0000950123-01-506891.txt : 20011009
0000950123-01-506891.hdr.sgml : 20011009
ACCESSION NUMBER: 0000950123-01-506891
CONFORMED SUBMISSION TYPE: SC TO-T
PUBLIC DOCUMENT COUNT: 20
FILED AS OF DATE: 20011002
GROUP MEMBERS: SBC INTERNET COMMUNICATIONS INC
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: PRODIGY COMMUNICATIONS CORP
CENTRAL INDEX KEY: 0000824740
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370]
IRS NUMBER: 043323363
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC TO-T
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-55923
FILM NUMBER: 1750609
BUSINESS ADDRESS:
STREET 1: 6500 RIVER PLACE BOULEVARD
STREET 2: BUILDING III
CITY: AUSTIN
STATE: TX
ZIP: 78730
BUSINESS PHONE: 5125271150
MAIL ADDRESS:
STREET 1: 6500 RIVER PLACE BUILDING III
CITY: AUSTIN
STATE: TX
ZIP: 78730
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: PRODIGY COMMUNICATIONS CORP
CENTRAL INDEX KEY: 0000824740
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370]
IRS NUMBER: 043323363
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-55923
FILM NUMBER: 1750610
BUSINESS ADDRESS:
STREET 1: 6500 RIVER PLACE BOULEVARD
STREET 2: BUILDING III
CITY: AUSTIN
STATE: TX
ZIP: 78730
BUSINESS PHONE: 5125271150
MAIL ADDRESS:
STREET 1: 6500 RIVER PLACE BUILDING III
CITY: AUSTIN
STATE: TX
ZIP: 78730
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: SBC COMMUNICATIONS INC
CENTRAL INDEX KEY: 0000732717
STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813]
IRS NUMBER: 431301883
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC TO-T
BUSINESS ADDRESS:
STREET 1: 175 E HOUSTON
STREET 2: ROOM 9-4
CITY: SAN ANTONIO
STATE: TX
ZIP: 78205
BUSINESS PHONE: 2108214105
MAIL ADDRESS:
STREET 1: 175 E HOUSTON
STREET 2: ROOM 9-4
CITY: SAN ANTONIO
STATE: TX
ZIP: 78205
FORMER COMPANY:
FORMER CONFORMED NAME: SOUTHWESTERN BELL CORP
DATE OF NAME CHANGE: 19920703
SC TO-T
1
d90977scto-t.txt
SCHEDULE TO
1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
SCHEDULE TO
(Rule 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------------
PRODIGY COMMUNICATIONS CORPORATION
(Name of Subject Company)
SBC INTERNET COMMUNICATIONS, INC.
(Offeror)
SBC COMMUNICATIONS INC.
(Offeror)
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
CUSIP 74283 P107
(CUSIP Number of Class of Securities)
WAYNE A. WIRTZ
SBC COMMUNICATIONS INC.
175 E. HOUSTON STREET
SAN ANTONIO, TX 78205
(210) 351-3736
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Filing Persons)
with a copy to:
JOSEPH B. FRUMKIN
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NY 10004-2498
(212) 558-4000
-----------------------
CALCULATION OF FILING FEE
Transaction Valuation(1): $407,137,143 Amount of Filing Fee(2): $81,428
(1) For purposes of calculating fee only. This amount is based upon (a) the
maximum number of Shares to be purchased pursuant to the Offer and (b) the
price offered per Share.
(2) The amount of the filing fee, calculated in accordance with Regulation
2
240.0-11 under the Securities Exchange Act of 1934, as amended, equals 1/50 of
one percent of the Transaction Valuation.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Not applicable
Form or Registration No.: Not applicable
Filing Party: Not applicable
Date Filed: Not applicable
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which
the statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[X] going-private transaction subject to Rule 13e-3.
[X] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [ ]
CUSIP NO. 74283 P 10 7
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
SBC Communications Inc.; I.R.S. Identification No. 43-1301883
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
AF, WC, 00
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 50,509,533
EACH
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH
10. SHARED DISPOSITIVE POWER
50,509,533
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
50,509,533 shares
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
41.77%
14. TYPE OF REPORTING PERSON
HC, CO
CUSIP NO. 74283 P 10 7
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
SBC Internet Communications, Inc.; I.R.S. Identification No. 74-2937337
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS
AF, WC, 00
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 50,448,283
EACH
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 0
WITH
10. SHARED DISPOSITIVE POWER
50,448,283
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
50,448,283 shares
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
41.72%
14. TYPE OF REPORTING PERSON
CO
This Tender Offer Statement, Rule 13e-3 Transaction Statement and Schedule
13D/A filed under cover of Schedule TO relates to the offer by SBC Internet
Communications, Inc., a Delaware corporation ("SBC Internet") and an indirect
wholly owned subsidiary of SBC Communications Inc., a Delaware corporation
("SBC"), to purchase all outstanding shares of Class A Common Stock, par value
$0.01 per share (the "Shares"), of Prodigy Communications Corporation, a
Delaware corporation (the "Company"), at a purchase price of $5.45 per Share net
to the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated October 2, 2001 (the "Offer to Purchase"), a copy of
which is attached hereto as Exhibit 12(a)(1)(i), and in the related Letter of
Transmittal (which, together with the Offer to Purchase, constitute the
"Offer"), a copy of which is attached hereto as Exhibit 12(a)(1)(ii).
ITEM 4. TERMS OF THE TRANSACTION.
(a) Reference is made to the information set forth under "Summary Term
Sheet", "Introduction", "Special Factors - Purpose of the Offer; SBC Plans for
Prodigy", "Special Factors - Certain Effects of the Offer", Section 1 ("Terms of
the Offer"), Section 2 ("Acceptance for Payment and Payment for Shares"),
Section 3 ("Procedures for Tendering Shares") and Section 4 ("Rights of
Withdrawal") of the Offer to Purchase, which is incorporated herein by
reference.
ITEM 6. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a) and (c)(1)-(7) Reference is made to the information set forth under
"Introduction", "Special Factors - Background of the Offer", "Special Factors -
Purpose of the Offer; SBC Plans for Prodigy", "Special Factors - Certain Effects
of the Offer", and Section 8 ("Merger; Section 203; Appraisal Rights; Rule
13e-3") of the Offer to Purchase, which is incorporated herein by reference.
-2-
3
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a), (b) and (d) Reference is made to the information set forth under
Section 9 ("Source and Amount of Funds") of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 10. FINANCIAL STATEMENTS.
(a) The financial statements of SBC and SBC Internet are not material to
the Offer.
(b) The pro forma financial statements of SBC and SBC Internet are not
material to the Offer.
ITEM 11. ADDITIONAL INFORMATION.
(a)(1) None.
(a)(2) Reference is made to the information set forth under "Introduction",
Section 2 ("Acceptance for Payment and Payment for Shares"), Section 3
("Procedures for Tendering Shares"), Section 9 ("Merger; Section 203; Appraisal
Rights; Rule 13e-3") and Section 12 ("Certain Legal Matters") of the Offer to
Purchase, which is incorporated herein by reference.
(a)(3) Reference is made to the information set forth under Section 12
("Certain Legal Matters") of the Offer to Purchase, which is incorporated herein
by reference.
(a)(4) Reference is made to the information set forth under "Special
Factors - Certain Effects of the Offer" of the Offer to Purchase, which is
incorporated herein by reference.
(a)(5) Reference is made to the information set forth under Section 12
("Certain Legal Matters") of the Offer to Purchase, which is incorporated
herein by reference.
(b) Reference is made to the Letter of Transmittal and the information set
forth under "Special Factors - Prodigy Financial Models and Projections" and
Schedule C ("Summary of Prodigy Financial Models and Projections") of the Offer
to Purchase, which is incorporated herein by reference.
ITEM 12. EXHIBITS.
(a)(1)(i) Offer to Purchase dated October 2, 2001.
(a)(1)(ii) Letter of Transmittal.
(a)(1)(iii) Notice of Guaranteed Delivery.
(a)(1)(iv) Letter from the Dealer Manager to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(v) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(1)(vi) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(a)(1)(vii) Summary Advertisement as published on October 2, 2001.
(a)(1)(viii)* Text of Press Release issued by SBC on September 21, 2001.
(a)(5)(i) Complaint of Leonard Schwartz, individually and on behalf of
all others similarly situated, against Prodigy Communications Corporation,
SBC Communications Inc., et. al. filed in the Court of Chancery of the State
of Delaware on September 24, 2001.
-3-
4
(a)(5)(ii) Complaint of Rose Meisner, on behalf of herself and all
others similarly situated, against Prodigy Communications Corporation, SBC
Communications Inc., et. al. filed in the Court of Chancery of the State of
Delaware on September 24, 2001.
(a)(5)(iii) Complaint of Mary Jane Crescente, individually and on behalf
of all others similarly situated, against Prodigy Communications Corporation,
SBC Communications Inc., et. al. filed in the Court of Chancery of the State
of Delaware on September 24, 2001.
(a)(5)(iv) Complaint of Rolling Investor Group, Inc., individually and
on behalf of all others similarly situated, against Prodigy Communications
Corporation, SBC Communications Inc., et. al. filed in the Court of Chancery
of the State of Delaware on September 24, 2001.
(a)(5)(v) Complaint of Bertha Mandelbaum, individually and on behalf of
all others similarly situated, against Prodigy Communications Corporation,
SBC Communications Inc., et. al. filed in the Court of Chancery of the State
of Delaware on September 24, 2001.
(a)(5)(vi) Complaint of Katy Lemberg, individually and on behalf of all
others similarly situated, against SBC Communications Inc., et. al. filed in
the Court of Chancery of the State of Delaware on September 24, 2001.
(a)(5)(vii) Complaint of Fishel Rispler, individually and on behalf of
all others similarly situated, against Prodigy Communications Corporation,
SBC Communications Inc., et. al. filed in the Court of Chancery of the State
of Delaware on September 24, 2001.
(a)(5)(viii) Complaint of Barry Feldman, individually and on behalf of
all others similarly situated, against Prodigy Communications Corporation,
SBC Communications Inc., et. al. filed in the Court of Chancery of the State
of Delaware on September 24, 2001.
(a)(5)(ix) Complaint of Joseph Leone, individually and on behalf of all
others similarly situated, against SBC Communications Inc., et. al. filed in the
Court of Chancery of the State of Delaware on September 24, 2001.
(a)(5)(x) Complaint of Toby R. Madison, individually and on behalf of all
others similarly situated, against Prodigy Communications Corporation, SBC
Communications Inc., et. al. filed in the Court of Chancery of the State of
Delaware on September 26, 2001.
(a)(5)(xi) Complaint of Thomas Ford, individually and on behalf of all
others similarly situated, against Prodigy Communications Corporation, SBC
Communications Inc., et. al. filed in the Court of Chancery of the State of
Delaware on September 26, 2001.
(b) None.
(d) None.
(g) None.
(h) None.
--------------
* Previously filed with the SEC as an exhibit to SBC's Schedule TO dated
September 21, 2001 and available for inspection in the manner set forth with
respect to information concerning SBC in Section 7 of the Offer to Purchase.
-4-
5
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
Item 1. Summary Term Sheet.
Reference is made to the information set forth under "Summary Term Sheet"
and "Questions and Answers" of the Offer to Purchase, which is incorporated
herein by reference.
Item 2. Subject Company Information.
(a) Reference is made to the information set forth under Section
6 ("Certain Information Concerning Prodigy") of the Offer to Purchase, which is
incorporated herein by reference.
(b) Reference is made to the information set forth under
"Introduction" of the Offer to Purchase, which is incorporated herein by
reference.
(c) Reference is made to the information set forth under Section
5 ("Price Range of Shares; Dividends") of the Offer to Purchase, which is
incorporated herein by reference.
(d) Reference is made to the information set forth under Section
5 ("Price Range of Shares; Dividends") of the Offer to Purchase, which is
incorporated herein by reference.
(e) Not Applicable.
(f) Reference is made to the information set forth under Schedule
B ("Security Ownership of Certain Beneficial Owners and Management") of the
Offer to Purchase, which is incorporated herein by reference.
Item 3. Identity and Background of Filing Person.
(a) Reference is made to the information set forth under Section 7
("Certain Information Concerning SBC and SBC Internet") and Schedule A
("Information Concerning the Directors and Executive Officers of SBC and SBC
Internet") of the Offer to Purchase, which is incorporated herein by reference.
(b) Reference is made to the information set forth under Section 7
("Certain Information Concerning SBC and SBC Internet") and Schedule A
("Information Concerning the Directors and Executive Officers of SBC and SBC
Internet") of the Offer to Purchase, which is incorporated herein by reference.
(c) Reference is made to the information set forth under Section 7
("Certain Information Concerning SBC and SBC Internet") and Schedule A
("Information Concerning the Directors and Executive Officers of SBC and SBC
Internet") of the Offer to Purchase, which is incorporated herein by reference.
Item 4. Terms of the Transaction.
(c) None.
-5-
6
(d) Reference is made to the information set forth under Section
8 ("Merger; Section 203; Appraisal Rights; Rule 13e-3") and Schedule D ("Section
262 of the Delaware General Corporate Law") of the Offer to Purchase, which is
incorporated herein by reference.
(e) Not applicable.
(f) Not applicable.
Item 5. Past Contacts, Transactions, Negotiations and Agreements.
(a) Reference is made to the information set forth under "Special
Factors - Background of SBC's Investment in Prodigy", "Special Factors - Terms
of Prodigy's Strategic Relationship with SBC", "Special Factors - Implementation
and Modification to Operating Relationships", "Special Factors - Relationships
between SBC, Telmex and America Movil", "Special Factors - Other Prodigy
Information or Projections" and Schedule A ("Information Concerning the
Directors and Executive Officers of SBC and SBC Internet") of the Offer to
Purchase, which is incorporated herein by reference.
(b) Reference is made to the information set forth under "Special
Factors - Background of the Offer", "Special Factors - Purpose of the Offer; SBC
Plan for Prodigy", Section 7 ("Certain Information Concerning SBC and SBC
Internet"), "Special Factors - Relationships between SBC, Telmex and America
Movil" of the Offer to Purchase and Schedule C ("Summary of Prodigy Financial
Models and Projections"), which is incorporated by reference.
(c) Reference is made to the information set forth under
"Introduction", "Special Factors - Background of SBC's Investment in Prodigy"
and "Special Factors - Background of the Offer" of the Offer to Purchase, which
is incorporated herein by reference.
(e) Reference is made to the information set forth under
"Introduction", Section 1 ("Terms of the Offer"), Section 2 ("Acceptance for
Payment and Payment for Shares"), Section 3 ("Procedure for Tendering Shares"),
Section 4 ("Rights of Withdrawal"), Section 9 ("Source and Amount of Funds") and
Section 10 ("Certain Conditions of the Offer") of the Offer to Purchase, which
is incorporated herein by reference.
Item 6. Purposes of the Transaction and Plans or Proposals
(b) Reference is made to the information set forth under "Special
Factors - Purpose of the Offer; SBC Plans for Prodigy" of the Offer to Purchase,
which is incorporated by reference.
(c)(8) Reference is made to the information set forth under
"Special Factors - Certain Effects of the Offer" of the Offer to Purchase, which
is incorporated herein by reference.
Item 7. Purposes, Alternatives, Reasons and Effects.
(a), (b) and (c) Reference is made to the information set forth
under "Introduction", "Special Factors - Background of the Offer", "Special
Factors - Purpose of the Offer; SBC Plans for Prodigy" and "Special Factors -
Purchaser's and SBC's Position Regarding the Fairness of the Offer" of the
Offer to Purchase, which is incorporated herein by reference.
(d) Reference is made to the information set forth under "Special
Factors - Certain Effects of the Offer", "Special Factors - Certain Federal
Income Tax Consequences of the Offer" and Section 8 ("Merger; Section 203;
Appraisal Rights; Rule 13e-3") of the Offer to Purchase, which is incorporated
herein by reference.
-6-
7
Item 8. Fairness of the Transaction.
(a), (b), (c), (d), (e) and (f) Reference is made to the
information set forth under "Special Factors - Background of the Offer",
"Special Factors - Purchaser's and SBC's Position Regarding the Fairness of the
Offer" and "Special Factors - Purpose of the Offer; SBC Plans for Prodigy" of
the Offer to Purchase, which is incorporated herein by reference.
Item 9. Reports, Opinions, Appraisals and Negotiations.
(a), (b) and (c) Reference is made to the information set forth
under "Special Factors - Preliminary Report of Goldman Sachs to SBC" of the
Offer to Purchase, which is incorporated herein by reference.
Item 10. Source and Amount of Funds or Other Consideration.
(c) Reference is made to the information set forth under Section
13 ("Fees and Expenses") of the Offer to Purchase, which is incorporated by
reference.
Item 11. Interest in Securities of the Subject Company.
(a) Reference is made to the information set forth under
"Introduction", "Certain Information Concerning SBC and SBC Internet", Schedule
A ("Information Concerning the Directors and Executive Officers of SBC and SBC
Internet") and Schedule B ("Security Ownership of Certain Beneficial Owners and
Management") of the Offer to Purchase, which is incorporated herein by
reference.
(b) Reference is made to the information set forth under Schedule
B ("Security Ownership of Certain Beneficial Owners and Management") of the
Offer to Purchase, which is incorporated herein by reference.
Item 12. The Solicitation or Recommendation.
(d) Reference is made to the information set forth under Section
12 ("Certain Legal Matters") and Section 6 ("Certain Information Concerning
Prodigy") of the Offer to Purchase, which is incorporated herein by reference.
(e) The filing persons are not aware of any officer, director or
affiliate of the Company or any person listed on Schedule A to the Offer to
Purchase who has made a recommendation either in support of or against the
Offer.
Item 13. Financial Statements.
(a) (1) The audited consolidated financial statements of the
Company as of and for the fiscal years ended December 31, 2000 and December 31,
1999 are incorporated herein by reference to the Consolidated Financial
Statements of the Company included as Item 8 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000 filed with the Securities
and Exchange Commission (the "Commission") on April 2, 2001.
(2) The unaudited consolidated financial statements of the
Company for the three and six month fiscal periods ended June 30, 2001 are
incorporated herein by reference to Item 1 ("Financial Statements") of Part I of
the Company's Quarterly Report on Form 10-Q for the quarter ended July 1, 2001
filed with the Commission on August 14, 2001.
-7-
8
(3) Reference is made to the information set forth under
Section 6 ("Certain Information Concerning Prodigy") of the Offer to Purchase,
which is incorporated herein by reference.
(4) Reference is made to the information set forth under
Section 6 ("Certain Information Concerning Prodigy") of the Offer to Purchase,
which is incorporated herein by reference.
(b) The pro forma financial statements of the Company are not
material to the Offer.
(c) Reference is made to the information set forth under Section
6 ("Certain Information Concerning Prodigy") of the Offer to Purchase, which is
incorporated herein by reference.
Item 14. Persons/Assets Retained, Employed, Compensated or Used.
(a) Reference is made to the information set forth under
"Introduction" and Item 13 ("Fees and Expenses") of the Offer to Purchase, which
is incorporated herein by reference.
(b) None.
Item 16. Exhibits.
(c) Report of Goldman, Sachs & Co. to SBC Communications Inc.,
dated June 19, 2001.
(f) Section 262 of the Delaware General Corporation Law
(included as Schedule D of the Offer to Purchase filed herewith as Exhibit
(a)(1)(i)).
-8-
9
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.
SBC INTERNET COMMUNICATIONS, INC.
By: /s/ Richard C. Dietz
------------------------------
Name: Richard C. Dietz
Title: President
SBC COMMUNICATIONS INC.
By: /s/ Michael J. Viola
-------------------------------
Name: Michael J. Viola
Title: Vice President and Treasurer
Date: October 2, 2001
-9-
10
EXHIBIT INDEX
EXHIBIT DESCRIPTION
(a)(1)(i) Offer to Purchase dated October 2, 2001.
(a)(1)(ii) Letter of Transmittal.
(a)(1)(iii) Notice of Guaranteed Delivery.
(a)(1)(iv) Letter from the Dealer Managers to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(1)(v) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(1)(vi) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(1)(vii) Summary Advertisement as published on October 2, 2001.
(a)(1)(viii)* Press Release issued by SBC on September 21, 2001.
(a)(5)(i) Complaint of Leonard Schwartz, individually and on behalf of all
others similarly situated, against Prodigy Communications
Corporation, SBC Communications Inc., et. al. filed in the Court
of Chancery of the State of Delaware on September 24, 2001.
(a)(5)(ii) Complaint of Rose Meisner, on behalf of herself and all others
similarly situated, against Prodigy Communications Corporation,
SBC Communications Inc., et. al. filed in the Court of Chancery
of the State of Delaware on September 24, 2001.
(a)(5)(iii) Complaint of Mary Jane Crescente, individually and on behalf of
all others similarly situated, against Prodigy Communications
Corporation, SBC Communications Inc., et. al. filed in the Court
of Chancery of the State of Delaware on September 24, 2001.
(a)(5)(iv) Complaint of Rolling Investor Group, Inc., individually and on
behalf of all others similarly situated, against Prodigy
Communications Corporation, SBC Communications Inc., et. al.
filed in the Court of Chancery of the State of Delaware on
September 24, 2001.
(a)(5)(v) Complaint of Bertha Mandelbaum, individually and on behalf of all
others similarly situated, against Prodigy Communications
Corporation, SBC Communications Inc., et. al. filed in the Court
of Chancery of the State of Delaware on September 24, 2001.
(a)(5)(vi) Complaint of Katy Lemberg, individually and on behalf of all
others similarly situated, against SBC Communications Inc., et.
al. filed in the Court of Chancery of the State of Delaware on
September 24, 2001.
(a)(5)(vii) Complaint of Fishel Rispler, individually and on behalf of all
others similarly situated, against Prodigy Communications
Corporation, SBC Communications Inc., et. al. filed in the Court
of Chancery of the State of Delaware on September 24, 2001.
-10-
11
(a)(5)(viii) Complaint of Barry Feldman, individually and on behalf of
all others similarly situated, against Prodigy Communications
Corporation, SBC Communications Inc., et. al. filed in the Court
of Chancery of the State of Delaware on September 24, 2001.
(a)(5)(ix) Complaint of Joseph Leone, individually and on behalf of all
others similarly situated, against SBC Communications Inc.,
et. al. filed in the Court of Chancery of the State of
Delaware on September 24, 2001.
(a)(5)(x) Complaint of Toby R. Madison, individually and on behalf of all
others similarly situated, against Prodigy Communications
Corporation, SBC Communications Inc., et. al. filed in the Court
of Chancery of the State of Delaware on September 26, 2001.
(a)(5)(xi) Complaint of Thomas Ford, individually and on behalf of all
others similarly situated, against Prodigy Communications
Corporation, SBC Communications Inc., et. al. filed in the Court
of Chancery of the State of Delaware on September 26, 2001.
(b) None.
(c) Report of Goldman, Sachs & Co. to SBC Communications Inc.,
dated June 19, 2001.
(d) None.
(f) Section 262 of the Delaware General Corporation Law (included
as Schedule D of the Offer to Purchase filed herewith as
Exhibit (a)(1)(i)).
(g) None.
(h) None.
------------
* Previously filed with the SEC as an exhibit to SBC's Schedule TO dated
September 21, 2001 and available for inspection in the manner set forth
with respect to information concerning SBC in Section 7 of the Offer to
Purchase.
-11-
EX-99.A.1.I
3
d90977ex99-a_1i.txt
OFFER TO PURCHASE
1
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF CLASS A COMMON STOCK
OF
PRODIGY COMMUNICATIONS CORPORATION
AT
$5.45 NET PER SHARE
BY
SBC INTERNET COMMUNICATIONS, INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SBC COMMUNICATIONS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, OCTOBER 30, 2001, WHICH DATE MAY BE EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN A NUMBER OF SHARES OF CLASS A COMMON STOCK, PAR VALUE
$.01 PER SHARE (THE "SHARES"), OF PRODIGY COMMUNICATIONS CORPORATION WHICH,
EXCLUDING THE SHARES BENEFICIALLY OWNED BY SBC COMMUNICATIONS INC. AND ITS
SUBSIDIARIES, WILL CONSTITUTE AT LEAST A MAJORITY OF THE REMAINING OUTSTANDING
SHARES ON A FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE ACCEPTED FOR
PAYMENT PURSUANT TO THE OFFER (THE "MINIMUM TENDER CONDITION"). THE OFFER IS
ALSO SUBJECT TO CERTAIN OTHER CONDITIONS DESCRIBED IN SECTION 10.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION OR PASSED UPON THE
MERITS OR FAIRNESS OF SUCH TRANSACTION OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should, as applicable, (1) complete and sign the Letter of Transmittal or
a facsimile thereof in accordance with the instructions in the Letter of
Transmittal, including any required signature guarantees, and mail or deliver
the Letter of Transmittal or such facsimile with such stockholder's
certificate(s) for the tendered Shares and any other required documents to the
Depositary (as defined herein), (2) follow the procedure for book-entry transfer
of Shares set forth in Section 3 or (3) request such stockholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Stockholders having Shares registered in the
name of a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other nominee if
they desire to tender Shares so registered.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available, or who cannot comply with the procedure
for book-entry transfer on a timely basis, may tender such Shares by following
the procedures for guaranteed delivery set forth in Section 3.
2
Questions and requests for assistance may be directed to the Information
Agent (as defined herein) or to the Dealer Managers (as defined herein) at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase and
the Letter of Transmittal may be directed to the Information Agent or to
brokers, dealers, commercial banks or trust companies.
---------------------
THE DEALER MANAGERS FOR THE OFFER ARE:
GOLDMAN, SACHS & CO.
The date of this Offer to Purchase is
October 2, 2001
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SUMMARY TERM SHEET
This summary highlights important and material information from this Offer
to Purchase but is intended to be an overview only. To fully understand the
offer described in this document and for a more complete description of the
terms of the offer described in this document, you should read carefully this
entire Offer to Purchase, the appendices to this Offer to Purchase, documents
incorporated by reference or otherwise referred to herein and the Letter of
Transmittal. We have included section references to direct you to a more
complete description of the topics contained in this summary.
- SBC and SBC Internet, a subsidiary of SBC, currently own approximately
42% of the Prodigy voting power and are proposing to acquire all of the
Class A Common Stock of Prodigy at a price of $5.45 per share. See
Section 1 beginning on page 22 for a description of the terms of the
Offer.
- This is a "going private" transaction. If the tender offer is completed,
SBC Internet and SBC intend to cause Prodigy to merge with SBC Internet
or an affiliate of SBC Internet and as a result:
- SBC will own all of the equity interests in Prodigy;
- you will no longer have any interest in Prodigy's future earnings or
growth;
- Prodigy will no longer be a public company; and
- Prodigy common stock will no longer trade on the Nasdaq National
Market.
See "Special Factors -- Certain Effects of the Offer" beginning on page
19.
- The tender offer has been commenced without obtaining the prior approval
of Prodigy's board of directors.
- SBC Internet has extensive commercial agreements with Prodigy that SBC
Internet will be free to modify if the tender offer and merger are
completed. See "Special Factors -- Terms of Prodigy's Strategic
Relationship with SBC" beginning on page 4 and "Special
Factors -- Implementation and Modifications to Operating Relationships"
beginning on page 5.
- The tender offer is conditioned on the tender of at least a majority of
the Class A Common Stock of Prodigy owned by persons other than SBC and
its subsidiaries. Because persons and entities affiliated with Telefonos
de Mexico (the "Telmex Affiliates") own approximately 59.3% of the Class
A Common Stock outstanding, this condition cannot be satisfied unless the
Telmex Affiliates tender at least a substantial portion of their shares.
Carlos Slim Helu is the Chairman of two of the Telmex Affiliates and he
also is a member of the board of directors of SBC. According to published
news reports on September 27, 2001, the Telmex Affiliates have said they
are studying the offer and have yet to make a final decision on whether
to sell their shares. See "Special Factors -- Relationships between SBC,
Telmex and America Movil" beginning on page 19.
- Stockholders who sell their shares in the offer will, if the offer is
completed, receive cash for their shares sooner than shareholders who
wait for the merger, but shareholders who tender will not be entitled to
a judicial appraisal of the fair value of their shares under Delaware law
and any shareholders who do not tender their shares and properly dissent
from the merger may exercise such appraisal rights. See Section 8
beginning on page 31 for more information on appraisal rights.
- SBC Internet presently intends to pay in a subsequent merger the same
consideration as is paid in the tender offer.
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QUESTIONS AND ANSWERS ABOUT THE TENDER OFFER
- WHO IS OFFERING TO BUY MY SECURITIES?
SBC Internet Communications, Inc., a Delaware corporation and an indirect
wholly owned subsidiary of SBC Communications Inc., is offering to buy your
securities as described in this document. See Section 7 of this document for
further information about SBC Internet and SBC.
- WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
SBC Internet is offering to buy all of the shares of Class A Common Stock of
Prodigy not currently owned by SBC or its subsidiaries. For information about
the conditions to which the offer is subject, see Section 10 of this document.
- HOW MUCH IS SBC INTERNET OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
SBC Internet is offering to pay $5.45 in cash for each share of Class A Common
Stock of Prodigy. See Section 1 of this document for information about the
terms of the offer.
- DOES SBC INTERNET HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Yes. SBC will assure that SBC Internet has the financial resources to fund the
offer described in this document with cash on hand, working capital,
intercompany borrowings or a combination thereof. See Section 9 of this
document for more information about how SBC Internet will finance the offer.
- WHY ARE SBC AND SBC INTERNET MAKING THIS OFFER?
SBC believes that Prodigy as a stand-alone company will increasingly have
difficulty competing with the large, well-capitalized companies that are
Prodigy's principal competitors. Prodigy's continued success is important to
SBC both to preserve the value of SBC's investment in Prodigy and to assure
that SBC, which is the largest provider of digital subscriber line ("DSL")
high speed Internet access in the United States, has a state-of-the-art
Internet service to offer its DSL customers. SBC has concerns as to whether
Prodigy has the resources necessary to provide such an Internet service as a
stand-alone company.
- IS THIS OFFER SUPPORTED BY THE PRODIGY BOARD OF DIRECTORS?
No. This offer is made without obtaining the prior approval of the Prodigy
board of directors and is not conditioned on the receipt of Prodigy board
approval. The Prodigy board of directors is required to advise Prodigy
stockholders of a board position within ten business days of the date of this
document.
- WHY AREN'T SBC AND SBC INTERNET SEEKING APPROVAL OF THEIR OFFER FROM PRODIGY'S
INDEPENDENT DIRECTORS?
SBC wants to begin to realize the benefits of an enhanced Prodigy Internet
offering as soon as possible and believes that making a tender offer directly
to Prodigy stockholders will be significantly faster than making a proposal
for consideration of Prodigy's independent directors and negotiating a merger
agreement with those directors. SBC believes that the Prodigy stockholders are
sophisticated investors capable of evaluating the fairness of the offer. SBC
Internet and SBC are not seeking to negotiate with Prodigy with respect to the
acquisition of Prodigy. SBC is prepared, however, to cooperate with the
independent directors of Prodigy in any way that does not delay SBC Internet's
acquisition of shares. SBC Internet and SBC reserve the right to amend the
offer if they enter into a merger or other agreement with Prodigy.
iv
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- HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE INITIAL OFFERING PERIOD?
You may tender your shares pursuant to the offer until Tuesday, October 30,
2001, which is the scheduled expiration date of the offering period, unless
SBC Internet decides to extend the offering period or provide a subsequent
offering period. See Section 3 of this document for information about
tendering your shares.
- CAN THE OFFER BE EXTENDED, AND HOW WILL I BE NOTIFIED IF THE OFFER IS
EXTENDED?
Yes, SBC Internet may elect to extend the offer. It can do so by issuing a
press release no later than 9:00 A.M., New York City time, on the next
business day following the scheduled expiration date of the offer, stating the
extended expiration date and the approximate number of shares tendered to
date. See Section 1 of this document for information about extension of the
offer.
- WILL THERE BE A SUBSEQUENT OFFERING PERIOD?
Following the satisfaction of all the conditions to the offer and the
acceptance of and payment for all the shares tendered during the offering
period, SBC Internet may elect to provide a subsequent offering period for at
least three business days, during which time stockholders whose shares have
not been accepted for payment may tender, but not withdraw, their shares and
receive the offer consideration. We are not permitted under the federal
securities laws to provide a subsequent offering period of more than twenty
business days. See Sections 1 and 4 of this document for more information
concerning any subsequent offering period.
- WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
The offer is conditioned upon, among other things, satisfaction of the minimum
tender condition, which requires there being validly tendered and not
withdrawn a majority of the Class A Common Stock of Prodigy on a fully diluted
basis, excluding shares owned by SBC and its subsidiaries. See the
Introduction to this document for a description of the minimum tender
conditions. For a complete description of all of the conditions to which the
offer is subject, see Section 10 of this document.
- HOW DO I TENDER MY SHARES?
If you hold the certificates for your shares, you should complete the enclosed
Letter of Transmittal and enclose all the documents required by it, including
your certificates, and send them to the Depositary at the address listed on
the back cover of this document. If your broker holds your shares for you in
"street name" you must instruct your broker to tender your shares on your
behalf. In any case, the Depositary must receive all required documents prior
to the expiration date of the offer, which is Tuesday, October 30, 2001 unless
extended. If you cannot comply with any of these procedures, you still may be
able to tender your shares by using the guaranteed delivery procedures
described in this document. See Section 3 of this document for more
information on the procedures for tendering your shares.
- UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
The tender of your shares may be withdrawn at any time prior to the expiration
date of the offer. There will be no withdrawal rights during any subsequent
offering period. See Section 4 of this document for more information.
- HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
You (or your broker if your shares are held in "street name") must notify the
Depositary at the address and telephone number listed on the back cover of
this document, and the notice must include the name of the stockholder that
tendered the shares, the number of shares to be withdrawn and the name in
which the
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tendered shares are registered. For complete information about the procedures
for withdrawing your previously tendered shares, see Section 4 of this
document.
- IF SBC INTERNET CONSUMMATES THE TENDER OFFER, WHAT ARE ITS PLANS WITH RESPECT
TO ALL THE SHARES THAT ARE NOT TENDERED IN THE OFFER?
If we consummate the tender offer, we intend to cause a merger to occur
between Prodigy and SBC Internet or an affiliate of SBC Internet in which any
remaining stockholders will also receive cash, subject to your right to
dissent and demand the fair cash value of your shares. If the minimum tender
condition is not satisfied, we do not presently intend to acquire any shares.
SBC Internet presently intends that the cash consideration paid in the merger
will be the same as paid in the tender offer.
- IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
The purchase of shares by SBC Internet will reduce the number of shares that
might otherwise trade publicly and may reduce the number of holders of shares,
which could adversely affect the liquidity and market value of the remaining
shares held by the public. The shares may also cease to be quoted on NASDAQ.
Also, SBC Internet may no longer be required to make filings with the SEC or
comply with the SEC's rules relating to publicly held companies. See "Special
Factors -- Certain Effects of the Offer" of this document for complete
information about the effect of the offer on your shares.
- WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On September 21, 2001, the last full trading day prior to the public
announcement of the offer, the reported closing price on The Nasdaq National
Market was $3.54 per share. During 2001 through September 21, the average
closing price was $4.03 per share. You should obtain a recent market quotation
for shares of the Class A Common Stock of Prodigy in deciding whether to
tender your shares. See Section 5 of this document for recent high and low
sales prices for the shares.
- WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
If you have questions or you need assistance you should contact the
Information Agent at the following address and telephone number:
Georgeson Shareholder Communications Inc.
17 State Street, 10th floor
New York, New York 10004
Toll Free: 1-800-223-2064
Banks and Brokers may call collect: 212-440-9800
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TABLE OF CONTENTS
SECTION PAGE
------- ----
Summary Term Sheet.......................................... iii
Questions and Answers....................................... iv
Introduction................................................ 1
Special Factors............................................. 3
1. Terms of the Offer.................................... 22
2. Acceptance for Payment and Payment for Shares......... 23
3. Procedure for Tendering Shares........................ 24
4. Rights of Withdrawal.................................. 26
5. Price Range of Shares; Dividends...................... 27
6. Certain Information Concerning Prodigy................ 28
7. Certain Information Concerning SBC and SBC Internet... 30
8. Merger; Section 203; Appraisal Rights; Rule 13e-3..... 31
9. Source and Amount of Funds............................ 33
10. Certain Conditions of the Offer....................... 33
11. Dividends and Distributions........................... 36
12. Certain Legal Matters................................. 36
13. Fees and Expenses..................................... 38
14. Miscellaneous......................................... 39
Schedule A Information Concerning the Directors and
Executive Officers of SBC and SBC Internet................ A-1
Schedule B Security Ownership of Certain Beneficial Owners
and Management............................................ B-1
Schedule C Summary of Prodigy Financial Models and
Projections............................................... C-1
Schedule D Section 262 of the Delaware General Corporate
Law....................................................... D-1
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TO THE HOLDERS OF SHARES OF CLASS A COMMON STOCK OF
PRODIGY COMMUNICATIONS CORPORATION:
INTRODUCTION
SBC Internet Communications, Inc., a Delaware corporation ("SBC Internet"
or "Purchaser") and an indirect wholly owned subsidiary of SBC Communications
Inc., a Delaware corporation ("SBC"), hereby offers to purchase all of the
outstanding shares of Class A Common Stock, par value $.01 per share (the
"Shares"), of Prodigy Communications Corporation, a Delaware corporation
("Prodigy"), at $5.45 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which together with any amendments or supplements hereto
or thereto, collectively constitute the "Offer"). Tendering stockholders will
not be obligated to pay brokerage fees or commissions or, subject to Instruction
6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer. The Purchaser will pay all charges and expenses
of Goldman, Sachs & Co. ("Goldman Sachs" or the "Dealer Managers"), American
Stock Transfer & Trust Company (the "Depositary") and Georgeson Shareholder
Communications Inc. (the "Information Agent").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN A NUMBER OF SHARES WHICH, EXCLUDING THE SHARES
BENEFICIALLY OWNED BY SBC AND ITS SUBSIDIARIES, WILL CONSTITUTE AT LEAST A
MAJORITY OF THE REMAINING OUTSTANDING SHARES ON A FULLY DILUTED BASIS AS OF THE
DATE THE SHARES ARE ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER. THE OFFER IS
ALSO SUBJECT TO CERTAIN OTHER CONDITIONS DESCRIBED IN SECTION 10.
PURPOSE OF THE OFFER; THE MERGER. The purpose of the Offer is to acquire
for cash as many outstanding Shares as possible as a first step in acquiring the
entire equity interest in Prodigy. SBC Internet currently intends, as soon as
practicable upon consummation of the Offer, to propose and seek to have Prodigy
effect a merger or some similar business combination (the "Merger") between
Prodigy and SBC Internet or an affiliate thereof, pursuant to which each then
outstanding Share (other than Shares held by Prodigy in treasury, or owned by
SBC and its subsidiaries or Shares, if any, that are held by stockholders who
are entitled to and who properly exercise dissenters' rights under Delaware
law), would be converted into cash pursuant to the terms of the Merger. SBC
Internet presently intends that the cash consideration paid in the Merger will
be the same as paid in the Offer. See Section 8.
The Merger is subject to a number of conditions, including approval by
stockholders of Prodigy, if such approval is required by applicable law. In the
event SBC Internet acquires 90% or more of the outstanding Shares pursuant to
the Offer or otherwise, SBC Internet will effect the Merger pursuant to the
short-form merger provisions of the Delaware General Corporation Law (the
"DGCL"), without prior notice to, or any action by, any other stockholder of
Prodigy. See Section 8.
MINIMUM TENDER CONDITION. The Offer is conditioned on, among other things,
the Minimum Tender Condition being satisfied. See Section 10. According to the
Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 (the "Form
10-Q"), filed by Prodigy on August 14, 2001 with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as of August 7, 2001, there were 70,480,750 Shares
issued and outstanding. According to information provided by Prodigy to SBC
there are approximately 4,223,313 Shares subject to issuance at $5.45 or less
pursuant to Prodigy's stock option and incentive plans.
Based on the foregoing, SBC Internet believes there are approximately
74,642,813 Shares outstanding on a fully diluted basis (treating as outstanding,
options or share purchase rights subject to issuance at approximately $5.45 or
less), excluding shares issued or issuable to SBC or its subsidiaries.
Accordingly, Purchaser believes that the Minimum Tender Condition would be
satisfied if at least approximately 37,321,407 Shares are validly tendered prior
to the Expiration Date (as defined herein).
1
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According to publicly available information, the Telmex Affiliates,
including Telefonos de Mexico, S.A. de C.V. ("Telmex"), Telmex Financial
Ventures, LLC and Carso Global Telecom, S.A. de C.V. ("CGT"), collectively own
approximately 41,910,111 Shares. Accordingly, the Minimum Tender Condition
cannot be satisfied unless the Telmex Affiliates tender a substantial portion of
their Shares. According to published news reports, on September 27, 2001, a
spokesperson for the Telmex Affiliates said they are studying the Offer and have
yet to make a final decision on whether to sell their Shares. Mr. Carlos Slim
Helu, Chairman of Telmex and CGT, is a director of SBC. See "Special
Factors -- Relationship Between SBC, Telmex and America Movil" for a description
of the relationships between SBC and the Telmex Affiliates.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
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SPECIAL FACTORS
BACKGROUND OF SBC'S INVESTMENT IN PRODIGY
The following is a description of the background of SBC's initial
investment in Prodigy. This background is drawn largely from the information
provided in Prodigy's proxy statement for Prodigy's 2000 Annual Meeting of
Stockholders at which the SBC investment in Prodigy was approved.
During the first half of 1999, each of SBC and Prodigy was exploring ways
to obtain additional resources for their respective Internet access businesses.
In that regard, Samer F. Salameh, then chairman of the board and chief executive
officer of Prodigy, and Andrea S. Hirsch, then executive vice president of
business development and general counsel of Prodigy, met and spoke on several
occasions with Stephen A. McGaw, then managing director-corporate development of
SBC, Dave Shanberg, then director-corporate development of SBC, and John Beans,
then director of business development for Pacific Telesis Shared Services, to
discuss possible transactions. During this time, SBC and Prodigy exchanged due
diligence information and, according to information previously disclosed by
Prodigy, in late June 1999, Prodigy engaged Bear Stearns as its financial
advisor.
SBC and Prodigy engaged in discussions with several other major Internet
service providers regarding potential business contributions and other strategic
alternatives. On September 17, 1999, Mr. Salameh and Ms. Hirsch met with Messrs.
McGaw and Shanberg in San Antonio to review a proposed term sheet for the
contribution of the SBC Internet access businesses to Prodigy in exchange for
equity in Prodigy.
At a meeting of Prodigy's board of directors held on September 23, 1999,
Prodigy's management reviewed with the board a term sheet for the SBC
transaction and discussed the proposed transaction. The board discussed the
strategic and other benefits of the SBC transaction to Prodigy, citing the
increased subscriber base, access to new marketing channels and the ability
Prodigy would have to leverage SBC's commitment to high speed Internet access.
During the course of the discussion, James R. Adams, a director of Prodigy
and a former officer of SBC, indicated that he did not consider himself
independent of SBC because he held stock in and received a pension from SBC. As
a result, Prodigy's board of directors established a special committee,
consisting of Mr. Salameh, Alfredo Sanchez, Arturo Elias, James M. Nakfoor and
Russell I. Pillar, with full authority to consider and make a recommendation to
the full board of directors regarding the proposed SBC transaction. These
directors were selected for the special committee because they did not have a
direct financial interest in SBC.
At a meeting held on October 20, 1999, the special committee further
considered the proposed SBC transaction. The special committee reviewed various
materials and discussed the underlying valuation principles and other material
arrangements of the proposed transaction. From October 20 through November 19,
1999, in a series of conference calls, representatives of SBC and Prodigy
continued to negotiate the terms of definitive agreements.
At a meeting held on November 19, 1999, the special committee reviewed
additional materials prepared by Prodigy's management and by Bear Stearns. At
the conclusion of their presentation, representatives of Bear Stearns stated
Bear Stearns' opinion that, as of November 19, 1999, the consideration to be
issued by Prodigy to SBC in the SBC transaction was fair, from a financial point
of view, to Prodigy. The special committee then recommended approval of the SBC
transaction to the full board of directors, which approved the transaction.
The Prodigy stockholders met and approved the initial SBC investment on May
24, 2000. The transactions contemplated in connection with SBC Internet's
initial investment in Prodigy were completed on May 31, 2000 and the strategic
relationship between SBC and Prodigy was established.
For a more detailed description of the course of events outlined above, see
the Proxy Statement, dated May 5, 2000, for Prodigy's 2000 Annual Meeting. See
Section 6.
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TERMS OF PRODIGY'S STRATEGIC RELATIONSHIP WITH SBC
In May 2000, upon closing the initial SBC investment, Prodigy and SBC
established a strategic relationship in which:
- SBC, through its indirect wholly owned subsidiary SBC Internet, acquired
an initial equity interest in Prodigy of approximately 43%;
- Prodigy became the exclusive retail Internet service marketed by SBC to
consumers and small businesses in the United States;
- SBC committed to obtain 1,200,000 additional Internet subscribers for
Prodigy over a three-year period and Prodigy agreed to pay SBC a fee
("bounty") for each such subscriber; and
- SBC became Prodigy's exclusive provider of various telecommunications
services.
FORMATION AND OWNERSHIP OF OPERATING PARTNERSHIP. In connection with the
establishment of the strategic relationship between Prodigy and SBC:
- Prodigy contributed substantially all of its assets and liabilities and
transferred its employees to a new limited partnership (the "Operating
Partnership") formed to own and operate Prodigy's business;
- SBC contributed to the Operating Partnership routers, servers and
associated telecommunications hardware and intangible assets consisting
primarily of royalty-free licenses to use SBC's trademarks; and
- Prodigy received an initial interest in the Operating Partnership of
approximately 57.4% and Purchaser received an initial interest in the
Operating Partnership of approximately 42.6%.
As of the date hereof, Purchaser has the right to exchange its units in the
Operating Partnership for approximately 50.45 million Shares. This number can
increase to up to a total of 51,843,631 Shares if Purchaser's book capital
account increases in accordance with the terms of an operating partnership
agreement between Purchaser and Prodigy.
Prodigy also issued to Purchaser one share of Class B Common Stock in
consideration of $100. Class B Common Stock is not quoted on the Nasdaq National
Market or any other exchange. The share of Class B Common Stock is convertible
at any time into the same number of shares of Class A Common Stock as
Purchaser's units in the Operating Partnership.
Prodigy's stockholders exchanged their shares of Common Stock for shares of
Class A Common Stock. Prodigy is now a holding company whose sole assets consist
of rights under certain stock-related agreements and plans and the approximate
57.4% interest in the Operating Partnership. Prodigy's sole business is to act
as the sole General Partner of the Operating Partnership.
CORPORATE GOVERNANCE. As part of its strategic relationship with SBC,
Prodigy amended its certificate of incorporation and by-laws to implement the
following corporate governance arrangements:
- each holder of Class A Common Stock is entitled to one vote per share and
Purchaser, as holder of Class B Common Stock, is entitled to one vote for
the share of Class B Common Stock held by it and one vote for each unit
in the Operating Partnership held by it;
- SBC has the right, through a class vote of the Class B Common Stock, to
elect three of Prodigy's nine directors and also has the contractual
right to appoint certain of Prodigy's officers;
- holders of Class A Common Stock and Class B Common Stock generally will
vote together as a single class on all other matters (including the
election of the directors who are not elected separately by SBC through a
class vote of the Class B Common Stock) presented to the stockholders for
their vote or approval except as otherwise required by applicable law or
Prodigy's Certificate of Incorporation; and
- Prodigy's board established an executive steering committee, which must
evaluate and unanimously approve all major corporate actions, such as
mergers, acquisitions and capital expenditures or
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borrowings in excess of $20 million, prior to being submitted to the
board for consideration. SBC has the right to appoint two members to the
executive steering committee and the Telmex Affiliates have the right to
appoint the other two members.
Please see "-- Relationships between SBC, Telmex and America Movil" for a
discussion of the voting agreement between SBC and the Telmex Affiliates.
IMPLEMENTATION AND MODIFICATIONS TO OPERATING RELATIONSHIPS
AMENDED AND RESTATED STRATEGIC AND MARKETING AGREEMENT WITH SBC. In order
to implement their strategic relationship, Prodigy and SBC in May of 2000
entered into a strategic and marketing agreement.
In connection with the strategic relationship, a number of SBC executives
have been transferred to or otherwise employed by Prodigy from time to time to
support its operations. These executives currently include Paul Roth, Chief
Executive and President, Greg Williams, Executive Vice President and Chief
Operating Officer, Allen Craft, Executive Vice President of Finance, Treasurer
and Chief Financial Officer, Daniel Iannotti, Vice President, General Counsel
and Secretary, and Rich Walker, Vice President of Human Resources. Messrs.
Iannotti and Walker retired from employment with SBC and in connection with such
resignations received a termination payment in accordance with a company-wide
early retirement program. Messrs. Roth, Williams and Craft continue to be
employees of SBC Operations, Inc., and Prodigy reimburses SBC Operations, Inc.
for salaries, bonuses and other amounts paid to them or expenses incurred in
respect of their continued employment by SBC. All amounts paid to individuals
transferred to Prodigy and SBC employees who are directors of Prodigy are
consistent with normal compensation levels for equivalent positions at SBC and
its subsidiaries.
During the fall of 2000, Prodigy began to experience liquidity problems and
was unable to obtain financing for its continued operation. SBC and the Telmex
Affiliates each advised Prodigy they were unlikely to invest additional amounts
in Prodigy. Prodigy's difficulties led Prodigy management to seek mechanisms to
reduce the near term cash requirements. In connection with this process, SBC and
Prodigy prepared financial models to illustrate the cash flow effects of
amending various terms of the Strategic and Marketing Agreement and a summary of
these models was shared with the Prodigy Board of Directors on October 18, 2000.
A summary of these discounted cash flow models is included below under
"-- Prodigy Financial Models and Projections".
At the October 18, 2000 meeting of the Prodigy Board of Directors, James S.
Kahan, Senior Executive Vice President -- Corporate Development of SBC,
discussed his perspective on, and possible actions to address the weakness of,
Prodigy's financial position. In particular he discussed the possibility of a
merger with an Internet service provider with a stronger cash position, raising
additional equity from private sources (including in connection with a possible
share repurchase or going private transaction) and continuing with Prodigy's
current business plan with only the modifications necessary to maintain
Prodigy's solvency. Mr. Kahan recommended that the Prodigy board establish a
committee of independent directors to consider these alternatives and hire
necessary advisors.
The Prodigy board requested that Mr. Kahan assist Prodigy in pursuing a
business combination for Prodigy, but the potential merger parties were not
interested in pursuing a transaction with Prodigy. Mr. Kahan also pursued an
equity investor that had expressed interest in acquiring an equity interest
comparable in size to that of SBC, possibly in conjunction with a share
repurchase or going private transaction. The complexity associated with bringing
in another major investor caused this alternative to appear less attractive.
Shortly thereafter, SBC proposed and Prodigy accepted a deferred bounty
payment structure that would help Prodigy mitigate its liquidity problems.
During November and December 2000, representatives of SBC worked with Prodigy's
management and outside legal and financial advisors retained by Prodigy's
independent directors to amend the terms of the strategic and marketing
agreement to reduce Prodigy's cash requirements for SBC procured subscribers,
and to return to SBC primary responsibility for the customer relationship.
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Prodigy directors who were independent of SBC directed the negotiations
with Purchaser and they retained outside legal counsel and financial advisors.
The principal issues in the negotiation were the timing and amounts of payments
by Prodigy to SBC for new subscribers and by SBC to Prodigy for portal services,
the timing of the migration of existing SBC DSL customers to the Prodigy
service, the length of SBC's commitment to Prodigy and the number of new
subscribers required to be procured to avoid adjustment payments from SBC to
Prodigy. During these negotiations it became clear that Prodigy was not going to
be able to obtain financing from a third party. At this time, although SBC was
reluctant to invest additional amounts, SBC agreed to extend Prodigy the
$110,000,000 credit facility described below under "-- SBC Credit Agreement".
