<PAGE> 1
As filed with the Securities and Exchange Commission on July 18, 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)
-------------------
DELAWARE 3661 04-2916246
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Number) Identification No.)
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)
-------------------
JOHN J. POGGI, JR.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
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:
ROBIN G. SEIM BRUCE E. SCHAEFFER, ESQ.
Vice President and Gray Cary Ware & Freidenrich
Corporate Controller A Professional Corporation
Bay Networks, Inc. 400 Hamilton Avenue
4401 Great America Parkway Palo Alto, CA 94301
Santa Clara, CA 95054
-------------------
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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================================================================
Title of Each Class of PROPOSED MAXIMUM PROPOSED MAXIMUM
Securities to be AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
Registered REGISTERED PER SHARE (1) PRICE (1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($0.01 par value) 6,407,393 shares $27.19 $174,217,015 $52,793
============================================================================================================================
</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 July
15, 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
<PAGE> 2
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> 3
PROSPECTUS
6,407,393 SHARES
BAY NETWORKS, INC.
COMMON STOCK
The 6,407,393 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 Rapid City Communications ("Rapid City") pursuant to a
merger of a newly formed, wholly-owned subsidiary of the Company with and into
Rapid City (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) one (1) year following the closing of the
Acquisition on June 25, 1997. 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, legal fees and disbursements of counsel for the Company, "blue sky"
expenses, accounting fees and filing fees, 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 July 16, 1997,
the last sales price of the Company's Common Stock as reported on the NYSE was
$29.00.
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 July ___, 1997
<PAGE> 4
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 Reports on
Form 10-Q for the quarters ended September 30, 1996, December 31, 1996 and
March 31, 1997; (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
Reports on Form 8-K filed on November 6, 1996 and July 8, 1997.
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 95052-8185
(telephone number (408) 988- 2400), Attn: Secretary.
Trademarks of Bay Networks, Inc. appear in this document. Other
trademarks, brand, product or company names may be the property of others.
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THE COMPANY
The Company develops, manufactures, markets and supports a
comprehensive line of data 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 products 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 and telecommunication
carriers.
The Company is a Delaware corporation incorporated on May 2, 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. The discussions in this
Prospectus may include forward-looking statements that involve risks and
uncertainties. In addition to those risk factors discussed elsewhere in this
Prospectus, the Company identifies the following risk factors which 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. As the technical
complexity of new products increases, it may become increasingly difficult to
introduce new products quickly and according to schedule. In addition, due to
development in the market, the Company may need to adjust its product mix and
market focus.
Recent Management Transitions and Restructuring. In the fiscal year
ended June 30, 1997, the Company appointed a new President, Chief Executive
Officer and Chairman of the Board; a new Executive Vice President of Sales,
Service, and Marketing; a new Executive Vice President and Chief Financial
Officer; a new Executive Vice President and General Manager, Internet/Telecom
Business Group; and a new Executive Vice President and General Manager,
Enterprise Business Group. In addition, the Company has reorganized its
business groups and realigned its resources and some employees in order to
better serve its customers, and strengthen its product development and
marketing abilities. The Company's success will depend on its ability to
effect a smooth transition to its new structure and new management team with
minimal disruption in operations. These changes, as well as future changes,
may adversely impact the Company's operating results or cash flows.
Dependence on Key Personnel. The Company's success depends upon the
continued contributions of its personnel, many of whom would be difficult to
replace. The loss of services of any of the Company's key employees could have
a material adverse effect on the Company. The Company's success will depend in
large part on its ability to attract and retain highly-skilled, managerial,
engineering, sales and marketing personnel and to motivate key employees and
officers. Competition for such personnel is intense. There can be no assurance
that the Company will be successful in retaining its key technical and
management personnel and in attracting and retaining the personnel it requires
to continue to grow.
