directors on the Company
Board (giving effect to the directors designated by Parent pursuant to this
sentence) multiplied by the percentage that the number of Shares so accepted
for payment bears to the total number of Shares then outstanding. In furtherance
thereof, the Company shall, upon request of Purchaser, promptly either increase
the size of the Company Board or secure the resignations of such number of its
incumbent directors, or both, as is necessary to enable Parent's designees to be
so elected to the Company Board, and shall cause Parent's designees to be so
elected. At such time, the Company shall also cause persons designated by Parent
to have proportionate (but not less than majority) representation on (i) each
committee of the Company Board, (ii) each board of directors (or similar body)
of each subsidiary (as hereinafter defined) of the Company and (iii) each
committee (or similar body) of each such board. The provisions of this Section
1.03(a) are in addition to and shall not limit any rights which Purchaser may
have as a holder or beneficial owner of Shares as a matter of applicable law
with respect to the election of directors or otherwise.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 1.03, including mailing to
stockholders (as part of the Schedule 14D-9 or otherwise) the information
required by such Section 14(f) and Rule 14f-1 as is necessary to enable Parent's
designees to be elected to the Company Board (provided that Purchaser shall have
provided to the Company on a timely basis all information required to be
included with respect to Purchaser's designees). In the event that Parent's
designees are elected to the Company Board, until the Effective Time (as
hereinafter defined), the Company Board shall have at least two directors who
are directors on the date hereof (the "Original Directors"); provided that, in
such event, if the number of Original Directors shall be reduced below two for
any reason whatsoever, any remaining Original Directors (or Original Director,
if there be only one remaining) shall be entitled to designate persons to fill
such vacancies who shall be deemed to be Original Directors for purposes of this
Agreement or, if no Original Director then remains, the other directors shall
designate two persons to fill such vacancies who shall not be stockholders,
affiliates or associates of Parent or Purchaser, and such persons shall be
deemed to be Original Directors
7
<PAGE> 15
for purposes of this Agreement. Notwithstanding anything in this Agreement to
the contrary, in the event that Parent's designees are elected to the Company
Board prior to the Effective Time, the affirmative vote of a majority of the
Original Directors shall be required for the Company to (i) amend or terminate
this Agreement or agree or consent to any amendment or termination of this
Agreement, (ii) exercise or waive any of the Company's rights, benefits or
remedies hereunder, (iii) extend the time for performance of Parent's and
Purchaser's respective obligations hereunder or (iv) take any other action by
the Company Board under or in connection with this Agreement other than the
actions provided for in Section 1.08 hereof which shall not require the approval
of the Original Directors.
Section 1.04 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and, in accordance with the Delaware General
Corporation Law (the "DGCL"), the Company and Purchaser shall consummate a
merger (the "Merger") pursuant to which (a) Purchaser shall be merged with and
into the Company and the separate corporate existence of Purchaser shall
thereupon cease, (b) the Company shall be the successor or surviving corporation
in the Merger (sometimes hereinafter referred to as the "Surviving Corporation")
and shall continue to be governed by the laws of the State of Delaware, and (c)
the separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger,
except as set forth in this Section 1.04. Pursuant to the Merger, (x) the
Certificate of Incorporation of the Company as in effect immediately prior to
the Effective Time (as hereinafter defined) shall be amended to read in its
entirety like the certificate of incorporation of Purchaser, provided that
Article First of the certificate of incorporation of Purchaser shall be amended
to read in its entirety as follows: "FIRST: The name of the Corporation is
"Sterling Commerce, Inc.," and, as so amended, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
by law and such certificate of incorporation, and (y) the by-laws of Purchaser,
as in effect immediately prior to the Effective Time, shall be the by-laws of
the Surviving Corporation until thereafter amended as provided by law, by such
certificate of incorporation or by such by-laws. The Merger shall have the
effects set forth in Section 259 of the DGCL.
Section 1.05 Closing. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m. on a date to be specified by the parties (the "Closing
Date"), which shall be no later than the second business day after satisfaction
or waiver of all of the conditions set forth in Article VI, unless another time
or date is agreed to by the parties hereto. The Closing will be held at the
offices of Skadden, Arps, Slate,
8
<PAGE> 16
Meagher & Flom LLP, Four Times Square, New York, New York, 10036 or at such
other location as is agreed to by the parties.
Section 1.06 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall file a
certificate of merger (the "Certificate of Merger") executed in accordance with
the relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL to effectuate the Merger. The Merger shall
become effective at such time as the Certificate of Merger is duly filed with
the Secretary of State of the State of Delaware or at such other subsequent date
or time as is agreed upon by the parties and specified in the Certificate of
Merger, such time being referred to herein as the "Effective Time."
Section 1.07 Directors and Officers. The directors of Purchaser and
the officers of the Company at the Effective Time shall, from and after the
Effective Time, be the directors and officers, respectively, of the Surviving
Corporation until their successors shall have been duly elected or appointed or
qualified or until their earlier death, resignation or removal in accordance
with the certificate of incorporation and by-laws of the Surviving Corporation.
Section 1.08 Stockholders' Meeting.
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Company Stockholders
Meeting") as promptly as practicable following the acceptance for
payment and purchase of Shares by Purchaser pursuant to the Offer for
the purpose of considering and taking action upon the approval of the
Merger and the approval and adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this
Agreement and obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined)
and, after consultation with Parent, respond promptly to any comments
made by the SEC with respect to the preliminary proxy or information
statement and cause a definitive proxy or information
9
<PAGE> 17
statement, including any amendment or supplement thereto (the "Proxy
Statement"), to be mailed to its stockholders at the earliest
practicable date, provided that no amendment or supplement to the Proxy
Statement will be made by the Company without consultation with Parent
and its outside counsel;
(iii) include in the Proxy Statement the
recommendation of the Company Board that stockholders of the Company
vote in favor of the approval of the Merger and the approval and
adoption of this Agreement; and
(iv) use its reasonable best efforts to solicit from
holders of Shares proxies in favor of the Merger and shall take all
other action reasonably necessary or advisable to secure any vote or
consent of stockholders required by Delaware law to effect the Merger.
(b) Parent will provide the Company with the information concerning
Parent and Purchaser required to be included in the Proxy Statement. Parent
shall vote, or cause to be voted, all of the Shares then owned by it, Purchaser
or any of its other subsidiaries or affiliates controlled by Parent in favor of
the approval of the Merger and the approval and adoption of this Agreement.
Section 1.09 Merger Without Meeting of Stockholders. Notwithstanding
Section 1.08, in the event that Parent, Purchaser and any other subsidiaries of
Parent shall acquire in the aggregate a number of the outstanding shares of each
class of capital stock of the Company, pursuant to the Offer or otherwise,
sufficient to enable Purchaser or the Company to cause the Merger to become
effective without a meeting of stockholders of the Company, the parties hereto
shall, subject to Article IV, take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.01 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any further action on the part of the holders
of any
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Shares or holders of common stock, par value $1.00 per share, of Purchaser (the
"Purchaser Common Stock"):
(a) Capital Stock of Purchaser. Each issued and outstanding share of
Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock. Each Share of Company Common
Stock held in the Company's treasury or by any of the Company's subsidiaries,
Parent or any of Parent's subsidiaries shall automatically be cancelled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common Stock. Each issued and outstanding
Share (other than Shares to be cancelled in accordance with Section 2.01(b) and
other than any Dissenting Shares (as hereinafter defined)) shall be converted
into the right to receive the Offer Price, payable to the holder thereof,
without interest (the "Merger Consideration"), upon surrender of the certificate
formerly representing such Share in the manner provided in Section 2.02. As of
the Effective Time, all such Shares shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor, without interest, upon the surrender of such certificate in accordance
with Section 2.02.
Section 2.02 Exchange of Certificates.
(a) Exchange Agent. Parent shall designate a bank or trust company
reasonably satisfactory to the Company to act as agent for the holders of the
Shares in connection with the Merger (the "Exchange Agent") to receive in trust
the funds to which holders of the Shares shall become entitled pursuant to
Section 2.01(c). At the Effective Time, Parent or Purchaser shall deposit, or
cause to be deposited, with the Exchange Agent for the benefit of holders of
Shares the aggregate consideration to which such holders shall be entitled at
the Effective Time pursuant to Section 2.01(c). Such funds shall be invested as
directed by Parent or the Surviving Corporation pending payment thereof by the
Exchange Agent to holders of the Shares.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
record of a certificate or certificates, which immediately prior to the
Effective Time
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represented outstanding Shares (the "Certificates"), whose Shares were converted
pursuant to Section 2.01 into the right to receive the Merger Consideration, (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent and shall be in such form and have such
other provisions not inconsistent with this Agreement as Parent and the Company
may reasonably specify) and (ii) instructions for use in surrendering the
Certificates in exchange for payment of the Merger Consideration. Upon surrender
of a Certificate for cancellation to the Exchange Agent and such other
documents as may reasonably be required by the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor the Merger Consideration, without
interest, for each Share formerly represented by such Certificate, and the
Certificate so surrendered shall forthwith be cancelled. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered
holder of the Certificate surrendered or shall have established to the
satisfaction of the Surviving Corporation that such tax either has been paid or
is not applicable. Until surrendered as contemplated by this Section 2.02, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Section 2.02.
(c) Transfer Books; No Further Ownership Rights in the Shares. At the
Effective Time, the stock transfer books of the Company shall be closed, and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following six
months after the Effective Time, the Surviving Corporation shall be entitled to
require the Exchange Agent to deliver to it any funds (including any earnings
received with respect thereto) which had been made available to the Exchange
Agent and which
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have not been disbursed to holders of Certificates, and thereafter such holders
shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) and only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Exchange Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(e) Withholding of Tax. Purchaser shall be entitled to deduct and
withhold from the Merger Consideration otherwise payable pursuant to this
Agreement to any former holder of Shares such amount as Purchaser (or any
affiliate thereof) or the Exchange Agent is required to deduct and withhold
pursuant to applicable rules under the Internal Revenue Code of 1986, as amended
(the "Code"), or any provision of state, local or foreign law. To the extent
that amounts are so withheld by Purchaser, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the former
holder of Shares in respect of which such withholding was made.
Section 2.03 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
any Shares as to which the holder thereof has demanded appraisal with respect to
the Merger in accordance with Section 262 of the DGCL and as of the Effective
Time has neither effectively withdrawn nor lost his right to such appraisal (the
"Dissenting Shares") shall not be converted into or represent a right to receive
cash pursuant to Section 2.01, but the holder thereof shall be entitled to only
such rights as are granted by the DGCL.
(b) Notwithstanding the provisions of Section 2.03(a), if any holder of
Shares who demands appraisal of his Shares under the DGCL effectively withdraws
or loses (through failure to perfect or otherwise) such holder's right to
appraisal, then as of the Effective Time or the occurrence of such event,
whichever later occurs, such holder's Shares shall automatically be converted
into and represent only the right to receive the Merger Consideration as
provided in Section 2.01(c), without interest, upon surrender of the Certificate
or Certificates representing such Shares pursuant to Section 2.02.
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(c) The Company shall give Parent (i) prompt notice of any written
demands for appraisal or payment of the fair value of any Shares, attempted
withdrawals of such demands, and any other instruments served on the Company
pursuant to the DGCL received by the Company and (ii) the opportunity to direct
all negotiations and proceedings with respect to demands for appraisal under the
DGCL. Except with the prior written consent of Parent, the Company shall not
voluntarily make any payment with respect to any demands for appraisal, settle
or offer to settle any such demands.
Section 2.04 Company Stock Option Plans.
(a) Parent and the Company shall take all actions necessary to
provide that each outstanding option to purchase shares of Company Common Stock
(a "Company Stock Option") granted under any Company Stock Option Plan (as
defined herein) which is outstanding immediately prior to the consummation of
the Offer, whether or not such Company Stock Option is vested and exercisable
immediately prior to the consummation of the Offer, shall be canceled, as of
the day immediately following the consummation of the Offer and the holder
thereof shall be entitled to receive an amount in cash payable at the time of
cancellation equal to the excess of (i) the product of (A) the excess, if any,
of (x) the Offer Price over (y) the per share exercise price of such Company
Stock Option multiplied by (B) the number of shares of Company Common Stock
subject to such Company Stock Option over (ii) any income tax or employment tax
withholding required under the Code.
(b) The Company and Parent agree that each of the Company Stock
Option Plans shall be amended, to the extent necessary, to reflect the
transactions contemplated by this Agreement. As soon as practicable after the
consummation of the Offer, Parent shall deliver to the holders of Company Stock
Options appropriate notices setting forth such holders' rights set forth herein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Company. Except as
set forth on the Disclosure Schedule delivered by the Company to Parent prior to
the execution of this Agreement (the "Company Disclosure Schedule") (each
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<PAGE> 22
section of which qualifies the correspondingly numbered representation and
warranty or covenant), the Company represents and warrants to Parent as follows:
(a) Organization, Standing and Corporate Power. Each of the Company
and its subsidiaries is a corporation or other legal entity duly organized,
validly existing and in good standing (with respect to jurisdictions which
recognize such concept) under the laws of the jurisdiction in which it is
organized and has the requisite corporate or other power, as the case may be,
and authority to carry on its business as now being conducted, except, as to
subsidiaries, for those jurisdictions where the failure to be so organized,
existing or in good standing individually or in the aggregate would not have, or
reasonably be expected to have, a material adverse effect (as defined in Section
8.03) on the Company. Each of the Company and its subsidiaries is duly
qualified or licensed to do business and is in good standing (with respect to
jurisdictions which recognize such concept) in each jurisdiction in which the
nature of its business or the ownership, leasing or operation of its properties
makes such qualification or licensing necessary, except for those jurisdictions
where the failure to be so qualified or licensed or to be in good standing
individually or in the aggregate would not have, or reasonably be expected to
have, a material adverse effect on the Company. The Company has made available
to Parent prior to the execution of this Agreement complete and correct copies
of its certificate of incorporation and by-laws, each as amended to date.