As a result of these negotiations, in January 2001 and again in June 2001,
Prodigy and SBC amended and restated the strategic and marketing agreement as
follows:
- SBC and its affiliates agreed to act as sales representatives to market
the Prodigy Internet service to retail residential dial-up subscribers in
the United States and agreed, subject to regulatory restrictions on SBC,
not to market the retail service of any other Internet service provider
to residential dial-up subscribers until December 31, 2009, subject to
the exceptions contained in the fifth bullet point of this section,
although SBC and its affiliates may market their own Internet products
and services to residential dial-up subscribers;
- SBC and its affiliates agreed to purchase the Prodigy Internet service
for resale to retail DSL and business dial-up subscribers and agreed,
subject to regulatory restrictions on SBC, not to market the service of
any other Internet service provider to retail DSL and business dial-up
subscribers until December 31, 2009, subject to the exceptions contained
in the fifth bullet point of this section;
- for residential dial-up subscribers, the Prodigy Internet service will be
co-branded by Prodigy and SBC, and Prodigy will provide customer service
activation and support for such subscribers;
- for business dial-up and DSL subscribers, the Prodigy Internet service
will be co-branded by Prodigy and SBC, and SBC and its affiliates will
provide customer service and bill such subscribers;
- SBC and its affiliates may:
- take action to preserve and retain certain legacy subscribers (i.e.,
SBC's subscribers prior to the initial transaction with Prodigy);
- co-brand with a competitive retail Internet service provider products
or services offered by SBC or its affiliates;
- enter into agreements with competitive retail Internet service
providers to provide DSL services in conjunction with the products or
services offered by SBC or its affiliates;
- list competitive retail Internet service providers on their web sites
or in their products as long as they are not more prominent or
otherwise treated more favorably than the Prodigy Internet service;
- provide any individual products and services constituting retail
Internet service provider services to a competitor whose products and
services are branded under the competitor's marks in bundles so long
as such bundles do not constitute a retail Internet service provider
service;
- conduct activities as a seller and supplier of advertising and
e-commerce through any medium;
- market any device not manufactured by or exclusively for SBC or its
affiliates which includes a competitive retail Internet service so
long as such marketing efforts are not predominately concentrated on
the use of the retail Internet service or product; and
- Market or deliver a retail Internet service provider service that
includes components of the Prodigy service purchased pursuant to the
resale agreement.
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- Prodigy agreed to pay SBC a fee of $35 for each of the first 50,000
residential dial-up subscribers procured by SBC in any calendar year; a
fee of $40 for each of the next 50,000 subscribers procured in any
calendar year; and a fee of $50 for each subscriber in excess of 100,000
procured in any calendar year. All fees are to be paid in equal
installments over a three-year period with the next installment due on
October 15, 2001 and subject to interest at the rate of 12% per annum;
- SBC agreed to procure a minimum of 3,750,000 DSL subscribers and 375,000
dial-up subscribers over the nine-year period beginning on January 1,
2001 and to pay Prodigy a penalty for a shortfall in either class of
subscribers in any one year period equal to six times the wholesale price
for such service and the amount of the shortfall in the number of
subscribers procured during such period, although an excess of
subscribers in one class in a given year may be used to (1) reduce the
subscriber commitment in another class or (2) offset the penalty or
receive a refund of a previous penalty, caused by a shortfall of
subscribers in another class (based on an agreed formula);
- SBC agreed to pay Prodigy for the resold Prodigy Internet service a
monthly price of $5.00 for each DSL subscriber and of $9.00 for each
business dial-up subscriber until December 31, 2003, and $4.00 for each
DSL and business dial-up subscriber thereafter until December 31, 2009,
except that if the number of DSL subscribers procured by SBC during the
three-year period ending on December 31, 2003 is less than 3,500,000,
then the monthly price for each DSL subscriber shall remain at $5.00,
unless, at any time thereafter, SBC and its affiliates shall have
procured in excess of 3,000,000 but less than 3,500,000 DSL subscribers,
in which case the monthly price shall be $4.50 and unless, at any time
thereafter, SBC and its affiliates shall have procured in excess of
3,500,000 DSL subscribers, in which case the monthly price shall be
$4.00. Notwithstanding the foregoing, if the number of DSL subscribers
equals or exceeds 3,000,000 prior to December 31, 2003, then the monthly
price shall be $4.50 until the number of DSL subscribers equals or
exceeds 3,500,000;
- SBC agreed to pay Prodigy a fee of $75 for each DSL subscriber Prodigy
procures for SBC and its affiliates and $10 for each long distance
customer Prodigy procures for SBC and its affiliates;
- SBC agreed to include Prodigy's name and logo in any advertising where
the SBC product or service includes the Prodigy Internet service;
- Prodigy agreed to make SBC and its affiliates its preferred provider of
DSL network services wherever such services are offered by SBC and its
affiliates;
- SBC agreed to forgive approximately $37,000,000 in fees for DSL and
business dial-up subscribers and provisioning expenses incurred by
Prodigy during the period from May 31, 2000 to December 31, 2000;
- SBC agreed to negotiate with Prodigy to determine whether or not to
forgive an amount to be agreed upon (not to exceed $5,000,000) of
charges, penalties, compensation or fees owed by FlashNet Communications,
Inc., which was acquired by and merged with and into Prodigy on May 31,
2000;
- SBC agreed to cause its subsidiary to transfer all of the subscribers of
Oklahoma Internet Online to Prodigy without charging a fee to Prodigy for
such subscribers;
- SBC and its affiliates agreed to cause Sterling Commerce, a subsidiary of
SBC, to make Prodigy a sales agent for Sterling's small business portal
on mutually agreeable terms;
- SBC agreed to utilize and cause its subsidiaries to utilize Prodigy as
their preferred provider of email services;
- Prodigy agreed to grant SBC the exclusive right to market its
long-distance phone service, local phone service, wireless phone
services, paging services and related telephony services to Prodigy's
subscribers, so long as SBC's terms were competitive with those offered
by other providers;
- Prodigy agreed that SBC would be Prodigy's exclusive network provider so
long as SBC offered its network services to Prodigy at the most favorable
rates offered to similar purchasers and SBC's terms were competitive with
those offered by other providers;
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- Prodigy agreed to grant SBC the exclusive right to provide
telecommunications advertising, telecommunications e-commerce and
Internet telephony applications in conjunction with the Prodigy Internet
service to Prodigy's subscribers, so long as SBC's terms were competitive
with those offered by other providers; and
- Prodigy agreed to utilize SBC as the exclusive provider of electronic
yellow and white pages and city guides on Prodigy's Web pages, so long as
SBC's terms are competitive with those offered by other providers.
SBC's exclusive rights described in the four preceding bullet points are
subject to Prodigy's existing agreements with other providers. Prodigy currently
has agreements with other providers of network, telecommunications and related
services. These agreements were not affected by the closing of SBC's initial
investment or the amendment and restatement of the strategic and marketing
agreement. When these agreements terminate, SBC's exclusive rights described
above will apply.
The agreements may be terminated before December 31, 2009 by SBC if the
Prodigy Internet service fails to meet non-subscriber revenue performance
standards for three consecutive quarters or by either party if the other party
breaches the agreement. For one year after December 31, 2009, or such earlier
date of termination if the agreement is terminated on account of SBC's early
withdrawal from, or breach of, the agreements, SBC and its affiliates will not
market on a stand-alone basis any other retail Internet service provided in the
United States.
The foregoing description of the agreements between Prodigy and SBC are
qualified in their entirety by reference to the text of the Narrowband Internet
Service Sales Agency Agreement, dated January 1, 2001, the Internet Service
Resale Agreement, dated January 1, 2001 and amended as of June 13, 2001 and the
Supplemental Agreement, dated January 1, 2001, which are incorporated by
reference herein and are filed as Exhibits O, P and Q to SBC's Schedule 13D/A,
dated September 21, 2001, filed with the SEC and available for inspection in the
manner set forth with respect to information concerning SBC in Section 7.
Representatives of SBC and Prodigy communicate with each other on a regular
basis regarding routine matters and the implementation of the agreements between
them. These regular communications relate to technology issues around the
Prodigy client software, e-mail platforms and network integration, systems
integration and communications between Prodigy and SBC, Prodigy dial-up access
product specifications and marketing, DSL marketing and promotions, development
of new products, migration of the historic SBC Internet access customer base to
the Prodigy service and financial terms of intercompany transactions. In
addition, as the parties gain experience with these agreements each sometimes
suggests modifications to the agreement terms, either generally or to address
unusual circumstances. As of the date hereof, these agreements have not been
amended although discussions concerning possible amendments continue to occur.
SBC CREDIT AGREEMENT. In order to assist Prodigy in meeting its liquidity
requirements in December 2000, SBC entered into a Credit Agreement, dated
December 29, 2000 (the "Credit Agreement"), with Prodigy pursuant to which SBC
agreed to make revolving loans to Prodigy, from time to time, in the maximum
aggregate principal amount of $110,000,000. The Credit Agreement will terminate
on December 31, 2003 or earlier at SBC's election if Prodigy is in breach of the
Credit Agreement or undergoes a change in control. The loans are unsecured, bear
interest at a rate per annum equal to the one month LIBOR plus 400 basis points,
and may be prepaid without penalty at any time. The principal and accrued
interest on all outstanding loans are due upon termination of the credit
agreement. As of the date hereof, approximately $15,900,000 is outstanding under
the Credit Agreement.
Until the Credit Agreement has been terminated and the principal and
interest on each loan has been paid in full, Prodigy may not:
- create, incur, assume or permit to exist any lien on any property owned
by it, other than certain permitted liens;
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- merge with or into any other person, unless no event of default shall
have occurred or be continuing as a result thereof and Prodigy is the
surviving corporation, or dispose of all or substantially all of its
assets;
- engage in transactions with its affiliates on terms and conditions less
favorable than could be obtained on an arm's-length basis; or
- except under limited circumstances, enter into any agreement or
arrangement that imposes any condition on or restricts Prodigy's ability
to create, incur or permit to exist any lien on its property or assets,
or imposes any condition on or restricts any subsidiary's ability to pay
dividends or make other distributions with respect to its capital stock
or guarantee indebtedness.
The foregoing description of the Credit Agreement is qualified in its
entirety by reference to the text of the Credit Agreement, which is filed as
Exhibit L to SBC's Schedule 13D/A, dated January 3, 2001, filed with the SEC and
available for inspection in the manner set forth with respect to information
concerning SBC in Section 7.
PAYMENTS BETWEEN SBC AND PRODIGY. In connection with the commercial
arrangements described elsewhere herein, SBC and Prodigy regularly make payments
to each other for services provided. In 2000, Prodigy paid SBC approximately
$136 million, primarily for DSL network services and customer care and pre-
migration dial-up fees. Other payments included dial and ISDN bounties, customer
premises equipment installation expenses and fulfillment. In 2000, SBC paid
Prodigy approximately $152 million, primarily for management fees for dial-up
and DSL and payment of DSL accounts receivable. Through August 2001, Prodigy
paid SBC approximately $58 million, primarily for pre-migration dial-up fees,
dial and ISDN bounties, operations expense reimbursements, and dial-up and ISDN
network expenses. Through August, 2001 SBC paid Prodigy approximately $90
million, primarily for dial-up management fees and dial-up and DSL portal fees.
BACKGROUND OF THE OFFER
Prodigy's financial difficulties in late 2000 caused SBC to consider
transactions that might bolster Prodigy's financial condition. Representatives
of SBC have periodically discussed with other major Internet service providers
the possibility of combining Prodigy or its subscribers with another Internet
service. None of these transactions has resulted in any agreement. In some cases
this was because the other party was not interested in pursuing a transaction
involving Prodigy. In other cases it did not appear likely a transaction could
be completed on terms likely to satisfy SBC's fundamental business objectives
for a strategic Internet service provider partner. Given the importance of the
SBC strategic relationship to Prodigy, SBC does not believe it is practicable
for Prodigy to effect a major strategic transaction that does not have SBC's
support.
In early 2001, SBC became increasingly concerned about the extensive
marketing, technical and financial resources that Prodigy competitors were
devoting to the development of Internet portals that take advantage of high
speed Internet access, such as DSL. In May 2001, SBC began to study the
possibility of acquiring the Shares not owned by it or its subsidiaries and
concluded that such a transaction could, on appropriate financial terms, be
advantageous to permit SBC to devote additional resources to Prodigy, reduce
expenses at Prodigy by eliminating costs associated with public ownership and
provide additional flexibility to move forward quickly if an opportunity arose
with another Internet service provider. During this time, SBC representatives
were continuing discussions with major Internet service providers, but such
discussions never went beyond preliminary discussions of possible terms. On May
10, 2001, Mr. Kahan and Albert K. Hoover, Managing Director -- Corporate
Development of SBC, met with Mr. Jaime Chico Pardo, Chief Executive Officer of
Telmex, and Andres Vazquez del Mercado, Executive Vice President of Corporate
Development of Telmex, to discuss the consumer Internet industry generally and
potential partnering opportunities with third party Internet service providers,
as well as the possibility of SBC acquiring Prodigy.
During June 2001, SBC prepared to make a proposal in the event it decided
to enter into negotiations with the Prodigy independent directors. On June 21,
2001, Mr. Hoover and Wayne Watts, Vice President and Assistant General
Counsel -- Corporate of SBC Operations, Inc., called Mr. Vazquez of Telmex to
advise
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him that SBC continued to consider acquiring the Shares. On June 27, 2001, Mr.
Kahan spoke on the telephone with Mr. Chico, to advise him that SBC was
considering making a proposal to acquire the Shares and that SBC hoped that the
Telmex Affiliates would find the proposal attractive. Mr. Chico advised Mr.
Kahan that the Telmex Affiliates wished to discuss joining with SBC in acquiring
the minority interest in Prodigy. Mr. Kahan advised Mr. Chico that this was not
SBC's preference, but perhaps it might be possible if appropriate stockholder
arrangements could be agreed between them. Mr. Kahan also advised Mr. Chico that
the possibility of a proposal to Prodigy would be discussed with the SBC Board
of Directors at their regularly scheduled meeting on June 29, 2001 and that Mr.
Slim should consider whether he might wish to recuse himself from that portion
of the meeting.
In connection with SBC's preparation for making a proposal, on June 21,
2001 Mr. Kahan and Mr. Watts advised Mr. Charles Foster, Chairman of the Board
of Directors of Prodigy and a former Group President of SBC, that SBC might be
making a proposal to enter into negotiations with Prodigy's board of directors,
and Mr. Foster might wish to advise the independent directors of this
possibility so they could consider what advisors they might wish to retain and
could be ready to proceed quickly if a proposal were made. Mr. Kahan made it
clear that no decision had been made by SBC to proceed with any proposal. On
June 26, 2001, Mr. Foster spoke separately with Mr. Watts and James D. Ellis,
Senior Executive Vice President and General Counsel of SBC, regarding possible
independent director legal counsel that would not have any significant
representation of SBC or its subsidiaries. On June 27, 2001 Mr. Watts advised
Mr. Foster that if the counsel he wished to retain did legal work for SBC or its
subsidiaries SBC would be willing to waive any conflict that might arise from a
Prodigy representation so long as the law firm was not one of SBC's principal
outside legal advisors.
SBC's board of directors on June 29, 2001 authorized management to proceed
with an acquisition of the minority interest in Prodigy. During the week of June
25, 2001, however, the trading price of the Shares increased from $3.93 to $5.69
and SBC management decided that it was not in SBC's interest to pursue a
transaction while the trading price of the Shares was at $5.69. Mr. Kahan
advised Mr. Foster on June 29, 2001 that SBC had decided not to make a proposal.
Following June 29, 2001, SBC continued periodic discussions with other
Internet service providers concerning possible transactions or commercial
partnerships. Discussions with parties are continuing and SBC is hopeful that
some agreement can be reached although no agreement has been reached as of the
date hereof. See "-- Purpose of the Offer; SBC Plans for Prodigy".
By September 2001, Prodigy's stock price had declined and SBC again began
considering the possibility of proceeding with a bid for Prodigy. At this time,
SBC decided in light of its desire to complete a transaction quickly to proceed
with a tender offer rather than negotiate terms with the Prodigy independent
directors. On September 19, 2001, Edward E. Whitacre, Jr., Chairman and Chief
Executive Officer of SBC, called Mr. Slim to advise him that SBC was again
considering proceeding with a Prodigy bid, that SBC intended to proceed using a
tender offer at a price of $5.45 per share and SBC would like the Telmex
Affiliates to tender their shares. Mr. Whitacre did not seek or obtain any
commitment from Mr. Slim as to his intentions. Mr. Chico followed up this
conversation with a call to Mr. Kahan in which he raised a number of questions
regarding the proposed transaction.
After the close of trading on September 21, 2001, Mr. Kahan and Mr. Watts
called Mr. Foster to advise him that SBC intended to commence the Offer. Mr.
Foster expressed surprise and indicated he needed to speak to the Prodigy
directors and senior management to apprise them of this development.
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On September 21, SBC also sent the following letter to Prodigy:
September 21, 2001
Mr. Charles E. Foster, Chairman & Chief Executive Officer
Prodigy Communications Corporation
6500 River Place Blvd., Building III
Austin, Texas 78730-1113
Dear Mr. Foster:
SBC Communications Inc. ("SBC") is pleased to advise you that it
intends to commence a tender offer for all of the outstanding shares
of common stock of Prodigy Communications Corporation (the "Company")
not owned by SBC at a purchase price of $5.45 per share in cash. This
represents a premium of approximately 54% over today's closing price
of $3.54 and a 35% premium over the average closing price for the
calendar year through today. In our view, this price represents a fair
price to the Company's shareholders and this transaction would be
mutually beneficial to the Company's shareholders and SBC. There will
be no financing contingency associated with the tender offer. The
tender offer will include a condition that at least a majority of the
shares not owned by SBC be tendered and other customary conditions.
Much has been accomplished since SBC made its investment in
Prodigy. We appreciate the efforts you and others have made to improve
the Company's performance and strategic position. At the same time, we
believe now is the time to move forward to fully integrate the Company
into the SBC family which we believe will greatly enhance the
competitive position of the Company's offering. Furthermore, with
well-funded national competitors stepping up their efforts in the
consumer Internet space, we believe Prodigy would encounter increasing
difficulties competing as a stand-alone company.
In order to promptly and fully realize these competitive
benefits, we wish to complete the acquisition of the Company as
quickly as possible. Accordingly we intend to commence a tender offer
next week without waiting for review by the independent directors of
the Company. As mentioned above, we are requiring that the transaction
be supported by the holders of a majority of the shares owned by
persons other than SBC. If, however, the independent directors wish to
retain legal and financial advisors to help them consider the position
of the independent directors with respect to the tender offer, then
SBC will support their doing so.
We are hopeful that by proceeding with a tender offer SBC will be
able to complete its acquisition of the Company more quickly and
Company shareholders will be able to receive payment for their shares
earlier than would be the case if we sought to negotiate a merger
agreement with the independent directors.
A copy of the press release announcing the tender offer is
attached for your information. We expect to make this release public
later today.
Al Hoover will head the SBC business team on this transaction and
Wayne Watts will lead the legal team. They may be reached at (210)
351-3425 and (210) 351-3476, respectively. If you have any questions
concerning our offer, please contact Al or Wayne.
Best regards,
James S. Kahan
On September 21, 22 and 23, 2001 Mr. Foster called Mr. Kahan numerous times
to seek clarification of the process by which SBC intended to proceed. Mr.
Foster expressed a desire to establish communications with SBC that could result
in a higher offer from SBC. Mr. Kahan advised Mr. Foster, in light of Mr.
Foster's employment as a senior officer of SBC prior to his retirement from SBC,
to turn over to the directors of Prodigy who have had no relationship with SBC
the process of considering the Offer. In light of the obligations
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he felt to Prodigy, its stockholders and employees, Mr. Foster said he believed
Prodigy needed its own legal and financial advisors in addition to any advisors
retained by the independent directors.
On September 25, 2001, Anthony Whittemore, Managing Director of the
investment banking firm Deutsche Banc Alex. Brown Inc. contacted Mr. Kahan to
advise him that he had been retained by the independent directors to assist them
in their evaluation of SBC's announced tender offer. Frank Connor and Matthew
Darnall, Managing Directors of Goldman, Sachs & Co., SBC's financial advisor
called Mr. Whittemore. In these conversations Mr. Whittemore indicated that
while the independent directors were still talking among themselves and seeking
advice from outside counsel, they wished to raise certain issues and concerns
with SBC, and discuss the anticipated chronology of events. Mr. Kahan indicated
that SBC wanted the independent directors to understand why SBC believed the
$5.45 price was fair and also indicated that SBC would be willing to have such a
discussion so long as it did not delay completion of the timing and terms of
Offer. Mr. Hoover and Mr. Whittemore had several conversations concerning the
scheduling of a meeting and clarifications about the timing and terms of the
Offer. Mr. Whittemore tentatively scheduled a meeting with Mr. Hoover for
Friday, September 28, but later advised Mr. Hoover that he needed more time to
prepare and would like to meet on Monday, October 1.
On September 26, 2001, Mr. Hoover and William R. Schlecht, Senior
Counsel -- Mergers & Acquisitions of SBC, contacted Mr. Foster at Mr. Foster's
request to discuss the terms of Prodigy's employee stock option plan. Mr. Foster
of Prodigy advised Mr. Hoover and Mr. Schlecht that the announcement of SBC's
intent to commence a tender offer had created some concerns among Prodigy
employees about their employment status and benefits. On September 27, 2001, Mr.
Iannotti and Mr. Walker of Prodigy called Mr. Hoover and Mr. Schlecht regarding
the Prodigy employee stock plans and indicated they could provide information on
Prodigy stock plans and asked to open a channel of communication as to SBC's
intentions in these areas if its bid were successful. Mr. Schlecht indicated
that SBC sought to minimize disruption to the Prodigy employees and would work
with Mr. Iannotti to provide clarification as to SBC's intentions.
Also on September 27, 2001, Mr. Iannotti called Mr. Wayne Wirtz, General
Attorney and Assistant General Counsel of SBC Operations, Inc., to advise him of
Mr. Iannotti's belief that two SBC employees elected to the Prodigy board of
directors may be in possession of material non-public information with respect
to Prodigy. Mr. Joseph Frumkin, a partner at SBC's outside counsel Sullivan &
Cromwell, called Mr. Iannotti to follow up on this issue. Mr. Iannotti indicated
that both SBC employees were Prodigy directors who had received in their
capacity as directors a three-year business plan in January 2001 and that
Prodigy was, according to Mr. Iannotti, exceeding the financial results
contemplated by the three year plan so far in 2001. See "-- Prodigy Financial
Model and Projections" and "-- Other Prodigy Information and Projections" for a
discussion of information concerning Prodigy in the possession of SBC.
On October 1, 2001, representatives of the independent directors of Prodigy
met with representatives of SBC. Attending on behalf of the independent
directors were Mr. Whittemore, together with Howard J. Lowenberg and Slavin
Zimbrek of Deutsche Banc Alex. Brown Inc. and Phillip M. Renfro, a partner of
Fulbright & Jaworski L.L.P., counsel to the independent directors. Present for
SBC were Messrs. Hoover, Watts, Schlecht and Slator of SBC, Mr. Frumkin of
Sullivan & Cromwell and Mr. Darnall and Gregg A. Walker of Goldman, Sachs & Co.
The meeting was procedural and the representatives discussed how to proceed
so that SBC and the independent directors could understand each others'
positions with respect to the Offer. Mr. Whittemore indicated that the
independent directors were actively studying the Offer and had not yet
determined a position regarding the Offer. Mr. Whittemore did indicate though,
that the independent directors were generally very bullish about Prodigy's
near-term financial prospects, questioned whether the market was adequately
valuing Prodigy before the announcement of the SBC offer, were positive on the
Prodigy dial-up business as an engine for growth, were concerned about the
timing of the Offer and had a long-term positive outlook for Prodigy's DSL
prospects. The attendees agreed they should speak further once SBC commenced its
tender offer and more information was publicly available regarding its proposal.
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PURPOSE OF THE OFFER; SBC PLANS FOR PRODIGY
The purpose of the Offer is for Purchaser to acquire for cash as many
outstanding Shares as possible as a first step in acquiring all of the equity
interests in Prodigy not owned by SBC and its subsidiaries.
Purchaser currently intends, as soon as practicable upon consummation of
the Offer, to propose and seek to have Prodigy effect the Merger, pursuant to
which each then outstanding Share (other than Shares held by Prodigy in
treasury, or owned by Purchaser, SBC or SBC's subsidiaries or Shares, if any,
that are held by stockholders who are entitled to and who properly exercise
dissenters' rights under Delaware law), would be converted pursuant to the terms
of the Merger. Purchaser presently intends that the cash consideration paid in
the Merger will be the same as paid in the Offer.
Purchaser and SBC believe it is desirable for Prodigy to become wholly
owned by SBC so that, as part of SBC, it will be a more financially stable and
competitive Internet service provider than Prodigy can be as a stand-alone
entity. This will allow the combined companies to provide a more competitive
broadband Internet access offering and to operate in a manner that can support
SBC's broader business objectives relating to its DSL business without regard to
the interests of the stockholders of Prodigy who are not affiliated with
Purchaser or SBC.
SBC has made and is continuing to make large capital investments in network
infrastructure to provide broadband Internet access through DSL technology and
is seeking to obtain as many DSL customers as possible. SBC competes with other
providers of broadband Internet access, through DSL, cable modems and other
technologies, for customers. SBC believes that as the market for broadband
Internet access evolves, customers and potential customers increasingly will
seek out providers of high speed access who also offer a package of content and
advanced products that is interesting, functional and integrated with the
technology of high speed access in a way that takes advantage of the high speed
network. SBC has concluded that Prodigy is unlikely to be able to obtain the
resources to develop such an offering as a stand-alone entity. SBC also has
concluded that after the Offer and the Merger, SBC could continue to provide the
Prodigy service as it now exists or in combination with the services of another
company that has a robust offering of content, a pipeline of advanced products
and a willingness to work with SBC to incorporate SBC developed or supported
advanced products into its offering. Although all discussions to date have been
preliminary and no agreement has been reached with any party, in general these
discussions have contemplated SBC helping to develop and purchasing a co-branded
Internet portal from a third party. SBC would market such co-branded portal
largely through its channels.
Purchaser and SBC are not seeking to negotiate with Prodigy with respect to
the acquisition of Prodigy by Purchaser. SBC is prepared, however, to cooperate
with the independent directors of Prodigy in any way that does not delay
Purchaser's acquisition of the equity in Prodigy not already owned by Purchaser
or SBC. Purchaser and SBC reserve the right to amend the Offer if they enter
into a merger or other agreement with Prodigy.
SBC believes that the employees of Prodigy are an important asset to the
business and operations of Prodigy. SBC wishes to minimize any concerns
Prodigy's employees may have regarding the Offer and the Merger. SBC understands
that it will be necessary to incent the Prodigy employees to remain following
completion of the Offer and the Merger. SBC intends to work with Prodigy
management to minimize disruption to the Prodigy workforce.
PURCHASER'S AND SBC'S POSITION REGARDING THE FAIRNESS OF THE OFFER
The rules of the SEC require Purchaser and SBC to express their belief as
to the fairness of the Offer to Prodigy's stockholders who are not affiliated
with Purchaser and SBC.
Purchaser and SBC believe that the Offer is both financially and
procedurally fair to Prodigy's stockholders who are not affiliated with
Purchaser and SBC on the basis of their observations that:
- The Offer is conditioned upon the tender of a majority of the Shares not
owned by SBC and its subsidiaries. Purchaser and SBC believe that the
Prodigy stockholders are sophisticated investors
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capable of evaluating the fairness of the Offer and an informed decision
by holders of a majority of Shares provides meaningful procedural
protections for Prodigy stockholders.
- The $5.45 per share cash consideration payable in the Offer represents a
54% premium to the closing price on September 21, 2001, the last trading
day prior to public announcement of the Offer, and a 35% premium to the
average closing price for 2001 through September 21, 2001.
- SBC believes Prodigy's prospects are made highly uncertain by a lack of
resources (including research and development), which substantially
impairs Prodigy's long-term competitive position. In particular, SBC
believes that the substantial resources other large, well-financed
competitors plan to devote to the development of advanced broadband
content and applications will vastly exceed the resources Prodigy can, on
a stand-alone basis, devote to the development of such content and
applications. SBC also believes that the availability of such content and
applications will become increasingly important in influencing customer
choice of broadband access providers and that if Prodigy is unable to
offer a competitive portal product, this will result in substantially
fewer subscribers and less non-subscription revenue than current
expectations.
- SBC believes that the decline in the trading price of the Shares over the
last two years has reflected broader adverse market trends affecting
Internet access companies, especially those that lack scale and financial
resources. Because SBC does not see any basis for believing these broader
adverse market trends will reverse, SBC believes the opportunity for all
holders of Shares to sell their Shares for $5.45 is beneficial to such
holders.
This belief, however, should not be construed as a recommendation as to
whether or not you should tender your Shares. Purchaser and SBC have not
considered other factors, other than as stated above, regarding the fairness of
the Offer to Prodigy stockholders who are not affiliated with Purchaser or SBC.
In particular, Purchaser and SBC have not independently considered with respect
to the fairness of the Offer:
- book value ($3.42 per Share as of June 30, 2001), which Purchaser and SBC
do not believe has any meaningful relation to the economic value of the
Shares, particularly because a majority of Prodigy's assets are
intangible assets;
- liquidation value, which Purchaser and SBC do not believe to be relevant
because substantial value results from continuing Prodigy as a going
concern and any liquidation would destroy that value;
- the purchase price paid by Purchaser and SBC for equity interests in
Prodigy because the purchases were effected in exchange for assets,
rather than for cash and market conditions have changed significantly
since that time; and
- other recent firm offers for Prodigy, of which Purchaser and SBC are
aware of none.
PRODIGY FINANCIAL MODELS AND PROJECTIONS
During the late summer and early fall of 2000, it became clear to the
respective managements of Prodigy and SBC that Prodigy would require substantial
amounts of new capital in order to continue its status quo business operations
and plans. Prodigy management believed that the amount of the cash shortfall
would be approximately $321 million through 2002. SBC management believed that
the amount of the cash shortfall would be approximately $365 million through
2002. SBC was reluctant to provide this capital and instead sought to explore
with the Prodigy board of directors alternative capital raising transactions and
modifications to Prodigy's business operations.
During the course of these discussions, working with Prodigy management and
utilizing a Prodigy-prepared model which Prodigy provided to SBC, SBC prepared
comparative analyses. These comparative analyses of Prodigy's business were
intended to show the cash flow impacts of modifications to the SBC-Prodigy
arrangements as well as the cash flow implications of variations in other
assumptions underlying the Prodigy management forecasts. In particular, in
October 2000, SBC prepared a financial model (the "October 2000 Model") that was
shared in summary form with Prodigy's board of directors. This model showed that
the amount of financing required to support Prodigy's operations could be
substantially reduced by changing the
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SBC-Prodigy relationship from one in which Prodigy paid SBC an up-front payment,
or "bounty", for each new subscriber to a "wholesale" model in which SBC
maintained the retail relationship with customers, Prodigy paid no bounty, and
SBC paid Prodigy a monthly per-subscriber fee for portal services.
The October 2000 Model was prepared to show on a comparative basis the cash
flow effects of business alternatives and not for valuation purposes. SBC did
not seek to question many of the assumptions underlying the Prodigy base model.
Discounted cash flow valuations were calculated from the October 2000 Model and
resulted in substantially higher valuations of Prodigy than that represented by
this Offer to Purchase. The financial model presented to Prodigy's board
contained a discounted cash flow valuation of Prodigy of $4.36 billion or
approximately $37.38 per fully diluted Share, using the Prodigy base case and
the "bounty" model, $2.87 billion or approximately $24.60 per fully diluted
Share, using an SBC base case and the "bounty" model, $3.23 billion or
approximately $27.69 per fully diluted Share, using an SBC "deferred bounty"
case (where bounty payments would continue to be made in installments over 36
months with interest accruing on unpaid amounts at 12% per annum) and $2.97
billion, or approximately $25.46 per fully diluted Share, using an SBC
"wholesale" case (this model was later adjusted in discussions between SBC and
Prodigy managements to $2.796 billion, or approximately $23.97 per fully diluted
Share). By comparison, on October 18, 2000, the closing price of the Shares was
$4.69.
SBC believes that the October 2000 Model, under all scenarios,
significantly overstates the value of Prodigy. An analysis of assumptions
underlying the October 2000 Model and the reasons for SBC's belief that it
substantially overstates the value of Prodigy follows.
SUMMARY OF OCTOBER 2000 MODEL. A summary of certain projections utilized
in the October 2000 Model is set forth in Schedule C to this Offer to Purchase.
SBC SUBSCRIBER COMMITMENTS AND PRODIGY PROCURED SUBSCRIBERS. SBC has
agreed to procure for Prodigy a minimum of 3,750,000 DSL subscribers and 375,000
dial-up subscribers over the nine-year period beginning on January 1, 2001. The
October 2000 Model assumed that SBC would deliver significantly more than twice
this minimum commitment and that Prodigy would itself procure 2 million DSL
subscribers by 2010. SBC does not believe these assumptions are likely to be
realized. Any shortfall in the DSL subscriber count would significantly affect
cash flow and valuation levels.
The October 2000 Model also assumed that SBC procured DSL subscribers would
remain with the Prodigy service following this nine-year period and that SBC
would continue to procure customers for the Prodigy service following such
period. Under the terms of its agreement with Prodigy, at the expiration of the
nine-year period SBC is not obligated to continue to obtain additional customers
for the Prodigy service and may cause any subscribers that SBC has procured for
the Prodigy service to be transferred to another Internet service provider. SBC
believes that this significantly reduces the future cash flow of Prodigy and
therefore the discounted present value of Prodigy today.
DSL NON-SUBSCRIPTION REVENUE. The October 2000 Model assumed that
non-subscription revenues would be approximately $2.25 per DSL subscriber, per
month in 2001 and increase to $13.31 per DSL subscriber, per month in 2010. SBC
believes these assumptions are unlikely to be realized by Prodigy.
TAXES. Prodigy has sustained tax losses in the past that could be used to
offset future tax liabilities. The October 2000 Model assumed that Prodigy would
benefit from utilizing such losses to offset future projected taxable income.
The projected net income has not yet materialized, however, so the value of the
tax benefits is likely to be greatly overstated.
DISCOUNT RATE. The October 2000 Model used "discounted cash flow" analysis
to estimate the valuation of Prodigy's Internet access business. This type of
analysis values future expected cash flows by discounting future cash flows back
to a value in today's dollars. In order to discount future cash flows, a rate of
discount based on the cost of capital is utilized. In the October 2000 Model,
this rate was 14%. SBC believes this rate is too low because Prodigy's current
actual cost of capital from outside sources would be significantly higher than
14%. If a more accurate discount rate had been used, the valuations of Prodigy
would be reduced accordingly.
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CHANGES IN THE MARKET AND THE ECONOMY. As investors are well aware, the
technology and Internet service provider markets, as well as general economic
conditions, have changed drastically and rapidly since last year. The valuations
of technology companies, and Internet service providers in particular, have
fallen considerably. Furthermore, companies such as Prodigy have had severe
limitations on access to capital and many such companies are finding it
difficult to make the capital investments in marketing, content and technology
necessary to succeed in this new economic climate.
OTHER PRODIGY INFORMATION OR PROJECTIONS
Three executives associated with SBC are elected as directors of Prodigy by
class vote of SBC's share of Prodigy Class B Common Stock. In their capacities
as directors of Prodigy, these directors from time to time receive non-public
information concerning Prodigy. This information includes financial updates and
projections. These individuals do not generally communicate information received
in their capacities as directors of Prodigy to others at SBC and in particular
have not disclosed to others at SBC the information contained in Prodigy's
January 2001 three-year plan or Prodigy's more recent financial results. These
individuals have had no involvement in the decisions of SBC and Purchaser with
respect to this Offer. SBC does not believe information received by these
individuals in their capacities as directors and not communicated to others at
SBC is in the possession of SBC for purposes of its disclosure requirements
under the federal securities laws and accordingly SBC is not disclosing any such
information.
Prodigy is required by the federal securities laws to provide Prodigy
stockholders with a "Solicitation Recommendation Statement on Schedule 14D-9"
within ten business days from the date hereof. This will contain important
information and may include any material non-public information that Prodigy
believes is necessary for stockholders to make a decision with respect to the
Offer. Purchaser and SBC urge all Prodigy stockholders to carefully review this
document. In addition, Prodigy is scheduled to release its third quarter
earnings on October 25, 2001 and Prodigy stockholders should consider this
earnings information when it is available.
PRELIMINARY REPORT OF GOLDMAN SACHS TO SBC
Goldman Sachs, in its role as financial advisor to SBC, has advised SBC
regarding its strategic alternatives with its investment in Prodigy. In that
regard, at the request of SBC's management, in June 2001 Goldman Sachs e-mailed
a preliminary report to SBC's management that set forth
- price and trading activity of the Shares for various periods,
- premiums over various trading prices for the Shares based on a range of
offer prices,
- premiums paid by majority shareholders of selected domestic target
companies in connection with their acquisition of the shares of such
companies not already owned by them,
- the equity value, enterprise value and certain multiples for Prodigy and
certain other selected Internet service providers, and
- deal value, enterprise value and certain multiples for selected
transactions involving Internet service providers.
Goldman Sachs did not prepare the preliminary report to recommend or
provide support for a fair or appropriate offer price for the Shares not held by
SBC. Had Goldman Sachs intended to do so, the information and comparisons
presented in the preliminary report may have been different. The preliminary
report was intended to serve as a guide for discussions with SBC's management in
connection with SBC's potential acquisition of the Shares. Goldman Sachs
e-mailed the preliminary report to SBC's management and answered related
questions.
During September, SBC determined to offer $5.45 per Share in the Offer
before advising Goldman Sachs that SBC was again considering seeking to acquire
the Shares. Goldman Sachs was not asked to and has not delivered a fairness
opinion to SBC in connection with the Offer.
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THE FULL TEXT OF THE PRELIMINARY REPORT OF GOLDMAN SACHS, DATED JUNE 19,
2001, IS ATTACHED TO THE SCHEDULE TO, FILED ON OCTOBER 2, 2001, IN CONNECTION
WITH THE OFFER AS EXHIBIT (C) AND IS INCORPORATED HEREIN BY REFERENCE. THE
DESCRIPTION OF THE PRELIMINARY REPORT IN THE OFFER TO PURCHASE IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO EXHIBIT (C), COPIES OF WHICH MAY BE OBTAINED FROM
THE SEC. SEE "AVAILABLE INFORMATION" BEGINNING ON PAGE 30. HOLDERS OF SHARES ARE
URGED TO, AND SHOULD, READ SUCH REPORT IN ITS ENTIRETY.
Copies of the preliminary report are also available for inspection and
copying at the principal executive offices of SBC during regular business hours
by any public stockholder or its representative who has been so designated in
writing, and will be provided to any such stockholder or representative upon
written request at the expense of the requesting party.
In preparing its preliminary report, Goldman Sachs relied upon the accuracy
and completeness of all of the financial and other information reviewed by it
and has assumed such accuracy and completeness for purposes of the report.
Goldman Sachs was not asked to make, and did not assume responsibility for
making, any independent evaluation of Prodigy, or did not verify and has not
assumed any responsibility for making any independent verification of the
information Goldman Sachs reviewed.
THE PRELIMINARY REPORT DOES NOT CONSTITUTE A RECOMMENDATION AS TO WHETHER
ANY HOLDER OF SHARES SHOULD TENDER THEIR SHARES IN THE OFFER.
SUMMARY OF PRELIMINARY REPORT PREPARED BY GOLDMAN SACHS. The following
summaries include information presented in tabular format. You should read these
tables together with the text of each summary.
QUOTED HISTORICAL SHARE PRICE SUMMARY. Goldman Sachs compiled and
presented the historic reported price and trading activity for the Shares for
the (i) three month period between March 14, 2001 and June 14, 2001, (ii) six
month period between December 14, 2000 and June 14, 2001, (iii) one year period
between June 14, 2000 and June 14, 2001 and (iv) two year period between June
14, 1999 and June 14, 2001. Goldman Sachs also compiled and presented indexed
price and trading activity for the Shares and the publicly traded securities of
EarthLink Inc., Juno Online Services Inc. and NetZero Inc. for the periods
described in (i) through (iv) of this paragraph.
VOLUME OF SHARES TRADED AT VARIOUS PRICES. Goldman Sachs compiled and
presented the historic trading activity at the various share prices for the
Shares during the (i) one month period between May 14, 2001 and June 14, 2001,
(ii) three month period between March 14, 2001 and June 14, 2001, (iii) one year
period between June 14, 2000 and June 14, 2001 and (iv) two year period between
June 14, 1999 and June 14, 2001. Goldman Sachs determined the weighted average
price for each period was $3.32, $3.01, $5.20 and $16.84, respectively and the
total shares traded as a percent of shares outstanding for each period was
6.22%, 13.65%, 74.09% and 265.17%, respectively.
BID PREMIUM SUMMARY. Goldman Sachs calculated hypothetical bid premiums
represented by a range of various bid prices between $4 and $9 compared to:
- weighted average prices of the Shares for the (i) one month period
between May 14, 2001 and June 14, 2001 ($3.32), (ii) three month period
between March 14, 2001 and June 14, 2001 ($3.01), (iii) one year period
between June 14, 2000 and June 14, 2001 ($5.20) and (iv) two year period
between June 14, 1999 and June 14, 2001 ($16.84);
- 52 week high of the Shares; and
- all time high of the Shares.
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A summary of the results follows:
WEIGHTED AVERAGE PRICE
------------------------------------- ALL TIME HIGH
BID PRICE 1 MONTH 3 MONTHS 1 YEAR 2 YEARS 52 WEEK HIGH FEB. 16, 1999
--------- ------- -------- ------ ------- ------------ -------------
$3.32 $3.01 $5.20 $16.84 $11.88 $49.00
------ ------ ------ ------ ------ -------
$4.00 20.5% 32.9% (23.1)% (76.2)% (66.3)% (91.8)%
$5.00 50.6% 66.1% (3.8)% (70.3)% (57.9)% (89.8)%
$6.00 80.7% 99.3% 15.4% (64.4)% (49.5)% (87.8)%
$7.00 110.8% 132.6% 34.6% (58.4)% (41.1)% (85.7)%
$8.00 141.0% 165.8% 53.8% (52.5)% (32.6)% (83.7)%
$9.00 171.1% 199.0% 73.1% (46.6)% (24.2)% (81.6)%
PREMIUM SUMMARY OF RECENT TRANSACTIONS. Goldman Sachs reviewed and
compared forty-seven recent transactions involving the acquisition of all
outstanding shares of domestic target companies by their respective majority
stockholders and reported (i) the initial premium over 52-week high, (ii) the
initial premium over the market price, (iii) the final premium over the market
price and (iv) the percent increase in offer. The forty-seven transactions
consisted of thirty-two all cash transactions, ten all stock transactions and
five transactions with both cash and stock consideration. Goldman Sachs
determined that the average offer premium for the forty-seven transactions was
approximately 21.3% in excess of the market price on the day before announcement
and that the final bid premium was approximately 30.0% in excess of such market
price.
COMPARISONS OF PUBLICLY TRADED INTERNET SERVICE PROVIDERS. Goldman Sachs
reviewed and compared certain financial information, including equity values,
enterprise values, ratios and public market multiples relating to Prodigy to
corresponding financial information for three other Internet service
providers -- EarthLink Inc., Juno Online Services Inc. and NetZero Inc.
The results of these comparisons are summarized below:
ENTERPRISE VALUE MULTIPLE OF
-----------------------------------------------------
REVENUES EBITDA PP&E
EQUITY ENTERPRISE ----------------- ------------------ ------------
VALUE VALUE LTM 2000 2001 LTM 2000 2001 GROSS NET
------ ---------- --- ---- ---- ---- ---- ---- ----- ----
Mean................. $620M $509M 1.0x 1.1x 0.5x 36.2x 23.2x 12.8x 10.2x 12.6x
Median............... 307M 415M 1.0 1.0 0.5 36.2 23.2 12.8 2.9 4.4
Goldman Sachs also reviewed and compared the following recent transactions
involving Internet service providers and presented a comparison of equity
values, enterprise values, ratios and private market multiples for each such
transaction.
- NetZero/Juno;
- EarthLink/Onemain.com;
- CoreComm/Voyager.net;
- Nextlink (XO)/Concentric;
- Prodigy/FlashNet;
- MindSpring/EarthLink; and
- WorldCom/Compuserve.
No company or transaction reviewed by Goldman Sachs in its report to SBC
management is identical to Prodigy or the Offer, as the case may be.
Accordingly, the values of such companies or transactions, as the case may be,
should not be construed as illustrative of a value for Prodigy or the Shares.
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Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with SBC, having acted as its financial advisor in connection with, and
having participated in certain of the negotiations leading to, the Offer and has
also provided certain investment banking services to SBC from time to time,
including having acted as SBC's financial advisor in the acquisition by SBC of
its initial interest in Prodigy, and may provide investment banking services to
SBC in the future. Goldman Sachs provides a full range of financial advisory and
securities services and, in the course of its normal trading activities, may
from time to time effect transactions and hold securities, including derivative
securities, of SBC and Prodigy for its own account and for the account of
customers.
Goldman Sachs are the Dealer Managers for the Offer. Please see Item 13 for
a description of the fee arrangement between Goldman Sachs and SBC.
RELATIONSHIPS BETWEEN SBC, TELMEX AND AMERICA MOVIL
SBC is not an affiliate of Telmex or America Movil S.A. de C.V. ("America
Movil") or any of the Telmex Affiliates or affiliates of America Movil. SBC
does, however, have the following business relationships with the Telmex
Affiliates:
- SBC and the Telmex Affiliates together own a majority of Prodigy. The
Telmex Affiliates own approximately 41,910,111 Shares. For a description
of SBC's and Purchaser's share ownership in Prodigy, please see "Special
Factors -- Terms of Prodigy's Strategic Relationship with SBC". In
addition, each of Telmex and SBC have the right to appoint two members of
Prodigy's Executive Steering Committee. Also, SBC has agreed to vote its
shares in Prodigy in favor of three Prodigy director nominees selected by
the Telmex Affiliates.
- SBC owns a 7.97% equity share in Telmex and a 7.98% equity share in
America Movil (America Movil resulted from a spin off of Telmex's
cellular business). Through its relationship with Telmex, SBC has worked
with Telmex to develop an advanced network, and has helped Telmex achieve
its goal of providing enhanced telephone service throughout Mexico;
- Carlos Slim Helu, the Chairman of CGT and Telmex, is also a director of
SBC;
- SBC and CGT have established two trusts pursuant to the shareholder's
agreements for their respective investments in Telmex and America Movil,
which govern SBC's share ownership in Telmex and America Movil:
- SBC and CGT have agreed to provide, and receive compensation for,
services to Telmex and America Movil under management services
agreements;
- Each of SBC and CGT has granted to the other a right of first offer on
any proposed transfer of Telmex and America Movil shares held by such
party, except for transfers to certain affiliates; and
- CGT, Telmex, America Movil and SBC have formed other joint ventures and
made joint investments in the past, and may do so in the future.
CERTAIN EFFECTS OF THE OFFER
PARTICIPATION IN FUTURE GROWTH. If you tender your Shares in the Offer,
you will not have the opportunity to participate in the future earnings, profits
and growth of Prodigy and will not have the right to vote on corporate matters
relating to Prodigy. If the Offer and the Merger are completed, SBC, as the
ultimate parent company of Prodigy, will indirectly own a 100% interest in the
net book value and net earnings of Prodigy and will benefit from any future
increase in the value of Prodigy. Similarly, SBC will bear the risk of any
decrease in the value of Prodigy and you will not face the risk of a decline in
the value of Prodigy.
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MARKET FOR SHARES. The purchase of Shares by SBC Internet pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
may reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
STOCK QUOTATION. The Shares are quoted on the Nasdaq Stock Market's
National Market (the "Nasdaq National Market"). According to published
guidelines of the National Association of Securities Dealers, the Shares might
no longer be eligible for quotation on the Nasdaq National Market if, among
other things, either (i) the number of Shares publicly held is less than
750,000, there are fewer than 400 holders of round lots, the aggregate market
value of publicly held Shares is less than $5,000,000, stockholder's equity is
less than $10,000,000 and there are fewer than two registered and active market
makers for the Shares, or (ii) the number of Shares publicly held is less than
1,100,000, there are fewer than 400 holders of round lots, the aggregate market
value of publicly held Shares is less than $15,000,000, there are fewer than
four registered and active market makers, and either (x) Prodigy's market
capitalization is less than $50,000,000 or (y) the total assets and total
revenue of Prodigy for the most recently completed fiscal year or two of the
last three most recently completed fiscal years, is less than $50,000,000.
Shares held directly or indirectly by directors, officers or beneficial owners
of more than 10% of the Shares are not considered as being publicly held for
this purpose. According to Prodigy's 2000 Annual Report as of the close of
business on March 15, 2001, there were 738 holders of record of Shares (not
including beneficial holders of Shares in street name) and there were 70,245,820
Shares outstanding.
If the Shares were to cease to be quoted on the Nasdaq National Market, the
market for the Shares could be adversely affected. It is possible that the
Shares would be traded or quoted on other securities exchanges or in the
over-the-counter market, and that price quotations would be reported by such
exchanges, or through the National Association of Securities Dealers Automated
Quotation System, Inc. ("NASDAQ") or other sources. The extent of the public
market for the Shares and the availability of such quotations would, however,
depend upon the number of stockholders and/or the aggregate market value of the
Shares remaining at such time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of registration
of the Shares under the Exchange Act and other factors.
MARGIN REGULATIONS. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve Board (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of the Shares. Depending upon factors similar
to those described above regarding listing and market quotations, the Shares
might no longer constitute "margin securities" for the purposes of the Federal
Reserve Board's margin regulations in which event the Shares would be ineligible
as collateral for margin loans made by brokers.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated by Prodigy upon application to
the SEC if the outstanding Shares are not listed on a national securities
exchange and if there are fewer than 300 holders of record of Shares.
Termination of registration of the Shares under the Exchange Act would reduce
the information required to be furnished by Prodigy to its stockholders and to
the SEC and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b) and the requirement to
furnish a proxy statement in connection with stockholders' meetings pursuant to
Section 14(a) and the related requirement to furnish an annual report to
stockholders, no longer applicable with respect to the Shares. Furthermore, the
ability of "affiliates" of Prodigy and persons holding "restricted securities"
of Prodigy to dispose of such securities pursuant to Rule 144 under the
Securities Act of 1933, as amended, may be impaired or eliminated. If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be eligible for NASDAQ reporting or for continued inclusion on
the Federal Reserve Board's list of "margin securities". SBC Internet intends to
seek to cause Prodigy to apply for termination of registration of the Shares as
soon as possible after consummation of the Offer if the requirements for
termination of registration are met.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER
Sales of Shares pursuant to the Offer and the exchange of Shares for cash
pursuant to the Merger will be taxable transactions for Federal income tax
purposes and may also be taxable under applicable state, local and
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other tax laws. For Federal income tax purposes, a stockholder who is a United
States person whose Shares are purchased pursuant to the Offer or who receives
cash as a result of the Merger will realize gain or loss equal to the difference
between the adjusted basis of the Shares sold or exchanged and the amount of
cash received therefor. Such gain or loss will be capital gain or loss if the
Shares are held as capital assets by the stockholder. Long-term capital gain of
a non-corporate stockholder is generally subject to a maximum tax rate of 20% in
respect of property held for more than one year.
