<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 13, 1997.
REGISTRATION NO. 333-______________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------
BAY NETWORKS, INC.
(Exact name of Registrant as specified in its charter)
--------------
<TABLE>
<S> <C> <C>
DELAWARE 3661 04-2916246
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Number) Identification No.)
</TABLE>
4401 GREAT AMERICA PARKWAY
SANTA CLARA, CA 95054
(408) 988-2400
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
--------------
DAVID L. HOUSE
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN
OF THE BOARD OF DIRECTORS
BAY NETWORKS, INC.
4401 GREAT AMERICA PARKWAY, SANTA CLARA, CA 95054
(408) 988-2400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
MONTGOMERY KERSTEN, ESQ. BRUCE E.SCHAEFFER, ESQ.
Secretary Gray Cary Ware & Freidenrich
Bay Networks, Inc. A Professional Corporation
4401 Great America Parkway 400 Hamilton Avenue
Santa Clara, CA 95054 Palo Alto, CA 94301
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box: /X/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. / / __________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / __________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================================
PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE (1) PRICE (1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($0.01 par value) 2,193,709 shares $20.4375 $44,833,928 $13,586
==========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration
fee and based on the average of the high and low prices of the
Common Stock of Bay Networks, Inc. as reported on the New York
Stock Exchange on January 6, 1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
2,193,709 SHARES
BAY NETWORKS, INC.
COMMON STOCK
The 2,193,709 shares of Common Stock of Bay Networks, Inc. (the
"Company") offered by this Prospectus (the "Shares") are outstanding shares
that may be sold from time to time by or on behalf of certain stockholders (the
"Selling Stockholders") of the Company described in this Prospectus under
"Selling Stockholders." The Selling Stockholders acquired the Shares from the
Company in a private transaction related to the Company's acquisition of all of
the outstanding stock of NetICs, Inc. ("NetICs") pursuant to a merger of NetICs
with and into a newly formed, wholly-owned subsidiary of the Company (the
"Acquisition"). The Company has agreed to register the Shares under the
Securities Act of 1933, as amended (the "Securities Act"), and to use its best
efforts to cause the registration statement covering the Shares to be declared
effective and to remain effective until the earlier of (i) such time as each of
the Selling Stockholders may sell all of the Shares held by him, her or it
without registration pursuant to Rule 144 under the Securities Act within a
three-month period; (ii) such time as all of the Shares have been sold by the
Selling Stockholders; or (iii) two (2) years following the closing of the
Acquisition on December 17, 1996. The Company will not receive any of the
proceeds from the sale of the Shares by the Selling Stockholders.
The Company has been advised by the Selling Stockholders that they
intend to sell all or a portion of the Shares from time to time on the New York
Stock Exchange ("NYSE"), in negotiated transactions or otherwise, and on terms
and at prices then obtainable. The Selling Stockholders and any
broker-dealers, agents or underwriters that participate with the Selling
Stockholders in the distribution of any of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commission
received by them and any profit on the resale of the Shares purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act. The Company and the Selling Stockholders have agreed to certain
indemnification arrangements. See "Plan of Distribution."
The Company will bear all costs and expenses incident to the offering
and sale of the Shares to the public, including without limitation, printing
expenses, filing fees, legal fees and disbursements of counsel for the Company,
accounting fees and "blue sky" expenses, but excluding any underwriting
commissions or similar charges and legal fees and disbursements of counsel for
the Selling Stockholders.
THE SHARES HAVE NOT BEEN REGISTERED FOR SALE UNDER THE SECURITIES
LAWS OF ANY STATE OR JURISDICTION AS OF THE DATE OF THIS PROSPECTUS. BROKERS
OR DEALERS EFFECTING TRANSACTIONS IN THE SHARES SHOULD CONFIRM THE REGISTRATION
OF THE SHARES UNDER THE SECURITIES LAWS OF THE STATES IN WHICH SUCH
TRANSACTIONS OCCUR, OR THE EXISTENCE OF ANY EXEMPTIONS FROM SUCH REGISTRATION.
The Company's Common Stock is listed on the NYSE. On January 6,
1997, the last sales price of the Company's Common Stock as reported on the
NYSE was $20.625.
