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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A/A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
AMENDMENT NO. 1
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Bay Networks, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 04-2916246
(State of incorporation (I.R.S. Employer
or organization) Identification Number)
4401 Great America Parkway,
Santa Clara, California 95054
(Address of principal executive office) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Preferred Stock Purchase Rights New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
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<PAGE>
Item 1. Description of Securities to be Registered
Bay Networks, Inc. (the "Company") and Northern Telecom Limited
("Nortel") entered into an Agreement and Plan of Merger, dated as of June 15,
1998 (the "Merger Agreement"), pursuant to which, subject to the satisfaction
of the terms and conditions thereof, a wholly-owned subsidiary of Nortel,
Northern Sub Inc., will merge with and into the Company (the "Merger"), as a
result of which the Company will become a wholly-owned subsidiary of Nortel.
The parties also entered into a Stock Option Agreement, dated as of June 15,
1998 (the "Option Agreement"), pursuant to which and subject to the terms and
conditions set forth therein, the Company granted to Nortel an option to
purchase up to 14.9% of the outstanding shares of Common Stock, $.01 par
value per share (the "Common Stock"), of the Company.
In connection with the Merger Agreement, the Company executed Amendment
No. 1, dated as of June 15, 1998 (the "Rights Amendment"), to the Rights
Agreement, dated as of February 7, 1995 (as amended, the "Rights Agreement"),
between the Company and The First National Bank of Boston, as Rights Agent
(the "Rights Agent"). The Rights Amendment provides that Nortel and its
Affiliates will be "Exempt Persons" under the Rights Agreement with respect
to their beneficial ownership of Common Stock resulting from the Merger
Agreement, the Option Agreement and certain other specified acquisitions of
Common Stock (described below); provided that in the event that Nortel or any
of its Affiliates becomes the beneficial owner of any other Common Stock,
they will not be deemed Exempt Persons. The Rights Amendment provides that
no "Stock Acquisition Date" or "Distribution Date" (as such terms are defined
in the Rights Agreement) will occur as a result of: (i) the approval,
execution or delivery of the Merger Agreement or the Option Agreement or (ii)
the consummation of the Merger or other transactions contemplated by and
pursuant to the Merger Agreement or the consummation of the transactions
contemplated by the Option Agreement. The Rights Amendment also provides
that the Rights will expire immediately prior to the effective time of the
Merger. A summary of the Company's Preferred Stock Purchase Rights is set
forth below.
Summary of Rights
On February 7, 1995, the Board of Directors of the Company declared a
dividend distribution of one Preferred Stock Purchase Right (each a "Right"
and collectively the "Rights") for each outstanding share of Common Stock.
The distribution was paid as of February 27, 1995 (the "Record Date"), to
stockholders of record on that date. Rights were also authorized for each
share of Common Stock issued between the Record Date and the Distribution
Date (as defined herein). Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of the Company's
Series A Preferred Stock, $.001 par value (the "Preferred Stock"), at a price
of $116.67 (the "Purchase Price"). The description and terms of the Rights
are set forth in the Rights Agreement.
