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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 18, 1996.
REGISTRATION NO. 333-11887
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FIRST PACIFIC NETWORKS, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 3577 77-0174188
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Number) Identification No.)
incorporation or
organization)
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871 FOX LANE
SAN JOSE, CALIFORNIA 95131
(408) 943-7600
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
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M. PETER THOMAS
CHIEF EXECUTIVE OFFICER
FIRST PACIFIC NETWORKS, INC.
871 FOX LANE, SAN JOSE, CALIFORNIA 95131
(408) 943-7600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
BRUCE E. SCHAEFFER
GRAY CARY WARE & FREIDENRICH
A PROFESSIONAL CORPORATION
400 HAMILTON AVENUE
PALO ALTO, CA 94301
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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, other than securities offered only in connection with dividend or interest
reinvestment plans, 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. / /
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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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.
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4,601,010 SHARES
FIRST PACIFIC NETWORKS, INC.
COMMON STOCK
The 4,601,010 shares of Common Stock of First Pacific Networks, Inc.
("FPN" or the "Company") offered by this Prospectus are shares of Common
Stock issuable or potentially issuable upon conversion of (i) 1,500 shares of
Series F Preferred Stock of FPN (the "Series F Preferred Shares") and (ii)
2,150 shares of Series E Preferred Stock of FPN (the "Series E Preferred
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 Series F Preferred Shares from the
Company in a private offering made in reliance upon Regulation D under the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to initially register under the Securities Act a number of shares of
Common Stock equal to at least 200% of the number of shares of Common Stock
that would be issuable if all the Series F Preferred Shares were converted at
the Fixed Conversion Price (as defined herein under "Risk Factors -- Need for
Additional Funds and No Assurance of Available Financing") on September 12,
1996, the date of filing of the Registration Statement of which this
Prospectus is a part the ("Registration Statement)," and to register an
additional number of shares of Common Stock if the number of shares of Common
Stock initially registered is insufficient to cover all of the Common Stock
issued or issuable upon conversion of the Series F Preferred Shares in
accordance with the terms thereof.
The Selling Stockholders acquired the Series E Preferred Shares from the
Company in a private offering made in reliance upon Regulation S under the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to initially register under the Securities Act a number of shares of
Common Stock equal to at least 120% of the number of shares of Common Stock
that would be issuable if the 2,500 Series E Preferred Shares outstanding on
September 12, 1996 were converted at the conversion rate in effect (see "Risk
Factors -- Need for Additional Funds and No Assurance of Available
Financing") on September 12, 1996 and to register an additional number of
shares of Common Stock if the number of shares of Common Stock initially
registered is insufficient to cover all of the Common Stock issued or
issuable upon conversion of the Series E Preferred Shares in accordance with
the terms thereof.
The number of shares of Common Stock initially registered and any
additional shares of Common Stock registered are hereinafter collectively
referred to as the "Shares". The Company has agreed to use its best efforts
to cause the registration statement(s) covering the Shares to be declared
effective and to remain effective for six (6) months from the date of
effectiveness of the Registration Statement. 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 in the Nasdaq SmallCap
Market, 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, registration,
filing and qualification fees, printers' and accounting fees and fees and
disbursements of counsel for the Company. All discounts or commissions will be
borne by 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.
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The Company's Common Stock is listed on the Nasdaq SmallCap Market. On
October , 1996, the last sales price of the Company's Common Stock as
reported on the Nasdaq SmallCap Market was $ .
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SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED HEREBY.
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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.
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The date of this Prospectus is October , 1996.
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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.,
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 60611 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. FPN's Common
Stock is traded on the Nasdaq SmallCap Market. Reports and other information
concerning FPN can also be inspected at the offices of the National Association
of Securities Dealers, Inc., Market Listing Section, 1735 K Street, N.W.,
Washington, D.C. 20006.
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. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A;
2. Form 10-K for the fiscal year ended March 31, 1996; and
3. Form 10-Q for the period ended June 30, 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 First
Pacific Networks, Inc. at 871 Fox Lane, San Jose, California 95131, Attention:
Chief Financial Officer.
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THE COMPANY
First Pacific Networks, Inc. has developed a patented
telecommunications technology that enables telephone, data and video
communications to be transmitted simultaneously over a single wiring system
to a large number of users on a cost-effective basis. The Company's strategy
is to use a combination of strategic alliances with network system
integrators, network infrastructure builders, major communications service
and equipment providers, distributors and licensees as well as direct product
sales to telephone service and cable television operators and utilities
worldwide to gain market penetration of its products.
The Company believes that worldwide market and regulatory developments and
technological advancements are contributing to the increased demand by both the
telephone and cable television industries for telecommunications systems capable
of providing multiple and integrated communications services to their
subscribers at a cost below or competitive with that necessary to build
conventional communication systems. In addition, electric utility companies and
municipalities are seeking to develop systems capable of implementing energy
management programs as well as providing other communication services such as
voice and data. The implementation of these systems requires upgrading of the
broadband networks of the cable television industry and replacement and/or re-
engineering of the switched voice and low-speed data networks operated by the
telephone companies and/or, in certain instances, the deployment of new
distribution networks. The Company believes that its technology can provide a
cost-effective means of implementing such re-engineering. The Company's
technology enables multiple communications services to be provided over upgraded
network distribution systems or new hybrid fiber/coaxial cable (HFC) networks on
an incremental user basis. To implement the Company's strategy, the Company is
adapting and incorporating its core technology and family of products into
systems designed to address specific market applications. The Company's current
marketing activities are targeted primarily to cable telephony systems
internationally and to selected domestic telephone markets, and domestic energy
management applications for utility companies.
