<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
(Rule 14-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR SECTION 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
Sylvan Learning Systems, Inc.
(Name of Subject Company (issuer) and Filing Person (offeror))
Common Stock, $0.01 par value
(Title of Class of Securities)
871399101
(CUSIP Number of Class of Securities)
Douglas L. Becker
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
SYLVAN LEARNING SYSTEMS, INC.
1000 LANCASTER STREET
BALTIMORE, MARYLAND 21202
(410) 843-8000
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of the Filing Person(s))
COPY TO:
Richard C. Tilghman, Jr.
PIPER MARBURY RUDNICK & WOLFE LLP
6225 SMITH AVENUE
BALTIMORE, MARYLAND 21209-3600
(410) 580-3000
CALCULATION OF FILING FEE
Transaction Valuation* Amount of Filing Fee
$166,250,000 $33,250.00
* For the purpose of calculating the filing fee only, this amount is based on
the purchase of 9,500,000 shares of common stock at the maximum tender
offer price of $17.50 per share.
[_] Check 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: Not applicable. Filing party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
[_] Check box if 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:
[_] third-party tender offer [_] going private transaction
subject to Rule 14d-1 subject to Rule 13e-3
[X] issuer tender offer [_] amendment to Schedule 13D
subject to Rule 13e-4 under Rule 13d-2
Check the following box if the filing is a final amendment reporting the results
of the tender offer [_]
<PAGE>
This Tender Offer Statement on Schedule TO relates to the offer by Sylvan
Learning Systems, Inc., a Maryland corporation, to purchase shares of its common
stock, $0.01 par value per share. Sylvan is offering to purchase up to
9,500,000 shares, or such lesser number of shares as are properly tendered
and not properly withdrawn, at a price not greater than $17.50 nor less than
$15.25 per share, net to the seller in cash, without interest. Sylvan's offer
is being made upon the terms and subject to the conditions set forth in the
Offer to Purchase dated March 21, 2000 and in the related Letter of Transmittal,
which, as amended or supplemented from time to time, together constitute the
offer. All shares tendered and purchased will include the associated preferred
stock purchase rights issued pursuant to the Amended and Restated Rights
Agreement dated as of December 18, 1999 between Sylvan and First Union National
Bank, as rights agent, and, unless the context otherwise requires, all
references to shares include the associated preferred stock purchase rights.
This Tender Offer Statement on Schedule TO is intended to satisfy the reporting
requirements of Rule 13e-4(c)(2) of the Securities Exchange Act of 1934, as
amended.
The information in the Offer to Purchase and the related Letter of
Transmittal, copies of which are filed with this Schedule TO as Exhibits
(a)(1)(i) and (a)(1)(ii) hereto, respectively, is incorporated herein by
reference in answer to Items 1 through 11 in this Tender Offer Statement on
Schedule TO.
ITEM 12. EXHIBITS.
(a)(1)(i) Offer to Purchase.
(a)(1)(ii) Letter of Transmittal.
(a)(1)(iii) Notice of Guaranteed Delivery.
(a)(1)(iv) Letter to participants in Sylvan's 401(K) Retirement
Savings Plan from Douglas L. Becker, Chairman and Chief
Executive Officer of Sylvan, dated March 21, 2000.
(a)(1)(v) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(1)(vi) Letter to Participants in Sylvan's 401(K) Retirement
Savings Plan.
(a)(1)(vii) Letter to Participants in Sylvan's Employee Stock Purchase
Plan.
(a)(2) Not applicable.
(a)(3) Not applicable.
(a)(4) Not applicable.
(a)(5)(i) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(5)(ii) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(5)(iii) Summary Advertisement dated March 21, 2000.
(a)(5)(iv) Press Release dated March 21, 2000.
(a)(5)(v) Letter to shareholders from Douglas L. Becker, Chairman and
Chief Executive Officer of Sylvan, dated March 21, 2000.
(b) Not applicable.
(d) Not applicable.
(g) Not applicable.
(h) Not applicable.
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: March 21, 2000 SYLVAN LEARNING SYSTEMS, INC.
By: /s/ Douglas L. Becker
-------------------------------
Name: Douglas L. Becker
Title: Chief Executive Officer
and Chairman of the Board
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
(a)(1)(i) Offer to Purchase.
(a)(1)(ii) Letter of Transmittal.
(a)(1)(iii) Notice of Guaranteed Delivery.
(a)(1)(iv) Letter to participants in Sylvan's 401(K) Retirement
Savings Plan from Douglas L. Becker, Chairman and Chief
Executive Officer of Sylvan, dated March 21, 2000.
(a)(1)(v) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(1)(vi) Letter to Participants in Sylvan's 401(K) Retirement Savings
Plan.
(a)(1)(vii) Letter to Participants in Sylvan's Employee Stock Purchase
Plan.
(a)(2) Not applicable.
(a)(3) Not applicable.
(a)(4) Not applicable.
(a)(5)(i) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(5)(ii) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(5)(iii) Summary Advertisement dated March 21, 2000.
(a)(5)(iv) Press Release dated March 21, 2000.
(a)(5)(v) Letter to shareholders from Douglas L. Becker, Chairman and
Chief Executive Officer of Sylvan, dated March 21, 2000.
(b) Not applicable.
(d) Not applicable.
(g) Not applicable.
(h) Not applicable.
<PAGE>
EXHIBIT 99(a)(1)(i)
Offer to Purchase for Cash
by
Sylvan Learning Systems, Inc.
of
Up to 9,500,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
At a Purchase Price Not Greater Than $17.50 nor Less Than $15.25 Per Share
The offer, proration period and withdrawal rights will expire at 12:00
Midnight, Eastern Time, on Monday, April 17, 2000, unless the offer is
extended.
Sylvan Learning Systems, Inc., a Maryland corporation, invites its
shareholders to tender up to 9,500,000 shares of its common stock, $0.01 par
value per share, for purchase by it at a price not greater than $17.50 nor
less than $15.25 per share, net to the seller in cash, without interest. We
will select the lowest purchase price that will allow us to buy 9,500,000
shares or, if a lesser number of shares are properly tendered, all shares that
are properly tendered and not withdrawn. All shares acquired in the offer will
be acquired at the same purchase price.
Only shares properly tendered at prices at or below the purchase price
selected by us, and not properly withdrawn, will be purchased. However,
because of the "odd lot" priority, proration and conditional tender provisions
described in this Offer to Purchase, all of the shares tendered at or below
the purchase price may not be purchased if more than the number of shares we
seek are properly tendered. Shares not purchased in the offer will be returned
as promptly as practicable following the Expiration Date. See Section 3.
We reserve the right, in our sole discretion, to purchase more than
9,500,000 shares pursuant to the offer. See Section 1.
THIS OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THIS OFFER, HOWEVER, IS SUBJECT TO OTHER CONDITIONS. SEE SECTION 7.
The shares are listed and traded on The Nasdaq Stock Market under the symbol
"SLVN". On March 20, 2000, the last full trading day before announcement of
the offer, the last reported sale price of the shares on The Nasdaq Stock
Market was $14.875. Shareholders are urged to obtain current market quotations
for the shares. See Section 8.
OUR BOARD OF DIRECTORS HAS APPROVED THIS OFFER. HOWEVER, NEITHER WE NOR OUR
BOARD OF DIRECTORS NOR THE DEALER MANAGERS MAKES ANY RECOMMENDATION TO YOU AS
TO WHETHER TO TENDER OR REFRAIN FROM TENDERING YOUR SHARES OR AS TO THE
PURCHASE PRICE AT WHICH YOU MAY CHOOSE TO TENDER YOUR SHARES. YOU MUST MAKE
YOUR OWN DECISION AS TO WHETHER TO TENDER YOUR SHARES AND, IF SO, HOW MANY
SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH YOU WILL TENDER THEM. IN
DOING SO, YOU SHOULD CONSIDER OUR REASONS FOR MAKING THIS OFFER, INCLUDING OUR
RECENT CASH SALE OF OUR COMPUTER-BASED TESTING BUSINESS AND OUR RECENTLY
ANNOUNCED NEW BUSINESS STRATEGY. SEE SECTION 2. OUR DIRECTORS AND EXECUTIVE
OFFICERS HAVE ADVISED US THAT THEY DO NOT INTEND TO TENDER ANY OF THEIR SHARES
IN THE OFFER.
-------------------------
The Dealer Managers for this offer are:
Goldman, Sachs & Co.
-------------------------
Purchase Offer dated March 21, 2000.
<PAGE>
IMPORTANT
If you wish to tender all or any part of the shares registered in your
name, you must:
. Follow the instructions described in Section 3 carefully, including
completing a Letter of Transmittal in accordance with the instructions
and delivering it, along with your share certificates and any other
required items, to First Union National Bank, the Depositary;
. If your shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee, contact the nominee if
you desire to tender your shares and request that the nominee tender
them for you; and
. Participants in our Employee Stock Purchase Plan or our 401(k)
Retirement Savings Plan who wish to tender any of their shares held in
these plans must follow the separate instructions and procedures
described in Section 3 of this Offer to Purchase.
Any shareholder who desires to tender shares and whose certificates for
the shares are not immediately available or cannot be delivered to the
Depositary or who cannot comply with the procedure for book-entry transfer or
whose other required documents cannot be delivered to the Depositary prior to
expiration of the offer must tender the shares pursuant to the guaranteed
delivery procedure set forth in Section 3.
TO PROPERLY TENDER SHARES, YOU MUST VALIDLY COMPLETE THE LETTER OF
TRANSMITTAL, INCLUDING THE SECTION RELATING TO THE PRICE AT WHICH YOU ARE
TENDERING SHARES.
If you wish to maximize the chance that your shares will be purchased at
the purchase price determined by us, you should check the box in the section
on the Letter of Transmittal captioned "Shares Tendered at Price Determined
Pursuant to the Offer." Note that this election could result in your shares
being purchased at the minimum price of $15.25 per share.
If you have questions, need assistance or require additional copies of
this Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery, you should contact D.F. King & Co., Inc., the Information Agent, or
Goldman, Sachs & Co., the Dealer Managers for the offer, at their respective
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF
AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR SHARES OR AS TO
THE PURCHASE PRICE AT WHICH YOU MAY CHOOSE TO TENDER YOUR SHARES IN THIS
OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR
TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU
WITH INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFER
OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED LETTER
OF TRANSMITTAL. IF ANYONE MAKES ANY RECOMMENDATION OR GIVES ANY INFORMATION OR
REPRESENTATION, YOU MUST NOT RELY UPON THAT RECOMMENDATION, INFORMATION OR
REPRESENTATION AS HAVING BEEN AUTHORIZED BY US OR THE DEALER MANAGERS.
<PAGE>
SUMMARY OF TERMS
We are providing this summary of terms for your convenience. It highlights
material information in this document, but you should realize that it does not
describe all of the details of the offer to the same extent described in this
document. We urge you to read the entire document and the related letter of
transmittal because they contain the full details of the offer. Where helpful,
we have included references to the sections of this document where you will
find a more complete discussion.
WHO IS OFFERING TO We are Sylvan Learning Systems, Inc. We are
PURCHASE MY SHARES? offering to purchase up to 9,500,000 shares of
our common stock and the associated preferred
stock purchase rights. No separate consideration
will be paid for these rights.
WHAT WILL THE PURCHASE We are conducting the offer through a procedure
PRICE FOR THE SHARES BE commonly called a modified "Dutch Auction." This
AND WHAT WILL BE THE FORM procedure allows you to select the price within a
OF PAYMENT? price range specified by us at which you are
willing to sell your shares. The price range for
this offer is $15.25 to $17.50. We will select
the lowest purchase price that will allow us to
buy 9,500,000 shares or, if a lesser number of
shares are properly tendered, all shares that are
properly tendered and not withdrawn. All shares
we purchase will be purchased at the same price,
even if you have selected a lower price, but we
will not purchase any shares above the purchase
price we determine. If you wish to maximize the
chance that your shares will be purchased, you
should check the box in the section on the letter
of transmittal indicating that you will accept
the purchase price we determine. You should
understand that this election could result in
your shares being purchased at the minimum price
of $15.25 per share. If your shares are purchased
in the offer, you will be paid the purchase
price, in cash, without interest, as soon as
practicable after the expiration of the offer
period. Under no circumstances will we pay
interest on the purchase price, even if there is
a delay in making payment. See Section 1.
HOW MANY SHARES WILL We will purchase 9,500,000 shares in the tender
SYLVAN PURCHASE? offer or such lesser number of shares as are
properly tendered. 9,500,000 shares represents
19% of our outstanding common stock. We will not
pay any additional consideration for the
preferred stock purchase rights. If more than
9,500,000 shares are tendered, all shares
tendered at or below the purchase price will be
purchased on a pro rata basis, except for "odd
lots" (lots held by owners of less than 100
shares), which will be purchased on a priority
basis. We also expressly reserve the right to
purchase additional shares up to 2% of the
outstanding shares and could decide to purchase
more shares subject to applicable legal
requirements. The offer is not conditioned on any
minimum number of shares being tendered by
shareholders. See Section 1.
HOW WILL SYLVAN PAY FOR We will need a maximum of $166,250,000 to
THE SHARES? purchase 9,500,000 shares, assuming the price
paid per share is $17.50. We recently completed
the sale of our computer-based testing business
for approximately $600 million in cash, net of
tax and transaction costs. We will use a portion
of these cash proceeds to pay for the shares we
purchase in the offer. See Section 9.
i
<PAGE>
HOW LONG DO I HAVE TO You may tender your shares until the tender offer
TENDER MY SHARES? expires. The offer will expire on Monday, April
17, 2000, at 12:00 Midnight, Eastern time, unless
we extend the offer. We may choose to extend the
offer at any time. We cannot assure you, however,
that we will extend the offer or, if we extend
it, for how long. See Sections 1 and 15.
HOW WILL I BE NOTIFIED IF If the offer is extended, we will make a public
SYLVAN EXTENDS THE OFFER? announcement of the extension no later than 9:00
a.m. on the first business day after the
previously scheduled expiration of the offer
period. See Section 15.
ARE THERE ANY CONDITIONS Yes. Our obligation to accept and pay for your
TO THE OFFER? tendered shares depends upon a number of
conditions, including:
. No significant decrease in the price of our
common stock or in the price of equity
securities generally and no adverse changes in
the U.S. stock markets or credit markets shall
have occurred during this offer.
. No legal action shall have been threatened,
pending or taken, that might adversely affect
the offer.
. No one shall have proposed, announced or made a
tender or exchange offer (other than this
offer), merger, business combination or other
similar transaction involving us.
. No material change in our business, condition
(financial or otherwise), assets, income,
operations, prospects or stock ownership shall
have occurred during this offer.
For more information on conditions to the offer,
see Section 7.
HOW DO I TENDER MY SHARES? To tender your shares, prior to 12:00 Midnight,
Eastern time, on Monday, April 17, 2000, unless
the offer is extended:
. you must deliver your share certificate(s) and
a properly completed and duly executed letter
of transmittal to the depositary at the address
appearing on the back cover page of this
document; or
. the depositary must receive a confirmation of
receipt of your shares by book-entry transfer
and a properly completed and duly executed
letter of transmittal or the other documents
described in this Offer to Purchase; or
. you must comply with the guaranteed delivery
procedure outlined in Section 3.
You may also contact the information agent, the
dealer managers or your broker for assistance.
The contact information for the information agent
and dealer managers is set forth on the back
cover page of this document. See Section 3 and
the instructions to the letter of transmittal.
We have been informed that participants in our
Employee Stock Purchase Plan who wish to tender
any of their shares held in their account under
the Employee Stock Purchase Plan must instruct
Salomon Smith Barney to tender their shares at
least three business days before the expiration
of the offer by following the separate
instructions and procedures described in Section
3.
ii
<PAGE>
We have been informed that participants in our
401(k) Retirement Savings Plan who wish to tender
any of their shares held in the savings plan must
instruct the trustee to tender their shares at
least three business days before the expiration
of the offer by following the separate
instructions and procedures described in Section
3.
Yes. You may withdraw your tendered shares at any
ONCE I HAVE TENDERED time before 12:00 Midnight, Eastern time, on
SHARES IN THE OFFER, CAN I Monday, April 17, 2000, unless we extend the
WITHDRAW MY TENDERED offer, in which case you can withdraw your shares
SHARES? until the expiration of the offer as extended. If
we have not accepted for payment the shares you
have tendered to us, you may also withdraw your
shares at any time after 12:00 Midnight, Eastern
time, on Monday, May 15, 2000. See Section 4.
HOW DO I WITHDRAW SHARES I You must deliver on a timely basis a written,
PREVIOUSLY TENDERED? telegraphic or facsimile notice of your
withdrawal to the depositary at the address
appearing on the back cover page of this
document. Your notice of withdrawal must specify
your name, the number of shares to be withdrawn
and the name of the registered holder of the
shares. Some additional requirements apply if the
certificates for shares to be withdrawn have been
delivered to the depositary or if your shares
have been tendered under the procedure for book-
entry transfer set forth in Section 3. See
Section 4.
IN WHAT ORDER WILL TENDERED First, we will purchase shares from all holders
SHARES BE PURCHASED? of "odd lots" of less than 100 shares (not
including any shares held in our Employee Stock
Purchase Plan or our 401(k) Retirement Savings
Plan, which will not have priority) who properly
tender all of their shares at or below the
purchase price selected by us. Second, after
purchasing all shares from the "odd lot" holders,
we will purchase shares from all other
shareholders who properly tender shares at or
below the purchase price selected by us, on a pro
rata basis, subject to the conditional tender
provisions described in Section 6. Therefore, all
of the shares that you tender in the offer may
not be purchased even if they are tendered at or
below the purchase price. See Section 1.
IF I DECIDE NOT TO TENDER, Shareholders who choose not to tender will own a
HOW WILL THE OFFER AFFECT greater interest in us following the offer.
MY SHARES?
WHAT DO SYLVAN AND ITS Our Board of Directors has approved this offer.
BOARD OF DIRECTORS THINK However, neither we nor our Board of Directors
OF THE OFFER? nor the dealer managers is making any
recommendation whether you should tender or
refrain from tendering your shares or at what
purchase price you should choose to tender your
shares. You must decide whether to tender your
shares and, if so, how many shares to tender and
the price or prices at which you will tender
them. You should discuss whether to tender your
shares with your broker or other financial
advisor. Our directors and executive officers
have advised us that they do not intend to tender
any of their shares in the offer. See Section 2.
iii
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WHEN WILL SYLVAN PAY ME We will pay the purchase price, in cash, without
FOR THE SHARES I TENDER? interest, for the shares we purchase as promptly
as practicable after the expiration of the offer
and the acceptance of the shares for payment. See
Sections 1 and 5.
On March 20, 2000, the last full trading day
WHAT IS THE RECENT MARKET before the announcement of the offer, the last
PRICE OF MY SHARES? reported sale price of the shares on The Nasdaq
Stock Market was $14.875. You are urged to obtain
current market quotations for your shares.
WILL I HAVE TO PAY If you are a registered shareholder and you
BROKERAGE COMMISSIONS IF I tender your shares directly to the depositary,
TENDER MY SHARES? you will not incur any brokerage commission. If
you hold shares through a broker or bank, we urge
you to consult your broker or bank to determine
whether transaction costs are applicable. See the
Introduction and Section 3.
WHAT ARE THE UNITED STATES Generally, you will be subject to United States
FEDERAL INCOME TAX federal income taxation when you receive cash
CONSEQUENCES IF I TENDER from us in exchange for the shares you tender. In
MY SHARES? addition, the receipt of cash for your tendered
shares will be treated either as (1) a sale or
exchange eligible for capital gains treatment or
(2) a dividend subject to ordinary income tax
rates. See Section 14.
WILL I HAVE TO PAY STOCK If you instruct the depositary in the related
TRANSFER TAX IF I TENDER letter of transmittal to make the payment for the
MY SHARES? shares to the registered holder, you will not
incur any stock transfer tax. See Section 5.
WHOM DO I CONTACT IF I The information agent or dealer managers can help
HAVE QUESTIONS ABOUT THE answer your questions. The information agent is
OFFER? D.F. King & Co., Inc. and the dealer managers are
Goldman, Sachs & Co. Their contact information is
set forth on the back cover page of this
document.
iv
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TABLE OF CONTENTS
<TABLE>
<S> <C>
FORWARD LOOKING STATEMENTS................................................. 1
INTRODUCTION............................................................... 2
THE OFFER.................................................................. 4
1. Number of Shares...................................................... 4
2. Recent Developments; Purpose of the Offer; Certain Effects of the
Offer.................................................................... 6
3. Procedures for Tendering Shares....................................... 9
4. Withdrawal Rights..................................................... 15
5. Purchase of Shares and Payment of Purchase Price...................... 16
6. Conditional Tender of Shares.......................................... 17
7. Conditions of the Offer............................................... 17
8. Price Range of Shares; Dividends...................................... 19
9. Source and Amount of Funds............................................ 20
10. Certain Information Concerning Us..................................... 20
11. Interests of Directors and Executive Officers; Transactions and
Arrangements Concerning the Shares...................................... 22
12. Effects of the Offer on the Market for Shares; Registration Under the
Exchange Act............................................................. 23
13. Certain Legal Matters; Regulatory Approvals........................... 23
14. Certain United States Federal Income Tax Consequences................. 23
15. Extension of the Offer; Termination; Amendment........................ 26
16. Fees and Expenses..................................................... 27
17. Miscellaneous......................................................... 28
</TABLE>
<PAGE>
FORWARD LOOKING STATEMENTS
This Offer to Purchase, the Introduction, Sections 2, 10 and 14 and
documents incorporated by reference contain statements that are not historical
facts and constitute projections, forecasts or forward-looking statements.
These statements may be identified by the use of forward-looking words or
phrases such as "believes," "expects," "anticipates," "intends," "plans,"
"estimates," "may" and "should". These statements are not guarantees of
performance. They are inherently subject to known and unknown risks,
uncertainties and assumptions that could cause our future results and
shareholder value to differ materially from those expressed in these
statements. Our actual actions or results may differ materially from those
expected or anticipated in the forward-looking statements. Specific factors
that might cause such a difference, include, but are not limited to:
. developments in the education and training markets;
. technological developments, particularly internet technology;
. the timing and success of our business development efforts;
. the level of competition we experience in our businesses and its effect
on pricing;
. consumer and business acceptance of the internet as a medium for
education and training;
. the success of our new internet incubator company and the start-up
companies in which we invest;
. other uncertainties, all of which are difficult to predict and many of
which are beyond our control; and
. general economic, business and social conditions.
We undertake no obligation to make any revision to the forward-looking
statements contained in this document or to update them to reflect events or
circumstances occurring after the date of this document.
1
<PAGE>
To the Holders of our Common Stock:
INTRODUCTION
Sylvan Learning Systems, Inc., a Maryland corporation, invites its
shareholders to tender shares of our common stock, $0.01 par value per share,
for purchase by it. We are offering to purchase up to 9,500,000 shares at a
price not greater than $17.50 nor less than $15.25 per share, net to the
seller in cash, without interest.
We will select the lowest purchase price that will allow us to buy 9,500,000
shares or, if a lesser number of shares are properly tendered, all shares that
are properly tendered and not withdrawn. All shares acquired in the offer will
be acquired at the same purchase price.
Our offer is being made upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of Transmittal
which, as they may be amended or supplemented from time to time, together
constitute this offer. All shares tendered and purchased will include the
tender and purchase of the associated preferred stock purchase rights issued
pursuant to the Amended and Restated Rights Agreement dated as of December 18,
1999, between us and First Union National Bank, as rights agent, and, unless
the context otherwise requires, all references in this document to shares
include the associated preferred stock purchase rights.
Only shares properly tendered at prices at or below the purchase price we
select and not properly withdrawn will be purchased. However, because of the
"odd lot" priority, proration and conditional tender provisions described in
this Offer to Purchase, all of the shares tendered at or below the purchase
price will not be purchased if more than the number of shares we seek are
tendered. We will return shares tendered at prices in excess of the purchase
price that we determine and shares we do not purchase because of proration or
conditional tenders as promptly as practicable following the Expiration Date.
See Section 3.
We reserve the right, in our sole discretion, to purchase more than
9,500,000 shares pursuant to the offer, subject to certain limitations and
legal requirements. See Sections 1 and 15.
The offer is not conditioned on any minimum number of shares being tendered.
The offer is, however, subject to other conditions. See Section 7.
Our Board of Directors has approved this offer. However, neither we nor our
Board of Directors nor the Dealer Managers is making any recommendation
whether you should tender or refrain from tendering your shares or at what
purchase price you should choose to tender your shares. You must make your own
decision whether to tender your shares and, if so, how many shares to tender
and the price or prices at which you will tender them. In deciding whether to
tender and at what purchase price, you should consider our reasons for making
this offer and other available information about us. See Section 2. Our
directors and executive officers have advised us that they do not intend to
tender any shares in the offer. See Section 11.
If at the expiration of the offer, more than 9,500,000 shares (or such
greater number of shares as we may elect to purchase) are properly tendered at
or below the purchase price and not properly withdrawn, we will buy shares
first from all Odd Lot Holders (as defined in Section 1) who properly tender
all their shares at or below the purchase price, and second, on a pro rata
basis from all other shareholders who properly tender shares at or below the
purchase price, other than shareholders who tender conditionally, and for whom
the condition is not satisfied. See Section 1.
2
<PAGE>
If you tender shares in the offer, your tender will include a tender of the
preferred stock purchase rights associated with your tendered shares. No
separate consideration will be paid for these rights. See Section 8.
The purchase price will be paid net to the tendering shareholder in cash,
without interest, for all shares purchased. Tendering shareholders who hold
shares registered in their own name and who tender their shares directly to
the Depositary will not be obligated to pay brokerage commissions,
solicitation fees or, subject to Instruction 7 of the Letter of Transmittal,
stock transfer taxes on our purchase of shares in the offer. Shareholders
holding shares through brokers or banks are urged to consult the brokers or
banks to determine whether transaction costs may apply if shareholders tender
shares through the brokers or banks and not directly to the Depositary. Also,
any tendering shareholder or other payee who fails to complete, sign and
return to the Depositary the Substitute Form W-9 that is included as part of
the Letter of Transmittal or Form W-8 obtained from the Depository may be
subject to required United States federal income tax backup withholding equal
to 31% of the gross proceeds payable to the tendering shareholder or other
payee pursuant to the offer. See Section 3.
We will pay the fees and expenses incurred in connection with the offer by
Goldman, Sachs & Co., the Dealer Managers for this offer, First Union National
Bank, the Depositary for this offer, D.F. King & Co., Inc., the Information
Agent for this offer, Salomon Smith Barney, which administers our Employee
Stock Purchase Plan, and Putnam Fiduciary Trust Company, the Trustee of our
401(k) Retirement Savings Plan. See Section 16.
Participants in our Employee Stock Purchase Plan may instruct Salomon Smith
Barney to tender some or all of the shares held in the participant's account
by following the instructions in the "Letter to Participants in Sylvan's
Employee Stock Purchase Plan" furnished separately and returning it to Salomon
Smith Barney in accordance with those instructions. If Salomon Smith Barney
has not received a participant's instructions at least three business days
prior to the Expiration Date, Salomon Smith Barney will not tender any shares
held in a participant's account under the Employee Stock Purchase Plan. Any
employee stock purchase plan shares tendered but not purchased will be
returned to the participant's account. See Section 3.
