<PAGE> 1
As filed with the Securities and Exchange Commission on March 10, 1997
Registration No. 33- __________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM S-3
REGISTRATION STATEMENT
Under the
Securities Act of 1933
PAIRGAIN TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 33-0282809
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
14402 FRANKLIN AVENUE
TUSTIN, CALIFORNIA 92780
(714) 832-9922
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
CHARLES S. STRAUCH
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
PAIRGAIN TECHNOLOGIES, INC.
14402 FRANKLIN AVENUE
TUSTIN, CALIFORNIA 92780
(714) 832-9922
(Name, Address, Including Zip Code, and Telephone Number
Including Area Code, of Agent for Service)
-------------
Copies to:
BRUCE R. HALLETT, ESQ.
BROBECK, PHLEGER & HARRISON LLP
4675 MACARTHUR COURT, SUITE 1000
NEWPORT BEACH, CALIFORNIA 92660
(714) 752-7535
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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 Amount to be Registered Proposed Maximum Proposed Maximum Amount of
Securities to be Offering Aggregate Registration
Registered Price Per Share(1) Offering Price Fee
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 2,366,852 shares $30.8125 $72,928,627 $22,100
$0.0005 per share
==========================================================================================================================
</TABLE>
(1) The price of $30.8125 per share, which was the average of the high and
low prices of the Common Stock on the Nasdaq National Market on March 7,
1997, is set solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
2,366,852 SHARES
PAIRGAIN TECHNOLOGIES, INC.
COMMON STOCK
($0.0005 par value per share)
___________________
This prospectus (the "Prospectus") relates to the public offering,
which is not being underwritten, of up to 2,366,852 shares (the "Shares") of
Common Stock, par value $0.0005 per share, of PairGain Technologies, Inc.
("PairGain," the "Company" or the "Registrant") by certain stockholders of the
Company (the "Selling Stockholders"). The Selling Stockholders received such
shares in connection with PairGain's acquisition of Avidia Systems, Inc.
("Avidia") through a statutory merger of a wholly-owned subsidiary of the
Company with and into Avidia (the "Merger"). The Shares were issued pursuant
to an exemption from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"), provided by Section 4(2) thereof. The
Shares are being registered by the Company pursuant to registration rights
granted by the Company to the Selling Stockholders. The Company has agreed to
bear certain expenses (other than selling commissions and fees and expenses of
counsel and other advisers to certain of the Selling Stockholders) in
connection with the registration of the Shares.
The Shares may be offered by the Selling Stockholders, or by pledgees,
donees, transferees or other successors in interest, from time to time in
transactions in the over-the-counter market, in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The Selling Stockholders, or their
pledgees, donees, transferees or other successors in interest, may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions
or commissions from the Selling Stockholders, or their pledgees, donees,
transferees or other successors in interest, and/or the purchasers of the
Shares for whom such broker-dealers may act as agents or to whom they sell as
principals (which compensation as to a particular broker-dealer might be in
excess of customary commissions). See "Distribution or Sale of the Shares."
The Company will not receive any part of the proceeds from sales of
the Shares by the Selling Stockholders. See "Use of Proceeds."
________________
THE COMMON STOCK OFFERED HEREBY HAS A HIGH DEGREE
OF RISK. SEE "INVESTMENT CONSIDERATIONS" BEGINNING ON PAGE 4.
________________
The Company's Common Stock is quoted on the Nasdaq National Market
under the symbol "PAIR." On March 7, 1997, the last reported sale price of the
Company's Common Stock on the Nasdaq National Market was $30.125 per share.
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions 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. See "Distribution or Sale
of the Shares" herein for a description of indemnification arrangements.
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 MARCH 10, 1997
<PAGE> 3
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION
WITH THE OFFERING MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, ANY SELLING STOCKHOLDER OR BY ANY OTHER PERSON. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES TO ANY PERSON OR BY ANYONE
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY BE
MADE.
