<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
(PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
(AMENDMENT NO. 3)
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
DIGITAL LINK CORPORATION
(Name of Subject Company)
DLZ CORP.
VINITA GUPTA
NARENDRA K. GUPTA
GUPTA CHILDREN'S TRUST AGREEMENT
NARENDRA AND VINITA GUPTA LIVING TRUST
THE NAREN AND VINITA GUPTA FOUNDATION
(Bidders)
COMMON STOCK, NO PAR VALUE PER SHARE
(Title of Class of Securities)
253856 10 8
(CUSIP Number of Class of Securities)
------------------------
VINITA GUPTA
DLZ CORP.
P.O. BOX 620154
WOODSIDE, CALIFORNIA 94062-0154
(408) 745-4550
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
------------------------
COPY TO:
CHRISTOPHER KAUFMAN, ESQ.
LATHAM & WATKINS
135 COMMONWEALTH DRIVE
MENLO PARK, CALIFORNIA 94025
(650) 328-4600
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<PAGE>
DLZ Corp., a California corporation ("Purchaser") hereby amends and
supplements its Tender Offer Statement on Schedule 14D-1, as amended (the
"Schedule 14D-1"), filed with the Securities and Exchange Commission on
September 10, 1999, with respect to the offer to purchase any and all of the
shares of Common Stock, no par value per share, of Digital Link Corporation, a
California corporation, for a purchase price of $10.30 per share upon the terms
and subject to the conditions set forth in the Offer to Purchase and in the
related Letter of Transmittal. This Amendment No. 3 to the Schedule 14D-1 also
constitutes Amendment No. 3 to the Statement on Schedule 13D of Purchaser and
Vinita Gupta, Narendra Gupta, the Gupta Children's Trust Agreement, the Narendra
and Vinita Gupta Living Trust and The Naren and Vinita Gupta Foundation.
Capitalized terms not defined herein have the meaning ascribed to them in the
Schedule 14D-1.
ITEM 10. ADDITIONAL INFORMATION.
Item 10(f) of the Schedule 14D-1 is hereby amended and supplemented by
amending and supplementing the Offer to Purchase as follows:
1. The text of the section entitled "Special Factors--Section 4. Fairness
of the Offer and the Merger", beginning on page 8 of the Offer to Purchase, is
amended to insert the word "procedural" in front of "fairness" in the fifth
sentence of the second paragraph, so that the paragraph reads in its entirety as
follows:
Consummation of the Offer is subject to the Minimum Condition and therefore
requires the tender of the holders of a majority of the Shares unaffiliated with
the Gupta Investors. However, consummation of the Merger through a long-form
merger does not require approval of a majority of shareholders unaffiliated with
the Gupta Investors. Shareholders who do not vote for the merger will have
appraisal rights to the extent provided under applicable law. See "Special
Factors--Section 7. Dissenter's Rights." The Purchaser did not structure the
Merger to require the approval of a majority of the Shares held by shareholders
unaffiliated with the Gupta Investors, because such approval is not required
under the CGCL and because the Purchaser, the Gupta Investors and the Gupta
Foundation believe that the procedural fairness of the transaction was
established by other factors, including the arms' length bargaining between the
Purchaser and the Special Committee. The Special Committee was comprised of all
directors who were not employees of the Company or affiliated with the
Purchaser, which directors constituted a majority of the Board. The transaction
was negotiated by the Special Committee, which was advised during the
negotiations by legal counsel and its financial advisor, DRW, and DRW rendered
its opinion as to the fairness, from a financial point of view, of the
consideration receivable pursuant to the Merger Agreement by holders of Shares.
In light of the foregoing factors, the Special Committee did not retain an
unaffiliated representative to act solely on behalf of shareholders unaffiliated
with Purchaser or the Gupta Investors for the purpose of negotiating the terms
of the Offer and the Merger or preparing a report concerning the fairness of the
transaction.
2. The following sentence is added at the end of the third paragraph under
"Opinion of Sutter Securities in the section "Special Factors--Section 4.
Fairness of the Offer and the Merger", beginning on page 8 of the Offer to
Purchase:
The Purchaser, the Gupta Investors and the Gupta Foundation relied upon
Sutter Securities' expertise in providing fairness opinions and did not request,
and Sutter Securities did not provide, a presentation by Sutter Securities of
the analyses conducted by Sutter Securities in connection with the rendering of
its opinion with respect to the fairness of the Transaction and the Merger
Consideration from a financial point of view to the Company's shareholders
(other than the Purchaser and the Gupta Investors).