(b) Subsidiaries. Exhibit 21.1 to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1999 includes all the subsidiaries
of the Company. All the outstanding shares of capital stock of, or other equity
interests in, each subsidiary (i) have been duly authorized, validly issued and
are fully paid and nonassessable, (ii) except for director qualifying shares,
are owned directly or indirectly by the Company, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens") and (iii) are free of any other
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests).
(c) Capital Structure. The authorized capital stock of the Company
consists of (i) 300,000,000 shares of Company Common Stock, par value $.01 per
share, and (ii) 50,000,000 shares of preferred stock, par value $.01 per share
("Company Authorized Preferred Stock"), of which 3,000,000 shares have been
designated as Company Junior Preferred Stock and reserved for issuance pursuant
to the Company Rights Plan. "Company Preferred Stock" means Company Authorized
Preferred Stock that is issued and outstanding from time to time. At the close
of business on January
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31, 2000: (i) 80,040,334 shares of Company Common Stock were issued and out
standing; (ii) 16,135,944 shares of Company Common Stock were held by the
Company in its treasury or by its subsidiaries (such shares, "Company Treasury
Stock"); (iii) no shares of Company Preferred Stock were issued or outstanding;
and (iv) no shares of Company Preferred Stock were held by the Company in its
treasury or by its subsidiaries. At the close of business on January 31, 2000:
(i) 20,903,047 shares of Company Common Stock were reserved for issuance
pursuant to the Sterling Commerce, Inc. Amended and Restated 1996 Stock Option
Plan, the Sterling Commerce, Inc. 1999 Stock Option Plan, the XcelleNet, Inc.
1987 Stock Option Plan, as amended, the XcelleNet, Inc. 1996 Long Term Incentive
Plan, and the XcelleNet, Inc. Stock Option Plan for Outside Directors
(collectively, the "Company Stock Option Plans"), of which 17,714,490 shares
were subject to outstanding Company Stock Options; and (ii) 4,000,000 shares of
Company Common Stock were reserved for issuance pursuant to the Sterling
Commerce, Inc. Employee Stock Purchase Plan, of which 280,661 have been
purchased and issued as of January 31, 2000. Section 3.01(c) of the Company
Disclosure Schedule sets forth information regarding the current exercise price,
date of grant, number granted and vesting schedule of Company Stock Options for
each holder thereof. All outstanding shares of capital stock of the Company
are, and all shares which may be issued will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. Except as set forth in this Section 3.01(c), except for changes since
January 31, 2000 resulting from the issuance of shares of Company Common Stock
or Company Stock Options pursuant to the Company Stock Option Plans and except
as permitted by Section 4.01(b), (x) there are not issued, reserved for issuance
or outstanding (A) any shares of capital stock or other voting securities of the
Company, (B) any securities of the Company convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of the Company and
(C) except for the issuance of Company capital stock pursuant to the Company
Rights Plan, any warrants, calls, options, subscriptions or other rights,
agreements or commitments to acquire from the Company or any of its
subsidiaries, or obligation of the Company or any of its subsidiaries to issue,
any capital stock, voting securities or securities convertible into or exchange
able or exercisable for capital stock or voting securities of the Company, and
(y) there are no outstanding obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any such securities or
to issue, deliver or sell, or cause to be issued, delivered or sold, any such
securities. Neither the Company nor any of its subsidiaries is a party to any
voting agreement with respect to the voting of any such securities. There are no
outstanding (A) securities of the Company or any of its subsidiaries convertible
into or exchangeable or exercisable for shares of capital stock or other voting
securities or ownership interests in any of its subsidiaries, (B) warrants,
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<PAGE> 24
calls, options, subscriptions or other rights, agreements or commitments to
acquire from the Company or any of its subsidiaries, or obligation of the
Company or any of its subsidiaries to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible into
or exchangeable or exercisable for any capital stock, voting securities or
ownership interests in, any of its subsidiaries or (C) obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any such outstanding securities of the Company subsidiaries or to issue, deliver
or sell, or cause to be issued, delivered or sold, any such securities. Other
than the Company subsidiaries, the Company does not directly or indirectly
beneficially own any securities or other beneficial ownership interests in any
other entity. To the knowledge of the Company, other than as set forth in the
Company SEC Documents (defined herein) as of the date hereof, no person or
"group" "beneficially owns" 5% or more of the Company's outstanding voting
securities, with the terms "beneficially owns" and "group" having the meanings
ascribed to them under Rule 13d-3 and Rule 13d-5 under the Exchange Act.
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and, subject, in the case of the Merger, to the Company
Stockholder Approval (as defined in Section 3.01(l)), to consummate the
Transactions. The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the Transactions have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of the Merger, to the Company Stockholder Approval. This
Agreement has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by Parent and Purchaser, constitutes
a legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms. The execution and delivery of this
Agreement does not, and the consummation of the Transactions and compliance with
the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under, or result in the creation of any Lien
upon any of the properties or assets of the Company or any of its subsidiaries
under, (i) the certificate of incorporation or by-laws of the Company or the
comparable organizational documents of any of its subsidiaries, (ii) any loan
or credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license or similar authorization
applicable to the Company or any of its subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order,
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decree, statute, law, ordinance, rule or regulation applicable to the Company or
any of its subsidiaries or their respective properties or assets, other than, in
the case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, losses or Liens that individually or in the aggregate would not (x)
have, or reasonably be expected to have, a material adverse effect on the
Company or (y) reasonably be expected to materially impair or delay the ability
of the Company to perform its obligations under this Agreement. No consent,
approval, order or authorization of, action by, or in respect of, or
registration, declaration or filing with, any federal, state, local or foreign
government, any court, administrative, regulatory or other governmental agency,
commission or authority or any non-governmental U.S. or foreign regulatory
agency, commission or authority or any arbitraltribunal (each, a "Governmental
Entity") or any other person is required by the Company or any of its
subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the Transactions, except for:
(1) the filing with the SEC of (A) the Schedule 14D-9 and, if applicable, the
Proxy Statement, and (B) such reports under Section 13(a), 13(d), 15(d) or 16(a)
of the Exchange Act, as may be required in connection with this Agreement and
the Transactions; (2) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business and
such filings with Governmental Entities to satisfy the applicable requirements
of state securities or "blue sky" laws; (3) the filing of a pre-merger
notification and report form under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and the expiration or termination of
the waiting period thereunder and the filing of comparable pre-merger
notifications in non-U.S. jurisdictions, if applicable, and the expiration of
any waiting periods thereunder; and (4) such consents, approvals, orders or
authorizations the failure of which to be made or obtained individually or in
the aggregate would not (x) have, or reasonably be expected to have, a material
adverse effect on the Company or (y) reasonably be expected to materially impair
or delay the ability of the Company to perform its obligations under this
Agreement.
(e) Reports; Financial Statements. The Company has filed all required
reports, schedules, forms, statements and other documents (including exhibits
and all other information incorporated therein) with the SEC since September 30,
1996 (the "Company SEC Documents"). As of their respective dates, the Company
SEC Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents, and none of the Company SEC
Documents when
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filed (as supplemented by subsequently filed Company SEC Documents) contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the Company SEC
Documents comply as to form, as of their respective dates of filing with the
SEC, in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal recurring year-end audit adjustments that are not material). Except (A)
as reflected in such financial statements or in the notes thereto, (B) for
liabilities incurred in connection with this Agreement or the Transactions or
(C) for liabilities incurred in the ordinary course of business since the date
of the most recent financial statements included in the Company SEC Documents,
neither the Company nor any of its subsidiaries has any liabilities of any kind
whatsoever, whether accrued, contingent, absolute, due, to become due,
determined, determinable or otherwise which would have, or would reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the Company.
(f) Information Supplied. In addition to the representations and
warranties of the Company contained in Sections 1.01(b) and 1.02(b), the Proxy
Statement, if any, will, at the date it is filed with the SEC, at any time that
it is amended or supplemented, at the time it is first mailed to the Company's
stockholders and at the time of the Company Stockholders Meeting, not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation or warranty is made by the Company
with respect to information that Parent or Purchaser supplied to them for
inclusion therein or for incorporation by reference therein. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the Transactions, since September
30,
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1999, the Company and its subsidiaries have conducted their business only in the
ordinary course, and there has not been (1) any material adverse change in the
Company, (2) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of the
Company's or its non wholly-owned subsidiaries' capital stock, (3) any split,
combination or reclassification of any of the Company's or its subsidiaries'
capital stock or any redemption or other acquisition by the Company or any of
its subsidiaries of any shares of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of the Company's or its subsidiaries' capital
stock, except for issuances of Company Common Stock under the Company Stock
Option Plans, (4) (A) any granting by the Company or any of its subsidiaries to
any director, officer or employee of the Company of any increase in
compensation, bonus or other benefits, except for normal increases in the
ordinary course of business or in connection with the hiring or promotion of any
such person or increases required under any employment agreements in effect as
of the date of the most recent audited financial statements included in the
Company SEC Documents filed and publicly available prior to the date of this
Agreement (as amended to the date of this Agreement, the "Company Filed SEC
Documents"), (B) any granting by the Company or any of its subsidiaries to any
such director, officer or employee of any increase in severance or termination
pay, except in the ordinary course of business or in connection with the hiring
or promotion of any such person, or (C) any entry by the Company or any of its
subsidiaries into, or any amendment of, any employment, deferred compensation,
consulting, severance, termination or indemnification agreement with any such
director, officer or employee, other than in the ordinary course of business or
in connection with the hiring or promotion of any such person, (5) except
insofar as may be required by a change in generally accepted accounting
principles, any change in accounting methods, principles or practices by the
Company, (6) any Tax (as hereinafter defined) election that individually or in
the aggregate would reasonably be expected to have a material effect on the
Company or any of its Tax attributes or any settlement or compromise of any
material Tax liability, (7) any amendment to any term of any outstanding
security of the Company or any of its subsidiaries that would materially
increase the obligations of the Company or such subsidiaries under such
security, (8) any entry into any agreement, commitment or transaction by the
Company or any of its subsidiaries which is material to the Company and its
subsidiaries taken as a whole, except for agreements, commitments or
transactions entered into in the ordinary course of business or (9) any
agreement to do any of the foregoing.
(h) Compliance with Applicable Laws; Litigation. The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders,
registra-
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tions and approvals of all Governmental Entities which are required for the
operation of the businesses of the Company and its subsidiaries as currently
conducted (collectively, the "Company Permits"), except where the failure to
have any such Company Permits individually or in the aggregate would not have,
or reasonably be expected to have, a material adverse effect on the Company. The
Company and its subsidiaries are in compliance with the terms of the Company
Permits and all applicable statutes, laws, ordinances, rules and regulations,
except where the failure so to comply individually or in the aggregate would not
have, or reasonably be expected to have, a material adverse effect on the
Company. No action, demand, injunction, decree, requirement or investigation by
any Governmental Entity and no suit, action or proceeding by any person, in each
case with respect to the Company or any of its subsidiaries or any of their
respective properties is pending or, to the knowledge (as defined in Section
8.03) of the Company, threatened, other than, in each case, those the outcome of
which individually or in the aggregate would not (i) have, or reasonably be
expected to have, a material adverse effect on the Company or (ii) reasonably be
expected to materially impair or delay the ability of the Company to perform its
obligations under this Agreement. As of the date of this Agreement, there is no
suit, action or proceeding by any person pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its subsidiaries
which questions the validity of this Agreement, the Offer or the Merger or any
action to be taken by the Company or any of its stockholders in connection with
the consummation of the Transactions.
(i) Benefit Plans. Section 3.01(i) of the Company Disclosure Schedule
contains a true and complete list of (v) each collective bargaining agreement,
(w) with respect to any current or former United States based employee, officer
or director of the Company or any of its subsidiaries, each change of control,
retention or retirement agreement, plan or arrangement in effect and each salary
continuation or severance agreement, plan or arrangement which would entitle any
such person to receive severance amounts in excess of the amounts which,
individually or in the aggregate, any such person would be provided in
accordance with Section 5.06(c) of the Company Disclosure Schedule, (x) each
stock option or phantom stock plan, (y) each material bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, retirement, vacation, severance, salary continuation, sick leave,
disability, death benefit, hospitalization, medical, employee loan, educational
assistance, or other plan, program or arrangement, and (z) each material
employment, retention, consulting, individual compensation, termination or
severance agreement relating to any current or former employee, officer or
director of the Company or any of its subsidiaries (collectively, the "Company
Benefit Plans").
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None of the Company Benefit Plans is subject to Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
With respect to each Company Benefit Plan, a complete and
correct copy of each of the following documents (if applicable) has been made
available to Parent: (i) the most recent document constituting the Company
Benefit Plan and all amendments thereto, and any related trust documents; (ii)
the most recent summary plan description, and all related summaries of material
modifications; (iii) the most recent IRS determination letter; (iv) the most
recent Form 5500 (including schedules and attachments); (v) the most recent
financial statements and actuarial reports (including for purposes of Financial
Accounting Standards Board report nos. 87, 106 and 112); and (vi) a description
of any nonwritten Company Benefit Plan.
(j) ERISA Compliance.
(i) With respect to the Company Benefit Plans and the
Other Benefit Plans (as defined herein) no event has occurred and, to
the knowledge of the Company, there exists no condition or set of
circumstances, in connection with which the Company or any of its
subsidiaries could be subject to any material liability under ERISA,
the Code, or any other applicable law.
