SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
S C H E D U L E 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
PENRIL DATACOMM NETWORKS, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, $0.01 PAR VALUE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
709352108
--------------------
(CUSIP Number)
Copy to:
Stephen I. Budow, Esq.
Mr. Ronald A. Howard Morrison Cohen Singer & Weinstein, LLP
1300 Quince Orchard Boulevard 750 Lexington Avenue
Gaithersburg, Maryland 20878 New York, New York 10022
Telephone (800) 473-6745 Telephone (212) 735-8600
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications)
November 18, 1996
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following space __.
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following page(s))
- 1 of 6 -
<PAGE>
CUSIP
No. 709352108 13D
================================================================================
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Ronald A. Howard
- --------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group* (a) |_|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds* SC
- --------------------------------------------------------------------------------
5 Check Box if Disclosure of Legal Proceedings is Required |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization United States
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of 0 shares 0%
Shares -----------------------------------------------------------------
Beneficially 8 Shared Voting Power
Owned By 0 shares 0%
Each -----------------------------------------------------------------
Reporting 9 Sole Dispositive Power
Person 0 shares 0%
With -----------------------------------------------------------------
10 Shared Dispositive Power
0 shares 0%
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned By Each Reporting Person
0 shares
- --------------------------------------------------------------------------------
12 Check Box if the Aggregate Amount in Row (11) excludes Certain Shares*|_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)
0%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- 2 of 6 -
<PAGE>
This Statement, dated November 18, 1996, constitutes Amendment No. 2 to the
Schedule 13D, dated May 6, 1993, regarding the reporting person's ownership of
shares of common stock of Penril DataComm Networks, Inc. (the "Issuer").
The Schedule 13D is hereinafter referred to as the "Schedule." All
capitalized terms used herein and otherwise undefined shall have the meanings
ascribed in the Schedule.
This Amendment No. 2 to the Schedule is filed in accordance with Rule 13d-2
of the Securities Exchange Act of 1934, as amended, by the reporting persons. It
shall restate the entire text of the Schedule except for information which has
materially changed since the filing of the Schedule.
ITEM 1. SECURITY AND ISSUER
Issuer: Penril DataComm Networks, Inc.
1300 Quince Orchard Boulevard
Gaithersburg, Maryland 20878
This statement relates to shares of common stock of the Issuer, $0.01
par value ("Common Stock").
ITEM 2. IDENTITY AND BACKGROUND
(a) Ronald A. Howard
(b) Business address: 1300 Quince Orchard Boulevard
Gaithersburg, Maryland 20878
(c) Principal Occupation: President, Access Beyond, Inc.
(d) No
(e) No
(f) Citizenship: United States
- 3 of 6 -
<PAGE>
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The reporting person acquired all of the shares reported in the
Schedule upon consummation of the merger of a subsidiary of the issuer with and
into Datability, Inc., in exchange for the reporting person's stock of
Datability, Inc. and upon exercise of options granted by the issuer.
ITEM 4. PURPOSE OF THE TRANSACTION
The original acquisition was the consideration payable in connection
with the acquisition of Datability, Inc. by Penril DataComm Networks, Inc.
All of the reporting person's shares of Common Stock of the Issuer
were converted into shares of common stock, par value $.01 per share, of Bay
Networks, Inc. ("Bay") pursuant to a formula set forth in the Plan and Agreement
of Merger, dated June 16, 1996, as amended on August 5, 1996, among the Issuer,
Bay, and a subsidiary of Bay. Immediately prior to the effectiveness of such
merger, the Issuer spun off its subsidiary, Access Beyond, Inc. and all
shareholders of the Issuer, including the reporting person, received one share
of Access Beyond, Inc. for each share of Common Stock of the Issuer.
ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER
(a) The following list sets forth the aggregate number and percentage
(based on 11,993,000 shares of Common Stock estimated to be outstanding as
reported in the Registration Statement Form S-1, as amended, of Access Beyond,
Inc.) of outstanding shares of Common Stock owned beneficially by the reporting
person named in Item 2, as of the close of business on November 18, 1996:
Number of Shares: 0
Percentage: 0%
(b) Ronald A. Howard has sole power to vote and to dispose of 0 shares
of Common Stock, representing 0% of the outstanding Common Stock.