The Rights will become exercisable on the date (the "Distribution Date")
that is the earlier of (i) the tenth day following the first date of public
announcement by the Company or by a person or group of affiliated or
associated persons (an "Acquiring Person"), other than (i) the Company, any
subsidiary of the Company or any employee benefit plan or employee stock plan
of the Company or any subsidiary of the Company, (ii) Nortel and any of its
Affiliates, so long as neither Nortel nor any of its Affiliates is the
Beneficial Owner of any Common Stock other than (A) Common Stock with respect
<PAGE>
to which Nortel and its Affiliates are the Beneficial Owner solely by reason
of the Merger Agreement, as may be amended from time to time, or the Option
Agreement, as may be amended from time to time, (B) any other Common Stock
beneficially owned by Nortel and its Affiliates not in excess of 1% of the
then outstanding Common Stock and (C) any other Common Stock beneficially
owned by Affiliates of Nortel (other than its Subsidiaries) not in excess of
5% of the then outstanding Common Stock (each an "Exempt Person"), that such
an Acquiring Person has acquired, or obtained the right to acquire, without
approval of the Board of Directors or good faith determination of the Board
of Directors that such a person or group of affiliated or associated persons
has inadvertently become an Acquiring Person, beneficial ownership of
securities of the Company (other than solely as a result of a reduction in
the outstanding shares of the Common Stock of the Company) or such earlier
date as a majority of the Board of Directors shall become aware of such
acquisition of the Common Stock (the "Stock Acquisition Date") (or, if the
tenth day after the Stock Acquisition Date occurs before a Record Date, the
close of business on the Record Date) or (ii) the tenth business day (subject
to extension by the Board prior to the time a person becomes an Acquiring
Person) following the commencement of, or public announcement of an intention
to commence, a tender or exchange offer by an person (other than by an Exempt
Person), the consummation of which would result in the beneficial ownership
of 15% or more of the outstanding Common Stock by such person, together with
its affiliates and associates (the earlier of such dates being called the
"Distribution Date"). The Rights will be evidenced, with respect to all
shares of Common Stock that are issued after the Record Date prior to the
Distribution Date (or earlier redemption or expiration of the Rights), by
certificates representing such shares of Common Stock together with a copy of
this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be
represented by and transferred with, and only with, the Common Stock. Until
the Distribution Date (or earlier redemption or expiration of the Rights),
new certificates issued for Common Stock (including, without limitation,
certificates issued upon transfer or exchange of Common Stock) after the
Record Date will contain a legend incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration
of the Rights), the surrender for transfer of any of the Company's Common
Stock certificates, with or without the aforesaid legend or the Summary of
Rights attached thereto, will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Company's Common Stock as of the close of business on the Distribution Date,
and such separate certificates alone will evidence the Rights from and after
the Distribution Date.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on February 6, 2005, unless earlier
redeemed or exchanged by the Company as described below.
The Purchase Price payable, and the number of shares of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on, or a subdivision, combination or reclassification of
the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or convertible
<PAGE>
securities at less than the current market price of the Preferred Stock or
(iii) upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding dividends payable in Preferred Stock) or of
subscription rights or warrants (other than those referred to above). The
number of Rights associated with each share of Common Stock is also subject
to adjustment in the event of a stock split of the Common Stock or a stock
dividend on the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such
case, prior to the Distribution Date.
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable and junior to any other series of preferred stock the Company
may issue (unless otherwise provided in terms of such other series). Each
share of Preferred Stock will have a preferred cumulative quarterly dividend
in an amount equal to the greater of (a) $175,000 or (b) 1,000 times the
dividend declared on each share of Common Stock. In the event of liquidation,
the holders of Preferred Stock will receive a preferred liquidation payment
equal to the greater of (a) $175,000 per share, plus accrued dividends to the
date of distribution whether or not earned or declared or (b) 1,000 times the
aggregate payment to be distributed per share of Common Stock. Each share of
Preferred Stock will have 1,000 votes, voting together with the shares of
Common Stock. In the event of any merger, consolidation or other transaction
in which shares of Common Stock are exchanged for or changed into other
securities, cash and/or other property, each share of Preferred Stock will be
entitled to receive 1,000 times the amount and type of consideration received
per share of Common Stock. The rights of the Preferred Stock as to dividends,
liquidation and voting, and in the event of mergers and consolidations, are
protected by customary antidilution provisions. In lieu of fractional shares
of Preferred Stock other than fractions that are multiples of one one-
thousandth of a share, an adjustment in cash will be made based on the market
price of the Preferred Stock on the last trading date prior to the date of
exercise. Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of one one-thousandth of a share of
Preferred Stock purchasable upon exercise of each Right should approximate
the value of one share of Common Stock.