(ii) Each Company Benefit Plan and Other Benefit Plan
has been operated and administered in all material respects in
accordance with its terms. The Company Benefit Plans and the Other
Benefits Plans are in compliance in all material respects with the
applicable provisions of ERISA, the Code and all other applicable laws.
In particular, to the knowledge of the Company, no individual who has
performed services for the Company or any of its subsidiaries has been
improperly excluded from participation in any Company Benefit Plan or
Other Benefit Plan. Each Company Benefit Plan and Other Benefit Plan
that is intended to be qualified under Section 401(a) or 501(c)(9) of
the Code so qualifies and has received a favorable determination letter
from the IRS to such effect. To the knowledge of the Company, no fact
or event has occurred since the date of any determination letter from
the IRS which is reasonably likely to adversely affect such favorable
determination. There are no audits or proceedings initiated pursuant to
the Employee Plans Compliance Resolution System or similar proceedings
pending with the Internal Revenue Service or Department of Labor with
respect to any Company Benefit Plan or Other Benefit Plan.
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(iii) Neither the Company nor any trade or business,
whether or not incorporated (an "ERISA Affiliate"), which together with
the Company would be deemed to be a "single employer" within the
meaning of Section 4001(b) of ERISA, has incurred any liability under
Title IV of ERISA and no condition exists that presents a risk to the
Company or any ERISA Affiliate of the Company of incurring any such
liability (other than liability for benefits or premiums to the Pension
Benefit Guaranty Corporation arising in the ordinary course), (y) no
Company Benefit Plan has incurred an "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA or Section 412 of the Code)
whether or not waived and (z) to the knowledge of the Company, there
are not any facts or circumstances that would change the funded status
of any Company Benefit Plan that is a "defined benefit" plan (as
defined in Section 3(35) of ERISA) since the date of the most recent
actuarial report for such plan. No Company Benefit Plan is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA.
(iv) Neither the Company nor any of its subsidiaries
is a party to any collective bargaining or other labor union contract
applicable to persons employed by the Company or any of its
subsidiaries and no collective bargaining agreement is being negotiated
by the Company or any of its subsidiaries. As of the date of this
Agreement, there is no labor dispute, strike or work stoppage against
the Company or any of its subsidiaries pending or, to the knowledge of
the Company, threatened which may interfere with the respective
business activities of the Company or any of its subsidiaries. As of
the date of this Agreement, none of the Company, any of its
subsidiaries or any of their respective representatives or employees
has committed any unfair labor practice in connection with the
operation of the respective businesses of the Company or any of its
subsidiaries, and there is no charge or complaint against the Company
or any of its subsidiaries by the National Labor Relations Board or any
comparable governmental agency pending or threatened in writing.
(v) No Company Benefit Plan or Other Benefit Plan
provides medical or life insurance benefits (whether or not insured)
with respect to current or former employees after retirement or other
termination of service.
(vi) Neither the execution and delivery of this
Agreement nor the consummation of the transactions hereby will (either
alone or in combination with another event) (w) result in any payment
becoming due, or
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increase the amount of any compensation due, (x) increase any benefits
otherwise payable under any Company Benefit Plan or Other Benefit Plan,
(y) result in the acceleration of the time of payment or vesting of any
such compensation or benefits, or (z) result in the failure of any
amount payable under any Company Benefit Plan or Other Benefit Plan to
be deductible for federal income tax purposes by virtue of Section 280G
or Section 162(m) of the Code (the arrangements providing for any of
the foregoing hereinafter referred to as the "Change in Control
Agreements" and the individuals directly or indirectly receiving
payments or otherwise benefitting under such Change in Control
Agreements hereinafter referred to as the "Change in Control
Individuals").
(vii) There are no pending or, to the knowledge of
the Company, threatened actions, claims, or proceedings against or
relating to any Company Benefit Plan or Other Benefit Plan (other than
routine benefit claims by persons entitled to benefits thereunder),
and, to the knowledge of the Company, there are no facts or
circumstances which could form a reasonable basis for any of the
foregoing.
(viii) All material liabilities have been adequately
reserved on the consolidated financial statements of the Company
included in the Company SEC Documents for each Company Benefit Plan and
Other Benefit Plan covering employees outside of the United States. The
benefits and compensation under the Company Benefit Plans and Other
Benefit Plans covering employees outside of the United States are no
more than customary and reasonable for the country in which such
employees work and the industry in which the Company and its
subsidiaries conduct their business.
(ix) Section 3.01(j) of the Company Disclosure
Schedule sets forth (I) in accordance with the terms thereof, the
maximum aggregate liability under all Change in Control Agreements
(assuming where necessary that any Change in Control Individual is
severed), and (II) as of the dates indicated thereon, the liability
under the Sterling Commerce, Inc. Supplemental Executive Retirement
Plan upon a "Change in Control" (as defined therein) (the "SERP"), the
assets in the SERP trust and liabilities under the SERP without a
Change in Control, the liability under the retention bonus program
identified in Section 4.9(c) of the Seller Disclosure Schedule to the
MSD Agreement (as defined herein), and the assets of the trust and
liabilities under the Sterling Commerce, Inc. Deferred Compensation
Plan.
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(k) Taxes.
(i) Each of the Company and its subsidiaries has
timely filed (after giving effect to any extensions of time to file
which were obtained and have not expired) all material Tax returns and
Tax reports required to be filed by it and all such returns and reports
are complete and correct in all material respects. The Company and each
of its subsidiaries has paid (or the Company has paid on its behalf)
all material Taxes due for all taxable periods through the date hereof,
and the most recent financial statements contained in the Company Filed
SEC Documents reflect an adequate reserve for all Taxes payable by the
Company and its subsidiaries for all taxable periods and portions
thereof accrued through the date of such financial statements.
(ii) No audits or other administrative proceedings or
court proceedings are pending or, to the knowledge of the Company,
threatened with respect to any Taxes or Tax Returns of the Company or
its subsidiaries. No material deficiencies for any Taxes have been
proposed, asserted or assessed against the Company or any of its
subsidiaries that have not been fully paid or are not adequately
reserved for in the most recent financial statements contained in the
Company Filed SEC Documents.
(iii) None of the Company, any of its subsidiaries,
nor any affiliated, consolidated, combined or unitary group of which
the Company or any of its subsidiaries is now or, to the knowledge of
the Company, ever was a member, has waived any statute of limitations
or agreed to any extension of time within which to file any Tax return,
or to pay any material Taxes which such statute of limitations has not
expired or Tax return or Taxes have not since been timely filed or
paid.
(iv) No Liens for Taxes exist with respect to any
assets or properties of the Company or any of its subsidiaries, except
for statutory Liens for Taxes not yet due.
(v) Neither the Company nor any of its subsidiaries
is a party to or is bound by any Tax sharing, Tax indemnity or similar
agreement with respect to Taxes pursuant to which it will have any
obligation to make any payment after the Closing Date. Neither the
Company nor any of its subsidiaries has entered into a closing
agreement pursuant to Section 7121 of the Code
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or any predecessor provision or any similar provision of state, local
or foreign Tax law.
(vi) The Company and its subsidiaries have withheld
and paid over all material Taxes required to be withheld in connection
with any amounts paid over or owing to any employee, creditor,
independent contractor or other third party.
(vii) No claim has been made by a taxing authority in
a jurisdiction where the Company or any of its subsidiaries does not
file Tax Returns to the effect that the Company or any of its
subsidiaries is or may be subject to Taxation by that jurisdiction.
(viii) Neither the Company nor any of its
subsidiaries has constituted either a "distributing corporation" or a
"controlled corporation" (within the meaning of Section 355(a)(1)(A) of
the Code) in a distribution of stock qualifying for tax-free treatment
under Section 355 of the Code (i) in the two years prior to the date of
this Agreement or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within
the meaning of Section 355(e) of the Code) in conjunction with the
Merger.
(ix) As used in this Agreement, "Taxes" shall include
all federal, state, local or foreign income, property, sales, excise,
use, occupation, service, transfer, payroll, franchise, withholding and
other taxes or similar governmental charges, fees, levies or other
assessments including any interest, penalties or additions with respect
thereto.
(l) Voting Requirements. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock at the Company
Stockholders Meeting called to adopt this Agreement (the "Company Stockholder
Approval") is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve and adopt this Agreement and the
transactions contemplated hereby.
(m) State Takeover Statutes. The Board of Directors of the Company has
approved this Agreement and the consummation of the Transactions and, assuming
the accuracy of Parent's representation and warranty contained in Section
3.02(d), such approval constitutes approval of the Merger and the other
Transactions
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by the Board of Directors of the Company under the provisions of Section 203 of
the DGCL such that Section 203 of the DGCL does not apply to the Merger and the
other Transactions. No other "fair price," "moratorium," "control share,"
"business combination," "affiliate transaction" or other anti-takeover statute
is applicable to the Company, the Shares, the Merger or the other Transactions.
(n) Brokers. Except for Goldman, Sachs & Co., no broker, investment
banker, financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company. The
Company has heretofore made available to Parent a complete and correct copy of
all agreements between the Company and Goldman, Sachs & Co. pursuant to which
such firm would be entitled to any payment relating to the Transactions.
(o) Intellectual Property.
(i) The Company and its subsidiaries own free and
clear of any Lien or have the valid and enforceable right to use all
material U.S. and foreign patents, trademarks (registered or
unregistered), service marks, trade names including, without
limitation, "Sterling Commerce," trade dress, corporate names, domain
names, copyrights (registered or unregistered), trade secrets, know-how
and other confidential or proprietary technical and business
information, inventions (patentable or unpatentable), processes,
formulae and software of any kind (including any and all documentation,
information, materials, licenses, other agreements or rights, or
registrations or applications for registration, relating to any of the
foregoing), as well as all goodwill symbolized by any of the foregoing
(collectively, "Intellectual Property"), necessary to carry on or
currently used in the business of the Company and its subsidiaries
substantially as currently conducted (collectively, the "Employed
Intellectual Property").
(ii) The activities, products and services of the
Company and its subsidiaries do not infringe in any material respect
upon, or constitute the unauthorized use in any material respect of the
Intellectual Property of any other person or entity. There are no
claims or suits pending or for which notice has been provided or, to
the knowledge of the Company, threatened (A) alleging that the
Company's or any of its subsidiaries, activities, products or services
infringe in any material respect upon or constitute the unauthorized
use in any material respect of any other person or entity's
Intellectual Property
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or (B) challenging the Company's or any of its subsidiaries' ownership
of, right to use, or the validity or enforceability of any license or
other agreement relating to, any Employed Intellectual Property. To the
knowledge of the Company, there are not material infringements or
unauthorized uses by third parties of any Employed Intellectual
Property owned by the Company and it subsidiaries.
(iii) The consummation of the Merger and the other
Transactions will not result in the loss by the Company or its
subsidiaries of any rights to Employed Intellectual Property.
(iv) The Company has heretofore delivered to Parent a
complete and accurate list of the following Employed Intellectual
Property owned by the Company or its subsidiaries: (A) all material
patents issued in the U.S. or any other country, by title, number and
issue date; (B) all material patent applications now pending in the
U.S. or any other country, or any transnational patent office, by
title, serial or application number and filing date; (C) all material
trademark and service mark registrations issued in the U.S. or any
other country, or by any transnational trademark office, by mark,
registration number and issue date; (D) all material applications for
trademark and service mark registrations now pending in the U.S. or any
other country, or any transnational trademark office, by mark, serial
or application number and filing date; (E) all material registered
copyrights, by title, registration number and registration date; (F)
all material applications for copyright registrations, by title,
application number and filing date; and (G) all material Internet
domain name registrations. All Employed Intellectual Property owned by
Company or its subsidiaries is valid, subsisting, enforceable, and,
where applicable, has been properly maintained except as would not
have, or reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the Company.
(p) Material Contracts.
(i) Section 3.01(p) of the Company Disclosure
Schedule sets forth a list of all Material Contracts (as hereinafter
defined), other than any entered into after the date hereof in
accordance with Section 4.01 hereof. The Company has heretofore made
available to Parent true, correct and complete copies of all written,
and summaries of all oral, contracts and agreements (and all
amendments, modifications and supplements thereto and all side letters
to
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which the Company or any of its subsidiaries is a party affecting the
obligations of any party thereunder) to which the Company or any of
its subsidiaries is a party or by which any of its or their properties
or assets are bound that are material to the business, properties or
assets of the Company and its subsidiaries taken as a whole,
including, without limitation: (A) material employment, severance,
product design or development, personal services, consulting,
non-competition or indemnification contracts (including, without
limitation, any material contract to which the Company or any of its
subsidiaries is a party involving employees of the Company); (B)
material licensing, merchandising or distribution agreements; (C)
contracts granting a right of first refusal or first negotiation; (D)
material partnership or joint venture agreements or other partnership
or joint venture agreements containing material financial obligations
of the Company or any of its subsidiaries; (E) agreements for the
acquisition, sale or lease of material properties or assets of the
Company (by merger, purchase or sale of assets or stock or otherwise)
entered into since January 1, 1997; (F) contracts or agreements with
any Governmental Entity entered into outside the ordinary course of
business; (G) loan or credit agreements, mortgages, indentures or
other agreements or instruments evidencing indebtedness for borrowed
money by the Company or any of its subsidiaries or any such agreement
pursuant to which indebtedness for borrowed money may be incurred,
other than any of the foregoing which represent obligations of the
Company and its subsidiaries in an aggregate amount of less than $1
million; (H) agreements that purport to limit, curtail or restrict the
ability of the Company or any of its subsidiaries to compete in any
geographic area or line of business; (I) contracts or agreements that
would be required to be filed as an exhibit to a Form 10-K filed by the
Company with the SEC on the date hereof that have not been filed or
incorporated by reference as an exhibit to a Company Filed SEC
Document; and (J) commitments and agreements to enter into any of the
foregoing (collectively, together with any such contracts entered into
in accordance with Section 4.01 hereof, the "Material Contracts").