(c) The reporting person originally received 920,115 shares of the
Issuer's Common Stock pursuant to an Agreement and Plan of Merger dated May 1,
1993 among the Issuer, Datability, Inc., Penril DataComm Networks, Inc., and
certain stockholders of Datability, Inc. As a result of a purchase price
adjustment such number were reduced by 92,012 to 828,103. Since the filing of
Amendment No.1 to the Schedule, the reporting person has acquired shares of
Common Stock pursuant to the exercise of options and made open market sales of
shares of Common Stock. As a result of such acquisitions and dispositions, the
reporting person owned, as of November 17, 1996, 925,603 shares of Common Stock.
-4 of 6-
<PAGE>
(d) No other person has the right to receive or the power to direct
the receipt of dividends from, or the proceeds from the sale of such securities.
(e) As of November 18, 1996, the reporting person ceased to be the
beneficial owner of more than five percent (5%) of the Common Stock.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE Issuer
Pursuant to the Agreement and Plan of Merger dated as of May 1, 1993,
the reporting person was required for at least 18 months but not longer than the
shorter of 30 months after Closing or the date on which the then Chairman of the
Board and President of Penril holds neither office, not to, among other things,
acquire any additional shares of Penril securities (subject to certain
exceptions), seek representation on the Board of Directors, solicit proxies in
opposition to a recommendation of a majority of the Penril directors, become
part of a "group" within the meaning of Regulations 13D-G or subject his shares
to a voting agreement, trust or similar arrangement. Pursuant to an amendment to
the reporting person's employment agreement such provision was extended.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit A - Cover page, signature page and relevant portions of the
Agreement and Plan of Merger, dated as of May 1, 1993, among Penril DataComm
Networks, Inc., Datability, Inc., P.D. Acquisition Corp., Ronald A. Howard and
Richard Rupp, relating to voting or disposition of the shares of Penril DataComm
Networks, Inc. owned by the reporting person.
Exhibit B - Cover page, signature page, and relevant portions of the
Plan and Agreement of Merger, dated June 16, 1996, as amended on August 5, 1996,
among the Issuer, Bay, and a subsidiary of Bay, relating to the exchange of
Issuer's shares for shares of Bay.
Exhibit C - Cover page, signature page and relevant portions of the
Amendment to the employment agreement of Ronald A. Howard, relating to voting or
disposition of the shares of the Issuer owned by the reporting person.
- 5 of 6 -
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned hereby certifies that the information set forth in this Schedule
is true, complete, and correct.
Date: November 20, 1996
/s/ Rona1d A. Howard
---------------------------------
RONALD A. HOWARD
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL
CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001).
- 6 of 6 -
EXHIBIT 99.A
AGREEMENT
AND PLAN OF MERGER
Dated as of
May 1, 1993
Among
Penril DataComm Networks, Inc.,
Datability, Inc.,
PD Acquisition Corp.,
and
the Stockholders of Datability listed on Appendix I.
<PAGE>
- 12 -
Exhibit C, subject in each case to the performance by Penril of its obligations
contained therein. Such Employment Agreements are being executed at the Closing.
3.04 Covenants of the Stockholders.
(a) Each Stockholder agrees, for himself and his respective personal
representatives, heirs, distributees, successors, assigns, agents, affiliates,
associates and other related persons, that for the period commencing on the
Closing Date and continuing for a period of eighteen (18) months after the
Closing and for an additional period thereafter ending on the earlier to occur
of (i) the date thirty (30) months after the Closing or (ii) the date Henry
David Epstein is neither Chairman of the Board nor President of Penril, no such
person, singly, as a partnership or as part of a group (as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended [the
"Exchange Act"]), directly or indirectly, through one or more intermediaries,
affiliates or associates (as the terms "affiliate" and "associate" are defined
by the rules and regulations under the Exchange Act), or otherwise, except with
the prior written approval of the Board of Directors of Penril, shall:
(i) Purchase, acquire or own, or offer or agree to purchase,
acquire or own, any securities of Penril other than, in the case of a
Stockholder, the number of Penril Shares set forth opposite such Stockholder's
name on Schedule I hereto (except upon exercise of employee stock options
granted to such Stockholder by Penril or pursuant to a stock split or stock
dividend or other pro rata distribution by Penril to holders of Penril Common
Stock);
<PAGE>
- 13 -
(ii) Sell shares of Penril Common Stock owned by such Stockholder
otherwise than pursuant to (A) "brokers' transactions" within the meaning of
Rule 144(g) promulgated under the Securities Act of 1933, as amended (the