Participants in our 401(k) Retirement Savings Plan may instruct the Trustee
of the savings plan and holder of record, Putnam Fiduciary Trust Company, to
tender some or all of the shares held for the participant's account by
following the instructions in the "Letter to Participants in the Sylvan 401(k)
Retirement Savings Plan" furnished separately and returning it to First Union
National Bank in accordance with those instructions. If First Union National
Bank has not received a participant's instructions at least three business
days prior to the Expiration Date, the Trustee will not tender any shares held
on behalf of the participant in the savings plan. The proceeds received by the
Trustee from any tender of shares from a participant's account will be
reinvested pro-rata in accordance with the participant's current investment
directions for new elective deferral contributions. However, if the
participant's current investment directions for new elective deferral
contributions provide that some or all of the participant's contributions are
to be invested in our common stock, then that portion of the tender proceeds
will be invested in the Putnam Stable Value Fund. Once the tender proceeds
have been credited to the participant's savings plan accounts, the participant
may reallocate his or her investments among the various investment funds under
the savings plan in the usual manner. See Section 3.
As of March 20, 2000, we had 50,344,374 issued and outstanding shares, and
1,159,001 shares reserved for issuance upon exercise of outstanding stock
options under our stock option plans. The 9,500,000 shares that we are
offering to purchase pursuant to the offer represent approximately 19% of our
outstanding shares outstanding on March 20, 2000. The shares are listed and
traded on The Nasdaq Stock Market under the symbol "SLVN". On March 20, 2000,
the last full trading day before the announcement of the offer, the last
reported sale price of the shares as reported on The Nasdaq Stock Market was
$14.875. Shareholders are urged to obtain current market quotations for the
shares. See Section 8.
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THE OFFER
1. Number of Shares.
Upon the terms and subject to the conditions of the offer, we will purchase
9,500,000 shares, or the lesser number of shares that are properly tendered
and not properly withdrawn in accordance with Section 4 before the Expiration
Date, as defined below, at prices not greater than $17.50 nor less than $15.25
per share, net to the seller in cash, without interest.
The term "Expiration Date" means 12:00 Midnight, Eastern time, on Monday,
April 17, 2000. We may, in our sole discretion, extend the period of time
during which the offer will remain open. In the event of an extension, the
term "Expiration Date" will refer to the latest time and date at which the
offer, as extended by us, will expire. See Section 15 for a description of our
right to extend, delay, terminate or amend the offer.
In accordance with Instruction 5 of the Letter of Transmittal, shareholders
desiring to tender shares must either (1) specify that they are willing to
sell their shares to us at the price determined in the offer, or (2) specify
the price, not greater than $17.50 nor less than $15.25 per share, at which
they are willing to sell their shares to us in the offer. As promptly as
practicable following the Expiration Date, we will, upon the terms and subject
to the conditions of the offer, determine a single per share purchase price
(in multiples of $0.125) that we will pay for shares properly tendered and not
properly withdrawn pursuant to the offer, taking into account the number of
shares tendered and the prices specified by tendering shareholders. We will
select the lowest purchase price that will allow us to buy 9,500,000 shares
or, if a lesser number of shares are properly tendered, all shares that are
properly tendered and not withdrawn. All shares purchased in the offer will be
purchased at the same purchase price.
Only shares properly tendered at prices at or below the purchase price we
determine and not properly withdrawn will be purchased. However, because of
the "odd lot" priority, proration and conditional tender provisions, all of
the shares tendered at or below the purchase price will not be purchased if
more than the number of shares we seek are properly tendered. All shares
tendered and not purchased pursuant to the offer, including shares tendered at
prices in excess of the purchase price we determine and shares not purchased
because of proration or conditional tenders, will be returned to the tendering
shareholders at our expense as promptly as practicable following the
Expiration Date.
We reserve the right to purchase more than 9,500,000 shares pursuant to the
offer. In accordance with applicable regulations of the Securities and
Exchange Commission, we may purchase pursuant to the offer an additional
number of shares not to exceed 2% of the outstanding shares without amending
or extending the offer. See Section 15.
In the event of an oversubscription of the offer, shares tendered at or
below the purchase price before the Expiration Date will be subject to
proration, except for Odd Lots (as defined below). The proration period also
expires on the Expiration Date.
If we (1) increase the price that may be paid for shares above $17.50 per
share or decrease the price that may be paid for shares below $15.25 per
share, (2) materially increase the Dealer Managers fee, (3) increase the
number of shares that we may purchase in the offer by more than 2% of our
outstanding shares, or (4) decrease the number of shares that we may purchase
in the offer, then the offer must remain open for at least ten business days
following the date that notice of the increase or decrease is first published,
sent or given in the manner specified in Section 15.
The offer is not conditioned on any minimum number of shares being tendered.
The offer is, however, subject to other conditions. See Section 7.
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Priority of Purchases. If more than 9,500,000 shares (or a greater number of
shares as we may elect to purchase) have been properly tendered at prices at
or below the purchase price selected by us and not properly withdrawn before
the Expiration Date, we will purchase properly tendered shares on the basis
set forth below:
. First, we will purchase all shares tendered by any Odd Lot Holder (as
defined below) who:
(1) tenders all shares owned beneficially or of record by the Odd Lot
Holder at a price at or below the purchase price selected by us
(tenders of less than all of the shares owned by the Odd Lot Holder
will not qualify for this preference); and
(2) completes the section entitled "Odd Lots" in the Letter of
Transmittal and, if applicable, in the Notice of Guaranteed Delivery.
. Second, after the purchase of all of the shares properly tendered by Odd
Lot Holders, subject to the conditional tender provisions described in
Section 6, we will purchase all other shares tendered at prices at or
below the purchase price, on a pro rata basis with appropriate
adjustments to avoid purchases of fractional shares, as described below.
Therefore, all of the shares that a shareholder tenders in the offer may not
be purchased even if they are tendered at prices at or below the purchase
price.
Odd Lots. The term "Odd Lots" means all shares tendered at prices at or
below the purchase price selected by us by any person (an "Odd Lot Holder")
who owned beneficially or of record a total of fewer than 100 shares (not
including any shares held in our Employee Stock Purchase Plan or in our 401(k)
Retirement Savings Plan) and so certified in the appropriate place on the
Letter of Transmittal and, if applicable, on the Notice of Guaranteed
Delivery. To qualify for this preference, an Odd Lot Holder must tender all
shares owned by the Odd Lot Holder in accordance with the procedures described
in Section 3. Odd Lots will be accepted for payment before any proration of
the purchase of other tendered shares. This preference is not available to
partial tenders or to beneficial or record holders of an aggregate of 100 or
more shares, even if these holders have separate accounts or certificates
representing fewer than 100 shares, or with respect to any shares held in our
Employee Stock Purchase Plan or in our 401(k) Retirement Savings Plan. By
tendering in the offer, an Odd Lot Holder who holds shares in its name and
tenders its shares directly to the Depositary would not only avoid the payment
of brokerage commissions, but also would avoid any applicable odd lot
discounts in a sale of the holder's shares. Any Odd Lot Holder wishing to
tender all of the shareholder's shares pursuant to the offer should complete
the section entitled "Odd Lots" in the Letter of Transmittal and, if
applicable, in the Notice of Guaranteed Delivery.
We also reserve the right, but will not be obligated, to purchase all shares
properly tendered by any shareholder who tenders any shares owned beneficially
or of record, at or below the purchase price selected by us and who, as a
result of proration, would then own beneficially or of record, an aggregate of
fewer than 100 shares. If we exercise this right, we will increase the number
of shares that we are offering to purchase in the offer by the number of
shares purchased through the exercise of the right.
Proration. If proration of tendered shares is required, we will determine
the proration factor as promptly as practicable following the Expiration Date.
Proration for each shareholder tendering shares, other than Odd Lot Holders,
will be based on the ratio of the number of shares tendered by the shareholder
to the total number of shares tendered by all shareholders, other than Odd Lot
Holders, at or below the purchase price selected by us. Because of the
difficulty in determining the number of shares properly tendered and not
properly withdrawn, and because of the Odd Lot procedure described above and
the conditional tender procedure described in Section 6, we do not expect that
we will be able to announce the final proration factor or commence payment for
any shares purchased pursuant to the offer until about seven business days
after the Expiration Date. The preliminary results of any proration will be
announced by press release as promptly as practicable after the Expiration
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Date. After the Expiration Date, shareholders may obtain preliminary proration
information from the Information Agent and also may be able to obtain the
information from their brokers.
As described in Section 14, the number of shares that we will purchase from
a shareholder pursuant to the offer may affect the United States federal
income tax consequences to the shareholder of the purchase and, therefore, may
be relevant to a shareholder's decision whether or not to tender shares. The
Letter of Transmittal affords each tendering shareholder the opportunity to
designate the order of priority in which shares tendered are to be purchased
in the event of proration.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of the shares and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on our
shareholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of shares.
2. Recent Developments; Purpose of the Offer; Certain Effects of the Offer.
Recent Developments
Introduction. Over the past year, our Board of Directors has conducted a
strategic review of our company, its structure and business prospects. The
Board considered several possible actions to maximize shareholder value. The
Board concluded that selling our computer-based testing business, known as
Prometric, would further our business objectives by allowing management to
focus on our core educational operating businesses and, by using the proceeds
of the sale, to finance new opportunities identified by our Board and
management.
Sale of Prometric. On January 26, 2000, we announced that we had entered
into an agreement with The Thomson Corporation to sell Prometric. The sale was
effective as of March 6, 2000. We received over $600 million in cash, net of
tax and transaction costs, from the sale of Prometric. Our Board has
determined to use these proceeds for the following purposes:
. approximately $130 million to pay down our revolving credit facility;
. approximately $100 million for expansion of our international university
initiative, which involves pursuing for-profit higher educational
opportunities outside the United States;
. approximately $120 million in cash to be invested over time in our new
internet incubator company (we will make additional investments in the
internet incubator company as described below);
. approximately $166 million for this tender offer; and
. approximately $84 million for working capital purposes.
New Business Strategy. On February 24, 2000, we announced a new business
strategy. Building on our brand recognition and industry-leading position in
education services, we will seek to create shareholder value by capitalizing
on the opportunity to establish a leadership position in the education and
training internet marketplace. We will also seek to maintain our leadership
position in our core educational services businesses. We will focus our
business on these two areas:
. Internet incubator company. Launching an incubator company to invest in
and incubate companies focusing on emerging internet technology
solutions for the education and training marketplace. The goal of the
incubator is to create asset value by investing in, starting and
managing companies that have strong potential for market leadership.
. Core educational services. Providing consumer-oriented educational
services, through an operating company that will include Sylvan Learning
Centers, contract education services, English language instruction and
our international university initiative.
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Investment in Internet Incubator Company. An important part of our new
business strategy is to launch the internet incubator company by the end of
the first quarter of 2000. We will have a controlling interest in this
company. We will commit $220 million in cash and $65 million in other assets
to the internet incubator. The assest we will contribute include our current
investments in Caliber Learning Network Inc., OnlineLearning.net, ZapMe!
Corp., and eSylvan, our online tutoring venture. Affiliates of Apollo
Management, L.P., including Rare Medium Group Inc., a leading internet
professional services firm, have committed $100 million in funding for the
internet incubator company. Also, certain members of Sylvan's management,
including Mr. Becker and Mr. Hoehn-Saric, and other investors at management's
discretion will invest approximately $15 million in the new venture. The
internet incubator company intends to seek to raise another $100 million from
strategic internet investors in the near future, bringing total funding to an
expected $500 million.
Organizational Changes. On February 24, 2000, we also announced
organizational changes to support our new business strategy. These
organizational changes include:
. Our President and Co-Chief Executive Officer, Douglas Becker, will
become our Chairman of the Board and sole Chief Executive Officer.
. Christopher Hoehn-Saric will assume the leadership position at the
internet incubator as Chairman and Chief Executive Officer.
Messrs. Becker and Hoehn-Saric have shared the responsibility of our Chief
Executive Officer for the past nine years.
. Lee McGee will serve as Executive Vice President of the internet
incubator company. Mr. McGee, our Executive Vice President and Chief
Financial Officer, will continue to serve in that capacity until his
replacement is hired. Mr. McGee has served as our Chief Financial
Officer since 1987.
. Peter Cohen has been promoted to become our President and Chief
Operating Officer and will report to Mr. Becker. In this role, Mr.
Cohen will focus on the performance of our core educational services
operating business. Mr. Cohen served as President of the Sylvan
Learning Center division since 1996.
. Raph Appadoo joined us as President and Chief Executive Officer of our
international university division in January 2000. In this newly
created position, Mr. Appadoo will be responsible for pursuing higher
educational opportunities outside the United States and will report
directly to Mr. Becker. Mr. Appadoo joined Sylvan from Aetna where he
served as executive vice president of their international operations.
Investment in Sylvan. We also announced on February 24, 2000 that affiliates
of Apollo Management, L.P., a private equity firm based in New York, Los
Angeles and London, will lead an additional investment of approximately $100
million in Sylvan. Joining Apollo in this $100 million investment will be an
affiliate of Investor AB, DB (Deutsche Bank) Capital and SKT LLC. The
investment will be in the form of ten-year subordinated convertible
debentures. The debentures will have a 5% cash coupon, payable on a semiannual
basis, and will be convertible into our common stock at a rate of $15.735 per
share. The transaction is expected to close prior to March 31, 2000. Laurence
Berg and Michael Gross, who are partners in Apollo Management, L.P., will join
our Board of Directors. We believe that these two investments by Apollo are a
validation of the growth prospects of our core educational services businesses
as well as our new business strategy.
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Purpose of the Offer; Certain Effects of the Offer
Purpose of the Offer. Our new business strategy emphasizes both growing our
core educational services operating businesses and the significant value-
creation potential of our internet incubator company. We believe this new
strategy provides shareholders a unique investment opportunity and will enable
us to maximize shareholder value. We are making the offer to buy back our
shares because we believe that our shares are undervalued in the public market
and that the offer is consistent with our long-term corporate goal of
increasing shareholder value. We believe that the offer is a prudent use of
our financial resources, given our newly announced business strategy, as well
as our assets and current market price of our common stock. We also believe
that investing in our own shares is an attractive use of capital and an
efficient means to provide value to our shareholders.
After the offer is completed, we believe that our anticipated cash flow from
operations, access to credit facilities and capital markets and financial
condition will be, taken together, adequate for our needs for at least the
next 12 months. However, our actual experience may differ significantly from
our expectations. Future events may adversely or materially affect our
business, expenses or prospects and could affect our available cash or the
availability or cost of external financial resources.
Our Board has approved the offer. However, neither we nor our Board of
Directors nor the Dealer Managers makes any recommendation to shareholders as
to whether to tender or refrain from tendering their shares or as to the
purchase price at which shareholders should tender their shares, and none of
them have authorized any person to make any recommendation. Shareholders are
urged to evaluate carefully all information in the offer, consult with their
own investment and tax advisors and make their own decision whether to tender
and, if so, how many shares to tender and the price or prices at which to
tender them. We have been advised that none of our directors or executive
officers intends to tender any of their shares pursuant to this offer.
Certain Effects of the Offer. Upon the completion of the offer, non-
tendering shareholders will own a greater interest in a company focused on its
core educational services businesses and the new internet incubator company.
Our new business strategy may or may not be successful. Non-tendering
shareholders will realize a proportionate increase in their relative ownership
interest in our company, and thus in our future earnings and assets, subject
to our right to issue additional shares and other equity securities in the
future. Shareholders may be able to sell non-tendered shares in the future on
Nasdaq or otherwise, at a net price significantly higher than the purchase
price in the offer. We can give no assurance, however, as to the price at
which a shareholder may be able to sell his or her shares in the future, which
may be higher or lower than the purchase price paid by us in this offer.
Shares that we acquire in this offer will be restored to the status of
authorized but unissued shares and will be available for us to issue in the
future without further shareholder action (except as required by applicable
law or Nasdaq rules) for all purposes, such as the acquisition of other
businesses or the raising of additional capital for use in our businesses. We
have no current plans for the issuance of shares repurchased pursuant to this
offer.
Except as disclosed in this Offer to Purchase, we currently have no plans,
proposals or negotiations underway that relate to or would result in:
. any extraordinary transaction, such as a merger, reorganization or
liquidation, involving us or any of our subsidiaries;
. any purchase, sale or transfer of an amount of our assets or any of our
subsidiaries' assets which is material to us and our subsidiaries, taken
as a whole;
. any material change in amounts we have available for borrowing under our
revolving credit facility (although as a result of the sale of
Prometric, the amounts available for borrowing under our credit
agreement will be reduced from $150 million to $100 million);
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. any material change in our present Board of Directors or management or
any plans or proposals to change the number or the term of directors
(although we may fill existing vacancies on the board) or to change any
material term of the employment contract of any executive officer;
. any material change in our present dividend policy of not paying cash
dividends, our capitalization, corporate structure or business;
. any class of our equity securities being delisted by Nasdaq or cease to
be authorized to be quoted in an automated quotations system operated by
a national securities association;
. any class of our equity securities becoming eligible for termination of
registration under section 12(g)(4) of the Securities Exchange Act of
1934, as amended (the "Exchange Act");
. the suspension of our obligation to file reports under Section 15(d) of
the Exchange Act;
. the acquisition or disposition by any person of our securities; or
. any changes in our charter, bylaws or other governing instruments or
other actions that could impede the acquisition of control of us.
Although we have no current plans to acquire additional shares of our common
stock other than through the offer, we may, in the future, purchase additional
shares in the open market, in private transactions, through tender offers or
otherwise, subject to the approval of our Board. Future purchases may be on
the same terms as this offer or on terms that are more or less favorable to
shareholders than the terms of this offer. However, Rule 13e-4 under the
Exchange Act prohibits us and our affiliates from purchasing any shares, other
than pursuant to the offer, until at least ten business days after the
Expiration Date. Any future purchases by us will depend on many factors,
including:
. the market price of the shares at that time;
. the results of this offer;
. our business strategy;
. our business and financial position; and
. general economic and market conditions.
3. Procedures for Tendering Shares.
Proper Tender of Shares. For shares to be tendered properly pursuant to the
offer:
(1) the certificates for the shares, or confirmation of receipt of the
shares pursuant to the procedure for book-entry transfer set forth
below, together with (a) a properly completed and duly executed Letter
of Transmittal (or a manually signed facsimile of the Letter of
Transmittal), including any required signature guarantees, (b) an
Agent's Message (as defined below) in the case of a book-entry transfer
or (c) the specific acknowledgement in the case of a tender through the
Automated Tender Offer Program (as described below) of the Book-Entry
Transfer Facility (as defined below), and any other documents required
by the Letter of Transmittal, must be received before 12:00 Midnight,
Eastern time, on the Expiration Date by the Depositary at its address
set forth on the back cover of this Offer to Purchase; or
(2) the tendering shareholder must comply with the guaranteed delivery
procedure set forth below.
In accordance with Instruction 5 of the Letter of Transmittal, each
shareholder desiring to tender shares pursuant to the offer must either (1)
check the box in the section of the Letter of Transmittal captioned "Shares
Tendered at Price Determined Pursuant to the Offer" or (2) check one of the
boxes in the section of the Letter of Transmittal captioned "Price (In
Dollars) per Share at Which Shares Are Being Tendered" indicating the price at
which shares are being tendered. A tender of shares will be proper if and only
if, one of these boxes is checked on the Letter of Transmittal.
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If tendering shareholders wish to maximize the chance that their shares will
be purchased, they should check the box in the section on the Letter of
Transmittal captioned "Shares Tendered at Price Determined Pursuant to the
Offer." Note that this election could result in the tendered shares being
purchased at the minimum price of $15.25 per share.
If tendering shareholders wish to indicate a specific price (in multiples of
$0.125) at which their shares are being tendered, they must check a box under
the section captioned "Price (in dollars) per Share at Which Shares Are Being
Tendered." Tendering shareholders should be aware that this election could
mean that none of their shares will be purchased if they check a box other
than the box representing the lowest price. A shareholder who wishes to tender
shares at more than one price must complete separate letters of transmittal
for each price at which shares are being tendered. The same shares cannot be
tendered (unless previously properly withdrawn in accordance with the terms of
the offer) at more than one price.
Odd Lot Holders who tender all their shares must also complete the section
captioned "Odd Lots" in the Letter of Transmittal and, if applicable, in the
Notice of Guaranteed Delivery, to qualify for the preferential treatment
available to Odd Lot Holders as set forth in Section 1.
Shareholders who hold shares through brokers or banks are urged to consult
the brokers or banks to determine whether transaction costs may apply if
shareholders tender shares through the brokers or banks and not directly to
the Depositary.
Participants in our Employee Stock Purchase Plan who wish to tender some or
all of the shares held in their accounts under the plan must follow the
instructions in the "Letter to Participants in Sylvan's Employee Stock
Purchase Plan" furnished separately and return it to Salomon Smith Barney in
accordance with those instructions. The instructions must be received by
Salomon Smith Barney no later than three business days prior to the Expiration
Date, or no shares allocated to the participant's account will be tendered.
Participants in our 401(k) Retirement Savings Plan who wish to tender some
or all of the shares allocated to their accounts must follow the instructions
in the "Letter to Participants in Sylvan's 401(k) Retirement Savings Plan"
furnished separately and return it to First Union National Bank in accordance
with those instructions. The instructions must be received by First Union
National Bank no later than three business days prior to the Expiration Date,
or no shares allocated to the participant's account will be tendered.
Signature Guarantees and Method of Delivery. No signature guarantee is
required if:
(1) the Letter of Transmittal is signed by the registered holder of the
shares (which term, for purposes of this Section 3, will include any
participant in The Depository Trust Company (the "Book-Entry Transfer
Facility") whose name appears on a security position listing as the
owner of the shares) tendered and the holder has not completed either
the box entitled "Special Delivery Instructions" or the box entitled
"Special Payment Instructions" on the Letter of Transmittal; or
(2) shares are tendered for the account of a bank, broker, dealer, credit
union, savings association or other entity that is a member in good
standing of the Securities Transfer Agents Medallion Program or a bank,
broker, dealer, credit union, savings association or other entity that
is an "eligible guarantor institution," as the term is defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended (each of
the foregoing constitutes an "Eligible Institution"). See Instruction 1
of the Letter of Transmittal.
If a certificate for shares is registered in the name of a person other than
the person executing a Letter of Transmittal, or if payment is to be made, or
shares not purchased or tendered are to be issued, to a person other than the
registered holder, then the certificate must be endorsed or accompanied by an
appropriate stock power, in either case, signed exactly as the name of the
registered holder appears on the certificate, with the signature guaranteed by
an Eligible Institution.
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In all cases, payment for shares tendered and accepted for payment pursuant
to the offer will be made only after timely receipt by the Depositary of
certificates for the shares (or a timely confirmation of the book-entry
transfer of the shares into the Depositary's account at the Book-Entry
Transfer Facility as described above), a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile of the Letter of
Transmittal), an Agent's Message in the case of a book-entry transfer or the
specific acknowledgment in the case of a tender through the Automated Tender
Offer Program of the Book-Entry Transfer Facility, and any other documents
required by the Letter of Transmittal.
The method of delivery of all documents, including certificates for shares,
the Letter of Transmittal and any other required documents, is at the election
and risk of the tendering shareholder. If delivery is by mail, we recommend
that shareholders use registered mail with return receipt requested, properly
insured. In all cases, sufficient time should be allowed to ensure timely
delivery.
Book-Entry Delivery. The Depositary will establish an account with respect
to the shares for purposes of the offer at the Book-Entry Transfer Facility
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the shares by causing the
Book-Entry Transfer Facility to transfer shares into the Depositary's account
in accordance with the Book-Entry Transfer Facility's procedures for transfer.
Although delivery of shares may be effected through a book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility, either (1) a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile of the Letter of Transmittal), with any required signature
guarantees, an Agent's Message in the case of a book-entry transfer or the
specific acknowledgement in the case of a tender through the Automated Tender
Offer Program of the Book-Entry Transfer Facility, and any other required
documents must be transmitted to and received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase before the
Expiration Date, or (2) the guaranteed delivery procedure described below must
be followed. Delivery of the Letter of Transmittal and any other required
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Depositary.
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 the Book-Entry Transfer Facility
has received an express acknowledgement from the participant in the Book-Entry
Transfer Facility tendering shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that we may
enforce such agreement against the participant.
Participants in the Book-Entry Transfer Facility may tender their shares in
accordance with the Automated Tender Offer Program to the extent it is
available to them for the shares they wish to tender. A shareholder tendering
through the Automated Tender Offer Program must expressly acknowledge that the
shareholder has received and agreed to be bound by the Letter of Transmittal
and that the Letter of Transmittal may be enforced against them.
Guaranteed Delivery. If a shareholder desires to tender shares pursuant to
the offer and the shareholder's share certificates are not immediately
available or cannot be delivered to the Depositary before the Expiration Date
(or the procedure for book-entry transfer cannot be completed on a timely
basis), or if time will not permit all required documents to reach the
Depositary before the Expiration Date, the shares still may be tendered, if
all of the following conditions are satisfied:
(1) the tender is made by or through an Eligible Institution;
(2) the Depositary receives by hand, mail, overnight courier, telegram or
facsimile transmission, on or before the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially
in the form we have provided with this Offer to Purchase, including
(where required) a signature guarantee by an Eligible Institution in
the form set forth in the Notice of Guaranteed Delivery; and
11
<PAGE>
(3) the certificates for all tendered shares, in proper form for transfer
(or confirmation of book-entry transfer of the shares into the
Depositary's account at the Book-Entry Transfer Facility), together
with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile of the Letter of Transmittal), including any
required signature guarantees, an Agent's Message in the case of a
book-entry transfer or the specific acknowledgement in the case of a
tender through the Automated Tender Offer Program of the Book-Entry
Transfer Facility, and any other documents required by the Letter of
Transmittal, are received by the Depositary within three Nasdaq trading
days after the date of receipt by the Depositary of the Notice of
Guaranteed Delivery.
Return of Unpurchased Shares. If any tendered shares are not purchased, or
if less than all shares evidenced by a shareholder's certificates are
tendered, certificates for unpurchased shares will be returned as promptly as
practicable after the expiration or termination of the offer or, in the case
of shares tendered by book-entry transfer at the Book-Entry Transfer Facility,
the shares will be credited to the appropriate account maintained by the
tendering shareholder at the Book-Entry Transfer Facility, in each case
without expense to the shareholder.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of shares
to be accepted, the purchase price to be paid for shares to be accepted and
the validity, form, eligibility (including time of receipt) and acceptance for
payment of any tender of shares will be determined by us, in our sole
discretion, and our determination will be final and binding on all parties. We
reserve the absolute right to reject any or all tenders of any shares that we
determine are not in proper form or the acceptance for payment of or payment
for which may, in the opinion of our counsel, be unlawful. We also reserve the
absolute right to waive any of the conditions of the offer or any defect or
irregularity in any tender with respect to any particular shares or any
particular shareholder, and our interpretation of the terms of the offer will
be final and binding on all parties. No tender of shares will be deemed to
have been properly made until all defects or irregularities have been cured by
the tendering shareholder or waived by us. We will not, and none of the Dealer
Managers, the Depositary, the Information Agent or any other person, will be
obligated to give notice of any defects or irregularities in tenders, nor will
any of them incur any liability for failure to give any notice.