(ii) Each of the Material Contracts constitutes the
valid and legally binding obligation of the Company or its
subsidiaries, enforceable in accordance with its terms, and is in full
force and effect. There is no default under any Material Contract so
listed either by the Company or, to the Company's knowledge, by any
other party thereto, and no event has occurred that with the lapse of
time or the giving of notice or both would constitute a default
thereunder by the Company or, to the Company's knowledge, any other
party. No party to any such Material Contract has given notice to the
Company of or
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made a claim against the Company with respect to any breach or default
thereunder.
(q) Real Property
(i) There is no real property owned in fee by the
Company and its subsidiaries.
(ii) Section 3.01(q) of the Company Disclosure
Schedule sets forth all leases, subleases and other agreements (the
"Real Property Leases") under which the Company or any of its
subsidiaries uses or occupies or has the right to use or occupy, now or
in the future, any real property. The Company has heretofore made
available to Parent true, correct and complete copies of all the Real
Property Leases (and all modifications, amendments and supplements
thereto and all side letters to which the Company or any of its
subsidiaries is a party affecting the obligations of any party
thereunder). Each Real Property Lease constitutes the valid and legally
binding obligation of the Company or its subsidiaries, enforceable in
accordance with its terms, and is in full force and effect. All rent
and other sums and charges payable by the Company and its subsidiaries
as tenants under each Real Property Lease are current and no
termination event or condition or uncured default of a material nature
on the part of the Company or any such subsidiary or, to the Company's
knowledge, the landlord, exists under any Real Property Lease. Each of
the Company and its subsidiaries has a good and valid leasehold
interest in each parcel of real property leased by it free and clear of
all Liens, except (A) Taxes and general and special assessments not in
default and payable without penalty and interest, and (B) other Liens
which do not materially interfere with the Company's or any of its
subsidiaries' use and enjoyment of such real property or materially
detract from or diminish the value thereof.
(iii) No party to any such Real Property Leases has
given notice to the Company or any of its subsidiaries of or made a
written claim against the Company or any of its subsidiaries with
respect to any material breach or material default thereunder.
(r) Opinion of Financial Advisor. The Company has received the
opinion of Goldman Sachs & Co., dated the date hereof, to the effect
that, as of such date, the Offer Price and the Merger Consideration are
fair from a financial point of view to the stockholders of the Company.
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(s) Company Rights Plan. The Company Rights Plan has been
amended to (i) render the Company Rights Plan inapplicable to the Offer and the
Merger and the other Transactions and (ii) ensure that (y) neither Parent nor
any of its subsidiaries is an Acquiring Person (as defined in the Company Rights
Plan) pursuant to the Company Rights Plan and (z) a Share Acquisition Date,
Distribution Date or Triggering Event (in each case as defined in the Company
Rights Plan) does not occur by reason of the approval, execution or delivery of
this Agreement, the consummation of the Offer and the Merger or the consummation
of the other Transactions.
(t) Year 2000. The current release of each of the Company's
and its subsidiaries' current product offerings and their critical information
technology systems and, to the knowledge of the Company, all third-party
components, services or products embedded or used in or required by the
Company's current product offerings are Year 2000 Compliant, except as would
not, individually or in the aggregate, have, or reasonably be expected to have,
a material adverse effect on the Company. A product or information technology
system is "Year 2000 Compliant" if it is capable of recording, storing,
processing and presenting calendar dates falling on or after January 1, 2000 in
the same manner and with substantially the same functionality as such software
or system records, stores, processes and presents calendar dates falling on or
before December 31, 1999, and treats the Year 2000 as a leap year, provided that
such software or system is presented with properly formatted and accurate dates
and date-related data in accordance with such software's or system's
requirements, and provided further that the hardware, operating system, software
and other system components with or on which such products or systems operate
are Year 2000 Compliant and performing properly.
Section 3.02 Representations and Warranties of Parent. Except
as set forth on the Disclosure Schedule delivered by Parent to the Company prior
to the execution of this Agreement (the "Parent Disclosure Schedule") (each
section of which qualifies the correspondingly numbered representation and
warranty or covenant), Parent represents and warrants to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent
and Purchaser is a corporation duly organized, validly existing and in good
standing (with respect to jurisdictions which recognize such concept) under the
laws of the jurisdiction in which it is organized and has the requisite
corporate or other power, as the case may be, and authority to carry on its
business as now being conducted, except, as to Purchaser, for those
jurisdictions where the failure to be so organized, existing or
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in good standing individually or in the aggregate would not have, or reasonably
be expected to have, a material adverse effect on Parent. Each of Parent and
Purchaser is duly qualified or licensed to do business and is in good standing
(with respect to jurisdictions which recognize such concept) in each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or licensing necessary,
except for those jurisdictions where the failure to be so qualified or licensed
or to be in good standing individually or in the aggregate would not have, or
reasonably be expected to have, a material adverse effect on Parent. Parent has
made available to the Company prior to the execution of this Agreement complete
and correct copies of its certificate of incorporation and by-laws, each as
amended to date.
(b) Authority; Noncontravention. Each of Parent and Purchaser
has all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement and to consummate the Transactions. The
execution, delivery and performance of this Agreement by Parent and Purchaser
and the consummation by Parent and Purchaser of the Transactions have been duly
authorized by all necessary corporate action on the part of Parent and
Purchaser. This Agreement has been duly executed and delivered by Parent and
Purchaser and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Parent and
Purchaser, enforceable against Parent and Purchaser in accordance with its
terms. The execution and delivery of this Agreement does not, and the
consummation of the Transactions and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or loss of
a benefit under, or result in the creation of any Lien upon any of the
properties or assets of Parent or any of its subsidiaries under, (i) the
certificate of incorporation or by-laws of Parent or Purchaser, (ii) any loan
or credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license or similar authorization
applicable to Parent or any of its subsidiaries or their respective properties
or assets or (iii) subject to the governmental filings and other matters
referred to in the following sentence, any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent or any of its
subsidiaries or their respective properties or assets, other than, in the case
of clauses (ii) and (iii), any such conflicts, violations, defaults, rights,
losses or Liens that individually or in the aggregate would not (x) have a
material adverse effect on Parent or (y) reasonably be expected to materially
impair or delay the ability of Parent to perform its obligations under this
Agreement. No consent, approval, order or authorization of, action by, or in
respect of, or registration,
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declaration or filing with, any Governmental Entity or any other person is
required by Parent or any of its subsidiaries in connection with the execution
and delivery of this Agreement by Parent or Purchaser or the consummation by
Parent or Purchaser of the transactions contemplated hereby, except for: (1) the
filing with the SEC of (A) the Offer Documents, and (B) such reports under
Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby; (2) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of other states
in which Parent is qualified to do business and such filings with Governmental
Entities to satisfy the applicable requirements of state securities or "blue
sky" laws; (3) the filing of a pre-merger notification and report form by Parent
under the HSR Act and the expiration or termination of the waiting period
thereunder and the filing of comparable pre-merger notifications in non-U.S.
jurisdictions, if applicable, and the expiration of any waiting periods
thereunder; and (4) such consents, approvals, orders or authorizations the
failure of which to be made or obtained individually or in the aggregate would
not (x) have a material adverse effect on Parent or (y) reasonably be expected
to materially impair or delay the ability of Parent or Purchaser to perform its
obligations under this Agreement.
(c) Information Supplied. In addition to Parent's and
Purchaser's representations and warranties contained in Sections 1.01(b) and
1.02(b), none of the information supplied or to be supplied by Parent or
Purchaser specifically for inclusion or incorporation by reference in the Proxy
Statement will, at the date it is filed with the SEC, at any time that it is
amended or supplemented at the time it is first mailed to the Company's
stockholders and at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
(d) Ownership of Company Common Stock. Neither Parent nor any
of its subsidiaries beneficially owns (as defined in Rule 13d-3 under the
Exchange Act) any Shares.
(e) Sufficient Funds. Parent has, and will make available to
Purchaser, sufficient funds to purchase all of the Shares outstanding on a fully
diluted basis at the Offer Price.
(f) Communications Act of 1934. To the knowledge of Parent,
Section 5.10(a) of the Parent Disclosure Schedule sets forth a complete and
accurate
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list of all steps necessary such that the Company and any person that (directly
or indirectly) is owned or controlled by or is under common ownership or control
with the Company will operate in compliance with the provisions of the
Communications Act, as if the Company and any such persons were "affiliates" of
a "Bell Operating Company" as of the Closing.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.01 Conduct of Business of the Company. Except as set
forth in Section 4.01 of the Company Disclosure Schedule, except as otherwise
expressly permitted by this Agreement or except as consented to by Parent (in
its sole discretion), during the period from the date of this Agreement to the
earlier of the Effective Time and the appointment or election of Parent's
designees to the Company Board pursuant to Section 1.03 (such earlier time, the
"Control Time"), the Company shall, and shall cause its subsidiaries to, carry
on their respective businesses in the ordinary course consistent with past
practice and in compliance in all material respects with all applicable laws and
regulations and, to the extent consistent therewith, use reasonable best efforts
to preserve intact their current business organizations (other than internal
organizational realignments), to keep available the services of their current
officers and other key employees and to preserve their relationships with those
persons having business dealings with them to the end that their goodwill and
ongoing businesses shall be unimpaired at the Effective Time. Without limiting
the generality of the foregoing (but subject to the above exceptions), during
the period from the date of this Agreement to the Control Time, the Company
shall not, and shall not permit any of its subsidiaries to:
(a) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of the Company to its parent, (I) declare, set
aside or pay any dividends on, or make any other distributions in respect of,
any of its capital stock, (II) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, except for
issuances of Company Common Stock upon the exercise of Company Stock Options
under the Company Stock Option Plans or in connection with other awards under
the Company Stock Option Plans outstanding as of the date hereof in accordance
with their present terms or issued pursuant to Section 4.01(b) or the issuance
of capital stock of the Company pursuant to the Company Rights Plan, (III)
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except pursuant to agreements entered into with respect to the Company Stock
Option Plans, purchase, redeem or otherwise acquire any shares of capital stock
of the Company or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities or
(IV) make any other actual, constructive or deemed distribution in respect of
any shares of its capital stock or otherwise make any payments to stockholders
in their capacity as such;
(b) issue, deliver, sell, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities (other
than Company Stock Options granted under clause (II) below or the issuance of
Company Common Stock upon the exercise of Company Stock Options or in connection
with other awards under the Company Stock Option Plans (I) outstanding as of
January 31, 2000 in accordance with their present terms, or (II) granted after
January 31, 2000 in the ordinary course of business consistent with past
practice (so long as such additional amount of Company Common Stock subject to
Company Stock Options (A) does not exceed 250,000 shares of Company Common Stock
in the aggregate, (B) does not vest, either in full or part, solely as a result
of the transactions contemplated by this Agreement, (C) is not granted to any
Change in Control Individual and (D) is not granted at an exercise price of less
than the fair market value of the Company Common Stock at the date of grant);
(c) amend its certificate of incorporation, by-laws or other
comparable organizational documents;
(d) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets of, or by
any other manner, any business or any person;
(e) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets
(including securitizations), other than the Company's Managed Systems Division
pursuant to the MSD Agreement (as hereinafter defined), a true and complete
copy, including all exhibits and schedules, of which has been previously
provided by the Company to Parent, or in the ordinary course of business
consistent with past practice;
(f) except for borrowings under credit facilities or lines of
credit existing on the date hereof, incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise become
responsible for
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the obligations of any person, or make any loans, advances or capital
contributions to, or investments in, any person other than its wholly owned
subsidiaries, except in the ordinary course of business consistent with past
practice and in amounts not material to the maker of such loan, advance, capital
contribution or investment;
(g) take, or agree to commit to take, any action that would or
is reasonably likely to result in any of the conditions to the Offer set forth
in Annex A or any of the conditions to the Merger set forth in Article VI not
being satisfied, or that would materially impair the ability of the Company,
Parent, Purchaser or the holders of Shares to consummate the Offer or the Merger
in accordance with the terms hereof or materially delay such consummation;
(h) make any capital expenditure or expenditures which exceed
$25,000,000 in the aggregate;
(i) make or revoke any Tax election, settle or compromise any
Tax liability material to the Company or any of its subsidiaries, or change (or
make a request to any taxing authority to change) its Tax or accounting methods,
policies, practice or procedures, except in each case as required by applicable
law or generally accepted accounting principles;
(j) except as required under existing Company Benefit Plans,
(i) grant any employee, officer or director any increase in wages, bonus,
severance, profit sharing, retirement, insurance or other compensation or
benefits (other than an increase in wages in the ordinary course of business
consistent with past practice for any individual other than a Change in Control
Individual), (ii) amend or terminate any Company Benefit Plan, (iii) establish
any new compensation or benefit plan or arrangement, (iv) enter into any
employment, consulting, retention, termination or severance agreement (other
than in the ordinary course of business consistent with past practice for any
individual other than a Change in Control Individual) or (v) enter into any
change in control agreement;
(k) revalue in any material respect any of its assets,
including, without limitation, writing down the value of inventory or
writing-off notes or accounts receivable other than in the ordinary and usual
course of business consistent with past practice or as required by generally
accepted accounting principles;
(l) (i) enter into any contract or agreement, other than in
the ordinary course of business consistent with past practice, or amend in any
material respect any
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of the Material Contracts or the agreements referred to in Section 3.01(q) other
than in the ordinary course of business; or (ii) enter into any contract,
agreement, commitment or arrangement providing for, or amend any contract,
agreement, commitment or arrangement to provide for, the taking of any action
that would be prohibited hereunder;
(m) pay, discharge or satisfy any material claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice of liabilities reflected or
reserved against in the consolidated financial statements of the Company and its
subsidiaries or incurred in the ordinary and usual course of business consistent
with past practice;
(n) settle or compromise any pending or threatened suit,
action or claim relating to the transactions contemplated hereby;
(o) enter into any agreement or arrangement that would limit
or restrict the Surviving Corporation and its affiliates (including Parent) or
any successor thereto, from engaging or competing in any line of business or in
any geographic area; or
(p) authorize, or commit or agree to take, any of the
foregoing actions;
provided that the limitations set forth in this Section 4.01 (other than clause
(a)) shall not apply to any transaction between the Company and any wholly owned
subsidiary or between any wholly owned subsidiaries of the Company.