"Securities Act") or transactions directly with a market maker meeting the
requirements of Rule 144(f) promulgated under the Securities Act, and/or (B)
private transactions which shall not exceed 100,000 shares in the aggregate per
twelve-month period;
(iii) Pledge, hypothecate or otherwise encumber any shares of
Common Stock, except in a bona fide transaction not undertaken as a means of
evading this Section 3.04;
(iv) Seek representation on the Board of Directors of Penril or
solicit, or encourage any other person to solicit, proxies or participate or
otherwise engage in any "solicitation" as such term is defined in Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in
opposition to a recommendation of a majority of the directors of Penril with
respect to any matter, whether or not such solicitation is subject to any of
Sections 14a-3 through 14a-14 of Regulation A or any successor provisions, or
otherwise make or permit to be published in any media any public statement
indicating such opposition;
(v) Initiate, propose or otherwise solicit shareholders for the
approval of one or more shareholder proposals with respect to Penril, as
described in Rule 14a-8 under the Exchange Act;
(vi) Acquire or affect the control of Penril, or directly or
indirectly participate in or encourage formation of any group seeking to acquire
or affect control
<PAGE>
- 14 -
of Penril whether by making a business combination proposal with respect to
Penril or otherwise; provided that this clause (vi) shall not preclude a
Stockholder from communicating to the Chairman of the Board of Penril a third
party proposal which he did not, directly or indirectly, initiate, formulate,
solicit or encourage;
(vii) Become part of any "group" as such term is used in Section
13(d)(3) of the Exchange Act with respect to securities of Penril;
(viii) Deposit any securities of Penril in a voting trust or
subject them to a voting agreement or other arrangement of similar effect; or
(ix) Encourage any person, firm, corporation, group or other
entity to engage in any of the actions covered by clauses (i) through (viii) of
this Section.
(b) Each Stockholder, for himself and his personal representatives,
heirs, distributees, successors, assigns, agents, affiliates, associates and
other related persons, acknowledges and agrees that in the event of any breach
of any provision of this Section 3.04 by any such person, Penril would be
irreparably harmed and could not be made whole by monetary damages. It is
accordingly agreed that in addition to any other remedy to which it may be
entitled at law or in equity, Penril shall be entitled to seek injunctive relief
and to compel specific performance of this Section 3.04, and each such person
consents to the entry of such relief and waives the making of a bond as a
condition for obtaining such relief. Moreover. each person subject to this
Section 3.04 agrees that any other provision of this Agreement or principle of
law to the contrary notwithstanding, no breach of any representation. warranty
or covenant of Penril set forth in this Agreement or any agreement
<PAGE>
- 57 -
6.02 Agreements by the Stockholders. (a) In addition to the covenants
set forth in Section 3.04 hereof, and not in derogation thereof, each
Stockholder agrees that he will not offer, sell, transfer, assign, mortgage,
pledge or otherwise dispose of, distribute or encumber any Penril Shares
delivered pursuant to this Agreement, except for bona fide pledges of Penril
Shares to secure up to $1,700,000 of existing indebtedness of the Stockholders,
which shares shall be included in those registered pursuant to Section 6.04(a)
hereof, unless, (i) in the opinion of counsel to Penril or the opinion of
counsel satisfactory to Penril's counsel, registration of such shares under the
Securities Act and the rules and regulations of the Commission thereunder, as
then in effect, is not required in connection with such transaction, or (ii)
sale of the Penril Shares is permissible pursuant to Rule 144 under the
Securities Act, in which event the Stockholder shall furnish Penril with an
opinion of counsel reasonably satisfactory to counsel for Penril to the effect
that sale of the Penril Shares proposed to be sold is permissible pursuant to
Rule 144, or (iii) a registration statement under the Securities Act is then in
effect with respect to such shares and the purchaser or transferee has been
furnished with a prospectus meeting the requirements of Section 10 of the
Securities Act.
(b) Anything in subparagraph (a) of this Section 6.02 to the contrary
notwithstanding, no Stockholder will offer, sell, transfer, assign, mortgage,
pledge or otherwise dispose of, distribute or encumber any Penril Shares if any
such transaction would render the consummation of the transactions contemplated
by this Agreement, to be deemed to be an "offer," "offer to sell," "offer for
sale," or "sale" of the Penril Shares to any
<PAGE>
- 58 -
person other than the Stockholders, within the meaning of Rule 145 of the Rules
and Regulations of the Commission under the Securities Act, as in effect on the
date hereof.