--------------
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED HEREBY.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------
The date of this Prospectus is January 13, 1997
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information filed by the Company can be inspected
and copied at the Commission's public reference room at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, as well as at the Regional Offices of the
Commission located at Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of such material can be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the fees prescribed by the Commission.
The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The Commission's web site can be accessed
at http://www.sec.gov. The Company's Common Stock is traded on the NYSE.
Reports and other information concerning the Company can also be inspected at
the offices of the NYSE, 20 Broad Street, New York, New York 10005.
The Company has also filed with the Commission a Registration
Statement on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, copies of which may be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of
the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference: (1) Annual
Report on Form 10-K for the year ended June 30, 1996; (2) Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996; (3) the description of the
Company's capital stock contained in the Company's Registration Statement on
Form 8-A filed on February 21, 1996; (4) the description of the Company's
Preferred Stock Purchase Rights attached to each share of the Company's Common
Stock contained in the Company's Registration Statement on Form 8-A filed on
February 21, 1996; and (5) Current Report on Form 8-K filed on November 6,
1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents. Any statement incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the foregoing documents incorporated by reference in this Prospectus (other
than any exhibits thereto). Requests for such documents should be directed to
Bay Networks, Inc. at 4401 Great America Parkway, Santa Clara, CA 95054
(telephone number (408) 988-2400), Attn: Secretary.
2
<PAGE> 4
THE COMPANY
The Company designs, manufactures, markets and supports a
comprehensive line of networking products and services, including high-speed
routers, switches, intelligent hubs, remote and internet access solutions and
sophisticated management software providing network design and configuration
solutions. These offerings enable end users to build or enhance their data
network systems, including all levels, from small local area networks to large
enterprise-wide information infrastructures.
The Company is a Delaware corporation incorporated in May, 1986. The
Company's principal executive offices are located at 4401 Great America
Parkway, Santa Clara, California 95054, telephone number (408) 988-2400. As
used in this Prospectus, references to the "Company" or the "Registrant"
include Bay Networks, Inc. and its subsidiaries.
RISK FACTORS
The following risk factors should be considered in conjunction with
the other information included and incorporated by reference in this Prospectus
before purchasing the Common Stock offered hereby.
Business Environment and Risk Factors That May Affect Future Results.
The following discussion should be read in conjunction with the consolidated
financial statements and related notes contained in the documents filed by the
Company with the Commission and incorporated herein by reference as well as
the other documents filed by the Company with the Commission. The Company's
future operating results may be affected by various trends and factors which
are beyond the Company's control. These include, among other factors, changes
in general economic conditions, rapid or unexpected changes in technologies
and uncertain business conditions that affect the data networking industry.
Accordingly, past results and trends should not be used by investors to
anticipate future results or trends.
Risks Related to Forward Looking Statements. With the exception of
historical information, the matters discussed in this document may include
forward-looking statements that involve risks and uncertainties. The Company
wishes to caution readers that a number of important factors, including those
identified in this section as well as factors discussed elsewhere in this
Prospectus and other reports filed by the Company with the Commission, could
affect the Company's actual results and cause actual results to differ
materially from those in the forward-looking statements.
Risks Related to New Products. The Company's future revenue is
dependent on its ability to successfully develop, manufacture and market
products for customers worldwide. In this regard, future growth is dependent on
the Company's ability to timely and successfully develop and introduce new
products, establish new distribution channels, develop affiliations with
leading market participants which facilitate product development and
distribution, and market existing and new products with service providers,
resellers and channel partners, and others. Also, future revenue may be
affected in part by factors which influence the business of the Company's
direct and indirect resellers, such as the resellers' organization structure,
purchasing patterns and inventory levels.
The Company believes that the markets for its products are
characterized by rapid rates of technological innovation for both hardware and
software. Rapid rates of technological change, in turn, may lead to shorter or
more unpredictable product life cycles. There can be no assurance that the
Company's research and development efforts will result in commercially
successful new technology and products in the future. In addition, as the
technical complexity of new products increases, it may become increasingly
difficult to introduce new products quickly and according to schedule.