Section 4.02 No Solicitation by the Company.
(a) The Company and its subsidiaries and each of their
respective affiliates, directors, officers, employees, agents and
representatives (including without limitation any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its subsidiaries) shall immediately cease any discussions or negotiations with
any other parties that may be ongoing with respect to any Company Takeover
Proposal (as defined below). The Company shall not, nor shall it authorize or
permit any of its subsidiaries to, nor shall it authorize or permit any of its
or its subsidiaries' affiliates, directors, officers, employees, agents or
representatives (including, without limitation, any investment banker, financial
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advisor, attorney, accountant or other representative retained by it or any of
its subsidiaries) to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing information or assistance), or take any other
action designed to facilitate, any inquiries, any expression of interest or the
making of any proposal which constitutes any Company Takeover Proposal or (ii)
participate in any discussions or negotiations regarding any Company Takeover
Proposal; provided, however, that if, during the Initial Period (as defined
herein), the Board of Directors of the Company (i) determines in good faith that
such Company Takeover Proposal is a Company Superior Proposal (as defined in
Section 4.02(b)) and (ii) determines in good faith, after receiving advice of
outside counsel, that such action is necessary for the Board of Directors of the
Company to comply with its fiduciary duties to stock holders under the DGCL,
and, prior to furnishing any non-public information to such person, the Company
receives from such person an executed confidentiality agreement with provisions
no less favorable to the Company (i.e., no less restrictive with respect to the
conduct of such person) than the Confidentiality Agreement (as defined herein),
the Company may, in response to a Company Takeover Proposal not solicited in
violation of this Section 4.02(a) and subject to providing prior written notice
of its decision to take such action to Parent (the "Company Notice") and
compliance with Section 4.02(c), following delivery of the Company Notice (x)
furnish information with respect to the Company and its subsidiaries to any
person making such a Company Takeover Proposal (provided that such information
has been previously delivered to Parent) and (y) participate in discussions or
negotiations regarding such a Company Takeover Proposal. For purposes of this
Agreement, "Company Takeover Proposal" means any inquiry, proposal or offer from
any person relating to any (r) direct or indirect acquisition or purchase
(including by way of lease, exchange, sale, mortgage, pledge or otherwise, in a
single transaction or series of related transactions) of substantial assets of
the Company or any of its subsidiaries, taken as a whole, (s) direct or indirect
acquisition or purchase (including by way of lease, exchange, sale, mortgage,
pledge or otherwise, in a single transaction or series of related transactions)
of 20% or more of any class of equity securities of the Company or any of its
subsidiaries whose business constitutes 20% or more of the net revenues, net
income or assets of the Company and its subsidiaries, taken as a whole, (t)
tender offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of any class of equity securities of the
Company, (u) merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries whose business constitutes 20% or more of
the net revenues, net income or assets of the Company and its subsidiaries,
taken as a whole, (v) acquisition by any person, after the date hereof, of
beneficial ownership or the right to acquire beneficial ownership of, or the
formation
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of any "group" (as such term is defined under Section 13(d) of the Exchange
Act), that beneficially owns or has the right to acquire beneficial ownership of
20% or more of any class of equity securities of the Company, (x) adoption by
the Company of a plan of liquidation, the declaration or payment by the Company
of an extraordinary dividend on any of its shares of capital stock or the
effectuation by the Company of a recapitalization or other type of transaction
that would involve either a change in the Company's outstanding capital stock or
a distribution of assets of any kind to the holders of such capital stock, (y)
repurchase by the Company or any of its subsidiaries of shares of Company Common
Stock, or (z) agreement to, or public announcement by the Company or any other
person, entity or group of a proposal, plan or intention to do any of the
foregoing, other than (i) the transactions contemplated by this Agreement or
(ii) the sale of the Company's Managed Systems Division pursuant to the MSD
Agreement. For purposes of this Agreement, the term "Initial Period" means the
period from the date hereof and continuing until 20 business days following the
commencement of the Offer; provided, however, that if the Offer is extended
beyond such 20 business day period by the Purchaser pursuant to Section 1.01(a),
and as of the date of such extension, the condition set forth in clause (iii) of
the first paragraph of Annex A has been met and the Minimum Condition has not
been met, the Initial Period shall be extended until the earlier of (a) the time
the Minimum Condition has been met and (b) 60 days from the commencement of the
Offer.
(b) Except as expressly permitted by this Section 4.02,
neither the Board of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by such Board of Directors or
such committee of the Merger or this Agreement, (ii) approve or recommend, or
propose publicly to approve or recommend, any Company Takeover Proposal or (iii)
cause the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, a "Company Acquisition
Agreement") related to any Company Takeover Proposal. Notwithstanding the
foregoing, in the event that, during the Initial Period, the Board of Directors
of the Company determines in good faith, after receiving advice from the
Company's outside counsel that (i) the withdrawal, modification or change of its
recommendation is necessary for the Board of Directors of the Company to comply
with its fiduciary duties to the Company's stockholders under the DGCL and (ii)
the Company Takeover Proposal is a Company Superior Proposal, the Board of
Directors of the Company may (subject to this and the following sentences) (x)
withdraw or adversely modify its approval or recommendation of the Transactions
or the matters to be considered at the Company Stockholders Meeting, (y) approve
or recommend such Company Superior Proposal and/or (z) simultaneously with the
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payment of the Termination Fee required pursuant to Section 5.04(b)(i),
terminate this Agreement and, if it so chooses, enter into a Company Acquisition
Agreement with respect to such Company Superior Proposal, but only after the
third business day following Parent's receipt of written notice advising Parent
that the Board of Directors of the Company is prepared to terminate this
Agreement and only if, during such three-day period, the Company and its
advisors shall have negotiated in good faith with Parent to make such
adjustments in the terms and conditions of this Agreement as would enable Parent
to proceed with the Transactions on such adjusted terms. For purposes of this
Agreement, a "Company Superior Proposal" means any bona fide written proposal
made by a third party to acquire, directly or indirectly, including pursuant to
a tender offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, more than 50%
of the combined voting power of the shares of Company Common Stock then
outstanding or all or substantially all the assets of the Company (excluding the
Company's Managed Systems Division) and which the Board of Directors of the
Company determines in its good faith judgment (after receiving and consistent
with a written opinion from a financial advisor of nationally recognized
reputation) to be more financially favorable to the Company's stockholders than
the Offer and the Merger and for which financing, to the extent required, is
then committed and which is not subject to any financing commitment.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company shall promptly and in
any event within 24 hours advise Parent orally and in writing of any Company
Takeover Proposal or request for information relating to the Company or any of
its subsidiaries, or for access to the properties, books or records of the
Company or any of its subsidiaries by any person that is considering making, or
has made, a Company Takeover Proposal and shall keep Parent reasonably informed,
on a current basis and in reason able detail, of the status and details thereof
and, if in writing, promptly deliver or cause to be delivered to Parent a copy
of such proposal or request.
(d) Nothing contained in this Section 4.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders which, in the good faith judgment of
the Board of Directors of the Company, after receiving advice of outside counsel
is necessary under applicable law, provided that the Company does not withdraw
or modify, or propose to withdraw or modify, its position with respect to the
Offer, the Merger or this Agreement or approve or recommend, or propose to
approve or recommend, a
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Company Takeover Proposal unless the Company and its Board of Directors have
complied with all the provisions of this Section 4.02.
(e) The Company covenants and agrees that it will not waive,
modify or amend in any manner, and will take all actions necessary to enforce,
any standstill and confidentiality provisions contained in agreements to which
the Company is a party or to which the Company is subject.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01 Access to Information; Confidentiality. To the
extent permitted by applicable law and subject to the Agreement dated November
19, 1999, between Parent and the Company (the "Confidentiality Agreement"), the
Company shall, and shall cause each of its subsidiaries to, afford to Parent and
to the officers, employees, accountants, counsel, financial advisors and other
representatives of Parent, reasonable access during normal business hours during
the period prior to the Effective Time to the Company's properties, books,
contracts, commitments, personnel and records and, during such period, the
Company shall, and shall cause each of its subsidiaries to, furnish promptly to
Parent all other information concerning its business, properties and personnel
as Parent may reasonably request, provided that no investigation pursuant to
this Section 5.01 shall affect or modify any representation or warranty given by
the Company. Parent will hold, and will cause its respective officers,
employees, accountants, counsel, financial advisors and other representatives
and affiliates to hold, any nonpublic information in accordance with the terms
of the Confidentiality Agreement.
Section 5.02 Reasonable Best Efforts; Cooperation. Upon the
terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Offer, the
Merger and the other Transactions, including, but not limited to, (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings and the taking of all steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
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Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the Transactions, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, (iv) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of this Agreement, and (v) the actions contemplated by Section 5.10 of
the Parent Disclosure Schedule. Nothing set forth in this Section 5.02(a) will
limit or affect actions permitted to be taken pursuant to Section 4.02.
Section 5.03 Indemnification, Exculpation and Insurance.
(a) Parent agrees to indemnify and hold harmless from
liabilities for acts or omissions occurring at or prior to the Effective Time
those classes of persons currently entitled to indemnification from the Company
and its subsidiaries as provided in their respective certificates of
incorporation or by-laws (or comparable organizational documents). Parent also
agrees to advance expenses to any such person promptly upon receipt of an
undertaking from such person that such expenses shall be repaid should it be
ultimately determined that such person is not entitled to indemnification. In
addition, from and after the Effective Time, directors and officers of the
Company who become directors or officers of Parent or any of its subsidiaries
will be entitled to indemnification under Parent's or any of its subsidiaries'
certificate of incorporation and by-laws, as the same may be amended from time
to time in accordance with their terms and applicable law, and to all other
indemnity rights and protections as are afforded to other directors and officers
of Parent or any of its subsidiaries.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) except for any disposition of assets by the Surviving
Corporation required by applicable law in connection with the Merger, transfers
or conveys all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision will be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 5.03.
(c) For six years after the Effective Time, Parent shall
maintain in effect the Company's current directors' and officers' liability
insurance covering acts or
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omissions occurring prior to the Effective Time with respect to those persons
who are currently covered by the Company's directors' and officers' liability
insurance policy on terms with respect to such coverage and amount no less
favorable than those of such policy in effect on the date hereof; provided that
Parent may substitute therefor policies of Parent or its subsidiaries containing
terms with respect to coverage and amount no less favorable to such directors or
officers; provided, further, that in no event shall Parent be required to pay
aggregate premiums for insurance under this Section 5.03(c) in excess of 200% of
the aggregate premiums paid by the Company in fiscal 1999 for such purpose.
(d) The provisions of this Section 5.03 (i) are intended to be
for the benefit of, and will be enforceable by, each indemnified party, his or
her heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
Section 5.04 Fees and Expenses. (a) Except as provided in this
Section 5.04, all fees and expenses incurred in connection with the Merger, this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated.
(b) In the event that (i) this Agreement is terminated by the
Company pursuant to Section 7.01(c)(ii), (ii) this Agreement is terminated by
Parent pursuant to Section 7.01(d)(iii), (iii) this Agreement is terminated by
Parent or the Company pursuant to Section 7.01(b)(i) solely as a result of the
failure of the Mini mum Condition to be satisfied and at or prior to such
termination the Company has received one or more Company Takeover Proposals
which at the time of such termination has not been absolutely and
unconditionally withdrawn or abandoned or (iv) this Agreement is terminated by
Parent pursuant to Section 7.01(d)(i) and such breach or failure to perform on
the part of the Company is willful and prior to such termination the Company has
received a Company Takeover Proposal, then promptly after such termination (and
in any event within one business day, except that any payment of the Termination
Fee pursuant to subparagraph (i) above shall be paid simultaneously with, and be
a necessary condition to, such termination), the Company shall pay Parent a fee
of $125 million by wire transfer of same day funds.
Section 5.05 Public Announcements. Parent and the Company will
consult with each other before issuing, and provide each other the opportunity
to review, comment upon and concur with, any press release or other public
statements
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with respect to the Transactions, and shall not issue any such press release or
make any such public statement prior to such consultation, except as either
party may determine is required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement shall be in the form
heretofore agreed to by the parties.
Section 5.06 Employee Benefit Plans.
(a) Parent hereby agrees that individuals who are employed by
the Company and its subsidiaries as of the Closing shall remain employees of the
Surviving Corporation and its subsidiaries immediately following the Closing.