6.03 Legend, Etc. Each of the Stockholders agrees that Penril may
endorse on any certificate for Penril Shares to be delivered pursuant to this
Agreement an appropriate legend referring to the provisions of Sections 6.01 and
6.02 hereof and that Penril may instruct its transfer agents not to transfer any
such Penril Shares unless advised by Penril that such provisions have been
complied with.
6.04 Registration Rights. Subject to the provisions of Section 3.04
and this Section 6.04, the Stockholders shall have the following registration
rights with respect to the Penril Shares:
(a) As soon as practicable after Penril is permitted under the
applicable rules, regulations and instructions of the Commission to file a
registration statement on Form S-3 with respect to the Penril Shares, Penril
shall file a registration statement on Form S-3 under the Securities Act with
respect to one-half of the Penril Shares issued to the Stockholders (which shall
not include the Penril Shares being held as collateral under the Escrow
Agreement), and shall use its best efforts to cause such registration statement
to become effective as soon thereafter as practicable. Penril shall only be
required to file one registration statement pursuant to this Section 6.04(a) and
shall not be required to register the Penril Shares on any form other than Form
S-3; provided, however, that if after the filing of Penril's Form 10-K for the
fiscal year ending July 31, 1994, Penril is still unable to file a registration
statement on Form S-3, it shall as promptly as possible thereafter file a
registration statement on any available form.
<PAGE>
- 81 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
each of Penril, Subsidiary and Datability by its duly authorized officer, all as
of the day and year first above written.
PENRIL DATACOMM NETWORKS, INC.
By: /s/ Henry David Epstein
------------------------------------
Title: Chairman of the Board and
President
PD ACQUISITION CORP.
By: /s/ Henry David Epstein
------------------------------------
Title: Chairman of the Board
DATABILITY, INC.
By: /s/ Ronald Howard
------------------------------------
Title: President
/s/ Ronald Howard
----------------------------------------
Ronald A. Howard
/s/ Richard Rupp
----------------------------------------
Richard Rupp
EXHIBIT 99.B
PLAN AND AGREEMENT OF MERGER
This Plan and Agreement of Merger entered into as of June 16, 1996 by and
among Bay Networks, Inc., a Delaware corporation (the "Buyer"), Beta Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of the Buyer (the
"Transitory Subsidiary"), and Penril DataComm Networks, Inc., a Delaware
corporation (the "Company"). The Buyer, the Transitory Subsidiary and the
Company are referred to collectively in this Agreement as the "Parties".
This Agreement contemplates a merger of the Transitory Subsidiary into the
Company, which merger will qualify as a tax-free reorganization described in
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the
"Code"). In such merger, the stockholders of the Company will receive solely
voting capital stock of the Buyer in exchange for their capital stock of the
Company.
The Parties acknowledge that in the event that the transactions
contemplated by this Agreement are not consummated, the Company would experience
a substantial loss and hardship; therefore, to minimize the potential for such
(i) failure to consummate the transactions and (ii) loss and hardship, the
Parties have knowingly agreed not to include in this Agreement many otherwise
normal conditions to closing the transaction, including but not limited to, a
condition that there shall be no material adverse change prior to the Effective
Time (as defined below) to the Company, its business, financial condition,
results of operations, or prospects, to the Company's industry or to the general
business conditions.
Now, therefore, in consideration of the representations, warranties and
covenants in this Agreement contained, the Parties agree as follows.
ARTICLE I
THE MERGER
1.1 The Merger. Upon and subject to the terms and conditions of this
Agreement, the Transitory Subsidiary shall merge with and into the Company (with
such merger referred to in this Agreement as the "Merger") at the Effective Time
(as defined below). From and after the Effective Time, the separate corporate
existence of the Transitory Subsidiary shall cease and the Company shall
continue as the surviving corporation in the Merger (the "Surviving
Corporation"). The "Effective Time" shall be the time at which the Company and
the Transitory Subsidiary file the certificate of merger or other appropriate
documents prepared and executed in accordance with the relevant provisions of
the Delaware General Corporation Law (the "Certificate of Merger") with the
Secretary of State of the State of Delaware. The Merger shall have the effects
set forth in Section 259 of the Delaware General Corporation Law.