Dependence on Personnel and Recent Management Transition. The
Company's success depends upon the continued contributions of its personnel,
many of whom would be difficult to replace. Certain of the Company's officers
and other key management personnel, including its Chief Financial Officer, have
recently announced their resignation from the Company. The Company is
conducting an active search to hire new management personnel to fill such
positions. In addition, the Company has recently appointed a new President,
Chief Executive Officer and Chairman of the Board of Directors. The Company's
success will depend on its ability to attract qualified personnel, to effect a
smooth transition to new management with minimal disruption in operations, and
to motivate and retain key employees and officers. In addition, further
changes in management personnel could adversely affect the Company's operating
results.
3
<PAGE> 5
Risks Related to Gross Profit. The Company's gross profit percentage
is a function of the product mix sold in any period. Other factors such as
unit volumes, obsolescence of inventory, heightened price competition, changes
in channels of distribution, shortages in components due to timely supplies of
parts from vendors or ability to obtain items at reasonable prices, and
availability of skilled labor, also may continue to affect the cost of sales
and the fluctuation in gross profit percentages in future periods. In the past,
the Company has paid premiums to secure adequate supplies of components, and it
could become necessary to make such payments again in the future.
Risks Related to Timing of Product Shipments. One of the risks
potentially affecting the Company's operating results is the fact that a
substantial portion of the Company's revenue in any period may result from
shipments during the latter part of a period. Because the Company establishes
its operating expense level based on its operational goals, if shipments in any
period do not meet goals, net profits may be adversely affected.
Risks Related to Backlog. The Company has attempted to reduce its
product manufacturing lead times. To the extent that backlog is reduced during
any particular period, it could result in more variability and less
predictability in the Company's quarter to quarter revenue and operating
results. If manufacturing lead times are not reduced, the Company's customers
may cancel, or not place, orders if shorter lead times are available from other
manufacturers. In addition, the Company's ability to meet customer demand may
also be dependent on the ability of the Company to increase manufacturing
levels for new products to volumes required based on anticipated orders by the
market.
Risks Related to Intellectual Property Rights. The Company currently
relies upon a combination of patents, copyrights, trademarks and trade secret
laws to establish and protect its proprietary rights in its products. The
Company maintains as proprietary the software and other portions of the
technology incorporated in its network management and other products, and may
license that technology to others as necessary. There can be no assurance that
the steps taken by the Company in this regard will be adequate to prevent
misappropriation of its technology or that the Company's competitors will not
independently develop technologies that are substantially equivalent or
superior to the Company's technology. In addition, the laws of some foreign
countries do not protect the Company's proprietary rights to the same extent as
do the laws of the United States. The Company has a number of patents and may
apply for additional patents. There can be no assurance that patents will issue
from any applications filed by the Company or that, if patents do issue, the
claims will be sufficiently broad to protect the technology invented by the
Company. In addition, no assurance can be given that any patents issued to the
Company will not be challenged, invalidated or circumvented or that the rights
granted thereunder will provide competitive advantages.
Because of the existence of a large number of patents in the
networking field and the rapid rate of issuance of new patents or new standards
that may issue or to obtain important technology, it may be necessary for the
Company to enter into technology licenses from others. Such licenses could
impact the Company's operating results, and there is no assurance that the
Company will be able to license such technology.
The Company has announced a number of strategic technology alliances
and cooperative marketing efforts. There can be no assurance that such
alliances will lead to standards acceptable to the market, or competitive
products.
Risks Related to New Markets. During the past several quarters, the
Company entered new markets, including the remote access and internet markets,
primarily through the acquisition of other businesses. In addition, the Company
announced the formation of a subsidiary, NETGEAR, which focuses on developing
and marketing products for the small office and home office market. The revenue
or net profits from these new markets and businesses has not been material in
the past. At present, these new markets are undeveloped and rapidly changing.
If these markets do not develop, or if the Company's strategies for these
markets are unsuccessful, the Company's operating results may be adversely
affected.