In the event (i) any person (other than an Exempt Person), alone or
together with its affiliates or associates, becomes the beneficial owner of
15% or more of the then outstanding shares of Common Stock or (ii) any
Acquiring Person or any of its affiliates or associates, directly or
indirectly, (1) shall merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving corporation of
such merger or combination and the Common Stock of the Company shall remain
outstanding and unchanged, (2) shall, in one transaction or a series of
transactions, transfer any assets to the Company or to any of its
subsidiaries in exchange (in whole or in part) for shares of Common Stock,
for shares of other equity securities of the Company, or for securities
exercisable for or convertible into shares of equity securities of the
Company (Common Stock or otherwise) or otherwise obtain from the Company,
with or without consideration, any additional shares of such equity
securities or securities exercisable for or convertible into shares of such
equity securities (other than pursuant to a pro rata distribution to all
holders of Common Stock or upon the exercise of Rights or the conversion of a
convertible security of the Company in accordance with its terms), (3) shall
sell, purchase, lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of, in one transaction or a series of transactions, to,
from or with (as the case may be) the Company or any of its subsidiaries,
<PAGE>
assets (including securities) on terms and conditions less favorable to the
Company than the Company would be able to obtain in arm's length negotiation
with an unaffiliated third party, other than pursuant to a Flip-Over Event
(as defined below), (4) shall sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of, in one transaction or a
series of transactions, to, from or with (as the case may be) the Company or
any of the Company's subsidiaries (other than incidental to the lines of
business, if any, engaged in as of the date hereof between the Company and
such Acquiring Person or associate or affiliate) assets having an aggregate
fair market value of more than $2,500,000, other than pursuant to a Flip-Over
Event, (5) shall receive any compensation from the Company or any of the
Company's subsidiaries, other than compensation for full-time employment as a
regular employee at rates in accordance with the Company's (or its
subsidiaries') past practices, or (6) shall receive the benefit, directly or
indirectly (except proportionately as a stockholder and except if resulting
from a requirement of law or governmental regulation), of any loans,
advances, guarantees, pledges or other financial assistance or any tax
credits or other tax advantage provided by the Company or any of its
subsidiaries, or (iii) while there is an Acquiring Person, there shall occur
any reclassification of securities (including any reverse stock split), any
recapitalization of the Company, or any merger or consolidation of the
Company with any of its subsidiaries or any other transaction or transactions
involving the Company or any of its subsidiaries (whether or not involving
the Acquiring Person) which shall have the effect of increasing by more than
1% the proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its subsidiaries which is directly or
indirectly owned or controlled by the Acquiring Person (such events are
collectively referred to herein as the "Flip-In Events"), then, and in each
such case, each holder of record of a Right, other than the Acquiring person,
will thereafter have the right to receive upon payment of the then-current
Purchase Price, in lieu of the one one-thousandth of a share of Preferred
Stock per outstanding Right, that number of shares of Common Stock having a
market value at the time of the transaction equal to the Purchase Price (as
adjusted to the Purchase Price in effect immediately prior to the Flip-In
Event multiplied by the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such Flip-In
Event) divided by one-half the average of the daily closing prices per share
of the Common Stock for the thirty (30) consecutive trading days ("Current
Market Price") on the date of such Flip-In Event. Notwithstanding the
foregoing, Rights held by the Acquiring Person or any Associate or Affiliate
thereof or certain transferees thereof will be null and void and no longer be
transferable.
The Company may at its option substitute for a share of Common Stock
issuable upon the exercise of Rights in accordance with this paragraph such
number or fractions of shares of Preferred Stock having an aggregate current
market value equal to the Current Market Price of a share of Common Stock.