Item 10(f) of the Schedule 14D-1 is further amended and supplemented to
incorporate by reference the Company's press release dated October 11, 1999,
announcing financial results of the third quarter ended September 30, 1999,
attached hereto as exhibit (a)(9), and the Company's press release dated October
14, 1999, announcing denial of plaintiffs' motion for a temporary restraining
order in connection with certain purported class action litigation relating to
the Offer and the Merger, attached hereto as exhibit (a)(10).
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 of the Schedule 14D-1 is hereby amended and supplemented to read in
its entirety as follows:
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Text of Press Release issued jointly by Purchaser and by the Company,
dated September 3, 1999.
(a)(8) Summary Advertisement, dated September 10, 1999.
(a)(9) Press Release issued by the Company dated October 11, 1999.
(a)(10) Press Release issued by the Company dated October 14, 1999.
(b)(1) Commitment Letter dated September 9, 1999, between Comerica
Bank-California and DLZ Corp.
(b)(2) Commitment Letter dated September 9, 1999, between Comerica
Bank-California and DLZ Corp.
(c)(1) Agreement and Plan of Merger by and between Purchaser and the
Company, dated as of September 3, 1999.
(c)(2) Form of Subscription Agreement to be entered into by DLZ Corp.and
certain members of the Gupta Family.
(c)(3) Depositary Agreement dated September 9, 1999, between Harris Trust
Company of New York and DLZ Corp.
(c)(4) Agreement of Joint Filing dated September 10, 1999, among DLZ Corp.,
Vinita Gupta, Narendra K. Gupta, the Gupta Children's Trust Agreement, the
Narendra and Vinita Gupta Living Trust and The Naren and Vinita Gupta
Foundation.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Complaint in EDWARD ABOFF, ET AL. V. RICHARD C. ALBERDING, ET AL.,
CASE NO. CV784389, FILED WITH THE SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR
THE COUNTY OF SANTA CLARA.
(g)(2) Complaint in WILLIAM LEVY, ET AL. V. DIGITAL LINK CORPORATION, ET
AL., CASE NO. CV784407, FILED WITH THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SANTA CLARA.
(g)(3) Complaint in ANDREW CURTIS WRIGHT, ET AL. V. DIGITAL LINK
CORPORATION, ET AL., CASE NO. CV784405, FILED WITH THE SUPERIOR COURT OF THE
STATE OF CALIFORNIA FOR THE COUNTY OF SANTA CLARA.
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
<TABLE>
<S> <C> <C>
Dated: October 15, 1999 DLZ CORP.
By: /s/ VINITA GUPTA
--------------------------------------
Name: Vinita Gupta
Title: President and Chief Executive Officer
GUPTA CHILDREN'S TRUST AGREEMENT
By: /s/ VINITA GUPTA
--------------------------------------
Name: Vinita Gupta
Title: Trustee
By: /s/ NARENDRA K. GUPTA
--------------------------------------
Name: Narendra K. Gupta
Title: Trustee
NARENDRA AND VINITA GUPTA LIVING TRUST
By: /s/ VINITA GUPTA
--------------------------------------
Name: Vinita Gupta
Title: Trustee
By: /s/ NARENDRA K. GUPTA
--------------------------------------
Name: Narendra K. Gupta
Title: Trustee
THE NAREN AND VINITA GUPTA FOUNDATION
By: /s/ VINITA GUPTA
--------------------------------------
Name: Vinita Gupta
Title: Trustee
By: /s/ NARENDRA K. GUPTA
--------------------------------------
Name: Narendra K. Gupta
Title: Trustee
/s/ VINITA GUPTA
---------------------------------------------
Vinita Gupta
/s/ NARENDRA K. GUPTA
---------------------------------------------
Narendra K. Gupta
</TABLE>
<PAGE>
Exhibit (a)(9)
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NEWS RELEASE
For Immediate Release CONTACT: Naresh C. Kapahi, CFO, Ext. 4570
(408) 745-6200
Digital Link Announces Third Quarter Results
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SUNNYVALE, California, October 11, 1999--Digital Link Corporation (Nasdaq:DLNK)
today announced financial results for its third quarter ended September 30,
1999.
For the third quarter 1999, net sales increased 24% to $16,400,000, compared to
net sales of $13,271,000 for the same period of the prior year. Year-to-date,
net sales for the first nine months of 1999 were $47,254,000 compared to
$40,587,000 for the same period of the prior year, an increase of 16%.