Revenue Fluctuations and Competition. The data networking industry
has grown in the past few years, however, the Company's revenue may fluctuate
year over year or any quarter over quarter based on competition and customers
waiting for anticipated product introductions. The networking industry is
highly competitive and competition is expected to intensify and could adversely
affect the Company's future results. Networking and communications suppliers
compete in areas such as: conformity to existing and emerging industry
standards; interoperability with other networking products; the ability to run
Ethernet, token ring and FDDI networks on most common cabling systems; network
management capabilities; ease of use; scalability; price; performance;
reliability; product features; technical support; marketing expertise; and
product innovation.
4
<PAGE> 6
There are many companies competing in various segments of the
intelligent hub, switching, router and remote access network markets. The
Company's principal competitors include Ascend Communications, Cabletron
Systems, Inc., Cascade Communications, Cisco Systems, Inc., Digital Equipment
Corporation, Fore Systems, Inc., Hewlett-Packard Company, Inc., International
Business Machines Corporation and 3Com Corporation, among others. Several of
the Company's competitors have greater name recognition, more extensive
engineering, manufacturing and marketing capabilities, and greater financial,
technological and personnel resources than those available to the Company. In
addition, certain companies in the networking industry have expanded their
product lines or technologies in recent years as a result of acquisitions.
There can be no assurance that the Company will be able to compete successfully
in the future with existing or new competitors.
With industry standards established and new standards emerging, more
companies have developed standards-based products and have sought to compete on
the basis of price. Pressures from competitors offering lower priced products
could result in future price reductions for the Company's products.
Risks Related to Acquisitions. To implement its business plans, the
Company may make further acquisitions in the future. Acquisitions require
significant financial and management resources both at the time of the
transaction and during the process of integrating the newly acquired business
into the Company's operations. The Company's operating results could be
adversely affected if it is unable to successfully integrate such new companies
into its operations. Certain acquisitions or strategic transactions may be
subject to approval by the other party's board or shareholders, domestic or
foreign governmental agencies, or other third parties. Accordingly, there is a
risk that important acquisitions or transactions could fail to be concluded as
planned. Future acquisitions by the Company could also result in issuances of
equity securities or the rights associated with the equity securities, which
could potentially dilute earnings per share. In addition, future acquisitions
could result in the incurrence of additional debt, taxes, or contingent
liabilities, and amortization expenses related to goodwill and other intangible
assets. These factors could adversely affect the Company's future operating
results and financial position. As the Company's competitors have pursued a
strategy of growth through acquisition, there is a risk that future
acquisitions could be more expensive due to competition among bidders for
target companies.
Reliance on Resellers and Distributors. VAR and distributor networks
have continued to represent an important part of the Company's overall sales
and distribution strategy. While the Company is not dependent on any single VAR
or distributor, the loss of, or changes in the relationship with or performance
by, several VARs or distributors nevertheless could have a material adverse
effect on the Company's revenue and operating results. The loss of, or changes
in the relationship with or performance by, one or more international
distributors could have a material adverse effect on the Company's revenue and
operating results.
Risks Related to Customer Support and Service. The market for the
Company's products increasingly demands high levels of customer support and
service. As a result, the Company aims to provide competitive levels of support
and service, as well as product warranties. There is a risk that the Company or
its contractors may be unable to provide a level of service that is acceptable
to its customers. There is also a risk that the Company may incur substantial
costs related to warranties or service claims.
Risks Related to International Sales. International sales may be an
increasingly important contributor to the Company's revenue and net profits. As
a result, operating results are increasingly affected by the risks of such
activities, including economic conditions in the international markets in which
the Company sells its products and political and economic instability,
fluctuations in currency exchange rates, changes in international regulatory
requirements, international staffing and employment issues, tariffs and other
trade barriers, import and export controls and the burden of complying with
foreign laws. Sales into developing nations may fluctuate to a greater extent
than sales to customers in developed nations, as those markets are only
beginning to adopt new technologies and establish purchasing practices. These
risks may adversely affect the Company's future operating results and financial
position.
Risks Related to Government Regulations and Product Certification.
The Company's operations are also subject to laws, regulations, government
policies, and product certification requirements worldwide. Changes in such
laws, regulations, policies, or requirements could affect the demand for the
Company's products or result in the need to modify products, which may involve
substantial costs or delays in sales and could have an adverse effect on the
Company's future operating results.