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files annual and quarterly reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information may be inspected, and
copies of such material may be obtained at prescribed rates, at the
Commission's Public Reference Section, Room 1024, 450 Fifth Street, N.W.,
Washington D.C. 20549, as well as at the Commission's regional offices at
Seven World Trade Center, 13th Floor, New York, New York 10048, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can also be obtained from the Public
Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The Commission also maintains a web site that
contains reports, proxy and information statements and other information
regarding registrants, such as the Company, that file electronically with the
Commission and the address is http://www.sec.gov. Reports, proxy statements
and other information concerning the Company may also be inspected at the
National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act, with respect to the Common
Stock offered hereby. This Prospectus, which is part of the Registration
Statement, 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 with
respect to the Company and the Shares offered hereby, reference is hereby made
to the Registration Statement. Statements contained in this Prospectus
concerning the provisions of any documents referred to are not necessarily
complete, and each such statement is qualified in its entirety by reference to
the copy of such document filed with the Commission.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the Commission are hereby
incorporated by reference in this Prospectus:
(i) the Annual Report of the Company on Form 10-K/A for
the year ended December 31, 1995;
(ii) the Quarterly Reports of the Company on Form 10-Q for
the quarters ended March 31, 1996, June 30, 1996 and
September 30, 1996;
(iii) definitive Proxy Statement filed with the Commission
on May 8, 1996 in connection with the Company's
Annual Meeting of Stockholders;
(iv) definitive Proxy Statement filed with the Commission
on November 12, 1996 in connection with the Company's
Special Meeting of Stockholders;
2
<PAGE> 4
(v) the Company's Report by Issuer of Securities on Form
10-C filed with the Commission on June 18, 1996;
(vi) the Current Report of the Company on Form 8-K filed
with the Commission on March 5, 1997; and
(vii) the description of the Company's Common Stock
contained in its Registration Statement on Form 8-A
filed with the Commission August 6, 1993, including
any amendment or report filed for the purpose of
updating such description.
All reports and other documents subsequently filed by the Company
pursuant to Section 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 reports and documents. Any statement incorporated
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 of such person, a copy of
any or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such document). Requests for such documents
should be submitted in writing to Charles W. McBrayer, Chief Financial Officer
at PairGain Technologies, Inc., 14402 Franklin Avenue, Tustin, California
92780, or by telephone at (714) 832-9922.
PairGain(R), Campus-Flex(R), Campus-T1(R), Campus-E1(R),
Campus-Star(TM), Campus-768(TM), Campus-REX(TM), CopperOptics(TM), HiGain(TM),
Megabit Modem(TM), EtherPhone(TM), AccessHub(TM), AccessGate(TM), PG-Plus(TM)
and PG-Flex(TM) are trademarks of the Company.
THE COMPANY
PairGain is a leading provider of telecommunications products based on
high-speed Digital Subscriber Line ("xDSL") technology. The Company designs,
manufactures, markets and supports products that allow telecommunications
carriers and private network owners to more efficiently provide high-speed
digital services to end users over the large existing infrastructure of
unconditioned copper wires. These services enable high-speed data transmission
for applications such as T1/E1, high-speed Internet access, telecommuting, wide
area networking and video conferencing.
The Company's direct sales force markets its products to the regional
Bell operating companies and their local telephone company affiliates and to
the larger independent telephone companies by working closely with the
planning, switching and transmission departments of such customers. The
Company sells to other independent carriers and owners of private networks
through direct sales, telesales and distributors. In addition to the specific
sales efforts directed at its public and private network customers, the
Company's marketing activities include participation in industry trade shows
and conferences, distribution of sales and product literature, media relations,
advertising in trade journals, direct mail and ongoing communications with its
customers and industry analysts.
The Company was incorporated in California in February 1988 and
changed its state of incorporation from California to Delaware in September
1993. The Company maintains its executive offices at 14402 Franklin Avenue,
Tustin, California 92780, and its telephone number at that address is (714)
832-9922.
3
<PAGE> 5
INVESTMENT CONSIDERATIONS
In addition to the other information in this Prospectus, the following
Investment Considerations should be considered carefully in evaluating an
investment in the shares of Common Stock offered by this Prospectus. Except
for the historical information contained herein, the matters discussed in this
Prospectus are forward-looking statements which involve risk and uncertainties,
including but not limited to economic, competitive, governmental and
technological factors affecting the Company's operations, markets, products,
services and prices and other factors discussed in the Company's filings with
the Commission.
Acquisition-Related Risks
The Company's acquisition of Avidia was its first significant
acquisition of another company. The Avidia acquisition will present the
Company with numerous challenges, including difficulties in the assimilation of
the operations, technologies and products of Avidia and managing separate
geographic operations. The process of integrating Avidia's business into the
Company's operations may result in unforeseen operating difficulties and
expenditures and may absorb significant management attention that would
otherwise be available for the ongoing development of the Company's business.