To the extent that Prodigy or any of its subsidiaries owns or leases real
property in New York State, transfer taxes may apply to the sale of Shares by a
stockholder pursuant to the Offer. Although SBC Internet will pay any such taxes
on behalf of the stockholders, such payment may be treated as additional
consideration paid for the Shares. In such case, the amount of such additional
consideration would be offset by treatment of the tax as an additional selling
expenses incurred by the stockholder. Accordingly, the payment of such taxes by
SBC Internet should have no effect on the amount of gain or loss recognized by a
stockholder.
THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE TO STOCKHOLDERS IN SPECIAL SITUATIONS
SUCH AS STOCKHOLDERS WHO RECEIVED THEIR SHARES UPON THE EXERCISE OF EMPLOYEE
STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND STOCKHOLDERS WHO ARE NOT UNITED
STATES PERSONS. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER, INCLUDING
THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.
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1. TERMS OF THE OFFER
Upon the terms and subject to the conditions set forth in the Offer
(including the terms and conditions set forth in Section 10 and if the Offer is
extended or amended, the terms and conditions of such extension or amendment
(the "Offer Conditions")), SBC Internet will accept for payment, and pay for,
Shares validly tendered on or prior to the Expiration Date (as defined herein)
and not withdrawn as permitted by Section 4. The term "Expiration Date" means
12:00 Midnight, New York City time, on Tuesday, October 30, 2001, unless and
until SBC Internet shall have extended the period for which the Offer is open,
in which event the term "Expiration Date" shall mean the latest time and date on
which the Offer, as so extended by SBC Internet, shall expire. The period until
12:00 Midnight, New York City time, on Tuesday, October 30, 2001, as such may be
extended is referred to as the "Offering Period."
SBC Internet may elect, in its sole discretion, to provide a subsequent
offering period of 3 to 20 business days (the "Subsequent Offering Period"). A
Subsequent Offering Period, if one is provided, is not an extension of the
Offering Period. A Subsequent Offering Period would be an additional period of
time, following the expiration of the Offering Period, in which stockholders may
tender Shares not tendered during the Offering Period. If SBC Internet decides
to provide for a Subsequent Offering Period, SBC Internet will make an
announcement to that effect by issuing a press release no later than 9:00 A.M.,
New York City time, on the next business day after the previously scheduled
Expiration Date. All Offer Conditions must be satisfied or waived prior to the
commencement of any Subsequent Offering Period.
Subject to the applicable rules and regulations of the SEC, SBC Internet
expressly reserves the right, in its sole discretion, at any time or from time
to time, to extend the Offering Period by giving oral or written notice of such
extension to the Depositary. During any such extension of the Offering Period,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the right of a tendering stockholder to withdraw such
stockholder's Shares. See Section 4. Subject to the applicable regulations of
the SEC, SBC Internet also expressly reserves the right, in its sole discretion,
at any time or from time to time, (i) to delay acceptance for payment of or
(regardless of whether such Shares were theretofore accepted for payment)
payment for, any tendered Shares, or to terminate or amend the Offer as to any
Shares not then paid for, on the occurrence of any of the Offer Conditions and
(ii) to waive any condition and to set forth or change any other term and
condition of the Offer, by giving oral or written notice of such delay,
termination or amendment to the Depositary and by making a public announcement
thereof. If SBC Internet elects to provide a Subsequent Offering Period, it
expressly reserves the right, in its sole discretion, at any time or from time
to time, to extend the Subsequent Offering Period (not beyond a total of 20
business days) by giving oral or written notice of such extension to the
Depositary. If SBC Internet accepts any Shares for payment pursuant to the terms
of the Offer, it will accept for payment all Shares validly tendered during the
Offering Period and not withdrawn, and, on the terms and subject to the
conditions of the Offer, including but not limited to the Offer Conditions, it
will promptly pay for all Shares so accepted for payment and will immediately
accept for payment and promptly pay for all Shares as they are tendered in any
Subsequent Offering Period. SBC Internet confirms that its reservation of the
right to delay payment for Shares which it has accepted for payment is limited
by Rule 14e-1(c) under the Exchange Act, which requires that a tender offeror
pay the consideration offered or return the tendered securities promptly after
the termination or withdrawal of a tender offer.
Any extension, delay, termination or amendment of the Offer will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be issued no later than 9:00 A.M.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(d), 14d-6(c)
and 14e-1 under the Exchange Act, which require that any material change in the
information published, sent or given to stockholders in connection with the
Offer be promptly disseminated to stockholders in a manner reasonably designed
to inform stockholders of such change) and without limiting the manner in which
SBC Internet may choose to make any public announcement, SBC Internet shall have
no obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release or other announcement.
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SBC Internet confirms that if it makes a material change in the terms of
the Offer or the information concerning the Offer, or if it waives a material
condition of the Offer, SBC Internet will extend the Offer to the extent
required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act.
If, during the Offering Period, SBC Internet, in its sole discretion, shall
decrease the percentage of Shares being sought or increase or decrease the
consideration offered to holders of Shares, such increase or decrease shall be
applicable to all holders whose Shares are accepted for payment pursuant to the
Offer and, if at the time notice of any decrease is first published, sent or
given to holders of Shares, the Offer is scheduled to expire at any time earlier
than the tenth business day from and including the date that such notice is
first so published, sent or given, the Offer will be extended until the
expiration of such ten business day period. 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 A.M. through 12:00 Midnight, New York
City time.
A request has been made to Prodigy for the use of Prodigy's stockholder
list and security position listings for the purpose of disseminating the Offer
to stockholders. Upon compliance by Prodigy with such request, this Offer to
Purchase and the related Letter of Transmittal will be mailed to record holders
of Shares and will be furnished to brokers, banks and similar person whose
names, or the names of whose nominees, appear on the stockholder 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. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including the
Offer Conditions and, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), SBC Internet will accept for
payment, and will pay for, Shares validly tendered and not withdrawn as promptly
as practicable after the expiration of the Offering Period. If there is a
Subsequent Offering Period, all Shares tendered during the Offering Period will
be immediately accepted for payment and promptly paid for following the
expiration thereof and Shares tendered during a Subsequent Offering Period will
be immediately accepted for payment and paid for as they are tendered. Subject
to applicable rules of the SEC, SBC Internet expressly reserves the right to
delay acceptance for payment of or payment for Shares in order to comply, in
whole or in part, with any applicable law. See Section 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 evidencing such
Shares (or a confirmation of a book-entry transfer of such Shares (a "Book-Entry
Confirmation") into the Depositary's account at The Depository Trust Company
(the "Book-Entry Transfer Facility")), a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other required documents.
For purposes of the Offer, SBC Internet will be deemed to have accepted for
payment Shares validly tendered and not withdrawn as, if and when SBC Internet
gives oral or written notice to the Depositary of its acceptance for payment of
such Shares pursuant to the Offer. Payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for the tendering stockholders for
the purpose of receiving payments from SBC Internet and transmitting such
payments to the tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON
THE PURCHASE PRICE FOR TENDERED SHARES BE PAID, REGARDLESS OF ANY DELAY IN
MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares tendered by book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, such Shares will be credited to an account maintained with the
Book-Entry Transfer Facility), as soon as practicable following expiration or
termination of the Offer.
SBC Internet reserves the right to transfer or assign in whole or in part
from time to time to one or more of its affiliates the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve SBC Internet of its obligations under the Offer
and will in no way
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prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES
VALID TENDER. To tender Shares pursuant to the Offer, (a) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions of the Letter of Transmittal, with any required
signature guarantees, certificates for Shares to be tendered, and any other
documents required by the Letter of Transmittal, must be received by the
Depositary prior to the Expiration Date at one of its addresses set forth on the
back cover of this Offer to Purchase, (b) such Shares must be delivered pursuant
to the procedures for book-entry transfer described below (and the Book-Entry
Confirmation of such delivery received by the Depositary, including an Agent's
Message (as defined herein) if the tendering stockholder has not delivered a
Letter of Transmittal), prior to the Expiration Date, or (c) the tendering
stockholder must comply with the guaranteed delivery procedures set forth below.
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 acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that SBC Internet may enforce such
agreement against the participant.
BOOK-ENTRY DELIVERY. The Depositary will establish accounts with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry transfer of Shares by causing the Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with the Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer, either
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in lieu of the Letter of Transmittal, and any other required documents, must, in
any case, be transmitted to and received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase by the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF THE SHARES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL
BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN
THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS
BY MAIL, IT IS RECOMMENDED THAT THE STOCKHOLDER USE PROPERLY INSURED REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. Except as otherwise provided below, all signatures
on a Letter of Transmittal must be guaranteed by a financial institution
(including most commercial banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program or by any other "Eligible Guarantor Institution," as
such term is defined in Rule 17 Ad-15 under the Exchange Act (each, an "Eligible
Institution"). Signatures on a Letter of Transmittal need not be guaranteed (a)
if the Letter of Transmittal is signed by the registered holders (which term,
for purposes of this section, includes any participant in the Book-Entry
Transfer Facility's systems whose name appears on a security position listing as
the owner of the Shares) of Shares tendered therewith and such registered holder
has not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of
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Transmittal or (b) if such Shares are tendered for the account of an Eligible
Institution. See Instructions 1 and 5 of the Letter of Transmittal. If the
certificates for Shares are registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made or certificates
for Shares not tendered or not accepted for payment are to be returned to a
person other than the registered holder of the certificates surrendered, then
the tendered certificates must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name or names of the registered
holders or owners appear on the certificates, with the signatures on the
certificates or stock powers guaranteed as described above. See Instructions 1
and 5 of the Letter of Transmittal.
GUARANTEED DELIVERY. A stockholder who desires to tender Shares pursuant
to the Offer and whose certificates for Shares are not immediately available, or
who cannot comply with the procedure for book-entry transfer on a timely basis,
or who cannot deliver all required documents to the Depositary prior to the
Expiration Date, may tender such Shares by following all of the procedures set
forth below:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by SBC Internet, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message in lieu of the Letter of
Transmittal), and any other required documents, are received by the
Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery. A "trading day" is any day on which the New
York Stock Exchange, Inc. is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
OTHER REQUIREMENTS. Notwithstanding any provision hereof, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) certificates evidencing such
Shares (or a timely Book-Entry Confirmation with respect to) such Shares into
the Book-Entry Transfer Facility, (b) a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message in lieu
of the Letter of Transmittal) and (c) any other documents required by the Letter
of Transmittal. Accordingly, tendering stockholders may be paid at different
times depending upon when certificates for Shares or Book-Entry Confirmations
with respect to Shares are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE OF THE TENDERED SHARES BE PAID
BY SBC INTERNET, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
SUCH PAYMENT.
TENDER CONSTITUTES AN AGREEMENT. The valid tender of Shares pursuant to
one of the procedures described above will constitute a binding agreement
between the tendering stockholder and SBC Internet upon the terms and subject to
the conditions of the Offer.
APPOINTMENT. By executing a Letter of Transmittal as set forth above, the
tendering stockholder irrevocably appoints designees of SBC Internet as such
stockholder's proxies, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by SBC Internet and with respect to any and
all other Shares or other securities issued or issuable in respect of such
Shares on or after October 2, 2001. All such proxies will be considered coupled
with an interest in the tendered Shares. Such appointment is effective when, and
only to the extent that, SBC Internet deposits the payment for such Shares with
the Depositary. Upon the effectiveness of such appointment, all prior powers of
attorney, proxies and consents given by such stockholder will be revoked, and no
subsequent powers of attorney, proxies and consents may be given (and, if given,
will not be deemed effective). SBC Internet's designees will, with respect to
the Shares for which the appointment
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is effective, be empowered to exercise all voting and other rights of such
stockholder as they, in their sole discretion, may deem proper at any annual,
special or adjourned meeting of the stockholders of Prodigy, by written consent
in lieu of any such meeting or otherwise. SBC Internet reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon SBC Internet's payment for such Shares, SBC Internet must be able to
exercise full voting rights with respect to such Shares.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by SBC Internet in its sole discretion, which determination
will be final and binding. SBC Internet reserves the absolute right to reject
any and all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of SBC Internet's
counsel, be unlawful. SBC Internet also reserves the absolute right to waive any
defect or irregularity in the tender of any Shares of any particular stockholder
whether or not similar defects or irregularities are waived in the case of other
stockholders. No tender of Shares will be deemed to have been validly made until
all defects and irregularities relating thereto have been cured or waived. None
of SBC Internet, the Depositary, the Information Agent, the Dealer Managers or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. SBC Internet's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and Instructions thereto) will be
final and binding.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 30.5%. All
stockholders who are United States persons surrendering Shares pursuant to the
Offer should complete and sign the main signature form and the Substitute Form
W-9 included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to SBC Internet and the
Depositary). Certain stockholders (including, among others, all corporations and
certain foreign individuals and entities) are not subject to backup withholding.
Non-corporate foreign stockholders should complete and sign the main signature
form and a Form W-8BEN Certificate of Foreign Status of Beneficial Owner for
United States Tax Withholding, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 8 to the
Letter of Transmittal.
4. RIGHTS OF WITHDRAWAL
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
termination of the Offering Period and, unless theretofore accepted for payment
by SBC Internet pursuant to the Offer, may also be withdrawn at any time after
Friday, November 30, 2001. There will be no withdrawal rights during any
Subsequent Offering Period for Shares tendered during the Subsequent Offering
Period.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person
having tendered the Shares to be withdrawn, the number or amount of Shares to be
withdrawn and the names in which the certificate(s) evidencing the Shares to be
withdrawn are registered, if different from that of the person who tendered such
Shares. The signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution, unless such Shares have been tendered for the account of
any Eligible Institution. If Shares have been tendered pursuant to the
procedures for book-entry tender as set forth in Section 3, any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares. If certificates for
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, the name of the registered holder and the serial numbers of the
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particular certificates evidencing the Shares to be withdrawn must also be
furnished to the Depositary as aforesaid prior to the physical release of such
certificates. All questions as to the form and validity (including time of
receipt) of any notice of withdrawal will be determined by SBC Internet, in its
sole discretion, which determination shall be final and binding. None of SBC,
Purchaser, the Dealer Managers, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give such notification. Withdrawals of tender for Shares may not be rescinded,
and any Shares properly withdrawn will be deemed not to have been validly
tendered for purposes of the Offer. However, withdrawn Shares may be retendered
by following one of the procedures described in Section 3 at any time prior to
the Expiration Date.
If SBC Internet extends the Offer, is delayed in its acceptance for payment
of Shares, or is unable to accept for payment Shares pursuant to the Offer, for
any reason, then, without prejudice to SBC Internet's rights under this Offer,
the Depositary may, nevertheless, on behalf of SBC Internet, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as set forth in this Section 4.
5. PRICE RANGE OF SHARES; DIVIDENDS
The Shares are quoted on the Nasdaq National Market under the symbol
"PRGY". The following table sets forth, for the calendar quarters indicated, the
high and low sales prices for the Shares on the Nasdaq National Market based
upon public sources:
SALES PRICE
-----------------
HIGH LOW
------- -------
CALENDAR YEAR
1999:
First Quarter............................................. $50.625 $20.000
Second Quarter............................................ 41.250 21.063
Third Quarter............................................. 28.625 14.000
Fourth Quarter............................................ 35.438 16.000
2000:
First Quarter............................................. 26.125 14.000
Second Quarter............................................ 15.000 8.250
Third Quarter............................................. 10.500 4.938
Fourth Quarter............................................ 6.250 1.125
2001:
First Quarter............................................. 5.219 1.500
Second Quarter............................................ 5.810 2.000
Third Quarter............................................. 7.25 3.25
Fourth Quarter (through October 1, 2001).................. 5.48 5.45
On September 21, 2001, the last full trading day prior to announcement of
the Offer, the reported closing price of the Shares on the Nasdaq National
Market was $3.54 per Share. On October 1, 2001, the last full trading day prior
to commencement of the Offer, the reported closing price of the Shares on the
Nasdaq National Market was $5.47 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A
CURRENT MARKET QUOTATION FOR THE SHARES.
To date, Prodigy has never paid a dividend on the Shares.
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6. CERTAIN INFORMATION CONCERNING PRODIGY
Prodigy is a Delaware corporation with its principal executive offices
located at 6500 River Place, Boulevard Building III, Austin, TX 78730 (telephone
number (512) 527-1500). Prodigy has described its business as follows:
Prodigy is a leading nationwide Internet service provider that
provides reliable Internet access and other Internet-based service.
Prodigy's nationwide Internet service offering, customer base and
well-recognized brand name have resulted in 2.8 million owned and
managed subscribers as of December 31, 2000. Prodigy utilizes a
nationwide network covering over 850 locations in all 50 states. This
network allows approximately 90% of the United States population to
access Prodigy's services with a local telephone call.
As of the date hereof, (i) Purchaser does not know whether or not any
executive officer, director or affiliate of Prodigy intends to tender shares in
the Offer, (ii) none of Prodigy, its executive officers, directors or affiliates
have made any public recommendation with respect to the Offer and (iii) Prodigy
has not made public any appraisal, report or opinion on the fairness of this
transaction.
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PRODIGY COMMUNICATIONS CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth summary historical consolidated financial
data for Prodigy as of and for the six months ended June 30, 2001 and 2000 and
as of and for each of the years ended December 31, 2000 and 1999.
This data and the comparative per share data set forth below are extracted
from, and should be read in conjunction with, the audited consolidated financial
statements and other financial information contained in Prodigy's Annual Report
on Form 10-K for the year ended December 31, 2000 as amended and the unaudited
consolidated interim financial information contained in Prodigy's Quarterly
Reports on Form 10-Q for the quarterly periods ended March 31, 2001 and June 30,
2001 as amended, including the notes thereto. More comprehensive financial
information is included in such reports (including management's discussion and
analysis of financial condition and results of operation) and other documents
filed by Prodigy with the SEC, and the following summary is qualified in its
entirety by reference to such reports and other documents and all of the
financial information and notes contained therein. Copies of such reports and
other documents may be examined at or obtained from the SEC and NASDAQ in the
manner set forth below. These documents are incorporated by reference in this
Offer to Purchase. See "-- Available Information" on page 30.
SIX MONTHS FOR THE YEARS
ENDED JUNE 30, ENDED DECEMBER 31,
------------------------------- --------------------------
2001 2000 2000 1999
-------------- -------------- ------------ -----------
(UNAUDITED) (UNAUDITED)
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
Income Statement Data:
Total revenues............................... $183,943 $151,585 $ 376,355 $173,408
Total operating costs and expenses........... 293,212 237,302 692,105 261,656
Net income (loss)............................ (67,152) (73,863) (209,623) (80,488)
Balance Sheet Data:
Current assets............................... $ 38,866 $ 37,495 $ 37,623 $ 51,818
Non-current assets........................... 609,063 946,138 765,042 294,170
Current liabilities.......................... 93,896 209,686 122,665 179,914
Non-current liabilities...................... 133,993 7,016 143,535 983
Total stockholders' equity................... 240,505 435,424 307,092 165,091
Cash dividends declared per common share..... $ 0.00 $ 0.00 $ 0.00 $ 0.00
Average shares of common stock outstanding..... 70,265 65,476 67,719 59,958
Prodigy historically has not reported earnings or a ratio of earnings to
fixed charges.
COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per share data for
Prodigy. Basic and diluted earnings per common share and book value per share is
presented for the six months ended June 30, 2001 and 2000 and for each of the
years ended December 31, 2000 and 1999.
SIX MONTHS FOR THE YEARS
ENDED JUNE 30, ENDED DECEMBER 31,
------------------------- -------------------
2001 2000 2000 1999
----------- ----------- -------- --------
(UNAUDITED) (UNAUDITED)
Basic and diluted net income (loss) per share:...... $(0.96) $(1.13) $(3.10) $(1.34)
Book value per share................................ $ 3.42 $ 6.65 $ 4.53 $ 2.75
Book value per share is not a term defined by generally accepted accounting
principles. Book value per share is calculated by dividing stockholders' equity
by the weighted average number of shares of common stock outstanding.
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Except as otherwise set forth herein, the information concerning Prodigy
contained in this Offer to Purchase has been taken from or based upon publicly
available documents and records on file with the SEC and other public sources
and is qualified in its entirety by reference thereto. Although SBC, SBC
Internet, the Information Agent and the Dealer Managers have no knowledge that
would indicate that any statements contained herein based on such documents and
records are untrue, SBC, SBC Internet, the Information Agent and the Dealer
Managers cannot take responsibility for the accuracy or completeness of the
information contained in such documents and records, or for any failure by
Prodigy to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Purchaser, SBC, the Information Agent or the Dealer Managers.
AVAILABLE INFORMATION. Prodigy is subject to the information and reporting
requirements of the Exchange Act and in accordance therewith is obligated to
file reports and other information with the SEC relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning Prodigy's directors and officers, their remuneration, stock options
granted to them, the principal holders of Prodigy's securities, any material
interests of such persons in transactions with Prodigy and other matters is
required to be disclosed in proxy statements distributed to Prodigy's
stockholders and filed with the SEC. Such reports, proxy statements and other
information should be available for inspection at the public reference room at
the SEC's offices at 450 Fifth Street, N.W., Washington, D.C. 20549 and also
should be available for inspection and copying at the regional offices of the
SEC located at the SEC address above and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60611. Copies may be obtained, by mail,
upon payment of the SEC's customary charges, by writing to its principal office
at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and can be
obtained electronically on the SEC's Website at http://www.sec.gov.
7. CERTAIN INFORMATION CONCERNING SBC AND SBC INTERNET
Purchaser is a Delaware corporation that owns SBC's Class B Share of
Prodigy Common Stock and an effective approximate 42% interest in Prodigy.
Purchaser is an indirect wholly owned subsidiary of SBC. For a description of
the Class B Shares, please see "Special Factors -- Terms of Prodigy's Strategic
Relationship with SBC". The principal executive offices of Purchaser are located
at 175 E. Houston, San Antonio, Texas 78205 (telephone number (210) 821-4105).
Purchaser and SBC have made no arrangements in connection with the Offer to
provide holders of Shares access to their corporate files or to obtain counsel
or appraisal services at their expense.
SBC is a holding company incorporated under the laws of the State of
Delaware in 1983 and has its principal executive offices at 175 E. Houston, San
Antonio, Texas 78205. SBC owns 61,250 Shares which were acquired by SBC as shown
in Schedule B to this Offer to Purchase and may be contributed to the capital of
Purchaser by SBC. As a holding company, SBC engages in business activities only
through its subsidiaries. Unless the context otherwise requires, references
herein to SBC agreeing to take or refrain from taking business actions refer to
SBC causing its operating subsidiaries to so act or refrain.
SBC ranks among the largest providers of telecommunications services in the
United States and the world. Through its subsidiaries, SBC provides a
comprehensive offering of communications services and products in the United
States and has investments in 28 countries. SBC offers its services and products
to businesses and consumers, as well as other providers of telecommunications
services.
AVAILABLE INFORMATION. Additional information concerning SBC is set forth
in SBC's Annual Report on Form 10-K for the year ended December 31, 2000 and
subsequent Quarterly Reports on Form 10-Q, which reports may be obtained from
the SEC in the manner set forth with respect to information concerning Prodigy
in Section 6.
FORWARD LOOKING DISCLAIMER. Statements Purchaser and SBC may publish,
including those in this Offer to Purchase, that are not strictly historical are
"forward-looking" statements. Although Purchaser and SBC believe the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, they can give no assurance that its expectations will be
realized. Forward-looking statements involve known and unknown risks which may
cause Purchaser's or SBC's actual results and corporate
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developments to differ materially from those expected. Factors that could cause
results and developments to differ materially from Purchaser's or SBC's
expectations include, without limitation, federal and state regulatory
developments, technology developments and capital expenditures, competition
within each business segment, cyclicity of the markets for the products of a
major segment, litigation, the effects of acquisitions and divestitures, and
other risks described from time to time in SBC's SEC reports including quarterly
reports on Form 10-Q, annual reports on Form 10-K and reports on Form 8-K.
The name, citizenship, business address, business telephone number, current
principal occupation (including the name, principle business and address of the
organization in which such occupation is conducted), and material positions held
during the past five years (including the name, principle business and address
of the organization in which such occupation was conducted), of each of the
directors and executive officers of SBC and Purchaser are set forth in Schedule
A to this Offer to Purchase.
Except as set forth under "Special Factors" or on Schedule B hereto,
neither SBC nor Purchaser, nor, to the best of their knowledge, any of the
persons listed in Schedule A hereto nor any associate or majority-owned
subsidiary of any of the foregoing, beneficially owns or has a right to acquire
any Shares or has engaged in any transactions in Shares in the past 60 days.
Schedule B hereto sets forth any acquisitions of Prodigy's securities by
Purchaser and SBC during the past two years.
Except as set forth under "Special Factors" or Schedule B hereto, there
have been no negotiations, transactions or material contacts during the past two
years between Purchaser or SBC, or, to the best of their knowledge, any of the
persons listed in Schedule A hereto, on the one hand, and Prodigy or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors, or a sale or other transfer of a material amount of assets nor to the
best knowledge of SBC and Purchaser have there been any negotiations or material
contacts between subsidiaries, executive officers and directors. Except as
described under "Special Factors", neither SBC nor Purchaser, nor, to the best
of their knowledge, any of the persons listed in Schedule A hereto, has since
the date hereof had any transaction with Prodigy or any of its executive
officers, directors or affiliates that would require disclosure under the rules
and regulations of the SEC applicable to the Offer.
8. MERGER; SECTION 203; APPRAISAL RIGHTS; RULE 13e-3
MERGER. If, pursuant to the Offer, Purchaser acquires Shares which,
together with Shares beneficially owned by Purchaser and its affiliates,
constitute at least 90% of the outstanding Shares, SBC currently intends to
transfer (and cause any such affiliates to transfer) the Shares owned by SBC and
any such affiliates to Purchaser to permit Purchaser to consummate a
"short-form" merger pursuant to Section 253 of the DGCL. Section 253 of the DGCL
provides that if Purchaser owns at least 90% of the outstanding Shares,
Purchaser may merge Prodigy into itself by executing, acknowledging and filing,
in accordance with Section 103 of the DGCL, a certificate of such ownership and
merger setting forth a copy of the resolution of Purchaser's board of directors
to so merge (including a statement of the terms and conditions of the merger and
the consideration to be paid by Purchaser upon surrender of Shares not owned by
Purchaser) and the date of its adoption. Under Section 253 of the DGCL, such a
merger of Prodigy with Purchaser would not require the approval or any other
action on the part of the Board of Directors or the stockholders of Prodigy.
Therefore, if at least 90% of the outstanding Shares are acquired pursuant to
the Offer or otherwise, Purchaser will be able to, and intends to, effect the
Merger without a meeting of holders of Shares.
If Purchaser purchases a sufficient number of Shares to satisfy the Minimum
Tender Condition, but does not purchase a sufficient number of Shares to effect
a "short-form" merger, Purchaser would seek to effect a merger of Purchaser with
Prodigy pursuant to Section 251 of the DGCL. Under Prodigy's Articles of
Incorporation and the DGCL, approval of the Board of Directors of Prodigy and a
vote of at least a majority of the outstanding Shares of Prodigy entitled to
vote thereon would be required to approve such a merger. If the Minimum Tender
Condition is satisfied, Purchaser would have a sufficient number of votes to
effect the shareholder approval of a merger pursuant to Section 251 of the DGCL,
which approval could be effected by a vote at a meeting of shareholders or by
written consent. Approval of such a merger would nonetheless also require the
approval of Prodigy's board of directors.
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THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR CONSENTS. ANY
SUCH SOLICITATION WHICH SBC OR THE PURCHASER MIGHT MAKE WILL BE MADE PURSUANT TO
SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS COMPLYING WITH THE REQUIREMENTS
OF SECTION 14(a) OF THE EXCHANGE ACT.
SECTION 203 OF THE DGCL. In general, Section 203 of the DGCL is an
anti-takeover statute that prevents an "Interested Stockholder" (defined
generally as a person with 15% or more of a corporation's outstanding voting
stock) of a Delaware corporation from engaging in a "Business Combination"
(defined as a variety of transactions, including mergers) with such corporation
for three years following the date such person became an Interested Stockholder
unless (i) before such person became an Interested Stockholder, the board of
directors of the corporation approved either the Business Combination or the
transaction which resulted in such person becoming an Interested Stockholder;
(ii) upon consummation of the transaction which resulted in such person becoming
an Interested Stockholder, the Interested Stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding stock held by directors who are also officers of the
corporation and by employee stock ownership plans that do not provide employees
with the rights to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer); or (iii) following the
transaction in which such person became an Interested Stockholder, the Business
Combination is approved by the board of directors of the corporation and
authorized at a meeting of stockholders by the affirmative vote of the holders
of two-thirds of the outstanding voting stock of the corporation not owned by
the Interested Stockholder.
Section 203 provides that during such three-year period the corporation may
not merge or consolidate with an Interested Stockholder or any affiliate or
associate thereof, and also may not engage in certain other transactions with an
Interested Stockholder or any affiliate or associate thereof, including without
limitation, (i) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets (except proportionately as a stockholder of the
corporation) having an aggregate market value equal to 10% or more of the
aggregate market value of all assets of the corporation determined on a
consolidated basis or the aggregate market value of all the outstanding stock of
a corporation; (ii) any transaction which results in the issuance or transfer by
the corporation or by certain subsidiaries thereof of any stock of the
corporation or such subsidiaries to the Interested Stockholder, except pursuant
to a transaction which effects a pro rata distribution to all stockholders of
the corporation; (iii) any transaction involving the corporation or certain
subsidiaries thereof which has the effect of increasing the proportionate share
of the stock of any class or series, or securities convertible into the stock of
any class or series, of the corporation or any such subsidiary which is owned
directly or indirectly by the Interested Stockholder (except as a result of
immaterial changes due to fractional share adjustments); or (iv) any receipt by
the Interested Stockholder of the benefit (except proportionately as a
stockholder of such corporation) of any loans, advances, guarantees, pledges or
other financial benefits provided by or through the corporation.
Purchaser and SBC's initial acquisition of Prodigy shares and their voting
agreement with the Telmex Affiliates were approved under Section 203 by the
Prodigy Board of Directors prior to the time that Purchaser and SBC owned any
Prodigy Shares or Prodigy Class B Common Stock. Accordingly, SBC and Purchaser
believe that Section 203 is inapplicable to any business combination of Prodigy
with Purchaser and SBC.
APPRAISAL RIGHTS. Holders of Shares do not have appraisal rights as a
result of the Offer. However, if the Merger is consummated, each holder of
Shares who has neither voted in favor of the Merger nor consented thereto in
writing and who properly demands an appraisal of their shares under Section 262
of the DGCL will be entitled to an appraisal by the Delaware Court of Chancery
of the fair value of his or her Shares, exclusive of any element of value
arising from the accomplishment or expectation of the Merger, together with a
fair rate of interest, if any, to be paid from the date of the Merger. In
determining such fair value, the Court may consider all relevant factors. The
value so determined could be more or less than the consideration to be paid in
the Offer and the Merger. Any judicial determination of the fair value could be
based upon considerations other than or in addition to the market value of the
Shares, including, among other things, asset values and earning capacity.
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If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal as
provided in the DGCL, the Shares of such stockholder will be converted into the
cash consideration offered in the Merger. A stockholder may withdraw his demand
for appraisal by delivery to Purchaser of a written withdrawal of his demand for
appraisal and acceptance of the Merger.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL which is attached as Schedule D to this Offer to
Purchase.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
RULE 13e-3. Because Purchaser is an affiliate of Prodigy, the transactions
contemplated herein constitute a "going private" transaction under Rule 13e-3
under the Exchange Act. Rule 13e-3 requires, among other things, that certain
financial information concerning Prodigy and certain information relating to the
fairness of the Offer and the Merger and the consideration offered to minority
stockholders be filed with the SEC and disclosed to minority stockholders prior
to consummation of the Merger. Purchaser and SBC have provided such information
in this Offer to Purchase.
9. SOURCE AND AMOUNT OF FUNDS
Purchaser estimates that the total amount of funds required to purchase all
of the outstanding Shares (other than those already owned by Purchaser) pursuant
to the Offer and to pay related fees and expenses will be approximately $410
million. SBC will assure that Purchaser will obtain these funds from cash on
hand and working capital, including ordinary course intercompany borrowings from
SBC affiliates.
It is anticipated that the indebtedness incurred by Purchaser in connection
with the Offer and the Merger, if any, will be paid from funds generated
internally by Purchaser and its subsidiaries (including, after the Merger, if
consummated, dividends paid by Prodigy and its subsidiaries) or through
additional borrowings. No final decisions have been made, however, concerning
the method Purchaser will employ to repay such indebtedness. Such decisions,
when made will be based on Purchaser's review from time to time of the
advisability of particular actions, as well as on prevailing interest rates and
financial and other economic conditions.
10. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or pay for any Shares, may postpone the
acceptance for payment of or pay for tendered Shares, and may, in its sole
discretion, terminate or amend the Offer as to any Shares not then paid for if
(i) at the expiration of the Offering Period, the Minimum Tender Condition has
not been satisfied or (ii) if on or after September 21, 2001, and at or prior to
the time of payment for any such Shares (whether or not any Shares have
theretofore been accepted for payment or paid for pursuant to the Offer), any of
the following events shall occur:
(a) there shall be threatened, instituted or pending any action,
proceeding or application before any court, government or governmental authority
or other regulatory or administrative agency or commission, domestic or foreign,
(i) which challenges the acquisition by Purchaser of the Shares, seeks to
restrain, delay or prohibit the consummation of the Offer or the transactions
contemplated by the Offer or subsequent business combination or, seeks to obtain
any material damages or otherwise directly or indirectly relates to the
transactions contemplated by the Offer or other subsequent business combination,
(ii) which seeks to prohibit or impose material limitations on Purchaser's or
SBC's acquisition, ownership or operation of all or any portion of their or
Prodigy's business or assets (including the business or assets of their
respective affiliates and subsidiaries) or of the Shares (including, without
limitation, the right to vote the Shares purchased by them, on an equal basis
with all other Shares, on all matters presented to the stockholders of Prodigy),
or seeks to compel Purchaser or SBC to dispose of or hold separate all or any
portion of their own or Prodigy's
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business or assets (including the business or assets of their respective
affiliates and subsidiaries) as a result of the transactions contemplated by the
Offer or subsequent business combination, (iii) which might adversely affect
Prodigy, Purchaser or SBC, or any of their respective affiliates or subsidiaries
(an "Adverse Effect"), or result in a diminution in the value of the Shares or
the benefits expected to be derived by Purchaser or SBC as a result of the
transactions contemplated by the Offer or subsequent business combination and
the Merger (a "Diminution in Value"); or (iv) which seeks to impose any
condition to the Offer unacceptable to SBC or Purchaser; or
(b) any statute, including without limitation any state anti-takeover
statute, rule, regulation or order or injunction shall be sought, proposed,
enacted, promulgated, entered, enforced or deemed or become applicable or
asserted to be applicable to the Offer or any subsequent business combination or
the transactions contemplated by the Offer or subsequent business combination
that might, directly or indirectly, result in any of the consequences referred
to in clauses (i) through (iv) of paragraph (a) above, including any
determination or assertion by any governmental authority that a filing under the
HSR Act (as defined herein) is required; or
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or be threatened that has or might have
a materially adverse effect on the business, properties, assets, liabilities,
capitalization, stockholders' equity, financial condition, operations, results
of operations or prospects of Prodigy or any of its subsidiaries, or Purchaser
or SBC shall have become aware of any fact that has or might have an Adverse
Effect or results or might result in a Diminution in Value; or
(d) there shall have occurred (i) any general suspension of, or limitation
on times or prices for, trading in securities on any national securities
exchange or in the over-the-counter market, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) the outbreak or escalation of a war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States, (iv) any limitation (whether or not mandatory) by any governmental
authority on, or any other event which might affect the extension of credit by
banks or other lending institutions, (v) a suspension of or limitation (whether
or not mandatory) on the currency exchange markets or the imposition of, or
material changes in, any currency or exchange control laws in the United States
or (vi) 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
(e) Prodigy or any subsidiary of Prodigy shall have (i) issued,
distributed, pledged, sold or authorized, or proposed the issuance of or sale,
distribution or pledge to any person of (A) any shares of its capital stock
(other than sales or issuances (in accordance with the present terms thereof)
pursuant to employee stock options outstanding on September 21, 2001) of any
class (including, without limitation, the Shares) or securities convertible into
or exchangeable for any such shares of capital stock, or any rights, warrants or
options to acquire any such shares or convertible securities or any other
securities of Prodigy, (B) any other securities in respect of, in lieu of or in
substitution for Shares outstanding on September 21, 2001, or (C) any debt
securities or any securities convertible into or exchangeable for debt
securities or any rights, warrants or options entitling the holder thereof to
purchase or otherwise acquire any debt securities, (ii) purchased or otherwise
acquired, or proposed or offered to purchase or otherwise acquire any
outstanding Shares or other securities, (iii) proposed, recommended, authorized,
declared, issued or paid any dividend or distribution on any Shares or any other
security, whether payable in cash, securities or other property, (iv) altered or
proposed to alter any material term of any outstanding security, (v) incurred,
agreed to incur or announced its intention to incur any debt other than in the
ordinary course of business and consistent with past practice, (vi) authorized,
recommended, proposed or publicly announced its intent to enter into any merger,
consolidation, liquidation, dissolution, business combination, acquisition or
disposition of assets or securities other than in the ordinary course of
business, any material change in its capitalization or business operations, any
release or relinquishment of any material contractual or other rights or any
comparable event, or taken any
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action to implement any such transaction previously authorized, recommended,
proposed or publicly announced or (vii) entered into any other agreement or
otherwise effected any other arrangement with any other party or with its
officers or other employees of Prodigy that might, individually or in the
aggregate, have an Adverse Effect or result in a Diminution in Value; or
(f) Prodigy or any of its subsidiaries shall have amended or proposed or
authorized any amendment to its articles of incorporation or by-laws or similar
organizational documents or Purchaser shall have learned that Prodigy or any of
its subsidiaries shall have proposed, adopted or recommended any such amendment
which has not previously been publicly disclosed by Prodigy and also set forth
in filings with the Commission; or
(g) a tender or exchange offer for some portion or all of the Shares shall
have been commenced or publicly proposed to be made by another person (including
Prodigy or its subsidiaries), or it shall have been publicly disclosed or
Purchaser shall have learned that (i) any person (including Prodigy or its
subsidiaries), entity or "group" (as defined in Section 13(d)(3) of the Exchange
Act) shall have acquired or proposed to acquire more than five percent of the
Shares, or shall have been granted any option or right, conditional or
otherwise, to acquire more than five percent of the Shares, other than
acquisitions for bona fide arbitrage purposes and other than acquisitions by
persons or groups who have publicly disclosed in a Schedule 13D or 13G (or
amendments thereto on file with the Commission) such ownership on or prior to
September 21, 2001; (ii) any such person, entity or group who has publicly
disclosed any such ownership of more than five percent of the Shares prior to
such date shall have acquired or proposed to acquire additional shares of Shares
constituting more than one percent of the Shares, or shall have been granted any
option or right to acquire more than one percent of the Shares; (iii) any new
group was, or is, formed which beneficially owns more than five percent of the
outstanding Shares; (iv) any person, entity or group shall have entered into a
definitive agreement or an agreement in principal or made a proposal with
respect to a tender offer or exchange offer for some portion or all of the
Shares or a merger, consolidation or other business combination or sale of
assets (other than in the ordinary course of business) with or involving Prodigy
or any of its affiliates or subsidiaries; or (v) any person shall have filed a
Notification and Report Form under the HSR Act or made a public announcement
reflecting an intent to acquire Prodigy or assets or securities of Prodigy; or
(h) Prodigy and Purchaser or SBC shall have reached an agreement or
understanding that the Offer be terminated or amended or SBC or Purchaser (or
one of their respective affiliates) shall have entered into a definitive
agreement or an agreement in principle to acquire Prodigy by merger or similar
business combination, or purchase of Shares or assets of Prodigy; or
(i) any change (or any condition, event or development involving a
prospective change) shall have occurred or be threatened in the general
economic, financial, currency exchange or market conditions in the United States
or abroad that has or might have an Adverse Effect or results or might result in
a Diminution in Value; or
(j) Prodigy or any of its subsidiaries shall have transferred into trust,
escrow or similar arrangement any amounts required to fund any existing benefit,
employment or severance agreements with any of its employees or shall have
entered into or otherwise affected with its officers or any other employees any
additional benefit, employment, severance or similar agreements, arrangements or
plans other than in the ordinary course of business or entered into or amended
any agreements, arrangements or plans so as to provide for increased benefits to
such employee or employees as a result of or in connection with the transactions
contemplated by the Offer or any subsequent business combination;
which in the sole judgment of Purchaser and SBC with respect to each and every
matter referred to above makes it inadvisable to proceed with the Offer or with
such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and SBC and
may be asserted by Purchaser or SBC regardless of the circumstances (including
any action or inaction by Purchaser or SBC) giving rise to
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any such conditions or may be waived by Purchaser or SBC in whole or in part at
any time and from time to time in its sole discretion. The determination as to
whether any condition has occurred shall be in the sole judgment of Purchaser
and SBC and will be final and binding on all parties. The failure by Purchaser
or SBC at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time. Notwithstanding the
fact that Purchaser reserves the right to assert the occurrence of a condition
following acceptance for payment but prior to payment in order to delay payment
or cancel its obligation to pay for properly tendered Shares, Purchaser will
either promptly pay for such Shares or promptly return such Shares.
A public announcement shall be made of a material change in, or waiver of,
such conditions, and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver. All Offer Conditions must be
satisfied or waived prior to the commencement of any Subsequent Offering Period.
11. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date hereof, Prodigy should (1) split, combine or
otherwise change the Shares or its capitalization, (2) acquire currently
outstanding Shares or otherwise cause a reduction in the number of outstanding
Shares or (3) issue or sell additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, to acquire any of the foregoing, other than Shares
issued pursuant to the exercise of stock options outstanding as of the date
hereof, then, subject to the provisions of Section 10 above, Purchaser, in its
sole discretion, may make such adjustments as it deems appropriate in the offer
price and other terms of the Offer, including, without limitation, the number or
type of securities offered to be purchased.
If, on or after the date hereof, Prodigy should declare or pay any cash
dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares any additional Shares, shares of any other class of
capital stock other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to stockholders of record on a date prior to
the transfer of the Shares purchased pursuant to the Offer to Purchaser or its
nominee or transferee on Prodigy's stock transfer records, then, subject to the
provisions of Section 10 above, (1) the offer price and other terms of the Offer
may, in the sole discretion of Purchaser, be reduced by the amount of any such
cash dividend or cash distribution and (2) the whole of any such noncash
dividend, distribution or issuance to be received by the tendering stockholders
will (a) be received and held by the tendering stockholders for the account of
Purchaser and will be required to be promptly remitted and transferred by each
tendering stockholder to the Depositary for the account of Purchaser,
accompanied by appropriate documentation of transfer, or (b) at the direction of
Purchaser, be exercised for the benefit of Purchaser, in which case the proceeds
of such exercise will promptly be remitted to Purchaser. Pending such remittance
and subject to applicable law, Purchaser will be entitled to all rights and
privileges as owner of any such noncash dividend, distribution, issuance or
proceeds and may withhold the entire offer price or deduct from the offer price
the amount or value thereof, as determined by Purchaser in its sole discretion.
12. CERTAIN LEGAL MATTERS
GENERAL. Except as otherwise disclosed herein, based upon an examination
of publicly available filings with respect to Prodigy, Purchaser and SBC are not
aware of any licenses or other regulatory permits which appear to be material to
the business of Prodigy and which might be adversely affected by the acquisition
of Shares by Purchaser pursuant to the Offer or of any approval or other action
by any governmental, administrative or regulatory agency or authority which
would be required for the acquisition or ownership of Shares by Purchaser
pursuant to the Offer. Should any such approval or other action be required, it
is currently contemplated that such approval or action would be sought or taken.
There can be no assurance that any such approval or action, if needed, would be
obtained or, if obtained, that it will be obtained without substantial
conditions or that adverse consequences might not result to Prodigy's or
Purchaser's business or that certain parts of Prodigy's or Purchaser's business
might not have to be disposed of in the event that such approvals were not
obtained or such other actions were not taken, any of which could cause
Purchaser to elect
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to terminate the Offer without the purchase of the Shares thereunder.
Purchaser's obligation under the Offer to accept for payment and pay for Shares
is subject to certain conditions. See Section 10.
ANTITRUST COMPLIANCE. Under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), certain acquisition transactions may
not be consummated unless certain information has been furnished to the
Antitrust Division of the Department of Justice and the Federal Trade Commission
and certain waiting period requirements have been satisfied. As explained more
fully below, however, the Offer is not a reportable transaction under the HSR
Act.
In late 1999, SBC filed a Notification and Report Form under the HSR Act
when Purchaser proposed to acquire an equity interest in Prodigy of
approximately 43%. This transaction, among other things, gave SBC the right to
elect by class vote three out of the nine directors on Prodigy's board of
directors and to vote generally in the election of directors for other director
nominees. See "Special Factors -- Terms of Prodigy's Strategic Relationship with
SBC."
Under HSR Act reporting regulations, this structure resulted in SBC being
deemed in "control" of Prodigy for the purposes of such regulations. In
particular, these regulations provide that the term "controls" means holding 50
percent or more of the outstanding voting securities of an issuer. Although SBC
did not at the time acquire 50 percent or more of Prodigy's outstanding voting
securities, the regulations provide specific instructions for calculating the
percentage of voting securities held. This percentage is "the sum of separate
ratios for each class of voting securities, expressed as a percentage," where
the ratio is the product of (1) the number of votes for directors that the
holder of a class of voting securities is entitled to cast divided by the total
number of votes for directors that may be cast by the class of voting
securities, and (2) the number of directors the class of voting securities is
entitled to elect divided by the total number of directors.
Under the formula outlined above, Purchaser's right to elect three
directors to Prodigy's board of directors coupled with its voting power from its
now 42% interest in Prodigy for the election of directors generally, resulted in
SBC being considered to "control" Prodigy for HSR Act purposes.
SBC's original HSR Act filing with respect to Prodigy indicated that the
filing was being made because the acquisition exceeded the 50% voting security
filing threshold. Based on the foregoing, SBC believes no HSR Act filing is
required in connection with the Offer and the Merger.
FEDERAL RESERVE BOARD REGULATIONS. Regulations G, T, U and X (the "Margin
Regulations") promulgated by the Federal Reserve Board place restrictions on the
amount of credit that may be extended for the purpose of purchasing margin stock
(including the Shares) if such credit is secured directly or indirectly by
margin stock. Purchaser and SBC will ensure that the financing of the
acquisition of the Shares will be in compliance with the Margin Regulations.
STATE TAKEOVER LAWS. A number of states have adopted laws and regulations
applicable to offers to acquire securities of corporations which are
incorporated in such states and/or which have substantial assets, stockholders,
principal executive offices or principal places of business therein. In Edgar v.
MITE Corporation, the Supreme Court of the United States held that the Illinois
Business Takeover Statute, which made the takeover of certain corporations more
difficult, imposed a substantial burden on interstate commerce and was therefore
unconstitutional. In CTS Corporation v. Dynamics Corporation of America, the
Supreme Court held that as a matter of corporate law, and in particular, those
laws concerning corporate governance, a state may constitutionally disqualify an
acquiror of "Control Shares" (ones representing ownership in excess of certain
voting power thresholds e.g. 20%, 33% or 50%) of a corporation incorporated in
its state and meeting certain other jurisdictional requirements from exercising
voting power with respect to those shares without the approval of a majority of
the disinterested stockholders.
Purchaser does not believe that any state takeover laws purport to apply to
the Offer or the Merger. Neither SBC nor Purchaser has currently complied with
any state takeover statute or regulation. Purchaser reserves the right to
challenge the applicability or validity of any state law purportedly applicable
to the Offer or the Merger and nothing in this Offer to Purchase or any action
taken in connection with the Offer or the Merger is intended as a waiver of such
right. If it is asserted that any state takeover statute is applicable to the
Offer or the Merger and if an appropriate court does not determine that it is
inapplicable or invalid as applied
37
45
to the Offer or the Merger, Purchaser might be required to file certain
information with, or to receive approvals from, the relevant state authorities,
and Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer, or be delayed in consummating the Offer or the Merger. In
such case, Purchaser may not be obliged to accept for payment or pay for any
Shares tendered pursuant to the Offer.
If it is asserted that one or more state takeover laws applies to the Offer
and it is not determined by an appropriate court that such act or acts do not
apply or are invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in consummating
the Offer. In such case, Purchaser may not be obligated to accept for payment
any Shares tendered. See Section 10.
STOCKHOLDER LITIGATION. On September 24 and 26, 2001, certain stockholders
of Prodigy filed eleven separate class action complaints in the Delaware Court
of Chancery against Prodigy, SBC, and various directors of Prodigy. Each of
these actions was brought as a putative class action on behalf of all holders of
Shares other than the defendants and persons related to or affiliated with the
defendants. The complaints in the eleven actions generally allege that:
- SBC, Prodigy and the individual Prodigy directors breached their
fiduciary duties as a result of the Offer;
- the Offer price is inadequate; and
- SBC is engaging in unfair self-dealing, not acting in good faith towards
Prodigy's public stockholders and that the Offer is a product of the
conflict of interest between SBC and Prodigy's public stockholders.
The lawsuits seek, among other things, to recover unspecified damages and
costs and to enjoin or rescind the transactions contemplated by this Offer to
Purchase. SBC and SBC Internet believe that these lawsuits are entirely without
merit and intend to defend against them vigorously.
LOAN AGREEMENT. In January 2001, an extension to an existing loan
agreement from August 1999, (as extended, the "Loan Agreement") was entered into
by and between Prodigy and Banco Inbursa, S.A. (the "Bank"), an affiliate of CGT
and Telmex. The Loan Agreement calls for the Bank to open a revolving line of
credit for Prodigy in an amount up to $150,000,000. According to Prodigy's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, as of such
date there was $109,200,000 in borrowings outstanding under the Loan Agreement.
Under the terms of the Loan Agreement, the Bank may terminate its obligations
thereunder and accelerate the payment of the outstanding loan balance if Prodigy
enters into a merger or spin-off transaction without the Bank's prior consent.
If the Merger is consummated, it would trigger the Bank's early termination and
acceleration option under the Loan Agreement. SBC expects that if the Merger is
consummated it will cause Prodigy to repay amounts owing under the Loan
Agreement and finance Prodigy's future business operation through intercompany
loans from affiliates of SBC.
13. FEES AND EXPENSES
Goldman Sachs are acting as Dealer Managers in connection with the Offer
and have provided certain financial advisory services to SBC in connection
therewith. SBC has agreed to pay Goldman Sachs as compensation for their
services as Dealer Managers and as financial advisors in connection with the
Offer a fee of up to $3 million payable upon consummation of the transaction.
SBC has agreed to reimburse Goldman Sachs for their reasonable out-of-pocket
expenses, including the fees and expenses of their counsel, in connection with
the Offer, and has agreed to indemnify Goldman Sachs, as well as the Information
Agent and the Depositary, against certain liabilities and expenses in connection
with the Offer, including liabilities under the federal securities laws.
SBC has also retained Georgeson Shareholder Communications Inc. to act as
the Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interviews and may request brokers, dealers and other nominee stockholders to
forward
38
46
materials relating to the Offer to beneficial owners of Shares. The Information
Agent will receive reasonable and customary compensation for such services, plus
reimbursement of out-of-pocket expenses and Purchaser will indemnify the
Information Agent against certain liabilities and expenses in connection with
the Offer, including liabilities under the federal securities laws.
Purchaser will pay the Depositary reasonable and customary compensation for
its services in connection with the Offer, plus reimbursement for out-of-pocket
expenses, and will indemnify the Depositary against certain liabilities and
expenses in connection therewith, including liabilities under the federal
securities laws. Brokers, dealers, commercial banks and trust companies will be
reimbursed by Purchaser for customary mailing and handling expenses incurred by
them in forwarding material to their customers.
In addition, Prodigy will incur its own fees and expenses in connection
with the Offer.