Risks of Stock Volatility and Absence of Dividends. In recent years,
the stock market in general and the market for technology stocks in particular,
including the Company's Common Stock, have experienced extreme price
fluctuations. There is a risk that stock price fluctuation could impact the
Company's operations. Changes in
5
<PAGE> 7
the price of the Company's Common Stock could affect the Company's ability to
successfully attract and retain qualified personnel or complete necessary
business combinations or other transactions in the future. The Company has
never paid any cash dividends on its capital stock, and there can be no
assurances that the Company will do so.
Risks Relating to the Tax Treatment of the Acquisition. If the
Acquisition fails to qualify as a reorganization as described in Section 368 of
the Internal Revenue Code, NetICs would recognize gain or loss as if it had
sold its assets in exchange for an amount equal to (i) the cash plus the fair
market value of the shares of the Company's Common Stock received by the NetICS
stockholders in the Acquisition and (ii) liabilities of NetICS effectively
assumed or transferred. As the successor stockholder of NetICs, the Company
would indirectly bear the income tax due on any such gain.
6
<PAGE> 8
SELLING STOCKHOLDERS
The Selling Stockholders acquired the Shares from the Company in
connection with the Company's acquisition of all of the outstanding stock of
NetICs pursuant to the Acquisition. The Acquisition was consummated on
December 17, 1996. The Selling Stockholders received the Shares, and cash in
an aggregate amount of $36,082,957.94, directly from the Company in exchange
for all of the outstanding shares of NetICs.
The following table lists the Selling Stockholders, the number of
shares of the Company's Common Stock which each owned or had the right to
acquire as of December 17, 1996, the number of shares of the Company's Common
Stock expected to be sold by each, and the number and the percentage of the
shares of the Company's Common Stock which each will own or have the right to
acquire after the offering pursuant to the Registration Statement, assuming the
sale of all the shares expected to be sold.
<TABLE>
<CAPTION>
Shares Shares Shares Percentage
Owned To Owned Owned
Before Be After After
Selling Stockholder Offering Offered Offering Offering
- ------------------- -------- ------- -------- --------
<S> <C> <C> <C> <C>
Borue H. O'Brien TTEE for the
Borue O'Brien Living Trust dated
12/15/82.............................. 11,869 11,869 0 *
A. Dana Callow, Jr.................... 41,543 41,543 0 *
Chestnut Partners, Inc................ 106,826 106,826 0 *
Brian J. Conway....................... 28,190 28,190 0 *
Alison R. Coolidge.................... 118,696 118,696 0 *
Da-Hai Ding........................... 6,134 5,934 200 *
Ralph Dormitzer....................... 35,608 35,608 0 *
David B. Fite Jr...................... 445,309 445,309 0 *
James M. Fitzgibbons.................. 29,674 29,674 0 *
Erik J. Forsberg...................... 2,967 2,967 0 *
Stephen J. Gaal....................... 28,190 28,190 0 *
Hale and Dorr Investments II.......... 29,674 29,674 0 *
Marc Hertzberg........................ 5,934 5,934 0 *
Albert A. Holman, III................. 118,696 118,696 0 *
Virginia M. Holman.................... 30,761 29,674 1,087 *
Infonetics Research Institute, Inc.... 5,934 5,934 0 *
Nelson Kong................................ 5,341 5,341 0 *
P. Andrews McLane.......................... 28,190 28,190 0 *
Ann Marie Rhodes........................... 5,934 5,934 0 *
Ronald M. Salett........................... 445,309 445,309 0 *
Kenneth T. Schiciano....................... 28,190 28,190 0 *
Peter R. Stickells......................... 148,370 148,370 0 *
Gary V. Vacon.............................. 445,309 445,309 0 *
</TABLE>
- ----------------
* Percentage is less than 1% of the number of outstanding shares
of the Company's Common Stock.