If the Company's management does not respond to these challenges effectively,
the Company's results of operations could be adversely affected. Moreover,
there can be no assurance that the anticipated benefits of the Avidia
acquisition will be realized.
Average Sales Price Reductions
Commencing in mid-1993, the Company began reducing the average sales
prices of its HiGain(TM) products in an effort to increase market demand for
its products and in anticipation of expected price competition. These
reductions have been significant, representing a reduction of as much as 14%,
in 1996, 23% in 1995 and 40% in 1994. The Company expects to continue to
reduce the average sales prices of its products, including its HiGain products,
in future periods. Accordingly, the Company's ability to maintain or increase
revenues will depend in part upon its ability to increase unit sales volumes of
HiGain products and to introduce and sell new products at rates sufficient to
compensate for the reduced revenue effect of such continuing reductions in the
average sales prices of the Company's HiGain products. Declining average sales
prices may also adversely affect gross margins on the Company's HiGain products
if the Company is unable to fully offset such reductions in average sales
prices by reductions in the Company's per unit costs. There can be no
assurance that the Company will be able to increase the unit sales volumes of
its HiGain products, introduce and sell new products, reduce its per unit costs
or maintain or increase revenues or margins attributable to such products.
Product Concentration
Revenues from HiGain products represented approximately 76% of the
Company's total revenues in each of the years 1996, 1995 and 1994. The Company
expects that revenues from HiGain products will continue to account for a
majority of the Company's revenues for the foreseeable future, although there
can be no assurance that the Company will be able to sustain recent levels of
HiGain product sales. A decline in demand for HiGain products, whether as a
result of competition, deployment of fiber cable, technological change or
otherwise, could have a material adverse effect on the Company's operating
results.
Future Operating Results Subject to Fluctuation
The Company's operating results may fluctuate in the future as a
result of a number of factors, including the timing of orders from, and
shipments to, major customers, the timing of new product announcements by the
Company or its competitors, variations in the Company's sales channels or the
mix of products its sells, changes in pricing policies by the Company's
suppliers, the availability and cost of key components, the timing of personnel
hirings, the market acceptance of new and enhanced versions of the Company's
products and the timing of final product approvals from any of the Regional
Bell Operating Companies ("RBOC's"). Further, the Company's expense levels are
based in part on expectations of future revenues, and the Company has been
4
<PAGE> 6
significantly increasing and intends to continue to significantly increase
operating expenditures and to increase inventory as its expands its levels of
operations. The Company anticipates that the rate of new orders may vary
significantly from month to month. Consequently, if anticipated sales and
shipments in any quarter do not occur when expected, operating expenses and
inventory levels could be disproportionately high, and the Company's operating
results for that quarter, and potentially future quarters, would be adversely
affected.
Competition
Competition in the Company's markets is intense, and the Company
expects that competition will increase. Many of the Company's potential
competitors have substantially greater name recognition and technical,
financial and marketing resources than the Company. There can be no assurance
that the Company will have the financial resources, technical expertise or
marketing, distribution and support capabilities to compete successfully in the
future. Competitive pressures could reduce demand for the Company's products,
cause the Company to further reduce prices on its existing products, increase
expenses or cause delays or cancellations of customer orders, any one of which
could adversely affect the Company's business and results of operations.
The Company's most significant domestic competitors are ADTRAN, Inc.
("ADTRAN") and ADC Telecommunications, which offer High-bit-rate Digital
Subscriber Line ("HDSL") systems and have often competed with the Company on
the basis of price. The Company may also face competition from the licensees of
its own HDSL technology. Specifically, the Company and Alcatel Network Systems,
Inc. ("Alcatel") have granted each other royalty-free cross licenses of current
PairGain HDSL technology and Alcatel's current Network Management Software.
Many companies have introduced or announced xDSL-based products,
including both T1 and E1 products, including HDSL chips currently offered by
Brooktree Corporation, the former supplier of the Company's SPAROW I chip,
Level One Communications and Metalink. Other companies that offer xDSL-based
products include Ascend, ADTRAN, Westel, Amati and Cisco. The Company also
faces significant competition from providers of other technologies used by
private network users to transmit information, including fiber and conventional
repeatered T1 lines. The Company expects that additional companies will
introduce competitive products in the future, and there can be no assurance
that the Company will continue to compete successfully in the future.