The Company is conducting ongoing product development and testing to adapt
its technology and products for specific market requirement applications and
evaluate products under operating conditions and to reduce product costs. To
date, no system wide first or commercial deployments of the Company's technology
have been implemented, although field trials and pilot systems that include
Company products are currently ongoing. Revenues have not been material and the
Company has incurred substantial operating losses.
In July 1992, the Company completed its initial public offering. The
Company was incorporated under the laws of the State of Delaware in 1987. In
August 1988, the Company changed its name to First Pacific Networks, Inc.
The principal executive offices of FPN are currently located at 871 Fox
Lane, San Jose, California 95131 and its telephone number is (408) 943-7600.
RISK FACTORS
THE SECURITIES OFFERED HEREBY INCLUDE A HIGH DEGREE OF RISK, AND
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FOLLOWING FACTORS AND RISK FACTORS IN
CONJUNCTION WITH THE OTHER INFORMATION INCLUDED AND INCORPORATED BY REFERENCE IN
THIS PROSPECTUS BEFORE PURCHASING THE COMMON STOCK OFFERED HEREBY. THIS
PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A
OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE
FORWARD-LOOKING STATEMENTS AS A RESULT OF THE RISK FACTORS SET FORTH BELOW AND
ELSEWHERE IN THIS PROSPECTUS.
NEED FOR ADDITIONAL FUNDS AND NO ASSURANCE OF AVAILABLE FINANCING. The
Company is experiencing negative cash flow from operations and it is expected
that the Company will continue to experience negative cash flow through the end
of fiscal 1997 and potentially thereafter. There can be no assurances that
adequate revenue growth and reduction of operating losses will be achieved, and
even if they are, management may choose to supplement the Company's cash
position.
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The Company believes based on its current operating levels that it has
sufficient cash resources at June 30, 1996, together with $1,500,000 and
$3,325,000 raised in private placements in August 1996 and October 1996,
respectively, for operating activities through November 1996, at which time
it will require additional funds from other sources unless and until it
obtains sufficient revenues from product sales or license fees. The Company
is actively seeking additional funding for both near-term and long-term
requirements from private equity or debt financings and from funding by
strategic partners of various operational activities. To the extent the
Company raises additional funding by issuing equity securities or securities
convertible into equity securities ownership dilution to stockholders will
result. The Company may issue an additional series of preferred stock with
rights, preferences or privileges senior to those of the Company's Common
Stock. Pursuant to the approval given by the Company's stockholders at it's
annual meeting on September 17, 1996 the Company has filed an amendment to
it's Restated Certificate of Incorporation increasing the authorized
number of shares of the Company's Common Stock to 90 million shares. There
can be no assurance that such increase in the authorized shares will be
sufficient to fulfill all of the Company's future financing requirements. The
Company does not have any commitments or arrangements to obtain any funding
and there can be no assurance that any required financing of the Company will
be available or if available will be obtainable on terms favorable to the
Company or its stockholders. The unavailability of any required financing,
could prevent or delay the continued development and marketing of the
Company's products, may require curtailment of the Company's operations and
could result in the bankruptcy or insolvency of the Company.
On May 31, 1996, the Company completed the sale of an aggregate of 5,000
shares of Series E Preferred Stock (the "Series E Preferred Shares") at
$1,000 per share or an aggregate purchase price of $5,000,000 (net proceeds
of $4,900,000 after the payment of placement fees) in a private placement.
The Series E Preferred Shares were offered and sold in reliance on Regulation
S promulgated under the Securities Act of 1933. In August 1996, one investor
converted 2,500 shares of the Series E Preferred Shares into 3,138,000 shares
of the Company's Common Stock and in October 1996 the remaining holder
converted 350 shares of the Series E Preferred Shares into 403,877 shares of
the Company's Common Stock. The remaining holder of Series E Preferred
Shares and the Company have entered into an agreement (the "Series E
Agreement") whereby the Company is obligated to use its best efforts, to
effect a "shelf registration" of the Common Stock issuable upon conversion of
the outstanding Series E Preferred Shares and to keep the registration
statement registering such shares effective for a period of not less than six
months in consideration of the willingness of the holder to forebear
conversion of 1,250 Series E Preferred shares, until the shares issuable upon
conversion are registered. In connection with the Series E Agreement the
Company has agreed to issue warrants to purchase up to 50,000 shares of
Common Stock to the remaining holder of Series E Preferred Shares. The
warrants will become exercisable over a three year term and have an exercise
price of $1.52 per share. The shares issuable upon exercise will be
registered pursuant to a separate additional registration statement.
On August 27, 1996, the Company completed the sale of an aggregate of
1,500 shares of Series F Preferred Stock (the "Series F Preferred Shares") at
$1,000 per share or an aggregate purchase price of $1,500,000 in a private
placement. The Series F Preferred Shares were offered and sold in reliance on
the exemption from registration under the Securities Act set forth in
Regulation D under the Securities Act. In accordance with the subscription
agreement between the Company and the holder of the Series F Preferred Shares
the Company is obligated to use its best efforts to effect a "shelf"
registration of the Common Stock issuable upon conversion of the Series F
Preferred Shares and to keep the registration statement registering such
shares effective for up to six months. In connection with the issuance of
the Series F Preferred Shares the Company has agreed to issue warrants to
purchase up to 100,000 shares of the Company's Common stock to an individual
as finder compensation. The warrants become exercisable over a three year
term and have an exercise price of $1.52 per share. The shares issuable upon
exercise will be registered pursuant to a separate additional registration
statement.