In the event that insufficient shares of Common Stock are available to permit
the exercise in full of the Rights in accordance with the foregoing
paragraph, the Board of Directors shall, to the extent permitted by
applicable law and any material agreements then in effect to which the
Company is a party, (A) determine the excess (such excess, the "Spread") of
(1) the value of the shares of Common Stock issuable upon the exercise of a
Right in accordance with this paragraph (the "Current Value") over (2) the
Purchase Price (as adjusted), and (B) with respect to each Right (other than
Rights which have become void pursuant to the foregoing paragraph), make
adequate provision to substitute for the shares of Common Stock issuable in
<PAGE>
accordance with this paragraph upon exercise of the Right and payment of the
Purchase Price, (1) cash, (2) a reduction in such Purchase Price, (3) shares
of Preferred Stock or other equity securities of the Company (including,
without limitation, shares or fractions of shares of Preferred Stock which,
by virtue of having dividend, voting and liquidation rights substantially
comparable to those of the shares of Common Stock, are deemed in good faith
by the Board of Directors to have substantially the same value as the shares
of Common Stock, (4) debt securities of the Company, (5) other assets or (6)
any combination of the foregoing, having a value which, when added to the
value of the shares of Common Stock actually issued upon exercise of such
Right, shall have an aggregate value equal to the Current Value (less the
amount of any reduction in such Purchase Price), where such aggregate value
has been determined by the Board of Directors upon the advice of a nationally
recognized investment banking firm selected in good faith by the Board of
Directors; provided, however, that if the Company shall not make adequate
provision to deliver value pursuant to clause (B) above within thirty (30)
days following the Flip-In Event, then the Company shall be obligated to
deliver, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, upon the surrender
for exercise of a Right and without requiring payment of such Purchase Price,
shares of Common Stock (to the extent available) and then, if necessary, such
number or fractions of shares of Preferred Stock (to the extent available)
and then, if necessary, cash, which shares and/or cash have an aggregate
value equal to the Spread. Rights are not exercisable following the
occurrence of the events set forth in the foregoing paragraph until the
expiration of the period during which the Rights may be redeemed as described
below.
Unless the Rights are earlier redeemed, in the event that following the
first occurrence of a Flip-In Event, directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any other person, and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any personal shall consolidate with, or merge
with or into, the Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities of the
Company or any other person or cash or any other property, or (z) the Company
shall sell or otherwise transfer (or one or more of its subsidiaries shall
sell or otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its subsidiaries (taken as a whole) to
any person or persons) (such transactions are collectively referred to herein
as the "Flip-Over Events"), the Rights Agreement provides that proper
provision shall be made so that each holder of record of a Right (other than
an Acquiring Person, or affiliates or associates thereof) will from and after
such date have the right to receive, upon payment of the then-current
Purchase Price, that number of shares of common stock of the acquiring
company having a market value at the time of such transaction equal to the
Purchase Price divided by one-half the Current Market Price of such common
stock, subject to adjustment.
No fractional shares of Common Stock will be issued upon exercise of the
Rights and, in lieu thereof, a payment in cash will be made to the holder of
such Rights equal to the same fraction of the current market value of a share
of Common Stock.
<PAGE>
At any time until the occurrence of a Flip-In Event, the Board may
redeem the Rights in whole, but not in part, at a price of $.001 per Right.
Immediately upon the action of the Board of Directors of the Company
authorizing redemption of the Rights, the right to exercise the Rights will
terminate, and the only right of the holders of Rights will be to receive the
Redemption price without any interest thereon.
At any time after the occurrence of a Flip-In Event, the Board of
Directors may, at its option, exchange all or any portion of the outstanding
Rights (other than Rights held by any Acquiring Person which have become
void) for shares of Common Stock, at an exchange ratio of one share of Common
Stock per Right, subject to appropriate adjustments. Immediately upon the
ordering of such exchange and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive shares of Common Stock or Common Stock Equivalents
pursuant to the exchange. In the event there are insufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit
any exchange of Rights, the Company shall take all actions necessary to
authorize additional shares.
Until the Rights become nonredeemable the Company may, except with
respect to the redemption price of the Rights, amend the Rights Agreement in
any manner. After the Rights become nonredeemable, the Company may amend the
Rights Agreement to cure any ambiguity, to correct or supplement any
provision which may be defective or inconsistent with any other provisions,
or to shorten or lengthen any time period under the Rights Agreement, or to
change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable, provided that no such amendment may
adversely affect the interests of the holders of the Rights (other than the
Acquiring Person or its affiliates or associates) or cause the Rights to
again be redeemable or the Rights Agreement to again be freely amendable.