All manufacturers of products based on HDSL technology face
competition from fiber optic and conventional repeatered systems as alternate
solutions for the delivery of T1, E1 and other high-bandwidth services to end
users. As telephone companies continue to install fiber cable and conventional
repeatered T1 systems to provide high-bandwidth service in local subscriber
loops, the demand for HDSL products may decline. Further, the deployment of
fiber to replace existing HDSL installations will result in the availability of
those existing HDSL systems for installation elsewhere and may adversely affect
future demand for HDSL products.
Dependence on Suppliers and Subcontractors
Certain components used in the Company's HDSL products are currently
purchased from a single source (including the Company's SPAROW II chip) and
others are available from a limited number of sources. In the past, the
Company has experienced delays in the receipt of certain of its key components,
which have resulted in delays in product deliveries. There can be no assurance
that delays in key component and product deliveries will not occur in the
future. The inability to obtain sufficient key components as required, or to
develop alternative sources if and as required in the future, could result in
delays or reductions in product shipments to the Company's customers. Any such
delays or reductions could have a material adverse effect on the Company's
reputation and customer relationships which could, in turn, have a material
adverse effect on the Company's business and results of operations. In
addition, the Company uses third-party subcontractors for the manufacture of
its products. This reliance on third-party subcontractors involves several
risks, including the potential absence of adequate capacity, the unavailability
of or interruptions in access to certain process technologies and reduced
control over product quality, delivery schedules, manufacturing yields and
costs.
Shortage of raw materials or production capacity constraints at the
Company's subcontractors could negatively affect the Company's ability to meet
its production obligations and result in increased prices for affected parts.
Any such reduction may result in delays in shipments of the Company's products
or increases in the price of components, either of which could have a material
adverse impact on the Company.
5
<PAGE> 7
Customer Concentrations
Aggregate sales to local telephone companies affiliated with Bell
Atlantic, BellSouth, NYNEX, Pacific Telesis, and SBC Communications (formerly
Southwestern Bell) accounted for approximately 59%, 63% and 66% of the
Company's total revenues for 1996, 1995 and 1994, respectively. As a result of
the Company's dependence on its largest customers, the Company's future success
will significantly depend upon the timeliness and size of future purchase
orders, if any, from its largest customers, the product requirements of such
customers, the financial and operational success of such customers, and in
particular, the success of such customers' services deployed using the
Company's products. The Company's sales to its largest customers have in the
past fluctuated and may in the future fluctuate significantly from quarter-
to-quarter and year-to-year. The loss of any such customer or the occurrence
of any such sales fluctuations could have a material adverse effect on the
Company's business and results of operations.
Dependence on New Markets and Technologies
The Company is evaluating new applications of high-speed copper
transmission technologies, is investing significant corporate resources in the
development of Asymmetric Digital Subscriber Line ("ADSL") technology, and
expects to devote significant additional resources to the development of other
new technologies in the future. In addition, the Company does not expect to
generate significant revenues from ADSL products in 1997, and there can be no
assurance that the Company will ever generate significant revenues from ADSL
products. There can be no assurance that such technologies will be viable or
that markets for such technologies will develop. Any failure in the
development of new markets and technologies could have a material adverse
effect on the Company's business.
Rapid Technological Change and Dependence on New Products
The market for the Company's products is characterized by rapid
technological advances, evolving industry standards, changes in end user
requirements and frequent new product introductions and enhancements. The
introduction of xDSL products involving superior technologies or the emergence
of alternative technologies or new industry standards could render the
Company's existing products, as well as products currently under development,
obsolete and unmarketable. The Company believes its future success will depend
in part upon its ability to continue, on a cost-effective and timely basis, to
enhance its xDSL products, develop and introduce new products for the xDSL
market and other markets, meet changing customer needs and achieve broad market
acceptance for its products. There can be no assurance that the Company will
be able to respond effectively to technological changes or new product
announcements, that the Company will be able to successfully develop and market
new products or product enhancements or that such products or enhancement will
achieve market acceptance. Any failure by the Company to anticipate or respond
on a cost effective and timely basis to technological developments, changes in
industry standards or end user requirements, or any significant delays in
product development or introduction, could have a material adverse effect on
the Company's business. Further, there are physical limits to the speed at
which transmissions can travel over copper wire, and the Company's copper-based
xDSL products will not be a viable solution for customers requiring service at
performance levels beyond the limits of copper wire.