On September 26, 1996, the Company entered into stock purchase agreements
with a group of investors for the sale of an aggregate of 3,500 shares of
Series G Preferred Stock (the "Series G Preferred Shares") at $1,000 per
share or an aggregate purchase price of $3,500,000 (net proceeds of
$3,325,000) in a private placement. The sale of the shares closed on October
1 and 2, 1996. The Series G Preferred Shares were offered and sold in
reliance on the exemption from registration under the Securities Act set
forth in Regulation D under the Securities Act. In accordance with the
registration rights agreements between the Company and the purchasers of the
Series G Preferred Shares the Company is obligated to use its best efforts to
effect a "shelf" registration of the Common Stock issuable upon conversion of
the Series G Preferred Shares and to keep the registration statement
registering such shares effective for up to one year. In connection with the
issuance of the Series G Preferred Shares, the Company has agreed to issue
warrants to purchase up to 350,000 shares of the Company's Common stock to
the placement agent. The warrants become exercisable over a three year term
and have an exercise price of $1.34 per share. The shares issuable upon
conversion of the Series G Preferred Shares and exercise of the warrants will
be registered pursuant to a separate additional registration statement.
Should the Registration Statement not be declared effective within ninety
(90) days from the date of closing of the Series G Preferred Share financing
the Company will incur certain penalties payable in cash or the Company's
Common Stock. When the Series G Preferred Shares are converted and if the
Series G Warrants are exercised they will result in additional dilution to
the stockholders.
The Series E Preferred Shares may be converted into the Company's Common
Stock at a conversion price which is the lower of (i) $3.25 (the "Series E
Fixed Conversion Price"), or (ii) 80% of the average closing bid price for
the three trading days prior to the date the investor gives notice of
conversion. The Series E Preferred Shares shall automatically be converted
into the Company's Common Stock, if not previously converted, on May 31,
1998. The Series E Preferred Shares are entitled to receive dividends only
when and if dividends are declared on the Company's Common Stock. The
Company has the right to redeem outstanding Series E Preferred Shares under
certain circumstances.
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The Series F Preferred Shares may be converted into the Company's Common
Stock at a conversion price which is the lower of (i) $1.27 (the "Series F
Fixed Conversion Price"), or (ii) 80% of the average closing bid price for
the three trading days prior to the date the investor gives notice of
conversion. The Series F Preferred Shares shall automatically be converted
into the Company's Common Stock, if not previously converted, on August 27,
1998. The Series F Preferred Shares are entitled to receive dividends only
when and if dividends are declared on the Company's Common Stock. The
Company has the right to redeem outstanding Series F Preferred Shares under
certain circumstances.
The Series G Preferred Shares may be converted into the Company's Common
Stock at a conversion price which is the lower of (i) $1.34 (the "Series G
Fixed Conversion Price"), or (ii) 85% of the average closing bid price for the
three trading days prior to the date the investor gives notice of conversion.
The Series G Preferred Shares shall automatically be converted into the
Company's Common Stock, if not previously converted, on October 1, 1998. The
Series G Preferred Shares are entitled to receive dividends only when and if
dividends are declared on the Company's Common Stock. The Company has the
right to redeem outstanding Series G Preferred Shares under certain
circumstances.
In addition, the Company has outstanding warrants that contain certain
piggyback registration rights. The warrants are subject to anti-dilution
adjustments and are currently exercisable into approximately 1,352,000 shares of
the Company's Common Stock. The shares issuable upon exercise will be
registered pursuant to a separate additional registration. If exercised the
warrants will result in additional dilution to stockholders.
CONTINUING OPERATING LOSSES; ACCUMULATED DEFICIT; UNCERTAINTY OF FUTURE
PROFITABILITY. The Company has incurred substantial losses since its inception
and, as of June 30, 1996, had an accumulated deficit of approximately
$131,408,000. The Company has incurred and expects to incur, over the near-
term, additional operating losses and will continue to incur operating losses
until such time as product sales generate sufficient revenues to fund its
operations. The timing of achieving profitability is primarily dependent upon
the continued development and commercial acceptance of the Company's products,
and management's ability to strategically focus the Company. There can be no
assurance as to whether or when achievement of profitable operations will occur.
Numerous factors may materially and unpredictably affect operating results
of the Company including the uncertainties of new product introduction and sales
growth; the timing and extent of field trials of the Company's products; and
recognition of license fees. Accordingly, the Company's operating results are
expected to fluctuate from period to period.
RECEIPT BY THE COMPANY OF A GOING CONCERN OPINION FROM ITS INDEPENDENT
ACCOUNTANTS. The report dated May 17, 1996, of Coopers & Lybrand L.L.P. on
the Company's consolidated financial statements for the fiscal year ended
March 31, 1996, contains an explanatory paragraph regarding the Company's
ability to continue as a going concern.