The following is an estimate of the fees and expenses to be incurred by
Purchaser and SBC:
Filing Fees................................................. $ 82,000
Financial Advisors' Fees and Expenses....................... 3,000,000
Legal Fees and Expenses..................................... 1,000,000
Accounting Fees and Expenses................................ -0-
Depositary Fees............................................. 10,000
Printing and Mailing Costs.................................. 200,000
Miscellaneous............................................... 300,000
Total.................................................. $4,592,000
==========
Purchaser has not made any provisions in connection with this Offer for
Prodigy stockholders access to its files or provide counsel or legal advise at
its expense. For discussion of Appraisal Rights see Section 8.
14. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. SBC Internet may, however, in its sole discretion, take such
action as it may deem necessary to make the Offer in any such jurisdiction and
extend the Offer to holders of Shares in such jurisdiction.
Neither SBC Internet nor SBC is aware of any jurisdiction in which the
making of the Offer or the acceptance of Shares in connection therewith would
not be in compliance with the laws of such jurisdiction.
SBC Internet and SBC have filed with the SEC a Tender Offer Statement on
Schedule TO pursuant to Rule l4d-3 of the General Rules and Regulations under
the Exchange Act, furnishing certain additional information with respect to the
Offer, and may file amendments thereto. Such Statement includes within it the
information required by the SEC's Statement on Schedule 13E-3 relating to "going
private" transactions. Such Statement and any amendments thereto, including
exhibits, may be examined and copies may be obtained from the principal office
of the SEC in Washington, D.C. in the manner set forth in Section 6.
No person has been authorized to give any information or make any
representation on behalf of Purchaser or SBC not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, such information
or representation must not be relied upon as having been authorized.
SBC INTERNET COMMUNICATIONS, INC.
October 2, 2001
39
47
SCHEDULE A
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF SBC AND SBC INTERNET
The following persons are the executive officers and/or directors of SBC
and SBC Internet as of the date of this Offer to Purchase. None of these persons
has been convicted in a criminal proceeding during the past five years
(excluding traffic violations or similar misdemeanors), nor has any of these
persons been a party to any judicial or administrative proceeding during the
past five years that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal
or state securities laws or a finding of any violation of federal or state
securities laws. The following tables set forth the name, business address,
present principal occupation, principal business and address of any corporation
or other organization in which the employment or occupation is conducted, and
material occupations, positions, offices or employment held within the past five
years of each director and executive officer of SBC and SBC Internet. Unless
otherwise specified, each person listed below is a citizen of the United States
and has his or her principal business address at 175 E. Houston, San Antonio, TX
78205.
SBC COMMUNICATIONS INC.
EXECUTIVE OFFICERS
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND CITIZENSHIP OFFICE(S) EMPLOYMENT HISTORY
-------------------- --------- -------------------------------
Edward E. Whitacre, Jr....... Chairman of the Board, Mr. Whitacre is Chairman of the
President and Chief Executive Board and Chief Executive
Officer. Officer and has served in this
capacity since January 1990. He
is a Director of Anheuser-Busch
Companies, Inc.; Burlington
Northern Santa Fe Corporation;
Emerson Electric Co.; and The
May Department Stores Company.
He is the Chairman of the
Executive Committee and a
member of the Corporate
Development Committee and the
Finance/Pension Committee.
James W. Callaway............ Group President. Mr. Callaway has held
high-level managerial positions
with SBC or its subsidiaries
for more than the past five
years, most recently as Group
President since November 1999.
Cassandra C. Carr............ Senior Executive Vice Ms. Carr has held high-level
President -- External managerial positions with SBC
Affairs. or its subsidiaries for more
than the past five years, most
recently as Senior Executive
Vice President -- External
Affairs since October 1998.
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PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND CITIZENSHIP OFFICE(S) EMPLOYMENT HISTORY
-------------------- --------- -------------------------------
James D. Ellis............... Senior Executive Vice Mr. Ellis has served as Senior
President and General Executive Vice President and
Counsel. General Counsel of SBC since
March 1989.
Karen E. Jennings............ Senior Executive Vice Ms. Jennings has held
President -- Human Resources. high-level managerial positions
with SBC or its subsidiaries
for more than the past five
years, most recently as Senior
Executive Vice
President -- Human Resources
since October 1998.
James S. Kahan............... Senior Executive Vice Mr. Kahan has served as Senior
President -- Corporate Executive Vice President --
Development. Corporate Development since
July 1993.
Stanley T. Sigman............ Group President and Chief Mr. Sigman has held high-level
Operating Officer. managerial positions with SBC
or its subsidiaries for more
than the past five years, most
recently as Group President and
Chief Operating Officer.
John H. Atterbury............ Group President -- SBC Mr. Atterbury has held
Enterprises. high-level managerial positions
with SBC or its subsidiaries
for more than the past five
years, most recently as Group
President -- SBC Enterprises
since June 2001.
Randall Stephenson........... Senior Executive Vice Mr. Stephenson has held high-
President and Chief Financial level managerial positions with
Officer. SBC or its subsidiaries for
more than the past five years,
most recently as Senior
Executive Vice President and
Chief Financial Officer since
August 2001.
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DIRECTORS
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND CITIZENSHIP OFFICE(S) EMPLOYMENT HISTORY
-------------------- --------- -------------------------------
Herman E. Gallegos........... Member of the Audit Committee Independent Management
Independent Management and the Corporate Public Consultant. Director of
Consultant Policy and Environmental Gallegos Institutional Investor
No Business Address Affairs Committee. Corporation from 1990 to 1994.
He served as an alternate U.S.
Public Delegate to the 49th
United Nations General Assembly
from 1994 to 1995. Mr. Gallegos
has been Director of SBC since
April 1997. He is a Director of
UnionBanCal Corporation.
Jess T. Hay.................. Member of the Audit Committee Chairman of HCB Enterprises
Chairman and Chairman of the Human Inc., a private investment
HCB Enterprises Inc Resources Committee. firm, Dallas, Texas. He is also
P.O. Box 239 Chairman of the Texas
Dallas, Texas 75221-0239 Foundation for Higher
Education, Dallas, Texas. Mr.
Hay was Chairman and Chief
Executive Officer of Lomas
Financial Group from 1969 until
his retirement in 1994. Mr. Hay
has been a Director of SBC
since April 1986. He is a
Director of Exxon Mobil
Corporation; Trinity
Industries; and Viad Corp.
James A. Henderson........... Member of the Audit Committee Chairman of the Board from 1995
Retired Chairman and and the Finance/Pension and Chief Executive Officer
Chief Executive Officer Committee. from 1994 of Cummins Engine
Cummins Inc. Company, Inc., Columbus,
301 Washington Street Indiana, until his retirement
Columbus, Indiana in December 1999. Mr. Henderson
47201-6743 has been a Director of SBC
since October 1999. He served
as a Director of Ameritech
Corporation from 1983 to 1999.
He is a Director of
Championship Auto Racing Teams,
Inc.; International Paper
Company; Rohm and Haas Company;
and Ryerson Tull, Inc.
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PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND CITIZENSHIP OFFICE(S) EMPLOYMENT HISTORY
-------------------- --------- -------------------------------
Admiral Bobby R. Inman....... Chairman of the Finance/ Admiral Inman served as Vice
United States Navy, Retired Pension Committee and a Admiral, United States Navy,
701 Brazos Street, Suite member of the Human Resources and Director, National Security
500 Committee. Agency, from 1977 to 1981, and
Austin, Texas 78701-2587 as Admiral, United States Navy,
and Deputy Director, Central
Intelligence Agency, from 1981
to 1982. He has been a Director
of SBC since March 1985.
Admiral Inman is a Director of
Fluor Corporation; Massey
Energy Company; Science
Applications International
Corporation; Temple-Inland
Inc.; and Xerox Corporation.
John B. McCoy................ Member of the Corporate Chairman from November 1999 and
Retired Chairman Development Committee and the Chief Executive Officer from
BANK ONE CORPORATION Human Resources Committee. October 1998 of Bank One
Mail Code: OH1-0277 Corporation until his
P.O. Box 710277 retirement in December 1999.
Columbus, Ohio 43271-0277 Mr. McCoy served as a Chairman
and Chief Executive Officer of
Banc One Corporation from 1978
to 1998. Mr. McCoy has been a
Director of SBC since October
1999. He served as a Director
of Ameritech Corporation from
1991 to 1999. He is a Director
of Cardinal Health, Inc.;
Corillian Corporation; and
Federal Home Loan Mortgage
Corporation.
S. Donley Ritchey............ Member of the Finance/Pension Managing Partner of Alpine
Managing Partner Committee and the Human Partners, Danville, California.
Alpine Partners Resources Committee. Mr. Ritchey was Chief Executive
485 Hartz Avenue, Suite 105 Officer and Chairman of the
Danville, California Board of Lucky Stores, Inc.
94526-3803 from 1981 to 1986. Mr. Ritchey
has been a Director of SBC
since April 1997. He served as
a Director of Pacific Telesis
Group from 1984 to 1997. He is
a Director of The McClatchy
Company.
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PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND CITIZENSHIP OFFICE(S) EMPLOYMENT HISTORY
-------------------- --------- -------------------------------
Joyce M. Roche............... Member of the Audit Committee President and Chief Executive
President and Chief and the Corporate Public Officer of Girls Incorporated,
Executive Officer Policy and Environmental New York, New York, and has
Girls Incorporated Affairs Committee. held this position since
120 Wall Street, 3rd Floor September 2000. Ms. Roche was
New York, New York an independent marketing
10005-3904 consultant from 1998 to 2000.
Ms. Roche was President and
Chief Operating Officer of
Carson, Inc. from 1996 to 1998,
and Executive Vice President of
Global Marketing of Carson,
Inc. from 1995 to 1996. Ms.
Roche has been a Director of
SBC since October 1998. She
served as a Director of
Southern New England
Telecommunications Corporation
from May 1997 to October 1998.
She is a Director of
Anheuser-Busch Companies, Inc.
and Tupperware Corporation.
James E. Barnes.............. Member of the Audit Committee Chairman of the Board,
Chairman of the Board, and the Corporate Development President and Chief Executive
President and Chief Committee. Officer of MAPCO Inc., Tulsa,
Executive Officer (Retired) Oklahoma, from 1986 until 1998.
MAPCO Inc. Mr. Barnes has been a Director
No Business Address of SBC since November 1990. Mr.
Barnes is a Director of BOK
Financial Corporation; Parker
Drilling Company; and Stilwell
Financial Inc.
Edward E. Whitacre, Jr....... Chairman of the Executive Chairman of the Board and Chief
Committee and a member of the Executive Officer of SBC and
Corporate Development has served in this capacity
Committee and the Finance/ since January 1990. Mr.
Pension Committee. Whitacre has been a Director of
Anheuser-Busch Companies, Inc.;
Burlington Northern Santa Fe
Corporation; Emerson Electric
Co.; and The May Department
Stores Company.
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PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND CITIZENSHIP OFFICE(S) EMPLOYMENT HISTORY
-------------------- --------- -------------------------------
August A. Busch, III......... Member of the Corporate Chairman of the Board and
Chairman of the Board and Development Committee, the President of Anheuser-Busch
President Executive Committee and the Companies, Inc., St. Louis,
Anheuser-Busch Companies, Human Resources Committee. Missouri. Mr. Busch has been
Inc. Director of SBC since October
One Busch Place 1983. He served as a Director
St. Louis, Missouri of Southwestern Bell Telephone
63118-1852 Company from 1980 to 1983. Mr.
Busch is a Director of
Anheuser-Busch Companies, Inc.
and Emerson Electric Co., and
an Advisory Member of the Board
of Directors of Grupo Modelo,
S.A. de C.V.
William P. Clark............. Member of the Corporate Senior Counsel to Clark, Cali
Senior Counsel Development Committee and the and Negranti, Attorneys at Law,
Clark, Call and Negranti Corporate Public Policy and San Luis Obispo, California,
Attorneys at Law Environmental Affairs and has served in this capacity
1031 Pine Street Committee. since 1996. He is also Chief
Paso Robles, California Executive Officer of Clark
93446-2537 Company, Paso Robles,
California. He is a retired
California Supreme Court
Justice and former Secretary of
the United States Department of
the Interior. Judge Clark has
been a Director of SBC since
April 1997. He served as a
Director of Pacific Telesis
Group from 1985 to 1997. He is
a Director of The Irish
Investment Fund, Inc.
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PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND CITIZENSHIP OFFICE(S) EMPLOYMENT HISTORY
-------------------- --------- -------------------------------
Lynn M. Martin............... Member of the Corporate Chair of the Council for the
Chair of the Council for Public Policy and Advancement of Women and
the Advancement of Women Environmental Affairs Advisor to the firm of Deloitte
Advisor to the Firm Committee and the Finance/ & Touche LLP, Chicago,
Deloitte & Touche LLP Pension Committee. Illinois, and is a professor at
Two Prudential Plaza the J.L. Kellogg Graduate
180 North Stetson Avenue, School of Management,
Suite 2000 Northwestern University. Ms.
Chicago, Illinois Martin served as U.S. Secretary
60601-6779 of Labor from 1991 to 1993, and
as a member of the U.S. House
of Representatives from
Illinois from 1981 to 1991. Ms.
Martin has been a Director of
SBC since October 1999. She
served as a Director of
Ameritech Corporation from 1993
to 1999. She is a Director of
certain Dreyfus Funds; Harcourt
General, Inc.; The Procter &
Gamble Company, Ryder System,
Inc.; and TRW Inc.
Mary S. Metz................. Member of the Audit Committee President of S.H. Cowell
President and the Corporate Public Foundation, San Francisco,
S. H. Cowell Foundation Policy and Environmental California, and has served in
120 Montgomery Street, Affairs Committee. this capacity since 1999. Dr.
Suite 2570 Metz was Dean of University
San Francisco, California Extension of the University of
94104-4335 California, Berkeley, from July
1991 until August 1998, and is
President Emerita of Mills
College. Dr. Metz has been a
Director of SBC since April
1997. She served as a Director
of Pacific Telesis Group from
1986 to 1997. She is a Director
of Longs Drug Stores
Corporation; Pacific Gas and
Electric Company; Sodexho
Marriott Services, Inc., and
UnionBanCal Corporation.
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PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND CITIZENSHIP OFFICE(S) EMPLOYMENT HISTORY
-------------------- --------- -------------------------------
Laura D'Andrea Tyson......... Member of the Audit Committee Dean of the Walter A. Haas
BankAmerica Dean and the Finance/Pension School of Business at the
Walter A. Haas School of Committee. University of California at
Business Berkeley, and has served in
University of California, this capacity since 1998. Dr.
Berkeley Tyson served as Professor of
545 Student Services Economics and Business
Building 1900 Administration at the
Berkeley, California 94720- University of California at
1900 Berkeley from 1997 to 1998. She
served as National Economic
Adviser to the President of the
United States from 1995 to 1996
and as Chair of the White House
Council of Economic Advisers
from 1993 to 1995. Dr. Tyson
has been a Director of SBC
since October 1999. She served
as a Director of Ameritech
Corporation from 1997 to 1999.
She is a Director of Eastman
Kodak Company; Fox
Entertainment Group, Inc.;
Human Genome Sciences, Inc.,
and Morgan Stanley Dean Witter
& Co.
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PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND CITIZENSHIP OFFICE(S) EMPLOYMENT HISTORY
-------------------- --------- -------------------------------
Gilbert F. Amelio............ Member of the Corporate General Partner, Chairman and
Chairman and CEO, Public Policy and Chief Executive Officer of
Beneventure Capital Environmental Affairs Beneventure Capital, San
Senior Partner, Sienna Committee and the Finance/ Francisco, California, and has
Ventures Pension Committee. held this position since March
P.O. Box 51748 2000. He is also Chairman and
Irvine, California Chief Executive Officer of each
92619-1748 of AmTech, LLC and AmTech
Capital, LP, San Francisco,
California, and has served as
such since 1999. Dr. Amelio was
Principal of Aircraft Ventures,
LLC from 1997 to 1999 and
Partner and Director of The
Parkside Group, LLC from 1998
to 1999. Dr. Amelio was
Chairman of the Board and Chief
Executive Officer of Apple
Computer, Inc. from 1996 to
1997. He was Chairman of the
Board, Chief Executive Officer
and President of National
Semiconductor Corporation from
1991 to 1996. Dr. Amelio was
elected a Director of SBC in
February 2001 and had
previously served as an
Advisory Director of SBC from
April 1997 to February 2001. He
served as a Director of Pacific
Telesis Group from 1995 to
1997. He is a Director of Phase
Metrics, Inc.
Clarence C. Barksdale........ Chairman of the Audit Vice Chairman, Board of
Vice Chairman, Board of Committee and a member of the Trustees, Washington
Trustees Corporate Public Policy and University, St. Louis,
Washington University Environmental Affairs Missouri. Mr. Barksdale was
7425 Forsyth Boulevard Committee. Chairman of the Board and Chief
St. Louis, Missouri Executive Officer of Centerre
63105-2198 Bancorporation from 1978 to
1988 and Chairman of the Board
of Centerre Bank N.A. from 1976
to 1988. Mr. Barksdale was Vice
Chairman of Boatmen's
Bancshares, Inc. from January
through June 1989. He has been
a Director of SBC since October
1983. Mr. Barksdale served as a
Director of Southwestern Bell
Telephone Company from 1982 to
1983.
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PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND CITIZENSHIP OFFICE(S) EMPLOYMENT HISTORY
-------------------- --------- -------------------------------
Martin K. Eby, Jr............ Member of the Audit Committee Chairman of the Board and Chief
Chairman of the Board and and the Finance/Pension Executive Officer of the Eby
Chief Executive Officer Committee. Corporation, Wichita, Kansas.
The Eby Corporation Mr. Eby has been a Director of
P.O. Box 1679 SBC since June 1992. He is a
Wichita, Kansas 67201-1679 Director of Intrust Bank, N.A.
and Intrust Financial
Corporation.
Charles F. Knight............ Chairman of the Corporate Chairman of the Board of
Chairman of the Board Development Committee and a Emerson Electric Co., St.
Emerson member of the Executive Louis, Missouri. Mr. Knight was
8000 West Florissant Committee and the Finance/ Chief Executive Officer of
P.O. Box 4100 Pension Committee. Emerson Electric Co. from 1986
St. Louis, Missouri to 2000. Mr. Knight has been a
63136-8506 Director of SBC since October
1983. He served as a Director
of Southwestern Bell Telephone
Company from 1974 to 1983. Mr.
Knight is a Director of
Anheuser-Busch Companies, Inc.;
BP Amoco p.l.c.; Emerson
Electric Co.; International
Business Machines Corporation;
and Morgan Stanley Dean Witter
& Co.
Toni Rembe................... Member of the Corporate Partner in the law firm of
Pillsbury Winthrop LLP Development Committee and the Pillsbury Winthrop LLP, San
P.O. Box 7880 Corporate Public Policy and Francisco, California. Ms.
San Francisco, California Environmental Affairs Rembe was elected a Director of
94120-7880 Committee. SBC in January 1998 and had
previously served as an
Advisory Director of SBC from
April 1997 to January 1998. She
served as a Director of Pacific
Telesis Group from 1991 to
1997. She is a Director of
AEGON N.V. and Potlatch
Corporation.
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PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND CITIZENSHIP OFFICE(S) EMPLOYMENT HISTORY
-------------------- --------- -------------------------------
Ing. Carlos Slim Helu........ Member of the Corporate Chairman of the Board of Carso
(Mexican citizen) Public Policy and Global Telecom, S.A. de C.V.,
Parque via 190 Environmental Affairs Mexico City, Mexico, and
Colonial Cuauntenore, 06599 Committee and Finance/Pension Chairman of the Board of
Mexico, D.F. Mexico Committee. Telefonos de Mexico, S.A. de
Chairman of the Board C.V. He also has been Chairman
Carso Global Telecom, S.A. of the Board of America Movil,
de C.V. S.A. de C.V. since September
Palmas 736 2000. He is Chairman Emeritus
Col. Lomas de Chapultepec of Grupo Carso, S.A. de C.V.,
11000 Mexico, D.F. having served as Chairman of
the Board of Grupo Carso from
1980 to 1998. Mr. Slim has been
a Director of SBC since
September 1993. He is a
Director of America Movil, S.A.
de C.V.; Carso Global Telecom,
S.A. de C.V.; Grupo Financiero
Inbursa, S.A. de. C.V.; Philip
Morris Companies Inc.; and
Telefonos de Mexico, S.A. de
C.V.
Patricia P. Upton............ Chairwoman of the Corporate President and Chief Executive
President and Chief Public Policy and Officer of Aromatique, Inc.,
Executive Officer Environmental Affairs Heber Springs, Arkansas. Ms.
Aromatique, Inc. Committee. Upton has been a Director of
P.O. Box 1500 SBC since June 1993.
Heber Springs, Arkansas
72543-1500
A-11
58
SBC INTERNET COMMUNICATIONS, INC.
DIRECTORS AND EXECUTIVE OFFICERS
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND CITIZENSHIP OFFICE(S) EMPLOYMENT HISTORY
-------------------- --------- -------------------------------
John H. Atterbury............ Chairman of the Board Mr. Atterbury has held
high-level managerial positions
with SBC or its subsidiaries
for more than the past five
years, most recently as Group
President for SBC since June
2001.
Richard C. Dietz............. President and Director Mr. Dietz has held various
management positions within SBC
or its subsidiaries for more
than the past five years.
A. Dale Robertson............ Vice President and Director Mr. Robertson has held various
management positions within SBC
or its subsidiaries for more
than the past five years.
Karol Sweitzer............... Chief Financial Officer Ms. Sweitzer has held various
management positions within SBC
or its subsidiaries for more
than the past five years.
Keith J. Epstein............. Secretary Mr. Epstein has held various
management positions within SBC
or its subsidiaries for more
than the past five years.
Jim G. McGuire............... Treasurer Mr. McGuire has held various
management positions within SBC
or its subsidiaries for more
than the past five years.
Carl J. Strutz............... Assistant Treasurer Mr. Strutz has held various
management positions within SBC
or its subsidiaries for more
than the past five years.
A-12
59
SCHEDULE B
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth (i) the current ownership of Shares and (ii)
the purchases of Shares, by Purchaser and SBC (including their respective
directors and executive officers) during the past 60 days.
SECURITIES OWNERSHIP SECURITIES TRANSACTIONS
FILING PERSON(S) (NUMBER AND PERCENTAGE)(1) FOR PAST 60 DAYS
---------------- -------------------------- -----------------------
SBC Communications Inc......................... 61,250 Class A Common None
Stock; .05%
SBC Internet Communications, Inc............... 1 Class B Common Stock(2) None
Karen E. Jennings (SBC Officer)................ 400 Class A Common Stock (3)
Carlos Slim Helu(4)............................ 41,910,111 Class A (6)
Common Stock; 34.3%
Carso Global Telecom
Palmas 736
Col. Lomas de Chapultepec
11000 Mexico, D.F.
Mexico....................................... 41,910,111 Class A (6)
Common Stock; 34.3%
Telmex Financial Ventures, LLC(5)
Parque via 190
Colonia Cuauhteoc
06599 Mexico, D.F.
Mexico....................................... 12,513,200 Class A (6)
Common Stock; 10.2%
In the past two years, SBC and SBC Internet have not acquired any
securities of Prodigy, except for (i) the Shares acquired by SBC and SBC
Internet in their initial investment in Prodigy and (ii) the Shares acquired in
connection with Prodigy's merger with FlashNet Communications, Inc. See "Special
Factors -- Terms of Prodigy's Strategic Relationship with SBC" and "Special
Factors -- Implementation and Modifications to Operating Relationships".
---------------
(1) Percentages based on total voting power of all outstanding shares of Class A
and Class B common stock.
(2) The 1 share of Class B common stock entitles the record holder thereof to
51,843,631 votes.
(3) Mrs. Jennings is the beneficial owner of 400 shares owned by her husband.
(4) Mr. Slim and members of his family own a majority of the outstanding voting
securities of CGT. CGT and other entities controlled by the Slim Family may
be deemed to control Telmex. Thus, Mr. Slim's shares consist of the holdings
of CGT and Telmex.
(5) Telmex Financial Ventures is a wholly owned subsidiary of Telmex. Telmex,
therefore, may be deemed to beneficially own 10.2% of Prodigy's voting
stock.
(6) SBC is not aware of any securities transactions by the Telmex Affiliates in
the last 60 days.
B-1
60
SCHEDULE C
SUMMARY OF PRODIGY FINANCIAL MODELS AND PROJECTIONS
PRODIGY MANAGEMENT BASE CASE
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
----- ----- ------ ------ ------ ------ ------ ------ ------ ------ ------
(IN MILLIONS EXCEPT PER SUB DATA)
Revenue................ $ 414 $ 884 $1,529 $2,307 $2,987 $3,653 $4,335 $4,982 $5,546 $6,088 $6,692
EBITDA................. $ (99) $(173) $ 15 $ 266 $ 536 $ 777 $1,019 $1,276 $1,524 $1,690 $1,879
Net Income............. $(181) $(343) $ (219) $ 36 $ 284 $ 461 $ 642 $ 840 $1,046 $1,198 $1,372
Cash
Available/(Required)... $ (74) $(216) $ (105) $ 189 $ 474 $1,033 $1,675 $2,490 $3,500 $4,670 $6,010
DSL Non-Subscription
Revenue/Sub.......... $0.12 $3.61 $ 7.95 $ 9.28 $ 9.93 $10.43 $10.95 $11.50 $12.07 $12.88 $13.31
Discounted Cash Flow Valuation = $4.36 Billion
SBC BASE CASE
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
----- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(IN MILLIONS EXCEPT PER SUB DATA)
Revenue............... $ 426 $1,060 $1,694 $2,369 $2,903 $3,332 $3,744 $4,162 $4,565 $5,018 $5,527
EBITDA................ $(103) $ (182) $ (66) $ 60 $ 320 $ 505 $ 661 $ 829 $ 979 $1,089 $1,214
Net Income............ $(189) $ (348) $ (289) $ (92) $ 151 $ 276 $ 382 $ 491 $ 583 $ 649 $ 725
Cash
Available/(Required).. $ (3) $ (234) $ (131) $ 7 $ 125 $ 445 $ 657 $ 848 $ 938 $1,011 $1,095
DSL Non-Subscription
Revenue/Sub......... $0.12 $ 2.25 $ 3.88 $ 5.88 $ 7.62 $ 9.01 $10.12 $11.07 $11.77 $12.52 $13.33
Discounted Cash Flow Valuation = $2.87 Billion
C-1
61
SUMMARY OF PRODIGY FINANCIAL MODELS AND PROJECTIONS (CONT.)
SBC DEFERRED BOUNTY CASE
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
----- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(IN MILLIONS EXCEPT PER SUB DATA)
Revenue.............. $ 426 $1,052 $1,698 $2,373 $2,903 $3,332 $3,744 $4,162 $4,565 $5,018 $5,527
EBITDA............... $(103) $ (178) $ (65) $ 60 $ 320 $ 505 $ 661 $ 829 $ 979 $1,089 $1,214
Net Income........... $(187) $ (340) $ (276) $ (70) $ 170 $ 290 $ 396 $ 504 $ 596 $ 664 $ 741
Cash
Available/(Required).. $ 58 $ (68) $ 83 $ 49 $ 261 $ 486 $ 879 $1,032 $1,149 $1,256 $1,378
DSL Non-Subscription
Revenue/Sub........ $0.12 $ 2.25 $ 3.88 $ 5.88 $ 7.62 $ 9.01 $10.12 $11.07 $11.77 $12.52 $13.33
Discounted Cash Flow Valuation = $3.23 Billion
SBC WHOLESALE CASE
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
----- ----- ----- ------ ------ ------ ------ ------ ------ ------ ------
(IN MILLIONS EXCEPT PER SUB DATA)
Revenue................ $ 426 $ 549 $ 834 $1,164 $1,422 $1,667 $1,889 $2,097 $2,292 $2,512 $2,760
EBITDA................. $ (58) $ (35) $ 50 $ 173 $ 340 $ 484 $ 602 $ 720 $ 826 $ 910 $1,007
Net Income............. $(161) $(254) $(204) $ 2 $ 187 $ 281 $ 360 $ 434 $ 496 $ 547 $ 605
Cash
Available/(Required).. $ 48 $ (36) $ 150 $ 180 $ 488 $ 767 $ 964 $1,026 $1,085 $1,139 $1,200
DSL Non-Subscription
Revenue/Sub.......... $0.12 $2.25 $3.88 $ 5.88 $ 7.62 $ 9.01 $10.12 $11.07 $11.77 $12.52 $13.33
Discounted Cash Flow Valuation = $2.97 Billion
C-2
62
SCHEDULE D
EXCERPTS FROM THE GENERAL CORPORATION LAW OF THE
STATE OF DELAWARE RELATING TO THE RIGHTS OF
DISSENTING STOCKHOLDERS PURSUANT TO SECTION 262
262 APPRAISAL RIGHTS. -- (a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to Section 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock under
the circumstances described in subsections (b) and (c) of this section. As used
in this section, the word 'stockholder' means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words 'stock' and 'share' mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words 'depository receipt' mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Section 252, Section 254, Section 257, Section
258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to Sections 251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock anything
except;
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in respect
thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash in
lieu of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
D-1
63
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsection (b) or (c) hereof that appraisal rights are available for any or all
of the shares of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the appraisal of
such stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of such
stockholder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such stockholder's shares. A proxy or
vote against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective;
or
(2) If the merger or consolidation was approved pursuant to section 228 or
section 253 of this title, then, either a constituent corporation before the
effective date of the merger or consolidation, or the surviving or resulting
corporation within ten days thereafter, shall notify each of the holders of any
class or series of stock of such constituent corporation who are entitled to
appraisal rights of the approval of the merger or consolidation and that
appraisal rights are available for any or all shares of such class or series of
stock of such constituent corporation, and shall include in such notice a copy
of this section. Such notice may, and, if given on or after the effective date
of the merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation the appraisal of
such holder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such notice
did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a second
notice before the effective date of the merger or consolidation notifying each
of the holders of any class or series of stock of such constituent corporation
that are entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send such a
second notice to all such holders on or within 10 days after such effective
date; provided, however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need only be sent
to each stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the transfer agent of
the corporation that is required to give either notice that such notice has been
given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day on
which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise
D-2
64
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
D-3
65
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (c) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal of
such stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding
in the Court of Chancery shall be dismissed as to any stockholder without the
approval of the Court, and such approval may be conditioned upon such terms as
the Court deems just.
(1) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
D-4
66
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal, certificates for the Shares and any other required documents
should be sent by each stockholder of Prodigy or his broker-dealer, commercial
bank, trust company or other nominee to the Depositary as follows:
The Depositary for the Offer is:
American Stock Transfer & Trust Company
By Mail: By Overnight Courier: By Hand:
59 Maiden Lane 59 Maiden Lane 59 Maiden Lane
Plaza Level Plaza Level Plaza Level
New York, NY 10038 New York, NY 10038 New York, NY 10038
By Facsimile Transmission (For Eligible Institutions Only):
(718) 234-5001
Confirm Receipt of Facsimile by Telephone Only:
(800) 937-5449
(718) 921-8200
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Information
Agent or the Dealer Managers at their respective telephone numbers and locations
listed below. You may also contact your broker, dealer, commercial bank or trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
#Georgeson Logo#
17 STATE STREET, 10TH FLOOR
NEW YORK, NEW YORK 10004
BANKS AND BROKERS CALL COLLECT:
(212) 440-9800
ALL OTHERS CALL TOLL-FREE:
(800) 223-2064
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO.
85 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 902-1000 (CALL COLLECT)
(800) 323-5678 (CALL TOLL FREE)
EX-99.A.1.II
4
d90977ex99-a_1ii.txt
LETTER OF TRANSMITTAL
1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF CLASS A COMMON STOCK
PAR VALUE $.01 PER SHARE
OF
PRODIGY COMMUNICATIONS CORPORATION
PURSUANT TO THE OFFER TO PURCHASE, DATED OCTOBER 2, 2001
BY
SBC INTERNET COMMUNICATIONS, INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SBC COMMUNICATIONS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, OCTOBER 30, 2001, WHICH DATE MAY BE EXTENDED.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail: By Courier: By Hand:
59 Maiden Lane 59 Maiden Lane 59 Maiden Lane
Plaza Level Plaza Level Plaza Level
New York, NY 10038 New York, NY 10038 New York, NY 10038
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(718) 234-5001
Confirm Facsimile Transmission by Telephone Only:
(800) 937-5449
(718) 921-8200
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND
COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
2
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF THE SHARES TENDERED
------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
------------------------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
TOTAL SHARES
TENDERED
------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, all shares represented by share certificates delivered to the Depositary will be deemed
to have been tendered. See Instruction 4.
------------------------------------------------------------------------------------------------------------------------
[ ] Check here if certificates have been lost, destroyed or mutilated. See
Instruction 11. Number of shares represented by lost, destroyed or
mutilated certificates: ------------------------.
This Letter of Transmittal is to be used by stockholders of Prodigy
Communications Corporation if certificates for the Shares (as defined below) are
to be forwarded herewith or, unless an Agent's Message (as defined in
Instruction 2 below) is utilized, if delivery of the Shares is to be made by
Book-Entry Transfer to an account maintained by the Depositary (as defined in
the Introduction to the Offer to Purchase) at the Book-Entry Transfer Facility
(as defined in and pursuant to the procedures set forth in Section 2 of the
Offer to Purchase). Holders who deliver Shares by Book-Entry Transfer are
referred to herein as "Book-Entry Stockholders" and other stockholders who
deliver Shares are referred to herein as "Certificate Stockholders."
Stockholders whose certificates for the Shares are not immediately
available or who cannot deliver either the certificates for, or a Book-Entry
Confirmation (as defined in Section 2 of the Offer to Purchase) with respect to,
their Shares and all other documents required hereby to the Depositary prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase) must
tender their Shares pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
Account Number:
Transaction Code Number:
3
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Eligible Institution which Guaranteed Delivery:
If delivery is by book-entry transfer (provide the following),
check box: [ ]
Account Number:
Transaction Code Number:
4
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN
THIS LETTER OF TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to SBC Internet Communications, Inc., a
Delaware corporation ("SBC Internet" or "Purchaser") and an indirect wholly
owned subsidiary of SBC Communications Inc., a Delaware corporation ("SBC"), the
above-described shares of Class A Common Stock, par value $.01 per share (the
"Shares"), of Prodigy Communications Corporation, a Delaware corporation
("Prodigy"), at $5.45 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated October 2,
2001 and in this related Letter of Transmittal (which, together with any
amendments or supplements hereto or thereto, collectively constitute the
"Offer"). The undersigned understands that SBC Internet reserves the right to
transfer or assign in whole or in part from time to time to one or more of its
affiliates the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve SBC
Internet of its obligations under the Offer and will in no way prejudice the
rights of tendering stockholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer. Receipt of the Offer is hereby
acknowledged.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of the Shares tendered herewith
in accordance with the terms of the Offer, the undersigned hereby sells, assigns
and transfers to, or upon the order of, SBC Internet, all right, title and
interest in and to all the Shares that are being tendered hereby (and any and
all non-cash dividends, distributions, rights, other Shares or other securities
issued or issuable in respect thereof on or after October 2, 2001 (collectively,
"Distributions")) and irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares (and all Distributions), with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver certificates for such Shares (and any and all Distributions), or
transfer ownership of such Shares (and any and all Distributions) on the account
books maintained by the Book-Entry Transfer Facility, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of SBC Internet, (ii) present such Shares (and any and all
Distributions) for transfer on the books of the Company, and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any and all Distributions), all in accordance with the terms of the
Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints SBC Internet, its officers and designees, and each of them, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, (i) to vote at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof or otherwise in such
manner as each such attorney-in-fact and proxy or his substitute shall in his
sole discretion deem proper with respect to, (ii) to execute any written consent
concerning any matter as each such attorney-in-fact and proxy or his substitute
shall in his sole discretion deem proper with respect to, and (iii) to otherwise
act as each such attorney-in-fact and proxy or his substitute shall in his sole
discretion deem proper with respect to, all of the Shares (and any and all
Distributions) tendered hereby and accepted for payment by SBC Internet. This
appointment will be effective if and when, and only to the extent that, SBC
Internet accepts such Shares for payment pursuant to the Offer. This power of
attorney and proxy are irrevocable and are granted in consideration of the
acceptance for payment of such Shares in accordance with the terms of the Offer.
Such acceptance for payment shall, without further action, revoke any prior
powers of attorney and proxies granted by the undersigned at any time with
respect to such Shares (and any and all Distributions), and no subsequent powers
of attorney, proxies, consents or revocations may be given by the undersigned
with respect thereto (and, if given, will not be deemed effective). SBC Internet
reserves the right to require that, in order for the Shares to be deemed validly
tendered, immediately upon SBC Internet's acceptance for payment of such Shares,
SBC Internet must be able to exercise full voting, consent and other rights with
respect to such Shares (and any and all Distributions), including voting at any
meeting of the Company's stockholders.
5
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that the undersigned owns the Shares
tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that the
tender of the tendered Shares complies with Rule 14e-4 under the Exchange Act,
and that when the same are accepted for payment by SBC Internet, SBC Internet
will acquire good, marketable and unencumbered title thereto and to all
Distributions, free and clear of all liens, restrictions, charges and
encumbrances and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or SBC Internet to be necessary or desirable to
complete the sale, assignment and transfer of the Shares tendered hereby and all
Distributions. In addition, the undersigned shall remit and transfer promptly to
the Depositary for the account of SBC Internet all Distributions in respect of
the Shares tendered hereby, accompanied by appropriate documentation of
transfer, and, pending such remittance and transfer or appropriate assurance
thereof, SBC Internet shall be entitled to all rights and privileges as owner of
each such Distribution and may withhold the entire purchase price of the Shares
tendered hereby or deduct from such purchase price the amount or value of such
Distribution as determined by SBC Internet in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. This tender is irrevocable; provided that Shares tendered pursuant
to the Offer may be withdrawn at any time on or prior to the Expiration Date
and, unless theretofore accepted for payment as provided in the Offer to
Purchase, may also be withdrawn at any time after Friday, November 30, 2001,
subject to the withdrawal rights set forth in Section 4 of the Offer to
Purchase.
The undersigned understands that the valid tender of the Shares pursuant to
any one of the procedures described in Section 3 of the Offer to Purchase and in
the Instructions hereto will constitute a binding agreement between the
undersigned and SBC Internet upon the terms and subject to the conditions of the
Offer (and if the Offer is extended or amended, the terms or conditions of any
such extension or amendment). Without limiting the foregoing, if the price to be
paid in the Offer is amended in accordance with the terms of the Offer to
Purchase, the price to be paid to the undersigned will be the amended price
notwithstanding the fact that a different price is stated in this Letter of
Transmittal. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, SBC Internet may not be required to accept for
payment any of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return any
certificates for any Shares not tendered or accepted for payment in the name(s)
of the registered holder(s) appearing above under "Description of the Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price of all Shares
purchased and/or return any certificates for any Shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
the Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and/or return any
certificates evidencing Shares not tendered or not accepted for payment (and any
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and/or return any such certificates (and any accompanying documents, as
appropriate) to, the person(s) so indicated. Unless otherwise indicated herein
in the box entitled "Special Payment Instructions," please credit any Shares
tendered herewith by Book-Entry transfer that are not accepted for payment by
crediting the account at the Book-Entry Transfer Facility designated above. The
undersigned recognizes that SBC Internet has no obligation pursuant to the
"Special Payment Instructions" to transfer any Shares from the name of the
registered holder thereof if SBC Internet does not accept for payment any of the
Shares so tendered.
6
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of the Shares
accepted for payment is to be issued in the name of someone other than the
undersigned, if certificates for any Shares not tendered or not accepted for
payment are to be issued in the name of someone other than the undersigned or
if any Shares tendered hereby and delivered by Book-Entry transfer that are
not accepted for payment are to be returned by credit to an account maintained
at a Book-Entry Transfer Facility other than the account indicated above.
Issue check and/or stock certificates to:
Name:
---------------------------------------------------------------------------
(PLEASE PRINT)
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
Book-Entry Transfer Facility account.
----------------------------------------------------------------------------
(ACCOUNT NUMBER)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for any Shares not tendered or not
accepted for payment and/or the check for the purchase price of any Shares
accepted for payment is to be sent to someone other than the undersigned or to
the undersigned at an address other than that shown under "Description of the
Shares Tendered."
Mail check and/or stock certificates to:
Name:
---------------------------------------------------------------------------
(PLEASE PRINT)
Address:
---------------------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
----------------------------------------------------------------------------
7
IMPORTANT
STOCKHOLDER: SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 BELOW)
(SIGNATURE(S) OF OWNER(S))
Name(s):
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Name of Firm:
--------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
--------------------------------------------------------------------------------
(SEE INSTRUCTION 5)
Address:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
--------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number:
----------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9)
Dated:
------------------------------ , 2001
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by the person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth full title and see
Instruction 5).
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
PLACE MEDALLION GUARANTEE IN SPACE BELOW.
Authorized signature(s):
--------------------------------------------------------------------------------
Name(s):
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Name of Firm:
--------------------------------------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
--------------------------------------------------------------------------------
Dated:
------------------------------ , 2001
8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, and such registered holder(s) has not completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a participant
in the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program or
by any other "Eligible Guarantor Institution," as such term is defined in Rule
17Ad-15 under the Exchange Act (each, an "Eligible Institution"). In all other
cases, all signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed
by stockholders of the Company either if certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if delivery of the Shares is
to be made by Book-Entry transfer pursuant to the procedures set forth herein
and in Section 3 of the Offer to Purchase. For a stockholder validly to tender
Shares pursuant to the Offer, either (a) a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof), together with
any required signature guarantees or an Agent's Message (in connection with
Book-Entry transfer of the Shares) and any other required documents, must be
received by the Depositary at one of its addresses set forth herein prior to the
Expiration Date (as defined in the Offer to Purchase) and either (i)
certificates for tendered Shares must be received by the Depositary at one of
such addresses prior to the Expiration Date or (ii) Shares must be delivered
pursuant to the procedures for Book-Entry transfer set forth herein and in
Section 3 of the Offer to Purchase and a Book-Entry Confirmation must be
received by the Depositary prior to the Expiration Date or (b) the tendering
stockholder must comply with the guaranteed delivery procedures set forth herein
and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the procedure
for book-entry transfer on a timely basis may tender their Shares by properly
completing and duly executing the Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth herein and in Section 3 of the Offer to
Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
SBC Internet, must be received by the Depositary prior to the Expiration Date
and (iii) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all such Shares), together with a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), with any required signature guarantees, or, in the case of a
Book-Entry transfer, an Agent's Message, and any other required documents must
be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the New York Stock Exchange, Inc. is open for business.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that SBC Internet may enforce such
agreement against the participant. The signatures on this Letter of Transmittal
cover the Shares tendered hereby.
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL
BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN
THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS
BY MAIL, IT IS RECOMMENDED THAT THE STOCKHOLDER USE PROPERLY INSURED REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or a manually signed facsimile thereof), waive any
right to receive any notice of acceptance of their Shares for payment.
9
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER). If fewer than all the Shares evidenced by any certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares that are to be tendered in the box entitled "Number of Shares
Tendered." In any such case, new certificate(s) for the remainder of the Shares
that were evidenced by the old certificates will be sent to the registered
holder, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as soon as practicable after the Expiration Date or the termination
of the Offer. All Shares represented by certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any stock certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to SBC Internet of the authority of such person to so act must be
submitted. If this Letter of Transmittal is signed by the registered holder(s)
of the Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment or certificates for any Shares
not tendered or not accepted for payment are to be issued in the name of a
person other than the registered holder(s). Signatures on any such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the certificates. Signature(s) on any such
certificates or stock powers must be guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, SBC Internet will pay all stock transfer taxes with respect to the transfer
and sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for any Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s) or such other person) payable
on account of the transfer to such other person will be deducted from the
purchase price of such Shares purchased unless evidence satisfactory to SBC
Internet of the payment of such taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates evidencing the Shares
tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares accepted for payment is to be issued in the name of, and/or
certificates for any Shares not accepted for payment or not tendered are to be
issued in the name of and/or returned to, a person other than the signer of this
Letter of Transmittal or if a check is to be sent, and/or such certificates are
to be returned, to a person other than the signer of this Letter of Transmittal,
or to an address other than that shown above, the appropriate boxes on this
Letter of Transmittal should be completed. Any stockholder(s) delivering Shares
by Book-Entry transfer may request that Shares not purchased be credited to such
account maintained at the Book-Entry Transfer Facility as such stockholder(s)
may designate in the box entitled "Special Payment Instructions." If no such
instructions are given, any such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated above as
the account from which such Shares were delivered.
8. BACKUP WITHHOLDING. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 in this Letter of Transmittal and certify under penalties of
perjury that such TIN is correct and that such stockholder is not subject to
backup withholding. If a tendering stockholder is subject to backup withholding,
such stockholder must cross out item (2) of the Certification box on the
Substitute Form W-9.
10
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the Federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund can be obtained by the stockholder upon filing an income tax
return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Non-corporate foreign stockholders should complete and sign the main signature
form and a Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for
United States Tax Withholding, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9" for
more instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance may be directed to the Information Agent or the Dealer Managers
at the addresses and phone numbers set forth below. Requests for additional
copies of the Offer to Purchase, this Letter of Transmittal, the Notice of
Guaranteed Delivery and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 may be directed to the Information
Agent at its address and phone number set forth below. You may also contact your
broker, dealer, commercial bank or trust companies or other nominee for
assistance concerning the Offer.
10. WAIVER OF CONDITIONS. Subject to the Offer to Purchase, SBC Internet
reserves the absolute right in its sole discretion to waive, at any time or from
time to time, any of the specified conditions of the Offer, in whole or in part,
in the case of any Shares tendered. In the Offer to Purchase, SBC Internet has
agreed, among other things, that it will not, without the prior written consent
of the Company, waive the Minimum Tender Condition (as defined on the cover of
the Offer to Purchase), except pursuant to the Offer to Purchase, or change any
Offer Condition or amend any other term of the Offer if any such change or
amendment would be in any manner adverse to the holders of Shares.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. THE STOCKHOLDER WILL THEN BE INSTRUCTED AS TO THE STEPS THAT MUST
BE TAKEN IN ORDER TO REPLACE THE CERTIFICATE(S). THIS LETTER OF TRANSMITTAL AND
RELATED DOCUMENTS CANNOT BE PROCESSED UNTIL THE PROCEDURES FOR REPLACING LOST,
DESTROYED OR STOLEN CERTIFICATES HAVE BEEN FOLLOWED.
IMPORTANT: TO TENDER SHARES PURSUANT TO THE OFFER THIS LETTER OF TRANSMITTAL
(OR A MANUALLY SIGNED FACSIMILE HEREOF) TOGETHER WITH ANY REQUIRED SIGNATURE
GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND
ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE
EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED SHARES MUST BE RECEIVED BY
THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR
BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION DATE OR THE TENDERING
STOCKHOLDERS MUST COMPLY WITH THE PROCEDURES FOR GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
stockholder's correct taxpayer identification number on Substitute Form W-9
below. If such stockholder is an individual, the taxpayer identification number
is his social security number. If the Depositary is not provided with the
correct taxpayer identification number or the certifications described above,
the stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments of cash to such stockholder with respect to
Shares purchased pursuant to the Offer may be subject to backup withholding of
30.5%.
11
Certain stockholders (including, among others, all corporations, and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that stockholder must submit a form W-8BEN, signed under
penalties of perjury, attesting to that individual's exempt status. Such Forms
can be obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" in Part II of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 30.5%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service by filing
an appropriate claim.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such stockholder is awaiting a taxpayer identification number).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
12
---------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME:
----------------------------------------------------------------------------------------------------------------------
Name:
----------------------------------------------------------------------------------
SUBSTITUTE Address:
FORM W-9
--------------------------------------------------------------------------------
(NUMBER AND STREET)
-----------------------------------------------------------------------------------
CITY (STATE) (ZIP
CODE)
----------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY Check appropriate box:
INTERNAL REVENUE SERVICE Individual/Sole Proprietor [ ] Corporation [ ]
Partnership [ ] Other (specify) [ ]
----------------------------------------------------------------------------------
REQUEST FOR PART I. -- Please provide your taxpayer SSN: ------------------------------------
TAXPAYER or identification number in the space or
IDENTIFICATION NUMBER (TIN) AND at right. If awaiting TIN, write EIN:------------------------------------
CERTIFICATION "Applied For."
----------------------------------------------------------------------------------
PART II. -- For payees exempt from backup withholding. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9."
----------------------------------------------------------------------------------
PART III. -- CERTIFICATION
Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number;
(2) I am not subject to backup withholding either because: (a) I am exempt from
backup withholding, (b) I have not been notified by the IRS that I am subject
to backup withholding as a result of a failure to report all interests or
dividends, or (c) the IRS has notified me that I am no longer subject to
backup withholding; and
(3) I am a United States person (including a United States resident alien).
----------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received
notification from the IRS that you are no longer subject to backup withholding, do
not cross out item (2).
SIGNATURE:
--------------------------------------------------------------------------------
DATE:
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 30.5% 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.
13
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective telephone numbers and locations
listed below. Requests for additional copies of the Offer to Purchase, the
Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer
materials may be directed to the Information Agent at its telephone number and
location listed below, and will be furnished promptly at SBC Internet's expense.
You may also contact your broker, dealer, commercial bank, trust company or
other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
#GEORGESON LOGO#
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 STATE STREET, 10TH FLOOR
NEW YORK, NEW YORK 10004
BANKS AND BROKERS CALL COLLECT:
(212) 440-9800
ALL OTHERS CALL TOLL-FREE:
(800) 223-2064
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO.
85 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 902-1000 (CALL COLLECT)
(800) 323-5678 (CALL TOLL FREE)
EX-99.A.1.III
5
d90977ex99-a_1iii.txt
NOTICE GUARANTEED DELIVERY
1
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
IF YOU ARE IN ANY DOUBT AS TO THE ACTION TO BE TAKEN, YOU SHOULD SEEK YOUR OWN
FINANCIAL ADVICE IMMEDIATELY FROM YOUR OWN APPROPRIATELY AUTHORIZED INDEPENDENT
FINANCIAL ADVISOR. IF YOU HAVE SOLD OR TRANSFERRED ALL OF YOUR REGISTERED
HOLDINGS OF SHARES (AS DEFINED BELOW), PLEASE FORWARD THIS DOCUMENT AND ALL
ACCOMPANYING DOCUMENTS TO THE STOCKBROKER, BANK OR OTHER AGENT THROUGH WHOM THE
SALE OR TRANSFER WAS EFFECTED FOR TRANSMISSION TO THE PURCHASER OR TRANSFEREE.
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF CLASS A COMMON STOCK
PAR VALUE $.01 PER SHARE
OF
PRODIGY COMMUNICATIONS CORPORATION
TO
SBC INTERNET COMMUNICATIONS, INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SBC COMMUNICATIONS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, OCTOBER 30, 2001, WHICH DATE MAY BE EXTENDED.
As set forth under Section 3 of the Offer to Purchase (as defined below),
this form (or a fascimile hereof) must be used to accept the Offer (as defined
in the Offer to Purchase) if (i) certificates representing shares of Class A
Common Stock, par value $.01 per share (the "Shares"), of Prodigy Communications
Corporation, a Delaware corporation ("Prodigy"), are not immediately available,
(ii) the procedure for book-entry transfer cannot be completed on a timely basis
or (iii) time will not permit certificates representing Shares and any other
required documents to reach the Depositary (as defined in the Offer to Purchase)
prior to the Expiration Date (as defined in the Offer to Purchase). This Notice
of Guaranteed Delivery may be delivered by hand to the Depositary, or
transmitted by telegram, facsimile transmission or mail to the Depositary and
must include a signature guarantee by an Eligible Institution (as defined in the
Offer to Purchase) in the form set forth herein. See the guaranteed delivery
procedures described under Section 3 of the Offer to Purchase.