1.2 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at a mutually agreed upon location,
commencing at 9:00 a.m. local time on a mutually agreeable date as soon as
practicable after the date on which all of the conditions to the obligations of
the Parties to consummate the transactions contemplated by this Agreement have
been satisfied or waived (the "Closing Date"), but in no event later than 150
days from the date hereof.
1.3 Actions at the Closing. At the Closing, (a) the Company shall deliver
to the Buyer and the Transitory Subsidiary the various certificates, instruments
and documents referred to in Section 5.2, (b) the Buyer and the Transitory
Subsidiary shall deliver to the Company the various certificates, instruments
and documents referred to in Section 5.3, (c) the Company and the Transitory
Subsidiary shall file with the Secretary of State of the State of Delaware the
Certificate of Merger, and (d) the Buyer shall deliver a certificate for the
Merger Shares (as defined below) to a bank, trust company or other entity
reasonably satisfactory to the Company appointed by the Buyer to act as the
exchange agent (the "Exchange Agent") in accordance with Section 1.7.
<PAGE>
1.4 Additional Action. The Surviving Corporation may, at any time after the
Effective Time, take any action, including executing and delivering any
document, in the name and on behalf of either the Company or the Transitory
Subsidiary, in order to consummate the transactions contemplated by this
Agreement.
1.5 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of any Party or the holder of any of the
following securities:
(a) Each share of common stock, $0.01 par value per share, of the Company
("Company Shares") issued and outstanding immediately prior to the Effective
Time (other than Company Shares owned beneficially by the Buyer or the
Transitory Subsidiary, Dissenting Shares (as defined below) and Company Shares
held in the Company's treasury) shall be converted into and represent the right
to receive (subject to the provisions of Section 1.9) such number of shares of
common stock, $0.01 par value per share, of the Buyer ("Buyer Common Stock") as
is equal to the Conversion Ratio (as defined below). The "Conversion Ratio"
shall mean the number determined by dividing (i) $10.00 (ii) by the Buyer Stock
Market Price. The "Buyer Stock Market Price" shall mean the average of the
closing prices of the Buyer's Common Stock on the New York Stock Exchange (the
"NYSE") five (5) consecutive trading days immediately preceding the second
business day immediately preceding to the Closing Date. Stockholders of record
of the Company ("Company Stockholders") shall be entitled to receive immediately
all of the shares of Buyer Common Stock into which their Company Shares were
converted pursuant to this Section 1.5(a) (the "Merger Shares").
(b) Each Company Share held in the Company's treasury immediately prior to
the Effective Time and each Company Share owned beneficially by the Buyer or the
Transitory Subsidiary shall be cancelled and retired without payment of any
consideration therefor.
(c) Each share of common stock, $0.01 par value per share, of the
Transitory Subsidiary issued and outstanding immediately prior to the Effective
Time shall be converted into and thereafter evidence one share of common stock,
$0.01 par value per share, of the Surviving Corporation.
1.6 Dissenting Shares.
(a) For purposes of this Agreement, "Dissenting Shares" means Company
Shares held as of the Effective Time by a Company Stockholder who has not voted
such Company Shares in favor of the adoption of this Agreement and the Merger
and with respect to which appraisal shall have been duly demanded and perfected
in accordance with Section 262 of the Delaware General Corporation Law and not
effectively withdrawn or forfeited prior to the Effective Time. Dissenting
Shares shall not be converted into or represent the right to receive Merger
Shares, unless such Company Stockholder shall have forfeited his right to
appraisal under the Delaware General Corporation Law or withdrawn, with the
consent of the Company, his demand for appraisal. If such Company Stockholder
has so forfeited or withdrawn his right to appraisal of Dissenting Shares, then
(i) as of the occurrence of such event, such holder's Dissenting Shares shall
cease to be Dissenting Shares and shall be converted into and represent the
right to receive the Merger Shares issuable in respect of such Company Shares
pursuant to Section 1.5 (a), and (ii) promptly following the occurrence of such
event, the Buyer shall deliver to the Exchange Agent a certificate representing
the Merger Shares to which such holder is entitled pursuant to Section 1.5(a).
