-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Eq1iLytq9ujL/iLIDVlKEIXC448F376nP5ic75GyzXyYURzuP2Z1bZXvuQVPuIcO cpu8EPEnq1veshNdIliCoQ== 0000950169-00-000222.txt : 20000322 0000950169-00-000222.hdr.sgml : 20000322 ACCESSION NUMBER: 0000950169-00-000222 CONFORMED SUBMISSION TYPE: SC TO-I PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 20000321 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SYLVAN LEARNING SYSTEMS INC CENTRAL INDEX KEY: 0000912766 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 521492296 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I SEC ACT: SEC FILE NUMBER: 005-42825 FILM NUMBER: 574922 BUSINESS ADDRESS: STREET 1: 1000 LANCASTER ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 4108438000 MAIL ADDRESS: STREET 1: 1000 LANCASTER ST CITY: BALTIMORE STATE: MD ZIP: 21202 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SYLVAN LEARNING SYSTEMS INC CENTRAL INDEX KEY: 0000912766 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 521492296 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I BUSINESS ADDRESS: STREET 1: 1000 LANCASTER ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 4108438000 MAIL ADDRESS: STREET 1: 1000 LANCASTER ST CITY: BALTIMORE STATE: MD ZIP: 21202 SC TO-I 1 SYLVAN LEARNING SYSTEMS TENDER OFFER 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 [_] 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. 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 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. EX-99.A.1.I 2 OFFER TO PURCHASE 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. 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. 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 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 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 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 TABLE OF CONTENTS 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
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 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 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. 3 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. 4 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 5 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. 6 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. 7 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); 8 . 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. 9 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. 10 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 (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 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 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 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. 15 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. 16 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 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; 18 .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.
High Low ------ ------ 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
19 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 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.
SEC Filings (File No. 0-22844) Period or Date Filed ------------------------------ -------------------------------- 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
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 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.
Percent of Name Position Number Outstanding Shares (%) ---- ------------------------ --------- ---------------------- 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 *
- -------- * 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 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 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 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 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 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 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 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) EX-99.A.1.II 3 LETTER OF TRANSMITTAL 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 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.
This Letter of Transmittal, including the accompanying instructions, should be read carefully before this Letter of Transmittal is completed. DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------- 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) - ------------------------------------------------------------------------------------------------------- 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.) - -------------------------------------------------------------------------------------------------------
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 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 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 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 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 [_]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.)
Name Interest ---- --------
(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 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 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 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 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 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 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 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 (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 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 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 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 EX-99.A.1.III 4 NOTICE OF GUARANTEED DELIVERY 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 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.
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. 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. 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: ________________________________________________________________ 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. EX-99.A.1.IV 5 LETTER TO 401(K) PLAN 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. 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 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. . 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. EX-99.A.1.V 6 LETTER TO BROKER DEALERS 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. 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. 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. EX-99.A.1.VI 7 LETTER TO PARTICIPANTS 401(K) 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. 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 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 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 EX-99.A.1.VII 8 LETTER TO EMPLOYEE STOCK PURCHASE PLAN 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. 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. If you wish to tender your shares, complete the Information Form and either: 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
If you have any questions, contact Salomon Smith Barney's Stock Plan Operations Department at (800) 367-4777 (toll free). 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 EX-99.A.5.I 9 LETTER TO CLIENT 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, 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 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 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. 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 ------------- EX-99.A.5.II 10 GUIDELINES W-9 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.
- ------------------------------------------------ -------------------------------------------------- Give the SOCIAL Give the EMPLOYER SECURITY IDENTIFICATION For this type of account: number of-- For this type of account: number of-- - ------------------------------------------------ -------------------------------------------------- 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 - ------------------------------------------------ --------------------------------------------------
(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. 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. EX-99.A.5.III 11 SUMMARY ADVERTISEMENT 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 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 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. 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 EX-99.A.5.IV 12 PRESS RELEASE 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 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. EX-99.A.5.V 13 LETTER TO SHAREHOLDERS 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 -----END PRIVACY-ENHANCED MESSAGE-----