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Risks Related to Gross Profit. The Company's gross profit percentage
is a function of the product mix sold in any period. Therefore, gross profit
percentage could fluctuate, affecting the Company's operating results. Other
factors such as unit volumes, obsolescence/surplus of inventory, heightened
price competition, changes in channels of distribution, shortages in components
due to shortages or delays in supplies of parts from vendors, the ability to
obtain items at reasonable prices, and the availability of skilled labor, may
also 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. 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. In addition, if the Company is
successful in reducing its inventory levels there is a greater risk relating to
efficient timing of manufacturing and product shipments.
Risks Relating to Manufacturing Operations. The Company has a variety
of manufacturing facilities and arrangements, both domestically and
internationally. There is a risk that the Company's manufacturing abilities
could be affected by the operations of its manufacturing suppliers, suppliers'
prices and capacity, and suppliers' quality control activities.
Risks Related to Backlog. The Company has reduced its product
manufacturing lead times. However, if shorter lead times are available from
other manufacturers, the Company's customers may cancel, or not place, orders.
If backlog is reduced during any particular period, it could result in
variability and less predictability in the Company's quarter to quarter revenue
and operating results. 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 and other
intellectual property. 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.
Legal Proceedings. As with other companies in the networking
industry, the Company is subject to the risk of adverse claims and litigation
on a variety of matters, including intellectual property and securities law
matters. On March 4, 1997, the Company announced that stockholders had filed
two separate lawsuits against the Company and ten of the Company's current and
former officers and directors. One lawsuit has been filed in the United States
District Court for the Northern District of California and alleges violations
of the federal securities
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laws. The other lawsuit has been filed in California Superior Court, County of
Santa Clara, and alleges violations of the California Corporations Code. Both
lawsuits purport to seek damages on behalf of a class of stockholders who
purchased the Company's common stock during the period of May 1, 1995 through
October 14, 1996. Both cases are in the initial stages of litigation and no
trial dates have been set. On April 18, 1997, a stockholder (represented by
some of the same plaintiffs' law firms as in the aforementioned cases) filed a
lawsuit in Santa Clara County, California Superior Court alleging violations of
the federal securities laws and California Corporations Code by the Company and
nine of its current and former officers and directors. The lawsuit purports to
seek damages on behalf of a class of stockholders who acquired the Company's
common stock pursuant to the Registration Statement and Prospectus that became
effective on November 15, 1995. This case is in the initial stages of
litigation. Major litigation may result in substantial costs and expenses to
the Company and significant diversion of efforts by the Company's technical and
management personnel. In addition, an adverse ruling in a major litigation
could have a material adverse effect on the Company's future operating results,
financial position, and cash flows.
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. The market for Internet
and Intranet access and switching products is new and evolving, and it is
difficult to predict its size or future growth rate. 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, rapidly changing, and
highly competitive. 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. This 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. Increasingly, there has been greater competition in the pricing of
networking products.
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., 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. See "Industry
Consolidation." 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.
Industry Consolidation. Certain of the Company's competitors have
expanded their product lines or technologies in recent years as a result of
acquisitions. 3Com Corporation recently acquired U.S. Robotics Corporation and
Ascend Communications, Inc. recently acquired Cascade Communications
Corporation. Such consolidations by competitors are likely to create entities
with increased market shares, customer bases, technology and marketing
expertise, sales forces, or proprietary technology in product markets in which
the Company competes.
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
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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. There can be no assurance that any acquired
products, technologies or businesses will contribute at anticipated levels to
the Company's sales or earnings, or that sales and earnings from combined
businesses will not be adversely affected by the integration process. 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, amortization expenses
related to goodwill and other intangible assets and expenses incurred to align
the accounting policies and practices of the acquired companies with those of
the Company. These factors could adversely affect the Company's future
operating results, financial position, and cash flows. 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 and Manufacturing. International
sales and manufacturing 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 and
manufactures its products, 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, financial position, and cash
flows.