(b) The Company shall give the Buyer (i) prompt notice of any written
demands for appraisal of any Company Shares, withdrawals of such demands, and
any other instruments that relate to such demands received by the Company and
(ii) the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the Delaware General Corporation Law. The Company
shall not, except with the prior written consent of the Buyer, make any payment
with respect to any demands for appraisal of Company Shares or offer to settle
or settle any such demands.
1.7 Exchange of Shares
(a) Prior to the Effective Time, the Buyer shall appoint the Exchange Agent
to effect the exchange for the Merger Shares of certificates that, immediately
prior to the Effective Time, represented Company Shares converted into Merger
Shares pursuant to Section 1.5 (including any Company Shares referred to in the
last
2
<PAGE>
sentence of Section 1.6(a)) ("Certificates"). On the Closing Date, the Buyer
shall deliver to the Exchange Agent, in trust for the benefit of holders of
Certificates, a stock certificate (issued in the name of the Exchange Agent or
its nominee) representing the Merger Shares, as described in Section 1.5(a). As
soon as practicable after the Effective Time, the Buyer shall cause the Exchange
Agent to send a notice and a transmittal form to each holder of a Certificate
(other than those surrendered and paid for at the Closing) advising such holder
of the effectiveness of the Merger and the procedure for surrendering to the
Exchange Agent such Certificate in exchange for the Merger Shares issuable
pursuant to Section 1.5(a). Each holder of a Certificate, upon proper surrender
thereof to the Exchange Agent in accordance with the instructions in such
notice, shall be entitled to receive in exchange therefor (subject to any taxes
required to be withheld) the Merger Shares issuable pursuant to Section 1.5(a).
Until properly surrendered, each such Certificate shall be deemed for all
purposes to evidence only the right to receive the Merger Shares issuable
pursuant to Section 1.5(a). Holders of Certificates shall not be entitled to
receive certificates for the Merger Shares to which they would otherwise be
entitled until such Certificates are properly surrendered.
(b) If any Merger Shares are to be issued in the name of a person other
than the person in whose name the Certificate surrendered in exchange therefor
is registered, it shall be a condition to the issuance of such Merger Shares
that (i) the Certificate so surrendered shall be transferable, and shall be
properly assigned, endorsed or accompanied by appropriate stock powers, (ii)
such transfer shall otherwise be proper and (iii) the person requesting such
transfer shall pay to the Exchange Agent any transfer or other taxes payable by
reason of the foregoing or establish to the satisfaction of the Exchange Agent
that such taxes have been paid or are not required to be paid. Notwithstanding
the foregoing, neither the Exchange Agent nor any Party shall be liable to a
holder of Company Shares for any Merger Shares issuable to such holder pursuant
to Section 1.5(a) that are delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(c) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed, the Buyer shall issue in exchange
for such lost, stolen or destroyed Certificate the Merger Shares issuable in
exchange therefor pursuant to Section 1.5(a). The Board of Directors of the
Buyer may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificate to give
the Buyer a bond in such sum as it may reasonably direct as indemnity against
any claim that may be made against the Buyer with respect to the Certificate
alleged to have been lost, stolen or destroyed.
(d) Promptly following the date which is six months after the Closing Date,
the Exchange Agent shall return to the Buyer all Merger Shares in its
possession, and the Exchange Agent's duties shall terminate. Thereafter, each
holder of a Certificate may surrender such Certificate to the Buyer and, subject
to applicable abandoned property, escheat and similar laws, receive in exchange
therefor the Merger Shares issuable with respect thereto pursuant to Section
1.5(a).
1.8 Dividends. No dividends or other distributions that are payable to the
holders of record of Buyer Common Stock as of a date on or after the Closing
Date shall be paid to former Company Stockholders entitled by reason of the
Merger to receive Merger Shares until such holders surrender their Certificates
in accordance with Section 1.7. Upon such surrender, the Buyer shall pay or
deliver to the persons in whose name the certificates representing such Merger
Shares are issued any dividends or other distributions that are payable to the
holders of record of Buyer Common Stock as of a date on or after the Closing
Date and which were paid or delivered between the Effective Time and the time of
such surrender; provided that no such person shall be entitled to receive any
interest on such dividends or other distributions.