Parent hereby agrees to honor, and agrees to cause the Surviving Corporation to
honor, and to make required payments when due under all Company Benefit Plans
and all similar types of contracts, agreements, arrangements, policies, plans
and commitments not required to be scheduled pursuant to Section 3.01(i) hereof
(the "Other Benefit Plans"), provided, that the Company shall have the right at
any time to amend or terminate any such Company Benefit Plan or Other Benefit
Plan in accordance with its terms. Neither this Section 5.06 nor any other
provision of this Agreement shall limit the ability or right of the Company and
its subsidiaries to terminate the employment of any of their respective
employees after the Closing (subject to any rights of any such employee pursuant
to any Company Benefit Plan or any Other Benefit Plan).
(b) For purposes of all employee benefit plans, programs and
arrangements maintained by or contributed to by Parent and its subsidiaries
(including, after the Closing, the Company), for which the Company's employees
are eligible for participation, Parent shall, or shall cause its subsidiaries
to, cause each such plan, program or arrangement to treat the prior service with
the Company and its affiliates of each person who is an employee or former
employee of the Company or its subsidiaries immediately prior to the Closing (a
"Company Employee") as service rendered to Parent or its subsidiaries, as the
case may be, for purposes of eligibility to participate in and vesting
thereunder (but not benefit accrual) to the same extent such service is
recognized under corresponding plans, programs or arrangements of the Company or
its affiliates prior to the Closing; provided, however, that such crediting of
service shall not operate to duplicate any benefit or the funding of such
benefit. Company Employees shall also be given credit for any deductible or
co-payment amounts paid in respect of the plan year in which the Closing occurs,
to the extent that, following the Closing, they participate in any other plan
for which deductibles or co-payments are required. Parent shall also cause each
Parent Benefit Plan to waive
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any preexisting condition which was waived under the terms of any Company
Benefit Plan immediately prior to the Closing or waiting period limitation which
would otherwise be applicable to a Company Employee on or after the Closing.
Parent shall recognize any accrued but unused vacation and sabbatical time of
the Company Employees as of the Closing Date, and Parent shall cause the Company
and its subsidiaries to provide or pay such paid vacation and sabbatical time
but only to the extent properly accrued or reserved for on the relevant balance
sheet.
(c) Parent shall provide severance pay to any Company Employee
who is terminated by Parent or the Surviving Corporation, or any of their
respective subsidiaries, during the period beginning on the Closing Date and
ending one year following the Closing Date. The amount of severance payable to
any such terminated Company Employee shall be the amount of severance pay
determined pursuant to Section 5.06(c) of the Company Disclosure Schedule with
respect to such employee.
(d) Parent acknowledges that for purposes of all the Company
Benefit Plans, the consummation of the transactions contemplated by this
Agreement will constitute a "Change in Control" of the Company (as that term is
defined in such Company Benefit Plans). Parent agrees (i) to cause the Company
after consummation of the transactions contemplated by this Agreement to pay all
amounts provided under such Company Benefit Plans, as a result of a Change in
Control of the Company in accordance with their terms, and (ii) to cause the
Company to honor, all rights, privileges and modifications to or with respect to
any such Company Benefit Plans which became effective as a result of such Change
in Control.
Section 5.07 Purchaser Compliance. Parent shall cause
Purchaser to comply with all of its obligations under or related to this
Agreement.
Section 5.08 [Intentionally Omitted.]
Section 5.09 MSD Agreement. From and after the Effective Time,
Parent and Purchaser agree to cause the Surviving Corporation and its
subsidiaries to comply with the Company's and its subsidiaries' obligations
under the Asset Purchase Agreement, dated as of January 26, 2000 by and among
the Company, Sterling Commerce (Southern), Inc., Sterling Commerce (U.K.) Ltd.,
Sterling Commerce B.V., Sterling Commerce International, Inc., Brave Acquisition
Corp. and Brave Cayman, Ltd. (the "MSD Agreement").
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Section 5.10 Other Actions. The Company makes the
representations and warranties, and prior to the consummation of the Offer
agrees to take the steps, set forth in Section 5.10(a) of the Parent Disclosure
Schedule. Prior to the consummation of the Offer, Parent agrees to assist the
Company in taking the foregoing steps. In addition Parent and the Company agree
to comply with, and take the actions provided for in, Section 5.10(b) of the
Parent Disclosure Schedule.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. If required by applicable law, the
Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No judgment, order, decree,
preliminary or permanent injunction, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any court or
other Governmental Entity of competent jurisdiction or other legal restraint or
prohibition (collectively, "Restraints") shall be in effect preventing,
enjoining or prohibiting the consummation of the Merger; provided, however, that
each of the parties shall have used its reason able best efforts to prevent the
entry of any such Restraints and to appeal as promptly as possible any such
Restraints that may be entered.
(c) Purchase of Shares in the Offer. Parent, Purchaser or
their affiliates shall have accepted for payment and paid for all of the Shares
tendered and not withdrawn pursuant to the Offer, except that this condition
shall not apply if Parent, Purchaser or their affiliates shall have failed to
purchase Shares pursuant to the Offer in breach of their obligations under this
Agreement.
Section 6.02 Frustration of Closing Conditions. None of
Parent, Purchaser or the Company may rely on the failure of any condition set
forth in Section 6.01 to be satisfied if such failure was caused by such party's
failure to use reasonable best efforts to consummate the Offer, the Merger and
the other Transactions, as required by and subject to Section 5.02.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.01 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after the Company
Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Offer shall have expired in accordance
with the terms of this Agreement without any Shares being purchased
therein; provided, however, that the right to terminate this Agreement
under this Section 7.01(b)(i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of Parent or Purchaser, as the
case may be, to purchase the Shares pursuant to the Offer on or prior
to such date;
(ii) [intentionally omitted]; or
(iii) if any Restraint having any of the effects set
forth in Section 6.01(b) shall be in effect and shall have become final
and nonappealable; provided, that the party seeking to terminate this
Agreement pursuant to this Section 7.01(b)(iii) shall have used
reasonable best efforts to prevent the entry of and to remove such
Restraint;
(c) by the Company:
(i) if prior to the purchase of Shares pursuant to
the Offer, Parent or Purchaser shall have breached or failed to perform
in any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement
or if any representation or warranty of Parent or Purchaser shall have
become untrue, which breach or failure to perform cannot be or has not
been cured within 30 days after the giving of written notice to Parent
or Purchaser, as applicable, except, in any case, for such breaches,
untruths or failures to perform which are not, in the Company's
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opinion, reasonably likely to adversely affect Parent's or Purchaser's
ability to complete the Offer or the Merger;
(ii) if the Board of Directors of the Company shall
have exercised its termination rights set forth in Section 4.02(b);
provided that, in order for the termination of this Agreement pursuant
to this paragraph (ii) to be deemed effective, the Company shall have
complied with all provisions of Section 4.02, including (A) the notice
provisions therein and (B) the obligation to simultaneously pay to
Parent the Termination Fee required pursuant to Section 5.04(b)(i); or
(iii) if Parent, Purchaser or any of their affiliates
shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the
Offer; provided, that the Company may not terminate this Agreement
pursuant to this Section 7.01(c)(iii) if the cause of such failure was
the Company's material breach of its obligations under this Agreement;
(d) by Parent or Purchaser:
(i) if prior to the purchase of Shares pursuant to
the Offer, the Company shall have breached or failed to perform any of
its representations, warranties, covenants or other agreements
contained in this Agreement or if any representation or warranty of the
Company shall have become untrue (except where the breach or untruth of
such representations or warranties results from changes specifically
permitted by the Agreement or from any transaction expressly consented
to in writing by Parent) which (A) would give rise to the failure of a
condition set forth in paragraph (c) or (d) of Annex A hereto and (B)
cannot be or has not been cured within 30 days after the giving of
written notice to the Company;
(ii) if, due to an occurrence not involving a breach
by Parent or Purchaser of their respective obligations hereunder, which
makes it impossible to satisfy any of the conditions set forth in
Annex A hereto, Parent, Purchaser, or any of their affiliates shall
have failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer;
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(iii) if (v) the Board of Directors of the Company
(or any committee thereof) withdraws or modifies its approval or
recommendation of the Offer, the Merger or this Agreement in a manner
adverse to Parent, (w) the Board of Directors of the Company (or any
committee thereof) shall have recommended to the stockholders of the
Company any Company Takeover Proposal, (x) the Company fails to call or
hold the Company Stockholder Meeting following the receipt by the
Company of a Company Takeover Proposal, (y) the Board of Directors of
the Company (or any committee thereof) shall have resolved to do any of
the foregoing, or (z) either Parent or Purchaser is entitled to
terminate the Offer as a result of the occurrence of an event set forth
in paragraph (b) of Annex A hereto; or
(iv) any person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Parent, Purchaser or their
affiliates or any group of which any of them is a member, shall have
acquired beneficial ownership (as determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of 20% or more of the Shares.
Section 7.02 Effect of Termination. In the event of
termination of this Agreement by either the Company, Parent or Purchaser as
provided in Section 7.01, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Parent, Purchaser or
the Company, other than the provisions of the last sentence of Section 5.01,
Section 5.04, this Section 7.02 and Article VIII, which provisions survive such
termination, provided, however, that nothing herein shall relieve any party from
any liability for any willful and material breach by such party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
Section 7.03 Amendment. This Agreement may be amended by the
parties at any time before or after the Company Stockholder Approval; provided,
however, that after any such approval, there shall not be made any amendment
that by law requires further approval by the stockholders of the Company or
Parent without the further approval of such stockholders. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties and approved by the Original Directors if required by Section 1.03.
Section 7.04 Extension; Waiver. At any time prior to the
Effective Time, a party may (a) extend the time for the performance of any of
the obligations or other acts of the other party, (b) waive any inaccuracies in
the representations and
49
<PAGE> 57
warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
7.03, waive compliance by the other party with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party and approved by the Original Directors
if required by Section 1.03. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 8.01 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
Section 8.02 Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Purchaser, to:
SBC Communications, Inc.
175 E. Houston Street
San Antonio, Texas 78205
Telecopy No.: (210) 351-5034
Attention: Senior Vice President -
Corporate Development
50
<PAGE> 58
with copies to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telecopy No.: (212) 310-8007
Attention: Howard Chatzinoff
George Gluck
and
SBC Communications, Inc.
175 E. Houston Street
San Antonio, Texas 78205
Telecopy No.: (210) 351-5034
Attention: Senior Vice President -
Corporate Development
(b) if to the Company, to
Sterling Commerce, Inc.
4600 Lakehurst Court
Dublin, Ohio 43016
Telecopy No.: (614) 718-1510
Attention: General Counsel
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telecopy No.: (212) 735-2000
Attention: Blaine V. Fogg
Eric J. Friedman
51
<PAGE> 59
Section 8.03 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person, where
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a person, whether through
the ownership of voting securities, by contract, as trustee or executor, or
otherwise;
(b) "material adverse change" or "material adverse effect"
means, when used in connection with the Company or Parent, any change, effect,
event, occurrence or state of facts that is materially adverse to the business,
financial condition or results of operations of such party and its subsidiaries
taken as a whole other than any change, effect, event or occurrence relating to
(i) the economy or securities markets of the United States or any other region
in general, (ii) this Agreement or the transactions contemplated hereby or the
announcement thereof or (iii) the industry in which the Company or Parent, as
the case may be, operates in general, and not specifically relating to the
Company or Parent or their respective subsidiaries;
(c) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity;
(d) a "subsidiary" of any person means another person, an
amount of the voting securities or other voting ownership or partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting securities or
interests, 50% or more of the equity interests of which) is owned directly or
indirectly by such first person.
(e) "knowledge" of any person which is not an individual means
the knowledge of such person's executive officers after due inquiry.
Section 8.04 Interpretation. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. The table of contents, index of terms and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this
52
<PAGE> 60
Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns.
Section 8.05 Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
Agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 8.06 Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred to herein), and
the Confidentiality Agreement (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement and (b) except for
the provisions of Article II and Section 5.03, are not intended to confer upon
any person other than the parties any rights or remedies.
SECTION 8.07 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICT OF LAWS THEREOF.
Section 8.08 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by either of the parties
hereto without the prior written consent of the other party except that
Purchaser may assign, in its sole discre-
53
<PAGE> 61
tion, any or all of its rights, interests and obligations hereunder to Parent or
to any direct or indirect wholly owned subsidiary of Parent; provided, that
Parent shall be obligated to cause such subsidiary to comply with its
obligations under or related to this Agreement. Any assignment in violation of
the preceding sentence shall be void. Subject to the preceding two sentences,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
Section 8.09 Consent to Jurisdiction. Each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of any federal
court located in the State of Delaware or any Delaware state court in the event
any dispute arises out of this Agreement or any of the transactions contemplated
by this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (c) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of Delaware or a Delaware state court.
Section 8.10 Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 8.11 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
54
<PAGE> 62
IN WITNESS WHEREOF, the parties hereto have caused this Agree-
ment and Plan of Merger to be signed by their respective officers hereunto duly
authorized, all as of the date first written above.
SBC COMMUNICATIONS, INC.
By: /s/ Stephen A. McGaw
------------------------------------
Name: Stephen A. McGaw
Title: Managing Director - Corporate
Development
SBC SILVER, INC.
By: /s/ Stephen A. McGaw
------------------------------------
Name: Stephen A. McGaw
Title: Vice President
STERLING COMMERCE, INC.