7
<PAGE> 9
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that they
intend to sell all or a portion of the Shares from time to time on the NYSE at
prices and at terms prevailing at the time of sale or at prices related to the
then current market price, or in negotiated transactions. The Shares may be
sold by one or more of the following methods: (a) a block trade in which the
broker or dealer so engaged will attempt to sell the Shares as agent, but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its own account pursuant to this Prospectus; (c) an
over-the-counter distribution in accordance with the rules of the New York
Stock Exchange; (d) ordinary brokerage transactions and transactions in which
the broker solicits purchasers; and (e) in privately negotiated transactions.
There is no assurance that any of the Selling Stockholders will sell any or all
of the Shares offered by them. Certain of the Shares owned by the Selling
Stockholders are being held in escrow for a one year period following the
closing of the Acquisition to secure indemnification obligations in connection
with the Acquisition. In addition, certain of the Shares owned by the Selling
Stockholders are subject to a Stockholder's Agreement which prohibits the sale
of such Shares for a period of one year following the closing of the
Acquisition. Accordingly, such Shares are not available for sale at this time.
In addition, certain of the Selling Stockholders are venture capital funds,
corporations or trusts which may, in the future, distribute their shares to
their partners, shareholders or trust beneficiaries, respectively. Those
shares may later be sold by those partners, shareholders or trust
beneficiaries.
In effecting sales, brokers or dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers
or dealers will receive commissions or discounts from the Selling Stockholders
in amounts to be negotiated prior to the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with such sales. The
Company will pay all expenses incident to the offering and sale of the Shares
to the public other than any underwriting commissions or similar charges and
legal fees and disbursements of counsel for the Selling Stockholders.
The Company has agreed to indemnify in certain circumstances the
Selling Stockholders and any underwriter and certain control and other persons
related to the foregoing persons against certain liabilities, including
liabilities under the Securities Act. The Selling Stockholders have agreed to
indemnify in certain circumstances the Company and certain related persons
against certain liabilities, including liabilities under the Securities Act.
The Company has agreed with the Selling Stockholders to keep the
Registration Statement of which this Prospectus constitutes a part effective
until the earlier of (i) such time as each of the Selling Stockholders may sell
all of the Shares held by him, her or it without registration pursuant to Rule
144 under the Securities Act within a three-month period; (ii) such time as all
of the Shares have been sold by the Selling Stockholders; or (iii) two (2)
years following the closing of the Acquisition on December 17, 1996. The
Company intends to de-register any of the Shares not sold by the Selling
Stockholders at the end of such period; however, at such time, any unsold
shares may be freely tradeable subject to compliance with Rule 144 of the
Securities Act.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common
Stock by the Selling Stockholders.
LEGAL MATTERS
The legality of the Shares is being passed upon by Gray Cary Ware &
Freidenrich, A Professional Corporation, Palo Alto, California.
EXPERTS
The consolidated financial statements and schedule of the Company as of
June 30, 1996 and 1995 and for each of the three years in the period ended June
30, 1996 incorporated by reference into and made a part of this Prospectus and
Registration Statement of the Company, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon incorporated by
reference herein which, as to fiscal 1994, is based in part on the report of
Price Waterhouse LLP, independent accountants, as it relates to Wellfleet
Communications, Inc.'s consolidated financial statements for the year ended June
30, 1994. The financial statements and schedule referred to above are
incorporated herein by reference in reliance upon such reports given upon the
authority of such firms as experts in accounting and auditing.
8
<PAGE> 10
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES, OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
PAGE
----
Available Information . . . . . . . . . 2
Incorporation of Certain
Documents by Reference . . . . . . . 2
The Company . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . 3
Selling Stockholders . . . . . . . . . 7
Plan of Distribution . . . . . . . . . 8
Use of Proceeds . . . . . . . . . . . . 8
Legal Matters . . . . . . . . . . . . . 8
Experts . . . . . . . . . . . . . . . . 8
2,193,709 SHARES
BAY NETWORKS, INC.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
January 13, 1997
<PAGE> 11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses in connection
with the sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration fees and New York
Stock Exchange filing fee.