Our Employee Stock Purchase Plan. Participants in our Employee Stock
Purchase Plan may instruct Salomon Smith Barney, which administers the
Employee Stock Purchase Plan, to tender some or all of the shares held in the
participant's account under the plan by following the instructions in the
"Letter to Participants in Sylvan's Employee Stock Purchase Plan" furnished
separately and returning it to Salomon Smith Barney in accordance with those
instructions. Each participant may direct that all, some or none of the shares
held in the participant's account under the Employee Stock Purchase Plan be
tendered and the price at which such participant's shares are to be tendered.
Any employee stock purchase plan shares tendered but not purchased will be
returned to the participant's employee stock purchase plan account. All
documents furnished to shareholders generally in connection with the offer
will be made available to participants whose accounts are credited with
shares. Participants in the Employee Stock Purchase Plan cannot use the Letter
of Transmittal to direct the tender of shares, but must use the separate
instruction letter sent to them.
Delivery of a Letter of Transmittal by an Employee Stock Purchase Plan
participant does not constitute proper tender of his or her employee stock
purchase plan shares. Proper tender can only be made by Salomon Smith Barney,
who is the record owner of these shares. Please note that the deadline for
submitting instruction letters to Salomon Smith Barney is earlier than the
Expiration Date. We have been advised that if Salomon Smith Barney has not
received a participant's instructions at least three business days prior to
the Expiration Date, Salomon Smith Barney will not tender any shares held in
the participant's account under in the Employee Stock Purchase Plan.
Participants in our Employee Stock Purchase Plan are urged to read the
separate instruction letter and related materials carefully.
12
<PAGE>
Our 401(k) Retirement Savings Plan. Participants in our 401(k) Retirement
Savings Plan may instruct the trustee of the plan, Putnam Fiduciary Trust
Company, to tender some or all of the shares allocated to a participant's
account by following the instructions in the "Letter to Participants in
Sylvan's 401(k) Retirement Savings Plan" furnished separately and returning it
to First Union National Bank in accordance with those instructions. All
documents furnished to shareholders generally in connection with the offer
will be made available to participants whose savings plan accounts are
credited with shares. Participants in the savings plan cannot use the Letter
of Transmittal to direct the tender of shares, but must use the separate
instruction letter sent to them.
Our 401(k) Retirement Savings Plan is prohibited from selling shares to us
for a price that is less than the prevailing market price. Accordingly, if a
participant in the savings plan elects to tender shares at a price that is
lower than the prevailing market price of our common stock at the expiration
of the offer, the tender price elected by the participant will be deemed to
have been increased to the closest tender price that is not less than the
closing price of our common stock on The Nasdaq Stock Market on the Expiration
Date.
Delivery of a Letter of Transmittal by a savings plan participant does not
constitute proper tender of his or her 401(k) Retirement Savings Plan shares.
Proper tender can only be made by the Trustee, who is the record owner of the
shares held in the savings plan. Please note that instruction letters must be
submitted to the Trustee prior to the Expiration Date. We have been advised
that if First Union National Bank has not received a participant's
instructions at least three business days prior to the Expiration Date, the
Trustee will not tender any shares held on behalf of the participant in the
savings plan.
The proceeds received by the Trustee from any tender of shares from a
participant's savings plan account will be reinvested pro-rata in accordance
with the participant's current investment directions for new elective deferral
contributions to that plan. However, if the participant's current investment
directions for new elective deferral contributions provide that some or all of
the participant's contributions are to be invested in our common stock, then
that portion of the tender proceeds will be invested in the Putnam Stable
Value Fund. Once the tender proceeds have been credited to the participant's
savings plan accounts, the participant may reallocate his or her investments
among the various investment funds under the savings plan in the usual manner.
Participants in our 401(k) Retirement Savings Plan are urged to read the
separate instruction letter and related materials carefully.
Tendering Shareholder's Representation and Warranty; Our Acceptance
Constitutes an Agreement. A tender of shares pursuant to any of the procedures
described above will constitute the tendering shareholder's acceptance of the
terms and conditions of the offer, as well as the tendering shareholder's
representation and warranty to us that (1) the shareholder has a "net long
position," within the meaning of Rule 14e-4 promulgated by the SEC under the
Exchange Act, in the shares or equivalent securities at least equal to the
shares being tendered, and (2) the tender of shares complies with Rule 14e-4.
It is a violation of Rule 14e-4 for a person, directly or indirectly, to
tender shares for that person's own account unless, at the time of tender and
at the end of the proration period or period during which shares are accepted
by lot (including any extensions thereof), the person so tendering (1) has a
net long position equal to or greater than the amount of (a) shares tendered
or (b) other securities convertible into or exchangeable or exercisable for
the shares tendered and will acquire the shares for tender by conversion,
exchange or exercise and (2) will deliver or cause to be delivered the shares
in accordance with the terms of the offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. Our acceptance for payment of shares tendered pursuant to the
offer will constitute a binding agreement between the tendering shareholder
and us on the terms and conditions of the offer.
United States Federal Income Tax Backup Withholding. Under the United States
federal income tax backup withholding rules, unless an exemption applies under
the applicable law and regulations, 31% of the gross proceeds payable to a
shareholder or other payee pursuant to the offer must be withheld and remitted
to the United States Internal Revenue Service ("IRS"), unless the
13
<PAGE>
shareholder or other payee provides his or her taxpayer identification number
(employer identification number or social security number) to the Depositary
(as payor) and certifies under penalties of perjury that the number is
correct. Therefore, each tendering shareholder should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup
withholding unless the shareholder otherwise establishes to the satisfaction
of the Depositary that the shareholder is not subject to backup withholding.
If the United States Holder does not provide the Depositary with the correct
taxpayer identification number, the United States Holder (as defined in
Section 14) may be subject to penalties imposed by the IRS. If withholding
results in an overpayment of taxes, a refund may be obtained from the IRS in
accordance with its refund procedures. Certain "exempt recipients" (including,
among others, all corporations and certain Non-United States Holders (as
defined in Section 14)) are not subject to these backup withholding and
information reporting requirements. In order for a Non-United States Holder to
qualify as an exempt recipient, that shareholder must submit an IRS Form W-8
or a Substitute Form W-8, signed under penalties of perjury, attesting to that
shareholder's exempt status. These statements can be obtained from the
Depositary. See Instruction 14 of the Letter of Transmittal.
To prevent United States federal income tax backup withholding equal to 31%
of the gross payments made to shareholders for shares purchased pursuant to
the offer, each shareholder who does not otherwise establish an exemption from
the backup withholding must provide the Depositary with the shareholder's
correct taxpayer identification number and provide other information by
completing the Substitute Form W-9 included as part of the Letter of
Transmittal.
Withholding For Non-United States Holders. Even if a Non-United States
Holder has provided the required certification to avoid backup withholding,
the Depositary will withhold United States federal income taxes equal to 30%
of the gross payments payable to a Non-United States Holder or his agent
unless the Depositary determines that a reduced rate of withholding is
available under a tax treaty or that an exemption from withholding is
applicable because the gross proceeds are effectively connected with the
conduct of a trade or business within the United States. To obtain a reduced
rate of withholding under a tax treaty, a Non-United States Holder must
deliver to the Depositary before the payment a properly completed and executed
IRS Form 1001. To obtain an exemption from withholding on the grounds that the
gross proceeds paid pursuant to the offer are effectively connected with the
conduct of a trade or business within the United States, a Non-United States
Holder must deliver to the Depositary a properly completed and executed IRS
Form 4224. A Non-United States Holder that qualifies for an exemption from
withholding by delivering IRS Form 4224 will generally be required to file a
United States federal income tax return and will be subject to United States
federal income tax on income derived from the sale of shares pursuant to the
offer in the manner and to the extent described in Section 14 as if it were a
United States Holder. The Depositary will determine a shareholder's status as
a Non-United States Holder and eligibility for a reduced rate of, or exemption
from, withholding by reference to any outstanding certificates or statements
concerning eligibility for a reduced rate of, or exemption from, withholding
(e.g., IRS Form 1001 or IRS Form 4224) unless facts and circumstances indicate
that reliance is not warranted. A Non-United States Holder may be eligible to
obtain a refund of all or a portion of any tax withheld if the Non-United
States Holder meets those tests described in Section 14 that would
characterize the exchange as a sale (as opposed to a dividend) or is otherwise
able to establish that no tax or a reduced amount of tax is due.
Non-United States Holders are urged to consult their tax advisors regarding
the application of United States federal income tax withholding, including
eligibility for a withholding tax reduction or exemption, and the refund
procedure.
Lost or Destroyed Certificates. Shareholders whose certificates for part or
all of their shares have been lost, stolen, misplaced or destroyed may either
complete the box in the Letter of Transmittal entitled, "Affidavit of Lost or
Destroyed Certificate(s)," and pay the listed insurance premium or contact the
Depositary at (800) 829-8432 for instructions as to the documents that will be
required to be
14
<PAGE>
submitted together with the Letter of Transmittal in order to receive stock
certificate(s) representing the shares. Shareholders are requested to contact
the Depositary immediately in order to permit timely processing of this
documentation.
Certificates for shares, together with a properly completed Letter of
Transmittal and any other documents required by the Letter of Transmittal,
must be delivered to the Depositary and not to us. Any documents delivered to
us will not be forwarded to the Depositary and will not be deemed to be
properly tendered.
4. Withdrawal Rights.
Shares tendered pursuant to the offer may be withdrawn at any time before
the Expiration Date and, unless already accepted for payment by us pursuant to
the offer, may also be withdrawn at any time after 12:00 Midnight, Eastern
time, on Monday, May 15, 2000. Except as otherwise provided in this Section 4,
tenders of shares pursuant to the offer are irrevocable.
For a withdrawal to be effective, a notice of withdrawal must be in written,
telegraphic, telex or facsimile transmission form and must be received in a
timely manner by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase. Any notice of withdrawal must specify the
name of the tendering shareholder, the number of shares to be withdrawn and
the name of the registered holder of the shares if different from that of the
person who tendered the shares. If the certificates for shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, before
the release of the certificates, the tendering shareholder must also submit
the serial numbers shown on the particular certificates for shares to be
withdrawn and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution (except in the case of shares tendered for the
account of an Eligible Institution). If shares have been tendered pursuant to
the procedure for book-entry transfer described in Section 3, the notice of
withdrawal also must specify the name and the number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn shares and must
otherwise comply with the Book-Entry Transfer Facility's procedures.
All questions as to the form and validity, including the time of receipt, of
any notice of withdrawal will be determined by us, in our sole discretion,
which determination will be final and binding on all parties. Neither we nor
none of the Dealer Managers, the Depositary, the Information Agent or any
other person will be obligated to give notice of any defects or irregularities
in any notice of withdrawal, nor will any of them incur liability for failure
to give any notice.
Participants in our Employee Stock Purchase Plan who wish to withdraw their
shares must follow the instructions found in the "Letter to Participants in
Sylvan's Employee Stock Purchase Plan" sent to them separately.
Participants in our 401(k) Retirement Savings Plan who wish to withdraw
their shares must follow the instructions found in the "Letter to Participants
in Sylvan's 401(k) Retirement Savings Plan" sent to them separately.
Withdrawals may not be rescinded, and any shares properly withdrawn will be
deemed not properly tendered for purposes of the offer. However, withdrawn
shares may be re-tendered before the Expiration Date by again following one of
the procedures described in Section 3.
If we extend the offer, are delayed in our purchase of shares or are unable
to purchase shares pursuant to the offer for any reason, then, without
prejudice to our rights under the offer, the Depositary may, subject to
applicable law, retain tendered shares on our behalf, and the shares may not
be withdrawn except to the extent tendering shareholders are entitled to
withdrawal rights as described in this Section 4. Our reservation of the right
to delay payment for shares that we have accepted for payment is limited by
Rule 13e-4(f)(5) under the Exchange Act, which requires that we must pay the
consideration offered or return the shares tendered promptly after termination
or withdrawal of a tender offer.
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<PAGE>
5. Purchase of Shares and Payment of Purchase Price.
As promptly as practicable following the Expiration Date, we (1) will
determine a single per share purchase price we will pay for the shares
properly tendered and not properly withdrawn before the Expiration Date,
taking into account the number of shares tendered and the prices specified by
tendering shareholders, and (2) will accept for payment and pay for (and
thereby purchase) up to 9,500,000 shares properly tendered at prices at or
below the purchase price and not properly withdrawn before the Expiration
Date. For purposes of the offer, we will be deemed to have accepted for
payment (and therefore purchased), subject to the "odd lot" priority,
proration and conditional tender provisions of this offer, shares that are
properly tendered at or below the purchase price selected by us and not
properly withdrawn only when, as and if we give oral or written notice to the
Depositary of its acceptance of the shares for payment pursuant to the offer.
We will accept for payment and pay the per share purchase price for all of
the shares accepted for payment pursuant to the offer as soon as practicable
after the Expiration Date. In all cases, payment for shares tendered and
accepted for payment pursuant to the offer will be made promptly, subject to
possible delay in the event of proration or conditional tender, but only after
timely receipt by the Depositary of certificates for shares, or of a timely
Book-Entry Confirmation of shares into the Depositary's account at the Book-
Entry Transfer Facility, and a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile of the Letter of Transmittal), an
Agent's Message in the case of a book-entry transfer or the specific
acknowledgement in the case of a tender through the Automated Tender Offer
Program of the Book-Entry Transfer Facility, and any other required documents.
We will pay for shares purchased pursuant to the offer by depositing the
aggregate purchase price for the shares with the Depositary, which will act as
agent for tendering shareholders for the purpose of receiving payment from us
and transmitting payment to the tendering shareholders.
In the event of proration, we will determine the proration factor and pay
for those tendered shares accepted for payment as soon as practicable after
the Expiration Date. However, we do not expect to be able to announce the
final results of any proration and commence payment for shares purchased until
approximately seven business days after the Expiration Date. Certificates for
all shares tendered and not purchased, including all shares tendered at prices
in excess of the purchase price and shares not purchased due to proration or
conditional tenders, will be returned or, in the case of shares tendered by
book-entry transfer, will be credited to the account maintained with the Book-
Entry Transfer Facility by the participant who delivered the shares, to the
tendering shareholder at our expense as promptly as practicable after the
Expiration Date or termination of the offer without expense to the tendering
shareholders. Under no circumstances will we pay interest on the purchase
price, including but not limited to, by reason of any delay in making payment.
In addition, if certain events occur, we may not be obligated to purchase
shares pursuant to the offer. See Section 7.
We will pay all stock transfer taxes, if any, payable on the transfer to us
of shares purchased pursuant to the offer. If, however, payment of the
purchase price is to be made to, or (in the circumstances permitted by the
offer) if unpurchased shares are to be registered in the name of, any person
other than the registered holder, or if tendered certificates are registered
in the name of any person other than the person signing the Letter of
Transmittal, the amount of all stock transfer taxes, if any (whether imposed
on the registered holder or the other person), payable on account of the
transfer to the person will be deducted from the purchase price unless
satisfactory evidence of the payment of the stock transfer taxes, or exemption
from payment of the stock transfer taxes, is submitted. See Instruction 7 of
the Letter of Transmittal.
Any tendering shareholder or other payee who fails to complete fully, sign
and return to the Depositary the Substitute Form W-9 included with the Letter
of Transmittal may be subject to required United States federal income tax
backup withholding of 31% of the gross proceeds paid to the shareholder or
other payee pursuant to the offer. See Section 3. Also see Section 3 regarding
United States federal income tax consequences for Non-United States
shareholders.
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<PAGE>
6. Conditional Tender of Shares.
Under certain circumstances and subject to the exceptions for Odd Lot
Holders described in Section 1, we may prorate the number of shares purchased
pursuant to the offer. As discussed in Section 14, the number of shares to be
purchased from a particular shareholder may affect the tax treatment of the
purchase to the shareholder and the shareholder's decision whether to tender.
The conditional tender alternative is made available so that a shareholder may
seek to structure the purchase of shares from the shareholder pursuant to the
offer in such a manner that it will be treated as a sale of such shares by the
shareholder, rather than the payment of a dividend to the shareholder, for
federal income tax purposes. Accordingly, a shareholder may tender shares
subject to the condition that a specified minimum number of the shareholder's
shares tendered pursuant to a Letter of Transmittal or Notice of Guaranteed
Delivery must be purchased if any shares tendered are purchased. Any
shareholder desiring to make a conditional tender must so indicate in the box
captioned "Conditional Tender" in the Letter of Transmittal or, if applicable,
the Notice of Guaranteed Delivery. Each shareholder is urged to consult with
his or her own tax advisor.
Any tendering shareholder wishing to make a conditional tender must
calculate and appropriately indicate the minimum number of shares that must be
purchased if any are purchased. If the effect of accepting tenders on a pro
rata basis would be to reduce the number of shares to be purchased from any
shareholder (tendered pursuant to a Letter of Transmittal or Notice of
Guaranteed Delivery) below the minimum number specified by that shareholder,
the conditional tender will automatically be regarded as withdrawn (except as
provided in the next paragraph). All shares tendered by a shareholder subject
to a conditional tender pursuant to the Letter of Transmittal or Notice of
Guaranteed Delivery and regarded as withdrawn as a result of proration will be
returned as promptly as practicable after the Expiration Date.
If conditional tenders would otherwise be regarded as withdrawn because of
proration and would cause the total number of shares to be purchased to fall
below 9,500,000, then to the extent feasible, we will select enough of the
conditional tenders that would otherwise have been deemed withdrawn to permit
us to purchase 9,500,000 shares. In selecting among the conditional tenders,
we will select by lot and will limit our purchase in each case to the
designated minimum of shares to be purchased.
7. Conditions of the Offer.
Notwithstanding any other provision of the offer, we may terminate or amend
the offer or may postpone the acceptance for payment of, or the purchase of
and the payment for shares tendered, subject to the rules under the Exchange
Act, if at any time on or after March 21, 2000 and before the Expiration Date
any of the following events have occurred (or have been determined by us to
have occurred) that, in our sole judgment and regardless of the circumstances
giving rise to the event or events (including any action or omission to act by
us), makes it inadvisable to proceed with the offer or with acceptance for
payment:
. there has been threatened, instituted or pending any action, suit or
proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or by any other person,
domestic, foreign or supranational, before any court, authority, agency
or other tribunal that directly or indirectly:
(1) challenges or seeks to make illegal, or to delay or otherwise
directly or indirectly to restrain, prohibit or otherwise affect
the making of the offer, the acquisition of some or all of the
shares pursuant to the offer or otherwise relates in any manner to
the offer; or
(2) in our reasonable judgment, could materially and adversely affect
our and our subsidiaries' business, condition (financial or
otherwise), income, operations or prospects, taken as a whole, or
otherwise materially impair in any way the contemplated
17
<PAGE>
future conduct of our business or any of our subsidiaries' business
or materially impair the contemplated benefits of the offer to us;
. there has been any action threatened, instituted, pending or taken,
including any settlement, or any approval withheld, or any statute,
rule, regulation, judgment, order or injunction threatened, invoked,
proposed, sought, promulgated, enacted, entered, amended, enforced or
deemed to be applicable to the offer or us or any of our subsidiaries,
including any settlement, by any court, government or governmental,
regulatory or administrative authority, agency or tribunal, domestic,
foreign or supranational, that, in our reasonable judgment, could
directly or indirectly:
(1) make the acceptance for payment of, or payment for, some or all of
the shares illegal or otherwise restrict or prohibit consummation
of the offer;
(2) delay or restrict our ability, or render us unable, to accept for
payment or pay for some or all of the shares;
(3) materially impair the contemplated benefits of the offer to us; or
(4) materially and adversely affect our and our subsidiaries' business,
condition (financial or otherwise), income, operations or
prospects, taken as a whole, or otherwise materially impair in any
way the contemplated future conduct of our or any of our
subsidiaries' business;
.there has occurred any of the following:
(1) any general suspension of trading in, or limitation on prices for,
securities on any United States national securities exchange or in
the over-the-counter market;
(2) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, whether or not
mandatory;
(3) the commencement of a war, armed hostilities or other international
or national calamity directly or indirectly involving the United
States;
(4) any limitation, whether or not mandatory, by any governmental,
regulatory or administrative agency or authority on, or any event
that, in our reasonable judgment, could materially affect, the
extension of credit by banks or other lending institutions in the
United States;
(5) any significant decrease in the market price of our common stock or
in the market prices of equity securities generally in the United
States or any changes in the general political, market, economic or
financial conditions in the United States or abroad that could
have, in our reasonable judgment, a material adverse effect on our
and our subsidiaries' business, condition (financial or otherwise),
income, operations or prospects, taken as a whole, or on the
trading in the shares of our common stock or on the benefits of the
offer to us;
(6) in the case of any of the foregoing existing at the time of the
commencement of the offer, a material acceleration or worsening
thereof; or
(7) any decline in the Nasdaq Composite Index by an amount in excess of
10% measured from the close of business on March 20, 2000.
. a tender or exchange offer for any or all of the shares (other than
this offer), or any merger, acquisition proposal, business combination
or other similar transaction with or involving us or any subsidiary,
has been proposed, announced or made by any person or has been publicly
disclosed;
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.We learn that:
(1) any entity, "group" (as that term is used in Section 13(d)(3) of
the Exchange Act) or person has acquired or proposes to acquire
beneficial ownership of more than 5% of our outstanding shares,
whether through the acquisition of stock, the formation of a group,
the grant of any option or right, or otherwise (other than as and
to the extent disclosed in a Schedule 13D or Schedule 13G filed
with the SEC on or before March 20, 2000); or
(2) any entity, group or person who has filed a Schedule 13D or
Schedule 13G with the SEC on or before March 20, 2000 has acquired
or proposes to acquire, whether through the acquisition of stock,
the formation of a group, the grant of any option or right, or
otherwise, beneficial ownership of an additional 2% or more of our
outstanding shares.
. any person, entity or group has filed a Notification and Report Form
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, reflecting an intent to acquire us or any of our shares of
common stock, or has made a public announcement reflecting an intent to
acquire us or any of our subsidiaries or any of our respective assets
or securities; or
. any change or changes have occurred or are threatened in our or our
subsidiaries' business, condition (financial or otherwise), assets,
income, operations, prospects or stock ownership that, in our
reasonable judgment, is or may be material to us or our subsidiaries;
or
. We determine that the consummation of the offer and the purchase of the
shares may cause our common stock to be delisted from The Nasdaq Stock
Market or to be eligible for deregistration under the Exchange Act.
The conditions referred to above are for our sole benefit and may be
asserted by us regardless of the circumstances (including any action or
omission to act by us) giving rise to any condition, and may be waived by us,
in whole or in part, at any time and from time to time in our sole discretion.
Our failure at any time to exercise any of the foregoing rights will not be
deemed a waiver of any right, and each such right will be deemed an ongoing
right that may be asserted at any time and from time to time. In certain
circumstances, if we waive any of the conditions described above, we may be
required to extend the Expiration Date. Any determination by us concerning the
events described above will be final and binding on all parties.
8. Price Range of Shares; Dividends.
Our common stock is listed for trading on The Nasdaq Stock Market under the
symbol "SLVN". It began trading in December 1993 following our initial public
offering. The following table sets forth, for the fiscal quarters indicated,
the high and low sales prices per share as reported on The Nasdaq Stock
Market. We have never paid any cash dividends on our common stock and our
revolving credit facility prohibits the payment of cash dividends.
<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
1998
First quarter............................................ $31.63 $22.00
Second quarter........................................... 34.75 28.94
Third quarter............................................ 36.88 21.38
Fourth quarter........................................... 31.00 18.25
1999
First quarter............................................ 34.25 25.25
Second quarter........................................... 28.94 21.06
Third quarter............................................ 27.97 15.88
Fourth quarter........................................... 18.53 11.19
2000
First quarter (through March 20, 2000)................... 16.69 12.86
</TABLE>
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<PAGE>
On March 20, 2000, the last full trading day before the announcement of the
offer, the last reported sale price of the shares as reported on The Nasdaq
Stock Market was $14.875. We urge shareholders to obtain current market
quotations for the shares.
Rights Plan. In 1996, our Board of Directors adopted a shareholder rights
plan, pursuant to which we declared a dividend of one preferred stock purchase
right for each share of our common stock outstanding. One right attaches to
each share of our common stock, and, when exercisable, each right will entitle
the registered holder to purchase from us one one-hundredth of a share of
Series A Junior Participating Preferred Stock, without par value per share, at
a price of $157.00 per one one-hundredth of a preferred share, subject to
adjustment.
In general, the rights become exercisable or transferable only upon the
occurrence of certain events relating to the acquisition by any person or
group, other than us, of beneficial ownership of 15% or more of the aggregate
voting power represented by our outstanding securities or the commencement of
a tender offer to acquire such beneficial ownership. The rights will expire on
November 7, 2006, subject to our right to extend the date, unless earlier
redeemed or exchanged by us or terminated. The rights may be redeemed in
whole, but not in part, at a price of $.05 per right by the Board of Directors
at any time before the time a person crosses the beneficial ownership
threshold.
On December 18, 1999, our Board of Directors amended our shareholder rights
plan. Effective October 1, 1999, several amendments were made to the Maryland
General Corporation Law. As a result, the Maryland General Corporation Law now
permits a provision in a shareholder rights plan that newly elected directors
may not vote to redeem rights for at least 180 days after their election. The
amendments to our plan incorporate this type of provision. In addition, we
appointed a new rights agent, First Union National Bank, which also now acts
as our transfer agent and is the Depositary.
The preferred stock purchase rights are not currently exercisable and trade
together with shares of our common stock. Absent circumstances causing the
rights to become exercisable or separately tradable prior to the Expiration
Date, the tender of any shares pursuant to the offer will include the tender
of the associated rights. No separate consideration will be paid for the
rights. Upon the purchase of shares by us pursuant to this offer, the sellers
of the shares purchased will no longer own the preferred stock purchase rights
associated with the purchased shares.
The foregoing description of the preferred stock purchase rights is
qualified in its entirety by reference to the form of the Amended and Restated
Rights Agreement, a copy of which has been filed as an exhibit to a Form 8-K
filed by us on December 17, 1999. This exhibit may be obtained from the SEC in
the manner provided in Section 10.
9. Source and Amount of Funds.
Assuming we purchase 9,500,000 shares pursuant to the offer at the maximum
specified purchase price of $17.50 per share, we expect the maximum aggregate
cost, including all fees and expenses applicable to the offer, will be
approximately $167.5 million. We will use a portion of the cash proceeds from
the sale of Prometric as described in Section 2 to finance the offer.