Net income for the third quarter of 1999 was $1,838,000 or $0.22 per share,
diluted, compared to a net loss of $4,273,000 or $0.74 per share for the third
quarter of 1998. Net income for the first nine months of 1999 was $3,655,000 as
compared to a net loss of $6,910,000 for the same period of the prior year.
The results above include a reversal of the restructuring charge in the pre-tax
amount of $424,000 for the three and nine month periods ended September 30,
1999. Also, the 1998 earnings reported above include a pre-tax restructuring
charge of $2,506,000 for the three and nine month periods ended September 30,
1998 and a pre-tax purchased research and development charge of $2,299,000 for
the nine month period ended September 30, 1998.
Excluding the effect of these special charges and reversals, earnings per share,
diluted, for the third quarter of 1999 were $0.18, compared to a loss of $0.30
per share for the third quarter of 1998 and earnings per share, diluted, for the
first nine months of 1999 were $0.40 compared to a loss of $0.31 per share for
the first nine months of 1998.
"We have made progress over the last nine months, and continued progress will
depend in part on the acceptance by the market of our new products and in the
short-term our profitability will be dependent on the level of revenues and the
relative mix of broadband and narrowband products," said Vinita Gupta, chief
executive officer and chairperson of the board of Digital Link.
This release contains forward-looking statements, including statements related
to the Company's progress, the introduction of new products, and their impact on
the Company's revenue and profit growth. These statements are subject to risks
and uncertainties that may cause actual future events and results to differ
materially, including, but not limited to, the impact of competitive products
and pricing, and the loss of, or difference in actual from anticipated levels of
purchases from, the Company's major customers. Readers are referred to documents
filed by Digital Link with the Securities and Exchange Commission, specifically
the most recent reports on Form 10-K and Form 10-Q, which further discuss these
and other important risk factors.
ABOUT DIGITAL LINK
Digital Link Corporation is a leading provider of high-performance,
cost-effective, digital network access products for both narrowband and
broadband applications. The company offers access solutions that increase the
level of intelligence at the demarcation point where LANs and WANs meet. These
products are used by Internet service providers and carriers as infrastructure
equipment, and by enterprises for connectivity to WAN services. Digital Link is
headquartered in Sunnyvale, California, and offers its products worldwide.
Additional information is available at Digital Link's website:
http://www.dl.com.
<PAGE>
DIGITAL LINK CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
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<S> <C> <C>
(UNAUDITED)
ASSETS
Current Assets:
Cash and short-term marketable securities......................................... $ 10,147 16,034
Accounts receivable............................................................... 6,343 4,767
Inventories....................................................................... 3,099 4,306
Prepaids and other current assets................................................. 1,045 998
Income taxes receivable........................................................... 0 2,501
Deferred income taxes............................................................. 3,069 3,069
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Total current assets............................................................ 23,703 31,675
Long-term marketable securities................................................... 28,210 18,696
Property and equipment, net....................................................... 2,173 2,582
Deferred income taxes............................................................. 1,560 1,560
Other assets...................................................................... 50 393
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Total assets.................................................................... $ 55,696 $ 54,906
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable.................................................................. $ 2,781 $ 2,365
Accrued payroll expense........................................................... 2,611 2,168
Other accrued liabilities......................................................... 4,890 4,764
Income taxes payable.............................................................. 288 243
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Total current liabilities....................................................... 10,570 9,540
Shareholders' equity................................................................ 45,126 45,366
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Total liabilities and shareholders' equity...................................... $ 55,696 $ 54,906
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</TABLE>
<PAGE>
DIGITAL LINK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED YEAR-TO-DATE
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1999 1998 1999 1998
--------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales............................................................. $ 16,400 $ 13,271 $ 47,254 $ 40,587
Cost of sales......................................................... 7,057 10,168 21,400 24,203
--------- --------- --------- ---------
Gross profit........................................................ 9,343 3,103 25,854 16,384
--------- --------- --------- ---------
Expenses:
Research & development.............................................. 2,978 3,856 8,163 10,245
Selling, general & administrative................................... 4,802 4,413 14,646 14,401
Purchased research & development.................................... 0 0 0 2,299
Restructuring charges............................................... *(424) 2,506 *(424) 2,506
--------- --------- --------- ---------
Total operating expenses.......................................... 7,356 10,775 22,385 29,451
--------- --------- --------- ---------
Operating income (loss)........................................... 1,987 (7,672) 3,469 (13,067)
Interest income....................................................... 464 551 1,404 1,619
--------- --------- --------- ---------
Income (loss) before provision for income taxes..................... 2,451 (7,121) 4,873 (11,448)
Provision (benefit) for income taxes.................................. 613 (2,848) 1,218 (4,538)
--------- --------- --------- ---------
Net income (loss)................................................... $ 1,838 $ (4,273) $ 3,655 $ (6,910)
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income (loss) per share, basic.................................. $ 0.23 $ (0.47) $ 0.45 $ (0.74)
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used in computing per share amounts, basic................... 8,013 9,129 8,122 9,311
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income (loss) per share, diluted................................ $ 0.22 $ (0.47) $ 0.44 $ (0.74)
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used in computing per share amounts, diluted................. 8,243 9,129 8,254 9,311
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
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* Adjustment due to reversal of restructuring charges.