Foreign Currency Rate Changes. Weaker foreign currency values
relative to the U.S. dollar may render the Company's products relatively more
expensive to customers in a particular country and may lead to a reduction in
sales or profitability in that country, or result in foreign exchange losses on
the conversion to U.S. dollars of foreign currency accounts receivable
resulting from international operations. The Company remains subject to the
transaction exposures that arise from foreign exchange movements between dates.
There can be no assurance that the Company's current or any future exchange
strategy will be successful in avoiding exchange related losses or that any of
the factors listed above will not have a material adverse effect on the
Company's future operating results, financial position, and cash flows.
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. In addition, there is a risk that the
Company's earnings may fluctuate due to changes in the Company's tax rate.
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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 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 has no present intention to 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, Rapid City 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 Rapid
City stockholders in the Acquisition and (ii) liabilities of Rapid City
effectively assumed or transferred. As the successor stockholder of Rapid
City, the Company would indirectly bear the income tax due on any such gain.
MANAGEMENT
In the fiscal year ended June 30, 1997, the Company appointed a new
President, Chief Executive Officer and Chairman of the Board, a new Executive
Vice President of Sales, Service, and Marketing; a new Executive Vice President
and Chief Financial Officer; a new Executive Vice President and General
Manager, Internet/Telecom Business Group; and a new Executive Vice President
and General Manager, Enterprise Business Group.
The current executive officers of Bay Networks as of June 30, 1997 are
as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ ----- --------------------------------------------------------------
<S> <C> <C>
David L. House 54 Chairman of the Board, President and Chief Executive Officer
Lloyd A. Carney 35 Executive Vice President and General Manager, Enterprise
Business Group
Stephen G. Pearse 38 Executive Vice President and General Manager, Internet/Telecom
Business Group
David J. Rynne 56 Executive Vice President and Chief Financial Officer
David A. Shrigley 49 Executive Vice President for Sales, Service and Marketing
John J. Poggi, Jr. 50 Vice President, General Counsel and Secretary
Jane A. Risser 46 Vice President and Corporate Treasurer
Robin G. Seim 37 Vice President and Corporate Controller
</TABLE>
David L. House joined the Company in 1996 as Chairman of the Board,
President and Chief Executive Officer. Prior to joining the Company, Mr. House
was the senior vice president and general manager of the Enterprise Server
Group at Intel Corporation. During his 22 years at Intel, Mr. House served in
a number of key general management, marketing and strategic planning roles. In
1991, Mr. House headed up the Architecture, Marketing and Applications Group,
where he managed all corporate marketing activities, including the introduction
of the highly regarded "Intel Inside(R)" campaign. From 1992 to 1995, as
senior vice president of corporate strategy, Mr. House was a key architect of
Intel's major strategic alliances, including the 1994 Intel-Hewlett Packard
alliance for 64-bit architecture. For 12 years, he held profit and loss
responsibility for Intel x86 microprocessors and related products.
Lloyd A. Carney is Executive Vice President and General Manager of the
Company's Enterprise Business Group. Most recently, Mr. Carney served as
executive vice president on special assignment assisting David House, Bay
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Networks' Chairman, President and CEO, on operating issues during the recent
management transition. Mr. Carney joined the Company in 1990 as director of
technical operations and was appointed vice president of customer support in
1993.
Stephen Pearse joined the Company in June 1997 as Executive Vice
President and General Manager of the Company's Internet/Telecom Business Group.
Prior to joining the Company, he was chief executive officer at Geotek
Technologies, a position he held since June 1996. Prior to Geotek, Mr. Pearse
was senior vice president, engineering, technology, operations, MIS at Time
Warner Communications.
David J. Rynne joined the Company in January 1997 as Executive Vice
President and Chief Financial Officer. Prior to joining the Company, Mr. Rynne
was senior vice president and chief financial officer of Tandem Computers, Inc.
Mr. Rynne served as chief financial officer of Tandem Computers since 1983.