10. Certain Information Concerning Us.
General. We are the leading provider of educational services to families,
schools and industry. Our Sylvan Learning Centers and contract education
services divisions provide personalized instruction services to K through 12
students through direct consumer relationships and under contract to school
systems. We provide courses to students throughout the world in the areas of
English language, teacher training and accredited university offerings through
the Wall Street Institute, ASPECT, Canter and Sylvan international
universities subsidiaries. Through our affiliate, Caliber Learning Network,
Inc., we also have the ability to distribute world-class professional
education and training programs.
20
<PAGE>
We are headquartered at 1000 Lancaster Street, Baltimore, Maryland 21202.
Our telephone number is (410) 843-8000.
Where You Can Find More Information. We are subject to the informational
filing requirements of the Exchange Act, and, accordingly, are obligated to
file reports, statements and other information with the SEC relating to our
business, financial condition and other matters. Information, as of particular
dates, concerning our directors and officers, their remuneration, options
granted to them, the principal holders of our securities and any material
interest of these persons in transactions with us is required to be disclosed
in proxy statements distributed to our shareholders and filed with the SEC. We
also have filed an Issuer Tender Offer Statement on Schedule TO with the SEC
that includes additional information relating to the offer. These reports,
statements and other information can be inspected and copied at the public
reference facilities maintained by the SEC at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549; and at its regional offices located at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of this material may also be
obtained by mail, upon payment of the SEC's customary charges, from the Public
Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The SEC also maintains a web site on the Internet at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
Incorporation by Reference. The rules of the SEC allow us to "incorporate by
reference" information into this document, which means that we can disclose
important information to you by referring you to another document filed
separately with the SEC. These documents contain important information about
us.
<TABLE>
<CAPTION>
SEC Filings (File No. 0-22844) Period or Date Filed
------------------------------ --------------------------------
<S> <C>
Annual Report on Form 10-K............... Year ended December 31, 1998
Quarterly Reports on Form 10-Q........... Quarter ended March 31, 1999
Quarter ended June 30, 1999
Quarter ended September 30, 1999
Reports on Form 8-K...................... Report filed December 17, 1999
Report filed February 2, 2000
</TABLE>
We incorporate by reference these documents and any additional documents
that we may file with the SEC between the date of this offer and the date of
expiration of withdrawal rights. Those documents include periodic reports,
such as annual reports on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K, as well as proxy statements.
You can obtain any of the documents incorporated by reference in this
document from us or from the SEC's web site at the address described above.
Documents incorporated by reference are available from us without charge,
excluding any exhibits to those documents. You can obtain documents
incorporated by reference in this Offer to Purchase by requesting them in
writing or by telephone from us at 1000 Lancaster Street, Baltimore, Maryland
21202, telephone: (410) 843-8000. Please be sure to include your complete name
and address in your request. If you request any incorporated documents, we
will mail them to you by first class mail, or another equally prompt means,
within one business day after we receive your request.
21
<PAGE>
11. Interests of Directors and Executive Officers; Transactions and
Arrangements Concerning the Shares.
As of March 20, 2000, we had 50,344,374 issued and outstanding shares and
1,159,001 shares reserved for issuance upon exercise of all outstanding stock
options. The 9,500,000 shares that we are offering to purchase hereunder
represent approximately 19% of the shares outstanding on March 20, 2000.
As of March 20, 2000, our directors and executive officers as a group (10
persons) beneficially owned 7,169,992 shares (including 3,232,964 of shares
issuable upon exercise of options) or approximately 14% of the total
outstanding shares of our common stock on that date. Each of our executive
officers and directors has advised us that he or she does not intend to tender
any shares pursuant to our offer. If we purchase 9,500,000 shares pursuant to
the offer, and none of our executive officers or directors tender shares
pursuant to the offer, then after the purchase of shares pursuant to the
offer, our executive officers and directors as a group would beneficially own
approximately 17% of the total shares of our common stock outstanding
immediately after the offer. The business address of each of our directors and
executive officers is 1000 Lancaster Street, Baltimore, Maryland 21202.
<TABLE>
<CAPTION>
Percent of
Name Position Number Outstanding Shares (%)
---- ------------------------ --------- ----------------------
<C> <S> <C> <C>
Douglas Becker(1).............. Chief Executive Officer
and Chairman of the
Board 1,667,610 3.23
Donald V. Berlanti(2).......... Director 48,750 *
Peter Cohen(3)................. President and Chief
Operating Officer 91,250 *
R. Christopher Hoehn-Saric(4).. Director 1,670,757 3.23
Rick Inatome(5)................ Director 1,500 *
B. Lee McGee(6)................ Executive Vice President
and Chief Financial
Officer 311,104 *
James H. McGuire............... Director -- --
R. William Pollock............. Director 3,274,842 6.50
J. Phillip Samper(7)........... Director 47,929 *
Paula Singer(8)................ Director 56,250 *
</TABLE>
- --------
* Represents beneficial ownership of less than 1% of the outstanding Sylvan
Common Stock.
(1) Includes 1,341,680 shares issuable upon exercise of options.
(2) Includes 48,750 shares issuable upon exercise of options.
(3) Includes 91,250 shares issuable upon exercise of options.
(4) Includes 1,341,680 shares issuable upon exercise of options.
(5) Includes 1,500 shares issuable upon exercise of options.
(6) Includes 311,104 shares issuable upon exercise of options.
(7) Includes 40,750 shares issuable upon exercise of options.
(8) Includes 56,250 shares issuable upon exercise of options.
Based on our records and on information provided to us by our directors,
executive officers, affiliates and subsidiaries, neither we nor any of our
affiliates or subsidiaries nor, to the best of our knowledge, any of our or
our subsidiaries' directors or executive officers, nor any associates or
subsidiaries of any of the foregoing, has effected any transactions involving
the shares during the 60 days prior to March 20, 2000, other than exercises of
previously granted stock options under our stock
22
<PAGE>
option plans, and purchases for the accounts of executive officers under our
Employee Stock Purchase Plan or 401(k) Retirement Savings Plan. We expect that
our Employee Stock Purchase Plan and our 401(k) Retirement Savings Plan will,
in accordance with the terms of the plans, elections in effect and present
patterns of contribution, continue to purchase shares prior to the expiration
of the offer.
Except as otherwise described in this Offer to Purchase, neither we nor, to
the best of our knowledge, any of our affiliates, directors or executive
officers, is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to the
offer or with respect to any of our securities, including, but not limited to,
any contract, arrangement, understanding or relationship concerning the
transfer or the voting of the securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or
the giving or withholding of proxies, consents or authorizations.
12. Effects of the Offer on the Market for Shares; Registration Under the
Exchange Act.
Our purchase of shares pursuant to the offer will reduce the number of
shares that might otherwise trade publicly and is likely to reduce the number
of shareholders. Nonetheless, we anticipate that there will be a sufficient
number of shares outstanding and publicly traded following consummation of the
offer to ensure a continued trading market for the shares. Based upon
published guidelines of The Nasdaq Stock Market, we do not believe that our
purchase of shares pursuant to the offer will cause our remaining shares to be
delisted from The Nasdaq Stock Market.
Our shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using the shares as collateral. We believe
that, following the purchase of shares pursuant to the offer, the shares will
continue to be "margin securities" for purposes of the Federal Reserve Board's
margin regulations.
Our shares are registered under the Exchange Act, which requires, among
other things, that we furnish information to our shareholders and to the SEC
and comply with the SEC's proxy rules in connection with meetings of our
shareholders. We believe that our purchase of shares pursuant to the offer
will not result in the shares becoming eligible for deregistration under the
Exchange Act.
13. Certain Legal Matters; Regulatory Approvals.
We are not aware of any license or regulatory permit material to our
business that might be adversely affected by our acquisition of shares as
contemplated in this offer or of any approval or other action by any
government or governmental, administrative or regulatory authority or agency,
domestic, foreign or supranational, that would be required for our acquisition
or ownership of shares as contemplated by this offer. Should any approval or
other action be required, we currently contemplate that we will seek that
approval or other action. We cannot predict whether we will be required to
delay the acceptance for payment of or payment for shares tendered pursuant to
the offer pending the outcome of any such matter. There can be no assurance
that any approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that the failure to obtain the
approval or other action might not result in adverse consequences to our
business. Our obligations under the offer to accept for payment and pay for
shares are subject to conditions. See Section 7.
14. Certain United States Federal Income Tax Consequences.
The following summary describes the principal United States federal income
tax consequences to United States Holders (as defined below) of an exchange of
shares for cash pursuant to the offer. Those shareholders who do not
participate in the exchange should not incur any United States federal income
tax liability from the exchange. This summary is based upon the Internal
Revenue Code of
23
<PAGE>
1986, as amended to the date of this offer (the "Code"), existing and proposed
United States Treasury Regulations promulgated under the Code, published
rulings, administrative pronouncements and judicial decisions, changes to
which could affect the tax consequences described in this offer (possibly on a
retroactive basis).
This summary addresses only shares held as capital assets. It does not
address all of the tax consequences that may be relevant to particular
shareholders because of their personal circumstances, or to other types of
shareholders (such as certain financial institutions, traders in securities
that elect mark to market, dealers or traders in securities or commodities,
insurance companies, "S" corporations, expatriates, tax-exempt organizations,
tax-qualified retirement plans, Non-United States Holders (as defined below),
persons who are subject to alternative minimum tax, or persons who hold shares
as a position in a "straddle" or as part of a "hedging" or "conversion"
transaction or that have a functional currency other than the United States
dollar). This summary may not be applicable with respect to shares acquired as
compensation (including shares acquired upon the exercise of stock options or
which were or are subject to forfeiture restrictions) or shares acquired under
a tax-qualified retirement plan. This summary also does not address the state,
local or foreign tax consequences of participating in the offer.
You should consult your tax advisor as to the particular consequences to you
of participating in this offer.
A "United States Holder" is a holder of shares that for United States
federal income tax purposes is:
. a citizen or resident of the United States;
. a corporation (or other entity taxable as a corporation) created or
organized in or under the laws of the United States or any State or the
District of Columbia;
. unless otherwise provided by applicable Treasury Department
regulations, an entity taxable as a partnership that is created or
organized in or under the laws of the United States or any State or the
District of Columbia;
. an estate the income of which is subject to United States federal
income taxation regardless of its source; or
. a trust (a) the administration over which a United States court can
exercise primary supervision and (b) all of the substantial decisions
of which one or more United States persons have the authority to
control and certain other trusts considered United States Holders for
federal income tax purposes.
A "Non-United States Holder" is a holder of shares other than a United
States Holder.
An exchange of shares for cash pursuant to the offer will be a taxable
event. A United States Holder participating in the exchange will be treated
either as having sold shares or as having received a dividend distribution
from Sylvan. A United States Holder's exchange of shares for cash pursuant to
the offer will be treated as a dividend to the extent of Sylvan's current or
accumulated earnings and profits as determined under federal income tax
principles, unless the exchange:
. results in a "complete termination" of the holder's stock interest in
Sylvan under section 302(b)(3) of the Code;
. is a "substantially disproportionate" redemption with respect to the
holder under section 302(b)(2) of the Code; or
. is "not essentially equivalent to a dividend" with respect to the
holder under section 302(b)(1) of the Code.
24
<PAGE>
In determining whether any of these tests have been met, a United States
Holder must take into account not only shares it actually owns, but also
shares it constructively owns within the meaning of section 318 of the Code.
A distribution to a shareholder is "not essentially equivalent to a
dividend" if it results in a "meaningful reduction" in the shareholder's stock
interest in Sylvan. If, as a result of an exchange of shares for cash pursuant
to the offer, a United States Holder of shares whose relative stock interest
in Sylvan is minimal and who exercises no control over corporate affairs
suffers a reduction in its proportionate interest in Sylvan (including any
ownership of preferred stock and any shares constructively owned), that United
States Holder should generally be regarded as having suffered a meaningful
reduction in its interest in Sylvan. Satisfaction of the "complete
termination" and "substantially disproportionate" exceptions is dependent upon
compliance with the respective objective tests set forth in section 302(b)(3)
and section 302(b)(2) of the Code. A distribution to a shareholder will result
in a "complete termination" if either (1) all of the shares actually and
constructively owned by the shareholder are exchanged pursuant to the offer or
(2) all of the shares actually owned by the shareholder are exchanged pursuant
to the offer and the shareholder is eligible to waive, and effectively waives,
the attribution of shares constructively owned by the shareholder in
accordance with the procedures described in section 302(c)(2) of the Code. A
distribution to a shareholder will be "substantially disproportionate" if the
percentage of the outstanding shares actually and constructively owned by the
shareholder immediately following the exchange of shares pursuant to the offer
(treating shares exchanged pursuant to the offer as outstanding) is less than
80% of the percentage of the outstanding shares actually and constructively
owned by the shareholder immediately before the exchange (treating shares
exchanged pursuant to the offer as outstanding).
Contemporaneous dispositions or acquisitions of shares by a shareholder or
related individuals or entities may be deemed to be part of a single
integrated transaction and may be taken into account in determining whether
any of the three tests under Section 302(b) of the Code has been satisfied.
Each shareholder should be aware that because proration may occur in the
offer, even if all the shares actually and constructively owned by a
shareholder are tendered pursuant to the offer, fewer than all of such shares
may be purchased by us. Thus, proration may affect whether the surrender by a
shareholder pursuant to the offer will meet any of the three tests under
Section 302 of the Code.
If an exchange of shares for cash by a United States Holder pursuant to the
offer is not treated as a distribution taxable as a dividend, the holder will
recognize capital gain or loss equal to the difference between the amount of
cash received and the holder's adjusted tax basis in the shares and in the
associated preferred stock purchase rights, if any, tendered to Sylvan, except
to the extent that the amount of cash received includes dividends that have
been declared by the Board of Directors of Sylvan before the exchange. The
gain or loss would be long-term capital gain or loss if the holding period for
the shares exceeded one year. In the case of a United States Holder that is an
individual, trust or estate, the maximum rate of United States federal income
tax applicable to net capital gain on shares held for more than one year is
20%.
If the amount received by a United States Holder in the offer is treated as
a distribution that is taxable as a dividend (as opposed to consideration
received in a sale or exchange), the amount of the distribution will be the
amount of cash received by the holder. The amount will be treated as a
dividend, taxable as ordinary income to the United States Holder, to the
extent of Sylvan's current or accumulated earnings and profits as determined
under Federal income tax principles. To the extent that the amount of the
distribution exceeds Sylvan's current and accumulated earnings and profits,
the excess first will be treated as a return of capital that will reduce the
holder's tax basis in the shares exchanged in the offer. Any remaining amount
after the United States Holder's basis has been reduced to zero will be
taxable as capital gain. The United States Holder's adjusted tax basis in its
shares exchanged in the offer generally will be transferred to any of its
remaining stockholdings in Sylvan, subject to, in the case of corporate
shareholders, reduction of basis or possible gain recognition under
25
<PAGE>
section 1059 of the Code in an amount equal to the non-taxed portion of the
dividend. If the United States Holder does not retain any actual stock
ownership in Sylvan (having a stock interest only constructively), the holder
may lose the benefit of the holder's adjusted tax basis in its shares. A
dividend received by a corporate United States Holder may be (1) eligible for
a dividends-received deduction (subject to applicable exceptions and
limitations) and (2) subject to the "extraordinary dividend" provisions of
section 1059 of the Code. Corporate shareholders should consult their own tax
advisors regarding (1) whether a dividends-received deduction will be
available to them, and (2) the possible application of section 1059 to the
ownership and disposition of their shares.
See Section 3 with respect to the application of United States federal
income tax withholding to payments made to Non-United States Holders and the
backup withholding tax requirements.
The trust under the 401(k) Retirement Savings Plan maintained by Sylvan and
its affiliates is exempt from federal income taxation. Accordingly, such trust
will not be taxable upon the receipt of any cash proceeds pursuant to the
offer. The shares of our common stock allocated to participants' accounts
under our 401(k) Retirement Savings Plan are employer securities as defined in
the Code. If a distribution from the savings plan includes employer
securities, the participant has the option of deferring federal income tax
after the distribution of the common stock on the increase in value of the
common stock that occurred while it was held in the savings plan. In addition,
the increase in value of the common stock that occurred while it was held in
the savings plan may be taxed at long-term capital gains rates rather than
ordinary income tax rates.
The tax discussion set forth above is included for general information only.
You are urged to consult your tax advisor to determine the particular tax
consequences to you of the offer, including the applicability and effect of
state, local and foreign tax laws.
15. Extension of the Offer; Termination; Amendment.
We expressly reserve the right, in our sole discretion, at any time and from
time to time, and regardless of whether or not any of the events set forth in
Section 7 have occurred or are deemed by us to have occurred, to extend the
period of time the offer is open and delay acceptance for payment of, and
payment for, any shares by giving oral or written notice of the extension to
the Depositary and making a public announcement of the extension. We also
expressly reserve the right, in our sole discretion, to terminate the offer
and reject for payment and not pay for any shares not theretofore accepted for
payment or paid for or, subject to applicable law, to postpone payment for
shares upon the occurrence of any of the conditions specified in Section 7 by
giving oral or written notice of the termination or postponement to the
Depositary and making a public announcement of the termination or
postponement. Our reservation of the right to delay payment for shares that we
have accepted for payment is limited by Rule 13e-4(f)(5) under the Exchange
Act, which requires that we must pay the consideration offered or return the
shares tendered promptly after termination or withdrawal of a tender offer.
Subject to compliance with applicable law, we further reserve the right, in
our sole discretion, and regardless of whether any of the events set forth in
Section 7 have occurred or are deemed by us to have occurred, to amend the
offer in any respect (including, without limitation, by decreasing or
increasing the consideration offered in the offer to holders of shares or by
decreasing or increasing the number of shares being sought in the offer).
Amendments to the offer may be made at any time and from time to time by
public announcement of the amendment. In the case of an extension, the
amendment must be issued no later than 9:00 a.m., Eastern time, on the first
business day after the last previously scheduled or announced Expiration Date.
Any public announcement made pursuant to the offer will be disseminated
promptly to shareholders in a manner reasonably designed to inform
shareholders of the change. Without limiting the manner in which we may choose
to make a public announcement, except as required by applicable law (including
Rule 13d-4(e)(2) under the Exchange Act), we will have no obligation to
publish, advertise or otherwise communicate any public
26
<PAGE>
announcement other than by issuing a press release to the Dow Jones News
Service or comparable service.
If we materially change the terms of the offer or the information concerning
the offer, or if we waive a material condition of the offer, we will extend
the offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2)
promulgated under the Exchange Act. These rules provide that the minimum
period during which an offer must remain open following material changes in
the terms of the offer or information concerning the offer (other than a
change in price or a change in percentage of securities sought) will depend on
the facts and circumstances, including the relative materiality of the terms
or information. If:
(1) we increase or decrease the price to be paid for shares, materially
increase the Dealer Managers fee or increase or decrease the number of
shares being sought in the offer and, in the event of an increase in
the number of shares being sought, the increase exceeds 2% of the
outstanding shares of our common stock, and
(2) the offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and
including, the date that notice of an increase or decrease is first
published, sent or given in the manner specified in this Section 15,
then, in each case, the offer will be extended until the expiration of a
period of ten business days. For purposes of the offer, a "business day" means
any day other than a Saturday, Sunday or Federal holiday and consists of the
time period from 12:01 am through 12:00 Midnight, Eastern time.
16. Fees and Expenses.
We have retained Goldman, Sachs & Co. to act as our financial advisors, as
well as the Dealer Managers, in connection with the offer. Goldman Sachs will
receive, for these services as Dealer Managers, a fee of $.10 per share
tendered and purchased in the offer. We also have agreed to reimburse Goldman,
Sachs & Co. for reasonable out-of-pocket expenses incurred in connection with
the offer, including reasonable fees and expenses of counsel, and to indemnify
Goldman, Sachs & Co. against liabilities in connection with the offer,
including liabilities under the federal securities laws.
We have retained D.F. King & Co., Inc. to act as Information Agent and First
Union National Bank to act as Depositary in connection with the offer. The
Information Agent may contact holders of shares by mail, telephone, telegraph
and personal interviews and may request brokers, dealers and other nominee
shareholders to forward materials relating to the offer to beneficial owners.
The Information Agent and the Depositary will each receive reasonable and
customary compensation for their respective services, will be reimbursed by us
for reasonable out-of-pocket expenses and will be indemnified against certain
liabilities in connection with the offer, including liabilities under the
federal securities laws.
Salomon Smith Barney administers our Employee Stock Purchase Plan. Salomon
Smith Barney will receive reasonable and customary compensation for its
services as plan administrator in connection with the offer and will be
reimbursed for certain out-of-pocket costs.
Putnam Fiduciary Trust Company acts as Trustee of our 401(k) Retirement
Savings Plan. Putnam Fiduciary Trust Company will be reimbursed for certain
out-of-pocket costs in connection with the offer.
We will not pay any fees or commissions to brokers, dealers or other persons
(other than fees to the Dealer Managers and the Information Agent as described
above) for soliciting tenders of shares pursuant to the offer. Shareholders
holding shares through brokers or banks are urged to consult the brokers or
banks to determine whether transaction costs may apply if shareholders tender
shares
27
<PAGE>
through the brokers or banks and not directly to the Depositary. We will,
however, upon request, reimburse brokers, dealers and commercial banks for
customary mailing and handling expenses incurred by them in forwarding the
offer and related materials to the beneficial owners of shares held by them as
a nominee or in a fiduciary capacity. No broker, dealer, commercial bank or
trust company has been authorized to act as our agent or the agent of, the
Dealer Managers, the Information Agent or the Depositary for purposes of the
offer. We will pay or cause to be paid all stock transfer taxes, if any, on
our purchase of shares except as otherwise provided in Instruction 7 in the
Letter of Transmittal.
17. Miscellaneous.
We are not aware of any jurisdiction where the making of the offer is not in
compliance with applicable law. If we become aware of any jurisdiction where
the making of the offer or the acceptance of shares pursuant to the offer is
not in compliance with any valid applicable law, we will make a good faith
effort to comply with the applicable law. If, after a good faith effort, we
cannot comply with the applicable law, the offer will not be made to, nor will
tenders be accepted from or on behalf of, the holders of shares residing in
that jurisdiction. 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 our behalf by the Dealer Managers or one or more
registered brokers or dealers licensed under the laws of the jurisdiction.
Pursuant to Rule 13e-4 promulgated under the Exchange Act, we have filed
with the SEC an Issuer Tender Offer Statement on Schedule TO, which contains
additional information relating to the offer. The Schedule TO, including the
exhibits and any amendments thereto, may be examined, and copies may be
obtained, at the same places and in the same manner set forth in Section 10
with respect to information concerning us.
Tendering shareholders should rely only on the information contained in this
document or to which we have referred them. We have not authorized anyone to
provide tendering shareholders with information or make any representation on
behalf of us in connection with this offer other than those contained in this
Offer to Purchase or in the related Letter of Transmittal. If given or made,
tendering shareholders should not rely on that information or representation
as having been authorized by us.
Sylvan Learning Systems, Inc.
March 21, 2000
28
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for shares and any other
required documents should be sent or delivered by each shareholder or the
shareholder's broker, dealer, commercial bank, trust company or nominee to the
Depositary at one of its addresses set forth below. To confirm delivery of
shares, shareholders are directed to contact the Depositary.
The Depositary for the offer is:
First Union National Bank
By Mail: By Overnight Delivery: By Hand Delivery:
First Union National First Union National First Union National
Bank Bank Bank
1525 West W.T. Harris 1525 West W.T. Harris 1525 West W.T. Harris
Blvd Blvd. Blvd.
Charlotte, NC 28288-1153 Charlotte, NC 28262 Building 3C3
Attn: Reorg Dept. Attn: Reorg Dept. Charlotte, NC 28262-1153
Attn: Reorg Dept.
Facsimile Transmission:
(704) 590-7628
Confirm Receipt of Facsimile by Telephone:
(704) 590-7408
Tendering shareholders may request additional copies of this offer, the Letter
of Transmittal or the Notice of Guaranteed Delivery and direct questions and
requests for assistance to the Information Agent or Dealer Managers at their
respective addresses and telephone numbers set forth below.
The Information Agent for the offer is:
D.F. King & Co., Inc.
77 Water Street, 20th Floor
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 487-4870
The Dealer Managers for the offer are:
Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
(212) 902-1000 (Call Collect)
<PAGE>
EXHIBIT 99(a)(1)(ii)
Letter of Transmittal
To Tender Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Sylvan Learning Systems, Inc.
Pursuant to the Offer to Purchase
Dated March 21, 2000
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, EASTERN TIME, ON MONDAY, APRIL 17, 2000, UNLESS THE OFFER IS
EXTENDED.
The Depositary for the offer is:
First Union National Bank
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand Delivery:
First Union National Bank First Union National Bank First Union National Bank
1525 West W.T. Harris Blvd. 1525 West W.T. Harris Blvd. 1525 West W.T. Harris Blvd.
Charlotte, NC 28288-1153 Charlotte, NC 28262-1153 Building 3C3
Attn: Reorg Dept. Attn: Reorg Dept. Charlotte, NC 28262
Attn: Reorg Dept.
</TABLE>
This Letter of Transmittal, including the accompanying instructions, should
be read carefully before this Letter of Transmittal is completed.
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Owner(s)
(Please fill in, if blank, exactly as name(s) Certificate(s) Enclosed
appear(s) on Share Certificate(s)) (attach signed list if necessary)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total
Number of
Shares
Share Evidenced by Number
Certificate Share of Shares
Number(s)* Certificate(s) Tendered**
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
Total Shares -----------------------------------------------
(Attach additional signed list if necessary. See Instruction 9.)
- -------------------------------------------------------------------------------------------------------
</TABLE>
Indicate in this box the order (by certificate number) in which
shares are to be purchased in the event of proration.***
1st: 2nd: 3rd: 4th: 5th:
* DOES NOT need to be completed by shareholders tendering shares by book-
entry transfer.
** Unless otherwise indicated, it will be assumed that all shares evidenced
by each certificate delivered to the Depositary are being tendered hereby.
See Instruction 4.
*** If you do not designate an order, in the event less than all shares
tendered are purchased due to proration, shares will be selected for
purchase by the Depositary.
Delivery of this Letter of Transmittal to an address other than as set forth
above will not constitute a valid delivery. Deliveries to Sylvan will not be
forwarded to the Depositary and therefore will not constitute valid delivery.
Deliveries to the Book-Entry Transfer Facility will not constitute valid
delivery to the Depositary. Deliveries of this Letter of Transmittal for
shares held in Sylvan's 401(k) Retirement Savings Plan or Sylvan's Employee
Stock Purchase Plan will not constitute valid direction to the trustee of the
savings plan to tender shares.
1
<PAGE>
This Letter of Transmittal is to be completed only if (a) certificates
representing shares are to be forwarded herewith, or (b) unless an Agent's
Message (as defined in the Offer to Purchase) is used or the acknowledgement
required by the Automated Tender Offer Program is provided, a tender of shares
is to be made concurrently by book-entry transfer to the account maintained by
the Depositary at The Depositary Trust Company (the "Book-Entry Transfer
Facility") pursuant to Section 3 of the Offer to Purchase. Shareholders who
desire to tender shares pursuant to the offer, but whose share certificates
are not immediately available or who cannot deliver the certificates and all
other documents required by this Letter of Transmittal to the Depositary on or
before the Expiration Date (as defined in the Offer to Purchase), or who
cannot comply with the procedure for book-entry transfer on a timely basis,
may nevertheless tender their shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2.