Until a Right is exercised, the holder, as such, will have no rights as
a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
The issuance of the Rights is not taxable to the Company or to
stockholders under presently existing federal income tax law, and will not
change the way in which stockholders can presently trade the Company's shares
of Common Stock. If the Rights should become exercisable, stockholders,
depending on then-existing circumstance, may recognize taxable income.
The Rights have certain antitakeover effects. Under certain
circumstances the Rights could cause substantial dilution to a person or
group who attempts to acquire the Company on terms not approved by the
Company's Board of Directors. However, the Rights should not interfere with
any merger or other business combination approved by the Board.
The description and terms of the Rights are set forth in the Rights
Agreement. The foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement.
<PAGE>
Item 2. Exhibits
1. Agreement and Plan of Merger, dated as of June 15, 1998, among
Northern Telecom Limited, Northern Sub Inc. and Bay Networks,
Inc. (Incorporated by reference to Exhibit 2 to the
Registrant's Current Report on Form 8-K filed June 17, 1998
(File No. 0-19366)).
2. Stock Option Agreement, dated as of June 15, 1998, between
Northern Telecom Limited and Bay Networks, Inc. (Incorporated
by reference to Exhibit 99.1 to the Registrant's Current
Report on Form 8-K filed June 17, 1998 (File No. 0-19366)).
3. Rights Agreement, dated as of February 7, 1995, between Bay
Networks, Inc. and The First National Bank of Boston, as
Rights Agent (Incorporated by reference to Exhibit 1 to the
Registrant's Registration Statement on Form 8-A filed on
February 15, 1995).
4. Amendment No. 1, dated as of June 15, 1998, to the Rights
Agreement, dated as of February 7, 1995, between Bay Networks,
Inc. and The First National Bank of Boston, as Rights Agent.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this amendment to be signed on
its behalf by the undersigned, thereunto duly authorized.
BAY NETWORKS, INC.
By: /s/ Jane A. Risser
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Name: Jane A. Risser
Title: Vice President & Corporate Treasurer
Dated: June 26, 1998
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
1. Agreement and Plan of Merger, dated as of June
15, 1998, among Northern Telecom Limited,
Northern Sub Inc. and Bay Networks, Inc.
(Incorporated by reference to Exhibit 2 to the
Registrant's Current Report on Form 8-K filed
June 17, 1998 (File No. 0-19366)).
2. Stock Option Agreement, dated as of June 15,
1998, between Northern Telecom Limited and Bay
Networks, Inc. (Incorporated by reference to
Exhibit 99.1 to the Registrant's Current Report
on Form 8-K filed June 17, 1998 (File No. 0-
19366)).
3. Rights Agreement, dated as of February 7, 1995,
between Bay Networks, Inc. and The First
National Bank of Boston, as Rights Agent
(Incorporated by reference to Exhibit 1 to the
Registrant's Registration Statement on Form 8-A
filed on February 15, 1995).
4. Amendment No. 1, dated as of June 15, 1998, to
the Rights Agreement, dated as of February 7,
1995, between Bay Networks, Inc. and The First
National Bank of Boston, as Rights Agent.
<PAGE>
EXHIBIT 4
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AMENDMENT No. 1 TO RIGHTS AGREEMENT
THIS AMENDMENT No. 1, dated as of June 15, 1998 (this "Amendment"),
is between BAY NETWORKS, INC., a Delaware corporation (the "Company"), and
THE FIRST NATIONAL BANK OF BOSTON (the "Rights Agent").
Recitals
A. The Company and the Rights Agent are parties to a Rights
Agreement dated as of February 7, 1995 (the "Rights Agreement").
B. Pursuant to Section 27 of the Rights Agreement, the Company
and the Rights Agent desire to amend the Rights Agreement as set forth
herein.