LISTING OF THE COMPANY'S COMMON STOCK ON NASDAQ SMALLCAP MARKET. During
1995, the Company received notice from Nasdaq indicating that as a result of the
Company's failure to maintain $4,000,000 of net tangible assets, as required by
the NASD bylaws governing continuance on the Nasdaq National Market, the
Company's Common Stock would be delisted if the required net tangible assets
condition was not satisfied. Subsequently, the NASD moved the Company to the
Nasdaq SmallCap Market commencing August 25, 1995. The NASD bylaws governing
continuance on the Nasdaq SmallCap Market require companies to, among other
things, maintain $1,000,000 of stockholder's equity. Should the Company not
raise sufficient additional equity financing it is possible that as a result of
fiscal 1997 losses that the Company could fall below this minimum stockholders'
equity requirement. Were such condition to occur and if (a) no temporary
exception was granted by Nasdaq, and (b) further equity financing or other means
of increasing stockholders' equity was not available, the Company's Common Stock
would be delisted from the Nasdaq SmallCap Market. A delisting of the Company
from Nasdaq could adversely affect the value and liquidity of the shares of the
Company's Common Stock and restrict the Company's future ability to raise equity
capital.
UNCERTAINTY OF MARKET ACCEPTANCE. The Company's technology and products
relate to an innovative method of providing telecommunications services. Market
acceptance of the Company's technology will depend in large part on the
Company's ability to demonstrate to potential customers and licensees, the
viability, relative cost-effectiveness and other benefits of the Company's
technology compared to competitive solutions or alternative communications
technologies. Many companies have significant investments and vested interests
in existing technologies and, accordingly, may be unwilling to rapidly accept
new communications technologies. Deployment by telephone and cable service
providers and electric utilities, particularly in the United States, may be
prevented
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or further delayed by regulatory barriers or limitations on new capital
expenditures. The Company believes that the ability to achieve rapid acceptance
of its technology in major telecommunications markets depends on its
establishment of strategic alliances with major equipment suppliers (OEM's),
system integrators and communication service providers as well as the ability to
demonstrate the cost effectiveness and functionality of the Company's products
in a market with evolving requirements.
There can be no assurance that the Company's existing or future products
will be commercially accepted other than as demonstrated by the Company's sales
growth to date. If market acceptance of these products is slower than
anticipated, the Company's product sales and results of operations would be
adversely affected, which may result in continuing losses. In addition, a
slower rate of product commercialization is likely to result in an increased
need for additional outside funding of the Company's operations.
COMPETITION. Many areas of the telecommunications industry are
characterized by intense competition, with a large number of companies offering
or seeking to develop technology or system capabilities similar to those of the
Company's technology or products. Many of these companies have substantially
greater financial, marketing and other resources than the Company, are
significantly more established in the industry and have substantial investments
in their technology. The Company's competitors include manufacturers and
vendors of technology and products which address specific customer or market
needs for each discrete area of the telecommunications industry. The Company
also competes directly with many companies who are developing or who are forming
alliances with companies in the communications field to develop innovative
communications technologies. In certain markets, the Company will also be
indirectly competing with companies who are also potential customers of its
technology and products, such as original equipment manufacturers. There can be
no assurance that competitors will not succeed in developing technologies or
offering products that are marketed at a lower price than those of the Company
or in obtaining market acceptance for products more rapidly than the Company.
Continued deregulation of the domestic telephone and cable television
industries, as well as the emergence of new telecommunications technologies, can
be expected to result in increased competition.
TECHNOLOGICAL CHANGES; RISK OF PRODUCT OBSOLESCENCE. The market for the
Company's technology and products is characterized by rapidly changing
technology and evolving industry standards. Although the Company believes its
approach to telecommunications requirements to be innovative, current
competitors or market entrants may develop new technologies, products, or
standards which could adversely affect the Company's ability to compete
effectively or which could render the Company's technology and products
obsolete. The Company's success will depend on its ability to anticipate
changes in technology and industry standards and to respond to market and
technological developments on a timely basis.
RELIANCE ON CORPORATE RELATIONSHIPS. From time to time, the Company has
established corporate relationships and intends to enter into future corporate
relationships to test, distribute and market its products. Continued
participation by corporate partners under marketing, distribution and supply
agreements with the Company will depend not only on the timely achievement of
development and marketing objectives by the Company, which cannot be assured,
but also on each corporate partner's own financial, competitive, marketing and
strategic considerations. The Company's agreements with strategic marketing,
distribution and supply partners are generally terminable by their corporate
partners on short notice. Suspension or termination of agreements with certain
corporate partners could have a material adverse affect on the Company.
DEPENDENCE ON SUPPLIERS. The Company relies on outside sources to
manufacture components of its products, none of which are contractually
obligated to meet the long-term requirements of the Company. While the Company
believes there are a number of potential sources of supply for each component,
there can be no assurance that current or alternative sources will be able to
supply all of the Company's demands on a timely basis. Although the Company
believes alternative sources are available, any interruption in the supply by
these suppliers or substitution of an alternative supplier would likely result
in delays in delivery that could adversely affect the Company's business. In
addition, reliance on outside manufacturing sources reduces the Company's
control over production costs.
RELIANCE ON THIRD PARTY MANUFACTURERS. The Companies strategy includes
seeking subcontracts with high volume manufacturers in order to provide the
capacity necessary to support projected demands for the Company's
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products without incurring the capital expenditures required in connection with
establishing an internal manufacturing capability. The Company may also seek to
cross-license the manufacture of certain elements of its systems to strategic
alliances when such activity could result in enhancements or cost reductions to
its products being funded by the licensee. There can be no assurance that the
Company will be able to secure subcontract manufacturing. Should it not be able
to do so and significant sales materialize, the Company will incur significant
expenditures in building manufacturing capacity and could experience delays in
fulfilling it's production obligations.