By: /s/ Albert K. Hoover
------------------------------------
Name: Albert K. hoover
Title: Executive Vice President
<PAGE> 63
ANNEX A
Certain Conditions of the Offer. Notwithstanding any other
provisions of the Offer, Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to Purchaser's obligation to pay for
or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate or amend the Offer as to any Shares not then paid for, if (i) any
applicable waiting period under the HSR Act, the Swedish Competition Act and the
German Gesetz gegen Wettebewerbsbeschraenkungen has not expired or terminated,
(ii) the Minimum Condition has not been satisfied, (iii) the Company has failed
to take one or more of the actions required of it in Section 5.10(a) of the
Parent Disclosure Schedule, or (iv) at any time on or after the date of this
Agreement and (except in the case of clause (b)) continuing in effect
immediately prior to the expiration of the Offer, any of the following events
shall occur (other than as a result of any action or inaction of Parent or any
of its subsidiaries which constitutes a breach of this Agreement):
(a) there shall be any statute, rule, regulation,
judgment, order or injunction issued, enacted, entered, enforced,
promulgated or deemed applicable to the Offer or the Merger or any
other action shall be taken by any Governmental Entity (other than
actions taken by any Governmental Entity pursuant to any state or
federal antitrust law, including without limitation the HSR Act, or the
Communications Act) (i) prohibiting or imposing any material
limitations on Parent's or Purchaser's ability to exercise ownership or
operation (or that of any of their respective subsidiaries or
affiliates) of all or a material portion of their or the Company's
businesses or assets, (ii) challenging the acquisition by Parent or
Purchaser of any Shares under the Offer, or restraining or prohibiting
the making or consummation of the Offer, the Merger or the performance
of any of the other Transactions, (iii) imposing material limitations
on the ability of Purchaser, or rendering Purchaser unable, to accept
for payment, pay for or purchase some or all of the Shares pursuant to
the Offer, and the Merger, or (iv) imposing material limitations on the
ability of Purchaser or Parent effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters properly presented to
the Company's stockholders, including without limitation the approval
and adoption of this Agreement and the Transactions;
A-1
<PAGE> 64
(b) the Company shall have entered into any Company
Acquisition Agreement with respect to any Company Superior Proposal in
accordance with Section 4.02(b) of this Agreement;
(c) (i) any of the representations and warranties of
the Company set forth in this Agreement (without giving effect to any
materiality or material adverse change or material adverse effect
qualification set forth therein) shall not be true and correct as of
the expiration of the Offer, except where the failure of such
representations and warranties to be so true and correct results from
changes specifically permitted by this Agreement or from any
transaction expressly consented to in writing by Parent or, in the
aggregate, does not have a material adverse effect on the Company; or
(ii) the representations and warranties of the Company set forth in
Section 3.01(c) or Section 3.01(g)(2) shall be untrue or incorrect in
any material respect, except where the failure of such representations
and warranties to be true and correct results from changes specifically
permitted by this Agreement or from any transaction expressly consented
to in writing by Parent;
(d) the Company shall have failed to perform in any
material respect any material obligation or to comply in any material
respect with any material agreement or covenant of the Company to be
performed or complied with by it under this Agreement at or immediately
prior to consummation of the Offer; or
(e) this Agreement shall have been terminated in
accordance with its terms;
(f) there shall have occurred any material adverse
effect on the Company or there shall have occurred any change,
condition, event or development that would reasonably be expected to
have a material adverse effect on the Company;
(g) Parent and the Company shall have agreed (in
their respective sole discretion) that Purchaser shall terminate the
Offer or postpone the acceptance for payment of or payment for Shares
thereunder; or
(h) there shall have occurred a declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States which, in either case, prohibits Parent's or
Purchaser's bank lenders from furnishing to them the funds necessary to
pay for the Shares upon consummation of the Offer;
A-2
<PAGE> 65
which in the reasonable judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser other than any action or inaction by Parent or Purchaser which
constitutes a breach of this Agreement) giving rise to such condition makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment of
or payment for Shares.
The foregoing conditions are for the sole benefit of Parent
and Purchaser and may be asserted by Parent or Purchaser regardless of the
circumstances giving rise to any such condition (other than as a result of any
action or inaction of Parent or any of its subsidiaries which constitutes a
breach of this Agreement) or may be waived by Parent or Purchaser, in whole or
in part, at any time and from time to time in the sole discretion of Parent or
Purchaser. The failure by Parent or Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right; the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
A-3
<PAGE> 1
EXHIBIT (d)(2)
STOCKHOLDER'S AGREEMENT
STOCKHOLDER'S AGREEMENT, dated as of February 18, 2000, among SBC
Communications, Inc., a Delaware corporation ("Parent"), SBC Silver, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and
the stockholders named in Exhibit A hereto (each a "Stockholder").
WHEREAS, simultaneously herewith, Parent and Purchaser are entering into
an Agreement and Plan of Merger, dated as of the date hereof (as amended from
time to time, the "Merger Agreement"), with Sterling Commerce, Inc., a Delaware
corporation (the "Company"), which contemplates, among other things, that Parent
or Purchaser will commence a tender offer (as modified from time to time as
permitted by the Merger Agreement, the "Offer") for all of the outstanding
shares of common stock, $.0l par value, of the Company ("Company Common Stock");
and that Purchaser will merge with the Company pursuant to the merger
contemplated by the Merger Agreement (the "Merger"); capitalized terms used but
not defined herein shall have the meanings set forth in the Merger Agreement,
whether or not such Merger Agreement shall be in effect from time to time;
WHEREAS, as of the date hereof, each Stockholder owns (either beneficially
or of record) the number of shares of Company Common Stock set forth opposite
such Stockholder's name on Exhibit A hereto (all such shares owned by the
Stockholders and any shares of Company Common Stock hereafter acquired by any
Stockholder prior to the termination of this Agreement being referred to herein
as the "Shares"); and
WHEREAS, as a condition to the willingness of Parent and Purchaser to
enter into the Merger Agreement, Parent and Purchaser have requested that each
Stockholder agree, and in order to induce Parent and Purchaser to enter into the
Merger Agreement, each Stockholder has agreed, severally and not jointly, to
enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
VOTING AGREEMENT
SECTION 1.1 Voting Agreement. Each Stockholder hereby agrees that, at any
meeting of the stockholders of the Company, however called, or in connection
with any written consent of the holders of shares of Company Common Stock, each
such Stockholder shall vote his or her Shares (a) in favor of the approval and
adoption of the Merger Agreement, the Merger and all the transactions
contemplated by the Merger Agreement and this Agreement and any other actions
required in furtherance thereof and hereof and (b) against any Company Takeover
Proposal and any actions in furtherance thereof.
SECTION 1.2 Irrevocable Proxy. Each Stockholder hereby irrevocably
constitutes and appoints Steve McGaw as his or her attorney and proxy pursuant
to the provisions of Section 212(c) of the Delaware General Corporation Law
("DGCL"), with full power of substitution, to vote and
<PAGE> 2
otherwise act (by written consent or otherwise) with respect to the Shares which
such Stockholder is entitled to vote at any meeting of stockholders of the
Company (whether annual or special and whether or not an adjourned or postponed
meeting) or consent in lieu of any such meeting or otherwise, on, and only on,
the matters described in Section 1.1 and to execute and deliver any and all
consents, instruments or other agreements or documents in order to take any and
all such actions in connection with or in furtherance of the obligations of such
Stockholder set forth in this Agreement and each of the transactions
contemplated by this Agreement or the Merger Agreement. THIS PROXY AND POWER OF
ATTORNEY IS IRREVOCABLE, SUBJECT TO SECTION 4.5, AND COUPLED WITH AN INTEREST.
Each Stockholder hereby revokes all other proxies and powers of attorney with
respect to such Stockholder's Shares that it may have heretofore appointed or
granted, and no subsequent proxy or power of attorney shall be given or written
consent executed (and if given or executed, shall not be effective) by such
Stockholder with respect thereto. All authority herein conferred or agreed to be
conferred shall survive the death or incapacity of a Stockholder and any
obligation of such Stockholder under this Agreement shall be binding upon the
heirs, personal representatives, successors and assigns of such Stockholder.
ARTICLE II
AGREEMENT TO TENDER
SECTION 2.1 Agreement to Tender. Each Stockholder hereby agrees that, if
Parent or Purchaser commences the Offer, such Stockholder will validly tender,
or cause to be validly tendered, all of the Shares then beneficially owned by
such Stockholder to Parent or Purchaser, as applicable, as soon as practicable
(and in any event within five business days) after the commencement of the Offer
in accordance with the terms and conditions of the Offer. Each Stockholder
further agrees that it will not withdraw such tendered Shares unless the Offer
is terminated by Parent or Purchaser, as applicable. Each Stockholder will be
entitled, upon consummation of the Offer, subject to and in accordance with the
Offer's terms and conditions, to receive an amount equal to the Offer Price with
respect to the tendered Shares. Each Stockholder hereby agrees to permit Parent
and Purchaser to publish and disclose in the Offer Documents and, if Company
Stockholder Approval is required under applicable law, the Proxy Statement
(including all documents and schedules filed with the SEC), their respective
identity and ownership of Company Common Stock and the nature of their
respective commitments, arrangements and understandings under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Stockholder. Each
Stockholder represents and warrants to Parent as follows:
<PAGE> 3
(a) Such Stockholder has the requisite power, authority and legal
capacity to enter into and deliver this Agreement and to carry out its
obligations hereunder. This Agreement has been duly executed and delivered by
such Stockholder and, assuming its due authorization, execution and delivery by
Parent and Purchaser, is a legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms.
(b) The execution and delivery of this Agreement by such Stockholder
does not, and the performance of this Agreement by such Stockholder will not,
(i) conflict with or violate any Laws or (ii) conflict with or violate any
contract or other instrument to which the Stockholder is a party or by which
such Stockholder is bound, including, without limitation, any voting agreement,
stockholders agreement or voting trust, except for any Liens created hereby.
(c) The execution and delivery of this Agreement by such Stockholder
does not, and the performance of this Agreement by such Stockholder will not,
require such Stockholder to obtain any consent, approval, authorization or
permit of, or to make any filing with or notification to, any person or
Governmental Authority, except as may be required by the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and the HSR Act.
(d) There is no suit, action, investigation or proceeding pending
or, to the knowledge of such Stockholder, threatened against such Stockholder at
law or in equity before or by any Governmental Authority that could reasonably
be expected to impair the ability of such Stockholder to perform its obligations
hereunder, and there is no judgment, decree, injunction, rule, order or writ of
any Governmental Authority to which such Stockholder is or its assets are
subject that could reasonably be expected to impair the ability of such
Stockholder to perform its obligations hereunder.
(e) Each Stockholder owns beneficially and of record the shares of
Company Common Stock set forth opposite such Stockholder's name on Exhibit A
hereto (with respect to such Stockholder, the "Existing Shares"). The Existing
Shares constitute all the shares of Company Common Stock owned beneficially and
of record by such Stockholder. Such Stockholder has sole voting power, sole
power of disposition, sole power to demand appraisal rights and all other
stockholder rights with respect to all of its Existing Shares, with no
restrictions, other than restrictions on disposition pursuant to applicable
securities laws, on such Stockholder's rights of voting or disposition
pertaining thereto. Such Stockholder has good and valid title to all Existing
Shares, free and clear of all Liens (other than any Liens created hereby) and,
when delivered by such Stockholder to Parent or Purchaser in accordance with the
Offer, good, marketable and valid title in and to such Existing Shares will be
transferred to Parent or Purchaser, as the case may be, free and clear of all
Liens.
SECTION 3.2 Survival. Notwithstanding anything otherwise provided for
herein, each Stockholder's representations and warranties contained in this
Section 3 shall be true and correct as of the date Parent or Purchaser, as the
case may be, accepts such Stockholder's Shares for payment pursuant to the terms
of the Offer.
<PAGE> 4
ARTICLE IV
COVENANTS OF THE STOCKHOLDER
SECTION 4.1 "No Shop". Each Stockholder shall immediately cease any
discussions or negotiations relating to a Company Takeover Proposal, other than
with respect to the Transactions, with any parties conducted heretofore. Each
Stockholder will not, directly or indirectly, and will instruct its
Representatives not to, directly or indirectly (i) solicit, initiate or
encourage (including by way of furnishing information or assistance), or take
any other action to facilitate, any inquiries, any expression of interest or the
making of any proposal which constitute any Company Takeover Proposal or (ii)
participate in any discussions or negotiations regarding any Company Takeover
Proposal. Anything in this Section 4.1 to the contrary notwithstanding, nothing
in this Section 4.1 shall limit in any way a Stockholder who is a director of
the Company from exercising any of his rights or performing any of his duties as
a director of the Company.
SECTION 4.2 Restriction on Transfer. Until and unless this Agreement has
been terminated, each Stockholder shall not except as expressly provided for in
this Agreement (a) sell, exchange, pledge, encumber or otherwise transfer or
dispose of, or agree to sell, exchange, pledge, encumber or otherwise transfer
or dispose of, any of its Shares (which for avoidance of doubt shall not include
any option to purchase Company Common Stock exercisable for Shares pursuant to
the terms of such option), or any interest therein, (b) deposit its Shares into
a voting trust or enter into a voting agreement or arrangement with respect to
such Shares or grant any proxy with respect thereto or (c) enter into any
agreement, arrangement, understanding, or undertaking to do any of the
foregoing.
SECTION 4.3 Waiver of Appraisal Rights. Each Stockholder hereby waives any
appraisal or other rights to dissent from the Merger that such Stockholder may
have.
SECTION 4.4 Termination. The covenants and agreements contained herein
with respect to the Shares shall terminate upon the termination of the Merger
Agreement in accordance with its terms.
ARTICLE V
DEFINITIONS
SECTION 5.1 Definitions. For the purpose of this Agreement, "beneficially
own" or "beneficial ownership" with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing, subject to any fiduciary duty in the
case of securities not held of record.
<PAGE> 5
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Severability. If any term or other provision of this Agreement
is or is deemed to be invalid, illegal or incapable of being enforced by any
applicable rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of this Agreement is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner so that the terms of this Agreement remain as originally contemplated to
the fullest extent possible.