David A. Shrigley joined the Company in November 1996 as Executive
Vice President for Sales, Service and Marketing. Prior to joining the Company,
Mr. Shrigley was vice president of corporate marketing at Intel Corporation, a
position he held since June 1995. From 1990 to 1995, Mr. Shrigley was vice
president of the sales and marketing group and general manager of Intel's Asia
Pacific Operation, headquartered in Hong Kong.
John J. Poggi, Jr. joined the Company in June 1997 as Vice President,
General Counsel and Secretary. Mr. Poggi came to the Company from a private
law practice advising high-technology clients on business law. Prior to
entering private practice, Mr. Poggi had spent fourteen years in the roles of
general counsel and secretary at Raynet Corporation and Spectra-Physics.
Jane A. Risser joined the Company in 1997 as Vice President and
Corporate Treasurer. Ms. Risser came to the Company from Apple Computer where
she spent eleven years in senior financial management positions, including
director of investor relations, director of finance, and most recently, vice
president and treasurer.
Robin G. Seim joined the Company in February 1996 as Director of
Finance, World Wide Manufacturing. In November 1996, he assumed responsibility
for corporate financial planning as well as manufacturing finance. Mr. Seim
was appointed Vice President and Corporate Controller in May 1997. Prior to
joining the Company, Mr. Seim held various financial and accounting management
positions at IBM from February 1982 through January 1996, the latest of which
was controller of IBM San Jose, Storage Systems Division.
8
<PAGE> 11
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
Rapid City pursuant to the Acquisition. The Acquisition was consummated on
June 25, 1997. The Selling Stockholders received the Shares directly from the
Company in exchange for all of the outstanding shares of Rapid City.
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 June 25, 1997, 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 Owned Before Shares To Shares Owned Percentage Owned
Selling Stockholder Offering Be Offered After Offering After Offering
------------------- ------------------- ---------- --------------- ----------------
<S> <C> <C> <C> <C>
Basil Alwan . . . . . . . . . . . . . 123,004 123,004 0 *
Bert Armijo . . . . . . . . . . . . . 21,652 21,652 0 *
Nael Atallah . . . . . . . . . . . . 50,739 50,739 0 *
Brad Bailey . . . . . . . . . . . . . 6,659 6,659 0 *
William G. Baldwin . . . . . . . . . 50,739 50,739 0 *
Steve Bell . . . . . . . . . . . . . 6,150 6,150 0 *
Roger Carlsen . . . . . . . . . . . . 21,935 21,935 0 *
James Carriere . . . . . . . . . . . 6,150 6,150 0 *
Kuo-Li Chang . . . . . . . . . . . . 14,350 14,350 0 *
Chuck Clay . . . . . . . . . . . . . 8,200 8,200 0 *
ComDisco, Inc. . . . . . . . . . . . 17,858 17,858 0 *
Dirk Eastman . . . . . . . . . . . . 61,502 61,502 0 *
Lorri Everhart . . . . . . . . . . . 3,382 3,382 0 *
Rebecca Farley . . . . . . . . . . . 10,250 10,250 0 *
Tom Flaherty . . . . . . . . . . . . 30,751 30,751 0 *
Richard Ghione . . . . . . . . . . . 1,025 1,025 0 *
Aziz Hajee . . . . . . . . . . . . . 10,706 10,250 456 *
Wendy Hogsett . . . . . . . . . . . . 35,620 35,620 0 *
Van Hunter . . . . . . . . . . . . . 153,755 153,755 0 *
Bobi Ji . . . . . . . . . . . . . . . 2,050 2,050 0 *
Michael Kawai . . . . . . . . . . . . 3,075 3,075 0 *
Dan Keller . . . . . . . . . . . . . 30,751 30,751 0 *
Diane Kennedy . . . . . . . . . . . . 27,060 27,060 0 *
Joseph S. Kennedy . . . . . . . . . . 615,022 615,022 0 *