2
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail: By Courier: By Hand:
59 Maiden Lane 59 Maiden Lane 59 Maiden Lane
Plaza Level Plaza Level Plaza Level
New York, NY 10038 New York, NY 10038 New York, NY 10038
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(718) 234-5001
Confirm Facsimile Transmission by Telephone Only:
(800) 937-5449
(718) 921-8200
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER
OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER
THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE
SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
2
3
Ladies and Gentlemen:
The undersigned hereby tenders to SBC Internet Communications, Inc., a
Delaware corporation ("SBC Internet" or "Purchaser") and an indirect wholly
owned subsidiary of SBC Communications Inc., a Delaware corporation ("SBC"),
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated October 2, 2001 (the "Offer to Purchase") and the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), receipt of which is hereby acknowledged,
the number of Shares set forth below pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
Signature(s):
--------------------------------------------------------------------------------
Name(s) of Record Holder(s):
--------------------------------------------------------------------------------
PLEASE PRINT OR TYPE
Number of Shares:
--------------------------------------------------------------------------------
Certificate Number(s) (If Available):
--------------------------------------------------------------------------------
Dated:
------------------------------------ , 2001
Address(es):
--------------------------------------------------------------------------------
INCLUDE ZIP CODE
Area Code and Telephone Number(s):
--------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number: -----------------------------
Check box if Shares will be tendered by Book-Entry Transfer: [ ]
Account Number:
--------------------------------------------------------------------------------
3
4
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program, the
Stock Exchange Medallion Program or an "Eligible Guarantor Institution" as such
term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, hereby (a) represents that the above named person(s) "own(s)" the
Shares tendered hereby within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), (b) represents that such tender
of Shares complies with Rule 14e-4 and (c) guarantees to deliver to the
Depositary either certificates representing the Share tendered hereby, in proper
form for transfer, or confirmation of Book-Entry Transfer of such Share into the
Depositary's accounts at The Depository Trust Company, in each case with
delivery of a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), with any required signature guarantees, or
an Agent's Message (as defined in the Offer to Purchase), and any other required
documents, within three New York Stock Exchange, Inc. trading days after the
date hereof.
--------------------------------------------------------------------------------
NAME OF FIRM
--------------------------------------------------------------------------------
ADDRESS
--------------------------------------------------------------------------------
ZIP CODE
--------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER:
--------------------------------------------------------------------------------
AUTHORIZED SIGNATURE
Name:
--------------------------------------------------------------------------------
PLEASE PRINT OR TYPE
Title:
--------------------------------------------------------------------------------
Date:
------------------------------------ , 2001
NOTE: DO NOT SEND CERTIFICATES FOR THE SHARES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
EX-99.A.1.IV
6
d90977ex99-a_1iv.txt
LETTER TO BROKERS AND DEALERS
1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
PAR VALUE $.01 PER SHARE
OF
PRODIGY COMMUNICATIONS CORPORATION
AT
$5.45 NET PER SHARE
BY
SBC INTERNET COMMUNICATIONS, INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SBC COMMUNICATIONS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, OCTOBER 30, 2001, WHICH DATE MAY BE EXTENDED.
October 2, 2001
To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees:
We have been appointed by SBC Internet Communications, Inc., a Delaware
corporation ("SBC Internet" or "Purchaser") and an indirect wholly owned
subsidiary of SBC Communications Inc., a Delaware corporation ("SBC") to act as
Dealer Managers in connection with SBC Internet's offer to purchase all
outstanding shares of Class A Common Stock, par value $.01 per share (the
"Shares"), of Prodigy Communications Corporation, a Delaware corporation
("Prodigy"), at $5.45 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated October 2,
2001, and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"). Please
furnish copies of the enclosed materials to those of your clients for whose
accounts you hold Shares registered in your name or in the name of your nominee.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. The Offer to Purchase, dated October 2, 2001.
2. The Letter of Transmittal to tender Shares for your use and for
the information of your clients. Facsimile copies of the Letter of
Transmittal may be used to tender Shares.
3. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if the procedures for tendering Shares set forth in the Offer to
Purchase cannot be completed prior to the Expiration Date (as defined in
the Offer to Purchase).
4. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
6. A return envelope addressed to the Depositary (as defined below).
2
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, OCTOBER 30, 2001 WHICH DATE MAY BE EXTENDED.
Please note the following:
1. The tender price is $5.45 per Share, net to the seller in cash
without interest.
2. The Offer is being made for all outstanding Shares.
3. THE OFFER IS BEING MADE WITHOUT THE PRIOR APPROVAL OF THE PRODIGY
BOARD OF DIRECTORS.
4. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON TUESDAY, OCTOBER 30, 2001, WHICH DATE MAY BE EXTENDED.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn a number of Shares which, excluding the
Shares beneficially owned by SBC and its subsidiaries, will constitute at
least a majority of the remaining outstanding Shares on a fully diluted
basis as of the date the Shares are accepted for payment pursuant to the
Offer (the "Minimum Tender Condition"). The Offer is also subject to the
other conditions set forth in the Offer to Purchase. See Sections 1 and 10
of the Offer to Purchase.
6. Tendering holders of Shares ("Holders") whose Shares are
registered in their own name and who tender directly to American Stock
Transfer & Trust Company, as depositary (the "Depositary"), will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase
of Shares by the SBC Internet pursuant to the Offer. However, federal
income tax backup withholding at a rate of 30.5% may be required, unless an
exemption is available or unless the required tax identification
information is provided. See Instruction 8 of the Letter of Transmittal.
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) certificates evidencing
such Shares (or a confirmation of a book-entry transfer of such Shares (a
"Book-Entry Confirmation") with respect to such Shares) into the
Depositary's account at The Depository Trust Company, (b) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase) in lieu
of the Letter of Transmittal) and (c) any other documents required by the
Letter of Transmittal. Accordingly, tendering Holders may be paid at
different times depending upon when certificates for Shares or Book-Entry
Confirmations with respect to Shares are actually received by the
Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE OF
THE TENDERED SHARES BE PAID BY SBC INTERNET, REGARDLESS OF ANY EXTENSION OF
THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
In order to take advantage of the Offer, Certificates for all tendered
Shares in proper form for transfer (or a Book-Entry Confirmation with respect to
all such shares), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees (or,
in the case of a book-entry transfer, an Agent's Message in lieu of the Letter
of Transmittal), and any required documents must be received by the Depositary,
all in accordance with the instructions set forth in the Letter of Transmittal
and the Offer to Purchase.
Any Holder who desires to tender Shares and whose certificates for Shares
are not immediately available, or who cannot comply with the procedures for
book-entry transfer on a timely basis, or who cannot deliver all required
documents to the Depositary prior to the Expiration Date, may tender such Shares
by following the procedures for guaranteed delivery set forth in Section 3 of
the Offer to Purchase.
SBC Internet will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer (other than
the Dealer Managers, the Depositary and the Information Agent as described in
the Offer to Purchase). SBC Internet 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. SBC Internet will pay or cause to be
paid any transfer taxes with respect to the transfer and sale of purchased
Shares to it or its order pursuant to the Offer, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
2
3
Any inquiries you may have with respect to the Offer should be addressed to
Goldman, Sachs & Co., the Dealer Managers for the Offer, at 85 Broad Street, New
York, NY 10004, telephone numbers (212) 902-1000 (call collect) or (800)
323-5678 (call toll free) or to Georgeson Shareholder Communications Inc., the
Information Agent for the Offer, at 17 State Street, 10th Floor, New York, NY
10004, telephone numbers (212) 440-9800 (call collect) or (800) 223-2064 (call
toll free).
Requests for additional copies of the enclosed materials may also be
directed to the Dealer Managers or to the Information Agent at the above
addresses and telephone numbers.
Very truly yours,
Goldman, Sachs & Co.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU THE AGENT
OF SBC, SBC INTERNET, THE COMPANY, THE DEALER MANAGERS, THE INFORMATION AGENT,
THE DEPOSITARY, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF
THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND
THE STATEMENTS CONTAINED THEREIN.
3
EX-99.A.1.V
7
d90977ex99-a_1v.txt
LETTER TO CLIENTS
1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
PAR VALUE $.01 PER SHARE
OF
PRODIGY COMMUNICATIONS CORPORATION
AT
$5.45 NET PER SHARE
BY
SBC INTERNET COMMUNICATIONS, INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SBC COMMUNICATIONS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, OCTOBER 30, 2001, WHICH DATE MAY BE EXTENDED.
October 2, 2001
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated October 2,
2001 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") in connection with the offer by SBC Internet Communications, Inc., a
Delaware corporation ("SBC Internet" or "Purchaser") and an indirect wholly
owned subsidiary of SBC Communications Inc., a Delaware corporation ("SBC"), to
purchase all outstanding shares of Class A Common Stock, par value $.01 per
share (the "Shares"), of Prodigy Communications Corporation, a Delaware
corporation ("Prodigy"), at $5.45 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer to Purchase.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF THE SHARES HELD FOR YOUR
ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD
AND PURSUANT TO YOUR INSTRUCTIONS. THE ENCLOSED LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf any or all of the Shares held by us for your account, upon the terms
and subject to the conditions set forth in the Offer to Purchase. Your attention
is directed to the following:
1. The tender price is $5.45 per Share, net to the seller in cash
without interest.
2. The Offer is being made for all outstanding Shares.
3. THE OFFER IS BEING MADE WITHOUT THE PRIOR APPROVAL OF THE PRODIGY
BOARD OF DIRECTORS.
4. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON TUESDAY, OCTOBER 30, 2001, WHICH DATE MAY BE EXTENDED.
2
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn a number of Shares which, excluding the
Shares beneficially owned by SBC and its subsidiaries, will constitute at
least a majority of the remaining outstanding Shares on a fully diluted
basis as of the date the Shares are accepted for payment pursuant to the
Offer (the "Minimum Tender Condition"). The Offer is also subject to the
other conditions set forth in the Offer to Purchase. See Sections 1 and 10
of the Offer to Purchase.
6. Tendering holders of Shares ("Holders") whose Shares are
registered in their own name and who tender directly to American Stock
Transfer & Trust Company, as depositary (the "Depositary"), will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase
of Shares by SBC Internet pursuant to the Offer. However, Federal income
tax backup withholding at a rate of 30.5% may be required, unless an
exemption is available or unless the required tax identification
information is provided. See Instruction 8 of the Letter of Transmittal.
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) certificates evidencing
such Shares (or a confirmation of a book-entry transfer of such Shares (a
"Book-Entry Confirmation") with respect to such Shares into the
Depositary's account at The Depository Trust Company, (b) a Letter of
Transmittal (or facsimile thereof) properly completed and duly executed
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase) in lieu
of the Letter of Transmittal) and (c) any other documents required by the
Letter of Transmittal. Accordingly, tendering Holders may be paid at
different times depending upon when certificates for Shares or Book-Entry
Confirmations with respect to Shares are actually received by the
Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE OF
THE TENDERED SHARES BE PAID BY SBC INTERNET, REGARDLESS OF ANY EXTENSION OF
THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is being made only by the Offer to Purchase and the related
Letter of Transmittal and any amendments or supplements thereto, and is being
made to all holders of the Shares. The Offer is not being made to (nor will
tenders be accepted from or on behalf of) holders of Shares in any jurisdiction
where the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth herein. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise specified below. An
envelope to return your instructions to us is enclosed. YOUR INSTRUCTIONS SHOULD
BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF
PRIOR TO THE EXPIRATION DATE.
2
3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
OF
PRODIGY COMMUNICATIONS CORPORATION
BY
SBC INTERNET COMMUNICATIONS, INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SBC COMMUNICATIONS INC.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase, dated October 2, 2001, and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") in connection with the offer by SBC Internet
Communications, Inc., a Delaware corporation ("SBC Internet" or "Purchaser") and
an indirect wholly owned subsidiary of SBC Communications Inc., a Delaware
corporation ("SBC"), to purchase all outstanding shares of Class A common stock,
par value $.01 per share (the "Shares"), of Prodigy Communications Corporation,
a Delaware corporation ("Prodigy"), at $5.45 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated October 2, 2001.
This will instruct you to tender to SBC Internet the number of Shares
indicated below (or, if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the offer.
Number of Shares to be Tendered* ____________________________________________
SIGN HERE
Account No.: _________________________________________________________________
Signature(s):
Dated: _________________________________________________________________
Print Name(s):
Address(es):
Area Code and Telephone Number:
Tax Identification or Social Security
Number:
-------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
EX-99.A.1.VI
8
d90977ex99-a_1vi.txt
SUBSTITUTE FORM W-9
1
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 NAME AND SOCIAL
FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF --
---------------------------------------------------------------------
1. Individual The individual
2. Two or more individuals (joint The actual owner of the ac-
account) count or, if combined funds,
any one of the
individuals(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minor Act)
4. a. The usual revocable savings The grantor-trustee(1)
trust (grantor is also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
5. Sole proprietorship The owner(3)
---------------------------------------------------------------------
GIVE THE NAME AND EMPLOYEE
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF --
---------------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or Legal entity(1)
pension trust
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational or other
tax-exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state
or local government, school
district, or prison) that
receives agricultural program
payments
------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the identifying number of the personal representative or
trustee unless the legal entity itself is not designated in the account
title.)
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.
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Internal Revenue Service Form SS-5, Application for a Social
Security Number Card, or Form SS-4, Application for Employer Identification
Number, at your local office of the Social Security Administration or the
Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on payments made in
connection with the offer include the following:
- A corporation.
- financial institution.
- An organization exempt from tax under section 501(a), 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).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL
REVENUE FORM W-8BEN (CERTIFICATE OF FOREIGN STATUS OF BENEFICIAL OWNER FOR
UNITED STATES TAX WITHHOLDING).
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. The IRS may also provide this information to the
Department of Justice for civil and criminal litigation and to cities, states
and the District of Columbia to carry out their tax laws. Payers must be given
the numbers whether or not recipients are required to file tax returns. Payers
must generally withhold 30.5% of taxable interest, dividend, 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. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) MISUSE OF TAXPAYER IDENTIFICATION NUMBERS. -- If the payer discloses or uses
taxpayer identification numbers in violation of Federal law, the payer may be
subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
EX-99.A.1.VII
9
d90977ex99-a_1vii.txt
SUMMARY ADVERTISEMENT
1
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
only by the Offer to Purchase, dated October 2, 2001, and the related Letter of
Transmittal and any amendments or supplements thereto, and is being made to all
holders of Shares. The Offer will not be made to (and tenders will not be
accepted from or on behalf of) holders of Shares in any jurisdiction in which
the making of the Offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
PAR VALUE $.01 PER SHARE
OF
PRODIGY COMMUNICATIONS CORPORATION
AT
$5.45 NET PER SHARE
BY
SBC INTERNET COMMUNICATIONS, INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SBC COMMUNICATIONS INC.
SBC Internet Communications, Inc., a Delaware corporation ("SBC Internet"
or "Purchaser") and an indirect wholly owned subsidiary of SBC Communications
Inc., a Delaware corporation ("SBC"), hereby offers to purchase all of the
outstanding shares of Class A Common Stock, par value $.01 per share (the
"Shares"), of Prodigy Communications Corporation, a Delaware corporation
("Prodigy"), at $5.45 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated October 2,
2001 (the "Offer to Purchase") and in the related Letter of Transmittal (which
together with any amendments or supplements thereto, collectively constitute the
"Offer"). Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, transfer
taxes on the purchase of Shares by the Purchaser pursuant to the Offer. The
Purchaser will pay all charges and expenses of Goldman, Sachs & Co. (the "Dealer
Managers"), American Stock Transfer & Trust Company (the "Depositary") and
Georgeson Shareholder Communications Inc. (the "Information Agent"). Following
the Offer, SBC Internet intends to effect the Merger (as defined herein).
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, OCTOBER 30, 2001, WHICH DATE MAY BE EXTENDED.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn a number of Shares which, excluding the Shares
beneficially owned by SBC and its subsidiaries, will constitute at least a
majority of the remaining outstanding Shares on a fully diluted basis as of the
date the Shares are accepted for payment pursuant to the Offer (the "Minimum
Tender Condition"). The Offer is also subject to certain other conditions
described in Section 10 of the Offer to Purchase.
2
The purpose of the Offer is to acquire for cash as many outstanding Shares
as possible as a first step in acquiring the entire equity interest in Prodigy.
SBC Internet currently intends, as soon as practicable upon consummation of the
Offer, to propose and seek to have Prodigy effect a merger or some similar
business combination (the "Merger") between Prodigy and SBC Internet or an
affiliate thereof, pursuant to which each then outstanding Share (other than
Shares held by Prodigy in treasury, or owned by SBC and its subsidiaries or
Shares, if any, that are held by stockholders who are entitled to and who
properly exercise dissenters' rights under Delaware law), would be converted
pursuant to the terms of the Merger into the right to receive cash in an amount
that SBC Internet presently expects would be equal to the per Share price paid
pursuant to the Offer, without interest.
THE OFFER IS BEING MADE WITHOUT THE PRIOR APPROVAL OF THE PRODIGY BOARD OF
DIRECTORS.
Upon the terms and subject to the conditions set forth in the Offer
(including the terms and conditions set forth in Section 10 of the Offer to
Purchase and, if the Offer is extended or amended, the terms and conditions of
such extension or amendment (the "Offer Conditions")), SBC Internet will accept
for payment, and will pay for, Shares validly tendered on or prior to the
Expiration Date (as defined herein) and not withdrawn as permitted by Section 4
of the Offer to Purchase. The term "Expiration Date" means 12:00 Midnight, New
York City time, on Tuesday, October 30, 2001, unless and until SBC Internet
shall have extended the period for which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date on which the Offer,
as so extended by SBC Internet, shall expire. The period until 12:00 Midnight,
New York City time, on Tuesday, October 30, 2001, as such period may be
extended, is referred to as the "Offering Period." If there is a Subsequent
Offering Period (as defined in the Offer to Purchase), all Shares tendered
during the Offering Period will be immediately accepted for payment and promptly
paid for following the expiration of the Offering Period and Shares tendered
during a Subsequent Offering Period will be immediately accepted for payment and
paid for as they are tendered. Subject to applicable rules of the SEC, SBC
Internet expressly reserves the right to delay acceptance for payment of or
payment for Shares in order to comply, in whole or in part, with any applicable
law. 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 such Shares (or a confirmation of a book-entry transfer of such
Shares (a "Book-Entry Confirmation") into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility")), a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and any
other required documents.
For purposes of the Offer, SBC Internet will be deemed to have accepted for
payment Shares validly tendered and not withdrawn as, if and when SBC Internet
gives oral or written notice to the Depositary of its acceptance for payment of
such Shares pursuant to the Offer. Payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for the tendering stockholders for
the purpose of receiving payments from SBC Internet and transmitting such
payments to the tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON
THE PURCHASE PRICE FOR TENDERED SHARES BE PAID, REGARDLESS OF ANY DELAY IN
MAKING SUCH PAYMENT.
3
Subject to the applicable rules and regulations of the SEC, SBC Internet
expressly reserves the right, in its sole discretion, at any time or from time
to time, to extend the Offering Period by giving oral or written notice of such
extension to the Depositary. During any such extension of the Offering Period,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the right of a tendering stockholder to withdraw such
stockholder's Shares. See Section 4 of the Offer to Purchase. Subject to the
applicable regulations of the SEC, SBC Internet also expressly reserves the
right, in its sole discretion, at any time or from time to time, (i) to delay
acceptance for payment of or (regardless of whether such Shares were theretofore
accepted for payment) payment for, any tendered Shares, or to terminate or amend
the Offer as to any Shares not then paid for, on the occurrence of any of the
conditions specified in Section 10 of the Offer to Purchase and (ii) to waive
any condition and to set forth or change any other term and condition of the
Offer, by giving oral or written notice of such delay, termination or amendment
to the Depositary and by making a public announcement thereof. If Purchaser
elects to provide a Subsequent Offering Period, it expressly reserves the right,
in its sole discretion, at any time or from time to time, to extend the
Subsequent Offering Period (not beyond a total of 20 business days) by giving
oral or written notice of such extension to the Depositary. If SBC Internet
accepts any Shares for payment pursuant to the terms of the Offer, it will
accept for payment all Shares validly tendered during the Offering Period and
not withdrawn, and, on the terms and subject to the conditions of the Offer,
including but not limited to the Offer Conditions, it will promptly pay for all
Shares so accepted for payment and will immediately accept for payment and
promptly pay for all Shares as they are validly tendered in any Subsequent
Offering Period. SBC Internet confirms that its reservation of the right to
delay payment for Shares which it has accepted for payment is limited by Rule
14e-1(c) under the Securities Exchange Act of 1934, which requires that a tender
offeror pay the consideration offered or return the tendered securities promptly
after the termination or withdrawal of a tender offer.
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
termination of the Offering Period and, unless theretofore accepted for payment
by SBC Internet pursuant to the Offer, may also be withdrawn at any time after
November 30, 2001. There will be no withdrawal rights during any Subsequent
Offering Period for Shares tendered during the Subsequent Offering Period.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person
having tendered the Shares to be withdrawn, the number or amount of Shares to be
withdrawn and the names in which the certificate(s) evidencing the Shares to be
withdrawn are registered, if different from that of the person who tendered such
Shares. The signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution (as defined in the Offer to Purchase), unless such Shares
have been tendered for the account of any Eligible Institution. If Shares have
been tendered pursuant to the procedures for book-entry tender as set forth in
Section 3 of the Offer to Purchase, any notice of withdrawal must specify the
name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. If certificates for Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, the name of the
registered holder and the serial numbers of the particular certificates
evidencing the Shares to be withdrawn must also be furnished to the Depositary
as aforesaid prior to the physical release of such certificates. All questions
as to the form and validity (including time of receipt) of any notice of
withdrawal will be determined by SBC Internet, in its sole discretion, which
determination shall be final and binding. None of SBC, Purchaser, the Dealer
Managers, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give such
notification. Withdrawals of tender for Shares may not be rescinded, and any
Shares properly withdrawn will be deemed not to have been validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by following
one of the procedures described in Section 3 of the Offer to Purchase at any
time prior to the Expiration Date.
If SBC Internet extends the Offer, is delayed in its acceptance for payment
of Shares, or is unable to accept for payment Shares pursuant to the Offer, for
any reason, then, without prejudice to SBC Internet's rights under this Offer,
the Depositary may, nevertheless, on behalf of SBC Internet, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as set forth in Section 4 of the
Offer to Purchase.
4
Sales of Shares pursuant to the Offer and the exchange of Shares for cash
pursuant to the Merger will be taxable transactions for Federal income tax
purposes and may also be taxable under applicable state, local and other tax
laws. For Federal income tax purposes, a stockholder who is a United States
person whose Shares are purchased pursuant to the Offer or who receives cash as
a result of the Merger will realize gain or loss equal to the difference between
the adjusted basis of the Shares sold or exchanged and the amount of cash
received therefor. Such gain or loss will be capital gain or loss if the Shares
are held as capital assets by the stockholder. Long-term capital gain of a
non-corporate stockholder is generally subject to a maximum tax rate of 20% in
respect of property held for more than one year. The income tax discussion set
forth above is included for general information only and may not be applicable
to stockholders in special situations such as stockholders who received their
shares upon the exercise of employee stock options or otherwise as compensation
and stockholders who are not United States persons. Stockholders should consult
their own tax advisors with respect to the specific tax consequences to them of
the Offer and the Merger, including the application and effect of federal,
state, local, foreign or other tax laws.
The information required to be disclosed by Rule 14d-6(d)(1) and Rule
13c-3(e)(1) of the General Rules and Regulations under the Exchange Act, is
contained in the Offer to Purchase and is incorporated herein by reference.
A request has been made to Prodigy for the use of Prodigy's stockholder
list and security position listings for the purpose of disseminating the Offer
to stockholders. Upon compliance by Prodigy with such request, the Offer to
Purchase and the related Letter of Transmittal will be mailed to record holders
of Shares and will be furnished to brokers, banks and similar person whose
names, or the names of whose nominees, appear on the stockholder 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 WHICH SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective addresses and telephone numbers
set forth on the back cover of the Offer to Purchase. Requests for additional
copies of the Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other tender offer materials may be directed to the
Information Agent. Shareholders may also contact their broker, dealer,
commercial bank, trust company or other nominee. SBC or SBC Internet will not
pay any fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to the Offer (other than the Dealer Managers, the
Depositary and the Information Agent as described in the Offer to Purchase).
The Information Agent for the Offer is:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 STATE STREET, 10TH FLOOR
NEW YORK, NEW YORK 10004
BANKS AND BROKERS CALL COLLECT: (212) 440-9800
ALL OTHERS CALL TOLL FREE: (800) 223-2084
The Dealer Manager for the Offer is:
GOLDMAN, SACHS & CO.
85 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 902-1000 (CALL COLLECT)
(800) 323-5678 (CALL TOLL FREE)
October 2, 2001
EX-99.A.5.I
10
d90977ex99-a_5i.txt
COMPLAINT
1
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
-------------------------------------------------
LEONARD SCHWARTZ, individually and )
on behalf of all others similarly )
situated, )
) Case No. 19121
Plaintiff, )
) CLASS ACTION COMPLAINT
v. )
)
JAMES R. ADAMS, LOUIS R. BRILL, )
ROBERT S. MCCLANE, JOE C. MCKINNEY, )
JAMIE CHICO PARDO, CHARLES E. )
FOSTER, ROBERT B. PICKERING, ANDRES )
VAZQUEZ DEL MERCADO BENSHIMOL, PAUL )
ROTH, JOHN H. ATTERBURY, III, )
PRODIGY COMMUNICATIONS CORPORATION )
and SBC COMMUNICATIONS INC., )
)
Defendants. )
-------------------------------------------------
SHAREHOLDERS' CLASS ACTION COMPLAINT
Plaintiff alleges upon personal knowledge with respect to paragraph 1, and
upon information and belief as to all other allegations herein, as follows:
THE PARTIES
1. Plaintiff has been the owner of shares of the common stock of Prodigy
Communications Corporation ("Prodigy" or the "Company") since prior to the
transaction herein complained of and continuously to date.
2. Prodigy is a corporation duly organized and existing under the laws
of the State of Delaware.
3. Defendant SBC Communications Inc. ("SBC") is a
2
corporation duly organized and existing under the laws of Delaware. SBC owns
approximately 42% of the Prodigy's outstanding common stock.
4. Defendant Charles Foster is Chairman of the Board of Directors of the
Company.
5. Defendant Robert B. Pickering is a Director of the Company designated
by SBC and a former officer and director of SBC.
6. James R. Adams is a director of the Company designated by Prodigy's
management and a former officer and/or director of SBC.
7. The remaining individual defendants are Directors of the Company.
8. Defendant Allen Craft is a director of the Company, as well as
Prodigy's chief financial officer. Defendant Craft has been employed by SBC
since 1993, most recently as director of finance of SBC International.
9. The individual defendants named above (the "Individual Defendants"),
as officers and/or directors of Company owe the highest fiduciary duties of good
faith, loyalty, fair dealing, due care, and candor to plaintiff and the other
embers of the Class (as described below).
10. The individual defendants are in a fiduciary relationship with
plaintiff and the other public stockholders of Prodigy and owe them the highest
obligations of good faith and fair dealing.
2
3
11. Defendant SBC, through its approximately 42% ownership of Prodigy, and
through having persons affiliated with SBC serve as officers and/or directors of
Prodigy, is in a fiduciary relationship with plaintiff and the other public
stockholders of Prodigy and owes them the highest obligations of good faith and
fair dealing.
CLASS ACTION ALLEGATIONS
12. Plaintiff brings this action on plaintiff's own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of
all Prodigy stockholders (except defendants herein and any person, firm, trust,
corporation or other entity related to or affiliated with any of the defendants)
and their successors in interest, who are or will be threatened with injury
arising from defendants' actions as more fully described herein.
13. This action is properly maintainable as a class action.
14. The class of stockholders for whose benefit this action is brought is
so numerous that joinder of all Class members is impracticable. There are
approximately 27.5 million shares of Prodigy common stock beneficially held by
thousands of shareholders other than SBC, who are geographically dispersed
throughout the United States.
15. There are questions of law and fact which are common to the Class
including, inter alia, the following:
(a) whether defendants have breached their fiduciary
3
4
and other common law duties owed to them to plaintiff and the members of the
Class; and
(b) whether plaintiff and the other members of the Class will be
damaged irreparably by the wrongs complained of.
16. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. The claims of
plaintiff are typical of the claims of the other members of the Class and
plaintiff has the same interests as the other members of the Class.
Accordingly, plaintiff will fairly and adequately represent the Class.
17. The prosecution of separate actions by individual members of the
Class would creates a risk of inconsistent or varying adjudications with
respect to individual members of the Class and establish incompatible standards
of conduct for the party opposing the Class.
18. Defendants have acted and are about to act on grounds generally
applicable to the Class, thereby making appropriate final injunctive relief
with respect to the Class as a whole.
SUBSTANTIVE ALLEGATIONS
19. On September 21, 2001, SBC issued a press release announcing that it
was offering to acquire all shares of Prodigy stock not already owned by SBC
for $5.45 per share.
20. In making this offer the defendants have breached their duty of
loyalty to Prodigy stockholders by using their control
4
5
of Prodigy to force plaintiff and the Class to exchange their equity interest
in Prodigy, and deprive Prodigy's public shareholders of the fair proportionate
value to which they are entitled. The individual defendants have also breached
their duties of loyalty and due care by not taking adequate measures to ensure
that the interests of Prodigy's public shareholders are properly protected from
overreaching. SBC has breached its fiduciary duties, which arise from its
effective control of Prodigy, by using such effective control for its own
benefit.
21. The terms of the transaction are unfair to the Class, and the
unfairness is compounded by the disparity between the knowledge and information
possessed by defendants by virtue of their positions of control of Prodigy and
that possessed by Prodigy's public shareholders.
22. Plaintiff has no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
A. declaring this to be a proper class action;
B. enjoining, preliminarily and permanently, the transaction complained
of;
C. to the extent, if any, that the transaction complained of is
consummated prior to the entry of this Court's final judgment, rescinding the
same or awarding rescissory damages to the Class;
D. directing that defendants account for plaintiff and the Class for all
damages caused to them and account for all profits
5
6
and any special benefits obtained by defendants as a result of their unlawful
conduct;
E. awarding the plaintiff the costs and disbursements of this
action, including a reasonable allowance for the fees and expenses of
plaintiff's attorneys and experts; and
F. granting such other and further relief as the Court deems
appropriate.
ROSENTHAL, MONHAIT, GROSS &
GODDESS, P.A.
By: /s/ Carmella P. Keener
--------------------------
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
KIRBY MCINERNEY & SQUIRE LLP
830 Third Avenue, 10th Floor
New York, NY 10022
(212) 317-2300
6
EX-99.A.5.II
11
d90977ex99-a_5ii.txt
COMPLAINT
1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
------------------------------------------
ROSE MEISNER, on behalf of herself )
and all others similarly situated, )
)
Plaintiff, )
)
) C.A. NO. 19117NC
-against- )
)
)
JAMES R. ADAMS, LOUIS R. BRILL, ROBERT )
S. MCCLANE, JOE C. MCKINNEY, JAMIE )
CHICO PARDO, CHARLES E. FOSTER, )
ROBERT B. PICKERING, ANDRES VAZQUEZ )
DEL MERCADO BENSHIMOL, PAUL ROTH, )
JOHN H. ATTERBURY, III, PRODIGY )
COMMUNICATIONS CORPORATION AND SBC )
COMMUNICATIONS INC., )
)
)
Defendants. )
)
------------------------------------------
CLASS ACTION COMPLAINT
Plaintiff, by her attorneys alleges upon information and belief, except as
to paragraph 1 hereof, which is alleged upon knowledge, as follows:
1. Plaintiff has been the owner of the common stock of Prodigy
Communications Corporation ("Prodigy" or the "Company") since prior to the
wrongs herein complained of and continuously to date.
2. Prodigy is a corporation duly organized and existing under the laws
of the State of Delaware with its principal offices located at 6500 River Place
Blvd., Bldg. III, Austin, Texas 78730. Prodigy is a nationwide internet service
provider that provides
2
fast and reliable Internet access and other Internet-based services. Prodigy's
nationwide Internet service has a customer base of 2.8 million owned and managed
subscribers as of December 31, 2000. As of August 7, 2001, the Company had over
70 million shares of its common stock outstanding.
3. Defendant Charles Foster has been at all times relevant hereto
Chairman of the Board of Directors of the Company.
4. The individual defendants are and have been at all times relevant
hereto directors of the Company.
5. The individual defendants, by reason of their corporate
directorships and executive positions, stand in a fiduciary position relative
to the Company's public shareholders. Their fiduciary duties, at all times
relevant herein, require them to exercise their best judgment, and to act in a
prudent manner, and in the best interest of the Company's public shareholders.
Said defendants owe the public shareholders of Prodigy the highest duty of good
faith, fair dealing, due care, loyalty, and full candid and adequate disclosure.
6. Defendant SBC Communications Inc. ("SBC") is a holding company
that, through its subsidiaries, provides a comprehensive offering of
communications services and products in the United States and has investments in
more than 20 countries. By virtue of its ownership of the Company's Class B
stock, SBC controls approximately 42% of the voting power of the Company and
owes the Company's
2
3
public stockholders the highest obligations of good faith, fair dealing, due
care, loyalty and full and candid disclosure.
CLASS ACTION ALLEGATIONS
7. Plaintiff brings this action on her own behalf and as a class action,
pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all
security holders of the Company (except the defendants herein and any person,
firm, trust, corporation, or other entity related to or affiliated with any of
the defendants) or their successors in interest, who are or will be threatened
with injury arising from defendants' actions as more fully described herein
(the "Class").
8. This action is properly maintainable as a class action.
9. The class is so numerous that joinder of all members is
impracticable. As of August 7, 2001, there were approximately 70 million shares
of Prodigy common stock outstanding.
10. There are questions of law and fact which are common to the class
including, inter alia, the following: (a) whether defendants have breached
their fiduciary and other common law duties owned by them to plaintiff and the
members of the class; (b) whether defendants are pursuing a scheme and course
of business designed to eliminate the public shareholders of Prodigy in order
to enrich SBC at the expense and to the detriment of the plaintiff and the
other public stockholders who are members of the class; (c) whether the
proposed acquisition, hereinafter described, constitutes a
3
4
breach of the duty of fair dealing with respect to the plaintiff and the other
members of the class; and (d) whether the class is entitled to injunctive
relief or damages as a result of defendants' wrongful conduct.
11. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. The claims of
plaintiff are typical of the claims of the other members of the class and
plaintiff has the same interests as the other members of the class. Plaintiff
will fairly and adequately represent of the class.
12. The prosecution of separate actions by individual members of the
class would create the risk of inconsistent or varying adjudications with
respect to individual members of the class which would establish incompatible
standards of conduct for defendants, or adjudications with respect to
individual members of the class which would as a practical matter be
dispositive of the interests of the other members not parties to the
adjudications or substantially impair or impede their ability to protect their
interests.
13. Defendants have acted in a manner which affects plaintiff and all
members of the class, thereby making appropriate injunctive relief and/or
corresponding declaratory relief with respect to the class as a whole.
4
5
CLAIM FOR RELIEF
14. On September 24, 2001 it was reported in The Wall Street Journal
(online edition) that SBC offered to pay $384 million for the 58% of Prodigy
that it doesn't already own.
15. Under the terms of the deal, SBC will offer $5.45 for each Prodigy
share. The tender offer represents a 54% premium over Prodigy's closing stock
price Friday of $3.54 and a 35% premium over the stock's average closing price
for the calendar year-to-date. There are currently about 70.5 million
outstanding Prodigy shares not owned by SBC, according to an SBC spokesman.
16. The price of $5.45 per share to be paid to the class members is
unfair and grossly inadequate consideration because, among other things: (a)
the intrinsic value of the stock of Prodigy is materially in excess of $5.45
per share, giving due consideration to the possibilities of growth and
profitability of Prodigy in light of its business, earnings and earnings power,
present and future; (b) the $5.45 per share price is inadequate and offers an
inadequate premium to the public stockholders of Prodigy; and (c) the $5.45 per
share price is not the result of arm's length negotiations but was fixed
arbitrarily by SBC to "cap" the market price of Prodigy stock, as part of a
plan for SBC to obtain complete ownership of Prodigy assets and business at the
lowest possible price, at the expense of Prodigy's public shareholders. The
proposed plan will, for a grossly inadequate consideration, deny plaintiff and
the other members of the class
5
6
their right to share proportionately in the future success of Prodigy and its
valuable assets, while permitting SBC to reap huge benefits from the
transaction.
17. By reason of the foregoing acts, practices and course of conduct, SBC
has breached and will breach its duties as controlling stockholder of Prodigy
by engaging in improper overreaching in attempting to carry out the proposed
transaction.
18. Plaintiff and the class have suffered and will suffer irreparable
injury unless SBC is enjoined from breaching its fiduciary duties and from
carrying out the aforesaid plan and scheme.
19. Plaintiff and the other members of the class have no adequate remedy
at law.
WHEREFORE, plaintiff demands judgment against the defendants jointly and
severally, as follows:
A. declaring this action to be a class action and certifying plaintiff
as a class representative;
B. enjoining, preliminarily and permanently, SBC's acquisition of the
Prodigy stock owned by plaintiff and the other members of the class under the
terms presently proposed;
C. to the extent, if any, that the buyout complained of is consummated
prior to the entry of this Court's final judgment, rescinding such transaction,
or granting, inter alia, rescissory damages;
6
7
D. directing that defendants account to plaintiff and the class for
all damages caused to them and account for all profits and any special benefits
obtained as a result of the unlawful conduct alleged herein;
E. awarding plaintiff the costs and disbursements of this action,
including a reasonable allowance for the fees and expenses of plaintiff's
attorneys and experts; and
F. granting plaintiff and the other members of the class such other
and further relief as may be just and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
BY: Carmella P. Keener
__________________
P.O. Box 1070
913 North Market Street
Suite 1401
Mellon Bank Center
Wilmington, Delaware 19801
(302) 656-4433
OF COUNSEL:
BULL & LIFSHITZ, LLP
18 East 41st Street
New York, New York 10017
212 213-6222
7
EX-99.A.5.III
12
d90977ex99-a_5iii.txt
COMPLAINT
1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
________________________________________________
MARY JANE CRESCENTE, individually and on
behalf of all others similarly situated,
Class Action NO. 19118NC
Plaintiff,
- against - CLASS ACTION
COMPLAINT
JAMES R. ADAMS, LOUIS R. BRILL, ROBERT
S. MCCLANE, JOE C. MCKINNEY, JAMIE
CHICO PARDO, CHARLES E. FOSTER,
ROBERT B. PICKERING, ANDRES VAZQUEZ
DEL MERCADO BENSHIMOL, PAUL ROTH,
JOHN H. ATTERBURY, III, PRODIGY
COMMUNICATIONS CORPORATION and
SBC COMMUNICATIONS INC.,
Defendants.
________________________________________________
INTRODUCTION
Plaintiff alleges on information and belief, except for those allegations
which pertain to plaintiff which are alleged upon personal knowledge, as
follows:
1. This action arises out of an unlawful scheme and plan by certain
members of Prodigy Communications, Corporation ("Prodigy" or "the Company")
Board of Directors and SBC Communications Inc. ("SBC"), Prodigy's controlling
shareholder, to acquire the remaining ownership of Prodigy for grossly
inadequate consideration and without full and complete disclosure of all
material information, in breach of defendants' fiduciary duties.
THE PARTIES
2. Plaintiff is and has been at all relevant times the owner of Prodigy
common stock.
3. Prodigy is a corporation organized and existing under the laws of the
Delaware and is headquartered at 6500 River Place Blvd., Bldg. III, Austin,
Texas 78730. Prodigy is
2
nationwide Internet service provider. As of September 24, 2001, Prodigy has
issued and outstanding about 70.5 million shares of common stock.
4. Defendant SBC is a holding company, organized under the laws of the
state of Delaware, and through its subsidiaries, provides communications in the
United States. SBC, which owns approximately 42% of the Company's outstanding
common stock, is proposing to purchase the remaining Prodigy stock it does not
already own (58%).
5. James R. Adams, Louis R. Brill, Robert S. McClane, Joe C. McKinney,
Jaime Chico Pardo and Andres Vazquez del Mercado Benshimol are and have been at
all relevant times directors of Prodigy.
6. Adams is a former employee of SBC.
7. Paul Roth ("Roth") is and has at all relevant times been a director
of Prodigy. Roth serves as Prodigy president and chief executive officer.
8. John H. Atterbury III ("Atterbury") is and has at all relevant times
been a director of Prodigy. Atterbury is group president for SBC.
9. Charles E. Foster ("Foster") is and has at all relevant times been a
director of Prodigy. Foster has served as the chairman of the board of Prodigy
since December 2000 and was Prodigy's president and chief executive officer
from December 2000 to March 2001. Foster has served as group president of SBC
since September 2000 and from July 1995 to July 2000. From July 2000 to
September 2000, Foster was group president, national operations of SBC.
10. Robert B. Pickering ("Pickering") is and has at all relevant times
been a director of Prodigy. Pickering has served as senior vice president of
corporate finance of SBC since October 2000. From December 1997 to October
2000, Pickering was employed by Pacific Bell Telephone Company, a subsidiary of
SBC, serving as senior vice president, finance, from
3
November 1999 to October 2000 and chief financial officer from December 1997 to
November 1999.
11. The individual defendants named above (the "Individual Defendants"),
as officers and/or directors of the Company, (as specified above) and SBC, as
the controlling stockholder of Prodigy, owe the highest fiduciary duties of
good faith, loyalty, fair dealing, due care, and candor to plaintiff and the
other members of the Class (as defined below).
CLASS ACTION ALLEGATIONS
12. Plaintiff brings this action pursuant to Rule 23 of the Rules of the
Court of Chancery, individually and on behalf of all other stockholders of the
Company (except the defendants herein and any persons, firm, trust,
corporation, or other entity related to or affiliated with them and their
successors in interest), who are or will be threatened with injury arising from
defendants' actions, as more fully described herein (the "Class").
13. This action is properly maintainable as a class action for the
following reasons:
(a) The Class is so numerous that joinder of all members is
impracticable. As of September 24, 2001 there were approximately 89
institutional holders of record of Prodigy common stock and likely many more
beneficial owners.
(b) There are questions of law and fact which are common to the
Class, including, inter alia, the following:
(i) Whether SBC has engaged and is continuing to engage in a
plan and scheme to benefit itself at the expense of the members of the Class;
(ii) Whether SBC and the Individual Defendants have fulfilled,
and are capable of fulfilling, their fiduciary duties to plaintiff and the
other members of the Class, including their duties of entire fairness, fair
dealing, loyalty, due care, and candor;
4
(iii) Whether all material facts in connection with the
challenged transaction have been disclosed; and
(iv) Whether plaintiff and the other members of the Class would
be irreparably damaged if the Defendants are not enjoined from the conduct
described herein.
14. The claims of plaintiff are typical of the claims of the other
members of the Class in that all members of the Class will be damaged alike by
the wrongs complained of herein.
15. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. Plaintiff is an
adequate representative of the Class.
16. The prosecution of separate actions by individual members of the
Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for defendants, or adjudications with respect to individual
members of the Class which would as a practical matter be dispositive of the
interests of the other members not parties to the adjudications or substantially
impair or impede their ability to protect their interests.
17. The defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary and
final injunctive relief on behalf of the Class as a whole is appropriate.
BACKGROUND AND SUBSTANTIVE ALLEGATIONS
18. On September 21, 2001, Prodigy announced in a press release that
SBC had offered to pay $384 million for the 58% of Prodigy that it doesn't
already own (the "Offer"). Under the terms of the Offer, SBC will offer $5.45
for each Prodigy share.
5
19. The Offer represents a 54% premium over Prodigy's closing stock
price September 21, 2001 of $3.54 and a 35% premium over the stock's average
closing price for the calendar year-to-date. However, the price of Prodigy
stock has traded as high as $8.50 per share during the past 52 weeks, as high
as $7.15 per share in July, 2001 and as high as $5.90 on September 4, 2001.
20. The price proposed in the Offer is particularly unfair in light of the
Company's recent performance and anticipated financial performance. On September
10, 2001, Prodigy shares were trading at $5.25 but like many other
publicly-traded companies, the price has fallen dramatically following the
attack on the World Trade Center in New York and the resulting economic
uncertainty.
21. On August 14, 2001, Prodigy announced that the number of internet
subscribers it owned and managed had increased 30%, from 2.6 million at June
30, 2000 to 3.3 million at June 30, 2001 and that total revenue had increased
$58.6 million or, 47% during the same period.
22. On July 26, 2001 Defendant Roth announced, "Second-quarter results
demonstrate the strength of Prodigy's DSL business and our ability to execute
our new business plan. We're succeeding in meeting our promise to increase our
earnings, while at the same time, we are devoting resources to a new Prodigy
Internet experience that is designed for broadband customers." The same day
Defendant Foster announced, "Given today's economy, Prodigy is one of the few
Internet companies that has turned the corner and been able to build and
successfully execute a new financial model. Prodigy's relationship with SBC
Communications has proven to be the model for what it takes to grow a broadband
subscriber base profitably, and at the same time, provides resources to continue
to grow our dial base."
6
23. Because SBC has a controlling interest in the Company's common stock,
no third party will likely bid for Prodigy. SBC thus will be able to proceed
with the Offer without an auction or other type of market check to maximize
value for the public shareholders.
24. SBC is intent on paying the lowest possible price to Class members,
even though it is duty-bound to pay a fair price to the Company's public
shareholders. Thus, SBC has a clear and material conflict of interest in the
proposed Offer.
25. By reason of the foregoing acts, practices, and course of conduct by
defendants, plaintiff and the other members of the Class have been and will be
damaged because they will not receive their fair proportion of the value of
Prodigy's assets and business and will be prevented from obtaining fair
consideration for their shares of Prodigy's common stock.
26. The Offer has been timed and structured unfairly in that:
(a) The Offer is designed and intended to eliminate members of the
class as stockholders of the Company from continued equity participation in the
Company at a price per share which Individual Defendants knew or should know is
unfair and inadequate;
(b) SBC has unique knowledge of the Company and has access to
information denied or unavailable to the Class; and
(c) SBC has violated its duty of fair dealing by timing the offer to
place an artificial cap on the market price of Prodigy stock.
27. Defendants will continue to breach their fiduciary duties owed to
plaintiff and the Class and will consummate the offer to the irreparable harm
of plaintiff and the Class.
28. Plaintiff and the other members of the Class have no adequate remedy
at law.
WHEREFORE, plaintiff demands judgment as follows:
A. Declaring this to be a proper class action and naming plaintiff as
Class representative;
7
B. Granting preliminary and permanent injunctive relief against the
consummation of the Offer as described herein;
C. In the event the Offer is consummated, rescinding the Offer or
awarding rescissionary damages;
D. Ordering defendants to pay to plaintiff and to other members of the
Class all damages suffered and to be suffered by them as the result of the acts
and transactions alleged herein;
E. Awarding plaintiff the costs and disbursements of the action
including allowances for plaintiff's reasonable attorneys and experts fees; and
F. Granting such other and further relief as may be just and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Carmella P. Keener
----------------------
Mellon Bank Center; Suite 1401
919 Market Street
P.O. Box 1070
Wilmington, Delaware 19899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
GOODKIND LABATON RUDOFF &
SUCHAROW LLP
100 Park Avenue
New York, New York 10017
(212) 907-0700
EX-99.A.5.IV
13
d90977ex99-a_5iv.txt
COMPLAINT
1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
--------------------------------------------
ROLLING INVESTOR GROUP, INC., individually : C.A. No. 19120NC
and on behalf of all others similarly :
situated, :
: CLASS ACTION
Plaintiff, : COMPLAINT
:
- against - :
JAMES R. ADAMS, LOUIS R. BRILL, ROBERT S. :
MCCLANE, JOE C. MCKINNEY, JAMIE CHICO :
PARDO, CHARLES E. FOSTER, ROBERT B. :
PICKERING, ANDRES VAZQUEZ DEL :
MERCADO BENSHIMOL, PAUL ROTH, JOHN :
H. ATTERBURY, III, PRODIGY :
COMMUNICATIONS CORPORATION and SBC :
COMMUNICATIONS INC., :
:
Defendants. :
--------------------------------------------
INTRODUCTION
Plaintiff alleges on information and belief, except for those allegations
which pertain to plaintiff which are alleged upon personal knowledge, as
follows:
1. This action arises out of an unlawful scheme and plan by SBC
Communications, Inc. ("SBC") to acquire the remaining ownership of Prodigy
Communications Corp. ("Prodigy" or the "Company") for grossly inadequate
consideration and without full and complete disclosure of all material
information, in breach of defendants' fiduciary duties.
THE PARTIES
2. Plaintiff is and has been at all relevant times the owner of Prodigy
Class A common stock.
1
2
3. Defendant Charles E. Foster ("Foster") is and was at all relevant
times the Chairman of Prodigy's Board of Directors. Foster also previously
served as Prodigy's President and Chief Executive Officer until March 2001.
Foster is also Group President of SBC.
4. Defendant Paul F. Roth ("Roth") is and was at all relevant times
President, Chief Executive Officer and a director of Prodigy.
5. Defendant James R. Adams ("Adams") is and was at all relevant times a
director of Prodigy. Adams previously served as President of defendant SBC from
1992 until 1995.
6. Defendant Robert S. Pickering ("Pickering") is and was at all
relevant times a director of Prodigy. Pickering is also Senior Vice President
of defendant SBC.
7. Defendant John H. Atterbury III ("Atterbury") is and was at all
relevant times a director of Prodigy. Atterbury is also Group President of
defendant SBC.
8. Defendants Jaime Chico Pardo, Andres R. Vazquez Del Mercado
Benshimol, Robert S. McClane, Louis R. Brill, and Joe C. McKinney are and were
at all relevant times directors of Prodigy.
9. The Individual Defendants, as officers and/or directors of Company,
owe the highest fiduciary duties of good faith, loyalty, fair dealing, due
care, and candor to plaintiff and the other members of the Class (as defined
below).
10. Prodigy is a corporation organized and existing under the laws of
the Delaware with its principal executive offices located at 6500 Place
Boulevard, Austin, Texas. Prodigy is an Internet service provider serving
consumers and small business owners. As of August 7, 2001, Prodigy had
70,480,750 shares of Class A common stock issued and outstanding.
11. SBC is a corporation organized and existing under the laws of the
State of Delaware. SBC provides communications services in the United States
and other countries, and
2
3
also provides long-distance phone services, wireless and data communications,
paging, Internet access and messaging cable and satellite television, security
services, and telecommunications equipment.
CLASS ACTION ALLEGATIONS
12. Plaintiff brings this action pursuant to Rule 23 of the Rules of the
Court of Chancery, individually and on behalf of all other stockholders of the
Company (except the defendants herein and any persons, firm, trust,
corporation, or other entity related to or affiliated with them and their
successors in interest), who are or will be threatened with injury arising from
defendants' actions, as more fully described herein (the "Class").
13. This action is properly maintainable as a class action for the
following reasons:
a) the Class is so numerous that joinder of all members is
impracticable. As of August 7, 2001, there were over 70 million shares of
Prodigy Class A common stock issued and outstanding, held by at least 730
shareholders of record and likely many more beneficial owners.
b) there are questions of law and fact which are common to the
Class, including, inter alia, the following:
i. whether defendants have engaged and are continuing to engage in a
plan and scheme to benefit themselves at the expense of the members of the
Class;
ii. whether the defendants have fulfilled, and are capable of
fulfilling, their fiduciary duties to plaintiff and the other members of the
Class, including their duties of entire fairness, fair dealing, loyalty, due
care, and candor;
iii. whether defendants have disclosed all material facts in
connection with the challenged transaction; and
3
4
iv. whether plaintiff and the other members of the Class would be
irreparably damaged if defendants are not enjoined from the conduct described
herein;
c) The claims of plaintiff are typical of the claims of the other
members of the Class in that all members of the Class will be damaged by
defendant's actions.
d) Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. Plaintiff is an
adequate representative of the Class.