1.9 Fractional Shares. No certificates or scrip representing fractional
Merger Shares shall be issued to former Company Stockholders upon the surrender
for exchange of Certificates, and such former Company Stockholders shall not be
entitled to any voting rights, rights to receive any dividends or distributions
or other rights as a stockholder of the Buyer with respect to any fractional
Merger Shares that would otherwise be issued to such former Company
Stockholders. In lieu of any fractional Merger Shares that would otherwise be
issued, each former Company Stockholder that would have been entitled to receive
a fractional Merger Share
3
<PAGE>
shall, upon proper surrender of such person's Certificates, receive a cash
payment equal to the closing price per share of the Buyer Common Stock on the
NYSE, on the business day immediately preceding the business day prior to the
Closing Date, multiplied by the fraction of a share that such Company
Stockholder would otherwise be entitled to receive. The fractional share
interests of each Company Stockholder will be aggregated. and no Company
Stockholder will receive cash in an amount equal to or greater than the value of
one full share of Buyer Common Stock.
1.10 Options and Rights.
(a) As of the Effective Time, all obligations of the Company with respect
to options to purchase Company Shares issued by the Company to the employees of
the Company listed on Schedule 1.10 pursuant to its stock option plans
("Options"), whether vested or unvested, shall be assumed by the Buyer.
(b) Immediately after the Effective Time, each Option outstanding
immediately prior to the Effective Time shall he deemed to constitute an option
to acquire, on the same terms and conditions as were applicable under such
Option at the Effective Time, such number of shares of Buyer Common Stock as is
equal to the number of Company Shares subject to the unexercised portion of such
Option multiplied by the Conversion Ratio (with any fraction resulting from such
multiplication to be rounded up or down to the nearest whole number or, in the
case of .5, to the nearest odd number). The exercise price per share of each
such Option shall be equal to the exercise price of such Option immediately
prior to the Effective Time, divided by the Conversion Ratio. The term,
exercisability, vesting schedule, status as an "incentive stock option" under
Section 422 of the Code, if applicable, and all of the other terms of the
Options shall otherwise remain unchanged. In addition to the foregoing, the
applicable provisions of each award agreement for Options to be outstanding
after the Effective Time will be equitably adjusted after the Spin-off
Transaction and prior to the Closing by the Company's Board of Directors to
reflect the Spin-off Transaction (as defined herein).
(c) As soon as practicable after the Effective Time, the Buyer or the
Surviving Corporation shall deliver to the holders of Options appropriate
notices setting forth such holders' rights pursuant to such Options, as amended
by this Section 1.10, and the agreements evidencing such Options shall continue
in effect on the same terms and conditions (subject to the amendments provided
for in this Section 1.10 and such notice).
(d) The Buyer shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Buyer Common Stock for delivery upon
exercise of the Options. As soon as practicable after the Effective Time, the
Buyer shall file a Registration Statement on Form S-8 (or any successor form)
under the Securities Act of 1933, as amended (the "Securities Act") with respect
to all shares of Buyer Common Stock subject to such Options that may be
registered on a Form S-8, and shall use its best efforts to maintain the
effectiveness of such Registration Statement for so long as such Options remain
outstanding.
(e) The Company shall obtain, prior to the Closing, the consent from each
holder of an Option to the adjustment or amendment, as the case may be, of such
Option or Right pursuant to this Section 1.10 (unless such consent is not
required under the terms of the applicable agreement, instrument or plan).
1.11 Certificate of Incorporation. The Certificate of Incorporation of the
Surviving Corporation shall be the same as the Certificate of Incorporation of
the Transitory Subsidiary immediately prior to the Effective Time, except that
the name of the corporation set forth therein shall be changed to the name of
the Company.
1.12 By-laws. The By-laws of the Surviving Corporation shall be the same as
the By-laws of the Transitory Subsidiary immediately prior to the Effective
Time, except that the name of the corporation set forth therein shall be changed
to the name of the Company.
1.13 Directors and Officers. The directors of the Transitory Subsidiary
shall become the directors of the Surviving Corporation as of the Effective
Time. The officers of the Company shall remain as officers of the Surviving
Corporation after the Effective Time, retaining their respective positions,
except as specified by the Buyer pursuant to Section 5.2(g).
4
<PAGE>
8.14 Construction. The language used in this Agreement shall be deemed to
be the language chosen by the Parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against any Party. Any reference
to any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise.
8.15 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated in this Agreement by reference and
made a part hereof.
8.16 Non-Survival of Representations, Warranties and Agreements. No
representations, warranties or agreements in this Agreement shall survive the
Closing, except for those contained in Article I and Sections 4.10 (the last
sentence only), 4.12, 4.13, 4.14, 4.15 and 4.17 and, to the extent relating to
such specified provisions, those contained in this Article VIII.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
THE BUYER:
BAY NETWORKS, INC.