In January 1994, the Company entered into a three-year agreement with Sanyo
Electric Co. Ltd. ("Sanyo") providing for Sanyo to manufacture the customer
interface unit of the FPN1000 system. Sanyo commenced initial manufacturing of
the customer interface unit during the fourth quarter of fiscal 1995. The
Company has outstanding non cancelable commitments with Sanyo to purchase
approximately $2.0 million of customer interface units. The Company and Sanyo
currently have agreed that the Company will purchase this inventory which is
comprised of both finished goods and components through the remainder of fiscal
1997.
RISKS OF INTERNATIONAL OPERATIONS. The Company's strategy includes
marketing its technology to licensees and partners, which may include
governmental entities, and selling products in foreign countries. In addition,
a substantial portion of the components of the Company's products are fabricated
overseas. Accordingly, the Company's business will be subject to many of the
risks of international operations, including tariffs and other trade barriers,
currency control regulations, political instability, unexpected changes in
regulatory requirements, difficulties in staffing and managing foreign
operations, longer payment cycles, greater difficulty in accounts receivable
collection and potential adverse tax consequences. Also, currency conversion
gains and losses could contribute to fluctuations in the Company's results of
operations. If for any reason exchange or price controls or other restrictions
on the conversion or repatriation of foreign currencies were imposed, the
Company's operating results could be adversely affected. There can be no
assurance that these factors will not have an adverse impact on the Company's
international operations and, consequently, its operating results.
DEPENDENCE ON LICENSEES AND INDEPENDENT DISTRIBUTORS. To the extent the
Company licenses its technology, revenues beyond the initial license fee will be
derived primarily from product component sales to or royalties from licensees or
other revenue-sharing arrangements which are dependent on the successful
marketing of products utilizing Company technology. Principal marketing
activities are expected to be conducted or controlled by licensees of the
Company's technology. Accordingly, the Company's future success will depend to
a significant extent on the commitment of Company licensees to the Company's
technology and products. If the Company licenses its technology and products,
it may also not have control over the manufacturing process, quality assurance
or costs. Although the Company's licensing strategy is based partially on the
Company's assessment that licensees may be more effective than the Company in
penetrating certain markets and obtaining greater market share, there can be no
assurance that this will be the case. Accordingly, revenues which may be
derived by the Company under license arrangements may be less than from sales
which might have been derived by the Company if the Company were marketing its
products directly. In addition, Entergy Enterprises is entitled to receive or
participate in certain license and sublicense fees derived by the Company.
Further, because the Company believes that the success of a telecommunications
technology such as the Company's depends on rapid and widespread market
penetration, the inability of licensees to achieve such penetration will
materially adversely affect the Company's business and prospects. In certain
markets, marketing efforts (including marketing to potential licensees) are or
may in the future be conducted by independent distributors and OEMs who may also
represent entities that are more significant to the distributor's business than
is the Company and who may have no contractual obligation to market the
Company's technology or products.
DEPENDENCE ON PATENTS AND OTHER PROPRIETARY RIGHTS. The Company has twelve
issued United States patents, six issued foreign patents and two additional
United States patent applications pending, all generally covering the Company's
core technology. In addition, more than 20 corresponding patent applications
are pending in various foreign countries. The Company believes these patents
have been and will continue to be important in enabling the Company to compete
in the telecommunications industry. However, there can be no assurance that the
Company's patents will not be challenged or circumvented by competitors or will
provide the Company with any competitive advantages or that other companies will
not be able to market functionally similar products, systems or processes
without violating the Company's patent rights or that any additional patents
will be issued.
8
<PAGE>
Failure to obtain patent protection in certain foreign countries may have a
material adverse affect on the Company's ability to compete effectively in those
countries. The Company also relies on trade secrets that it seeks to protect,
in part, through confidentiality agreements with employees and other parties.
There can be no assurance that these agreements will not be breached, that the
Company will have adequate remedies for any breach or that the Company's trade
secrets will not otherwise become known to or independently developed by
competitors. As the Company intends to enforce its patents, trademarks and
copyrights and protect its trade secrets, it may be involved from time to time
in litigation to determine the enforceability, scope and validity of these
rights. Any such litigation could result in substantial cost to the Company and
diversion of effort by the Company's management and other personnel.
GOVERNMENT REGULATION. The Company's markets in the United States may be
materially affected by regulations and actions of the Federal Communications
Commission ("FCC"), state public service and utility commissions, the United
States Congress, and the courts relating to regulatory barriers between the
telephone service and cable television industries, rate restrictions for
services provided by companies in such industries, or other factors which affect
the market and demand for and availability of communication systems providing a
combination of telephone, computer, and video services. In certain United
States markets, regulatory barriers restrict the ability of some service
providers to provide a full range of communications services. Although
legislation has been proposed to change the current regulations for those who
provide both telephone and video services, there can be no assurance that such
legislation will be implemented or, if implemented, when such changes will
become effective. These restrictions may be an important factor in decisions by
domestic telephone companies or cable operators in purchasing Company products
or licensing Company technology. A decision by a utility to deploy an energy
management system using PowerView-TM- for use in its existing service territory
for energy applications will depend in part on the evaluation and approval of
public utility commissions. There can be no assurance that public utility
commissions will permit utilities to recover the full costs of PowerView in
their customer rate bases.
RISKS RELATING TO FIELD AND PILOT TESTING. Telecommunications technologies
such as the Company's are generally first evaluated through a lengthy process of
testing, field trials and first deployments prior to any commercial deployments.
