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.
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
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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
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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).
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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/ Xxxxx X. Xxxxx
-------------------------------------
Title: Executive Vice President
THE TRANSITORY SUBSIDIARY:
BETA ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Title: Executive Vice President
THE COMPANY:
PENRIL DATACOMM NETWORKS, INC.
By: /s/ Xxxxx Xxxxx Xxxxxxx
-------------------------------------
Title: President, Chief Executive Officer
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