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
Shares Owned Before Shares To Shares Owned Percentage Owned
Selling Stockholder Offering Be Offered After Offering After Offering
------------------- ------------------- ---------- --------------- ----------------
<S> <C> <C> <C> <C>
Amir Khan . . . . . . . . . . . . . . 32,537 32,537 0 *
Cliff Knudson . . . . . . . . . . . . 6,659 6,659 0 *
Shyam Kota . . . . . . . . . . . . . 8,569 8,569 0 *
Mark Lerner . . . . . . . . . . . . . 24,700 24,600 100 *
John Lynn . . . . . . . . . . . . . . 50,739 50,739 0 *
Randi Lyssand . . . . . . . . . . . . 8,815 8,815 0 *
John McQuillan . . . . . . . . . . . 13,331 12,300 1,031 *
Milan Momirov . . . . . . . . . . . . 553,520 553,520 0 *
Marcelo Mourier . . . . . . . . . . . 67,652 67,652 0 *
Dave Newman. . . . . . . . . . . . .. 41,001 41,001 0 *
John Nirenstein . . . . . . . . . . . 153,755 153,755 0 *
Joan Patrick . . . . . . . . . . . . 12,300 12,300 0 *
Joe Regan . . . . . . . . . . . . . . 50,739 50,739 0 *
Richmond and Katherine McPherson Trust
U/A/D January 17, 1997 . . . . . . . 41,001 41,001 0 *
Dave Roberts . . . . . . . . . . . . 13,530 13,530 0 *
Robert Rogers . . . . . . . . . . . . 84,565 84,565 0 *
Mark Rotolo . . . . . . . . . . . . . 4,100 4,100 0 *
Ken Rubin . . . . . . . . . . . . . . 30,751 30,751 0 *
Padma Sanampudi . . . . . . . . . . . 16,781 16,781 0 *
Ross Schibler . . . . . . . . . . . . 246,008 246,008 0 *
Gabe Tarr . . . . . . . . . . . . . . 30,751 30,751 0 *
Thomas R. McPherson Revocable Trust . 328,011 328,011 0 *
Edwin Tsang . . . . . . . . . . . . . 50,739 50,739 0 *
Ihsan Tumenbatur . . . . . . . . . . 50,739 50,739 0 *
Anh Vu . . . . . . . . . . . . . . . 10,250 10,250 0 *
Sutten Wasserman . . . . . . . . . . 30,751 30,751 0 *
Michael Wong . . . . . . . . . . . . 59,195 59,195 0 *
Foundation Capital, L.P. . . . . . . 1,014,420 1,014,420 0 *
Foundation Capital Entrepreneurs Fund,
L.L.C. . . . . . . . . . . . . . . .
88,209 88,209 0 *
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
Shares Owned Before Shares To Shares Owned Percentage Owned
Selling Stockholder Offering Be Offered After Offering After Offering
------------------- ------------------- ---------- --------------- ----------------
<S> <C> <C> <C> <C>
Institutional Venture Partners
Founders Fund I, L.P. . . . . . . . . 13,721 13,721 0 *
Institutional Venture Management VI . 7,350 7,350 0 *
Institutional Venture Partners VI . . 346,472 346,472 0 *
Matrix Partners IV, L.P. . . . . . . 465,556 465,556 0 *
Matrix IV Entrepreneurs Fund, L.P. .. 24,502 24,502 0 *
Mayfield Associates Fund III, A
California Limited Partnership . . . 66,157 66,157 0 *
Mayfield VIII, A California Limited
Partnership . . . . . . . . . . . . . 1,036,472 1,036,472 0 *
WS Investment Company '96A . . . . . 12,247 12,247 0 *
</TABLE>
________________
* Percentage is less than 1% of the number of outstanding shares
of the Company's Common Stock.
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. Further, certain Shares owned by certain of the Selling
Stockholders are subject to repurchase by the Company. 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 bear all costs and expenses incident to the offering and sale of
the Shares to the public, including without limitation, printing expenses,
legal fees and disbursements of counsel for the Company, "blue sky" expenses,
accounting fees and filing fees, but excluding any underwriting commissions or
similar charges and legal fees and disbursements of counsel for the Selling
Stockholders.