Accordingly, the Rights Agreement is hereby amended as follows:
1. Amendment of Section 1(m). Section 1(m) of the Rights
-------------------------
Agreement is amended to read in its entirety as follows:
"(m) 'Exempt Person' shall mean (i) the Company or any
Subsidiary (as such term is hereinafter defined) of the Company, in
each case including, without limitation, in its fiduciary capacity
or any employee benefit plan of the Company or of any Subsidiary of
the Company, or any entity or trustee holding Common Stock for or
pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for
employees of the Company or of any Subsidiary of the Company or
(ii) Northern Telecom Limited ("Nortel") and any of its Affiliates,
so long as neither Nortel nor any of its Affiliates is the
Beneficial Owner of any Common Stock other than (A) Common Stock
with respect to which Nortel and its Affiliates are the Beneficial
Owner solely by reason of the Agreement and Plan of Merger dated as
of June 15, 1998, as may be amended from time to time (the "Merger
Agreement") among the Company, Nortel and a wholly owned subsidiary
of Nortel or the Option Agreement, as may be amended from time to
time, referred to therein (the "Option Agreement"), (B) any other
Common Stock beneficially owned by Nortel and its Affiliates not in
excess of 1% of the then outstanding Common Stock and (C) any other
Common Stock beneficially owned by Affiliates of Nortel (other than
its Subsidiaries) not in excess of 5% of the then outstanding
Common Stock. Notwithstanding any provision of this Rights
Agreement to the contrary, no Distribution Date or Stock
Acquisition Date shall be deemed to have occurred, neither Nortel
nor any of its Affiliates shall be deemed to have become an
Acquiring Person and no holder of Rights shall be entitled to
exercise such Rights under, or be entitled to any rights pursuant
to Sections 3(a), 7(a), 11(a) or 13(a), of this Rights Agreement
solely by reason of (X) the approval, execution or delivery of the
Merger Agreement or the Option Agreement or (Y) the consummation of
the merger or other transactions contemplated by and pursuant to
<PAGE>
the Merger Agreement or the consummation of the transactions
contemplated by the Option Agreement; provided that in the event
that Nortel or any of its Affiliates becomes the Beneficial Owner
of any Common Stock in any manner other than as set forth above,
the provisions of this sentence (other than this proviso) shall not
be applicable."
2. Amendment of Section 7(a). Paragraph (a) of Section 7 of the
-------------------------
Rights Agreement is amended by (x) deleting the word "or" immediately
preceding clause (iv) therein, (y) adding the following new phrase
immediately following clause (iv) therein: "or (v) immediately prior to
the Effective Time (as defined in the Merger Agreement)" and (z) in the
parenthetical at the end of 7(a) removing "and" between (iii) and (iv)
and then adding "and (v)" after (iv).
3. Effectiveness. This Amendment shall be deemed effective as of
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June 15, 1998 as if executed by both parties on such date. Except as
amended hereby, the Rights Agreement shall remain in full force and
effect and shall be otherwise unaffected hereby.
4. Miscellaneous. This Amendment shall be deemed to be a contract
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made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such state
applicable to contracts to be made and performed entirely within such
state. This Amendment may be executed in any number of counterparts,
each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one
and the same instrument. If any term, provision, covenant or
restriction of this Amendment is held by a court of competent
jurisdiction or other authority to be invalid, illegal, or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the date first written above.
BAY NETWORKS, INC.
/s/ Jane A. Risser
--------------------------------------------------
Name: Jane A. Risser
Title: Vice President and Corporate Treasurer
THE FIRST NATIONAL BANK OF BOSTON
/s/ Katherine Anderson
--------------------------------------------------
Name: Katherine Anderson
Title: Director, Client Services
EXHIBIT 4
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AMENDMENT No. 1 TO RIGHTS AGREEMENT
THIS AMENDMENT No. 1, dated as of June 15, 1998 (this "Amendment"),
is between BAY NETWORKS, INC., a Delaware corporation (the "Company"), and
THE FIRST NATIONAL BANK OF BOSTON (the "Rights Agent").