To be Paid
By The
Registrant
----------
SEC Registration Fee ................................ $13,586
NYSE listing fee .................................... 7,678
Accounting fees and expenses ........................ 10,000
Printing ............................................ 0
Transfer agent and registrar fees and expenses ...... 0
Blue Sky fees and expenses (including counsel fees).. 0
Legal fees and expenses ............................. 10,000
Miscellaneous expenses .............................. 0
-------
Total ....................................... $41,246
=======
The Company will pay all expenses of registration, issuance and
distribution of the shares being sold by the Selling Stockholders, excluding
underwriting commissions and similar charges and legal fees and disbursements
of counsel for the Selling Stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article EIGHTH of the Company's Certificate of Incorporation provides
that no director of the Company shall be liable for any breach of fiduciary
duty, except to the extent that the Delaware General Corporation Law prohibits
the elimination or limitation of liability of directors for breach of fiduciary
duty.
Article TWELFTH of the Company's Certificate of Incorporation provides
that a director or officer of the Company (a) shall be indemnified by the
Company against all costs, charges, expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement incurred in connection with any
litigation or other legal proceeding (other than an action by or in the right
of the Company) brought against him by virtue of his position as a director or
officer of the Company if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Company, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful and (b) shall be indemnified by the Company
against all costs, charges and expenses (including attorneys' fees) incurred in
connection with any action by or in the right of the Company brought against
him by virtue of his position as a director or officer of the Company if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Company, except that no indemnification
shall be made with respect to any such matter as to which such person shall
have been adjudged to be liable to the Company, unless a court determines that,
despite such adjudication but in view of all of the circumstances, he is
entitled to indemnification of such expenses. Notwithstanding the foregoing,
to the extent that a director or officer has been successful, on the merits or
otherwise, including, without limitation, the dismissal of an action with
prejudice or the settlement of an action without admission of liability, he is
required to be indemnified by the Company against all costs, charges and
expenses (including attorneys' fees) incurred in connection therewith.
Expenses shall be advanced to a director or officer at his request, provided
that he undertakes to repay the amount advanced if it is ultimately determined
that he is not entitled to indemnification for such expenses.
Indemnification is required to be made unless the Board of Directors
or independent legal counsel determines that the applicable standard of conduct
required for indemnification has not been met. In the event
II-1
<PAGE> 12
of a determination by the Board of Directors or independent legal counsel that
the director or officer did not meet the applicable standard of conduct
required for indemnification, or if the Company fails to make an
indemnification payment within sixty (60) days after such payment is claimed by
such person, such person is permitted to petition the court to make an
independent determination as to whether such person is entitled to
indemnification. As a condition precedent to the right of indemnification, the
director or officer must give the Company notice of the action for which
indemnity is sought and the Company has the right to participate in such action
or assume the defense thereof.
Article TWELFTH of the Company's Certificate of Incorporation further
provides that the indemnification provided therein is not exclusive, and
provides that in the event that the Delaware General Corporation Law is amended
to expand the indemnification permitted to directors or officers the Company
must indemnify those persons to the fullest extent permitted by such law as so
amended.
In addition, with the approval of its Board of Directors, the Company
has entered into separate indemnification agreements with its directors and
officers which require the Company to, among other things, indemnify them
against certain liabilities which may arise by reason of their status or
service.
The Company has obtained liability insurance for the benefit of its
directors and officers.
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement:
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
5.1 Opinion of Gray Cary Ware & Freidenrich, A Professional Corporation.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Price Waterhouse LLP, independent accountants.
23.3 Consent of Gray Cary Ware & Freidenrich, A Professional Corporation
(included in Exhibit 5.1).
24.1 Power of Attorney (included in the Signature Page contained in Part II
of the Registration Statement).
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
II-2
<PAGE> 13
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement; provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
D. The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under
the Securities Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under
the Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Santa Clara, State of California, on the 13th
day of January, 1997.
BAY NETWORKS, INC.
By: /s/ William J. Ruehle
-----------------------------------
William J. Ruehle
Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
Each of the officers and directors of Bay Networks, Inc. whose
signature appears below hereby constitutes and appoints David L. House and
William J. Ruehle, and each of them, their true and lawful attorneys and
agents, with full power of substitution, each with power to act alone, to sign
and execute on behalf of the undersigned any amendment or amendments to the
Registration Statement on Form S-3 and to perform any acts necessary in order
to file such amendments, and each of the undersigned does hereby ratify and
confirm all that said attorneys and agents, or their or his substitutes, shall
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on January 13, 1997 by the
following persons in the capacities indicated.