<PAGE>
DIGITAL LINK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING RESTRUCTURING CHARGES AND PURCHASED RESEARCH AND DEVELOPMENT
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED YEAR-TO-DATE
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1999 1998 1999 1998
--------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales............................................................. $ 16,400 $ 13,271 $ 47,254 $ 40,587
Cost of sales......................................................... 7,057 10,168 21,400 24,203
--------- --------- --------- ---------
Gross profit........................................................ 9,343 3,103 25,854 16,384
--------- --------- --------- ---------
Expenses:
Research & development.............................................. 2,978 3,856 8,163 10,245
Selling, general & administrative................................... 4,802 4,413 14,646 14,401
--------- --------- --------- ---------
Total operating expenses.......................................... 7,780 8,269 22,809 26,946
--------- --------- --------- ---------
Operating income (loss)........................................... 1,563 (5,166) 3,045 (8,262)
Interest income....................................................... 464 551 1,404 1,619
--------- --------- --------- ---------
Income (loss) before provision for income taxes..................... 1,099 (4,615) 4,449 (6,643)
Provision (benefit) for income taxes.................................. 498 (1,846) 1,112 (2,634)
--------- --------- --------- ---------
Net income (loss)................................................... $ 1,520 $ (2,769) $ 3,337 $ (4,009)
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income (loss) per share, basic.................................. $ 0.19 $ (0.30) $ 0.41 $ (0.31)
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used in computing per share amounts, basic................... 8,013 9,129 8,122 9,311
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income (loss) per share, diluted................................ $ 0.18 $ (0.30) $ 0.40 $ (0.31)
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used in computing per share amounts, diluted................. 8,243 9,129 8,254 9,311
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
<PAGE>
Exhibit (a)(10)
FOR IMMEDIATE RELEASE
CONTACT: DAN BURCH
MACKENZIE PARTNERS,
INC.
(212) 929-5500
TEMPORARY RESTRAINING ORDER DENIED IN LAWSUIT CHALLENGING
TENDER OFFER FOR DIGITAL LINK CORPORATION
SUNNYVALE, California, October 14, 1999--Digital Link Corporation (Nasdaq:
"DLNK") and DLZ Corp. announced that the California Superior Court has denied an
application for a temporary restraining order filed by plaintiffs in two
purported class actions challenging DLZ's tender offer for all of Digital Link's
shares for $10.30 cash. DLZ was formed by Digital Link's founder to purchase all
Digital Link shares owned by the public.
Plaintiffs' application sought to restrain DLZ from proceeding with or
completing the proposed merger of DLZ with Digital Link following the tender
offer. The Court also denied plaintiffs' application for expedited discovery.
The court set a hearing for December 2, 1999 on plaintiffs' threatened
application for a preliminary injunction. If the tender is consummated and the
related short-form merger is completed, there will be no hearing on plaintiff's
present motion for a preliminary injunction.
The tender offer is scheduled to expire at 12:00 midnight, New York City time,
on Friday October 15, 1999.
The Information Agent for the Tender Offer is MacKenzie Partners, Inc.
Additional information and copies of the tender offer documents can be obtained
from Mackenzie by calling (800) 322-2885.
ABOUT DIGITAL LINK
Digital Link Corporation is leading provider of high-performance,
cost-effective, digital network access products for narrowband and broadband
applications. The company offers access solutions that increase the level of
intelligence at the demarcation point where LAN's and WAN's meet. These products
are used by Internet service providers and carriers as infrastructure equipment,
and by enterprises for connectivity to WAN services. Digital Link is
headquartered in Sunnyvale, California, and offers its products worldwide.
Additional information is available at Digital Link's website:
http://www.dl.com.