As a result, the Company has expended and may continue to expend substantial
sums on product development and modifications and for inventory to support field
trials which may not result in any commercial deployments. The Company's
technology and products have been tested in certain field trials which have not
yet resulted in significant purchases of Company products. Field trials are
ongoing and the Company is unable to predict whether or when any commercial
deployments will result, as this may depend on numerous factors beyond the
Company's control, such as regulatory constraints, priorities and limitations on
capital expenditures of the customer.
VOLATILITY OF STOCK PRICE. The trading price of the Company's Common
Stock has been highly volatile and could continue to be subject to
significant fluctuations in response to variations in the Company's quarterly
operating results, general trends in the industry and other factors. The
market prices of stocks of high technology companies often fluctuate based on
factors unrelated to the operating performance of specific companies.
Announcements by potential customers of their plans with respect to field
trials or deployment orders for products of the Company or of competitors of
the Company could cause the market price of the Common Stock to fluctuate
substantially. Announcements of regulatory changes, or the failure to make
changes which are anticipated by the telecommunications industry or the
public, may create public perception that the business prospects of the
Company may be adversely affected. Such a perception, whether or not
accurate, may adversely affect the market price of the Common Stock.
DEPENDENCY ON HARDWARE SUPPLIERS. The Company's PowerView-Registered
Trademark- system is integrated with hardware and software components that
comprise the in-home network. The Company has completed integration of its
current version of PowerView-Registered Trademark- in cooperation with two
hardware suppliers. The Company is currently dependent upon these suppliers for
its continued involvement in certain field trials of PowerView-Registered
Trademark- as well as potential near-term sales activities. Should these
suppliers be unable to supply or discontinue production, the Company could
experience significant delays and costs as a result of identifying and
integrating the PowerView-Registered Trademark- product with a replacement
supplier. Although the Company is investigating and evaluating additional
sources there can be no
9
<PAGE>
assurance that such activities will occur or, occur in a timely enough
fashion to avoid delays and incurring significant additional integration
costs.
FLUCTUATION IN REVENUES. The Company's strategy includes licensing
arrangements, which are expected to include a license fee. During the period in
which license fees are derived and retained by the Company, these fees can
represent a substantial portion of the Company's revenues. Because of the
extensive period of time involved in negotiating and obtaining a licensing
arrangement as well as the inability to predict whether or when any licenses
will be entered into, the Company may experience significant fluctuations in
revenues (or periods in which minimal or no revenues are recognized) and
operating results, at least over the near term. In addition, Entergy
Enterprises has the right to receive or participate in certain license or
sublicense fees derived by the Company. Additional variability in revenues and
operating results may arise from timing and extent of field trials, budgeting
and purchasing patterns of customers, regulation of cable television operators
and telephone companies and technological developments in the telecommunications
industry, as well as general economic trends. Notwithstanding the lack of
revenues in certain periods, the Company continues to incur significant expenses
and, accordingly, substantial net losses and cash flow shortfalls from
operations. The continued inability of the Company to generate revenues on a
predictable basis could result in the interruption or cancellation of certain of
the Company's research and product development efforts, and require the Company
to obtain additional funds.
DEPENDENCE UPON KEY PERSONNEL. Because of the specialized technical nature
of the Company's business the Company's success will depend to a significant
extent upon a number of key technical and management employees. While the
Company employees are required to sign standard agreements concerning
confidentiality and ownership of inventions, the employees are generally not
otherwise subject to employment agreements. The loss of the services of any of
the Company's key employees could have a material adverse effect on the
Company's business, financial condition or results of operations. The Company
does not maintain life insurance policies on its key employees.
NO ASSURANCE OF ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL. The Company's
ability to maintain its competitive technological position will depend, in part,
upon its ability to attract and retain highly qualified scientific, managerial
and manufacturing personnel. Competition for such personnel is intense. The
loss of a significant group of key employees would adversely affect the
Company's product development effort.
OBLIGATIONS DUE ENTERGY ENTERPRISES. Pursuant to an Amended Product
License Agreement (the "License Agreement") with Entergy Enterprises, Inc.
(Entergy) the Company is obligated to pay Entergy $3,500,000 in March 1998 and
$3,500,000 in March 1999. The amounts due Entergy will be reduced by any
royalty payments paid to Entergy in connection with the License Agreement prior
to their payment. There can be no assurance that the Company will have
generated sufficient cash flow from its operating activities to meet this
obligation and as a result may be required to seek external debt or equity
financing at that time.
ANTI-TAKEOVER PROVISIONS. The Company is subject to agreements and
provisions which could hinder or preclude an unsolicited acquisition of the
Company. The Company has an employment agreement with one of its executive
officers and severance agreements with five of its other officers and employees.
The employment agreement which expires in June 1997, provides for the executive
to be paid the remainder of his contract if it is terminated upon a change of
control. The severance agreements generally provide for six months salary in
the event the officer/employee is terminated without cause. Additional payments
would be due in the event new employment is not secured within a twelve month
period. In addition, the Company's Restated Certificate of Incorporation
authorizes the Board of Directors to issue, without stockholder authorization,
shares of preferred stock, in one or more designated series or classes. The
Restated Certificate of Incorporation and By-laws also provide for the Board of
Directors to be divided into three classes which serve for staggered three-year
terms. The Company is also subject to a Delaware statute regulating business
combinations. In addition, the Company has adopted a preferred stock purchase
plan. Any of these agreements or provisions could discourage, hinder or
preclude an unsolicited acquisition of the Company and could make it less likely
that stockholders receive a premium for their shares as a result of any such
attempt. These provisions may also have a depressive effect on the market price
of the Common Stock.