14. The prosecution of separate actions by individual members of the
Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for defendants, or adjudications with respect to
individual members of the Class which would as a practical matter be
dispositive of the interests of the other members not parties to the
adjudications or substantially impair or impede their ability to protect their
interests.
15. The defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary and
final injunctive relief on behalf of the Class as a whole is appropriate.
BACKGROUND AND SUBSTANTIVE ALLEGATIONS
16. On or about September 21, 2001, Bloomberg News reported, in part,
that: "SBC Communications, Inc. offered to acquire the 58 percent of Internet
service provider Prodigy Communications Corp. that it doesn't already own for
$384 million, or $5.45 a share."
17. The price of Prodigy stock has traded as high as $7.20 per share on
July 25, 2001. Thus, the proposed buyout price of $5.45 per share is grossly
inadequate.
4
5
18. The price proposed in the offer is also unfair in light of the
Company's financial prospects. On or about July 26, 2001, Prodigy announced
that its second-quarter loss narrowed as subscriber gains helped revenue rise
25 percent. Specifically, Prodigy reported that it had 3.32 million customers
at the quarter's end compared with 2.55 million a year ago. The Company's Chief
Financial Officer, Allen Craft, further announced that the Company expects to
end the year with 3.4 million to 3.7 million customers after "retooling" the
service in the fourth quarter, when it plans a new marketing campaign.
19. Because SBC controls approximately 48% of the Company's
outstanding common stock, no third party will likely bid for Prodigy, SBC and
Prodigy management will thus be able to proceed with the proposed transaction
without an auction or other type of market check to maximize value for the
public shareholders.
20. SBC and Prodigy management are intent on paying the lowest
possible price to Class members, even though SBC and Prodigy management are
duty-bound to pay the highest fair price to the Company's public shareholders.
Thus, SBC and Prodigy management have clear and material conflicts of interest
in the offer.
21. Prodigy's Board of Directors are in a position to dictate the
terms of the proposed transaction. Defendants Pickering, Atterbury, Foster and
Adams are beholden to defendant SBC for their positions and the attendant
perquisites and cannot represent or protect the interests of the Company's
public shareholders with impartiality and vigor.
22. As noted above, SBC and its affiliates currently control
approximately 48 percent of Prodigy's outstanding Class A common shares.
23. Because of its control over the Company and Prodigy's Board of
Directors, SBC is in a position to dictate the terms of the Offer. In addition,
defendants Pickering, Atterbury, Foster
5
6
and Adams have conflicts of interest and thus cannot represent or protect the
interests of the Company's public shareholders with impartiality and vigor.
24. The Offer is in furtherance of a fraudulent plan to take Prodigy
private, which, if not enjoined, will result in the elimination of the public
stockholders of Prodigy in a transaction that is inherently unfair to them and
that is the product of the defendants' conflict of interest, as described
herein. More particularly, the Offer is in violation of defendants' fiduciary
duties and has been timed and structured unfairly in that:
a) the Offer is designed and intended to eliminate members of the
Class as stockholders of the Company from continued equity participation in the
Company at a price per share which defendants know or should know is grossly
unfair and inadequate;
b) defendants, by virtue of, among other things, their voting and
ownership power, control and dominate Prodigy's Board of Directors;
c) defendants have unique knowledge of the Company and have access to
information denied or unavailable to the class. Without all material
information, Class members are unable to determine whether the price offered in
the Offer is fair; and
d) defendants have violated their duty of fair dealing by
manipulating the timing of the Offer to benefit themselves at the expense of
the plaintiff and the class.
25. Unless enjoined by this Court, defendants will continue to breach
their fiduciary duties owed to plaintiff and the Class and will consummate the
Offer to the irreparable harm of plaintiff and the Class.
26. Plaintiff and the other members of the Class have no adequate remedy at
law,
WHEREFORE, plaintiff demands judgment as follows:
6
7
A. Declaring this to be a proper class action and naming plaintiff as
Class representative;
B. Granting preliminary and permanent injunctive relief against the
consummation of the Offer as described herein;
C. In the event the Offer is consummated, rescinding the transaction or
awarding rescissionary damages;
D. Ordering defendants to pay to plaintiff and to other members of the
Class all damages suffered and to be suffered by them as the result of the acts
and transactions alleged herein;
E. Awarding plaintiff the costs and disbursements of the action
including allowances for plaintiff's reasonable attorneys and experts fees; and
F. Granting such other and further relief as may be just and proper.
Dated: September 24, 2001 ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: Carmella P. Keener
____________________
Mellon Bank Center, Suite 1401
919 Market Street
Wilmington, DE 19899
(302) 656-4433
OF COUNSEL:
ENTWISTLE & CAPPUCCI LLP
Vincent R. Cappucci
Robert N. Cappucci
299 Park Avenue, 14th Floor
New York, New York 10171
SLOTNICK, SHAPIRO & CROCKER, L.L.P.
Stephen D. Oestreich
100 Park Avenue, 35th Floor
New York, New York 10017
(212) 687-5000
7
EX-99.A.5.V
14
d90977ex99-a_5v.txt
COMPLAINT
1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
-------------------------------------------------x
BERTHA MANDELBAUM, :
:
Plaintiff, :
:
- against - : C.A. No. 19119NC
JAMES R. ADAMS, LOUIS R. BRILL, ROBERT S. :
MCCLANE, JOE C. MCKINNEY, JAMIE CHICO PARDO, :
CHARLES E. FOSTER, ROBERT B. PICKERING, :
ANDRES VAZQUEZ DEL MERCADO BENSHIMOL, :
PAUL ROTH, JOHN H. ATTERBURY, III, :
PRODIGY COMMUNICATIONS CORPORATION and :
SBC COMMUNICATIONS INC., :
:
Defendants. :
-------------------------------------------------x
CLASS ACTION COMPLAINT
Plaintiff alleges upon information and belief, except for paragraph 1
hereof, which is alleged upon knowledge, as follows:
1. Plaintiff has been the owner of shares of the common stock of Prodigy
Communications Corporation ("Prodigy" or the "Company") since prior to the
wrongs herein complained of and continuously to date.
2. Prodigy is a corporation duly organized and existing under the laws
of the State of Delaware. The Company is an Internet Service Provider.
3. Defendant SBC Communications, Inc. ("SBC") owns or controls 100% of
the Class B shares and approximately 42% of the total equity of the Company.
- 1 -
2
4. Defendant Charles E. Foster is Chairman, President and Chief Executive
Officer of the Company and was appointed to the Board by Prodigy management.
5. Defendant Robert B. Pickering is a Director of the company designated
by SBC and a former officer and director of SBC.
6. James R. Adams is a director of the Company designated by Prodigy's
management and a former officer and/or director of SBC.
7. The remaining individual defendants are Directors of the Company.
8. SBC, as controlling shareholder, and the director defendants stand in
a fiduciary position relative to the Company's public shareholders and owe the
public shareholders of Prodigy the highest duties of good faith, fair dealing,
due care, loyalty, and full and candid disclosure.
CLASS ACTION ALLEGATIONS
9. Plaintiff brings this action as a class action, pursuant to Rule 23 of
the Rules of the Court of Chancery, on behalf of all security holders of the
Company (except the defendants herein and any person, firm, trust, corporation,
or other entity related to or affiliated with any of the defendants) and their
successors in interest, who are or will be threatened with injury arising from
defendants' actions as more fully described herein (the "Class").
- 2 -
3
10. This action is properly maintainable as a class action.
11. The class is so numerous that joinder of all members is impracticable.
There are approximately 70.2 million Class A shares and 51.8 million Class B
shares of Prodigy common stock outstanding owned by hundreds, if not thousands,
of holders other than SBC and its affiliates.
12. There are questions of law and fact which are common to the class
including, inter alia, the following: (a) whether defendants have breached their
fiduciary and other common law duties owed by them to plaintiff and the members
of the class; (b) whether SBC is pursuing a scheme and course of business
designed to eliminate the public securities holders of Prodigy in violation of
the laws of the State of Delaware in order to enrich SBC at the expense and to
the detriment of plaintiff and the other public stockholders who are members of
the class; (c) whether the proposed transaction, hereinafter described,
constitutes a breach of the duty of fair dealing with respect to the plaintiff
and the other members of the class; and (d) whether the class is entitled to
injunctive relief or damages as a result of the wrongful conduct committed by
defendants.
13. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. The claims of the
plaintiff are typical of the claims
- 3 -
4
of other members of the class and plaintiff has the same interests as the other
members of the class. Plaintiff will fairly and adequately represent the class.
14. Defendants have acted in a manner which affects plaintiff and all
members of the class alike, thereby making appropriate injunctive relief and/or
corresponding declaratory relief with respect to the class as a whole.
15. The prosecution of separate actions by individual members of the
Class would create a risk of inconsistent or varying adjudications with respect
to individual members of the Class, which would establish incompatible
standards of conduct for defendants, or adjudications with respect to
individual members of the Class which would, as a practical matter, be
dispositive of the interests of other members or substantially impair or impede
their ability to protect their interests.
SUBSTANTIVE ALLEGATIONS
16. On September 21, 2001, SBC announced that it had made a proposal to
purchase all of the shares of common stock of the Company not held by SBC and
its affiliates. Under the proposed transaction, which is structured as a tender
offer, the Company's public shareholders would receive $5.45 per share in cash.
17. The price of $5.45 per share to be paid to class members is unfair
and inadequate consideration because, among other things: (a) the intrinsic
value of the stock of Prodigy is
-4-
5
materially in excess of $5.45 per share, giving due consideration to the
prospects for growth and profitability of Prodigy in light of its business,
earnings and earnings power, present and future; (b) the $5.45 per share price
offers an inadequate premium to the public stockholders of Prodigy; and (c) the
$5.45 per share price is not the result of arm's length negotiations but was
fixed arbitrarily by SBC to "cap" the market price of Prodigy Stock, as part of
a plan for SBC to obtain complete ownership of Prodigy, its assets and
businesses at the lowest possible price.
18. The proposal is an attempt by SBC to unfairly aggrandize SBC at the
expense of Prodigy's public stockholders. The proposal will, for inadequate
consideration, deny plaintiff and the other members of the class their right to
share proportionately in the future success of Prodigy and its valuable
assets, while permitting SBC to benefit wrongfully from the transaction.
19. Given SBC's stock ownership and representation on Prodigy Board and
in management, it has unique knowledge of the Company's business and prospects
not known to the public stockholders.
20. Because of SBC's stock ownership and the offices held by SBC
personnel, no third party, as a practical matter, is likely to attempt any
competing bid for Prodigy.
-5-
6
21. Plaintiff and the other members of the Class will suffer
irreparable damage unless defendants are enjoined from breaching their fiduciary
duties to Prodigy's public shareholders.
22. Plaintiff and the other members of the Class have no
adequate remedy at law.
WHEREFORE, plaintiff demands judgment against defendants, jointly
and severally, as follows:
(1) declaring this action to be a class action and certifying
plaintiff as the Class representative and her counsel as Class counsel;
(2) enjoining, preliminarily and permanently, the transaction
complained of herein;
(3) to the extent, if any, that the transaction or transactions
complained of are consummated prior to the entry of this Court's final judgment,
rescinding such transaction or transactions, or granting the Class rescissory
damages;
(4) directing that defendants account to plaintiff and the
other members of the Class for all damages caused to them and account for all
profits and any special benefits obtained as a result of their unlawful conduct;
(5) awarding plaintiff the costs and disbursements of this
action, including a reasonable allowance for the fees and expenses of
plaintiff's attorneys and experts; and
- 6 -
7
(6) Granting plaintiff and the other members of the Class such other and
further relief as may be just and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Carmella P. Keener
___________________________
919 N. Market Street
Suite 1401
Mellon Bank Center
Wilmington, Delaware 19801
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
BERNSTEIN LIEBHARD & LIFSHITZ, LLP
10 East 40th Street
New York, NY 10016
(212) 779-1414
-7-
EX-99.A.5.VI
15
d90977ex99-a_5vi.txt
COMPLAINT
1
' IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
-------------------------------------------
KATY LEMBERG, :
Plaintiff, :
:
- against - : Civil Action No. 19124
:
:
:
CHARLES E. FOSTER, PAUL ROTH :
ROBERT PICKERING, JOHN H. ATTERBURY :
III and SBC COMMUNICATIONS INC. :
:
Defendants. :
------------------------------------------
CLASS ACTION COMPLAINT
Plaintiff, Katy Lemberg, individually and on behalf of all others
similarly situated, by her attorneys, alleges the following upon information
and belief, based on the investigation of her counsel, except for those
allegations which pertain to plaintiff, which allegations are based upon
personal knowledge:
NATURE OF THE ACTION
1. Plaintiff brings this action on behalf of herself and all other
public shareholders of Prodigy Communications Corp. ("Prodigy" or the
"Company") who are threatened with the deprivation of the value of their shares
of Prodigy common stock.
2. This action seeks, inter alia, to enjoin SBC Communications, Inc.
("SBC") from acquiring Prodigy for grossly
2
inadequate consideration. Plaintiff also seeks damages in the event the
transaction is consummated, as presently proposed.
THE PARTIES
3. Plaintiff is the owner of shares of common stock of Prodigy and has
been the owner continuously of such shares since prior to the wrongs complained
of herein.
4. Defendant SBC is a corporation organized and existing under the laws
of the State of Delaware with its principal officer located at 175 East Houston
Street, San Antonio, Texas, 78205. SBC is a telecommunications company
providing services in the United States and abroad. SBC provides local and long
distance telephone service, wireless and data communications, paging, Internet
access and messaging, cable and satellite television, security services and
telecommunications equipment. SBC also provides directory advertising and
publishing. SBC is the single largest shareholder of Prodigy, currently owning
42% of Prodigy common stock.
5. Defendant Charles E. Foster ("Foster") is, and at all relevant times
has been, the Chairman of the Board of Directors and a Director of Prodigy.
Foster also is, and at all relevant times was, the Group President of SBC.
6. Defendant Paul Roth ("Roth") is, and since February 2001 has been,
the President and Chief Executive Officer of Prodigy. Roth also is, and at all
relevant times has been, the Vice President of SBC Telecom, a unit of SBC.
7. Defendant John H. Atterbury III ("Atterbury") is, and at all relevant
times has been, a Director of Prodigy.
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Atterbury also is, and at all relevant times has been, the Group President and
the Chairman of the Board of Directors of SBC.
8. Defendant Robert Pickering ("Pickering") is, and at all
relevant times has been, a Director of Prodigy. Pickering also is, and at all
relevant times has been, the Senior Vice President of SBC.
9. Defendants Foster, Roth, Atterbury and Pickering (the
"Individual Defendants"), as executives and directors of Prodigy, owe fiduciary
duties of good faith, fair dealing, loyalty, due care, and candor to plaintiff
and the other members of the Class. The Individual Defendants, in breach of
those fiduciary duties, exercised their power as SBC executives to cause SBC to
initiate the Tender Offer for Prodigy (described herein) for inadequate
consideration. SBC, as the controlling entity, caused the Individual Defendants
and aided and abetted in their breach of fiduciary duties to Prodigy's
shareholders.
CLASS ACTION ALLEGATIONS
10. Plaintiff brings this action on her own behalf and as a
class action, pursuant to Rule 23 of the Rules of this Court on behalf of
herself and all other stockholders of Prodigy as of September 21, 2001, or their
successors in interest, who are or may be deprived of the opportunity to receive
maximum value for their Prodigy stock by the acts taken or threatened by the
defendants as further described herein (the "Class"). Excluded from the Class
are defendants herein and any person, firm, trust, corporation, or other entity
related to or affiliated with any of the defendants.
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4
11. This action is properly maintainable as a class action for the
following reasons:
(a) The Class is so numerous that joinder of all members is
impracticable. While the exact number of class members is unknown to plaintiff
at this time and can only be ascertained through appropriate discovery, there
are more than 16.83 million shares of Prodigy common stock outstanding. The
holders of these shares are believed to be geographically dispersed throughout
the United States. Prodigy common stock is listed and actively traded on the
NASDAQ National Market.
(b) There are questions of law and fact which are common to the
Class, including, inter alia, the following:
(i) whether the proposed transaction is grossly unfair to the
Class;
(ii) whether plaintiff and the other members of the Class would
be irreparably damaged were the transactions complained of
herein consummated;
(iii) whether defendants have breached common law duties of fair
dealing and loyalty owed by them to plaintiff and the
other members of the Class, and or aided and abetted in
the breach of fiduciary duties, and
(iv) whether defendants have failed or will fail to obtain
maximum value for the Prodigy stock held by plaintiff and
the Class.
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5
(c) The claims of plaintiff are typical of the claims of the other members
of the Class and plaintiff has no interests that are adverse or antagonistic to
the interests of the Class.
(d) The plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. Plaintiff is an
adequate representative of the Class and will fairly and adequately protect the
interests of the Class.
12. The prosecution of separate actions by individual members of the Class
would create the risk of inconsistent or varying adjudications with respect to
individual members of the Class which would establish incompatible standards of
conduct for defendants, or adjudications with respect to individual members of
the Class which would as a practical matter be dispositive of the interests of
the other members not parties to the adjudications or substantially impair or
impede their ability to protect their interests.
13. The defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary and
final injunctive relief on behalf of the Class as a whole is appropriate.
5
6
SUBSTANTIVE ALLEGATIONS
BACKGROUND
14. Prodigy is an Internet service provider that serves consumers and
small business owners. SBC is the single largest shareholder of Prodigy and
currently owns 42% of Prodigy common stock. As discussed herein, Prodigy is
beholden to SBC, both financially and strategically.
15. In November 1999, SBC and Prodigy announced that they would combine
their Internet businesses. Towards this end, Prodigy issued 49 million new
shares of common stock, then valued at approximately $1.6 billion, giving SBC a
43%(1) ownership stake. In return, SBC agreed to make Prodigy the exclusive
Internet-access provider for consumers and small businesses in its service area
of about 100 million people. The additional SBC customers boosted Prodigy's
subscriber base to approximately 2 million, making it the third-largest
Internet-service provider. SBC also promised to provide Prodigy with at least
1.2 million more customers over the next three years. Pursuant to this
agreement, Prodigy would pay SBC for providing the network infrastructure for
Prodigy's Internet service and would also pay SBC for selling the co-branded
service.
16. Commenting on this transaction in the November 22, 1999 Bloomberg News
Service, Jeffrey Kagan, an independent
--------------------
(1) SBC's holding in Prodigy was later reduced to 42% as a result of an
increase in the total number of Prodigy shares outstanding.
6
7
telecommunications analyst stated that "Prodigy has been one of the oldest
crown jewels in the online and Internet space".
17. The transaction was completed in June 2000. Thus, as a result, Prodigy
was made beholden to SBC for a very significant percentage of its user market,
its network infrastructure and sales of its services. SBC, on the other hand,
effectively had acquired a crown jewel in the online and Internet industry and
thus, was able to provide its customers digital-subscriber-line service, a
popular method of providing high-speed Internet access over traditional copper
telephone lines.
18. In January 2001, SBC agreed to provide Prodigy with a $110 million line
of credit to help mitigate Prodigy's cash flow problem. Part of Prodigy's
cash-flow problem stemmed from the terms of its November 1999 agreement with SBC
that required Prodigy to pay SBC a bounty of $40 to $75 for each subscriber
obtained. As of January 2001, Prodigy already was indebted to SBC for deferred
bounty payments. As a result of this $110 million credit line, Prodigy grew even
more beholden to SBC.
THE TENDER OFFER
19. On September 21, 2001, after the close of the market, SBC announced a
tender offer for the remaining outstanding shares of Prodigy common stock which
it does not already own at $5.45 per share (the "Tender Offer"). SBC stated
that it expects to commence the Tender Offer as soon as practicable, probably
early in the week of October 1, 2001.
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8
20. The purpose of the Tender Offer is to enable SBC to acquire one
hundred (100%) percent equity ownership of Prodigy and its valuable assets for
its own benefit at the expense of Prodigy's public stockholders who will be
deprived of their equity investment and the benefits thereof including, among
other things, the expected growth in the Company's profitability.
21. By the acts, transactions and courses of conduct alleged herein,
defendants, individually and as part of a common plan and scheme, or in breach
of their fiduciary duties to plaintiff and the other members of the Class, may
unfairly deprive plaintiff and the other members of the Class of the true value
of their investment in Prodigy.
22. The proposed transaction is the product of unfair dealing, and the
price of $5.45 cash per share to be paid to Class members is inadequate and
unfair. Although $5.45 represents a premium over the current trading price of
Prodigy common stock, within the past year Prodigy common stock has traded as
high as $7.90 per share. Moreover, over the past two and one half years, the
average trading price of Prodigy common stock has been $14.15. SBC plainly is
taking advantage of the current severe weakness in the Internet service
provider and telecommunications sectors, which also have been impacted
adversely these past few weeks, to acquire Prodigy on the cheap.
23. If the Tender Offer is allowed to proceed, the Individual Defendants
will have violated their fiduciary duties owed to the public shareholders of
Prodigy and have acted to put
8
9
the interests SBC ahead of those of Prodigy's public shareholders. The
Individual Defendants may not be permitted to use their positions as executives
and directors to the detriment of plaintiff and the other members of the Class.
24. Prodigy shareholders will, if the transaction is consummated, be
deprived of the opportunity for substantial gains in and the future value of
the Company.
25. The agreed Tender Offer price of $5.45 per share to be paid to class
members is unfair and grossly inadequate because, among other things:
(a) There is no indication that Prodigy's board of directors has taken
sufficient steps to ensure that the interests of Prodigy's stockholders, in
maximizing the value of their holdings, are protected. Indeed, there were no
negotiations between SBC and a special committee of outside directors of
Prodigy. Nor was there an auction or other method of seeking out the highest
possible bidder for Prodigy.
(b) The Individual Defendants have a duty to maximize shareholder value,
and as such, must seriously consider other offers and must take such action as
is necessary to obtain for Prodigy shareholders the highest value for their
securities. The Individual Defendants have not taken action necessary to
properly comply with their fiduciary duties; and
(c) In light of SBC's de facto control of Prodigy, and the inherent
conflict of interests of the Individual Defendants who hold executive and
director positions with both Prodigy and SBC, it
9
10
is unfair and in violation of defendants' fiduciary duties to consummate a
takeover of the Company without first obtaining a recommendation and input by a
truly independent representative of the public stockholders, or otherwise
ensuring that a fair price is offered.
26. The Individual Defendants have not, in accordance with their fiduciary
duties:
(a) adequately ensured that no conflicts of interest exist or if such
conflicts exist to ensure that all conflicts would be resolved in the best
interests of Prodigy's public shareholders;
(b) taken all appropriate steps to enhance Prodigy's value and
attractiveness as a merger/acquisition candidate;
(c) undertaken an appropriate evaluation of Prodigy's worth as a
merger/acquisition candidate; or
(d) taken all appropriate steps to effectively expose Prodigy to the
marketplace in an effort to create an active auction or market check for
Prodigy;
27. Because SBC dominates and controls the financial, business and
corporate affairs of Prodigy, and because the Individual Defendants hold
executive and director positions within Prodigy, defendants are in possession of
private corporate information concerning Prodigy's assets, businesses and future
prospects, there exists an imbalance and disparity of knowledge and economic
power between them and the public stockholders of Prodigy which makes it
inherently unfair for them to pursue any proposed
10
11
transaction wherein they will reap disproportionate benefits to the exclusion of
other means of maximizing stockholder value.
28. By reason of the foregoing, the Individual Defendants, have
violated or may violate their fiduciary duties to Prodigy and the public
stockholders of Prodigy in that they have acted against the best interests of
the class, have failed to maximize shareholder value (including failing to
actively pursue the acquisition of Prodigy by other companies or conducting a
fair and open auction or market check), and have otherwise failed to take other
steps to protect the interests of the Class.
29. Further, by reason of the foregoing acts, practices and course of
conduct, the defendants may have failed to exercise ordinary care and diligence
in the exercise of their fiduciary obligations toward plaintiff and other
Prodigy public stockholders.
30. As a result of the actions of defendants, plaintiff and the other
members of the Class may have been damaged in that they have not and will not
receive their fair proportion of the value of Prodigy's assets and businesses
and will be prevented from obtaining appropriate consideration for their shares
of Prodigy's common stock.
31. Plaintiff and the Class may suffer irreparable damage unless
defendants are prevented from carrying out the aforesaid plan and scheme.
32. Plaintiff has no adequate remedy at law.
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WHEREFORE, plaintiff demands judgment as follows:
(1) declaring this to be a proper class action and plaintiff the
class representative;
(2) enjoining, preliminarily and permanently, the proposed offer
under the terms presently proposed; requiring defendants to conduct an open and
fair auction of the Company to maximize shareholder value;
(3) to the extent, if any, that the transaction or transactions
complained of are consummated prior to the entry of this Court's final judgment,
rescinding such transaction or transactions, or awarding to plaintiff and the
Class rescissory damages;
(4) directing that defendants pay to plaintiff and the other members
of the Class all damages caused to them and account for all profits and any
special benefits obtained as a result of their unlawful conduct;
(5) awarding to plaintiff the costs and disbursements of this action,
including a reasonable allowance for the fees and expenses of plaintiff's
attorneys and expert; and
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(6) granting such other further relief as the Court may deem just and
proper.
Dated: September 24, 2001
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Carmella P. Keener
________________________
Mellon Bank Center, Suite 1401
919 North Market Street
Wilmington, Delaware 19899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
WOLF POPPER L.L.P.
845 Third Avenue
New York, NY 10022
(212) 759-4600
13
EX-99.A.5.VII
16
d90977ex99-a_5vii.txt
COMPLAINT
1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
----------------------------------------------x
FISHEL RISPLER, |
|
Plaintiff, |
|
- against - | C.A. No.
JAMES R. ADAMS, LOUIS R. BRILL, ROBERT S. |
MCCLANE, JOE C. MCKINNEY, JAMIE CHICO PARDO, |
CHARLES E. FOSTER, ROBERT B. PICKERING, |
ANDRES VAZQUEZ DEL MERCADO BENSHIMOL, |
PAUL ROTH, JOHN H. ATTERBURY, III, |
PRODIGY COMMUNICATIONS CORPORATION and |
SBC COMMUNICATIONS INC., |
|
Defendants. |
----------------------------------------------x
CLASS ACTION COMPLAINT
Plaintiff alleges upon information and belief, except for paragraph 1
hereof, which is alleged upon knowledge, as follows:
1. Plaintiff has been the owner of shares of the common stock of Prodigy
Communications Corporation ("Prodigy" or the "Company") since prior to the
wrongs herein complained of and continuously to date.
2. Prodigy is a corporation duly organized and existing under the laws of
the State of Delaware. The Company is an Internet Service Provider.
3. Defendant SBC Communications, Inc. ("SBC") owns or controls 100% of
the Class B shares and approximately 42% of the total equity of the Company.
- 1 -
2
4. Defendant Charles E. Foster is Chairman, President and Chief Executive
Officer of the Company and was appointed to the Board by Prodigy management.
5. Defendant Robert B. Pickering is a Director of the Company designated
by SBC and a former officer and director of SBC.
6. James R. Adams is a director of the Company designated by Prodigy's
management and a former officer and/or director of SBC.
7. The remaining individual defendants are Directors of the Company.
8. SBC, as controlling shareholder, and the director defendants stand in
a fiduciary position relative to the Company's public shareholders and owe the
public shareholders of Prodigy the highest duties of good faith, fair dealing,
due care, loyalty, and full and candid disclosure.
CLASS ACTION ALLEGATIONS
9. Plaintiff brings this action as a class action, pursuant to Rule 23 of
the Rules of the Court of Chancery, on behalf of all security holders of the
Company (except the defendants herein and any person, firm, trust, corporation,
or other entity related to or affiliated with any of the defendants) and their
successors in interest, who are or will be threatened with injury arising from
defendants' actions as more fully described herein (the "Class").
- 2 -
3
10. This action is properly maintainable as a class action.
11. The class is so numerous that joinder of all members is
impracticable. There are approximately 70.2 million Class A shares and 51.8
million Class B shares of Prodigy common stock outstanding owned by hundreds,
if not thousands, of holders other than SBC and its affiliates.
12. There are questions of law and fact which are common to the class
including, inter alia, the following: (a) whether defendants have breached
their fiduciary and other common law duties owed by them to plaintiff and the
members of the class; (b) whether SBC is pursuing a scheme and course of
business designed to eliminate the public securities holders of Prodigy in
violation of the laws of the State of Delaware in order to enrich SBC at the
expense and to the detriment of plaintiff and the other public stockholders who
are members of the class; (c) whether the proposed transaction, hereinafter
described, constitutes a breach of the duty of fair dealing with respect to the
plaintiff and the other members of the class; and (d) whether the class is
entitled to injunctive relief or damages as a result of the wrongful conduct
committed by defendants.
13. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. The claims of the
plaintiff are typical of the claims
-3-
4
of other members of the class and plaintiff has the same interests as the other
members of the class. Plaintiff will fairly and adequately represent the class.
14. Defendants have acted in a manner which affects plaintiff and all
members of the class alike, thereby making appropriate injunctive relief and/or
corresponding declaratory relief with respect to the class as a whole.
15. The prosecution of separate actions by individual members of the
Class would create a risk of inconsistent or varying adjudications with respect
to individual members of the Class, which would establish incompatible standards
of conduct for defendants, or adjudications with respect to individual members
of the Class which would, as a practical matter, be dispositive of the interests
of other members or substantially impair or impede their ability to protect
their interests.
SUBSTANTIVE ALLEGATIONS
16. On September 21, 2001, SEC announced that it had made a proposal
to purchase all of the shares of common stock of the Company not held by SBC and
its affiliates. Under the proposed transaction, which is structured as a tender
offer, the Company's public shareholders would receive $5.45 per share in cash.
17. The price of $5.45 per share to be paid to class members is
unfair and inadequate consideration because, among other things: (a) the
intrinsic value of the stock of Prodigy is
- 4 -
5
materially in excess of $5.45 per share, giving due consideration to the
prospects for growth and profitability of Prodigy in light of its business,
earnings and earnings power, present and future; (b) the $5.45 per share price
offers an inadequate premium to the public stockholders of Prodigy; and (c) the
$5.45 per share price is not the result of arm's length negotiations but was
fixed arbitrarily by SBC to "cap" the market price of Prodigy stock, as part of
a plan for SBC to obtain complete ownership of Prodigy, its assets and
businesses at the lowest possible price.
18. The proposal is an attempt by SBC to unfairly aggrandize SBC at the
expense of Prodigy's public stockholders. The proposal will, for inadequate
consideration, deny plaintiff and the other members of the class their right to
share proportionately in the future success of Prodigy and its valuable assets,
while permitting SBC to benefit wrongfully from the transaction.
19. Given SBC's stock ownership and representation on Prodigy's Board and
in management, it has unique knowledge of the Company's business and prospects
not known to the public stockholders.
20. Because of SBC's stock ownership and the offices held by SBC
personnel, no third party, as a practical matter, is likely to attempt any
competing bid for Prodigy.
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6
21. Plaintiff and the other members of the Class will suffer irreparable
damage unless defendants are enjoined from breaching their fiduciary duties to
Prodigy public shareholders.
22. Plaintiff and the other members of the Class have no adequate remedy
at law.
WHEREFORE, plaintiff demands judgment against defendants, jointly and
severally, as follows:
(1) declaring this action to be a class action and certifying plaintiff
as the Class representative and her counsel as Class counsel;
(2) enjoining, preliminary and permanently, the transaction complained of
herein;
(3) to the extent, if any, that the transaction or transactions
complained of are consummated prior to the entry of this Court's final
judgment, rescinding such transaction or transactions, or granting the Class
rescissory damages;
(4) directing that defendants account to plaintiff and the other members
of the Class for all damages caused to them and account for all profits and any
special benefits obtained as a result of their unlawful conduct;
(5) awarding plaintiff the costs and disbursements of this action,
including a reasonable allowance for the fees and expenses of plaintiff's
attorneys and experts; and
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7
(6) Granting plaintiff and the other members of the Class such other
and further relief as may be just and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Carmella P. Keener
------------------------------
919 N. Market Street
Suite 1401
Mellon Bank Center
Wilmington, Delaware 19801
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
BEATIE & OSBORN LLP
599 Lexington Avenue
New York, NY 10022
(212) 888-9000
-7-
EX-99.A.5.VIII
17
d90977ex99-a_5viii.txt
COMPLAINT
1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
----------------------------------------X
BARRY FELDMAN, :
:
Plaintiff, :
:
v. : C.A. No. 19114NC
:
JAMES R. ADAMS; LOUIS R. BRILL; ROBERT :
S. MCCLANE; JOE C. MCKINNEY; JAIME :
CHICO PARDO; CHARLES E. FOSTER; :
ROBERT B. PICKERING; ANDRES VAZQUEZ :
DEL MERCADO BENSHIMOL; PAUL ROTH; :
JOHN H. ATTERBURY, III, SBC :
COMMUNICATIONS, INC.; and PRODIGY :
COMMUNICATIONS CORPORATION, :
:
Defendants. :
----------------------------------------X
CLASS ACTION COMPLAINT
Plaintiff, by and through plaintiff's attorneys, alleges upon information
and belief, except as to paragraph 1 which is alleged upon personal knowledge,
as follows:
THE PARTIES
1. Plaintiff Barry Feldman ("plaintiff") is the owner of Class A common
stock of Prodigy Communications Corporation ("Prodigy" or the "Company") and
has been the owner of such shares continuously since prior to the wrongs
complained of herein.
2. Prodigy is a corporation duly existing and organized under the laws
of the State of Delaware, with its principal executive offices located in
Austin, Texas. The Company is a nationwide Internet service provider that
purports to provide fast and reliable Internet access and other Internet-based
services.
2
3. Defendant SBC Communications Inc. ("SBC") is a Delaware holding company
whose subsidiaries provide wireline and wireless telecommunications services and
equipment, directory advertising, electronic security services and cable
television services. As of May 11, 2001, SBC owned the Company's single Class B
voting share, entitling it to approximately 51.8 million votes on each matter
submitted for shareholder vote by the Company. By virtue of its Class B common
stock holding, SBC controls approximately 42% of the voting power of the
Company, and is in a fiduciary relationship with plaintiff and the other public
stockholders of Prodigy, and owes plaintiff and the other public stockholders
the highest obligations of good faith, fair dealing, due care, loyalty and full,
candid and adequate disclosure.
4. Defendant Charles E. Foster ("Foster") is and at all relevant times has
been Chairman of the Board of directors of Prodigy. Foster also serves as group
President of SBC.
5. Defendant Robert B. Pickering ("Pickering") is and at all relevant times
has been a director of Prodigy, Pickering is also a Senior Vice President of
Finance at SBC.
6. Defendant James R. Adams ("Adams") is and at all relevant times has been
a director of Prodigy. Adams also served as President of SBC from 1992 through
1995.
7. The remaining individual defendants are and at all relevant times have
been directors of Prodigy.
8. The defendants referred to in paragraphs 4 through 7 are collectively
referred to herein as the "Individual Defendants."
9. By reason of the above Individual Defendants' positions with the Company
as officers and/or directors, said individuals are in a fiduciary relationship
with plaintiff and the other public stockholders of Prodigy, and owe plaintiff
and the other members of the class the highest obligations of good faith, fair
dealing, due care, loyalty and full, candid and adequate disclosure.
3
CLASS ACTION ALLEGATIONS
10. Plaintiff brings this action on his own behalf and as a class action,
pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf all
shareholders of Prodigy Class A common stock, or their successors in interest,
who are being and will be harmed by defendants' conduct described herein (the
"Class"). Excluded from the Class are defendants herein and any person, firm,
trust, corporation or other entity related to or affiliated with any of the
defendants.
11. This action is properly maintainable as a class action.
12. The Class is so numerous that joinder of all members is impracticable.
As of September 21, 2001, there were approximately 70.5 million shares of
Prodigy Class A common stock outstanding owned by hundreds if not thousands of
public shareholders.
13. There are questions of law and fact which are common to the Class
including, inter alia; the following:
(a) whether defendants have improperly engaged in a course of
conduct designed to benefit themselves at the expense of
Prodigy's Class A stockholders; and
(b) whether plaintiff and the other members of the Class would be
irreparably damaged were the transactions complained of herein
consummated.
14. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. Plaintiff's claims
are typical of the claims of the other members of the Class and plaintiff has
the same interests as the other members of the Class. Accordingly, plaintiff is
an adequate representative of the Class and will fairly and adequately protect
the interests of the Class.
15. The prosecution of separate actions by individual Class members would
create the risk of inconsistent or varying adjudications with respect to the
individual members of the Class
4
which would establish incompatible standards of conduct for defendants, or
adjudications with respect to individual members of the Class which would, as a
practical matter, be dispositive of the interests of the other members not
parties to the adjudications or substantially impair their ability to protect
their interests.
16. Defendants have acted on grounds generally applicable to the Class
with respect to the matters complained of herein, thereby making appropriate
the relief sought herein with respect to the Class as a whole.
SUBSTANTIVE ALLEGATIONS
17. On or about September 21, 2001, SBC announced that it was offering to
pay approximately $384 million for the 58% of Prodigy that it does not already
own. SBC has proposed to purchase the Company's Class A common stock for a
price of $5.45 per share in cash. Prodigy common stock traded as high as $5.90
per share on September 5, 2001, and traded as high as $7.20 per share on July
25, 2001.
18. SBC has timed the proposal to freeze out Prodigy's public
shareholders in order to capture for itself Prodigy's future potential without
paying an adequate or fair price to the Company's public shareholders.
19. SBC has timed the announcement of the proposed buyout to place an
artificial lid on the market price of Prodigy common stock so that the market
would not reflect Prodigy's improving potential, thereby purporting to justify
an unreasonably low price.
20. SBC has clear and material conflicts of interest and is acting to
better its own interests at the expense of Prodigy's public shareholders. SBC
has selected and/or controls three of the Company's nine directors, and two of
the Company's remaining five directors are former SBC insiders.
5
21. As a result of the above, SBC has access to internal financial
information about Prodigy, its true value, expected increase in true value, and
the benefits of 100% ownership of Prodigy to which plaintiff and the Class
members are not privy. SBC is using such inside information to benefit itself
in this proposed transaction, to the detriment of the Prodigy's public
stockholders.
22. SBC is engaging in self-dealing and not acting in good faith toward
plaintiff and the other members of the Class. By reason of the foregoing, SBC
and the Individual Defendants have breached and are breaching their fiduciary
duties to the members of the Class.
23. Unless the proposed buyout is enjoined by the Court, defendants will
continue to breach their fiduciary duties owed to plaintiff and the members of
the Class to the irreparable harm of the members of the Class.
24. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff prays for judgment and relief as follows:
A. Ordering that this action may be maintained as a class action and
certifying plaintiff as the Class representative;
B. Preliminarily and permanently enjoining defendants and all persons
acting in concert with them, from proceeding with, consummating or closing the
proposed transaction;
C. In the event the proposed buyout is consummated, rescinding it and
setting it aside or awarding rescissory damages to the Class;
6
D. Directing defendants to account to Class members for their damages
sustained as a result of the wrongs complained of herein;
E. Awarding plaintiff the costs of this action, including reasonable
allowance for plaintiff's attorneys' and experts' fees;
F. Granting such other and further relief as this Court may deem just and
proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Carmella P. Keener
_________________________
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
Of Counsel:
SCHIFFRIN & BARROWAY, LLP
Marc A. Topaz
Gregory M. Castaldo
Three Bala Plaza East
Suite 400
Bala Cynwyd, PA 19004
(610) 667-7706
EX-99.A.5.IX
18
d90977ex99-a_5ix.txt
COMPLAINT
1
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
JOSEPH LEONE,
Plaintiff, Civil Action No. 1911316
-against-
PRODIGY COMMUNICATIONS CORP.,
CHARLES E. FOSTER, ROBERT B. PICKERING,
RANDALL L. STEPHENSON, JAMES R. ADAMS,
LOUIS R. BRILL, ROBERT S. MCCLANE,
JOE C. MCKINNEY, JAIME CHICO PARDO
AND SBC COMMUNICATIONS, INC.,
Defendants.
SHAREHOLDER'S CLASS ACTION COMPLAINT
Plaintiff, by his attorneys, for his complaint against defendants, alleges
upon personal knowledge with respect to paragraph 2, and upon information and
belief based, inter alia, upon the investigation of counsel, as to all other
allegations herein, as follows:
NATURE OF THE ACTION
1. This is a stockholders' class action on behalf of the public
stockholders of Prodigy Communications Corp. ("Prodigy" or the "Company") to
enjoin the proposed acquisition of the publicly owned shares of Prodigy's common
stock by its controlling shareholder, defendant SBC Communications Inc. ("SBC").
2
THE PARTIES
2. Plaintiff has been the owner of the common stock of the Company
since prior to the transaction herein complained of and continuously to date.
3. Defendant Prodigy is a corporation duly organized and existing
under the laws of the State of Delaware.
4. Defendant SBC is a corporation duly organized and existing under
the laws of Delaware. SBC owns approximately 42% of the Company's outstanding
common stock.
5. Defendant Charles E. Foster is Chairman of the Board of the
Company. He is also Group President of SBC.
6. Defendant Robert B. Pickering is a director of the Company. He
is also senior vice president of corporate finance of SBC.
7. Defendant Randall L. Stephenson is a director of the Company. He
is also senior vice president of consumer marketing of SBC.
8. Defendant James R. Adams is a director of the Company. He also
served as president of SBC from 1992 to 1995.
9. Defendants Louis R. Brill, Robert S. McClane, Joe C. McKinney
and Jaime Chico Pardo are directors of the Company.
10. The defendants named in paragraphs 5 through 9 (the "Individual
Defendants") are in a fiduciary relationship with plaintiff and the other
public stockholders of Prodigy and owe them the highest obligations of good
faith and fair dealing.
-2-
3
11. Defendant SBC, through its approximately 42% ownership of
Prodigy and having persons affiliated with on Prodigy's board, has effective
and working control of Prodigy. As such, defendant SBC is in a fiduciary
relationship with plaintiff and the other public stockholders of Prodigy and
owes them the highest obligations of good faith and fair dealing.
CLASS ACTION ALLEGATIONS
12. Plaintiff brings this action on his own behalf and as a class
action pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of
all Prodigy stockholders (except defendants herein and any person, firm,
trust, corporation or other entity related to or affiliated with any of the
defendants) and their successors in interest, who are or will be threatened
with injury arising from defendants' actions as more fully described herein.
13. This action is properly maintainable as a class action.
14. The class of stockholders for whose benefit this action is
brought is so numerous that joinder of all Class members is impracticable.
15. There are questions of law and fact which are common to the
Class including, inter alia, the following:
(a) whether the Individual Defendants have breached their
fiduciary and other common law duties owed by them to plaintiff and the members
of the Class;
(b) whether plaintiff and the other members of the
-3-
4
Class will be damaged irreparably by defendants' failure to take action designed
to obtain the best value for the public shareholders' interest in Prodigy.
16. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. The claims of
plaintiff are typical of the claims of the other members of the Class and
plaintiff has the same interests as the other members of the Class.
Accordingly, plaintiff will fairly and adequately represent the Class.
17. The prosecution of separate actions by individual members of the Class
would create a risk of inconsistent or varying adjudications with respect to
individual members of the Class and establish incompatible standards of conduct
for the party opposing the Class.
18. Defendants have acted and are about to act on grounds generally
applicable to the Class, thereby making appropriate final injunctive relief with
respect to the Class as a whole.
SUBSTANTIVE ALLEGATIONS
19. On September 21, 2001, it was announced that SBC offered to acquire all
of the outstanding shares of Prodigy, it does not already own, for $5.45 per
share.
20. The consideration to be paid to Class members in the transaction is
unconscionable and unfair and grossly
-4-
5
inadequate because, among other things, the intrinsic value of Prodigy's common
stock is materially in excess of the amount offered for those securities in the
proposed acquisition given the stock's current trading price and the Company's
prospects for future growth and earnings.
21. SBC timed its offer to take advantage of the decline in the market
price of Prodigy's stock. The offer has the effect of capping the market for
Prodigy's stock to facilitate SBC's plan to obtain the public interest in
Prodigy as cheaply as possible.
22. Under the circumstances, the Individual Defendants are obligated to
explore all alternatives to maximize shareholder value.
23. The defendants have breached their duty of loyalty to Prodigy
stockholders by using their control of Prodigy to force plaintiff and the Class
to sell their equity interest in Prodigy at an unfair price, and deprive
Prodigy's public shareholders of maximum value to which they are entitled. The
Individual Defendants have also breached the duties of loyalty and due care by
not taking adequate measures to ensure that the interests of Prodigy's public
shareholders are properly protected from overreaching. SBC has breached its
fiduciary duties, which arise from its effective control of Prodigy, by using
such effective control for its own benefit.
24. The terms of the transaction are grossly unfair to
-5-
6
the Class, and the unfairness is compounded by the gross disparity between the
knowledge and information possessed by defendants by virtue of their positions
of control of Prodigy and that possessed by Prodigy's public shareholders.
Defendants' scheme and intent is to take advantage of this disparity and to
induce the Class to relinquish their shares in the acquisition at an unfair
price on the basis of incomplete or inadequate information.
25. Plaintiff has no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
A. declaring this to be a proper class action;
B. enjoining, preliminarily and permanently, the acquisition under the
terms presently proposed;
C. to the extent, if any, that the transaction complained of is
consummated prior to the entry of this Court's final judgment, rescinding the
same or awarding rescissory damages to the Class;
D. directing that defendants account to plaintiff and the Class for all
damages caused to them and account for all profits and any special benefits
obtained by defendants as a result of their unlawful conduct;
E. awarding to plaintiff the costs and disbursements of this action,
including a reasonable allowance for the fees and expenses of plaintiff's
attorneys and experts; and
-6-
7
F. granting such other and further relief as the Court deems
appropriate.
Dated: September 24, 2001
CHIMICLES & TIKELLIS, LLP
By: /s/ Pamela Tikellis
----------------------------
One Rodney Square
P.O. Box 1035
Wilmington, Delaware 19899
(302) 656-2500
Attorneys for Plaintiff
OF COUNSEL:
FARUQI & FARUQI, LLP
320 East 39th Street
New York, New York 10016
(212) 983-9330
-7-
EX-99.A.5.X
19
d90977ex99-a_5x.txt
COMPLAINT
1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
----------------------------------------x
TOBY R. MADISION, |
|
Plaintiff, |
|
v. | C.A. No. 19129 NC
|
JAMES R. ADAMS; LOUIS R. BRILL; ROBERT |
S. MCCLANE; JOE C. MCKINNEY; JAIME |
CHICO PARDO; CHARLES E. FOSTER; |
ROBERT B. PICKERING; ANDRES VAZQUEZ |
DEL MERCADO BENSHIMOL; PAUL ROTH; |
JOHN H. ATTERBURY, III; SBC |
COMMUNICATIONS INC.; and PRODIGY |
COMMUNICATIONS CORPORATION, |
|
Defendants. |
----------------------------------------x
CLASS ACTION COMPLAINT
Plaintiff, by and through plaintiff's attorneys, alleges upon information
and belief, except as to paragraph 1 which is alleged upon personal knowledge,
as follows:
THE PARTIES
1. Plaintiff Toby R. Madision ("plaintiff") is the owner of Class A
common stock of Prodigy Communications Corporation ("Prodigy" or the "Company")
and has been the owner of such shares continuously since prior to the wrongs
complained of herein.
2. Prodigy is a corporation duly existing and organized under the laws of
the State of Delaware, with its principal executive offices located in Austin,
Texas. The Company is a nationwide Internet service provider that purports to
provide fast and reliable Internet access and other Internet-based services.
2
3. Defendant SBC Communications Inc. ("SBC") is a Delaware holding company
whose subsidiaries provide wireline and wireless telecommunications services and
equipment, directory advertising, electronic security services and cable
television services. As of May 11, 2001, SBC owned the Company's single Class B
voting share, entitling it to approximately 51.8 million votes on each matter
submitted for shareholder vote by the Company. By virtue of its Class B common
stock holding, SBC controls approximately 42% of the voting power of the
Company, and is in a fiduciary relationship with plaintiff and the other public
stockholders of Prodigy, and owes plaintiff and the other public stockholders
the highest obligations of good faith, fair dealing, due care, loyalty and full,
candid and adequate disclosure.
4. Defendant Charles E. Foster ("Foster") is and at all relevant times
has been Chairman of the Board of directors of Prodigy, Foster also serves as
group President of SBC.
5. Defendant Robert B. Pickering ("Pickering") is and at all
relevant times has been a director of Prodigy. Pickering is also a Senior Vice
President of Finance at SBC.
6. Defendant James R. Adams ("Adams") is and at all relevant times has
been a director of Prodigy. Adams also served as President of SBC from 1992
through 1995.
7. The remaining individual defendants are and at all relevant times have
been directors of Prodigy.
8. The defendants referred to in paragraphs 4 through 7 are collectively
referred to herein as the "Individual Defendants."
9. By reason of the above Individual Defendants' positions with the
Company as officers and/or directors, said individuals are in a fiduciary
relationship with plaintiff and the other public stockholders of Prodigy, and
owe plaintiff and the other members of the class the highest obligations of good
faith, fair dealing, due care, loyalty and full, candid and adequate disclosure.
3
CLASS ACTION ALLEGATIONS
10. Plaintiff brings this action on his own behalf and as a class action,
pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all
shareholders of Prodigy Class A common stock, or their successors in interest,
who are being and will be harmed by defendants' conduct described herein (the
"Class"). Excluded from the Class are defendants herein and any person, firm,
trust, corporation or other entity related to or affiliated with any of the
defendants.
11. This action is properly maintainable as a class action.
12. The Class is so numerous that joinder of all members is impracticable.
As of September 21, 2001, there were approximately 70.5 million shares of
Prodigy Class A common stock outstanding owned by hundreds if not thousands of
public shareholders.
13. There are questions of law and fact which are common to the Class
including, inter alia, the following:
(a) whether defendants have improperly engaged in a course of conduct
designed to benefit themselves at the expense of Prodigy's Class
A stockholders; and
(b) whether plaintiff and the other members of the Class would be
irreparably damaged were the transactions complained of herein
consummated.
14. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. Plaintiff's claims
are typical of the claims of the other members of the Class and plaintiff has
the same interests as the other members of the Class. Accordingly, plaintiff is
an adequate representative of the Class and will fairly and adequately protect
the interests of the Class.
15. The prosecution of separate actions by individual Class members would
create the risk of inconsistent or varying adjudications with respect to the
individual members of the Class
4
which would establish incompatible standards of conduct for defendants, or
adjudications with respect to individual members of the Class which would, as a
practical matter, be dispositive of the interests of the other members not
parties to the adjudications or substantially impair their ability to protect
their interests.
16. Defendants have acted on grounds generally applicable to the Class
with respect to the matters complained of herein, thereby making appropriate
the relief sought herein with respect to the Class as a whole.
SUBSTANTIVE ALLEGATIONS
17. On or about September 21, 2001, SBC announced that it was offering to
pay approximately $384 million for the 58% of Prodigy that it does not already
own. SBC has proposed to purchase the Company's Class A common stock for a
price of $5.45 per share in cash. Prodigy common stock traded as high as $5.90
per share on September 5, 2001, and traded as high as $7.20 per share on July
25, 2001.
18. SBC has timed the proposal to freeze out Prodigy's public
shareholders in order to capture for itself Prodigy's future potential without
paying an adequate or fair price to the Company's public shareholders.
19. SBC has timed the announcement of the proposed buyout to place an
artificial lid on the market price of Prodigy common stock so that the market
would not reflect Prodigy's improving potential, thereby purporting to justify
an unreasonably low price.
20. SBC has clear and material conflicts of interest and is acting to
better its own interests at the expense of Prodigy's public shareholders. SBC
has selected and/or controls three of the Company's nine directors, and two of
the Company's remaining five directors are former SBC insiders.