This Letter of Transmittal may not be used for shares held in Sylvan's
Employee Stock Purchase Plan. See Instruction 17. Participants in the Employee
Stock Purchase Plan must follow the instructions in the "Letter to
Participants in Sylvan's Employee Stock Purchase Plan" and related materials
sent to them separately.
If participants in Sylvan's Employee Stock Purchase Plan own shares apart
from the Employee Stock Purchase Plan that they desire to tender, such holders
must both submit this Letter of Transmittal to tender the non-employee stock
purchase plan shares, and follow the instructions described in the "Letter to
Participants in Sylvan's Employee Stock Purchase Plan" and related materials
sent to them separately to tender shares held in their account under the
Employee Stock Purchase Plan.
This Letter of Transmittal may not be used for shares held in Sylvan's
401(k) Retirement Savings Plan. See Instruction 18. Participants in the
savings plan must follow the instructions in the "Letter to Participants in
Sylvan's 401(k) Retirement Savings Plan" and related materials sent to them
separately. Putnam Fiduciary Trust Company, the trustee for Sylvan's 401(k)
Retirement Savings Plan and holder of record, will submit one Letter of
Transmittal for the savings plan on behalf of all of the tendering
participants in Sylvan's 401(k) Retirement Savings Plan.
If participants in Sylvan's 401(k) Retirement Savings Plan own shares apart
from the savings plan that they desire to tender, such holders must both
submit this Letter of Transmittal to tender the non-savings plan shares, and
follow the instructions described in the "Letter to Participants in Sylvan's
401(k) Retirement Savings Plan" and related materials sent to them separately
to tender shares allocated to their savings plan account.
2
<PAGE>
Check only one box. If more than one box is checked or if no box is checked,the
shares will not be properly tendered.
Shares Tendered at Price Determined by Shareholder
(See Instruction 5)
By checking one of the following boxes below instead of the box under
"Shares Tendered at a Price Determined Pursuant to the Offer," the
undersigned hereby tenders shares at the price checked. This action could
result in none of the shares being purchased if the purchase price
determined by Sylvan for the shares is less than the price checked below. A
shareholder who desires to tender shares at more than one price must
complete a separate Letter of Transmittal for each price at which shares
are tendered. The same shares cannot be tendered at more than one price.
Price (In Dollars) per Share at Which Shares Are Being Tendered
[_] $15.250 [_] $16.000 [_] $16.750
[_] $15.375 [_] $16.125 [_] $16.875
[_] $15.500 [_] $16.250 [_] $17.000
[_] $15.625 [_] $16.375 [_] $17.125
[_] $15.750 [_] $16.500 [_] $17.250
[_] $15.875 [_] $16.625 [_] $17.375
[_] $17.500
OR
Shares Tendered at Price Determined Pursuant to the Offer
(See Instruction 5)
[_]The undersigned wants to maximize the chance of having Sylvan purchase all
of the shares the undersigned is tendering (subject to the possibility of
proration). Accordingly, by checking this one box instead of one of the
price boxes above, the undersigned hereby tenders shares and is willing to
accept the purchase price determined by Sylvan in accordance with the
terms of the offer. This action could result in receiving a price per
share of as low as $15.25.
3
<PAGE>
Odd Lots
(See Instruction 8)
To be completed only if shares are being tendered by or on behalf of a
person owning, beneficially or of record, an aggregate of fewer than 100
shares (not including any shares held in Sylvan's Employee Stock Purchase
Plan or in Sylvan's 401(k) Retirement Savings Plan). The undersigned either
(check one box):
[_]is the beneficial or record owner of an aggregate of fewer than 100
shares, all of which are being tendered; or
[_]is a broker, dealer, commercial bank, trust company, or other nominee that
(a) is tendering for the beneficial owner(s), shares with respect to which
it is the record holder, and (b) believes, based upon representations made
to it by the beneficial owner(s), that each such person is the beneficial
owner of an aggregate of fewer than 100 shares and is tendering all of the
shares.
In addition, the undersigned is tendering shares either (check one box):
[_]at the purchase price, as the same it will be determined by Sylvan in
accordance with the terms of the offer (persons checking this box need not
indicate the price per share above); or
[_]at the price per share indicated above in the section captioned "Price (In
Dollars) per Share at Which Shares Are Being Tendered."
Conditional Tender
(See Instruction 16)
A tendering shareholder may condition his or her tender of shares upon
Sylvan purchasing a specified minimum number of the shares tendered, all as
described in Section 6 of the Offer to Purchase. Unless at least that minimum
number of shares you indicate below is purchased by Sylvan pursuant to the
terms of the offer, none of the shares tendered will be purchased. It is the
tendering shareholder's responsibility to calculate that minimum number of
shares that must be purchased if any are purchased, and each shareholder is
urged to consult his or her own tax advisor. Unless this box has been checked
and a minimum specified, the tender will be deemed unconditional.
[_]The minimum number of shares that must be purchased, if any are purchased,
is: shares.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, Sylvan may terminate or amend the offer or may postpone
the acceptance for payment of, or the payment for, shares tendered or may
accept for payment fewer than all of the shares tendered. In any event, the
undersigned understands that certificate(s) for any shares not tendered or not
purchased will be returned to the undersigned at the address indicated above,
unless otherwise indicated under the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" below.
The undersigned understands that acceptance of shares by Sylvan for payment
will constitute a binding agreement between the undersigned and Sylvan upon
the terms and subject to the conditions of the offer.
The check for the aggregate net purchase price for the shares tendered and
purchased will be issued to the order of the undersigned and mailed to the
address indicated above, unless otherwise indicated under the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" below. The undersigned acknowledges that Sylvan has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
shares from the name of its registered holder(s), or to order the registration
or transfer of any shares tendered by book-entry transfer, if Sylvan does not
purchase any of the shares.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS (See SPECIAL DELIVERY INSTRUCTIONS
Instructions 1, 6, 7 and 10) (See Instructions 1, 6, 7 and 10)
To be completed only if certifi- To be completed only if certifi-
cate(s) for shares not tendered cate(s) for shares not tendered
or not purchased and/or any check or not purchased and/or any check
for the purchase price are to be for the purchase price is to be
issued in the name of someone mailed or sent to someone other
other than the undersigned, or if than the undersigned, or to the
shares tendered hereby and deliv- undersigned at an address other
ered by book-entry transfer which than that designated above.
are not purchased are to be re-
turned by credit to an account at Mail:[_] Check
the Book-Entry Transfer Facility [_] Share Certificate(s) to:
other than that designated above.
Name: ____________________________
Issue:[_] Check (Please Print)
[_] Share Certificate(s) to:
Address :_________________________
Name: ____________________________
(Please Print) __________________________________
(Include Zip Code)
Address: _________________________
__________________________________
(Include Zip Code)
__________________________________
(Tax Identification or Social
Security Number)
(See Substitute Form W-9)
[_]Credit shares delivered by
book-entry transfer and not
purchased to the account set
forth below:
Account Number: __________________
5
<PAGE>
[_]Check here if any certificate representing shares tendered hereby has been
lost, stolen, destroyed or mutilated and completely fill in the following
information. If you have lost certificates valued at $100,000 or more, or
if these certificates are part of an estate or trust, please call First
Union National Bank at (800) 829-8432 for additional instructions. Complete
this form only if you cannot locate some or all of your Sylvan common stock
certificate(s). Please print clearly.
Affidavit of Lost or Destroyed Certificate(s)
This affidavit can only be used until the Expiration Date. After the
Expiration Date please call First Union National Bank at (800) 829-8432.
Affidavit of Lost or Destroyed Certificate(s)
STATE OF
ss.
COUNTY OF
The undersigned (hereinafter called "Deponent"), being duly sworn, deposes
and says that:
(1) Deponent is an adult whose mailing address is:
- -------------------------------------------------------------------------------
and is the owner of or is acting in a representative or fiduciary capacity
with respect to certain securities (describe type of security, identification
number and number of shares or face value):
Certificate No(s):
issued by Sylvan Learning Systems, Inc. and registered in the name of: ________
(2) Deponent further says that the aforesaid security or securities
(hereinafter called the "Original", whether one or more) have been lost,
stolen, destroyed or misplaced under the following circumstances:______________
- -------------------------------------------------------------------------------
(3) That said Original (was) (was not) endorsed. (If endorsed, describe form
of endorsement and state whether signature was guaranteed.)
(4) Deponent has made or caused to be made diligent search for Original, and
has been unable to find or recover same, and that Deponent was the
unconditional owner of Original at the time of loss, and is entitled to the
full and exclusive possession thereof; that neither the Original nor the
rights of Deponent therein have, in whole or in part, been assigned,
transferred, hypothecated, pledged or otherwise disposed of, in any manner
whatsoever, and that no person, firm or corporation other than Deponent has
any right, title, claim, equity or interest in, to, or respecting Original or
the proceeds thereof, except as may be set forth in Statement (5) following.
(5) (If Deponent's interest in the Original is in a representative or
fiduciary capacity, indicate below the designation of such capacity, i.e.,
Administrator, Executor, etc. and the title of the estate, as follows):
Deponent is of the estate of ;
(Specify names of any other persons having an interest in the Original. List
them below and indicate the nature of their interest, such as heir, legatee,
etc.)
<TABLE>
<CAPTION>
Name Interest
---- --------
<S> <C>
</TABLE>
(6) Deponent makes this affidavit for the purpose of requesting and inducing
Sylvan and its agents to issue new securities in substitution for the Original
and Seaboard Surety Company to assume liability in respect thereof under its
Indemnity Bond.
(7) Deponent agrees that if said Original should ever come into Deponent's
hands, custody or power, Deponent will immediately and without consideration
surrender Original to Sylvan, its transfer agents, subscription agents,
trustees or Seaboard Surety Company for cancellation.
(8) Signed, sealed and dated: , 2000
Signature of Deponent Signature of Deponent
Sworn to and subscribed before
Sworn to and subscribed before me me this day of , 2000.
this day of , 2000.
NOTARY PUBLIC NOTARY PUBLIC
(Affix Notarial Seal) (Affix Notarial Seal)
My Commission expires: My Commission expires:
6
<PAGE>
See below terms and conditions
for shareowner lost certificate replacements under $100,000
Replacement Insurance Premium Calculation for lost common stock
certificates.
------------- X $0.37 = --------------------
Shares Lost Insurance Premium Total Premium Due*
Per Share
* The minimum premium due is $25.00
Please make your check payable to Seaboard Surety Company and enclose it
with this Letter of Transmittal.
Terms and conditions for shareholder lost certificate replacements under
$100,000
By signing this Letter of Transmittal, I certify that I am the lawful owner
of the shares described on the front of this form, that these shares have not
been pledged or endorsed and that no other person, firm, corporation, agency
or government has asserted any right or title, claim equity or interest in
this (these) certificate(s). I have made a diligent search for the
certificate(s), and I have been unable to find it (them). I hereby agree (for
myself, my heirs, assigns and personal representatives), in consideration of
the exchange of the shares represented by certificate(s), to completely
indemnify, protect and hold harmless Seaboard Surety Company, Sylvan Learning
Systems, Inc., First Union National Bank, and their respective affiliates
collectively, from and against any and all losses, costs and damages which
they may be subject to, or liable for, as a result of the action taken in
honoring the affidavit provided. I agree that this form is attached to and
made part of a blanket bond underwritten by Seaboard Surety Company to
protect the foregoing, Sylvan and First Union National Bank. I agree to
surrender the certificate(s) for its (their) cancellation if I find it (them)
at any time.
[_]Check here if tendered shares are being delivered by book-entry transfer
to an account maintained by the Depositary at the Book-Entry Transfer
Facility and complete the following:
Name of Tendering Institution: ______________________________________________
Account No.: ____________________________
Transaction Code No.: ___________________
[_]Check here if shares are being tendered pursuant to a notice of
guaranteed delivery previously sent to the Depositary and complete the
following:
Name(s) of Registered Holder(s): __________________________________________
Date of execution of Notice of Guaranteed Delivery: , 2000
Name of Institution that Guaranteed Delivery: _____________________________
Window Ticket Number (if any): ____________________________________________
7
<PAGE>
Note: Signatures must be provided below.
Please read the accompanying instructions carefully
To First Union National Bank:
The undersigned hereby tenders to Sylvan Learning Systems, Inc., a Maryland
corporation, the above-described shares of Sylvan's common stock, $0.01 par
value per share, at the price per share indicated in this Letter of
Transmittal, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated March 21,
2000, receipt of which is hereby acknowledged, and in this Letter of
Transmittal which, as amended or supplemented from time to time, together
constitute the offer. All shares tendered and purchased will include the
associated preferred stock purchase rights issued pursuant to the Amended and
Restated Rights Agreement dated as of December 18, 1999 between Sylvan and
First Union National Bank, as rights agent, and, unless the context otherwise
requires, all references to shares include the associated preferred stock
purchase rights.
Subject to, and effective upon, acceptance for payment of the shares
tendered in accordance with the terms and subject to the conditions of the
offer, including, if the offer is extended or amended, the terms and
conditions of the extension or amendment, the undersigned agrees to sell,
assign and transfer to, or upon the order of, Sylvan all right, title and
interest in and to all shares tendered and orders the registration of all
shares if tendered by book-entry transfer and irrevocably constitute and
appoint the Depositary as the true and lawful agent and attorney-in-fact of
the undersigned with respect to the shares with full knowledge that the
Depositary also acts as the agent of Sylvan, with full power of substitution
(the power of attorney being deemed to be an irrevocable power coupled with an
interest), to:
(a) deliver certificate(s) representing the shares or transfer ownership
of the shares on the account books maintained by the Book-Entry Transfer
Facility, together, in either case, with all accompanying evidences of
transfer and authenticity, to or upon the order of Sylvan upon receipt by
the Depositary, as the undersigned's agent, of the purchase price with
respect to the shares;
(b) present certificates for the shares for cancellation and transfer on
Sylvan's books; and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of the shares, subject to the next paragraph, all in accordance
with the terms and subject to the conditions of the offer.
The undersigned covenants, represents and warrants to Sylvan that:
(1) the undersigned has full power and authority to tender, sell, assign
and transfer the shares (including the associated preferred stock purchase
rights) tendered hereby and when and to the extent accepted for payment,
Sylvan will acquire good, marketable and unencumbered title to the tendered
shares (including the associated preferred stock purchase rights), free and
clear of all security interests, liens, restrictions, charges,
encumbrances, conditional sales agreements or other obligations relating to
the sale or transfer of the shares, and not subject to any adverse claims;
(2) the undersigned understands that tenders of shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the instructions will constitute the undersigned's acceptance of the
terms and conditions of the offer, including the undersigned's
representation and warranty that (i) the undersigned has a "net long
position," within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, in the shares or equivalent securities at
least equal to the shares being tendered, and (ii) the tender of shares
complies with Rule 14e-4;
(3) the undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or Sylvan to be necessary or
desirable to complete the sale, assignment and transfer of the shares
tendered; and
(4) the undersigned has read, understands and agrees to all of the terms
of the offer.
8
<PAGE>
The undersigned understands that tenders of shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions will constitute a binding agreement between the undersigned and
Sylvan upon the terms and subject to the conditions of the offer. The
undersigned acknowledges that under no circumstances will Sylvan pay interest
on the purchase price, including without limitation, by reason of any delay in
making payment.
All authority conferred or agreed to be conferred will survive the death or
incapacity of the undersigned, and any obligation of the undersigned will be
binding on the heirs, personal representatives, executors, administrators,
successors, assigns, trustees in bankruptcy and legal representatives of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The name(s) and address(es) of the registered holder(s) should be printed,
if they are not already printed above, exactly as they appear on the
certificates representing shares tendered. The certificate numbers, the number
of shares represented by the certificates and the number of shares that the
undersigned wishes to tender, should be set forth in the appropriate boxes
above. The price at which the shares are being tendered should be indicated in
the box below.
The undersigned understands that Sylvan will determine a single per share
price, not greater than $17.50 nor less than $15.25, that it will pay for
shares properly tendered, taking into account the number of shares tendered
and the prices specified by tendering shareholders. Sylvan will select the
lowest purchase price that will allow it to buy 9,500,000 shares or, if a
lesser number of shares are properly tendered, all shares that are properly
tendered and not withdrawn. All shares acquired in the offer will be acquired
at the same purchase price. All shares properly tendered at prices at or below
the purchase price and not properly withdrawn will be purchased, subject to
the conditions of the offer and the "odd lot" priority, proration and
conditional tender provisions described in the Offer to Purchase. Shares
tendered at prices in excess of the purchase price that is determined by
Sylvan and shares not purchased because of proration or conditional tenders
will be returned.
9
<PAGE>
IMPORTANT
SHAREHOLDERS SIGN HERE
(Please Complete and Return the Attached Substitute Form W-9.)
(Must be signed by the registered holder(s) exactly as
such holder(s) name(s) appear(s) on certificate(s) for
shares or on a security position listing or by
person(s) authorized to become the registered
holder(s) thereof by certificates and documents
transmitted with this Letter of Transmittal. If
signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation
or other person acting in a fiduciary or
representative capacity, please set forth full title
and see Instruction 6.)
.......................................................
.......................................................
(Signature(s) of Owner(s))
Dated: .........................................., 2000
Name(s): ..............................................
................................................
(Please Print)
Capacity (full title): ................................
Address: ..............................................
................................................
(Include Zip Code)
Daytime Area Code and Telephone Number: ...............
Tax Identification or
Social Security Number: ...............................
(SEE SUBSTITUTE FORM W-9)
Guarantee of Signature(s) (See Instructions 1 and 6)
Authorized Signature: .................................
Name: .................................................
(Please Print)
Title: ................................................
Name of Firm: .........................................
Address: ..............................................
(Include Zip Code)
Area Code and Telephone Number: .......................
Dated: ........................................., 2000
10
<PAGE>
PAYER: FIRST UNION NATIONAL BANK
Part I--TAXPAYER
IDENTIFICATION NUMBER-FOR ----------------------
SUBSTITUTE ALL ACCOUNTS, ENTER Social security number
Form W-9 TAXPAYER IDENTIFICATION OR
NUMBER IN THE BOX AT RIGHT ----------------------
Department of AND CERTIFY BY SIGNING AND Employer identification
the Treasury DATING BELOW. number
Internal Note: If the account is in
Revenue more than one name, see the
Service chart in the enclosed
Guidelines to determine
which number to give the
payer.
-------------------------------------------------------
Part II--For payees exempt from backup withholding,
please write "EXEMPT" here (see the enclosed
Guidelines):
------------------------------------------------------
--------------------------------------------------------
Payer's Request for Part III--Certification--UNDER PENALTIES OF PERJURY,
Taxpayer I CERTIFY THAT (1) The number shown on this form is
Identification my correct Taxpayer Identification Number (or I am
Number (TIN) waiting for a number to be issued to 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 be-
cause of underreporting interest or dividends on your
tax return and you have not been notified by the IRS
that you are no longer subject to backup withholding.
(Also, see instructions in the enclosed Guidelines.)
Signature: ___________________________________________
Date: ________, 2000
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 are awaiting (or will soon apply for) a taxpayer
identification number.
Certificate of Awaiting Taxpayer Identification Number
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and that I mailed or delivered an application to
receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office (or I intend to mail
or deliver an application in the near future). I understand that,
notwithstanding the information I provided in Part 3 of the Substitute Form
W-9 above (and the fact that I have completed this Certificate of Awaiting
Taxpayer Identification Number), if I do not provide a taxpayer
identification number to the Depositary within sixty (60) days, the
Depositary is required to withhold 31% of all cash payments made to me
thereafter until I provide a number.
Signature _________________________________ Date: ____________, 2000
Name (Please Print) __________________________________________________________
Address (Please Print) _______________________________________________________
11
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer.
1. Guarantee of Signatures. No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered holder of the
shares (which term, for these purposes, includes any participant in the
Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of the shares) tendered exactly as the name of the
registered holder appears on the certificate(s) for the shares tendered
with this Letter of Transmittal and payment and delivery are to be made
directly to the owner unless the owner has completed either the box
entitled "Special Payment Instructions" or "Special Delivery Instructions"
above; or
(b) the shares are tendered for the account of a bank, broker, dealer,
credit union, savings association or other entity which is a member in good
standing of the Securities Transfer Agents Medallion Program or a bank,
broker, dealer, credit union, savings association or other entity which is
an "eligible guarantor institution," as that term is defined in Rule 17Ad-
15 promulgated under the Securities Exchange Act of 1934, as amended (each
of the foregoing constituting an "Eligible Institution").
In all other cases, an Eligible Institution must guarantee all signatures on
this Letter of Transmittal. See Instruction 6.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed only if certificates
for shares are delivered with it to the Depositary (or the certificates will
be delivered pursuant to a Notice of Guaranteed Delivery previously sent to
the Depositary) or if a tender for shares is being made concurrently pursuant
to the procedure for tender by book-entry transfer set forth in Section 3 of
the Offer to Purchase. Certificates for all physically tendered shares must be
delivered or mailed or confirmation of a book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of shares tendered
electronically must be received or a valid tender through the Book-Entry
Transfer Facility's Automated Tender Offer Program must be made, and in each
case a properly completed and duly executed Letter of Transmittal (or manually
signed facsimile of the Letter of Transmittal), including any required
signature guarantees, an Agent's Message in the case of a book-entry transfer
or the specific acknowledgement in the case of a tender through the Automated
Tender Offer Program of the Book-Entry Transfer Facility, and any other
documents required by this Letter of Transmittal, should be mailed or
delivered to the Depositary at the appropriate address set forth in this
document and must be delivered to the Depositary on or before the Expiration
Date. Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Depositary.
Participants in the Book-Entry Transfer Facility may tender their shares in
accordance with the Automated Tender Offer Program to the extent it is
available to such participants for the shares they wish to tender. A
shareholder tendering through the Automated Tender Offer Program must
expressly acknowledge that the shareholder has received and agreed to be bound
by the Letter of Transmittal and that the Letter of Transmittal may be
enforced against such shareholder.
Shareholders whose certificates are not immediately available or who cannot
deliver certificates for their shares and all other required documents to the
Depositary before the Expiration Date, or whose shares cannot be delivered on
a timely basis pursuant to the procedures for book-entry transfer, must, in
any case, tender their shares by or through any Eligible Institution by
properly completing and duly executing and delivering a Notice of Guaranteed
Delivery (or facsimile of the Notice of Guaranteed Delivery) and by otherwise
complying with the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase. Pursuant to that procedure, certificates for all physically
tendered shares or book-entry confirmations, as the case may be, as well as
this properly completed and duly executed Letter of Transmittal (or manually
signed facsimile of this Letter of Transmittal), an Agent's Message in the
case of a book-entry transfer or the specific acknowledgement in the case of a
tender
12
<PAGE>
through the Automated Tender Offer Program of the Book-Entry Transfer
Facility, and all other documents required by this Letter of Transmittal, must
be received by the Depositary within three (3) Nasdaq Stock Market trading
days after receipt by the Depositary of the Notice of Guaranteed Delivery, all
as provided in Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth therein.
For shares to be tendered validly pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
The method of delivery of all documents, including certificates for shares,
the Letter of Transmittal and any other required documents, is at the election
and risk of the tendering shareholder. If delivery is by mail, Sylvan
recommends that you use registered mail with return receipt requested,
properly insured. In all cases, sufficient time should be allowed to ensure
timely delivery.
Except as specifically permitted by Section 6 of the Offer to Purchase,
Sylvan will not accept any alternative, conditional or contingent tenders, nor
will it purchase any fractional shares, except as expressly provided in the
Offer to Purchase. All tendering shareholders, by execution of this Letter of
Transmittal (or a facsimile of this Letter of Transmittal), waive any right to
receive any notice of the acceptance of their tender.
3. Inadequate Space. If the space provided in the box entitled "Description
of Shares Tendered" above is inadequate, the certificate numbers and/or the
number of shares should be listed on a separate signed schedule and attached
to this Letter of Transmittal.
4. Partial Tenders and Unpurchased Shares. (Not applicable to shareholders
who tender by book-entry transfer.) If fewer than all of the shares evidenced
by any certificate are to be tendered, fill in the number of shares that are
to be tendered in the column entitled "Number of Shares Tendered" in the box
entitled "Description of Shares Tendered" above. In that case, if any tendered
shares are purchased, a new certificate for the remainder of the shares
(including any shares not purchased) evidenced by the old certificate(s) will
be issued and sent to the registered holder(s), unless otherwise specified in
either the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" in this Letter of Transmittal, as soon as
practicable after the Expiration Date. Unless otherwise indicated, all shares
represented by the certificate(s) set forth above and delivered to the
Depositary will be deemed to have been tendered.
5. Indication of Price at Which Shares are Being Tendered. For shares to be
properly tendered, the shareholder must either (1) check the box next to the
section captioned "Shares Tendered at Price Determined Pursuant to the Offer"
in this Letter of Transmittal or (2) check one of the boxes in the section
captioned "Price (In Dollars) per Share at Which Shares Are Being Tendered" in
this Letter of Transmittal indicating the price at which the shareholder is
tendering shares. Only one box may be checked. If more than one box is checked
or if no box is checked, the shares will not be properly tendered. A
shareholder wishing to tender a portion(s) of the holder's shares at different
prices must complete a separate Letter of Transmittal for each price at which
the holder wishes to tender each portion of the holder's shares. The same
shares cannot be tendered (unless previously and properly withdrawn as
provided in Section 4 of the Offer to Purchase) at more than one price.
6. Signatures on Letter Of Transmittal; Stock Powers and Endorsements.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the shares tendered, the signature(s) must correspond exactly with the name(s)
as written on the face of the certificate(s) without any change whatsoever.
13
<PAGE>
(b) If the shares tendered are registered in the names of two or more joint
holders, each holder must sign this Letter of Transmittal.
(c) If any 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 (or facsimile) as there are different
registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered holder(s) of
the shares tendered, no endorsement(s) of certificate(s) representing the
shares or separate stock power(s) are required unless payment is to be made or
the certificate(s) for shares not tendered or not purchased are to be issued
to a person other than the registered holder(s). Signature(s) on the
certificate(s) 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 certificate(s) listed, or if payment is to be made or certificate(s) for
shares not tendered or not purchased are to be issued to a person other than
the registered holder(s), the certificate(s) must be endorsed or accompanied
by appropriate stock power(s), in either case signed exactly as the name(s) of
the registered holder(s) appears on the certificate(s), and the signature(s)
on the certificate(s) or stock power(s) must be guaranteed by an Eligible
Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificate(s) or stock power(s) is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or any other person acting in a fiduciary or
representative capacity, that person should so indicate when signing this
Letter of Transmittal and must submit proper evidence satisfactory to Sylvan
of his or her authority to so act.