10
<PAGE>
SELLING STOCKHOLDERS
The Selling Stockholder holding the Series E Preferred Shares acquired
the Series E Preferred Shares from the Company in a private offering made in
reliance on Regulation S under the Securities Act in a transaction
consummated on May 31, 1996 (See "Risk Factors - Need for Additional Funds
and No Assurance of Available Financing"). The Company and the holder of the
outstanding Series E Preferred Shares have agreed to include such shares in
the Registration Statement on Form S-3.
The Selling Stockholder holding the Series F Preferred Shares acquired
the Series F Preferred Shares from the Company in a private offering made in
reliance on Regulation D under the Securities Act, in a transaction
consummated on August 27, 1996 (See "Risk Factors - Need for Additional Funds
and No Assurance of Available Financing").
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
upon the conversion of the Series E and Series F Preferred Shares (the
"Preferred Shares") purchased by each, the number of Shares expected to be
sold by each, assuming the conversion of all Preferred Shares 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.
Shares
Owned Shares Percentage
Before Shares To Owned After Owned After
Selling Stockholder(1) Offering Be Offered Offering Offering(4)
---------------------- -------- ---------- -------- --------
Newsun Limited(2) 2,642,683 2,238,806 403,877 1.0
Musuem Assets Ltd.(3) 2,362,204 2,362,204 -- 0 -- --
- ---------------
(1) The persons named in the table have sole voting and investment power with
respect to all shares of FPN Common Stock shown as beneficially owned by
them.
(2) Represents 120% of the shares issuable upon conversion of the Series E
Preferred Shares had such conversion occurred on September 11, 1996 and
includes 403,877 shares acquired in connection with conversion of 350 shares
of Series E Preferred Stock in October 1996. The conversion rate at
September 11, 1996 was 80% of the average closing bid price of the
Company's Common Stock for the three trading days prior to September 11,
1996. (See "Risk Factors - Need for Additional Funds and No Assurance of
Available Financing".)
(3) Represents 200% of the shares issuable upon conversion of the Series F
Preferred Shares had such conversion occurred on September 11, 1996. The
conversion rate at September 11, 1996 was the Series F Fixed Conversion
Price. (See "Risk Factors - Need for Additional Funds and No Assurance of
Available Financing".)
(4) The number of shares of the Company's Common Stock issued and outstanding
on October 17, 1996 was 39,312,521
11
<PAGE>
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that they, or
their respective pledges, donees, transferees or successors in interest, intend
to sell all or a portion of the Shares from time to time on the Nasdaq SmallCap
Market 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 Nasdaq
SmallCap Market; (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. Pursuant to the terms of the
Certificate of Designation for Series E Preferred Stock, Series E Preferred
Shares are immediately convertible into Common Stock at the option of the
holder and are convertible into shares of Common Stock at a conversion rate
which may vary with the market price of the Company's Common Stock.
Pursuant to the terms of the Certificate of Designation for Series F
Preferred Stock Series F Preferred Shares are convertible at the option of
the holder into Common Stock on the earlier of October 26, 1996, or the
effectiveness of the Registration Statement on Form S-3. The Series F
Preferred Shares are convertible into shares of Common Stock at a conversion
rate which may vary with the market price of the Company's Common Stock. See
"Risk Factors -- Need for Additional Funds and No Assurance of Available
Financing." Therefore, the number of shares of Common Stock into which the
Series E and Series F Preferred Shares are convertible and which may be sold
by the Selling Stockholders at a particular time will vary in accordance with
the then applicable conversion rates.
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,
including without limitation, registration, filing and qualification fees,
printers' and accounting fees and fees and disbursements of counsel of the
Company. All discounts or commissions will be borne by the Selling
Stockholders.
The Company has agreed to indemnify in certain circumstances the Selling
Stockholders against certain liabilities, including certain 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 for
six months. The Company intends to de-register any of the Shares not sold by
the Selling Stockholders at the end of such six month period.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares 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.
12
<PAGE>
EXPERTS
The consolidated balance sheets as of March 31, 1996 and 1995 and the
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended March 31, 1996 incorporated by
reference in this Prospectus have been incorporated in reliance on the report
(which contains an explanatory paragraph relating to the Company's ability to
continue as a going concern as described in Note 2 of Notes to Consolidated
Financial Statements) of Coopers & Lybrand L.L.P, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
13
<PAGE>
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. . . . . . . . . . . . . . . . 3
Incorporation of Certain
Documents by Reference . . . . . . . . . . . . . 3
The Company. . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . 4
Selling Stockholders . . . . . . . . . . . . . . . .11
Plan of Distribution . . . . . . . . . . . . . . . .12
Use of Proceeds. . . . . . . . . . . . . . . . . . .12
Legal Matters. . . . . . . . . . . . . . . . . . . .12
Experts. . . . . . . . . . . . . . . . . . . . . . .13
4,601,010 SHARES
FIRST PACIFIC NETWORKS, INC.
COMMON STOCK
----------------------------------------
PROSPECTUS
-----------------------------------------
October , 1996
<PAGE>
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 Nasdaq
filing fee.