5
21. As a result of the above, SBC has access to internal financial
information about Prodigy, its true value, expected increase in true value, and
the benefits of 100% ownership of Prodigy to which plaintiff and the Class
members are not privy. SBC is using such inside information to benefit itself in
this proposed transaction, to the detriment of the Prodigy's public
stockholders.
22. SBC is engaging in self-dealing and not acting in good faith toward
plaintiff and the other members of the Class. By reason of the foregoing, SBC
and the Individual Defendants have breached and are breaching their fiduciary
duties to the members of the Class.
23. Unless the proposed buyout is enjoined by the Court, defendants will
continue to breach their fiduciary duties owed to plaintiff and the members of
the Class to the irreparable harm of the members of the Class.
24. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff prays for judgment and relief as follows:
A. Ordering that this action may be maintained as a class action and
certifying plaintiff as the Class representative;
B. Preliminarily and permanently enjoining defendants and all persons
acting in concert with them, from proceeding with, consummating or closing the
proposed transaction;
C. In the event the proposed buyout is consummated, rescinding it and
setting it aside or awarding rescissory damages to the Class;
6
D. Directing defendants to account to Class members for their damages
sustained as a result of the wrongs complained of herein;
E. Awarding plaintiff the costs of this action, including reasonable
allowance for plaintiff's attorneys' and experts' fees;
F. Granting such other and further relief as this Court may deem just
and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Carmella P. Keener
__________________________
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
Of Counsel:
CAULEY GELLER BOWMAN & COATES, LLP
One Boca Place
2255 Glades Road
Suite 421 A
Boca Raton, FL 33431
(561) 750-3000
EX-99.A.5.XI
20
d90977ex99-a_5xi.txt
COMPLAINT
1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
-----------------------------------------X
THOMAS FORD, :
:
Plaintiff, :
:
:
v. : C.A. No. 19131-NC
:
JAMES R. ADAMS; LOUIS R. BRILL; ROBERT :
S. MCCLANE; JOE C. MCKINNEY; JAIME :
CHICO PARDO; CHARLES E. FOSTER; :
ROBERT B. PICKERING; ANDRES VAZQUEZ :
DEL MERCADO BENSHIMOL; PAUL ROTH; :
JOHN H. ATTERBURY, III; SBC :
COMMUNICATIONS, INC.; and PRODIGY :
COMMUNICATIONS CORPORATION, :
:
Defendants. :
-----------------------------------------X
CLASS ACTION COMPLAINT
Plaintiff, by and through plaintiff's attorneys, alleges upon information
and belief, except as to paragraph 1 which is alleged upon personal knowledge,
as follows:
THE PARTIES
1. Plaintiff Thomas Ford ("plaintiff") is the owner of Class A common
stock of Prodigy Communications Corporation ("Prodigy" or the "Company") and has
been the owner of such shares continuously since prior to the wrongs complained
of herein.
2. Prodigy is a corporation duly existing and organized under the laws of
the State of Delaware, with its principal executive offices located in Austin,
Texas. The Company is a nationwide Internet service provider that purports to
provide fast and reliable Internet access and other Internet-based services.
2
3. Defendant SBC Communications Inc. ("SBC") is a Delaware holding
company whose subsidiaries provide wireline and wireless telecommunications
services and equipment, directory advertising, electronic security services and
cable television services. As of May 11, 2001, SBC owned the Company's single
Class B voting share, entitling it to approximately 51.8 million votes on each
matter submitted for shareholder vote by the Company. By virtue of its Class B
common stock holding, SBC controls approximately 42% of the voting power of the
Company, and is in a fiduciary relationship with plaintiff and the other public
stockholders of Prodigy, and owes plaintiff and the other public stockholders
the highest obligations of good faith, fair dealing, due care, loyalty and full,
candid and adequate disclosure.
4. Defendant Charles E. Foster ("Foster") is and at all relevant times
has been Chairman of the Board of directors of Prodigy. Foster also serves as
group President of SBC.
5. Defendant Robert B. Pickering ("Pickering") is and at all relevant
times has been a director of Prodigy. Pickering is also a Senior Vice President
of Finance at SBC.
6. Defendant James R. Adams ("Adams") is and at all relevant times has
been a director of Prodigy. Adams also served as President of SBC from 1992
through 1995.
7. The remaining individual defendants are and at all relevant times have
been directors of Prodigy.
8. The defendants referred to in paragraphs 4 through 7 are collectively
referred to herein as the "Individual Defendants."
9. By reason of the above Individual Defendants' positions with the
Company as officers and/or directors, said individuals are in a fiduciary
relationship with plaintiff and the other public stockholders of Prodigy, and
owe plaintiff and the other members of the class the highest obligations of good
faith, fair dealing, due care, loyalty and full, candid and adequate disclosure.
3
CLASS ACTION ALLEGATIONS
10. Plaintiff brings this action on his own behalf and as a class action,
pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf all
shareholders of Prodigy Class A common stock, or their successors in interest,
who are being and will be harmed by defendants' conduct described herein (the
"Class"). Excluded from the Class are defendants herein and any person, firm,
trust, corporation or other entity related to or affiliated with any of the
defendants.
11. This action is properly maintainable as a class action.
12. The Class is so numerous that joinder of all members is impracticable.
As of September 21, 2001, there were approximately 70.5 million shares of
Prodigy Class A common stock outstanding owned by hundreds if not thousands of
public shareholders.
13. There are questions of law and fact which are common to the Class
including, inter alia, the following:
(a) whether defendants have improperly engaged in a course of conduct
designed to benefit themselves at the expense of Prodigy's Class A stockholders;
and
(b) whether plaintiff and the other members of the Class would be
irreparably damaged were the transactions complained of herein consummated.
14. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. Plaintiff's claims
are typical of the claims of the other members of the Class and plaintiff has
the same interests as the other members of the Class. Accordingly, plaintiff is
an adequate representative of the Class and will fairly and adequately protect
the interests of the Class.
15. The prosecution of separate actions by individual Class members would
create the risk of inconsistent or varying adjudications with respect to the
individual members of the Class
4
which would establish incompatible standards of conduct for defendants, or
adjudications with respect to individual members of the Class which would, as a
practical matter, be dispositive of the interests of the other members not
parties to the adjudications or substantially impair their ability to protect
their interests.
16. Defendants have acted on grounds generally applicable to the Class
with respect to the matters complained of herein, thereby making appropriate
the relief sought herein with respect to the Class as a whole.
SUBSTANTIVE ALLEGATIONS
17. On or about September 21, 2001, SBC announced that it was offering to
pay approximately $384 million for the 58% of Prodigy that it does not already
own. SBC has proposed to purchase the Company's Class A common stock for a
price of $5.45 per share in cash. Prodigy common stock traded as high as $5.90
per share on September 5, 2001, and traded as high as $7.20 per share on July
25, 2001.
18. SBC has timed the proposal to freeze out Prodigy's public
shareholders in order to capture for itself Prodigy's future potential without
paying an adequate or fair price to the Company's public shareholders.
19. SBC has timed the announcement of the proposed buyout to place an
artificial lid on the market price of Prodigy common stock so that the market
would not reflect Prodigy's improving potential, thereby purporting to justify
an unreasonably low price.
20. SBC has clear and material conflicts of interest and is acting to
better its own interests at the expense of Prodigy's public shareholders. SBC
has selected and/or controls three of the Company's nine directors, and two of
the Company's remaining five directors are former SBC insiders.
5
21. As a result of the above, SBC has access to internal financial
information about Prodigy, its true value, expected increase in true value, and
the benefits of 100% ownership of Prodigy to which plaintiff and the Class
members are not privy. SBC is using such inside information to benefit itself in
this proposed transaction, to the detriment of the Prodigy's public
stockholders.
22. SBC is engaging in self-dealing and not acting in good faith toward
plaintiff and the other members of the Class. By reason of the foregoing, SBC
and the Individual Defendants have breached and are breaching their fiduciary
duties to the members of the Class.
23. Unless the proposed buyout is enjoined by the Court, defendants will
continue to breach their fiduciary duties owed to plaintiff and the members
of the Class to the irreparable harm of the members of the Class.
24. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff prays for judgment and relief as follows:
A. Ordering that this action may be maintained as a class action and
certifying plaintiff as the Class representative;
B. Preliminarily and permanently enjoining defendants and all persons
acting in concert with them, from proceeding with, consummating or closing the
proposed transaction;
C. In the event the proposed buyout is consummated, rescinding it and
setting it aside or awarding rescissory damages to the Class;
6
D. Directing defendants to account to Class members for their damages
sustained as a result of the wrongs complained of herein;
E. Awarding plaintiff the costs of this action, including reasonable
allowance for plaintiff's attorneys' and experts' fees;
F. Granting such other and further relief as this Court may deem just
and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Carmella P. Keener
------------------------------
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
Attorneys for Plaintiff
Of Counsel:
STULL, STULL & BRODY
6 East 45th Street
New York, NY 10017
(212) 687-7230
WEISS & YOURMAN
551 Fifth Ave., #1600
New York, NY 10176
(212) 682-3025
EX-99.C
21
d90977ex99-c.txt
REPORT OF GOLDMAN, SACHS & CO.
1
[GOLDMAN SACHS LOGO]
P PRICE PERFORMANCE
3 MONTH PRICE & VOLUME
[LINE GRAPH]
Volume (000) Closing Market Price(USD)
03/14/2001 86 3.281
03/15/2001 71 3.250
03/16/2001 98 3.000
03/19/2001 85 3.000
03/20/2001 185 2.563
03/21/2001 95 2.781
03/22/2001 72 2.750
03/23/2001 58 2.750
03/26/2001 54 2.875
03/27/2001 73 2.719
03/28/2001 72 2.688
03/29/2001 70 3.031
03/30/2001 201 3.250
04/02/2001 58 3.000
04/03/2001 234 2.000
04/04/2001 83 2.344
04/05/2001 50 2.750
04/06/2001 25 2.438
04/09/2001 37 2.360
04/10/2001 119 2.400
04/11/2001 195 2.200
04/12/2001 32 2.280
04/16/2001 26 2.250
04/17/2001 205 2.010
04/18/2001 118 2.320
04/19/2001 57 2.550
04/20/2001 155 2.350
04/23/2001 56 2.510
04/24/2001 41 2.530
04/25/2001 58 2.637
04/26/2001 207 3.330
04/27/2001 84 3.150
04/30/2001 71 3.220
05/01/2001 128 3.080
05/02/2001 581 3.370
05/03/2001 392 3.010
05/04/2001 247 3.010
05/07/2001 154 2.540
05/08/2001 168 2.490
05/09/2001 124 2.330
05/10/2001 159 2.420
05/11/2001 138 2.370
05/14/2001 149 2.450
05/15/2001 137 2.270
05/16/2001 173 2.190
05/17/2001 168 2.110
05/18/2001 82 2.210
05/21/2001 314 2.500
05/22/2001 638 3.130
05/23/2001 294 3.300
05/24/2001 333 3.400
05/25/2001 361 4.050
05/29/2001 197 3.700
05/30/2001 129 3.480
05/31/2001 315 3.640
06/01/2001 107 3.700
06/04/2001 28 3.690
06/05/2001 225 4.050
06/06/2001 69 3.850
06/07/2001 41 3.950
06/08/2001 39 3.890
06/11/2001 164 3.830
06/12/2001 111 4.040
06/13/2001 189 4.040
06/14/2001 106 3.970
6 MONTH PRICE & VOLUME
[LINE GRAPH]
Volume (000) Closing Market Price(USD)
12/14/2000 164 2.01563
12/15/2000 185 2
12/18/2000 189 1.8125
12/19/2000 413 1.5625
12/20/2000 367 1.625
12/21/2000 266 1.5625
12/22/2000 652 2.3125
12/26/2000 261 1.75
12/27/2000 500 1.71875
12/28/2000 685 1.59375
12/29/2000 743 1.5
01/02/2001 139 1.5625
01/03/2001 122 1.8125
01/04/2001 188 2.25
01/05/2001 432 3.125
01/08/2001 242 2.90625
01/09/2001 184 2.5
01/10/2001 95 2.6875
01/11/2001 499 3.375
01/12/2001 335 3.53125
01/16/2001 146 3.6875
01/17/2001 306 3.875
01/18/2001 376 4
01/19/2001 1,213 5
01/22/2001 500 4.96875
01/23/2001 367 4.5
01/24/2001 111 4.375
01/25/2001 116 4
01/26/2001 140 3.875
01/29/2001 171 4.4375
01/30/2001 96 4.625
01/31/2001 130 4.75
02/01/2001 178 4.65625
02/02/2001 109 4.53125
02/05/2001 66 4
02/06/2001 50 3.9375
02/07/2001 95 4
02/08/2001 74 3.53125
02/09/2001 55 3.5625
02/12/2001 37 3.75
02/13/2001 73 3.25
02/14/2001 103 3.375
02/15/2001 33 3.5
02/16/2001 42 3.3125
02/20/2001 47 3.25
02/21/2001 182 2.625
02/22/2001 193 3
02/23/2001 71 3
02/26/2001 50 2.9375
02/27/2001 84 2.875
02/28/2001 43 2.9375
03/01/2001 62 3.125
03/02/2001 130 3.71875
03/05/2001 172 3.5
03/06/2001 100 3.5
03/07/2001 74 3.53125
03/08/2001 87 3.5
03/09/2001 75 3.5
03/12/2001 65 3.4375
03/13/2001 79 3.53125
03/14/2001 86 3.28125
03/15/2001 71 3.25
03/16/2001 98 3
03/19/2001 85 3
03/20/2001 185 2.5625
03/21/2001 95 2.78125
03/22/2001 72 2.75
03/23/2001 58 2.75
03/26/2001 54 2.875
03/27/2001 73 2.71875
03/28/2001 72 2.6875
03/29/2001 70 3.03125
03/30/2001 201 3.25
04/02/2001 58 3
04/03/2001 234 2
04/04/2001 83 2.34375
04/05/2001 50 2.75
04/06/2001 25 2.4375
04/09/2001 37 2.36
04/10/2001 119 2.4
04/11/2001 195 2.2
04/12/2001 32 2.28
04/16/2001 26 2.25
04/17/2001 205 2.01
04/18/2001 118 2.32
04/19/2001 57 2.55
04/20/2001 155 2.35
04/23/2001 56 2.51
04/24/2001 41 2.53
04/25/2001 58 2.6367
04/26/2001 207 3.33
04/27/2001 84 3.15
04/30/2001 71 3.22
05/01/2001 128 3.08
05/02/2001 581 3.37
05/03/2001 392 3.01
05/04/2001 247 3.01
05/07/2001 154 2.54
05/08/2001 168 2.49
05/09/2001 124 2.33
05/10/2001 159 2.42
05/11/2001 138 2.37
05/14/2001 149 2.45
05/15/2001 137 2.27
05/16/2001 173 2.19
05/17/2001 168 2.11
05/18/2001 82 2.21
05/21/2001 314 2.5
05/22/2001 638 3.13
05/23/2001 294 3.3
05/24/2001 333 3.4
05/25/2001 361 4.05
05/29/2001 197 3.7
05/30/2001 129 3.48
05/31/2001 315 3.64
06/01/2001 107 3.7
06/04/2001 28 3.69
06/05/2001 225 4.05
06/06/2001 69 3.85
06/07/2001 41 3.95
06/08/2001 39 3.89
06/11/2001 164 3.83
06/12/2001 111 4.04
06/13/2001 189 4.04
06/14/2001 106 3.97
1 YEAR PRICE & VOLUME
[LINE GRAPH]
Volume (000) Closing Market Price (USD)
06/14/2000 147 11.375
06/15/2000 106 11
06/16/2000 300 11.3125
06/19/2000 175 11.125
06/20/2000 369 11.1875
06/21/2000 539 11.5
06/22/2000 144 11.1875
06/23/2000 166 10.875
06/26/2000 212 10.8125
06/27/2000 225 10.625
06/28/2000 173 10.375
06/29/2000 396 10.4375
06/30/2000 436 10.5
07/03/2000 127 10.375
07/05/2000 285 10.375
07/06/2000 434 10
07/07/2000 161 9.5625
07/10/2000 164 9.5
07/11/2000 150 9.375
07/12/2000 307 9.0625
07/13/2000 198 8.84375
07/14/2000 303 8.96875
07/17/2000 213 8.9375
07/18/2000 615 8.6875
07/19/2000 213 8.84375
07/20/2000 164 8.8125
07/21/2000 122 8.875
07/24/2000 178 8.25
07/25/2000 284 8
07/26/2000 171 8.03125
07/27/2000 215 8
07/28/2000 232 8
07/31/2000 385 8
08/01/2000 174 8
08/02/2000 254 7.5625
08/03/2000 266 7.3125
08/04/2000 258 6.9375
08/07/2000 160 6.8125
08/08/2000 374 6.625
08/09/2000 354 6.8125
08/10/2000 309 7.0625
08/11/2000 317 7.875
08/14/2000 190 7.5
08/15/2000 237 7.625
08/16/2000 280 7.625
08/17/2000 203 7.671875
08/18/2000 139 7.6875
08/21/2000 421 7.625
08/22/2000 214 7.8125
08/23/2000 111 7.75
08/24/2000 89 7.5
08/25/2000 152 7.6875
08/28/2000 184 7.75
08/29/2000 172 7.875
08/30/2000 122 7.875
08/31/2000 148 7.53125
09/01/2000 215 7.625
09/05/2000 169 7.5
09/06/2000 171 7.875
09/07/2000 205 7.78125
09/08/2000 178 7.625
09/11/2000 230 8
09/12/2000 227 8.125
09/13/2000 171 7.875
09/14/2000 220 8.4375
09/15/2000 116 8.203125
09/18/2000 99 8.3125
09/19/2000 180 8.5
09/20/2000 99 8
09/21/2000 238 7.25
09/22/2000 279 6.875
09/25/2000 644 7
09/26/2000 213 6.75
09/27/2000 249 6.25
09/28/2000 451 5.53125
09/29/2000 1,723 5.125
10/02/2000 234 5.6875
10/03/2000 305 6.125
10/04/2000 133 5.78125
10/05/2000 111 5.8125
10/06/2000 176 5.5625
10/09/2000 98 5.625
10/10/2000 150 5.3125
10/11/2000 926 5.28125
10/12/2000 258 5
10/13/2000 240 5.125
10/16/2000 77 5
10/17/2000 106 4.625
10/18/2000 227 4.6875
10/19/2000 170 4.8125
10/20/2000 146 4.75
10/23/2000 190 4.9375
10/24/2000 572 5.53125
10/25/2000 89 5
10/26/2000 126 5.375
10/27/2000 233 4.75
10/30/2000 84 4.625
10/31/2000 205 4.375
11/01/2000 115 4.5625
11/02/2000 147 4.5
11/03/2000 94 4.5625
11/06/2000 *- 4.40625
11/07/2000 64 4.53125
11/08/2000 77 4.25
11/09/2000 205 4.0625
11/10/2000 127 4
11/13/2000 305 4.125
11/14/2000 369 4.1875
11/15/2000 488 4.0625
11/16/2000 149 3.875
11/17/2000 126 3.625
11/20/2000 145 3.1875
11/21/2000 162 3.0625
11/22/2000 215 3.125
11/24/2000 66 3
11/27/2000 133 2.9375
11/28/2000 173 2.625
11/29/2000 174 2.5
11/30/2000 95 2.5
12/01/2000 261 1.90625
12/04/2000 269 2.15625
12/05/2000 174 2.1875
12/06/2000 275 2.25
12/07/2000 188 2.375
12/08/2000 199 2.375
12/11/2000 146 2.4375
12/12/2000 197 2.3125
12/13/2000 118 2.125
12/14/2000 164 2.015625
12/15/2000 185 2
12/18/2000 189 1.8125
12/19/2000 413 1.5625
12/20/2000 367 1.625
12/21/2000 266 1.5625
12/22/2000 652 2.3125
12/26/2000 261 1.75
12/27/2000 500 1.71875
12/28/2000 685 1.59375
12/29/2000 743 1.5
01/02/2001 139 1.5625
01/03/2001 122 1.8125
01/04/2001 188 2.25
01/05/2001 432 3.125
01/08/2001 242 2.90625
01/09/2001 184 2.5
01/10/2001 95 2.6875
01/11/2001 499 3.375
01/12/2001 335 3.53125
01/16/2001 146 3.6875
01/17/2001 306 3.875
01/18/2001 376 4
01/19/2001 1,213 5
01/22/2001 500 4.96875
01/23/2001 367 4.5
01/24/2001 111 4.375
01/25/2001 116 4
01/26/2001 140 3.875
01/29/2001 171 4.4375
01/30/2001 96 4.625
01/31/2001 130 4.75
02/01/2001 178 4.65625
02/02/2001 109 4.53125
02/05/2001 66 4
02/06/2001 50 3.9375
02/07/2001 95 4
02/08/2001 74 3.53125
02/09/2001 55 3.5625
02/12/2001 37 3.75
02/13/2001 73 3.25
02/14/2001 103 3.375
02/15/2001 33 3.5
02/16/2001 42 3.3125
02/20/2001 47 3.25
02/21/2001 182 2.625
02/22/2001 193 3
02/23/2001 71 3
02/26/2001 50 2.9375
02/27/2001 84 2.875
02/28/2001 43 2.9375
03/01/2001 62 3.125
03/02/2001 130 3.71875
03/05/2001 172 3.5
03/06/2001 100 3.5
03/07/2001 74 3.53125
03/08/2001 87 3.5
03/09/2001 75 3.5
03/12/2001 65 3.4375
03/13/2001 79 3.53125
03/14/2001 86 3.28125
03/15/2001 71 3.25
03/16/2001 98 3
03/19/2001 85 3
03/20/2001 185 2.5625
03/21/2001 95 2.78125
03/22/2001 72 2.75
03/23/2001 58 2.75
03/26/2001 54 2.875
03/27/2001 73 2.71875
03/28/2001 72 2.6875
03/29/2001 70 3.03125
03/30/2001 201 3.25
04/02/2001 58 3
04/03/2001 234 2
04/04/2001 83 2.34375
04/05/2001 50 2.75
04/06/2001 25 2.4375
04/09/2001 37 2.36
04/10/2001 119 2.4
04/11/2001 195 2.2
04/12/2001 32 2.28
04/16/2001 26 2.25
04/17/2001 205 2.01
04/18/2001 118 2.32
04/19/2001 57 2.55
04/20/2001 155 2.35
04/23/2001 56 2.51
04/24/2001 41 2.53
04/25/2001 58 2.6367
04/26/2001 207 3.33
04/27/2001 84 3.15
04/30/2001 71 3.22
05/01/2001 128 3.08
05/02/2001 581 3.37
05/03/2001 392 3.01
05/04/2001 247 3.01
05/07/2001 154 2.54
05/08/2001 168 2.49
05/09/2001 124 2.33
05/10/2001 159 2.42
05/11/2001 138 2.37
05/14/2001 149 2.45
05/15/2001 137 2.27
05/16/2001 173 2.19
05/17/2001 168 2.11
05/18/2001 82 2.21
05/21/2001 314 2.5
05/22/2001 638 3.13
05/23/2001 294 3.3
05/24/2001 333 3.4
05/25/2001 361 4.05
05/29/2001 197 3.7
05/30/2001 129 3.48
05/31/2001 315 3.64
06/01/2001 107 3.7
06/04/2001 28 3.69
06/05/2001 225 4.05
06/06/2001 69 3.85
06/07/2001 41 3.95
06/08/2001 39 3.89
06/11/2001 164 3.83
06/12/2001 111 4.04
06/13/2001 189 4.04
06/14/2001 106 3.97
2 YEAR PRICE & VOLUME
[LINE GRAPH]
Volume (000) Closing Market Price (USD)
06/14/1999 404 22
06/15/1999 421 22.5
06/16/1999 416 23.4375
06/17/1999 275 22.9375
06/18/1999 190 23.125
06/21/1999 228 22.8125
06/22/1999 599 23.25
06/23/1999 237 23.25
06/24/1999 240 23.5
06/25/1999 213 22.5
06/28/1999 283 22.25
06/29/1999 232 22.4375
06/30/1999 1,441 25.875
07/01/1999 491 25
07/02/1999 174 24.5
07/06/1999 1,121 26.625
07/07/1999 360 26.625
07/08/1999 463 27
07/09/1999 230 27.5
07/12/1999 511 26.5625
07/13/1999 382 27.1875
07/14/1999 257 27.3125
07/15/1999 447 27.3125
07/16/1999 212 27.125
07/19/1999 352 25.75
07/20/1999 353 24.9375
07/21/1999 336 24.5
07/22/1999 143 23.875
07/23/1999 255 24.25
07/26/1999 310 22.75
07/27/1999 154 23.375
07/28/1999 234 22.8125
07/29/1999 210 22.125
07/30/1999 130 21.875
08/02/1999 156 21.875
08/03/1999 361 20.4375
08/04/1999 415 18.25
08/05/1999 981 17
08/06/1999 415 17.375
08/09/1999 364 16.0625
08/10/1999 619 15.3125
08/11/1999 415 16.375
08/12/1999 198 15.5
08/13/1999 314 17.25
08/16/1999 199 16.75
08/17/1999 275 17.125
08/18/1999 647 19
08/19/1999 227 18
08/20/1999 834 20
08/23/1999 812 21.75
08/24/1999 424 21.75
08/25/1999 316 21
08/26/1999 326 21.5
08/27/1999 238 21
08/30/1999 361 18.875
08/31/1999 299 18.5625
09/01/1999 116 18
09/02/1999 516 17.125
09/03/1999 304 17.8125
09/07/1999 398 17.125
09/08/1999 442 16.375
09/09/1999 330 16.6875
09/10/1999 367 17.25
09/13/1999 212 17.125
09/14/1999 77 17
09/15/1999 153 16.6875
09/16/1999 198 17
09/17/1999 101 16.625
09/20/1999 132 16.4375
09/21/1999 254 16.8125
09/22/1999 298 16.8125
09/23/1999 945 17.5625
09/24/1999 234 16.875
09/27/1999 315 17.4375
09/28/1999 256 17.5625
09/29/1999 182 17.25
09/30/1999 150 17.75
10/01/1999 164 16.7813
10/04/1999 178 16.6875
10/05/1999 255 16.125
10/06/1999 281 16.5
10/07/1999 393 16.625
10/08/1999 203 17.125
10/11/1999 600 18.875
10/12/1999 1,442 20.625
10/13/1999 677 19.375
10/14/1999 730 20.625
10/15/1999 1,340 21.5625
10/18/1999 1,164 20.125
10/19/1999 948 20.3125
10/20/1999 650 21
10/21/1999 1,166 21.5
10/22/1999 806 21.5625
10/25/1999 368 21.25
10/26/1999 759 21.875
10/27/1999 552 20.625
10/28/1999 1,227 22.4375
10/29/1999 2,260 25.375
11/01/1999 843 24.875
11/02/1999 647 25.25
11/03/1999 1,385 25.75
11/04/1999 804 25.125
11/05/1999 562 24.75
11/08/1999 829 22.625
11/09/1999 1,124 23.6875
11/10/1999 957 23
11/11/1999 890 23.3125
11/12/1999 306 22.75
11/15/1999 282 22.875
11/16/1999 408 23.0625
11/17/1999 1,621 24.375
11/18/1999 2,510 27.5
11/19/1999 3,524 32.125
11/22/1999 4,251 31
11/23/1999 1,996 28.75
11/24/1999 1,504 27.4375
11/26/1999 530 29
11/29/1999 893 28.875
11/30/1999 585 27.0625
12/01/1999 449 26.875
12/02/1999 680 27.375
12/03/1999 715 25.625
12/06/1999 875 24.625
12/07/1999 644 24.6875
12/08/1999 819 23.75
12/09/1999 1,233 25.125
12/10/1999 971 23.75
12/13/1999 582 22.6875
12/14/1999 709 21.75
12/15/1999 793 20.5
12/16/1999 472 20.25
12/17/1999 776 21.6875
12/20/1999 657 21.1875
12/21/1999 1,666 24
12/22/1999 772 22.375
12/23/1999 307 21.875
12/27/1999 605 20.5625
12/28/1999 680 19.9375
12/29/1999 766 20.5
12/30/1999 750 20.0625
12/31/1999 621 19.375
01/03/2000 460 20.8125
01/04/2000 454 20.875
01/05/2000 423 20.125
01/06/2000 1,207 22.6875
01/07/2000 957 22.875
01/10/2000 442 23.125
01/11/2000 684 21
01/12/2000 607 20.0625
01/13/2000 389 20.125
01/14/2000 1,010 19.375
01/18/2000 458 20
01/19/2000 254 19.9375
01/20/2000 363 19.5
01/21/2000 433 19
01/24/2000 579 19.3125
01/25/2000 534 20.8125
01/26/2000 522 21.25
01/27/2000 384 21.5
01/28/2000 455 19.9375
01/31/2000 386 19.875
02/01/2000 326 19.5625
02/02/2000 350 20.125
02/03/2000 388 20.5
02/04/2000 468 21.0625
02/07/2000 918 23.5
02/08/2000 1,324 24.875
02/09/2000 871 24
02/10/2000 774 25.5625
02/11/2000 871 25.75
02/14/2000 658 24.875
02/15/2000 592 25.625
02/16/2000 578 22.75
02/17/2000 437 23.4375
02/18/2000 397 21.25
02/22/2000 437 21
02/23/2000 218 21.0625
02/24/2000 235 20.5
02/25/2000 263 19.875
02/28/2000 291 19.375
02/29/2000 235 20.0625
03/01/2000 480 21.875
03/02/2000 256 20.375
03/03/2000 330 21
03/06/2000 291 19.8125
03/07/2000 236 19.375
03/08/2000 197 19.875
03/09/2000 899 18.6875
03/10/2000 758 19.0625
03/13/2000 369 18.4375
03/14/2000 499 18.0625
03/15/2000 287 17.875
03/16/2000 292 18.375
03/17/2000 400 18.5625
03/20/2000 266 17.875
03/21/2000 297 17.3281
03/22/2000 693 17.6875
03/23/2000 427 17
03/24/2000 822 16.375
03/27/2000 253 16.125
03/28/2000 420 15.9375
03/29/2000 296 15.5625
03/30/2000 428 14.3125
03/31/2000 545 15.0625
04/03/2000 416 13.875
04/04/2000 977 12
04/05/2000 921 11.9375
04/06/2000 664 13
04/07/2000 517 13.0625
04/10/2000 295 12.1875
04/11/2000 276 11.5
04/12/2000 303 10.75
04/13/2000 382 11
04/14/2000 559 10.125
04/17/2000 995 10.625
04/18/2000 385 10.1875
04/19/2000 478 11.9375
04/20/2000 364 12.375
04/24/2000 364 10.375
04/25/2000 435 9.8125
04/26/2000 666 11.1875
04/27/2000 427 10.875
04/28/2000 491 11.25
05/01/2000 296 11.875
05/02/2000 284 12.0625
05/03/2000 183 11.1875
05/04/2000 322 11.6875
05/05/2000 298 12.125
05/08/2000 508 12.9375
05/09/2000 285 12.625
05/10/2000 211 11.75
05/11/2000 329 11.8125
05/12/2000 160 11.875
05/15/2000 248 12.5
05/16/2000 278 13
05/17/2000 192 12.5
05/18/2000 140 12.0625
05/19/2000 117 11.75
05/22/2000 172 11.1875
05/23/2000 159 10.5
05/24/2000 131 10.9375
05/25/2000 89 10.125
05/26/2000 97 10.125
05/30/2000 169 11.0625
05/31/2000 139 10.75
06/01/2000 218 10.75
06/02/2000 153 11.9375
06/05/2000 116 11.875
06/06/2000 178 11.875
06/07/2000 311 12.5625
06/08/2000 155 11.6875
06/09/2000 134 11.875
06/12/2000 137 11.0625
06/13/2000 102 11.5
06/14/2000 147 11.375
06/15/2000 106 11
06/16/2000 300 11.3125
06/19/2000 175 11.125
06/20/2000 369 11.1875
06/21/2000 539 11.5
06/22/2000 144 11.1875
06/23/2000 166 10.875
06/26/2000 212 10.8125
06/27/2000 225 10.625
06/28/2000 173 10.375
06/29/2000 396 10.4375
06/30/2000 436 10.5
07/03/2000 127 10.375
07/05/2000 285 10.375
07/06/2000 434 10
07/07/2000 161 9.5625
07/10/2000 164 9.5
07/11/2000 150 9.375
07/12/2000 307 9.0625
07/13/2000 198 8.84375
07/14/2000 303 8.96875
07/17/2000 213 8.9375
07/18/2000 615 8.6875
07/19/2000 213 8.84375
07/20/2000 164 8.8125
07/21/2000 122 8.875
07/24/2000 178 8.25
07/25/2000 284 8
07/26/2000 171 8.03125
07/27/2000 215 8
07/28/2000 232 8
07/31/2000 385 8
08/01/2000 174 8
08/02/2000 254 7.5625
08/03/2000 266 7.3125
08/04/2000 258 6.9375
08/07/2000 160 6.8125
08/08/2000 374 6.625
08/09/2000 354 6.8125
08/10/2000 309 7.0625
08/11/2000 317 7.875
08/14/2000 190 7.5
08/15/2000 237 7.625
08/16/2000 280 7.625
08/17/2000 203 7.67188
08/18/2000 139 7.6875
08/21/2000 421 7.625
08/22/2000 214 7.8125
08/23/2000 111 7.75
08/24/2000 89 7.5
08/25/2000 152 7.6875
08/28/2000 184 7.75
08/29/2000 172 7.875
08/30/2000 122 7.875
08/31/2000 148 7.53125
09/01/2000 215 7.625
09/05/2000 169 7.5
09/06/2000 171 7.875
09/07/2000 205 7.78125
09/08/2000 178 7.625
09/11/2000 230 8
09/12/2000 227 8.125
09/13/2000 171 7.875
09/14/2000 220 8.4375
09/15/2000 116 8.20313
09/18/2000 99 8.3125
09/19/2000 180 8.5
09/20/2000 99 8
09/21/2000 238 7.25
09/22/2000 279 6.875
09/25/2000 644 7
09/26/2000 213 6.75
09/27/2000 249 6.25
09/28/2000 451 5.53125
09/29/2000 1,723 5.125
10/02/2000 234 5.6875
10/03/2000 305 6.125
10/04/2000 133 5.78125
10/05/2000 111 5.8125
10/06/2000 176 5.5625
10/09/2000 98 5.625
10/10/2000 150 5.3125
10/11/2000 926 5.28125
10/12/2000 258 5
10/13/2000 240 5.125
10/16/2000 77 5
10/17/2000 106 4.625
10/18/2000 227 4.6875
10/19/2000 170 4.8125
10/20/2000 146 4.75
10/23/2000 190 4.9375
10/24/2000 572 5.53125
10/25/2000 89 5
10/26/2000 126 5.375
10/27/2000 233 4.75
10/30/2000 84 4.625
10/31/2000 205 4.375
11/01/2000 115 4.5625
11/02/2000 147 4.5
11/03/2000 94 4.5625
11/06/2000 83 4.40625
11/07/2000 64 4.53125
11/08/2000 77 4.25
11/09/2000 205 4.0625
11/10/2000 127 4
11/13/2000 305 4.125
11/14/2000 369 4.1875
11/15/2000 488 4.0625
11/16/2000 149 3.875
11/17/2000 126 3.625
11/20/2000 145 3.1875
11/21/2000 162 3.0625
11/22/2000 215 3.125
11/24/2000 66 3
11/27/2000 133 2.9375
11/28/2000 173 2.625
11/29/2000 174 2.5
11/30/2000 95 2.5
12/01/2000 261 1.90625
12/04/2000 269 2.15625
12/05/2000 174 2.1875
12/06/2000 275 2.25
12/07/2000 188 2.375
12/08/2000 199 2.375
12/11/2000 146 2.4375
12/12/2000 197 2.3125
12/13/2000 118 2.125
12/14/2000 164 2.01563
12/15/2000 185 2
12/18/2000 189 1.8125
12/19/2000 413 1.5625
12/20/2000 367 1.625
12/21/2000 266 1.5625
12/22/2000 652 2.3125
12/26/2000 261 1.75
12/27/2000 500 1.71875
12/28/2000 685 1.59375
12/29/2000 743 1.5
01/02/2001 139 1.5625
01/03/2001 122 1.8125
01/04/2001 188 2.25
01/05/2001 432 3.125
01/08/2001 242 2.90625
01/09/2001 184 2.5
01/10/2001 95 2.6875
01/11/2001 499 3.375
01/12/2001 335 3.53125
01/16/2001 146 3.6875
01/17/2001 306 3.875
01/18/2001 376 4
01/19/2001 1,213 5
01/22/2001 500 4.96875
01/23/2001 367 4.5
01/24/2001 111 4.375
01/25/2001 116 4
01/26/2001 140 3.875
01/29/2001 171 4.4375
01/30/2001 96 4.625
01/31/2001 130 4.75
02/01/2001 178 4.65625
02/02/2001 109 4.53125
02/05/2001 66 4
02/06/2001 50 3.9375
02/07/2001 95 4
02/08/2001 74 3.53125
02/09/2001 55 3.5625
02/12/2001 37 3.75
02/13/2001 73 3.25
02/14/2001 103 3.375
02/15/2001 33 3.5
02/16/2001 42 3.3125
02/20/2001 47 3.25
02/21/2001 182 2.625
02/22/2001 193 3
02/23/2001 71 3
02/26/2001 50 2.9375
02/27/2001 84 2.875
02/28/2001 43 2.9375
03/01/2001 62 3.125
03/02/2001 130 3.71875
03/05/2001 172 3.5
03/06/2001 100 3.5
03/07/2001 74 3.53125
03/08/2001 87 3.5
03/09/2001 75 3.5
03/12/2001 65 3.4375
03/13/2001 79 3.53125
03/14/2001 86 3.28125
03/15/2001 71 3.25
03/16/2001 98 3
03/19/2001 85 3
03/20/2001 185 2.5625
03/21/2001 95 2.78125
03/22/2001 72 2.75
03/23/2001 58 2.75
03/26/2001 54 2.875
03/27/2001 73 2.71875
03/28/2001 72 2.6875
03/29/2001 70 3.03125
03/30/2001 201 3.25
04/02/2001 58 3
04/03/2001 234 2
04/04/2001 83 2.34375
04/05/2001 50 2.75
04/06/2001 25 2.4375
04/09/2001 37 2.36
04/10/2001 119 2.4
04/11/2001 195 2.2
04/12/2001 32 2.28
04/16/2001 26 2.25
04/17/2001 205 2.01
04/18/2001 118 2.32
04/19/2001 57 2.55
04/20/2001 155 2.35
04/23/2001 56 2.51
04/24/2001 41 2.53
04/25/2001 58 2.6367
04/26/2001 207 3.33
04/27/2001 84 3.15
04/30/2001 71 3.22
05/01/2001 128 3.08
05/02/2001 581 3.37
05/03/2001 392 3.01
05/04/2001 247 3.01
05/07/2001 154 2.54
05/08/2001 168 2.49
05/09/2001 124 2.33
05/10/2001 159 2.42
05/11/2001 138 2.37
05/14/2001 149 2.45
05/15/2001 137 2.27
05/16/2001 173 2.19
05/17/2001 168 2.11
05/18/2001 82 2.21
05/21/2001 314 2.5
05/22/2001 638 3.13
05/23/2001 294 3.3
05/24/2001 333 3.4
05/25/2001 361 4.05
05/29/2001 197 3.7
05/30/2001 129 3.48
05/31/2001 315 3.64
06/01/2001 107 3.7
06/04/2001 28 3.69
06/05/2001 225 4.05
06/06/2001 69 3.85
06/07/2001 41 3.95
06/08/2001 39 3.89
06/11/2001 164 3.83
06/12/2001 111 4.04
06/13/2001 189 4.04
06/14/2001 106 3.97
1
2
[GOLDMAN SACHS]
P PRICE PERFORMANCE
3 MONTH INDEXED PRICE
[LINE CHART]
PRGY ELNK JWEB NZRO
3/14/01 100.00(%) 100.00(%) 100.00(%) 100.00(%)
3/15/01 99.05 105.70 111.11 95.24
3/16/01 91.43 105.06 111.11 90.48
3/19/01 91.43 108.86 100.00 95.24
3/20/01 78.10 108.86 91.67 95.24
3/21/01 84.76 111.39 97.22 95.24
3/22/01 83.81 115.19 91.67 95.24
3/23/01 83.81 121.52 94.44 95.24
3/26/01 87.62 122.15 88.89 109.52
3/27/01 82.86 115.82 91.67 119.05
3/28/01 81.90 110.13 88.89 109.52
3/29/01 92.38 118.35 88.89 104.76
3/30/01 99.05 122.78 100.00 100.00
4/2/01 91.43 116.46 88.89 95.24
4/3/01 60.95 111.39 69.44 85.71
4/4/01 71.43 108.86 69.44 76.19
4/5/01 83.81 115.19 77.78 104.76
4/6/01 74.29 114.56 69.44 95.24
4/9/01 71.92 118.89 81.78 106.67
4/10/01 73.14 125.06 84.44 121.90
4/11/01 67.05 114.23 97.78 115.81
4/12/01 69.49 119.19 100.44 120.38
4/13/01 69.49 119.19 100.44 120.38
4/16/01 68.57 119.29 92.44 114.29
4/17/01 61.26 115.75 83.56 114.29
4/18/01 70.70 111.39 88.89 114.29
4/19/01 77.71 113.22 83.56 112.76
4/20/01 71.62 108.86 77.33 114.29
4/23/01 76.50 110.38 72.89 118.86
4/24/01 77.10 116.96 76.44 114.29
4/25/01 80.36 113.92 72.89 117.33
4/26/01 101.49 111.90 104.89 114.29
4/27/01 96.00 112.41 139.56 111.24
4/30/01 98.13 110.78 186.67 117.03
5/1/01 93.87 120.51 256.89 164.57
5/2/01 102.70 133.67 206.22 169.14
5/3/01 91.73 133.47 176.89 160.00
5/4/01 91.73 138.43 162.67 144.76
5/7/01 77.41 129.11 134.22 187.43
5/8/01 75.89 121.62 165.78 187.43
5/9/01 71.01 128.91 148.44 179.81
5/10/01 73.75 128.61 146.67 190.48
5/11/01 72.23 130.03 136.89 158.48
5/14/01 74.67 123.75 127.11 153.90
5/15/01 69.18 129.11 131.56 141.71
5/16/01 66.74 131.65 128.00 135.62
5/17/01 64.30 135.70 123.56 129.52
5/18/01 67.35 131.95 124.44 123.43
5/21/01 76.19 136.61 126.22 131.05
5/22/01 95.39 143.29 155.56 155.43
5/23/01 100.57 142.78 153.78 146.29
5/24/01 103.62 137.01 149.33 140.19
5/25/01 123.43 136.20 142.22 141.71
5/28/01 123.43 136.20 142.22 141.71
5/29/01 112.76 130.73 125.33 137.14
5/30/01 106.06 122.94 119.11 128.00
5/31/01 110.93 133.47 115.56 129.52
6/1/01 112.76 134.78 123.56 129.52
6/4/01 112.46 139.44 144.00 124.95
6/5/01 123.43 145.82 141.33 143.24
6/6/01 117.33 141.87 137.78 140.19
6/7/01 120.38 145.52 131.56 144.76
6/8/01 118.55 146.13 159.11 178.29
6/11/01 116.72 141.97 168.89 193.52
6/12/01 123.12 143.39 158.22 173.71
6/13/01 123.12 142.68 152.00 163.05
6/14/01 120.99 133.97 136.00 156.95
6 MONTH INDEXED PRICE
[LINE CHART]
PRGY ELNK JWEB NZRO
12/14/00 100.00(%) 100.00(%) 100.00(%) 100.00(%)
12/15/00 99.22 94.31 106.00 103.03
12/18/00 89.92 94.72 92.00 96.97
12/19/00 77.52 84.55 78.00 93.94
12/20/00 80.62 79.67 70.00 84.85
12/21/00 77.52 73.17 80.00 72.73
12/22/00 114.73 69.92 80.00 69.70
12/25/00 114.73 69.92 80.00 69.70
12/26/00 86.82 72.76 60.00 72.73
12/27/00 85.27 67.48 44.00 75.76
12/28/00 79.07 69.92 44.00 75.76
12/29/00 74.42 65.45 42.00 84.85
1/1/01 74.42 65.45 42.00 84.85
1/2/01 77.52 69.11 54.00 75.76
1/3/01 89.92 83.74 62.00 75.76
1/4/01 111.63 91.06 76.00 87.88
1/5/01 155.04 81.30 64.00 75.76
1/8/01 144.19 79.27 70.00 78.79
1/9/01 124.03 91.87 72.00 74.24
1/10/01 133.33 99.19 72.00 81.82
1/11/01 167.44 103.66 80.00 93.94
1/12/01 175.19 103.25 102.00 109.09
1/15/01 175.19 103.25 102.00 109.09
1/16/01 182.95 99.19 126.00 136.36
1/17/01 192.25 117.89 156.00 160.61
1/18/01 198.45 117.07 174.00 157.58
1/19/01 248.06 112.60 208.00 151.52
1/22/01 246.51 114.63 264.00 166.67
1/23/01 223.26 117.07 224.00 163.64
1/24/01 217.05 121.14 230.00 163.64
1/25/01 198.45 110.16 242.00 157.58
1/26/01 192.25 109.76 196.00 148.48
1/29/01 220.16 110.57 172.00 145.45
1/30/01 229.46 109.76 168.00 145.45
1/31/01 235.66 108.94 168.00 142.42
2/1/01 231.01 104.47 142.00 124.24
2/2/01 224.81 116.67 118.00 112.12
2/5/01 198.45 122.36 194.00 133.33
2/6/01 195.35 119.51 166.00 130.30
2/7/01 198.45 118.70 162.00 124.24
2/8/01 175.19 115.85 166.00 100.00
2/9/01 176.74 120.33 168.00 96.97
2/12/01 186.05 129.67 140.00 96.97
2/13/01 161.24 118.70 130.00 96.97
2/14/01 167.44 119.92 130.00 90.91
2/15/01 173.64 119.11 128.00 90.91
2/16/01 164.34 120.33 118.00 81.82
2/19/01 164.34 120.33 118.00 81.82
2/20/01 161.24 118.70 98.00 84.85
2/21/01 130.23 113.82 88.00 74.24
2/22/01 148.84 112.20 86.00 81.82
2/23/01 148.84 110.57 88.00 81.82
2/26/01 145.74 109.76 104.00 87.88
2/27/01 142.64 116.67 94.00 87.88
2/28/01 145.74 117.07 94.00 84.85
3/1/01 155.04 117.07 92.00 78.79
3/2/01 184.50 127.64 104.00 78.79
3/5/01 173.64 130.89 96.00 75.76
3/6/01 173.64 129.27 98.00 72.73
3/7/01 175.19 134.15 98.00 69.70
3/8/01 173.64 130.89 90.00 69.70
3/9/01 173.64 128.46 76.00 66.67
3/12/01 170.54 125.61 73.00 48.48
3/13/01 175.19 139.84 82.00 54.55
3/14/01 162.79 128.46 72.00 63.64
3/15/01 161.24 135.77 80.00 60.61
3/16/01 148.84 134.96 80.00 57.58
3/19/01 148.84 139.84 72.00 60.61
3/20/01 127.13 139.84 66.00 60.61
3/21/01 137.98 143.09 70.00 60.61
3/22/01 136.43 147.97 66.00 60.61
3/23/01 136.43 156.10 68.00 60.61
3/26/01 142.64 156.91 64.00 69.70
3/27/01 134.88 148.78 66.00 75.76
3/28/01 133.33 141.46 64.00 69.70
3/29/01 150.39 152.03 64.00 66.67
3/30/01 161.24 157.72 72.00 63.64
4/2/01 148.84 149.59 64.00 60.61
4/3/01 99.22 143.09 50.00 54.55
4/4/01 116.28 139.84 50.00 48.48
4/5/01 136.43 147.97 56.00 66.67