7. Stock Transfer Taxes. Except as provided in this Instruction 7, no stock
transfer tax stamps or funds to cover tax stamps need accompany this Letter of
Transmittal. Sylvan will pay any stock transfer taxes payable on the transfer
to it of shares purchased pursuant to the offer. If, however, either (a)
payment of the purchase price for shares tendered and accepted for purchase is
to be made to any person other than the registered holder(s); (b) shares not
tendered or rejected for purchase are to be registered in the name(s) of any
person(s) other than the registered holder(s); or (c) certificate(s)
representing tendered shares are registered in the name(s) of any person(s)
other than the person(s) signing this Letter of Transmittal, then the
Depositary will deduct from the purchase price the amount of any stock
transfer taxes (whether imposed on the registered holder(s), other person(s)
or otherwise) payable on account of the transfer to that person, unless
satisfactory evidence of the payment of the taxes or any exemption therefrom
is submitted.
8. Odd Lots. As described in Section 1 of the Offer to Purchase, if Sylvan
is to purchase fewer than all shares tendered before the Expiration Date and
not properly withdrawn, the shares purchased first will consist of all shares
properly tendered by any shareholder who owned, beneficially or of record, an
aggregate of fewer than 100 shares (not including any shares held in Sylvan's
Employee Stock Purchase Plan or in Sylvan's 401(k) Retirement Savings Plan),
and who tenders all of the holder's shares at or below the purchase price (an
"Odd Lot Holder"). This preference will not be available unless the section
captioned "Odd Lots" is completed.
9. Order of Purchase in Event of Proration. As described in Section 1 of the
Offer to Purchase, shareholders may designate the order in which their shares
are to be purchased in the event of proration. The order of purchase may have
an effect on the federal income tax treatment of the purchase price for the
shares purchased. See Sections 1 and 14 of the Offer to Purchase.
10. Special Payment and Delivery Instructions. If certificate(s) for shares
not tendered or not purchased and/or check(s) are to be issued in the name of
a person other than the signer of this Letter of Transmittal or if the
certificates and/or checks are to be sent to someone other than the person
signing this Letter of Transmittal or to the signer at a different address,
the box entitled "Special Payment Instructions" and/or the box entitled
"Special Delivery Instructions" on this Letter of Transmittal should be
completed as applicable and signatures must be guaranteed as described in
Instruction 1.
14
<PAGE>
11. Irregularities. All questions as to the number of shares to be accepted,
the price to be paid for the shares and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of shares
will be determined by Sylvan in its sole discretion, which determination will
be final and binding on all parties. Sylvan reserves the absolute right to
reject any or all tenders of shares it determines not to be in proper form or
the acceptance of which or payment for which may, in the opinion of Sylvan's
counsel, be unlawful. Sylvan also reserves the absolute right to waive any of
the conditions of the offer or any defect or irregularity in any tender with
respect to any particular shares or any particular shareholder, and Sylvan's
interpretation of the terms of the offer (including these Instructions) will
be final and binding on all parties. No tender of shares will be deemed to be
properly made until all defects and irregularities have been cured by the
tendering shareholder or waived by Sylvan. Unless waived, any defects or
irregularities in connection with tenders must be cured within that time as
Sylvan will determine. None of Sylvan, the Dealer Managers (as defined in the
Offer to Purchase), the Depositary, the Information Agent (as defined in the
Offer to Purchase) or any other person is or will be obligated to give notice
of any defects or irregularities in tenders and none of them will incur any
liability for failure to give any notice of defect or irregularity.
12. Questions and Requests for Assistance and Additional Copies. You may
request additional copies of this Offer to Purchase, the Letter of Transmittal
or the Notice of Guaranteed Delivery from the Information Agent at its address
and telephone numbers set forth on the back cover of the Offer to Purchase.
13. Tax Identification Number and Backup Withholding. Federal income tax law
generally requires that a shareholder whose tendered shares are accepted for
purchase, or the shareholder's assignee (in either case, the "Payee"), provide
the Depositary with the Payee's correct Taxpayer Identification Number
("TIN"), which, in the case of a Payee who is an individual, is the Payee's
social security number. If the Depositary is not provided with the correct TIN
or an adequate basis for an exemption, the Payee may be subject to penalties
imposed by the Internal Revenue Service and backup withholding in an amount
equal to 31% of the gross proceeds received pursuant to the offer. If
withholding results in an overpayment of taxes, a refund may be obtained.
To prevent backup withholding, each Payee must provide the Payee's correct
TIN by completing the Substitute Form W-9 set forth in this document,
certifying that the TIN provided is correct (or that the Payee is awaiting a
TIN) and that (i) the Payee is exempt from backup withholding, (ii) the Payee
has not been notified by the Internal Revenue Service that the Payee is
subject to backup withholding as a result of a failure to report all interest
or dividends, or (iii) the Internal Revenue Service has notified the Payee
that the Payee is no longer subject to backup withholding.
If the Payee lacks a TIN, the Payee should (i) consult the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 ("W-9 Guidelines") for instructions on applying for a TIN, (ii) write
"Applied For" in the space provided in Part 1 of the Substitute Form W-9, and
(iii) sign and date the Substitute Form W-9 and the Certificate of Awaiting
Taxpayer Identification Number set forth in this document. If the Payee does
not provide the Payee's TIN to the Depositary within sixty (60) days, backup
withholding will begin and continue until the Payee furnishes the Payee's TIN
to the Depositary. Note that writing "Applied For" on the Substitute Form W-9
means that the Payee has already applied for a TIN or that the Payee intends
to apply for one in the near future.
If shares are held in more than one name or are not in the name of the
actual owner, consult the W-9 Guidelines for information on which TIN to
report.
Exempt Payees (including, among others, all corporations and certain foreign
individuals) are not subject to backup withholding and reporting requirements.
To prevent possible erroneous backup withholding, an exempt Payee should write
"Exempt" in Part 2 of the Substitute Form W-9. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on the Substitute Form W-9 for
15
<PAGE>
additional instructions. In order for a nonresident alien or foreign entity to
qualify as exempt, that person must submit a completed IRS Form W-8
Certificate of Foreign Status or a Substitute Form W-8, signed under penalty
of perjury attesting to the exempt status. This form may be obtained from the
Depositary.
14. Withholding For Non-United States Shareholders. Even if a Non-United
States Holder (as defined in Section 14 of the accompanying Offer to Purchase)
has provided the required certification to avoid backup withholding, the
Depositary will withhold United States federal income taxes equal to 30% of
the gross payments payable to a Non-United States Holder or his agent unless
the Depositary determines that a reduced rate of withholding is available
under a tax treaty or that an exemption from withholding is applicable because
the gross proceeds are effectively connected with the conduct of a trade or
business within the United States. To obtain a reduced rate of withholding
under a tax treaty, a Non-United States Holder must deliver to the Depositary
before the payment a properly completed and executed IRS Form 1001. To obtain
an exemption from withholding on the grounds that the gross proceeds paid
pursuant to the offer are effectively connected with the conduct of a trade or
business within the United States, a Non-United States Holder must deliver to
the Depositary a properly completed and executed IRS Form 4224. A Non-United
States Holder that qualifies for an exemption from withholding by delivering
IRS Form 4224 will generally be required to file a United States federal
income tax return and will be subject to United States federal income tax on
income derived from the sale of shares pursuant to the offer in the manner and
to the extent described in Section 14 of the accompanying Offer to Purchase as
if it were a United States Holder. The Depositary will determine a
shareholder's status as a Non-United States Holder and eligibility for a
reduced rate of, or exemption from, withholding by reference to any
outstanding certificates or statements concerning eligibility for a reduced
rate of, or exemption from, withholding (e.g., IRS Form 1001 or IRS Form 4224)
unless facts and circumstances indicate that reliance is not warranted. A Non-
United States Holder may be eligible to obtain a refund of all or a portion of
any tax withheld if the Non-United States Holder meets those tests described
in Section 14 of the accompanying Offer to Purchase that would characterize
the exchange as a sale (as opposed to a dividend) or is otherwise able to
establish that no tax or a reduced amount of tax is due.
Non-United States Holders are urged to consult their tax advisors regarding
the application of United States federal income tax withholding, including
eligibility for a withholding tax reduction or exemption, and the refund
procedure.
15. Lost, Stolen, Destroyed or Mutilated Certificates. If any certificate(s)
representing shares has been lost, stolen, destroyed or mutilated, the
shareholder should do the following:
. Refer to the calculation on the "Affidavit of Lost or Destroyed
Certificate(s)" form for certificate replacements under $100,000;
. Write a check payable to Seaboard Surety Company for the amount of the
replacement premium; and
. Return the "Affidavit of Lost or Destroyed Certificate(s)," the
replacement premium check, a properly completed and executed copy of the
Letter of Transmittal and any certificate(s) you may have in your
possession to the Depositary.
16. Conditional Tenders. As described in Sections 1 and 6 of the Offer to
Purchase, shareholders may condition their tenders on all or a minimum number
of their tendered shares being purchased. If Sylvan is to purchase less than
all of the shares tendered before the Expiration Date and not withdrawn, the
Depositary will perform a preliminary proration, and any shares tendered at or
below the purchase price pursuant to a conditional tender for which the
condition was not satisfied by the preliminary proration will be deemed
withdrawn, subject to reinstatement if such conditional tendered shares are
subsequently selected by random lot for purchase subject to Sections 1 and 6
of the Offer
16
<PAGE>
to Purchase. Conditional tenders will be selected by lot only from
shareholders who tender all of their shares. All tendered shares will be
deemed unconditionally tendered unless the "Conditional Tender" box is
completed. The conditional tender alternative is made available so that a
shareholder may assure that the purchase of shares from the shareholder
pursuant to the offer will be treated as a sale of the shares by the
shareholder, rather than the payment of a dividend to the shareholder, for
federal income tax purposes. Odd Lot Shares, which will not be subject to
proration, cannot be conditionally tendered. It is the tendering shareholder's
responsibility to calculate the minimum number of shares that must be
purchased from the shareholder in order for the shareholder to qualify for
sale (rather than dividend) treatment, and each shareholder is urged to
consult his or her own tax advisor.
In the event of proration, any shares tendered pursuant to a conditional
tender for which the minimum requirements are not satisfied may not be
accepted and thereby will be deemed withdrawn.
17. Sylvan's Employee Stock Purchase Plan. Participants in Sylvan's Employee
Stock Purchase Plan may not use this Letter of Transmittal to direct the
tender of shares held in their account under the Employee Stock Purchase Plan,
but must comply with the instructions found in the "Letter to Participants in
Sylvan's Employee Stock Purchase Plan" sent separately to them. Participants
in the Employee Stock Purchase Plan are urged to carefully read the "Letter to
Participants in Sylvan's Employee Stock Purchase Plan" and related materials
sent to them.
18. Sylvan's 401(k) Retirement Savings Plan. Participants in Sylvan's 401(k)
Retirement Savings Plan may not use this Letter of Transmittal to direct the
tender of shares allocated to their savings plan accounts, but must comply
with the instructions found in the "Letter to Participants in Sylvan's 401(k)
Retirement Savings Plan" sent separately to them. Participants in the savings
plan are urged to carefully read the "Letter to Participants in Sylvan's
401(k) Retirement Savings Plan" and related materials sent to them.
This Letter of Transmittal, properly completed and duly executed (or a
manually signed facsimile of this Letter of Transmittal), together with
certificates representing shares being tendered or confirmation of book-entry)
transfer and all other required documents, or a Notice of Guaranteed Delivery,
must be received before 12:00 Midnight, Eastern time, on the Expiration Date.
Shareholders are encouraged to return a completed Substitute Form W-9 with
this Letter of Transmittal.
The Information Agent for the offer is:
D.F. King & Co., Inc.
77 Water Street, 20th Floor
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 487-4870
The Dealer Managers for the offer are:
Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
(212) 902-1000 (Call Collect)
(800) 323-5678 (Call Toll Free)
17
<PAGE>
EXHIBIT 99(a)(1)(iii)
SYLVAN LEARNING SYSTEMS, INC.
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the offer if certificates evidencing shares of common
stock, $0.01 par value per share, of Sylvan Learning Systems, Inc., a Maryland
corporation, are not immediately available, or if the procedure for book-entry
transfer described in the Offer to Purchase dated March 21, 2000 and the
related Letter of Transmittal, which, as amended or supplemented from time to
time, together constitute the offer, cannot be completed on a timely basis or
time will not permit all required documents, including a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile of the
Letter of Transmittal), an Agent's Message in the case of a book-entry
transfer (as defined in the Offer to Purchase) or the specific acknowledgement
in the case of a tender through the Automated Tender Offer Program of the
Book-Entry Transfer Facility (as defined in the Offer to Purchase), and any
other required documents, to reach the Depositary prior to the Expiration Date
(as defined in the Offer to Purchase).
This Notice of Guaranteed Delivery, properly completed and duly executed,
may be delivered by hand, mail or facsimile transmission to the Depositary.
See Section 3 of the Offer to Purchase.
The Depositary for the offer is:
First Union National Bank
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand Delivery:
First Union National Bank First Union National Bank First Union National Bank
1525 West W.T. Harris Blvd. 1525 West W.T. Harris Blvd. 1525 West W.T. Harris Blvd.
Charlotte, NC 28288-1153 Charlotte, NC 28262-1153 Building 3C3
Attn: Reorg Dept. Attn: Reorg Dept. Charlotte, NC 28262
Attn: Reorg Dept.
</TABLE>
Facsimile Transmission:
(704) 590-7628
Confirm Receipt of Facsimile by Telephone:
(704) 590-7408
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via facsimile transmission
other than as set forth above will not constitute a valid delivery. Deliveries
to Sylvan will not be forwarded to the Depositary and therefore will not
constitute valid delivery. Deliveries to the Book-Entry Transfer Facility will
not constitute valid delivery to the Depositary.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on the Letter of Transmittal is required to be
guaranteed by an Eligible Institution (as defined in the Offer to Purchase)
under the instructions to the Letter of Transmittal, the signature guarantee
must appear in the applicable space provided in the signature box on the
Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned tenders to Sylvan at the price per share indicated in this
Notice of Guaranteed Delivery, upon the terms and subject to the conditions
described in the Offer to Purchase and the related Letter of Transmittal,
receipt of which is hereby acknowledged, the number of shares specified below
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. All shares tendered and purchased will include the
associated preferred stock purchase rights issued pursuant to the Amended and
Restated Rights Agreement dated as of December 18, 1999 between Sylvan and
First Union National Bank, as rights agent, and, unless the context otherwise
requires, all references to shares include the associated preferred stock
purchase rights.
Number of shares to be tendered: shares.
Odd Lots
To be completed ONLY if shares are being tendered by or on behalf of a
person owning beneficially or of record an aggregate of fewer than 100
shares (not including any shares held in Sylvan's Employee Stock Purchase
Plan or in Sylvan's 401(k) Retirement Savings Plan). The undersigned either
(check one box):
[_]is the beneficial or record owner of an aggregate of fewer than 100
shares, all of which are being tendered; or
[_]is a broker, dealer, commercial bank, trust company, or other nominee
that (a) is tendering for the beneficial owner(s) of shares with respect
to which it is the record holder, and (b) believes, based upon
representations made to it by the beneficial owner(s), that each person
was the beneficial or record owner of an aggregate of fewer than 100
shares and is tendering all of those shares.
In addition, the undersigned is tendering shares either (check one box):
[_]at the purchase price determined by Sylvan in accordance with the terms
of the offer (persons checking this box need not indicate the price per
share below); or
[_]at the price per share indicated below in the section captioned "Price
(In Dollars) per Share at Which Shares Are Being Tendered."
Conditional Tender
A tendering shareholder may condition his or her tender of shares upon
Sylvan purchasing a specified minimum number of the shares tendered, all as
described in the Offer to Purchase, particularly in Section 6. Unless at
least the minimum number of shares you indicate below is purchased by Sylvan
pursuant to the terms of the offer, none of the shares tendered by you will
be purchased. It is the tendering shareholder's responsibility to calculate
the minimum number of shares that must be purchased if any are purchased,
and each shareholder is urged to consult his or her own tax advisor. Unless
this box has been completed and a minimum specified, the tender will be
deemed unconditional.
[_]The minimum number of shares that must be purchased, if any are purchased
is: shares.
<PAGE>
Check only one box. If more than one box is checked or if
no box is checked, the shares will not be properly tendered.
Shares Tendered at Price Determined by Shareholder
(See Instruction 5 to the Letter of Transmittal)
By checking one of the following boxes below instead of the box under
"Shares Tendered at Price Determined Pursuant to the Offer," the undersigned
hereby tenders shares at the price checked. This action could result in none
of the shares being purchased if the purchase price determined by Sylvan for
the shares is less than the price checked below. A shareholder who desires to
tender shares at more than one price must complete a separate Letter of
Transmittal for each price at which shares are tendered. The same shares
cannot be tendered at more than one price.
Price (In Dollars) per Share at Which Shares Are Being Tendered
[_]$15.250 [_]$16.000 [_]$16.750
[_]$15.375 [_]$16.125 [_]$16.875
[_]$15.500 [_]$16.250 [_]$17.000
[_]$15.625 [_]$16.375 [_]$17.125
[_]$15.750 [_]$16.500 [_]$17.250
[_]$15.875 [_]$16.625 [_]$17.375
[_]$17.500
OR
Shares Tendered at Price Determined Pursuant to the Offer
(See Instruction 5 to the Letter of Transmittal)
[_]The undersigned wants to maximize the chance of having Sylvan purchase
all of the shares the undersigned is tendering (subject to the
possibility of proration). Accordingly, by checking this one box instead
of one of the price boxes above, the undersigned hereby tenders shares
and is willing to accept the purchase price determined by Sylvan in
accordance with the terms of the offer. This action could result in
receiving a price per share of as low as $15.25.
Signature(s): __________________________________________________________________
Name(s) of Record Holder(s): ___________________________________________________
Please Type or Print
Certificate Nos.: ______________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
Zip Code
Daytime Area Code and Telephone No.: ___________________________________________
Date: ______________, 2000
If shares will be delivered by book-entry transfer, provide the following
information:
Account Number: ________________________________________________________________
<PAGE>
Guarantee
(Not to be used for a signature guarantee.)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity that is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity that is an "eligible guarantor institution," as
that term is defined in Rule 17Ad-15 promulgated under the Securities
Exchange Act of 1934, as amended (each of the foregoing constituting an
"Eligible Institution"), guarantees the delivery to the Depositary of the
shares tendered, in proper form for transfer, or a confirmation that the
shares tendered have been delivered pursuant to the procedure for book-entry
transfer described in the Offer to Purchase into the Depositary's account at
the Book-Entry Transfer Facility, in each case together with a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile of the Letter of Transmittal), an Agent's Message in the case of a
book-entry transfer or the specific acknowledgement in the case of a tender
through the Automated Tender Offer Program of the Book-Entry Transfer
Facility, and any other required documents, all within three (3) Nasdaq
Stock Market trading days after the date of receipt by the Depositary of
this Notice of Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates representing shares to the Depositary within the time period
set forth in the Offer to Purchase. Failure to do so could result in a
financial loss to the Eligible Institution.
Name of Firm: _____________________________
Address: __________________________________
Zip Code: _________________________________
Area Code and Telephone No.: ______________
___________________________________________
Authorized Signature
Name: _____________________________________
Please Print: _____________________________
Title: ____________________________________
Date: __________, 2000
Note: Do not send share certificates with this form. Certificates for shares
should be sent with the Letter of Transmittal.
<PAGE>
EXHIBIT 99(a)(1)(iv)
SYLVAN LEARNING SYSTEMS, INC.
March 21, 2000
To The Participants In Our 401(k) Retirement Savings Plan:
Sylvan Learning Systems, Inc. invites you, as a holder of shares of its
common stock through your participation in Sylvan's 401(k) Retirement Savings
Plan, to tender to it some or all of the shares held in your savings plan
account. We are offering to purchase up to 9,500,000 shares at a price not
greater than $17.50 nor less than $15.25 per share, net to the seller in cash,
without interest, as specified by shareholders tendering their shares.
We will select the lowest purchase price that will allow us to buy 9,500,000
shares or, if a lesser number of shares are properly tendered, all shares that
are properly tendered and not withdrawn. All shares acquired in the offer will
be acquired at the same purchase price.
Our offer is being made upon the terms and subject to the conditions set
forth in the Offer to Purchase and related Letter of Transmittal. The terms
and conditions of the offer are explained in detail in the enclosed Offer to
Purchase and the related Letter of Transmittal. I encourage you to read these
materials carefully before making any decision with respect to the offer.
The offer will expire at 12:00 Midnight, Eastern time, on Monday, April 17,
2000, unless we extend it. If you wish to tender some or all of the shares
held in your savings plan account, you must provide tender instructions to
Putnam Fiduciary Trust Company, as trustee of the savings plan and holder of
record. We have been advised that you must provide these instructions no later
than three business days before the expiration of the offer. If you do not
wish to tender any of the shares allocated to your savings plan account, you
do not need to take any action.
Instructions on how to tender those shares are explained in detail in the
accompanying materials, which you should read and follow carefully. In
general, to tender the shares held in your savings plan account, you must
complete, sign and deliver the enclosed Directions Form to First Union
National Bank in the enclosed self-addressed envelope. If you authorize the
tender of your shares, all such shares will be tendered unless you indicate a
lesser number of shares in the Directions Form. You must indicate the price at
which you want to tender the shares within the range indicated in the
Directions Form and accompanying documents. If your requested tender price is
greater than the purchase price determined by Sylvan, Sylvan will not purchase
your shares and they will remain in your savings plan account.
If you tender shares, the tender proceeds will be reinvested pro-rata in
accordance with your current investment directions for new elective deferral
contributions. However, if your current investment directions for new elective
deferral contributions provide that some or all of your contributions are to
be invested in Sylvan common stock, then that portion of the tender proceeds
will be invested in the Putnam Stable Value Fund. Once the tender proceeds
have been credited to your savings plan account, you may reallocate your
investments among the various investment funds under the savings plan in the
usual manner.
Sylvan's Board of Directors has approved the offer. However, neither Sylvan
nor Sylvan's Board of Directors nor the Dealer Managers is making any
recommendation whether you should tender or refrain from tendering you shares
or at what purchase price you should choose to tender your shares. You must
make your own decision as to whether to tender your shares and, if so, how
many shares to tender and the price or prices at which you will tender them.
In deciding whether to tender and at what purchase price, you should consider
our reasons for making this offer and recent developments announced by Sylvan,
which are discussed in the Offer to Purchase. Our directors and executive
officers have advised us that they do not intend to tender any shares in the
offer.
<PAGE>
Putnam Fiduciary Trust Company will not tender any shares for which it does
not receive directions in good order. Any tender instructions you provide will
be held in strict confidence by Putnam Fiduciary Trust Company and First Union
National Bank and will not be divulged or released to any directors, officers
or employees of Sylvan, except as required by law.
If you have any questions regarding the offer or need assistance in
tendering your shares, please contact D.F. King & Co., Inc., the Information
Agent for the offer, at (800) 487-4870 (toll-free).
Sincerely,
SYLVAN LEARNING SYSTEMS, INC.
/s/ Douglas L. Becker
Douglas L. Becker
Chairman and Chief Executive Officer
2
<PAGE>
Questions and Answers
About the Tender Offer For the Common Stock of Sylvan
That Relate Solely to Participants in Sylvan's 401(k) Retirement Savings Plan
At what price may I tender my shares?
. You may elect to tender your shares at the price determined according to
the offer at a specified price, in increments of $0.125, starting at $15.25
per share up to and including $17.50 per share.
. You must indicate your election as to the number of savings plan shares you
wish to tender and the price at which you want to tender those shares on
the enclosed Directions Form.
Our 401(k) Retirement Savings Plan is prohibited from selling shares to us
for a price that is less than the prevailing market price. Accordingly, if you
elect to tender shares at a price that is lower than the closing market price
of our common stock on the Nasdaq Stock Market at the expiration of the offer,
the tender price you elect will be deemed to have been increased to the
closest tender price that is not less than the closing price on the Nasdaq
Stock Market at the expiration of the offer.
What if my designated price is above Sylvan's purchase price?
. Shares that are tendered at a designated price that is above the purchase
price determined by Sylvan will not be purchased and will remain in your
savings plan account.
How do I tender the shares allocated to my savings plan account?
. You may instruct the trustee to tender some or all of the shares allocated
to your savings plan account by following the instructions in the "Letter
to Participants in Sylvan's 401(k) Retirement Savings Plan" furnished
separately.
. The Directions Form provided separately must be completed and sent to First
Union National Bank in the envelope provided with these documents.
. To have shares properly tendered in the offer, First Union National Bank
must receive the Directions Form no later than 12:00 Midnight, Eastern time
on Wednesday, April 12, 2000, three business days prior to the expiration
of the offer.
How do I withdraw the shares allocated to my savings plan account from the
tender?
. Shares allocated to your savings plan account can be withdrawn from the
tender by notifying First Union National Bank at any time before 12:00
Midnight, Eastern time, on Wednesday, April 12, 2000, three business days
prior to the Expiration Date or at any time after 12:00 Midnight Eastern
time, on Monday, May 15, 2000, if we have not accepted the tendered shares
for payment pursuant to the offer before that date.
. For a withdrawal to be effective, a written, telegraphic or facsimile
transmission form must be timely provided to First Union National Bank at
the address on the back cover of the Offer to Purchase.
Who is the trustee of Sylvan's 401(k) Retirement Savings Plan?
. The trustee of Sylvan's 401(k) Retirement Savings Plan is Putnam Fiduciary
Trust Company.
<PAGE>
. First Union National Bank, as depositary, will advise Putnam Fiduciary
Trust Company of all plan participant instructions and Putnam Fiduciary
Trust Company will tender a Letter of Transmittal on behalf of Sylvan's
401(k) Retirement Savings Plan.
What if I hold shares outside Sylvan's 401(k) Retirement Savings Plan?
. If you hold shares outside Sylvan's 401(k) Retirement Savings Plan, you
will receive, under separate cover, tender offer materials that can be used
to tender the shares held outside Sylvan's 401(k) Retirement Savings Plan.
. Those tender offer materials must not be used to instruct Putnam Fiduciary
Trust Company to tender shares allocated to your savings plan account.
How will the proceeds of the tender of my savings plan shares be invested?
. If you tender shares held in your savings plan account, the tender proceeds
will be reinvested pro-rata in accordance with your current investment
directions for new elective deferral contributions. However, if your
current investment directions for new elective deferral contributions
provide that some or all of your contributions are to be invested in Sylvan
common stock, then that portion of the tender proceeds will be invested in
the Putnam Stable Value Fund. Once the tender proceeds have been credited
to your savings plan accounts, you may reallocate your investments among
the various investment funds under the savings plan in the usual manner.
Can I take advantage of the
"Odd Lot" priority?
. No. Shares held in Sylvan's 401(k) Retirement Savings Plan are not eligible
to avoid proration by virtue of the "odd lot" priority.
Can I make a conditional tender of the shares allocated to my savings plan
account?
. No. Shares held in Sylvan's 401(k) Retirement Savings Plan cannot be
conditionally tendered.