SECTION 6.2 Entire Agreement. This Agreement constitutes the entire
understanding between Parent, Purchaser and each Stockholder with respect to the
subject matter hereof and thereof and supersedes all prior agreements and
understandings, both written and oral, between Parent, Purchaser and each
Stockholder with respect to the subject matter hereof and thereof.
SECTION 6.3 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same instrument.
SECTION 6.4 Mutual Drafting. Each party hereto has participated in the
drafting of this Agreement, which each party acknowledges is the result of
extensive negotiations between the parties.
SECTION 6.5 Assignment. This Agreement shall not be assigned by operation
of law or otherwise without the prior written consent of the other parties
hereto, provided that Parent may assign its rights hereunder to any direct or
indirect wholly owned subsidiary of Parent, but no such assignment shall relieve
Parent of its obligations hereunder if such assignee does not perform such
obligations.
SECTION 6.6 Amendments. This Agreement may not be amended, supplemented,
waived or otherwise modified or terminated, except upon the execution and
delivery of a written agreement executed by the parties hereto.
SECTION 6.7 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by delivery in person, facsimile
transmission, registered or certified mail (postage prepaid, return receipt
requested), or courier service providing proof of delivery to the respective
parties at the following addresses (or to such other address for a party as
shall be specified in a notice given in accordance with this Section 6.7).
<PAGE> 6
If to Parent or Purchaser:
SBC Communications, Inc.
175 E. Houston Street
San Antonio, Texas 78205
Telecopy No.: (210) 351-3488
Attention: Vice President and Assistant General Counsel -
Mergers and Acquisitions
with copies to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telecopy No.: (212) 310-8007
Attention: Howard Chatzinoff, Esq.
George Gluck, Esq.
If to the Stockholder:
c/o Sterling Commerce, Inc.
4600 Lakehurst Court
Dublin, Ohio 43106
Telecopy No.: (614) 718-1510
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telecopy: (212) 735-2000
Attention: Blaine V. Fogg
Eric J. Friedman
SECTION 6.8 No Third Party Beneficiaries. This Agreement is not intended
to be for the benefit of, and shall not be enforceable by, any person or entity
not a party hereto.
SECTION 6.9 Specific Performance. Each of the parties hereto acknowledges
that a breach by it of any agreement contained in this Agreement will cause the
other party to sustain damage for which it would not have an adequate remedy at
law for money damages, and therefore each of the parties hereto agrees that in
the event of any such breach the aggrieved party shall be entitled to the remedy
of specific performance of such agreement and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or in
equity.
SECTION 6.10 Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
right, power or remedy by such party.
<PAGE> 7
SECTION 6.11 No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon strict compliance by any
other party hereto with its obligations hereunder, and any custom or practice of
the parties at variance with the terms hereof, shall not constitute a waiver by
such party of its rights to exercise any such or other right, power or remedy or
to demand such compliance.
SECTION 6.12 Governing Law.
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without giving effect to the principles
of conflicts of law.
(b) Each party hereby irrevocably submits to the exclusive
jurisdiction of the Court of Chancery in the State of Delaware in any action,
suit or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such court (and
waives any objection based on forum non conveniens or any other objection to
venue therein); provided, however, that such consent to jurisdiction is solely
for the purpose referred to in this subsection (b) and shall not be deemed to be
a general submission to the jurisdiction of such court or in the State of
Delaware other than for such purposes.
SECTION 6.13 Waiver of Jury Trial. EACH OF PARENT, PURCHASER AND THE
STOCKHOLDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, PURCHASER
OR THE STOCKHOLDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT THEREOF.
SECTION 6.14 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
[Signatures on Following Page.]
<PAGE> 8
IN WITNESS WHEREOF, Parent, Purchaser and each Stockholder have caused
this Agreement to be duly executed as of the date first above written.
SBC COMMUNICATIONS, INC.
By: /s/ Stephen A. McGaw
------------------------
Name: Stephen A. McGaw
Title: Managing Director-
Corporate Development
SBC SILVER, INC.
By: /s/ Stephen A. McGaw
------------------------
Name: Stephen A. McGaw
Title: Vice President
STOCKHOLDERS:
By: /s/ Sterling L. Williams
------------------------
Sterling L. Williams
By: /s/ Warner C. Blow
------------------------
Warner C. Blow
By: /s/ Charles J. Wyly, Jr.
------------------------
Charles J. Wyly, Jr.
By: /s/ Sam Wyly
------------------------
Sam Wyly
Exhibit A
<TABLE>
<CAPTION>
Name Shares
- ---- ------
<S> <C>
Sterling L. Williams 3,755,776
Warner C. Blow 1,359,031
Charles J. Wyly, Jr. 988,366
Sam Wyly 1,045,672
</TABLE>
<PAGE> 1
EXHIBIT (d)(3)
PERSONAL AND CONFIDENTIAL
November 19, 1999
SBC Communications Incorporated
175 East Houston Street
San Antonio, TX 78205
Attention: Steve McGaw
Dear Mr. McGaw:
In connection with your consideration of a possible transaction with Sterling
Commerce, Inc. (the "Company"), you have requested information concerning the
Company. As a condition to your being furnished such information, you agree to
treat any and all information (whether written, oral, electronic, computer
generated or stored, or otherwise) concerning the Company and/or its affiliates
(whether prepared by the Company or its Representatives or otherwise) which is
furnished (whether before or after the date hereof) to you or your
Representatives by the Company and/or its affiliates or their respective
Representatives (herein collectively referred to as the "Evaluation Material")
in accordance with the provisions of this letter and to take or abstain from
taking certain other actions herein set forth. The term "Representatives", when
applied to either party hereto, means the directors, officers, employees,
agents, accountants, advisors and other representatives of such party and its
subsidiaries. The term "Evaluation Material" also shall be deemed to include all
notes, analyses, compilations, studies, interpretations or other documents
(whether written, oral, electronic,
<PAGE> 2
computer generated or stored, or otherwise) prepared by you or your
Representatives which contain, reflect or are based upon, in whole or in part,
the information furnished to you or your Representatives by the Company or its
Representatives. The term "Evaluation Material" does not include information
which (i) is already in your possession, provided that such information is not
known by you to be subject to another confidentiality agreement with or other
obligation of confidentiality to the Company or another party, or (ii) becomes
generally available to the public other than as a result of a disclosure by you
or your Representatives, (iii) becomes available to you on a non-confidential
basis from a source other than the Company or its Representatives, provided that
such source is not known by you to be bound by a confidentiality agreement with
or other obligation of confidentiality to the Company or another party, or (iv)
was or is independently developed by you or your Representatives without breach
of any confidentiality obligation to the Company, provided that the person or
persons who developed or develop such information do not have access to the
Evaluation Material.
You hereby agree that the Evaluation Material will be used solely for the
purpose of evaluating a possible transaction between the Company and you, and
that such information will be kept strictly confidential by you and your
Representatives and that you and your Representatives will not disclose any of
the Evaluation Material in any manner whatsoever, recognizing that the
disclosure or unauthorized use of such Evaluation Material will injure the
Company's business; provided, however, that (i) any of such information may be
disclosed to your Representatives who need to know such information for the
purpose of evaluating any such possible transaction between the Company and you
(it being understood that such Representatives shall be informed by you of the
confidential nature of such information and shall be directed by you to treat
such information confidentially), and (ii) any disclosure of such information
may be made to which the Company consents in writing. You shall be responsible
for any breach of this letter agreement by your Representatives.
You hereby acknowledge that you are aware, and that you will advise such
Representatives who are informed as to the matters which are the subject of this
letter, that the United States securities laws prohibit any person who has
<PAGE> 3
received from an issuer material, non-public information concerning the matters
which are the subject of this letter from purchasing or selling securities of
such issuer or from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person is likely
to purchase or sell such securities.
In the event that you receive a request to disclose all or any part of the
information contained in the Evaluation Material under the terms of a valid and
effective subpoena or order issued by a court of competent jurisdiction or by a
governmental body, you agree to (i) immediately notify the Company of the
existence, terms and circumstances surrounding such a request, and (ii) permit
the Company to take such action as the Company, in its sole discretion, deems
advisable to resist or narrow such request or to obtain confidential treatment
for any information required to be disclosed pursuant to such request. You agree
to cooperate fully with the Company in its taking of any such action. Whether or
not any such action by the Company is successful, you agree to disclose only
such portion of the Evaluation Material as your counsel determines you are
legally required to disclose and to use your best efforts to obtain reliable
assurance that confidential treatment will be accorded to all Evaluation
Material you disclose.
In addition, without the prior written consent of the Company, you will not, and
will direct such Representatives not to, disclose to any person either the fact
that the Company is considering a transaction or that discussions or
negotiations are taking place concerning a possible transaction between the
Company and you or any of the terms, conditions or other facts with respect to
any such possible transaction, including the status thereof. In addition,
without your prior written consent, the Company will not, and will direct its
Representatives not to, disclose to any person that discussions or negotiations
are taking place concerning a possible transaction between the Company and you,
or any of the terms, conditions or other facts with respect to any such possible
transaction between the Company and you, including the status thereof.
You hereby acknowledge that the Evaluation Material is being furnished to you in
consideration of your agreement that for a period of one year from the date
hereof, you and your Representatives will not (i) propose to the Company or its
Representatives, or propose to or discuss with any other person, or make any
public disclosure concerning, any transaction between
<PAGE> 4
you and the Company or its security holders or involving any of its securities
or security holders unless the Company shall have requested in writing that you
make such a proposal (and, then, only in accordance with such request), or (ii)
acquire or seek to acquire, or advise, assist or encourage any other person in
acquiring or seeking to acquire, directly or indirectly, control of the Company
or its board of directors or any securities, businesses or assets of the Company
or any of its subsidiaries, unless the Company shall have consented in advance
in writing to such acquisition (and, then, only in accordance with such
consent), or (iii) request that the Company or its Representatives waive any of
the restrictions set forth in this paragraph. You also agree that the Company
shall be entitled to legal and equitable relief, including injunction, in the
event of any breach or threatened breach of the provisions of this paragraph or
any other provision of this letter agreement; that you shall not oppose the
granting of such relief, and that the Company will suffer irreparable injury
from any such breach for which damages alone would not be an adequate remedy.
Although the Company has endeavored to include in the Evaluation Material
information known to it which it believes to be relevant for the purpose of your
investigation, you understand that neither the Company nor any of its
Representatives have made or make any representation or warranty, express or
implied, as to the accuracy or completeness of the Evaluation Material. You
agree that neither the Company nor its Representatives shall have any liability
to you or any of your Representatives resulting from the use of the Evaluation
Material or any errors therein or omissions therefrom.
In the event that you do not proceed with the transaction which is the subject
of this letter within a reasonable time, you shall promptly notify the Company
of such decision and immediately, or at any time upon the request of the
Company, redeliver to the Company all written Evaluation Material and any other
written material containing or reflecting any information in the Evaluation
Material (whether prepared by the Company, its Representatives, or otherwise)
and will not retain any copies, extracts or other reproductions in whole or in
part of such written material. All documents, memoranda, notes and other
writings whatsoever prepared by you or your Representatives based on the
information in the Evaluation Material shall be destroyed, and such destruction
shall be certified in writing to the Company by an authorized
<PAGE> 5
officer supervising such destruction. Notwithstanding the return or destruction
of the Evaluation Material, you and your Representatives will continue to be
bound by the obligations of confidentiality and other obligations hereunder.
You agree that without the prior written consent of the Company, for a period of
two years from the date hereof, (i) you will not permit any of your
Representatives who have knowledge of a possible transaction with the Company
to, directly or indirectly, solicit for employment in any capacity (as director,
officer, employee, consultant or advisor) any employee of the Company or any of
its subsidiaries, and (ii) you will not, directly or indirectly, employ in any
such capacity any employee of the Company or any of its subsidiaries with whom
you had contact or who became known to you during your evaluation of or
discussions with the Company. You also agree that neither you nor your
Representatives will contact any employee, customer, competitor, supplier or
joint venturer of the Company or its subsidiaries in connection with your
evaluation of the Company without the prior written approval of the Company. For
the purpose of this paragraph, the use of general, non-targeted employment
advertising shall not be deemed to be direct or indirect solicitation. In
addition, without your prior written consent, for a period of two years from the
date hereof, the Company will not, directly or indirectly, employ in any
capacity any employees of you or any of your subsidiaries with whom the Company
had contact or who became known to the Company during your evaluation of or
discussions with the Company.
You agree that unless and until a definitive agreement between the Company and
you with respect to any transaction referred to in the first paragraph of this
letter has been executed and delivered, neither the Company nor you will be
under any legal obligation of any kind whatsoever with respect to such a
transaction by virtue of this or any written or oral expression with respect to
such a transaction by any of its Representatives except, in the case of this
letter, for the matters specifically agreed to herein. In addition, you further
understand that neither you nor your Representatives shall have any claims
whatsoever against the Company or its Representatives arising out of or relating
to any transaction (other than those provided in any definitive agreement with
the undersigned) nor, unless a definitive agreement is entered into with the
undersigned, against any third party with whom a transaction is entered into. No
provision of this letter agreement may be modified or waived except by a
separate writing by the
<PAGE> 6
Company and you expressly so modifying or waiving such provision.
<PAGE> 7
This letter shall be governed by, and construed in accordance with, the laws of
the State of New York.
Very truly yours,
STERLING COMMERCE, INC.
By /s/ Goldman, Sachs & Co.
------------------------
Goldman, Sachs & Co.
On behalf of Sterling Commerce, Inc.
Confirmed and Agreed to:
SBC COMMUNICATIONS INCORPORATED
By: /s/ Paul R. Driscoll
--------------------
Date: November 23, 1999
-----------------