Signature Title
/s/ David L. House
- ------------------------ President, Chief Executive Officer and Chairman of
David L. House the Board of Directors (Principal Executive Officer)
/s/ Ronald V. Schmidt
- ------------------------ Executive Vice President, Chief Technology
Ronald V. Schmidt Officer and Director
/s/ William J. Ruehle
- ------------------------ Executive Vice President and Chief Financial
William J. Ruehle Officer (Principal Financial Officer)
/s/ Vito E. Palermo
- ------------------------ Vice President and Corporate Controller (Principal
Vito E. Palermo Accounting Officer)
<PAGE> 15
/s/ Arthur Carr
- ------------------------ Director
Arthur Carr
/s/ Shelby H. Carter, Jr.
- ------------------------- Director
Shelby H. Carter, Jr.
/s/ Kathleen Ann Cote
- ------------------------- Director
Kathleen Ann Cote
/s/ John S. Lewis
- -------------------------- Director
John S. Lewis
/s/ Andrew K. Ludwick
- ------------------------- Director
Andrew K. Ludwick
/s/ Benjamin F. Robelen
- ------------------------- Director
Benjamin F. Robelen
/s/ Paul J. Severino
- ------------------------- Director
Paul J. Severino
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Page No.
- ----------- --------
<S> <C>
5.1 Opinion and Consent of Gray Cary Ware & Freidenrich, A Professional
Corporation.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Price Waterhouse LLP, independent accountants.
23.3 Consent of Gray Cary Ware & Freidenrich, A Professional Corporation
(included in Exhibit 5.1).
24.1 Power of Attorney (included in the Signature Page contained in Part II
of the Registration Statement).
</TABLE>
<PAGE> 1
EXHIBIT 5.1
January 13, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: BAY NETWORKS, INC.: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
As legal counsel for Bay Networks, Inc., a Delaware corporation (the
"Company"), we are rendering this opinion in connection with the preparation
and filing of a registration statement on Form S-3 (the "Registration
Statement") relating to the registration under the Securities Act of 1933, as
amended, of 2,193,709 shares of Common Stock, par value $.01 per share (the
"Common Stock"), issued by the Company pursuant to an Agreement of Merger,
dated as of December 17, 1996, among the Company, HB Acquisition, Inc., a
Delaware corporation and a wholly-owned subsidiary of the Company, and NetICs,
Inc., a Delaware corporation.
We have examined such instruments, documents and records as we deemed
relevant and necessary for the basis of our opinion hereinafter expressed. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
to the originals of all documents submitted to us as copies.
Based on such examination, we are of the opinion that the 2,193,709
shares of Common Stock of the Company being registered pursuant to the
Registration Statement and to be sold by the selling stockholders are duly
authorized shares of Common Stock and are validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above and the use of our name wherever it
appears in said Registration Statement.
This opinion is to be used only in connection with the issuance of the
Common Stock while the Registration Statement is in effect.
Respectfully submitted,
/s/ GRAY CARY WARE & FREIDENRICH
GRAY CARY WARE & FREIDENRICH
A Professional Corporation
<PAGE> 1
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Bay Networks, Inc.
for the registration of 2,193,709 shares of its common stock and to the
incorporation by reference therein of our reports dated July 19, 1996 with
respect to the consolidated financial statements and the financial statement
schedule, of Bay Networks, Inc. included in its Annual Report (Form 10-K)
for the year ended June 30, 1996, filed with the Securities and Exchange
Commission.
Ernst & Young LLP
Palo Alto, California
January 10, 1997
<PAGE> 1
Exhibit 23.2
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
July 18, 1994 relating to the financial statements of Wellfleet Communications,
Inc. for the year ended June 30, 1994, appearing on page 19 of Bay Networks,
Inc.'s Annual Report on Form 10-K for the year ended June 30, 1996. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 10, 1997