What if I have questions about the tender offer?
. Contact D.F. King & Co., Inc., the Information Agent for the tender offer,
at (800) 487-4870 with any questions about the terms and conditions of the
tender offer or how to tender your shares.
Where do I obtain additional copies of the Letter to Participants in
Sylvan's 401(k) Retirement Savings Plan?
. Additional copies of the Letter to Participants in Sylvan's 401(k)
Retirement Savings Plan and any of the other tender offer documents can be
obtained from the Information Agent.
<PAGE>
EXHIBIT 99(a)(1)(v)
Goldman, Sachs & Co.
85 Broad Street,
New York, NY 10004
SYLVAN LEARNING SYSTEMS, INC.
Offer to Purchase for Cash
by
Sylvan Learning Systems, Inc.
up to 9,500,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a Purchase Price not Greater than $17.50 nor Less Than $15.25 Per Share
The offer, proration period and withdrawal rights will expire at 12:00
Midnight, Eastern Time, on Monday, April 17, 2000, unless the offer is
extended.
March 21, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Sylvan Learning Systems, Inc., a Maryland corporation, is offering to
purchase shares of its common stock, $0.01 par value per share. The offer is
for the purchase of up to 9,500,000 shares at a price not greater than $17.50
nor less than $15.25 per share, net to the seller in cash, without interest,
as specified by shareholders tendering their shares.
Sylvan will select the lowest purchase price that will allow it to buy
9,500,000 shares or, if a lesser number of shares are properly tendered, all
shares that are properly tendered and not withdrawn. All shares acquired in
the offer will be acquired at the same purchase price.
Sylvan's offer is being made upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of Transmittal,
which, as amended or supplemented from time to time, together constitute the
offer. All shares tendered and purchased will include the associated preferred
stock purchase rights issued pursuant to the Amended and Restated Rights
Agreement dated as of December 18, 1999, between Sylvan and First Union
National Bank, as rights agent, and, unless the context otherwise requires,
all references to shares include the associated preferred stock purchase
rights.
Only shares properly tendered at prices at or below the purchase price and
not properly withdrawn will be purchased. However, because of the "odd lot"
priority, proration and conditional tender provisions described in the Offer
to Purchase, all of the shares tendered at or below the purchase price will
not be purchased if more than the number of shares Sylvan seeks are properly
tendered. Shares tendered at prices in excess of the purchase price that is
determined by Sylvan and shares not purchased because of proration or
conditional tenders will be returned as promptly as practicable following the
Expiration Date.
Sylvan reserves the right, in its sole discretion, to purchase more than
9,500,000 shares pursuant to the offer.
The offer is not conditioned on any minimum number of shares being tendered.
The offer is, however, subject to other conditions.
<PAGE>
If at the expiration of the offer more than 9,500,000 shares, or any greater
number of shares as Sylvan may elect to purchase, are properly tendered at or
below the purchase price and not properly withdrawn, Sylvan will buy shares
first from any person (an "Odd Lot Holder") who owned beneficially or of
record an aggregate of fewer than 100 shares (not including any shares held in
Sylvan's Employee Stock Purchase Plan or Sylvan's 401(k) Retirement Savings
Plan) and so certified in the appropriate place on the Letter of Transmittal
and, if applicable, on a Notice of Guaranteed Delivery, who properly tender
all their shares at or below the purchase price, and then on a pro rata basis
from all other shareholders who properly tender shares at prices at or below
the purchase price, subject to the conditional tender provisions.
For your information and for forwarding to those of 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. The Offer to Purchase dated March 21, 2000;
2. The Letter of Transmittal for your use and for the information of your
clients, together with the accompanying Substitute Form W-9. Facsimile
copies of the Letter of Transmittal, with manual signatures, may be used to
tender shares;
3. A letter to the shareholders of Sylvan dated March 21, 2000 from
Douglas L. Becker, Chairman and Chief Executive Officer of Sylvan;
4. The Notice of Guaranteed Delivery to be used to accept the offer and
tender shares pursuant to the offer if none of the procedures for tendering
shares described in the Offer to Purchase can be completed on a timely
basis;
5. A printed form of letter, which you may send to your clients for whose
accounts you hold shares registered in your name or in the name of your
nominee, with an instruction form provided for obtaining the clients'
instructions with regard to the offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to First Union National Bank, as
Depositary for the offer.
Your prompt action is requested. We urge you to contact your clients as
promptly as possible. Please note that the offer, proration period and
withdrawal rights will expire at 12:00 Midnight, Eastern time, on Monday,
April 17, 2000, unless the offer is extended.
Holders of shares whose certificate(s) for the shares are not immediately
available or who cannot deliver the certificate(s) and all other required
documents to the Depositary, or complete the procedures for book-entry
transfer, before the Expiration Date must tender their shares according to the
procedure for guaranteed delivery described in Section 3 of the Offer to
Purchase.
Neither Sylvan nor any officer, director, shareholder, agent or other
representative of Sylvan will pay any fees or commissions to any broker,
dealer or other person for soliciting tenders of shares pursuant to the offer
(other than fees paid to Goldman, Sachs & Co., as Dealer Managers, as
described in the Offer to Purchase). Sylvan will, however, upon request,
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients whose shares are held
by you as a nominee or in a fiduciary capacity. Sylvan will pay or cause to be
paid any stock transfer taxes applicable to its purchase of shares, except as
otherwise provided in the Letter of Transmittal.
<PAGE>
Requests for additional copies of the enclosed materials and any inquiries
you may have with respect to the offer should be addressed to D.F. King & Co.,
Inc., as Information Agent, 77 Water Street, 20th Floor, New York, NY 10005,
(212) 269-5550 (banks and brokers call collect) or (800)
487-4870 (all others call toll free).
Very truly yours,
GOLDMAN, SACHS & CO.
Nothing contained in this document or in the enclosed documents will make
you or any other person an agent of Sylvan, the Dealer Managers, the
Information Agent or 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 and the statements contained in those documents.
<PAGE>
EXHIBIT 99(a)(1)(vi)
SYLVAN LEARNING SYSTEMS, INC.
Offer to Purchase for Cash
by Sylvan Learning Systems, Inc.
up to 9,500,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a Purchase Price not Greater than $17.50 nor Less than $15.25 Per Share
The offer, proration period and withdrawal rights will expire at 12:00
Midnight, Eastern Time, on Monday, April 17, 2000, unless the offer is
extended.
To the Participants in Sylvan's 401(k) Retirement Savings Plan:
Enclosed for your consideration are the Offer to Purchase dated March 21,
2000 and the related Letter of Transmittal in connection with the offer by
Sylvan Learning Systems, Inc., a Maryland corporation, to purchase shares of
its common stock, $0.01 par value per share. Sylvan is offering to purchase up
to 9,500,000 shares at a price not greater than $17.50 nor less than $15.25
per share, net to the seller in cash, without interest, as specified by
shareholders tendering their shares. As a participant in Sylvan's 401(k)
Retirement Savings Plan, you may tender shares that are held on your behalf in
the savings plan. If you wish to do so, you must direct the plan trustee, the
holder of record, to do so on your behalf by following the instructions in
this letter.
If you do not wish to direct the sale of any portion of the shares in your
savings plan account, you do not need to take any action. If you would like to
direct the sale of some or all of the shares held on your behalf in your
savings plan account in response to this offer, detailed instructions on how
to tender those shares are set forth below.
The Offer. Sylvan will select the lowest purchase price that will allow it
to buy 9,500,000 shares or, if a lesser number of shares are properly
tendered, all shares that are properly tendered and not withdrawn. Sylvan will
pay the same price for all shares purchased in the offer. All shares properly
tendered at prices at or below the purchase price and not properly withdrawn
will be purchased, subject to the conditions of the offer and the "odd lot"
priority, proration and conditional tender provisions described in the Offer
to Purchase. If more than the number of shares Sylvan seeks are properly
tendered, Sylvan will not purchase all of the shares tendered at or below the
purchase price because of proration. Shares tendered at prices in excess of
the purchase price that is determined by Sylvan and shares not purchased
because of proration or conditional tenders will be returned as promptly as
practicable following the expiration of the offer.
Sylvan's offer is being made upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of Transmittal,
which, as amended or supplemented from time to time, together constitute the
offer. All shares tendered and purchased will include the associated preferred
stock purchase rights issued pursuant to the Amended and Restated Rights
Agreement dated as of December 18, 1999, between Sylvan and First Union
National Bank, as rights agent, and, unless the context otherwise requires,
all references to shares include the associated preferred stock purchase
rights.
Sylvan reserves the right, in its sole discretion, to purchase more than
9,500,000 shares pursuant to the offer.
<PAGE>
You must carefully follow the instructions below if you want to direct the
trustee to tender some or all of the shares held on your behalf in your
savings plan account. Failure to follow the instructions below properly may
make you ineligible to direct the trustee to tender the shares held in your
savings plan account in the offer. Putnam Fiduciary Trust Company, as trustee
of the savings plan, is the holder of record of the shares held in your
savings plan account. Pursuant to your instructions, Putnam Fiduciary Trust
Company will complete a Letter of Transmittal with respect to the shares held
on your behalf in your savings plan account. A tender of the shares held on
your behalf in your savings plan account can be made only by Putnam Fiduciary
Trust Company, as the trustee of the savings plan and the registered holder of
the shares.
If you tender shares, the tender proceeds will be reinvested pro-rata in
accordance with your current investment directions for new elective deferral
contributions. However, if your current investment directions for new elective
deferral contributions provide that some or all of your contributions are to
be invested in Sylvan common stock, then that portion of the tender proceeds
will be invested in the Putnam Stable Value Fund. Once the tender proceeds
have been credited to your savings plan accounts, you may reallocate your
investments among the various investment funds under the savings plan in the
usual manner.
Because the terms and conditions of the Letter of Transmittal will govern
the tender of the shares held in the savings plan, you should read the Letter
of Transmittal carefully. The Letter of Transmittal, however, is furnished to
you for your information only and cannot be used by you to tender shares that
are held on your behalf in your savings plan account. You should also read the
Offer to Purchase carefully before making any decision regarding the offer.
The offer is being made solely pursuant to the Offer to Purchase and the
related Letter of Transmittal and is being made to all record holders of
shares of common stock of Sylvan. The offer is not being made to, nor will
tenders be accepted from or on behalf of, holders of shares of common stock of
Sylvan residing in any jurisdiction in which the making of the offer or
acceptance thereof would not be in compliance with the securities laws of that
jurisdiction.
Tendering Shares. To instruct the trustee to tender any or all of the shares
held on your behalf in your savings plan account, you must complete the
enclosed Directions Form and return it to First Union National Bank in the
enclosed self-addressed envelope.
Please note the following:
1. We have been advised that if First Union National Bank has not received
your Directions Form at least three business days before the expiration of the
offer, the trustee will not tender any shares held on your behalf in the
savings plan. The offer, proration period and withdrawal rights will expire at
12:00 Midnight, Eastern time, on Monday, April 17, 2000, unless the offer is
extended. Consequently, your Directions Form must be received by First Union
National Bank no later than 12:00 Midnight, Eastern time on Wednesday, April
12, 2000.
2. Shares held on your behalf in your savings plan account may be tendered
at prices not greater than $17.50 nor less than $15.25 per share.
3. The savings plan is prohibited from selling shares to Sylvan for a price
that is less than the prevailing market price. Accordingly, if you elect to
tender shares at a price that is lower than the prevailing price of Sylvan's
common stock on the Nasdaq Stock Market at the expiration of the offer, the
tender price you elect will be deemed to have been increased to the closest
tender price that is not less than that closing price.
2
<PAGE>
4. The offer is for up to 9,500,000 shares, constituting approximately 19%
of the shares outstanding as of March 20, 2000. The offer is not conditioned
on any minimum number of shares being tendered. The offer is, however, subject
to other conditions described in the Offer to Purchase.
5. Sylvan's Board of Directors has approved the making of the offer.
However, neither Sylvan nor Sylvan's Board of Directors nor the Dealer
Managers is making any recommendation whether you should tender or refrain
from tendering your shares or at what purchase price you should choose to
tender your shares. You must make your own decision as to whether to tender
your shares and, if so, how many shares to tender and the price or prices at
which you will tender them.
6. Your tender instructions will be held in strict confidence by the trustee
and First Union National Bank and will not be divulged or released to any
directors, officers or employees of Sylvan except as required by law.
7. Tendering shareholders will not be obligated to pay any brokerage fees or
commissions or solicitation fees to the Dealer Managers, Depositary,
Information Agent or Sylvan or, except as described in the Letter of
Transmittal, stock transfer taxes on the transfer of shares pursuant to the
offer.
8. As more fully described in the Offer to Purchase, tenders will be deemed
irrevocable unless timely withdrawn. If you instruct the trustee to tender the
shares held on your behalf in your savings plan account, and you subsequently
decide to change your instructions or withdraw your tender of shares, you may
do so by submitting a new Directions Form. However, the new Directions Form
will be effective only if it is received by First Union National Bank, at the
address on the back cover of the Offer to Purchase, on or before 12:00
Midnight, Eastern time on Wednesday, April 12, 2000, three business days
before the expiration of the offer. The offer is scheduled to expire at 12:00
Midnight, Eastern time, on Monday, April 17, 2000. Upon receipt of a timely
submitted, new Directions Form, your previous instructions to tender the
shares will be deemed canceled. If your new Directions Form directed the
trustee to withdraw from tender the shares held on your behalf in your savings
plan account, you may later re-tender those shares by submitting another
Directions Form so long as it is received by First Union National Bank on or
before three business days before the expiration of the offer. Additional
Directions Forms may be obtained by calling D.F. King & Co., Inc., the
Information Agent, at (800) 487-4870.
Unless you direct the trustee on the enclosed Directions Form to tender the
shares held on your behalf in your savings plan account, no shares will be
tendered.
If you have any questions about the offer or any of the other matters
discussed above, please call D.F. King & Co., Inc., the Information Agent, at
(800) 487-4870.
3
<PAGE>
DIRECTIONS FORM
WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
BY SYLVAN LEARNING SYSTEMS, INC.
UP TO 9,500,000 SHARES OF ITS COMMON STOCK
The undersigned acknowledges receipt of the accompanying letter and enclosed
Offer to Purchase, dated March 21, 2000, and the related Letter of Transmittal
and Letter to the Participants in Sylvan's 401(k) Retirement Savings Plan in
connection with the offer by Sylvan Learning Systems, Inc., a Maryland
corporation, to purchase up to 9,500,000 shares of its common stock, $0.01 par
value per share.
These Instructions will instruct Putnam Fiduciary Trust Company, as trustee
of Sylvan's 401(k) Retirement Savings Plan and holder of record, to tender the
number of shares indicated below (or if no number is indicated below, all
shares) held by Putnam for the undersigned's 401(k) Retirement Savings Plan
account upon the terms and subject to the conditions set forth in the Offer to
Purchase.
NOTE: Shares allocated to participant accounts for which Putnam does not
receive directions will not be tendered.
Number of Shares Tendered: Shares
(Please indicate the number of Shares you wish Putnam to tender from your
401(k) Retirement Savings Plan account. If this space is left blank, Putnam
will tender all shares from your 401(k) Retirement Savings Plan account.)
Requested Tender Price Per Share: Per Share
(The requested price per share must be in increments of $0.125, starting at
$15.25 per share up to and including $17.50 per share.)
Dated ___________________________________, 2000
_______________________________________________
(Signature)
Print Name: __________________________________
Print Social Security Number: _________________
Address: ______________________________________
________________________________________
________________________________________
Daytime Telephone Number
with Area Code: _______________________
4
<PAGE>
EXHIBIT 99(a)(1)(vii)
SYLVAN LEARNING SYSTEMS, INC.
Offer to Purchase for Cash
by Sylvan Learning Systems, Inc.
up to 9,500,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a Purchase Price not Greater than $17.50 nor Less than $15.25 Per Share
The offer, proration period and withdrawal rights will expire at 12:00
Midnight, Eastern Time, on Monday, April 17, 2000, unless the offer is
extended.
To the Participants in Sylvan's Employee Stock Purchase Plan:
Sylvan Learning Systems, Inc. has announced an offer to purchase up to
9,500,000 shares of its common stock, $0.01 par value per share, including the
associated preferred stock purchase rights, at a price of not greater than
$17.50 nor less than $15.25 per share, net to the seller in cash, without
interest. The offer is being made pursuant to the Offer to Purchase and the
related Letter of Transmittal, which are enclosed. As a participant in
Sylvan's Employee Stock Purchase Plan, you may tender shares that are held in
your employee stock purchase plan account at Salomon Smith Barney.
If you do not wish to tender any portion of the shares in your employee
stock purchase plan account, you do not need to take any action. If you would
like to tender some or all of the shares held in your employee stock purchase
plan account in response to this offer, you must follow the instructions set
forth below.
The Offer. Sylvan will select the lowest purchase price that will allow it
to buy 9,500,000 shares or, if a lesser number of shares are properly
tendered, all shares that are properly tendered and not withdrawn. Sylvan will
pay the same price for all shares purchased in the offer. All shares properly
tendered at prices at or below the purchase price and not properly withdrawn
will be purchased, subject to the conditions of the offer and the "odd lot"
priority, proration and conditional tender provisions described in the Offer
to Purchase. If more than the number of shares Sylvan seeks are properly
tendered, Sylvan will not purchase all of the shares tendered because of
proration. Shares tendered at prices in excess of the purchase price that is
determined by Sylvan and shares not purchased because of proration or
conditional tenders will be returned as promptly as practicable following the
expiration of the offer.
Sylvan's offer is being made upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of Transmittal,
which, as amended or supplemented from time to time, together constitute the
offer. All shares tendered and purchased will include the associated preferred
stock purchase rights issued pursuant to the Amended and Restated Rights
Agreement dated as of December 18, 1999, between Sylvan and First Union
National Bank, as rights agent, and, unless the context otherwise requires,
all references to shares include the associated preferred stock purchase
rights.
Sylvan reserves the right, in its sole discretion, to purchase more than
9,500,000 shares pursuant to the offer.
Because the terms and conditions of the Letter of Transmittal will govern
the tender of the shares held in accounts under the Employee Stock Purchase
Plan, you should read the Letter of Transmittal carefully. The Letter of
Transmittal, however, is furnished to you for your information only and cannot
be used by you to tender shares that are held in your employee stock purchase
plan account. You must use the attached Instruction Form to properly tender
shares that are held in your employee stock purchase plan account. You should
also read the Offer to Purchase carefully before making any decision regarding
the offer.
<PAGE>
The offer is being made solely pursuant to the Offer to Purchase and the
related Letter of Transmittal and is being made to all record holders of
shares of common stock of Sylvan. The offer is not being made to, nor will
tenders be accepted from or on behalf of, holders of shares of common stock of
Sylvan residing in any jurisdiction in which the making of the offer or
acceptance thereof would not be in compliance with the securities laws of that
jurisdiction.
Tendering Shares. To instruct Salomon Smith Barney to tender any or all of
the shares held in your employee stock purchase plan account, you must
complete the Instruction Form set forth below and return it to Salomon Smith
Barney.
Please note the following:
1. We have been advised that if Salomon Smith Barney has not received your
Instruction Form at least three business days before the expiration of the
offer, Salomon Smith Barney will not tender any shares held in your employee
stock purchase plan account. The offer, proration period and withdrawal rights
will expire at 12:00 Midnight, Eastern time, on Monday, April 17, 2000, unless
the offer is extended. Consequently, your Instruction Form must be received by
Salomon Smith Barney no later than 12:00 Midnight, Eastern time on Wednesday,
April 12, 2000.
2. Shares held in your employee stock purchase plan account may be tendered
at prices not greater than $17.50 nor less than $15.25 per share.
3. The offer is for up to 9,500,000 shares, constituting approximately 19%
of the shares outstanding as of March 20, 2000. The offer is not conditioned
on any minimum number of shares being tendered. The offer is, however, subject
to other conditions described in the Offer to Purchase.
4. Sylvan's Board of Directors has approved the making of the offer.
However, neither Sylvan nor Sylvan's Board of Directors nor the Dealer
Managers nor Salomon Smith Barney is making any recommendation whether you
should tender or refrain from tendering your shares or at what purchase price
you should choose to tender your shares. You must make your own decision as to
whether to tender your shares and, if so, how many shares to tender and the
price or prices at which you will tender them.
5. Tendering shareholders will not be obligated to pay any brokerage fees or
commissions or solicitation fees to tender their shares. Except as described
in the Letter of Transmittal, tendering shareholders will not be obligated to
pay any stock transfer taxes on the transfer of shares pursuant to the offer.
6. As more fully described in the Offer to Purchase, tenders will be deemed
irrevocable unless timely withdrawn. If you instruct Salomon Smith Barney to
tender the shares held in your employee stock purchase plan account, and you
subsequently decide to change your instructions or withdraw your tender of
shares, you may do so by submitting a new Instruction Form. However, the new
Instruction Form will be effective only if it is received by Salomon Smith
Barney, at the address listed below, on or before 12:00 Midnight, Eastern time
on Wednesday, April 12, 2000, three business days before the expiration of the
offer. The offer is scheduled to expire at 12:00 Midnight, Eastern time, on
Monday, April 17, 2000. Upon receipt of a timely submitted, new Instruction
Form, your previous Instruction Form to tender the shares will be deemed
canceled. If your new Instruction Form directed Salomon Smith Barney to
withdraw from tender the shares held in your employee stock purchase plan
account, you may later re-tender those shares by submitting a new Instruction
Form so long as it is received by Salomon Smith Barney on or before three
business days before the expiration of the offer.
This letter has been prepared by Sylvan and is being sent to you by Salomon
Smith Barney at Sylvan's request. Unless you direct Salomon Smith Barney on
the attached Instruction Form to tender the shares held in your employee stock
purchase plan account, no shares will be tendered.
<PAGE>
If you wish to tender your shares, complete the Information Form and either:
<TABLE>
<S> <C>
1. Return it by mail to: Salomon Smith Barney Inc.
Attention: Stock Plan Operations
P.O. Box 2152
New York, New York 10116
or
2. Return it by
facsimile to: (212) 801-4812
Attention: Stock Plan Operations--Sylvan
Learning Systems, Inc. Offer to Purchase for Cash
</TABLE>
If you have any questions, contact Salomon Smith Barney's Stock Plan
Operations Department at (800) 367-4777 (toll free).
<PAGE>
Instruction Form
Name of Participant:____________________________________________________________
Salomon Smith Barney Account Number:____________________________________________
Social Security Number:_________________________________________________________
Daytime Telephone Number: ( ) -
Check only one box. If more than one box is checked or if no box is
checked, the shares will not be properly tendered.
[_] Tender shares.
(Please indicate the number of shares you wish to tender from your account.)
[_] Tender all shares.
Shares Tendered at Price Determined by Shareholder
(See Instruction 5 to the Letter of Transmittal)
By checking one of the following boxes below instead of the box under
"Shares Tendered at Price Determined Pursuant to the Offer," the
undersigned hereby tenders shares at the price checked. This action could
result in none of the shares being purchased if the purchase price
determined by Sylvan for the shares is less than the price checked below.
A shareholder who desires to tender shares at more than one price must
complete a separate Instruction Form for each price at which shares are
tendered. The same shares cannot be tendered at more than one price.
Price (In Dollars) per Share at Which Shares Are Being Tendered
[_]$15.250 [_]$16.000 [_]$16.750
[_]$15.375 [_]$16.125 [_]$16.875
[_]$15.500 [_]$16.250 [_]$17.000
[_]$15.625 [_]$16.375 [_]$17.125
[_]$15.750 [_]$16.500 [_]$17.250
[_]$15.875 [_]$16.625 [_]$17.375
[_]$17.500
OR
Shares Tendered at Price Determined Pursuant to the Offer
(See Instruction 5 to the Letter of Transmittal)
[_] The undersigned wants to maximize the chance of having Sylvan purchase
all of the shares the undersigned is tendering (subject to the possibility
of proration). Accordingly, by checking this one box instead of one of the
price boxes above, the undersigned hereby tenders shares and is willing to
accept the purchase price determined by Sylvan in accordance with the
terms of the offer. This action could result in receiving a price per
share of as low as $15.25.
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
Signature:______________________________________________________________________
Date: __________________, 2000
<PAGE>
EXHIBIT 99(a)(5)(i)
SYLVAN LEARNING SYSTEMS, INC.
Offer to Purchase for Cash
by
Sylvan Learning Systems, Inc.
up to 9,500,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a Purchase Price not Greater than $17.50 nor Less than $15.25 Per Share
The offer, proration period and withdrawal rights will expire at 12:00
Midnight, Eastern Time, on Monday, April 17, 2000, unless the offer is
extended.
March 21, 2000
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated March 21,
2000 and the related Letter of Transmittal in connection with the offer by
Sylvan Learning Systems, Inc., a Maryland corporation, to purchase shares of
its common stock, $0.01 par value per share. Sylvan is offering to purchase up
to 9,500,000 shares at a price not greater than $17.50 nor less than $15.25
per share, net to the seller in cash, without interest, as specified by
shareholders tendering their shares.
Sylvan will select the lowest purchase price that will allow it to buy
9,500,000 shares or, if a lesser number of shares are properly tendered, all
shares that are properly tendered and not withdrawn. All shares acquired in
the offer will be acquired at the same purchase price.
Sylvan's offer is being made upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of Transmittal,
which, as amended or supplemented from time to time, together constitute the
offer. All shares tendered and purchased will include the associated preferred
stock purchase rights issued pursuant to the Amended and Restated Rights
Agreement dated as of December 18, 1999, between Sylvan and First Union
National Bank, as rights agent, and, unless the context otherwise requires,
all references to shares include the associated preferred stock purchase
rights.
Only shares properly tendered at prices at or below the purchase price and
not properly withdrawn will be purchased. However, because of the "odd lot"
priority, proration and conditional tender provisions described in the Offer
to Purchase, all of the shares tendered at or below the purchase price will
not be purchased if more than the number of shares Sylvan seeks are properly
tendered. Shares tendered at prices in excess of the purchase price that is
determined by Sylvan and shares not purchased because of proration or
conditional tenders will be returned as promptly as practicable following the
Expiration Date.
Sylvan reserves the right, in its sole discretion, to purchase more than
9,500,000 shares pursuant to the offer.
If at the expiration of the offer more than 9,500,000 shares, or any greater
number of shares as Sylvan may elect to purchase, are properly tendered at or
below the purchase price and not properly withdrawn before the Expiration
Date, Sylvan will purchase shares first from any person (an "Odd Lot Holder")
who owned beneficially or of record an aggregate of fewer than 100 shares (not
including any shares held in Sylvan's Employee Stock Purchase Plan or in
Sylvan's 401(k) Retirement Savings Plan) and so certified in the appropriate
place on the Letter of Transmittal and, if applicable, on a Notice of
Guaranteed Delivery, and properly tendered all those shares at or below the
purchase price and then,
<PAGE>
subject to the conditional tender provisions, on a pro rata basis from all
other shareholders who properly tender shares at prices at or below the
purchase price.
A tender of your shares can be made only by us as the holder of record and
pursuant to your instructions. The Letter of Transmittal is furnished to you
for your information only and cannot be used by you to tender your shares held
by us for your account.