SEC Registration Fee. . . . . . . . . . . . . . . . . . .$ 2,284
--------
Nasdaq filing fee . . . . . . . . . . . . . . . . . . . . 7,500
--------
Accounting fees and expenses. . . . . . . . . . . . . . . 2,000
--------
Printing. . . . . . . . . . . . . . . . . . . . . . . . . -
--------
Transfer agent and registrar fees and expenses. . . . . . -
--------
Blue Sky fees and expenses (including counsel fees) . . . -
--------
Legal fees and expenses . . . . . . . . . . . . . . . . . 5,000
--------
Miscellaneous expenses. . . . . . . . . . . . . . . . . . 1,000
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . .$ 17,784
--------
--------
The Company will pay all expenses of registration, issuance and
distribution of the shares being sold by the Selling Stockholders, excluding
underwriting discounts and commissions and legal fees.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation and By-Laws of the Company provide that
the Company shall indemnify any person to the full extent permitted by the
Delaware General Corporate Law (the "GCL"). Section 145 of the GCL, relating to
indemnification, is hereby incorporated herein by reference.
In accordance with Section 102(a)(7) of the GCL, the Certificate of
Incorporation of the Company eliminates the personal liability of directors to
the Company or its shareholders for monetary damages for breach of fiduciary
duty as a director with certain limited exceptions set forth in Section
102(a)(7).
The Registrant has also entered into indemnification agreements with each
of its executive officers and directors, as well as several of its officers, the
form of which is filed as Exhibit 10.1 and reference is hereby made to such
form.
<PAGE>
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement:
EXHIBIT
NUMBER EXHIBIT TITLE
4.1 Certificate of Designation of Series E Preferred Stock of First
Pacific Networks, Inc. (1)
4.2 Form of Series E Offshore Securities Subscription Agreement (2)
4.3 Certificate of Designation of Series F Preferred Stock of First
Pacific Networks, Inc. (3)
4.4 Form of Subscription Agreement between First Pacific Networks, Inc.
and the investor executing such Agreement (3)
4.5 Letter of agreement between Newsun Limited and First Pacific Networks,
Inc.(3)
10.1 Form of Indemnifaction Agreement (4)
5.1 Opinion of Gray Cary Ware & Freidenrich, A Professional
Corporation.(3)
23.1 Consent of Coopers & Lybrand L.L.P., independent accountants.(3)
23.2 Consent of Gray Cary Ware & Freidenrich, A Professional Corporation
(included in Exhibit 5.1)(3)
24.1 Power of Attorney (included in the Signature Page contained in Part II
of the Registration Statement).(3)
- ---------------
(1) Filed as Exhibit 3.7 to the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1996 and incorporated herein by
reference.
(2) Filed as Exhibit 4.6 to the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1996 and incorporated herein by
reference.
(3) Previously filed.
(4) Filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1996 and incorporated herein by
reference.
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
<PAGE>
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;
(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. The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
D. 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.
E. 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
<PAGE>
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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Amendment No. 1 to Registration Statement on Form S-3 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of San Jose, State of California on the 18th day of October 1996.
First Pacific Networks, Inc.
By: /s/ M. Peter Thomas
-----------------------
M. Peter Thomas
President and Chief Executive
Officer
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed below on
October 18, 1996 by the following persons in the capacities indicated.
SIGNATURE TITLE
/s/ M. Peter Thomas PRESIDENT, CHIEF EXECUTIVE OFFICER AND
- ------------------------------------ DIRECTOR (PRINCIPLE EXECUTIVE OFFICER)
M. Peter Thomas
/s/ Kenneth W. Schneider EXECUTIVE VICE PRESIDENT FINANCE;
- ------------------------------------ CHIEF FINANCIAL OFFICER; CORPORATE
Kenneth W. Schneider SECRETARY (PRINCIPLE FINANCIAL AND
ACCOUNTING OFFICER)
/s/ Craig J. Brunet * CHAIRMAN OF THE BOARD OF DIRECTORS
- ------------------------------------
Craig J. Brunet
/s/ Robert P. McNamara, Ph.D. * CHIEF TECHNICAL OFFICER; DIRECTOR
- ------------------------------------
Robert P. McNamara, Ph.D.
/s/ Ambassador William A. Wilson * DIRECTOR
- ------------------------------------
Ambassador William A. Wilson
/s/ Paul C. O'Brien * DIRECTOR
- ------------------------------------
Paul C. O'Brien
/s/ Dr. Bill B. May * DIRECTOR
- ------------------------------------
Dr. Bill B. May
*By /s/ M. Peter Thomas
--------------------------------
Attorney in fact
<PAGE>
INDEX TO EXHIBITS
Exhibit No.
- -----------
4.1 Certificate of Designation of Series E Preferred Stock of First
Pacific Networks, Inc. (1)
4.2 Form of Series E Offshore Securities Subscription Agreement (2)
4.3 Certificate of Designation of Series F Preferred Stock of First
Pacific Networks, Inc. (3)
4.4 Form of Subscription Agreement between First Pacific Networks, Inc.
and the investor executing such Agreement (3)
4.5 Letter of agreement between Newsun Limited and First Pacific Networks,
Inc.(3)
10.1 Form of Indemnifaction Agreement (4)
5.1 Opinion of Gray Cary Ware & Freidenrich, A Professional
Corporation.(3)
23.1 Consent of Coopers & Lybrand LLP, independent accountants.(3)
23.2 Consent of Gray Cary Ware & Freidenrich, A Professional Corporation
(included in Exhibit 5.1)(3)
24.1 Power of Attorney (included in the Signature Page contained in Part II
of the Registration Statement).(3)
- ---------------
(1) Filed as Exhibit 3.7 to the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1996 and incorporated herein by
reference.
(2) Filed as Exhibit 4.6 to the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1996 and incorporated herein by
reference.
(3) Previously filed.
(4) Filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1996 and incorporated herein by
reference.