11
<PAGE> 14
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) one (1) year
following the closing of the Acquisition on June 25, 1997. 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.
12
<PAGE> 15
- --------------------------------------------------------------------------------
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
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information .................................... 2
Incorporation of Certain
Documents by Reference ................................... 2
The Company .............................................. 3
Risk Factors ............................................. 3
Management ............................................... 7
Selling Stockholders ..................................... 9
Plan of Distribution ..................................... 11
Use of Proceeds .......................................... 12
Legal Matters ............................................ 12
Experts .................................................. 12
</TABLE>
6,407,393 SHARES
BAY NETWORKS, INC.
COMMON STOCK
__________________
PROSPECTUS
__________________
July ___, 1997
13
<PAGE> 16
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 fee and New York
Stock Exchange listing fee.
<TABLE>
<CAPTION>
To be Paid
By The
Registrant
----------
<S> <C>
SEC registration fee ............................................................ $ 52,793
NYSE listing fee ................................................................ 22,425
Accounting fees and expenses .................................................... 50,000
Printing ........................................................................ 3,000
Transfer agent and registrar fees and expenses .................................. 0
Blue Sky fees and expenses (including counsel fees) ............................. 0
Legal fees and expenses ......................................................... 15,000
Miscellaneous expenses .......................................................... 0
Total ................................................................... $143,218
==========
</TABLE>
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.
14
<PAGE> 17
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 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
15
<PAGE> 18
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. 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.
16
<PAGE> 19
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 18th
day of July, 1997.
BAY NETWORKS, INC.
By: /S/ JOHN J. POGGI, JR.
--------------------------------------
John J. Poggi, Jr.
Vice President, General Counsel
and Secretary
POWER OF ATTORNEY
Each of the officers and directors of Bay Networks, Inc. whose
signature appears below hereby constitutes and appoints David J. Rynne and John
J. Poggi, Jr., 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 July 18, 1997 by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
- ------------------------------------ -----------------------------------------------------
<S> <C>
/s/ DAVID L. HOUSE
- ------------------------------------
David L. House President, Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)
/s/ DAVID J. RYNNE
- ------------------------------------
David J. Rynne Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ ROBIN G. SEIM
- ------------------------------------
Robin G. Seim Vice President and Corporate Controller
(Principal Accounting Officer)
/s/ ARTHUR CARR
- ------------------------------------
Arthur Carr Director
/s/ SHELBY H. CARTER, JR
- ------------------------------------
Shelby H. Carter, Jr. Director
/s/ KATHLEEN ANNE COTE
- ------------------------------------
Kathleen Anne Cote Director
</TABLE>
17
<PAGE> 20
<TABLE>
<S> <C>
/s/ JOHN S. LEWIS
- ------------------------------------
John S. Lewis Director
/s/ ANDREW K. LUDWICK
- ------------------------------------
Andrew K. Ludwick Director
- ------------------------------------
Benjamin F. Robelen Director
/s/ RONALD V. SCHMIDT
- ------------------------------------
Ronald V. Schmidt Director
/s/ PAUL J. SEVERINO
- ------------------------------------
Paul J. Severino Director
</TABLE>
18
<PAGE> 21
INDEX TO EXHIBITS
Exhibit No. Page No.
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).
19
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF GRAY CARY WARE & FREIDENRICH]
July 18, 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 6,407,393 shares of Common Stock, par value $0.01 per share (the
"Common Stock"), issued by the Company pursuant to an Agreement of Merger,
dated as of June 18, 1997, among the Company, Indy Acquisition, Inc., a
Delaware corporation and a wholly-owned subsidiary of the Company, and Rapid
City Communications, a California 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 6,407,393
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.
20
<PAGE> 2
Securities and Exchange Commission
July 18, 1997
Page 2
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 6,407,393 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
July 18, 1997
22
<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 Bay Networks,
Inc. 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
July 18, 1997
23