By: /s/ Bruce I. Sachs
-------------------------------------
Title: Executive Vice President
THE TRANSITORY SUBSIDIARY:
BETA ACQUISITION CORP.
By: /s/ Bruce I. Sachs
-------------------------------------
Title: Executive Vice President
THE COMPANY:
PENRIL DATACOMM NETWORKS, INC.
By: /s/ Henry David Epstein
-------------------------------------
Title: President, Chief Executive Officer
29
EXHIBIT 99.C
Penril DataComm Networks, Inc.
1300 Quince Orchard Blvd.
Gaithersburg, MD 20878
October 25, 1995
Mr. Ronald A. Howard
9010 Falls Road
Potomac, MD 20854
Re: Amendment to Employment Agreement
Dear Ron:
Reference is made to the Employment Agreement dated as of May 1, 1993 (the
"Employment Agreement") between Penril DataComm Networks, Inc. and Ronald A.
Howard. Unless otherwise indicated, capitalized terms used herein shall have the
same meaning as in the Employment Agreement.
1. Amendments to Employment Agreement.
In consideration of the mutual covenants set forth herein, the parties
agree that the Employee Agreement is hereby amended, effective immediately,
in the following respects.
(a) Section 3 of the Employment Agreement is hereby amended to delete the
date "April 30, 1996" and to substitute for it the date "April 30, 1997."
(b) Subsection 4(a) of the Employment Agreement is hereby amended to delete
the dollar figure "$200,000" and to substitute for it the dollar figure
"$225,000."
(c) Section 4 of the Employment Agreement is hereby amended by to add a new
subsection 4(f) thereto to read as follows:
"(f) If the Company is sold or acquired during the term of this
Agreement, whether by sale of shares, merger, consolidation, share
exchange, sale of all or substantially all assets or otherwise, then
immediately upon the closing of such sale or acquisition, Executive
shall receive a bonus equal to 30 months salary at the rate specified
in subsection 4(a) hereof."
<PAGE>
Mr. Ronald A. Howard Page 2
October 25, 1995
(d) Section 9 of the Employment Agreement is hereby amended to add a new
subsection (g) thereto to read as follows:
"(g) Sections 3.02 and 3.04 of the Merger Agreement are hereby
incorporated herein by reference and made part hereof and shall be
binding on Executive to the same extent as if fully set forth herein,
with the following changes: (i) the covenants set forth in subsections
(b) and (c) of Section 3.02 of the Merger Agreement shall be binding
on Executive through April 30, 1997; (ii) the covenants set forth in
Section 3.04 of the Merger Agreement shall be binding on Executive
through April 30, 1997; and (iii) the covenant set forth in subsection
3.04(a)(iv) of the Merger Agreement shall not prevent Executive from
being appointed or elected to the Board of Directors of the Company."
2. Section Headings.
The section headings in this letter agreement are inserted for convenience
only and shall not be part of this instrument.
3. Governing Law.
This letter agreement shall be governed by and construed in accordance with
the laws of the State of New York.
4. Effect of Amendment.
Except as amended and supplemented hereby, all of the terms, conditions,
covenants and provisions of the Employment Agreement shall remain and
continue in full force and effect and are hereby ratified, repeated and
confirmed in all respects.
5 Entire Agreement.
This letter agreement and the Employment Agreement as amended and
supplemented hereby constitute the entire agreement and understanding
between the parties hereto with respect to Executive's employment
relationship with the Company and supersede any and all prior agreements
and understandings relating thereto.
<PAGE>
Mr. Ronald A. Howard Page 3
October 25, 1995
6. Counterparts; Effectiveness.
This letter agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This letter agreement
shall not be effective and binding upon either party hereto until signed by
both of them.
Please confirm your agreement to the foregoing by signing where indicated
on the counterpart of this letter agreement provided and returning it to the
undersigned.
Very truly yours,
PENRIL DATACOMM NETWORKS, INC.
By: /s/ Henry David Epstein
-------------------------------------
Henry David Epstein
Chairman, President
and Chief Executive Officer
AGREED TO:
/s/ Ronald A. Howard
- --------------------------------
Ronald A. Howard
Dated: October 25, 1995