Accordingly, we request instructions as to whether you wish to tender any or
all of the shares held by us for your account, upon the terms and subject to
the conditions of the offer.
Please note the following:
1. Shares may be tendered at prices not greater than $17.50 nor less than
$15.25 per share, as indicated in the attached Instruction Form.
2. The priority in which certificates will be purchased in the event of
proration may be designated.
3. The offer is not conditioned on any minimum number of shares being
tendered. The offer is, however, subject to other conditions described in
the Offer to Purchase.
4. The offer, proration period and withdrawal rights will expire at 12:00
Midnight, Eastern time, on Monday, April 17, 2000, unless the offer is
extended.
5. The offer is for 9,500,000 shares, constituting approximately 19% of the
shares outstanding as of March 20, 2000.
6. Sylvan's Board of Directors has approved the making of the offer.
However, neither Sylvan nor Sylvan's Board of Directors nor the Dealer
Managers is making any recommendation whether you should tender or refrain
from tendering your shares or at what purchase price you should choose to
tender your shares. You must make the decision whether to tender your
shares and, if so, how many shares to tender and the price or prices at
which you will tender them.
7. Tendering shareholders who hold shares registered in their own name and
who tender their shares directly to the Depositary will not be obligated to
pay brokerage commissions, solicitation fees or, subject to Instruction 7
of the Letter of Transmittal, stock transfer taxes on the purchase of
shares by Sylvan in the offer.
Sylvan will, upon the terms and subject to the conditions of the offer,
accept all your shares for purchase if:
. you owned beneficially or of record an aggregate of fewer than 100
shares (not including any shares held in Sylvan's Employee Stock
Purchase Plan or in Sylvan's 401(k) Retirement Savings Plan);
. you instruct us to tender on your behalf all your shares at or below the
purchase price before the Expiration Date; and
. you complete the section entitled "Odd Lots" in the attached Instruction
Form.
If you wish to tender portions of your shares at different prices, you must
complete a separate Instruction Form for each price at which you wish to
tender each portion of your shares. We must submit separate Letters of
Transmittal on your behalf for each price you will accept for each portion
tendered.
If you wish to have us tender any or all of your shares, please instruct us
by completing, executing, detaching and returning the attached Instruction
Form. An envelope to return your Instruction Form to
2
<PAGE>
us is enclosed. If you authorize us to tender your shares, all your shares
will be tendered unless otherwise indicated on the attached Instruction Form.
Please forward your Instruction Form to us as soon as possible to allow us
ample time to tender your shares on your behalf prior to the expiration of the
offer.
As described in the Offer to Purchase, if more than 9,500,000 shares, or any
greater number of shares as Sylvan may elect to purchase, have been properly
tendered at or below the purchase price and not properly withdrawn before the
Expiration Date, Sylvan will purchase tendered shares on the basis described
below:
1. First, all shares tendered and not withdrawn before the Expiration Date
by any Odd Lot Holder who:
(a) tenders all shares owned beneficially or of record by the Odd Lot
Holder at a price at or below the purchase price (tenders of less than all
shares owned by the Odd Lot Holder will not qualify for this preference);
and
(b) completes the section captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery; and
2. Second, after purchase of all of the foregoing shares, subject to the
conditional tender provisions described in Section 6 of the Offer to
Purchase, all other shares properly tendered at prices at or below the
purchase price and not properly withdrawn before the Expiration Date, on
a pro rata basis (with appropriate adjustments to avoid purchases of
fractional shares) as described in the Offer to Purchase.
The offer is being made solely pursuant to the Offer to Purchase and the
related Letter of Transmittal and is being made to all record holders of
shares of common stock of Sylvan. The offer is not being made to, nor will
tenders be accepted from or on behalf of, holders of shares of common stock of
Sylvan residing in any jurisdiction in which the making of the offer or
acceptance thereof would not be in compliance with the securities laws of that
jurisdiction.
3
<PAGE>
Instruction Form
Instructions For Tender of Shares of Sylvan Learning Systems, Inc.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated March 21, 2000 and the related Letter of Transmittal in
connection with the offer by Sylvan Learning Systems, Inc., a Maryland
corporation, to purchase shares of its Common Stock, $0.01 par value per
share. Sylvan is offering to purchase up to 9,500,000 shares at a price not
greater than $17.50 nor less than $15.25 per share, net to the seller in cash,
without interest, as specified by shareholders tendering their shares.
Sylvan's offer is being made upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal,
which, as amended or supplemented from time to time, together constitute the
offer. All shares tendered and purchased will include the associated preferred
stock purchase rights issued pursuant to the Amended and Restated Rights
Agreement dated as of December 18, 1999, between Sylvan and First Union
National Bank, as rights agent, and, unless the context otherwise requires,
all references to shares include the associated preferred stock purchase
rights.
This will instruct you to tender to Sylvan, on (our) (my) behalf, the number
of shares indicated below (or if no number is indicated below, all shares)
which are beneficially owned by (us) (me) and registered in your name, upon
the terms and subject to the conditions of offer.
Number of shares to be tendered: shares.*
Odd Lots
[_]By checking this box, the undersigned represents that the undersigned
owns, beneficially or of record, an aggregate of fewer than 100 shares
and is tendering all of those shares.
In addition, the undersigned is tendering shares either (check one box):
[_]at the purchase price, as it will be determined by Sylvan in accordance
with the terms of the offer (persons checking this box need not indicate
the price per share below); or
[_]at the price per share indicated below under "Price (In Dollars) per
Share at Which Shares Are Being Tendered."
Conditional Tender
A tendering shareholder may condition his or her tender of shares upon
Sylvan purchasing a specified minimum number of the shares tendered, all as
described in Section 6 of the Offer to Purchase. Unless at least the minimum
number of shares you indicate below is purchased by Sylvan pursuant to the
terms of the offer, none of the shares tendered by you will be purchased. It
is the tendering shareholder's responsibility to calculate the minimum
number of shares that must be purchased if any are purchased, and each
shareholder is urged to consult his or her own tax advisor. Unless this box
has been completed and a minimum specified, the tender will be deemed
unconditional.
[_]The minimum number of shares that must be purchased, if any are purchased
is: shares.
--------
* Unless otherwise indicated, it will be assumed that all shares held by us
for your account are to be tendered.
<PAGE>
Check only one box. If more than one box is checked or if no box is
checked, the shares will not be properly tendered.
Shares Tendered at Price Determined by Shareholder
(See Instruction 5 to the Letter of Transmittal)
By checking one of the following boxes below instead of the box under
"Shares Tendered at Price Determined Pursuant to the Offer," the
undersigned hereby tenders shares at the price checked. This action could
result in none of the shares being purchased if the purchase price
determined by Sylvan for the shares is less than the price checked below.
A shareholder who desires to tender shares at more than one price must
complete a separate Instruction Form for each price at which shares are
tendered. The same shares cannot be tendered at more than one price.
Price (In Dollars) per Share at Which Shares Are Being Tendered
[_]$15.250 [_]$16.000 [_]$16.750
[_]$15.375 [_]$16.125 [_]$16.875
[_]$15.500 [_]$16.250 [_]$17.000
[_]$15.625 [_]$16.375 [_]$17.125
[_]$15.750 [_]$16.500 [_]$17.250
[_]$15.875 [_]$16.625 [_]$17.375
[_]$17.500
OR
Shares Tendered at Price Determined Pursuant to the Offer
(See Instruction 5 to the Letter of Transmittal)
[_] The undersigned wants to maximize the chance of having Sylvan purchase
all of the shares the undersigned is tendering (subject to the possibility
of proration). Accordingly, by checking this one box instead of one of the
price boxes above, the undersigned hereby tenders shares and is willing to
accept the purchase price determined by Sylvan in accordance with the
terms of the offer. This action could result in receiving a price per
share of as low as $15.25.
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
Sign here:
Signature(s):
----------------------------------------------------------
Print Name(s):
--------------------------------------------------------
Address(es):
---------------------------------------------------------
Area Code and Telephone Number:
----------------------------------------
Taxpayer Identification or Social Security Number:
-----------------------------
Date: , 2000
-------------
<PAGE>
EXHIBIT 99(a)(5)(ii)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer.--Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------ --------------------------------------------------
Give the SOCIAL Give the EMPLOYER
SECURITY IDENTIFICATION
For this type of account: number of-- For this type of account: number of--
- ------------------------------------------------ --------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 9. A valid trust, estate The legal entity
2. Two or more individuals The actual owner of or pension (do not furnish the
(joint account) the account or, if identifying number of
combined funds, the the personal
first individual on representative or
the account(1) trustee unless the
3. Husband and wife (joint The actual owner of legal entity itself
account) the is not designated in
account or, if the account title(5)
joint funds, 10. Corporate account The corporation
(1) 11. Religious, charitable The organization
4. Custodian account of a The minor(2) or educational
minor (Uniform organization account
Gift to Minors Act) 12. Partnership account The partnership
5. Adult and minor (joint The adult or, if held in the name of the
account) the minor is the business
only contributor, 13. Association, club, or The organization
the minor(1) other tax-exempt
6. Account in the name of The ward, minor, or organization
guardian or committee incompetent 14. A broker or registered The broker or
for a designated ward, person(3) nominee nominee
minor, or incompetent 15. Account with the The public entity
person Department of
7. a. A revocable savings The grantor- Agriculture in the name
trust account (in trustee(1) of a public entity
which grantor is (such as a State or
also trustee) local government,
b. Any "trust" account The actual owner(1) school district, or
that is not a legal prison) that receives
or valid trust agricultural program
under State law payments
8. Sole proprietorship The owner(4)
account
- ------------------------------------------------ --------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER OF SUBSTITUTE
FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number ("TIN") or you don't know
your number, obtain Form SS-5, Application for a Social Security Number Card,
or Form SS-4, Application for Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number. As soon as you receive your TIN, complete another W-9,
include your TIN, sign and date the form, and send it to the Depositary.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust. A common trust fund operated by a bank
under section 584(a) of the Code.
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
. An entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
. Payments of patronage dividends where the amount renewed is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to 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 taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852) of the Code.
. Payments described in section 6049(b)(5) of the Code to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451 of the Code.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above must still complete the substitute form W-9
enclosed herewith to avoid possible erroneous backup withholding. File
substitute form W-9 with the payer, remembering to certify your taxpayer
identification number on Part III of the form, write "exempt" on the face of
the form and sign and date the form and return it to the payer.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.
Privacy Act Notice--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to
file a tax return. Payers must generally withhold 31% of taxable interest,
dividends, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, 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 which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99(a)(5)(iii)
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 March 21, 2000, and the related Letter of Transmittal,
and any amendments or supplements to the Offer to Purchase or Letter
of Transmittal. 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 or acceptance of offers to sell Shares would not be
in compliance with the laws of that jurisdiction.
In any jurisdiction where the securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Sylvan by
Goldman, Sachs & Co., the Dealer Managers of this
Offer, or one or more registered brokers or dealers
licensed under the laws of that jurisdiction.
Notice of Offer to Purchase for Cash
by
Sylvan Learning Systems, Inc.
up to 9,500,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a Purchase Price not Greater than $17.50 nor
Less than $15.25 Per Share
Sylvan Learning Systems, Inc., a Maryland corporation ("Sylvan"), is
offering to purchase for cash up to 9,500,000 shares of its common stock, $0.01
par value per share (including the associated preferred stock purchase rights,
the "Shares"), upon the terms and subject to the conditions set forth in the
Offer to Purchase dated March 21, 2000 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which together, as they may be amended and
supplemented from time to time, constitute the "Offer"). Sylvan is inviting its
shareholders to tender their Shares at prices specified by the tendering
shareholders that are not greater than $17.50 nor less than $15.25 per Share,
net to the seller in cash, without interest, upon the terms and subject to the
conditions of the Offer. The Offer is not conditioned on any minimum number of
Shares being tendered. The Offer is, however, subject to other conditions set
forth in the Offer to Purchase and the related Letter of Transmittal.
--------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME,
ON MONDAY, APRIL 17, 2000,
UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------
SYLVAN'S BOARD OF DIRECTORS HAS APPROVED THE OFFER. HOWEVER, NEITHER SYLVAN
NOR ITS BOARD OF DIRECTORS NOR THE DEALER MANAGERS IS MAKING ANY RECOMMENDATION
TO ITS SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR
SHARES OR AS TO THE PRICE OR PRICES AT WHICH
<PAGE>
SHAREHOLDERS MAY CHOOSE TO TENDER THEIR SHARES. SHAREHOLDERS MUST MAKE THEIR OWN
DECISION AS TO WHETHER TO TENDER THEIR SHARES AND, IF SO, HOW MANY SHARES TO
TENDER AND THE PRICE OR PRICES AT WHICH SUCH SHARES SHOULD BE TENDERED. SYLVAN'S
DIRECTORS AND EXECUTIVE OFFICERS HAVE ADVISED SYLVAN THAT THEY DO NOT INTEND TO
TENDER ANY SHARES IN THE OFFER.
Sylvan will, upon the terms and subject to the conditions of the Offer,
determine the single per Share price, not in excess of $17.50 nor less than
$15.25 per Share, that it will pay for Shares properly tendered under the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering shareholders. Sylvan will select the lowest purchase price (the
"Purchase Price") that will allow it to purchase 9,500,000 Shares, or such
lesser number of Shares as are properly tendered (and not properly withdrawn)
pursuant to the Offer. All Shares properly tendered (and not properly withdrawn)
prior to the "expiration date" (as defined below) at prices at or below the
Purchase Price will be purchased at the Purchase Price, upon the terms and
subject to the conditions of the Offer, including the "odd lot" and proration
provisions.
Under no circumstances will interest be paid on the Purchase Price for the
Shares, regardless of any delay in making such payment. All Shares acquired in
the Offer will be acquired at the Purchase Price regardless of whether the
shareholder selected a lower price. The term "expiration date" means 12:00
Midnight, Eastern time, on Monday, April 17, 2000, unless Sylvan, in its sole
discretion, shall have extended the period of time during which the Offer will
remain open, in which event the term "expiration date" shall refer to the latest
time and date at which the Offer, as so extended by Sylvan, shall expire. Sylvan
reserves the right, in its sole discretion, to purchase more than 9,500,000
Shares under the Offer subject to applicable law. For purposes of the Offer,
Sylvan will be deemed to have accepted for payment (and therefore purchased)
Shares properly tendered and not withdrawn, subject to the "odd lot" and
proration provisions of the Offer, only when, as and if Sylvan gives oral or
written notice to First Union National Bank, the depositary of the Offer, of its
acceptance for payment of such Shares under the Offer. Payment for Shares
tendered and accepted for payment under the Offer will be made only after timely
receipt by the depositary of certificates for such Shares or a timely
confirmation of a book-entry transfer of such Shares into the depositary's
account at the "book-entry transfer facility" (as defined in the Offer to
Purchase), a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile of the Letter of Transmittal), an Agent's Message (as
defined in the Offer to Purchase) in the case of a book-entry transfer, or the
specific acknowledgement in the case of a tender through the Automated Tender
Offer Program of the Book-Entry Transfer Facility (as defined in the Offer to
Purchase) and any other documents required by the Letter of Transmittal.
Upon the terms and subject to the conditions of the Offer, if more than
9,500,000 Shares, or such greater number of Shares as Sylvan may elect to
purchase subject to applicable law, have been properly tendered (and not
properly withdrawn) prior to the expiration date at prices at or below the
Purchase Price, Sylvan will purchase properly tendered Shares on the following
basis: (1) all Shares properly tendered and not properly withdrawn prior to the
expiration date by any "odd lot holder" (as defined in the Offer to Purchase)
who (a) tenders all Shares owned beneficially or of record by such odd lot
holder at a price at or below the Purchase Price (partial tenders will not
qualify for this preference) and (b) completes the section entitled "Odd Lots"
in
<PAGE>
the Letter of Transmittal and, if applicable, in the Notice of Guaranteed
Delivery and (2) after the purchase of all of the foregoing Shares, all other
Shares properly tendered at prices at or below the Purchase Price and not
properly withdrawn prior to the expiration date, on a pro rata basis, with
appropriate adjustments to avoid purchases of fractional Shares. All other
Shares that have been tendered and not purchased will be returned to the
shareholder as promptly as practicable after the expiration date.
Sylvan expressly reserves the right, in its sole discretion, at any time
and from time to time, to extend the period of time during which the Offer is
open and thereby delay acceptance for payment of, and payment for, any Shares by
giving oral or written notice of such extension to the depositary and making a
public announcement thereof no later than 9:00 a.m., Eastern time, on the next
business day after the previously scheduled expiration date. During any such
extension, all Shares previously tendered and not properly withdrawn will remain
subject to the Offer and to the right of a tendering shareholder to withdraw
such shareholder's Shares.
Sylvan is making the Offer because (1) Sylvan believes that its Shares are
undervalued in the public market, (2) Sylvan believes that the Offer is
consistent with its long-term corporate goal of increasing shareholder value,
(3) the Offer is a prudent use of its financial resources given its newly
announced business strategy, as well as its assets and current market price, and
(4) Sylvan believes that investing in its own Shares is an attractive use of
capital and an efficient means to provide value to its shareholders. In
addition, where Shares are tendered by the registered owner thereof directly to
the depositary pursuant to the Offer, the sale of those Shares in the Offer will
permit the seller to avoid the usual transaction costs associated with open
market sales.
Tenders of Shares under the Offer are irrevocable, except that tendered
Shares may be withdrawn at any time prior to the expiration date and, unless
previously accepted for payment by Sylvan under the Offer, may also be withdrawn
at anytime after 12:00 Midnight, Eastern time, on Monday, May 15, 2000. For
withdrawal to be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must be timely received by First Union at its address set
forth on the back cover page of the Offer to Purchase. Any such notice of
withdrawal must specify the name of the tendering shareholder, the number of
Shares to be withdrawn and the name of the registered holder of such Shares. If
the certificates for Shares to be withdrawn have been delivered or otherwise
identified to the depositary, then, before the release of such certificates, the
serial numbers shown on such certificates must be submitted to the depositary
and the signature(s) on the notice of withdrawal must be guaranteed by an
"eligible guarantor institution" (as defined in the Offer to Purchase), unless
such Shares have been tendered for the account of an eligible guarantor
institution. If Shares have been tendered pursuant to the procedure for book-
entry transfer set forth in the Offer to Purchase, any notice of withdrawal also
must specify the name and the number of the account at the book-entry transfer
facility to be credited with the withdrawn Shares and must otherwise comply with
such book-entry transfer facility's procedures. All questions as to the form and
validity of any notice of withdrawal, including the time of receipt, will be
determined by Sylvan, in its sole discretion, whose determination will be final
and binding. None of Sylvan, First Union as the depositary, D.F. King & Co.,
Inc. as the information agent, Goldman, Sachs & Co. as the Dealer Managers or
any other person will be under any duty to give notification of any defects or
irregularities in any tender or notice of withdrawal or incur any liability for
failure to give any such notification.
<PAGE>
In certain circumstances, some tendering shareholders whose Shares are
purchased in the Offer may be treated for U.S. federal tax purposes as having
received an amount taxable as a distribution or dividend rather than as a
capital gain or loss. Shareholders are strongly encouraged to read the Offer to
Purchase for additional information regarding the U.S. federal tax consequences
of participating in the Offer.
The information required to be disclosed by Rule 13e-4(d)(1) under the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal are being
mailed promptly to record holders of Shares whose names appear on Sylvan's
shareholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list 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. SHAREHOLDERS SHOULD READ THEM CAREFULLY BEFORE MAKING ANY
DECISION REGARDING THE OFFER.
Any questions or requests for assistance may be directed to the information
agent or the Dealer Managers at the respective telephone numbers and addresses
set forth below. Additional copies of the Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
information agent at the address and telephone number set forth below and will
be promptly furnished by Sylvan at its expense. Shareholders may also contact
their broker, dealer, commercial bank, trust company or nominee for assistance
concerning the Offer. To confirm delivery of Shares, shareholders are directed
to contact the depositary.
The Information Agent for the offer is:
D.F. KING & CO., INC.
77 Water Street, 20/th/ Floor
New York, New York 10005
Banks and Brokers Call Collect (212) 269-5550
All Others Call Toll Free (800) 487-4870
The Dealer Managers for the offer are:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, NY 10004
(212) 902-1000 (call collect)
(800) 323-5678 (call toll free)
March 21, 2000
<PAGE>
EXHIBIT 99(a)(5)(iv)
FOR IMMEDIATE RELEASE
- ---------------------
March 21, 2000
Contact: Contacts:
Lee McGee
(410) 843-8704
Linda Palarino
(410) 843-8094
SYLVAN LEARNING SYSTEMS, INC. ANNOUNCES TENDER OFFER FOR ITS COMMON STOCK
Baltimore, Maryland, March 21, 2000 - Sylvan Learning Systems, Inc.
(NASDAQ: SLVN) today announced that it has commenced a "Dutch Auction" tender
offer to purchase up to 9.5 million shares, or approximately 19 percent, of
its outstanding common stock at a premium to the closing price of Sylvan's
common stock on Monday, March 20, 2000. The company intends to finance the
repurchase with a portion of the proceeds of the sale on March 6, 2000 of its
computer-based testing division, known as Prometric, to The Thomson Corporation.
According to Douglas Becker, CEO of Sylvan, "Our recently announced
strategy emphasizes both the opportunity to grow our core educational services
operating businesses and the significant investment potential of our new
Internet "e-learning" Incubator. This new structure will allow Sylvan to become
the true clicks-and-mortar leader in the educational industry. We believe that
this strategy will enable us to maximize shareholder value. We are making the
offer to buy back our shares because we believe that our shares are undervalued
in the public market and that the offer is consistent with our long-term
corporate goal of increasing shareholder value."
Sylvan plans to repurchase up to 9.5 million shares of its common stock
at a single, per-share price within a price range of $15.25 to $17.50 per
share. Under the terms of the offer, shareholders will have the opportunity to
tender all or a portion of their shares at a price within this specified price
range. The closing price of Sylvan's common stock on Monday, March 20, 2000, was
$14.875 per share. Shareholders whose shares are purchased in the offer will
be paid the same purchase price net in cash, without interest, after expiration
of the offer period.
Sylvan's Board of Directors has approved the offer. However, neither Sylvan
nor its Board of Directors nor the Dealer Managers is making any recommendation
to its shareholders as to whether to tender or
<PAGE>
refrain from tendering their shares or as to the price or prices at which
shareholders may choose to tender their shares. Shareholders must make their own
decision as to whether to tender their shares and, if so, how many shares to
tender and the price or prices at which such shares should be tendered. Sylvan's
directors and executive officers have advised Sylvan that they will not tender
any of their shares in the offer.
THIS PRESS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT AN
OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL ANY SHARES OF SYLVAN'S
COMMON STOCK. THE SOLICITATION OF OFFERS TO BUY SYLVAN'S COMMON STOCK WILL ONLY
BE MADE PURSUANT TO THE OFFER TO PURCHASE AND RELATED MATERIALS THAT SYLVAN WILL
BE SENDING OUT TO ITS SHAREHOLDERS SHORTLY. SHAREHOLDERS SHOULD READ THOSE
MATERIALS CAREFULLY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING
THE VARIOUS TERMS AND CONDITIONS TO THE OFFER.
The tender offer will expire on Monday, April 17, 2000, at 12:00 Midnight,
Eastern time, unless the company elects to extend the offer. The offer is
subject to various conditions described on the Offer to Purchase.
About Sylvan Learning Systems
Sylvan Learning Systems, Inc. (www.sylvan.net) is the leading provider of
--------------
educational services to families, schools and industry. The Sylvan Learning
Centers and Contract Education Services divisions provide personalized
instruction services to K-12 students through direct consumer relationships and
under contract to school systems. Sylvan provides courses to adult students
throughout the world in the areas of English language, Teacher Training and
accredited University offerings through the Wall Street Institute/ ASPECT,
Canter and Sylvan International Universities subsidiaries. Through its
affiliate, Caliber Learning Network, Inc., Sylvan also has the ability to
distribute world-class adult professional education and training programs.
This release may include information that could constitute forward-looking
statements made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. Any such forward-looking statements may involve
risk and uncertainties that could cause actual results to differ materially from
any future results encompassed within the forward-looking statements. Factors
that could cause or contribute to such differences include those matters
disclosed in the Sylvan's Security and Exchange Commission filings.
<PAGE>
EXHIBIT 99(a)(5)(v)
SYLVAN LEARNING SYSTEMS, INC.
March 21, 2000
To Our Shareholders:
We invite you to tender your shares of our common stock for purchase by
Sylvan. We are offering to purchase up to 9,500,000 shares at a price not
greater than $17.50 nor less than $15.25 per share, net to the seller in cash,
without interest, as specified by shareholders tendering their shares.
We will select the lowest purchase price that will allow us to buy 9,500,000
shares or, if a lesser number of shares are properly tendered, all shares that
are properly tendered and not withdrawn. All shares acquired in the offer will
be acquired at the same purchase price.
Our offer is being made upon the terms and subject to the conditions set
forth in the enclosed Offer to Purchase and related Letter of Transmittal. I
encourage you to read these materials carefully before making any decision
with respect to the offer. The offer will expire at 12:00 Midnight, Eastern
time, on Monday, April 17, 2000, unless we extend it.
Our recently announced new business strategy emphasizes both growing our
core educational services operating businesses and the significant value-
creation potential of our internet incubator company. We believe this new
strategy provides shareholders a unique investment opportunity and will enable
us to maximize shareholder value. We are making the offer to buy back our
shares because we believe that our shares are undervalued in the public market
and that the offer is consistent with our long-term corporate goal of
increasing shareholder value. We believe that the offer is a prudent use of
our financial resources, given our newly announced business strategy, as well
as our assets and current market price of our common stock. We also believe
that investing in our own shares is an attractive use of capital and an
efficient means to provide value to our shareholders.
Our Board has approved the offer. However, neither we nor our Board of
Directors nor the Dealer Managers makes any recommendation to shareholders as
to whether to tender or refrain from tendering their shares or as to the
purchase price at which shareholders should tender their shares, and none of
them have authorized any person to make any recommendation. Shareholders are
urged to evaluate carefully all information in the offer, consult with their
own investment and tax advisors and make their own decision whether to tender
and, if so, how many shares to tender and the price or prices at which to
tender them. We have been advised that none of our directors or executive
officers intends to tender any of their shares pursuant to the offer.
We have included a summary of the terms of the offer in the Offer to
Purchase. Please read the Offer to Purchase and Letter of Transmittal for more
information about the offer.
If you do not wish to participate in this offer, you do not need to take any
action. If you do wish to tender your shares, the instructions on how to
tender shares are explained in detail in the enclosed materials.
If you have any questions regarding the offer or need assistance in
tendering your shares, please contact D.F. King & Co., Inc., the Information
Agent for the offer, at (800) 487-4870 (toll-free).
Sincerely,
SYLVAN LEARNING SYSTEMS, INC.
/s/ Douglas L. Becker
------------------------------------
Douglas L. Becker
Chairman and Chief Executive Officer