4/6/01 120.93 147.15 50.00 60.61
4/9/01 117.09 152.72 58.88 67.88
4/10/01 119.07 160.65 60.80 77.58
4/11/01 109.15 146.73 70.40 73.70
4/12/01 113.12 153.11 72.32 76.61
4/13/01 113.12 153.11 72.32 76.61
4/16/01 111.63 153.24 66.56 72.73
4/17/01 99.72 148.68 60.16 72.73
4/18/01 115.10 143.09 64.00 72.73
4/19/01 126.51 145.43 60.16 71.76
4/20/01 116.59 139.84 55.68 72.73
4/23/01 124.53 141.79 52.48 75.64
4/24/01 125.52 150.24 55.04 72.73
4/25/01 130.81 146.34 52.48 74.67
4/26/01 165.21 143.74 75.52 72.73
4/27/01 156.28 144.39 100.48 70.79
4/30/01 159.75 142.31 134.40 74.47
5/1/01 152.81 154.80 184.96 104.73
5/2/01 167.19 171.71 148.48 107.64
5/3/01 149.33 171.45 127.36 101.82
5/4/01 149.33 177.82 117.12 92.12
5/7/01 126.02 165.85 96.64 119.27
5/8/01 123.53 156.23 119.36 119.27
5/9/01 115.60 165.59 106.88 114.42
5/10/01 120.06 165.20 105.60 121.21
5/11/01 117.58 167.02 98.56 100.85
5/14/01 121.55 158.96 91.52 97.94
5/15/01 112.62 165.85 94.72 90.18
5/16/01 108.65 169.11 92.16 86.30
5/17/01 104.68 174.31 88.96 82.42
5/18/01 109.64 169.50 89.60 78.55
5/21/01 124.03 175.48 90.88 83.39
5/22/01 155.29 184.07 112.00 98.91
5/23/01 163.72 183.41 110.72 93.09
5/24/01 168.68 176.00 107.52 89.21
5/25/01 200.93 174.96 102.40 90.18
5/28/01 200.93 174.96 102.40 90.18
5/29/01 183.57 167.93 90.24 87.27
5/30/01 172.65 157.92 85.76 81.45
5/31/01 180.59 171.45 83.20 82.42
6/1/01 183.57 173.14 88.96 82.42
6/4/01 183.07 179.12 103.68 79.52
6/5/01 200.93 187.32 101.76 91.15
6/6/01 191.01 182.24 99.20 89.21
6/7/01 195.97 186.93 94.72 92.12
6/8/01 192.99 187.71 114.56 113.45
6/11/01 190.02 182.37 121.60 123.15
6/12/01 200.43 184.20 113.92 110.55
6/13/01 200.43 183.28 109.44 103.76
6/14/01 196.96 172.10 97.92 99.88
1 YEAR INDEXED PRICE
[LINE CHART]
PRGY ELNK JWEB NZRO
6/14/00 100.00(%) 100.00(%) 100.00(%) 100.00(%)
6/15/00 96.70 98.51 103.57 93.30
6/16/00 99.45 95.54 101.30 91.07
6/19/00 97.80 93.68 90.91 89.29
6/20/00 98.35 96.65 102.60 89.29
6/21/00 101.10 94.98 100.65 88.39
6/22/00 98.35 90.71 103.25 85.71
6/23/00 95.60 86.62 99.35 81.25
6/26/00 95.05 89.59 101.30 80.36
6/27/00 93.41 89.22 102.60 76.79
6/28/00 91.21 88.10 109.09 92.86
6/29/00 91.76 88.20 112.34 89.29
6/30/00 92.31 91.82 111.69 74.55
7/3/00 91.21 91.45 110.39 80.36
7/4/00 91.21 91.45 110.39 80.36
7/5/00 91.21 87.73 112.66 78.57
7/6/00 87.91 88.10 117.53 77.23
7/7/00 84.07 86.62 116.88 75.00
7/10/00 83.52 82.16 112.99 85.71
7/11/00 82.42 79.93 111.69 77.23
7/12/00 79.67 81.41 116.88 78.57
7/13/00 77.75 83.64 108.44 113.39
7/14/00 78.85 94.05 109.74 105.36
7/17/00 78.57 102.97 107.14 100.45
7/18/00 76.37 98.51 102.60 96.43
7/19/00 77.75 93.68 97.73 91.96
7/20/00 77.47 95.17 96.75 91.96
7/21/00 78.02 92.57 92.86 89.73
7/24/00 72.53 87.36 95.78 81.25
7/25/00 70.33 89.22 101.30 86.61
7/26/00 70.60 87.36 103.90 83.04
7/27/00 70.33 80.39 93.67 80.36
7/28/00 70.33 68.40 83.12 78.57
7/31/00 70.33 74.35 94.16 75.45
8/1/00 70.33 65.06 96.10 77.68
8/2/00 66.48 66.17 74.68 72.77
8/3/00 64.29 64.31 70.13 72.32
8/4/00 60.99 65.06 66.88 72.99
8/7/00 59.89 69.89 64.29 72.77
8/8/00 58.24 66.54 62.99 69.64
8/9/00 59.89 65.80 61.69 73.21
8/10/00 62.09 63.20 61.69 76.34
8/11/00 69.23 62.83 58.12 72.32
8/14/00 65.93 59.48 55.19 70.54
8/15/00 67.03 58.36 51.30 65.18
8/16/00 67.03 57.25 63.64 66.96
8/17/00 67.45 57.25 60.06 70.54
8/18/00 67.58 57.62 54.55 65.63
8/21/00 67.03 60.59 53.25 59.82
8/22/00 68.68 59.11 54.55 58.04
8/23/00 68.13 60.22 52.60 54.02
8/24/00 65.93 59.48 55.19 53.13
8/25/00 67.58 58.74 54.22 47.32
8/28/00 68.13 59.85 54.55 48.66
8/29/00 69.23 59.85 57.79 52.23
8/30/00 69.23 68.40 63.64 58.04
8/31/00 66.21 66.91 64.94 60.27
9/1/00 67.03 66.91 64.61 57.59
9/4/00 67.03 66.91 64.61 57.59
9/5/00 65.93 72.12 63.64 60.27
9/6/00 69.23 75.09 62.34 58.93
9/7/00 68.41 69.89 59.74 60.27
9/8/00 67.03 67.66 59.09 57.59
9/11/00 70.33 68.40 55.84 57.14
9/12/00 71.43 67.66 57.79 54.46
9/13/00 69.23 64.31 61.69 56.25
9/14/00 74.18 67.66 64.29 56.70
9/15/00 72.12 69.52 58.12 54.91
9/18/00 73.08 61.71 56.49 50.00
9/19/00 74.73 61.34 57.79 49.11
9/20/00 70.33 60.59 54.55 46.43
9/21/00 63.74 59.48 52.60 42.86
9/22/00 60.44 61.71 52.60 43.30
9/25/00 61.54 62.08 50.97 42.86
9/26/00 59.34 60.97 49.35 42.86
9/27/00 54.95 57.99 46.75 39.29
9/28/00 48.63 58.36 43.51 38.39
9/29/00 45.05 54.28 41.56 30.36
10/2/00 50.00 51.30 40.91 34.82
10/3/00 53.85 49.81 37.66 30.36
10/4/00 50.82 47.77 33.77 35.27
10/5/00 51.10 49.44 31.82 32.59
10/6/00 48.90 45.72 27.27 34.82
10/9/00 49.45 50.93 28.57 34.82
10/10/00 46.70 46.84 27.92 32.14
10/11/00 46.43 42.75 26.30 31.25
10/12/00 43.96 41.26 24.03 29.46
10/13/00 45.05 44.61 27.27 30.36
10/16/00 43.96 41.26 28.90 29.02
10/17/00 40.66 38.66 29.87 26.79
10/18/00 41.21 38.66 28.57 29.02
10/19/00 42.31 39.41 29.22 29.46
10/20/00 41.76 42.38 30.19 26.79
10/23/00 43.41 43.68 34.42 28.57
10/24/00 48.63 42.19 36.36 29.02
10/25/00 43.96 39.03 34.09 28.13
10/26/00 47.25 42.01 32.47 25.89
10/27/00 41.76 42.01 32.14 24.55
10/30/00 40.66 40.15 31.17 24.11
10/31/00 38.46 38.85 27.60 20.98
11/1/00 40.11 37.55 28.90 26.79
11/2/00 39.56 40.89 32.47 27.68
11/3/00 40.11 42.38 30.84 25.00
11/6/00 38.74 51.30 35.71 22.32
11/7/00 39.84 47.58 38.31 23.21
11/8/00 37.36 47.58 31.82 23.21
11/9/00 35.71 44.24 32.79 20.54
11/10/00 35.16 43.12 32.47 20.54
11/13/00 36.26 43.12 31.17 21.43
11/14/00 36.81 42.38 29.87 25.45
11/15/00 35.71 47.03 35.06 25.89
11/16/00 34.07 46.47 31.17 23.21
11/17/00 31.87 42.47 31.17 24.11
11/20/00 28.02 49.63 31.17 21.65
11/21/00 26.92 46.84 26.30 21.43
11/22/00 27.47 42.19 24.35 18.75
11/23/00 27.47 42.19 24.35 18.75
11/24/00 26.37 45.54 26.30 22.77
11/27/00 25.82 42.75 25.97 24.11
11/28/00 23.08 41.26 26.62 22.32
11/29/00 21.98 40.52 24.03 19.64
11/30/00 21.98 38.66 24.03 16.07
12/1/00 16.76 38.29 24.03 16.52
12/4/00 18.96 37.73 21.43 14.73
12/5/00 19.23 40.15 20.13 15.18
12/6/00 19.78 37.73 15.91 15.18
12/7/00 20.88 36.99 12.99 14.29
12/8/00 20.88 38.29 13.31 13.84
12/11/00 21.43 40.71 19.16 15.18
12/12/00 20.33 42.38 18.83 14.73
12/13/00 18.68 44.05 18.18 14.73
12/14/00 17.72 45.72 16.23 14.73
12/15/00 17.58 43.12 17.21 15.18
12/18/00 15.93 43.31 14.94 14.29
12/19/00 13.74 38.66 12.66 13.84
12/20/00 14.29 36.43 11.36 12.50
12/21/00 13.74 33.46 12.99 10.71
12/22/00 20.33 31.97 12.99 10.27
12/25/00 20.33 31.97 12.99 10.27
12/26/00 15.38 33.27 9.74 10.71
12/27/00 15.11 30.86 7.14 11.16
12/28/00 14.01 31.97 7.14 11.16
12/29/00 13.19 29.93 6.82 12.50
1/1/01 13.19 29.93 6.82 12.50
1/2/01 13.74 31.60 8.77 11.16
1/3/01 15.93 38.29 10.06 11.16
1/4/01 19.78 41.64 12.34 12.95
1/5/01 27.47 37.17 10.39 11.16
1/8/01 25.55 36.25 11.36 11.61
1/9/01 21.98 42.01 11.69 10.94
1/10/01 23.63 45.35 11.69 12.05
1/11/01 29.67 47.40 12.99 13.84
1/12/01 31.04 47.21 16.56 16.07
1/15/01 31.04 47.21 16.56 16.07
1/16/01 32.42 45.35 20.45 20.09
1/17/01 34.07 53.90 25.32 23.66
1/18/01 35.16 53.53 28.25 23.21
1/19/01 43.96 51.49 33.77 22.32
1/22/01 43.68 52.42 42.86 24.55
1/23/01 39.56 53.53 36.36 24.11
1/24/01 38.46 55.39 37.34 24.11
1/25/01 35.16 50.37 39.29 23.21
1/26/01 34.07 50.19 31.82 21.88
1/29/01 39.01 50.56 27.92 21.43
1/30/01 40.66 50.19 27.27 21.43
1/31/01 41.76 49.81 27.27 20.98
2/1/01 40.93 47.77 23.05 18.30
2/2/01 39.84 53.35 19.16 16.52
2/5/01 35.16 55.95 31.49 19.64
2/6/01 34.62 54.65 26.95 19.20
2/7/01 35.16 54.28 26.30 18.30
2/8/01 31.04 52.97 26.95 14.73
2/9/01 31.32 55.02 27.27 14.29
2/12/01 32.97 59.29 22.73 14.29
2/13/01 28.57 54.28 21.10 14.29
2/14/01 29.67 54.83 21.10 13.39
2/15/01 30.77 54.46 20.78 13.39
2/16/01 29.12 55.02 19.16 12.05
2/19/01 29.12 55.02 19.16 12.05
2/20/01 28.57 54.28 15.91 12.50
2/21/01 23.08 52.04 14.29 10.94
2/22/01 26.37 51.30 13.96 12.05
2/23/01 26.37 50.56 14.29 12.05
2/26/01 25.82 50.19 16.88 12.95
2/27/01 25.27 53.35 15.26 12.95
2/28/01 25.82 53.53 15.26 12.50
3/1/01 27.47 53.53 14.94 11.61
3/2/01 32.69 58.36 16.88 11.61
3/5/01 30.77 59.85 15.58 11.16
3/6/01 30.77 59.11 15.91 10.71
3/7/01 31.04 61.34 15.91 10.27
3/8/01 30.77 59.85 14.61 10.27
3/9/01 30.77 58.74 12.34 9.82
3/12/01 30.22 57.43 11.85 7.14
3/13/01 31.04 63.94 13.31 8.04
3/14/01 28.85 58.74 11.69 9.38
3/15/01 28.57 62.08 12.99 8.93
3/16/01 26.37 61.71 12.99 8.48
3/19/01 26.37 63.94 11.69 8.93
3/20/01 22.53 63.94 10.71 8.93
3/21/01 24.45 65.43 11.36 8.93
3/22/01 24.18 67.66 10.71 8.93
3/23/01 24.18 71.38 11.04 8.93
3/26/01 25.27 71.75 10.39 10.27
3/27/01 23.90 68.03 10.71 11.16
3/28/01 23.63 64.68 10.39 10.27
3/29/01 26.65 69.52 10.39 9.82
3/30/01 28.57 72.12 11.69 9.38
4/2/01 26.37 68.40 10.39 8.93
4/3/01 17.58 65.43 8.12 8.04
4/4/01 20.60 63.94 8.12 7.14
4/5/01 24.18 67.66 9.09 9.82
4/6/01 21.43 67.29 8.12 8.93
4/9/01 20.75 69.83 9.56 10.00
4/10/01 21.10 73.46 9.87 11.43
4/11/01 19.34 67.09 11.43 10.86
4/12/01 20.04 70.01 11.74 11.29
4/13/01 20.04 70.01 11.74 11.29
4/16/01 19.78 70.07 10.81 10.71
4/17/01 17.67 67.99 9.77 10.71
4/18/01 20.40 65.43 10.39 10.71
4/19/01 22.42 66.50 9.77 10.57
4/20/01 20.66 63.94 9.04 10.71
4/23/01 22.07 64.83 8.52 11.14
4/24/01 22.24 68.70 8.94 10.71
4/25/01 23.18 66.91 8.52 11.00
4/26/01 29.27 65.72 12.26 10.71
4/27/01 27.69 66.02 16.31 10.43
4/30/01 28.31 65.07 21.82 10.97
5/1/01 27.08 70.78 30.03 15.43
5/2/01 29.63 78.51 24.10 15.86
5/3/01 26.46 78.39 20.68 15.00
5/4/01 26.46 81.31 19.01 13.57
5/7/01 22.33 75.84 15.69 17.57
5/8/01 21.89 71.43 19.38 17.57
5/9/01 20.48 75.72 17.35 16.86
5/10/01 21.27 75.54 17.14 17.86
5/11/01 20.84 76.37 16.00 14.86
5/14/01 21.54 72.68 14.86 14.43
5/15/01 19.96 75.84 15.38 13.29
5/16/01 19.25 77.32 14.96 12.71
5/17/01 18.55 79.70 14.44 12.14
5/18/01 19.43 77.50 14.55 11.57
5/21/01 21.98 80.24 14.75 12.29
5/22/01 27.52 84.16 18.18 14.57
5/23/01 29.01 83.87 17.97 13.71
5/24/01 29.89 80.48 17.45 13.14
5/25/01 35.60 80.00 16.62 13.29
5/28/01 35.60 80.00 16.62 13.29
5/29/01 32.53 76.79 14.65 12.86
5/30/01 30.59 72.21 13.92 12.00
5/31/01 32.00 78.39 13.51 12.14
6/1/01 32.53 79.17 14.44 12.14
6/4/01 32.44 81.90 16.83 11.71
6/5/01 35.60 85.65 16.52 13.43
6/6/01 33.85 83.33 16.10 13.14
6/7/01 34.73 85.47 15.38 13.57
6/8/01 34.20 85.83 18.60 16.71
6/11/01 33.67 83.39 19.74 18.14
6/12/01 35.52 84.22 18.49 16.29
6/13/01 35.52 83.81 17.77 15.29
6/14/01 34.90 78.69 15.90 14.71
2 YEAR INDEXED PRICE
[LINE CHART]
PRGY ELNK JWEB NZRO
6/14/99 100.00(%) 100.00(%) 100.00(%) #N/A(%)
6/15/99 102.27 106.39 97.58 #N/A
6/16/99 106.53 114.32 104.85 #N/A
6/17/99 104.26 115.53 106.06 #N/A
6/18/99 105.11 117.62 107.27 #N/A
6/21/99 103.69 123.24 136.97 #N/A
6/22/99 105.68 129.74 158.18 #N/A
6/23/99 105.68 138.55 175.15 #N/A
6/24/99 106.82 144.71 215.15 #N/A
6/25/99 102.27 136.67 253.33 #N/A
6/28/99 101.14 142.29 225.45 #N/A
6/29/99 101.99 154.63 213.33 #N/A
6/30/99 117.61 156.17 223.03 #N/A
7/1/99 113.64 163.00 232.12 #N/A
7/2/99 111.36 171.37 236.36 #N/A
7/5/99 111.36 171.37 236.36 #N/A
7/6/99 121.02 169.82 241.82 #N/A
7/7/99 121.02 159.47 232.73 #N/A
7/8/99 122.73 187.89 227.88 #N/A
7/9/99 125.00 180.18 222.42 #N/A
7/12/99 120.74 172.25 222.42 #N/A
7/13/99 123.58 170.04 215.15 #N/A
7/14/99 124.15 174.45 253.94 #N/A
7/15/99 124.15 165.64 247.27 #N/A
7/16/99 123.30 171.81 235.15 #N/A
7/19/99 117.05 160.35 235.15 #N/A
7/20/99 113.35 156.39 225.45 #N/A
7/21/99 111.36 158.59 223.03 #N/A
7/22/99 108.52 150.44 211.52 #N/A
7/23/99 110.23 155.51 201.21 #N/A
7/26/99 103.41 141.63 180.00 #N/A
7/27/99 106.25 141.85 200.00 #N/A
7/28/99 103.69 125.11 207.88 #N/A
7/29/99 100.57 121.15 191.52 #N/A
7/30/99 99.43 118.28 194.55 #N/A
8/2/99 99.43 109.25 178.18 #N/A
8/3/99 92.90 104.19 160.00 #N/A
8/4/99 82.95 94.27 145.45 #N/A
8/5/99 77.27 91.63 136.97 #N/A
8/6/99 78.98 101.54 141.82 #N/A
8/9/99 73.01 92.07 144.85 #N/A
8/10/99 69.60 97.14 142.42 #N/A
8/11/99 74.43 94.27 142.42 #N/A
8/12/99 70.45 94.27 149.09 #N/A
8/13/99 78.41 100.66 144.85 #N/A
8/16/99 76.14 107.05 145.45 #N/A
8/17/99 77.84 112.89 158.79 #N/A
8/18/99 86.36 114.76 169.70 #N/A
8/19/99 81.82 105.51 169.09 #N/A
8/20/99 90.91 105.95 169.09 #N/A
8/23/99 98.86 107.49 179.39 #N/A
8/24/99 98.86 106.17 192.73 #N/A
8/25/99 95.45 106.83 212.73 #N/A
8/26/99 97.73 111.23 179.39 #N/A
8/27/99 95.45 107.71 184.24 #N/A
8/30/99 85.80 101.98 178.18 #N/A
8/31/99 84.38 102.86 183.64 #N/A
9/1/99 81.82 99.56 175.15 #N/A
9/2/99 77.84 96.48 174.55 #N/A
9/3/99 80.97 101.76 177.58 #N/A
9/6/99 80.97 101.76 177.58 #N/A
9/7/99 77.84 101.32 181.82 #N/A
9/8/99 74.43 96.26 177.58 #N/A
9/9/99 75.85 102.20 178.79 #N/A
9/10/99 78.41 100.00 186.67 #N/A
9/13/99 77.84 93.83 179.39 #N/A
9/14/99 77.27 94.93 187.27 #N/A
9/15/99 75.85 97.80 185.45 #N/A
9/16/99 77.27 94.71 179.39 #N/A
9/17/99 75.57 95.59 181.82 #N/A
9/20/99 74.72 96.92 173.33 #N/A
9/21/99 76.42 92.95 172.12 #N/A
9/22/99 76.42 115.86 163.64 #N/A
9/23/99 79.83 96.48 164.85 #N/A
9/24/99 76.70 105.95 168.48 100.00
9/27/99 79.26 101.32 168.48 86.91
9/28/99 79.83 100.88 160.00 90.77
9/29/99 78.41 98.24 151.52 93.35
9/30/99 80.68 97.58 156.97 89.27
10/1/99 76.28 94.71 154.55 88.20
10/4/99 75.85 92.73 151.52 83.91
10/5/99 73.30 94.49 152.73 84.55
10/6/99 75.00 100.88 159.70 87.12
10/7/99 75.57 100.44 161.21 89.27
10/8/99 77.84 101.76 167.27 98.71
10/11/99 85.80 101.98 163.64 107.30
10/12/99 93.75 100.00 156.36 108.80
10/13/99 88.07 94.93 150.30 100.00
10/14/99 93.75 97.69 156.36 93.45
10/15/99 98.01 92.51 147.88 89.27
10/18/99 91.48 93.39 138.18 82.40
10/19/99 92.33 94.05 141.21 78.11
10/20/99 95.45 90.97 142.42 67.81
10/21/99 97.73 91.63 140.00 65.24
10/22/99 98.01 93.17 135.76 82.62
10/25/99 96.59 91.19 140.00 84.55
10/26/99 99.43 89.87 150.30 75.54
10/27/99 93.75 86.56 143.64 73.61
10/28/99 101.99 85.24 149.09 71.24
10/29/99 115.34 90.53 146.67 70.60
11/1/99 113.07 91.63 140.61 68.24
11/2/99 114.77 88.33 146.67 68.03
11/3/99 117.05 86.56 150.30 67.38
11/4/99 114.20 91.19 174.55 73.18
11/5/99 112.50 101.54 172.12 70.17
11/8/99 102.84 98.90 181.82 72.53
11/9/99 107.67 103.52 180.61 73.39
11/10/99 104.55 101.10 170.30 73.82
11/11/99 105.97 99.12 171.52 80.47
11/12/99 103.41 101.10 170.91 81.55
11/15/99 103.98 105.95 172.12 84.12
11/16/99 104.83 106.39 185.45 86.70
11/17/99 110.80 103.52 181.82 95.06
11/18/99 125.00 106.61 185.45 92.70
11/19/99 146.02 111.45 180.61 93.56
11/22/99 140.91 121.59 195.15 90.34
11/23/99 130.68 121.15 175.76 82.19
11/24/99 124.72 120.04 175.76 79.61
11/25/99 124.72 120.04 175.76 79.61
11/26/99 131.82 122.69 178.18 78.33
11/29/99 131.25 116.74 170.91 76.82
11/30/99 123.01 111.23 166.06 72.96
12/1/99 122.16 110.13 158.79 74.25
12/2/99 124.43 114.98 159.39 76.82
12/3/99 116.48 113.88 166.06 79.40
12/6/99 111.93 126.87 164.85 75.97
12/7/99 112.22 128.19 167.27 74.68
12/8/99 107.95 134.80 165.45 76.82
12/9/99 114.20 137.67 158.79 72.96
12/10/99 107.95 134.80 161.82 73.39
12/13/99 103.13 132.16 157.58 74.46
12/14/99 98.86 124.23 149.70 77.25
12/15/99 93.18 120.70 150.91 75.11
12/16/99 92.05 119.16 164.85 77.68
12/17/99 98.58 115.64 158.79 85.84
12/20/99 96.31 111.01 281.21 80.90
12/21/99 109.09 107.05 647.27 116.52
12/22/99 101.70 102.20 593.94 89.27
12/23/99 99.43 101.76 447.88 87.12
12/24/99 99.43 101.76 447.88 87.12
12/27/99 93.47 97.58 436.36 92.92
12/28/99 90.63 95.59 403.64 87.12
12/29/99 93.18 95.15 373.33 86.48
12/30/99 91.19 95.15 333.33 90.99
12/31/99 88.07 93.06 344.24 92.49
1/3/00 94.60 98.68 357.58 99.79
1/4/00 94.89 92.73 342.42 95.71
1/5/00 91.48 99.34 346.06 99.36
1/6/00 103.13 94.71 323.64 93.56
1/7/00 103.98 91.63 322.42 90.56
1/10/00 105.11 97.58 368.48 88.63
1/11/00 95.45 104.63 403.64 86.27
1/12/00 91.19 100.44 349.09 85.62
1/13/00 91.48 100.44 343.03 110.09
1/14/00 88.07 101.76 344.24 104.72
1/17/00 88.07 101.76 344.24 104.72
1/18/00 90.91 103.52 341.21 109.01
1/19/00 90.63 104.63 323.64 109.87
1/20/00 88.64 104.41 301.82 110.09
1/21/00 86.36 100.88 305.45 113.73
1/24/00 87.78 98.68 292.12 118.45
1/25/00 94.60 96.48 272.73 120.17
1/26/00 96.59 96.48 267.27 118.67
1/27/00 97.73 95.59 273.94 122.10
1/28/00 90.63 93.17 254.55 119.96
1/31/00 90.34 93.39 253.33 110.30
2/1/00 88.92 94.71 259.39 116.74
2/2/00 91.48 98.68 259.39 112.02
2/3/00 93.18 103.96 272.73 118.88
2/4/00 95.74 107.49 289.09 112.45
2/7/00 106.82 110.79 260.61 108.15
2/8/00 113.07 106.61 248.48 107.94
2/9/00 109.09 98.24 242.42 104.29
2/10/00 116.19 93.61 266.67 103.00
2/11/00 117.05 86.56 247.27 100.86
2/14/00 113.07 78.19 247.27 103.00
2/15/00 116.48 77.31 247.88 94.64
2/16/00 103.41 77.97 241.82 94.42
2/17/00 106.53 77.31 233.33 93.56
2/18/00 96.59 69.82 232.73 86.70
2/21/00 96.59 69.82 232.73 86.70
2/22/00 95.45 76.65 231.52 88.41
2/23/00 95.74 91.19 230.30 92.27
2/24/00 93.18 82.82 226.67 85.84
2/25/00 90.34 84.80 208.48 85.62
2/28/00 88.07 88.55 218.18 79.83
2/29/00 91.19 87.67 224.24 80.69
3/1/00 99.43 87.22 204.24 79.18
3/2/00 92.61 82.16 192.12 74.25
3/3/00 95.45 87.67 198.79 78.11
3/6/00 90.06 84.58 202.42 77.04
3/7/00 88.07 83.04 186.67 66.09
3/8/00 90.34 79.96 176.97 82.40
3/9/00 84.94 81.06 193.79 92.70
3/10/00 86.65 83.70 192.73 79.83
3/13/00 83.81 79.52 223.03 81.97
3/14/00 82.10 78.19 228.48 75.54
3/15/00 81.25 73.79 193.94 71.24
3/16/00 83.52 77.09 207.88 69.10
3/17/00 84.38 75.77 207.27 68.45
3/20/00 81.25 74.01 178.79 58.37
3/21/00 78.76 73.57 174.55 51.50
3/22/00 80.40 76.21 183.64 61.37
3/23/00 77.27 77.31 182.42 66.31
3/24/00 74.43 76.21 176.36 65.24
3/27/00 73.30 75.11 174.55 62.66
3/28/00 72.44 73.79 169.70 63.95
3/29/00 70.74 72.47 159.39 56.44
3/30/00 65.06 69.60 147.88 54.51
3/31/00 68.47 68.50 152.73 52.36
4/3/00 63.07 65.20 128.48 50.21
4/4/00 54.55 61.67 122.42 47.21
4/5/00 54.26 59.03 138.18 42.92
4/6/00 59.09 61.01 130.91 46.57
4/7/00 59.38 62.78 129.70 45.92
4/10/00 55.40 56.39 140.61 43.78
4/11/00 52.27 53.30 127.27 37.98
4/12/00 48.86 52.42 112.73 31.76
4/13/00 50.00 45.15 100.61 27.47
4/14/00 46.02 39.87 87.27 24.03
4/17/00 48.30 42.29 82.42 18.45
4/18/00 46.31 58.15 92.12 31.97
4/19/00 54.26 54.63 105.45 31.01
4/20/00 56.25 49.56 122.42 28.43
4/21/00 56.25 49.56 122.42 28.43
4/24/00 47.16 46.20 107.27 39.27
4/25/00 44.60 59.47 109.09 55.15
4/26/00 50.85 62.78 104.85 43.99
4/27/00 49.43 63.66 99.39 41.42
4/28/00 51.14 66.52 96.36 41.42
5/1/00 53.98 70.04 99.39 40.13
5/2/00 54.83 61.89 96.97 35.84
5/3/00 50.85 59.47 89.70 33.48
5/4/00 53.13 60.35 89.09 31.55
5/5/00 55.11 61.45 86.06 31.33
5/8/00 58.81 59.91 86.06 28.97
5/9/00 57.39 64.98 78.18 27.25
5/10/00 53.41 66.96 81.21 29.83
5/11/00 53.69 64.54 80.00 27.79
5/12/00 53.98 66.96 78.79 28.33
5/15/00 56.82 72.91 83.03 29.40
5/16/00 59.09 77.53 87.88 30.90
5/17/00 56.82 75.55 83.33 30.47
5/18/00 54.83 69.60 77.58 32.19
5/19/00 53.41 59.91 75.15 30.90
5/22/00 50.85 61.67 70.91 31.76
5/23/00 47.73 57.05 65.76 27.47
5/24/00 49.72 55.73 61.52 28.76
5/25/00 46.02 52.42 63.64 27.25
5/26/00 46.02 51.54 67.27 26.18
5/29/00 46.02 51.54 67.27 26.18
5/30/00 50.28 56.83 72.73 26.82
5/31/00 48.86 52.20 78.18 27.25
6/1/00 48.86 55.07 81.21 25.75
6/2/00 54.26 63.44 95.15 29.83
6/5/00 53.98 66.96 106.67 27.47
6/6/00 53.98 64.10 104.24 26.39
6/7/00 57.10 63.22 120.61 28.33
6/8/00 53.13 61.89 107.27 25.11
6/9/00 53.98 61.01 106.67 26.82
6/12/00 50.28 58.15 96.67 25.97
6/13/00 52.27 59.25 98.18 24.36
6/14/00 51.70 59.25 93.33 24.03
6/15/00 50.00 58.37 96.67 22.42
6/16/00 51.42 56.61 94.55 21.89
6/19/00 50.57 55.51 84.85 21.46
6/20/00 50.85 57.27 95.76 21.46
6/21/00 52.27 56.28 93.94 21.24
6/22/00 50.85 53.74 96.36 20.60
6/23/00 49.43 51.32 92.73 19.53
6/26/00 49.15 53.08 94.55 19.31
6/27/00 48.30 52.86 95.76 18.45
6/28/00 47.16 52.20 101.82 22.32
6/29/00 47.44 52.26 104.85 21.46
6/30/00 47.73 54.41 104.24 17.92
7/3/00 47.16 54.19 103.03 19.31
7/4/00 47.16 54.19 103.03 19.31
7/5/00 47.16 51.98 105.15 18.88
7/6/00 45.45 52.20 109.70 18.56
7/7/00 43.47 51.32 109.09 18.03
7/10/00 43.18 48.68 105.45 20.60
7/11/00 42.61 47.36 104.24 18.56
7/12/00 41.19 48.24 109.09 18.88
7/13/00 40.20 49.56 101.21 27.25
7/14/00 40.77 55.73 102.42 25.32
7/17/00 40.63 61.01 100.00 24.14
7/18/00 39.49 58.37 95.76 23.18
7/19/00 40.20 55.51 91.21 22.10
7/20/00 40.06 56.39 90.30 22.10
7/21/00 40.34 54.85 86.67 21.57
7/24/00 37.50 51.76 89.39 19.53
7/25/00 36.36 52.86 94.55 20.82
7/26/00 36.51 51.76 96.97 19.96
7/27/00 36.36 47.63 87.42 19.31
7/28/00 36.36 40.53 77.58 18.88
7/31/00 36.36 44.05 87.88 18.13
8/1/00 36.36 38.55 89.70 18.67
8/2/00 34.38 39.21 69.70 17.49
8/3/00 33.24 38.11 65.45 17.38
8/4/00 31.53 38.55 62.42 17.54
8/7/00 30.97 41.41 60.00 17.49
8/8/00 30.11 39.43 58.79 16.74
8/9/00 30.97 38.99 57.58 17.60
8/10/00 32.10 37.44 57.58 18.35
8/11/00 35.80 37.22 54.24 17.38
8/14/00 34.09 35.24 51.52 16.95
8/15/00 34.66 34.58 47.88 15.67
8/16/00 34.66 33.92 59.39 16.09
8/17/00 34.87 33.92 56.06 16.95
8/18/00 34.94 34.14 50.91 15.77
8/21/00 34.66 35.90 49.70 14.38
8/22/00 35.51 35.02 50.91 13.95
8/23/00 35.23 35.68 49.09 12.98
8/24/00 34.09 35.24 51.52 12.77
8/25/00 34.94 34.80 50.61 11.37
8/28/00 35.23 35.46 50.91 11.70
8/29/00 35.80 35.46 53.94 12.55
8/30/00 35.80 40.53 59.39 13.95
8/31/00 34.23 39.65 60.61 14.48
9/1/00 34.66 39.65 60.30 13.84
9/4/00 34.66 39.65 60.30 13.84
9/5/00 34.09 42.73 59.39 14.48
9/6/00 35.80 44.49 58.18 14.16
9/7/00 35.37 41.41 55.76 14.48
9/8/00 34.66 40.09 55.15 13.84
9/11/00 36.36 40.53 52.12 13.73
9/12/00 36.93 40.09 53.94 13.09
9/13/00 35.80 38.11 57.58 13.52
9/14/00 38.35 40.09 60.00 13.63
9/15/00 37.29 41.19 54.24 13.20
9/18/00 37.78 36.56 52.73 12.02
9/19/00 38.64 36.34 53.94 11.80
9/20/00 36.36 35.90 50.91 11.16
9/21/00 32.95 35.24 49.09 10.30
9/22/00 31.25 36.56 49.09 10.41
9/25/00 31.82 36.78 47.58 10.30
9/26/00 30.68 36.12 46.06 10.30
9/27/00 28.41 34.36 43.64 9.44
9/28/00 25.14 34.58 40.61 9.23
9/29/00 23.30 32.16 38.79 7.30
10/2/00 25.85 30.40 38.18 8.37
10/3/00 27.84 29.52 35.15 7.30
10/4/00 26.28 28.30 31.52 8.48
10/5/00 26.42 29.30 29.70 7.83
10/6/00 25.28 27.09 25.45 8.37
10/9/00 25.57 30.18 26.67 8.37
10/10/00 24.15 27.75 26.06 7.73
10/11/00 24.01 25.33 24.55 7.51
10/12/00 22.73 24.45 22.42 7.08
10/13/00 23.30 26.43 25.45 7.30
10/16/00 22.73 24.45 26.97 6.97
10/17/00 21.02 22.91 27.88 6.44
10/18/00 21.31 22.91 26.67 6.97
10/19/00 21.88 23.35 27.27 7.08
10/20/00 21.59 25.11 28.18 6.44
10/23/00 22.44 25.88 32.12 6.87
10/24/00 25.14 25.00 33.94 6.97
10/25/00 22.73 23.13 31.82 6.76
10/26/00 24.43 24.89 30.30 6.22
10/27/00 21.59 24.89 30.00 5.90
10/30/00 21.02 23.79 29.09 5.79
10/31/00 19.89 23.02 25.76 5.04
11/1/00 20.74 22.25 26.97 6.44
11/2/00 20.45 24.23 30.30 6.65
11/3/00 20.74 25.11 28.79 6.01
11/6/00 20.03 30.40 33.33 5.36
11/7/00 20.60 28.19 35.76 5.58
11/8/00 19.32 28.19 29.70 5.58
11/9/00 18.47 26.21 30.61 4.94
11/10/00 18.18 25.55 30.30 4.94
11/13/00 18.75 25.55 29.09 5.15
11/14/00 19.03 25.11 27.88 6.12
11/15/00 18.47 27.86 32.73 6.22
11/16/00 17.61 27.53 29.09 5.58
11/17/00 16.48 25.17 29.09 5.79
11/20/00 14.49 29.41 29.09 5.20
11/21/00 13.92 27.75 24.55 5.15
11/22/00 14.20 25.00 22.73 4.51
11/23/00 14.20 25.00 22.73 4.51
11/24/00 13.64 26.98 24.55 5.47
11/27/00 13.35 25.33 24.24 5.79
11/28/00 11.93 24.45 24.85 5.36
11/29/00 11.36 24.01 22.42 4.72
11/30/00 11.36 22.91 22.42 3.86
12/1/00 8.66 22.69 22.42 3.97
12/4/00 9.80 22.36 20.00 3.54
12/5/00 9.94 23.79 18.79 3.65
12/6/00 10.23 22.36 14.85 3.65
12/7/00 10.80 21.92 12.12 3.43
12/8/00 10.80 22.69 12.42 3.33
12/11/00 11.08 24.12 17.88 3.65
12/12/00 10.51 25.11 17.58 3.54
12/13/00 9.66 26.10 16.97 3.54
12/14/00 9.16 27.09 15.15 3.54
12/15/00 9.09 25.55 16.06 3.65
12/18/00 8.24 25.66 13.94 3.43
12/19/00 7.10 22.91 11.82 3.33
12/20/00 7.39 21.59 10.61 3.00
12/21/00 7.10 19.82 12.12 2.58
12/22/00 10.51 18.94 12.12 2.47
12/25/00 10.51 18.94 12.12 2.47
12/26/00 7.95 19.71 9.09 2.58
12/27/00 7.81 18.28 6.67 2.68
12/28/00 7.24 18.94 6.67 2.68
12/29/00 6.82 17.73 6.36 3.00
1/1/01 6.82 17.73 6.36 3.00
1/2/01 7.10 18.72 8.18 2.68
1/3/01 8.24 22.69 9.39 2.68
1/4/01 10.23 24.67 11.52 3.11
1/5/01 14.20 22.03 9.70 2.68
1/8/01 13.21 21.48 10.61 2.79
1/9/01 11.36 24.89 10.91 2.63
1/10/01 12.22 26.87 10.91 2.90
1/11/01 15.34 28.08 12.12 3.33
1/12/01 16.05 27.97 15.45 3.86
1/15/01 16.05 27.97 15.45 3.86
1/16/01 16.76 26.87 19.09 4.83
1/17/01 17.61 31.94 23.64 5.69
1/18/01 18.18 31.72 26.36 5.58
1/19/01 22.73 30.51 31.52 5.36
1/22/01 22.59 31.06 40.00 5.90
1/23/01 20.45 31.72 33.94 5.79
1/24/01 19.89 32.82 34.85 5.79
1/25/01 18.18 29.85 36.67 5.58
1/26/01 17.61 29.74 29.70 5.26
1/29/01 20.17 29.96 26.06 5.15
1/30/01 21.02 29.74 25.45 5.15
1/31/01 21.59 29.52 25.45 5.04
2/1/01 21.16 28.30 21.52 4.40
2/2/01 20.60 31.61 17.88 3.97
2/5/01 18.18 33.15 29.39 4.72
2/6/01 17.90 32.38 25.15 4.61
2/7/01 18.18 32.16 24.55 4.40
2/8/01 16.05 31.39 25.15 3.54
2/9/01 16.19 32.60 25.45 3.43
2/12/01 17.05 35.13 21.21 3.43
2/13/01 14.77 32.16 19.70 3.43
2/14/01 15.34 32.49 19.70 3.22
2/15/01 15.91 32.27 19.39 3.22
2/16/01 15.06 32.60 17.88 2.90
2/19/01 15.06 32.60 17.88 2.90
2/20/01 14.77 32.16 14.85 3.00
2/21/01 11.93 30.84 13.33 2.63
2/22/01 13.64 30.40 13.03 2.90
2/23/01 13.64 29.96 13.33 2.90
2/26/01 13.35 29.74 15.76 3.11
2/27/01 13.07 31.61 14.24 3.11
2/28/01 13.35 31.72 14.24 3.00
3/1/01 14.20 31.72 13.94 2.79
3/2/01 16.90 34.58 15.76 2.79
3/5/01 15.91 35.46 14.55 2.68
3/6/01 15.91 35.02 14.85 2.58
3/7/01 16.05 36.34 14.85 2.47
3/8/01 15.91 35.46 13.64 2.47
3/9/01 15.91 34.80 11.52 2.36
3/12/01 15.63 34.03 11.06 1.72
3/13/01 16.05 37.89 12.42 1.93
3/14/01 14.91 34.80 10.91 2.25
3/15/01 14.77 36.78 12.12 2.15
3/16/01 13.64 36.56 12.12 2.04
3/19/01 13.64 37.89 10.91 2.15
3/20/01 11.65 37.89 10.00 2.15
3/21/01 12.64 38.77 10.61 2.15
3/22/01 12.50 40.09 10.00 2.15
3/23/01 12.50 42.29 10.30 2.15
3/26/01 13.07 42.51 9.70 2.47
3/27/01 12.36 40.31 10.00 2.68
3/28/01 12.22 38.33 9.70 2.47
3/29/01 13.78 41.19 9.70 2.36
3/30/01 14.77 42.73 10.91 2.25
4/2/01 13.64 40.53 9.70 2.15
4/3/01 9.09 38.77 7.58 1.93
4/4/01 10.65 37.89 7.58 1.72
4/5/01 12.50 40.09 8.48 2.36
4/6/01 11.08 39.87 7.58 2.15
4/9/01 10.73 41.37 8.92 2.40
4/10/01 10.91 43.52 9.21 2.75
4/11/01 10.00 39.75 10.67 2.61
4/12/01 10.36 41.48 10.96 2.71
4/13/01 10.36 41.48 10.96 2.71
4/16/01 10.23 41.52 10.08 2.58
4/17/01 9.14 40.28 9.12 2.58
4/18/01 10.55 38.77 9.70 2.58
4/19/01 11.59 39.40 9.12 2.54
4/20/01 10.68 37.89 8.44 2.58
4/23/01 11.41 38.41 7.95 2.68
4/24/01 11.50 40.70 8.34 2.58
4/25/01 11.99 39.65 7.95 2.64
4/26/01 15.14 38.94 11.44 2.58
4/27/01 14.32 39.12 15.22 2.51
4/30/01 14.64 38.56 20.36 2.64
5/1/01 14.00 41.94 28.02 3.71
5/2/01 15.32 46.52 22.50 3.81
5/3/01 13.68 46.45 19.30 3.61
5/4/01 13.68 48.18 17.75 3.26
5/7/01 11.55 44.93 14.64 4.22
5/8/01 11.32 42.33 18.08 4.22
5/9/01 10.59 44.86 16.19 4.05
5/10/01 11.00 44.76 16.00 4.29
5/11/01 10.77 45.25 14.93 3.57
5/14/01 11.14 43.07 13.87 3.47
5/15/01 10.32 44.93 14.35 3.19
5/16/01 9.95 45.81 13.96 3.06
5/17/01 9.59 47.22 13.48 2.92
5/18/01 10.05 45.92 13.58 2.78
5/21/01 11.36 47.54 13.77 2.95
5/22/01 14.23 49.87 16.97 3.50
5/23/01 15.00 49.69 16.78 3.30
5/24/01 15.45 47.68 16.29 3.16
5/25/01 18.41 47.40 15.52 3.19
5/28/01 18.41 47.40 15.52 3.19
5/29/01 16.82 45.50 13.67 3.09
5/30/01 15.82 42.78 12.99 2.88
5/31/01 16.55 46.45 12.61 2.92
6/1/01 16.82 46.91 13.48 2.92
6/4/01 16.77 48.53 15.71 2.82
6/5/01 18.41 50.75 15.42 3.23
6/6/01 17.50 49.37 15.03 3.16
6/7/01 17.95 50.64 14.35 3.26
6/8/01 17.68 50.85 17.36 4.02
6/11/01 17.41 49.41 18.42 4.36
6/12/01 18.36 49.90 17.26 3.91
6/13/01 18.36 49.66 16.58 3.67
6/14/01 18.05 46.63 14.84 3.54
2
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[GOLDMAN SACHS LOGO]
SHARES TRADED AT VARIOUS PRICES
ONE MONTH
[BAR GRAPH]
DAILY FROM 14-MAY-2001 TO 14-JUN-2001
Volume (000)
2.00 to 2.19 168
2.20 219
2.40 463
2.60 0
2.80 0
3.00 638
3.20 294
3.40 129
3.60 646
3.80 419
4.00 to 4.2.00 885
Weighted Average Price: 3.32 USD
Total Shares Traded as Percent of Shares Outstanding: 6.22%
THREE MONTHS
[BAR GRAPH]
DAILY FROM 14-MAR-2001 TO 14-JUN-2001
Volume (000)
2.00 to 2.19 606
2.20 1,126
2.40 1,148
2.60 477
2.80 54
3.00 1,799
3.20 1,511
3.40 129
3.60 646
3.80 419
4.00 to 4.2.00 885
Weighted Average Price: 3.01 USD
Total Shares Traded as Percent of Shares Outstanding: 13.65%
ONE YEAR
[BAR GRAPH]
DAILY FROM 14-JUN-2000 TO 14-JUN-2001
Volume (000)
1.00 to 1.99 3,947
2.00 8,071
3.00 9,178
4.00 6,633
5.00 6,576
6.00 2,192
7.00 5,796
8.00 4,641
9.00 782
10.00 2,453
11.00 to 12.00 1,781
Weighted Average Price: 5.20 USD
Total Shares Traded as Percent of Shares Outstanding: 74.09%
TWO YEARS
[BAR GRAPH]
DAILY FROM 14-JUN-1999 TO 14-JUN-2001
Volume (000)
1.00 to 3.99 21,196
4.00 15,400
7.00 11,654
10.00 18,147
13.00 4,379
16.00 17,824
19.00 36,528
22.00 28,678
25.00 21,274
28.00 3,419
31.00 to 34.00 7,774
Weighted Average Price: 16.84 USD
Total Shares Traded as Percent of Shares Outstanding: 265.17%
3
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[GOLDMAN SACHS LOGO]
PREMIUM ANALYSIS(1)
Weighted Average Price(1) All time
Current ------------------------------------- 52 week High
Price(1) 1 month 3 months 1 year 2 years high 16-Feb-99
-----------------------------------------------------------------------
$3.97 $3.22 $2.98 $5.25 $16.87 $11.88 $49.00
----- ----- ----- ----- ------ ------ ------
$4.00 0.8% 24.2% 34.2% (23.8)% (76.3)% (66.3)% (91.8)%
$4.25 7.1% 32.0% 42.6% (19.0)% (74.8)% (64.2)% (91.3)%
$4.50 13.4% 39.8% 51.0% (14.3)% (73.3)% (62.1)% (90.8)%
$4.75 19.6% 47.5% 59.4% (9.5)% (71.8)% (60.0)% (90.3)%
$5.00 25.9% 55.3% 67.8% (4.8)% (70.4)% (57.9)% (89.8)%
$5.25 32.2% 63.0% 76.2% 0.0% (68.9)% (55.8)% (89.3)%
$5.50 38.5% 70.8% 84.6% 4.8% (67.4)% (53.7)% (88.8)%
$5.75 44.8% 78.6% 93.0% 9.5% (65.9)% (51.6)% (88.3)%
$6.00 51.1% 86.3% 101.3% 14.3% (64.4)% (49.5)% (87.8)%
$6.25 57.4% 94.1% 109.7% 19.0% (63.0)% (47.4)% (87.2)%
$6.50 63.7% 101.9% 118.1% 23.8% (61.5)% (45.3)% (86.7)%
$6.75 70.0% 109.6% 126.5% 28.6% (60.0)% (43.2)% (86.2)%
$7.00 76.3% 117.4% 134.9% 33.3% (58.5)% (41.1)% (85.7)%
$7.25 82.6% 125.2% 143.3% 38.1% (57.0)% (38.9)% (85.2)%
$7.50 88.9% 132.9% 151.7% 42.9% (55.5)% (36.8)% (84.7)%
$7.75 95.2% 140.7% 160.1% 47.6% (54.1)% (34.7)% (84.2)%
$8.00 101.5% 148.4% 168.5% 52.4% (52.6)% (32.6)% (83.7)%
$8.25 107.8% 156.2% 176.8% 57.1% (51.1)% (30.5)% (83.2)%
$8.50 114.1% 164.0% 185.2% 61.9% (49.6)% (28.4)% (82.7)%
$8.75 120.4% 171.7% 193.6% 66.7% (48.1)% (26.3)% (82.1)%
$9.00 126.7% 179.5% 202.0% 71.4% (46.7)% (24.2)% (81.6)%
--------
(1) As of 6/14/2001.
4
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[GOLDMAN SACHS LOGO]
COMPARISON OF PUBLICLY TRADED COMPARABLES
($ IN MILLIONS)
% 52 Enterprise Value Multiple of
----------------------------------------------------------
Price Week Equity Ent. Revenues (1) EBITDA (1) PP&E Enterprise Value
--------------------- ------------------- ---------------
Company 6/14/2001 High Value Value LTM 2001 2002 LTM 2001 2002 Gross Net Per Subscriber (2)
------------------------------------------------------------------------------------------------------------------------------------
Prodigy $3.97 34.5% $485 $807 1.9x 2.2x NA 24.9x 23.2x NA 26.2x 30.8x $262
Earthlink 13.23 76.4% 1,802 1,216 1.0 1.0 0.8x 47.6 NM 12.8x 2.9 4.4 $253
Juno 1.53 13.5% 64 23 0.2 0.2 0.2 NM NM NM 1.4 2.7 $25
NetZero 1.03 13.0% 130 -9 NA NA NA NM NM NA NA NA -$123
-----------------------------------------------------------------------------------------------------------------------------------
Mean 34.4% $620 $509 1.0x 1.1x 0.5x 36.2x 23.2x 12.8x 10.2x 12.6x $104
Median 24.0% 307 415 1.0 1.0 0.5 36.2 23.2 12.8 2.9 4.4 139
-----------------------------------------------------------------------------------------------------------------------------------
----------
(1) Wall Street research estimates.
(2) As of latest public filings. Uses paid subscribers.
5
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[GOLDMAN SACHS LOGO]
SUMMARY STATISTICS FOR DOMESTIC MINORITY BUY-INS
1995 - PRESENT(1)
FOR U.S. TARGETS, THE PREMIUM OF THE INITIAL BID WAS 21.3% OVER THE MARKET PRICE
ONE DAY PRIOR TO ANNOUNCEMENT AND THE FINAL BID WAS AT A 30.0% PREMIUM
PREMIUM OF INITIAL BID VS. ONE DAY PRIOR TO ANNOUNCEMENT
[BAR GRAPH]
% PREMIUM
-20 TO 0 5
0 TO 10 12
10 TO 20 13
20 TO 30 7
30 TO 60 6
60 TO 125 4
TOTAL 47
PREMIUM OF INITIAL BID VS. 52-WEEK HIGH
[BAR GRAPH]
% PREMIUM
-80 TO -50 2
-50 TO -20 11
-20 TO -10 7
-10 TO 0 14
0 TO 10 11
10 TO 20 2
TOTAL 47
--------
(1) Source: SDC. As of 6/14/2001 based on date of announcement. Analysis
includes 47 domestic deals.
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[GOLDMAN SACHS LOGO]
--------------------------------------------------------------------------------
SUMMARY STATISTICS FOR DOMESTIC MINORITY BUY-INS
1995 - PRESENT(1)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
47 TOTAL TRANSACTIONS
--------------------------------------------------------------------------------
INITIAL PREMIUM OVER 52-WEEK HIGH
INITIAL PREMIUM OVER MARKET PRICE
FINAL PREMIUM OVER MARKET PRICE
PERCENT INCREASE IN OFFER
--------------------------------------------------------------------------------
|
|
-----------------------------------------------------
| | |
| | |
--------------------------------------------------------------------------------
32 CASH TRANSACTIONS 10 STOCK TRANSACTIONS 5 CASH/STOCK TRANSACTIONS
--------------------------------------------------------------------------------
INITIAL PREMIUM OVER INITIAL PREMIUM OVER INITIAL PREMIUM OVER
52-WEEK HIGH 52-WEEK HIGH 52-WEEK HIGH
INITIAL PREMIUM OVER INITIAL PREMIUM OVER INITIAL PREMIUM OVER
MARKET PRICE MARKET PRICE MARKET PRICE
FINAL PREMIUM OVER FINAL PREMIUM OVER FINAL PREMIUM OVER
MARKET PRICE MARKET PRICE MARKET PRICE
PERCENT INCREASE PERCENT INCREASE PERCENT INCREASE
IN OFFER IN OFFER IN OFFER
MEAN MEAN MEAN
(15.3)% (16.2)% 1.1%
(1) Source: SDC. Includes all deals with domestic targets and a transaction size
greater than $100mm as of 6/14/2001 based on date of announcement.
--------------------------------------------------------------------------------
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[GOLDMAN SACHS LOGO]
COMPARABLE ISP DEAL SUMMARY
------------------------------------------------------------------------------------------------------------------------------------
Enterprise Value
Equity Value Enterprise Value as a Multiple of Enterprise
Ann. at Deal at Deal Active ---------------------- Value per
Date Announcement Announcement Subscribers LTM Revenue LTM EBITDA Subscriber
------------------------------------------------------------------------------------------------------------------------------------
NetZero/Juno 6/7/01 $71 29 985,000 0.2x NM $29
Earthlink/OneMain.com 6/8/00 310 333 762,000 3.3x NM $437
CoreComm/Voyager.net(1) 3/13/00 540 546 360,000 11.3x 45.4x $1,516
Nextlink (XO)/Concentric 1/10/00 2,900 3,175 NA 21.6x NM NA
Prodigy/FlashNet 11/8/99 123 89 244,000 3.3x NM $367
MindSpring/Earthlink(2) 9/23/99 1,699 1,365 1,233,741 5.6x NM $1,106
WorldCom/CompuServe 9/8/97 1,186 1,018 2,600,000 1.2x NM $392
------------------------------------------------------------------------------------------------------------------------------------
MEAN $976 $936 1,030,790 6.6x 45.4x $641
------------------------------------------------------------------------------------------------------------------------------------
MEDIAN $540 $546 873,500 3.3x 45.4x $414
------------------------------------------------------------------------------------------------------------------------------------
HIGH $2,900 $3,175 2,600,000 21.6x 45.4x $1,516
------------------------------------------------------------------------------------------------------------------------------------
LOW $71 $29 244,000 0.2x 45.4x $29
------------------------------------------------------------------------------------------------------------------------------------
(1) CoreComm (CC) and Voyager.net (VN) amended their transaction subsequent to
the collar in the original agreement being breached. CoreComm offered $1.14 in
cash and .614 common shares per Voyager.net common share valuing each share at
close at $5.975. Transaction closed at an Equity Value of $189.1
(2) MindSpring (MS) merged with EarthLink Network (EN) to form EarthLink (EL) in
a merger-of-equals stock swap transaction. EN common shareholders were to
receive 1.615 EL common shares and ME common shareholders were to receive 1 EL
common share per share held. The transaction was accounted for as a pooling of
interests.
8