Recitals
A. The Company and the Rights Agent are parties to a Rights
Agreement dated as of February 7, 1995 (the "Rights Agreement").
B. Pursuant to Section 27 of the Rights Agreement, the Company
and the Rights Agent desire to amend the Rights Agreement as set forth
herein.
Accordingly, the Rights Agreement is hereby amended as follows:
1. Amendment of Section 1(m). Section 1(m) of the Rights
-------------------------
Agreement is amended to read in its entirety as follows:
"(m) 'Exempt Person' shall mean (i) the Company or any
Subsidiary (as such term is hereinafter defined) of the Company, in
each case including, without limitation, in its fiduciary capacity
or any employee benefit plan of the Company or of any Subsidiary of
the Company, or any entity or trustee holding Common Stock for or
pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for
employees of the Company or of any Subsidiary of the Company or
(ii) Northern Telecom Limited ("Nortel") and any of its Affiliates,
so long as neither Nortel nor any of its Affiliates is the
Beneficial Owner of any Common Stock other than (A) Common Stock
with respect to which Nortel and its Affiliates are the Beneficial
Owner solely by reason of the Agreement and Plan of Merger dated as
of June 15, 1998, as may be amended from time to time (the "Merger
Agreement") among the Company, Nortel and a wholly owned subsidiary
of Nortel or the Option Agreement, as may be amended from time to
time, referred to therein (the "Option Agreement"), (B) any other
Common Stock beneficially owned by Nortel and its Affiliates not in
excess of 1% of the then outstanding Common Stock and (C) any other
Common Stock beneficially owned by Affiliates of Nortel (other than
its Subsidiaries) not in excess of 5% of the then outstanding
Common Stock. Notwithstanding any provision of this Rights
Agreement to the contrary, no Distribution Date or Stock
Acquisition Date shall be deemed to have occurred, neither Nortel
nor any of its Affiliates shall be deemed to have become an
Acquiring Person and no holder of Rights shall be entitled to
exercise such Rights under, or be entitled to any rights pursuant
to Sections 3(a), 7(a), 11(a) or 13(a), of this Rights Agreement
solely by reason of (X) the approval, execution or delivery of the
Merger Agreement or the Option Agreement or (Y) the consummation of
the merger or other transactions contemplated by and pursuant to
<PAGE>
the Merger Agreement or the consummation of the transactions
contemplated by the Option Agreement; provided that in the event
that Nortel or any of its Affiliates becomes the Beneficial Owner
of any Common Stock in any manner other than as set forth above,
the provisions of this sentence (other than this proviso) shall not
be applicable."
2. Amendment of Section 7(a). Paragraph (a) of Section 7 of the
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Rights Agreement is amended by (x) deleting the word "or" immediately
preceding clause (iv) therein, (y) adding the following new phrase
immediately following clause (iv) therein: "or (v) immediately prior to
the Effective Time (as defined in the Merger Agreement)" and (z) in the
parenthetical at the end of 7(a) removing "and" between (iii) and (iv)
and then adding "and (v)" after (iv).
3. Effectiveness. This Amendment shall be deemed effective as of
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June 15, 1998 as if executed by both parties on such date. Except as
amended hereby, the Rights Agreement shall remain in full force and
effect and shall be otherwise unaffected hereby.
4. Miscellaneous. This Amendment shall be deemed to be a contract
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made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such state
applicable to contracts to be made and performed entirely within such
state. This Amendment may be executed in any number of counterparts,
each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one
and the same instrument. If any term, provision, covenant or
restriction of this Amendment is held by a court of competent
jurisdiction or other authority to be invalid, illegal, or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the date first written above.
BAY NETWORKS, INC.
/s/ Jane A. Risser
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Name: Jane A. Risser
Title: Vice President & Corporate Treasurer
THE FIRST NATIONAL BANK OF BOSTON
/s/
--------------------------------------------------
Name:
Title:
Dated: June 29, 1998