Need to Generate International Sales
To date, sales of the Company's products outside of the United States
and Canada have been limited. The Company's ability to meet its objectives
will require it to generate significant international sales in 1997 and beyond.
International business is subject to risks in addition to those inherent in the
Company's North American business including substantially different regulatory
requirements in different jurisdictions, varying technical standards, tariffs
and trade barriers, political and economic instability, reduced protection for
intellectual property rights in certain countries, difficulties in staffing and
maintaining foreign operations, difficulties in managing distributors,
potentially adverse tax consequences, foreign currency exchange fluctuations,
the burden of complying with a wide variety of complex foreign laws and
treaties and the possibility of difficulties in collecting
6
<PAGE> 8
accounts receivable and increased days sales outstanding. There can be no
assurance that the Company will be able to generate significant international
sales, or establish new strategic marketing relationships in the future. In
addition, in the event the Company is successful in doing business outside of
North America, the Company may also face economic, political and foreign
currency situations that are substantially more volatile than those commonly
experienced in the United States and other international markets. There can be
no assurance that any of these factors will not have a material adverse effect
on the Company's business and results of operations.
Proprietary Technology
The Company's success and future revenue growth will depend, in part,
on its ability to protect trade secrets, obtain or license patents and operate
without infringing on the rights of others. Although the Company regards its
technology as proprietary, it has limited patents on such technology. The
Company relies on a combination of technical leadership, trade secrets,
copyright and trademark law and nondisclosure agreements to protect its
unpatented proprietary know-how. However, there can be no assurance that such
measures will provide meaningful protection for the Company's trade secrets or
other proprietary information. Moreover, in the absence of patent protection,
the Company's business may be adversely affected by competitors who
independently develop substantially equivalent 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 is also
subject to the risk of adverse claims and litigation alleging infringement of
the intellectual property rights of others. From time to time the Company has
received claims of infringement of other parties' proprietary rights, although
the Company is not party to any pending intellectual property litigation.
There can be no assurance that third parties will not assert infringement
claims against the Company in the future or that any such claims will not
result in costly litigation or require the Company to obtain a license to
intellectual property rights of such parties, regardless of the merit of such
claims. No assurance can be given that any necessary licenses will be
available or that, if available, such licenses can be obtained on commercially
reasonable terms.
Dependence on Key Personnel
The success of the Company is dependent in large part on two of its
founders, Howard S. Flagg and Benedict A. Itri, on its Chairman and Chief
Executive Officer, Charles S. Strauch, and on other key management and
technical personnel, the loss of one or more of whom could adversely affect the
Company's business. The Company does not have employment contracts with any of
its executive officers. In addition, the Company believes that its future
success will depend in large part upon its continued ability to attract, retain
and motivate highly skilled employees, who are in great demand. There can be
no assurance that the Company will be able to do so.
Management of Expanding Operations
The Company has experienced a period of significantly expanding
operations and headcount, which has placed, and will continue to place, a
significant strain on the Company's personnel and other resources. The
Company's ability to manage any future increases in the scope of its operations
or headcount, should they occur, will depend on significant expansion of its
manufacturing, research and development, marketing and sales, management and
financial and administrative capabilities. The failure of the Company's
management to effectively manage any expansion in its business could have a
material adverse effect on the Company's business and results of operations.
Reliance on Primary Manufacturing Facilities
The Company historically conducted virtually all final assembly and
final test functions at its manufacturing facility in Tustin, California. In
1996, the Company entered into an agreement to have its PG-2 products
manufactured, on a turnkey basis, by Jabil Circuits at Jabil's St. Petersburg,
Florida facility. Any extended interruption of
7
<PAGE> 9
operations at either of these facilities could have a material adverse effect
on the Company's business and results of operations.
Capital Requirements
The Company's capital requirements will depend on many factors,
including the levels at which the Company maintains inventory, the continued
market acceptance of the Company's products, growth in unit sales volume of
HiGain products, the extent to which the Company invests in new technology and
improvements to its existing xDSL technology, the marketing expenditures
associated with launching new products and maintaining a competitive position in
the marketplace and the response of competitors to products based on the
Company's technology. To the extent that the Company's existing resources,
together with future earnings, are insufficient to fund the Company's future
activities, the Company may need to raise additional funds through public or
private financings. No assurance can be given that additional financing will be
available or that, if available, it can be obtained on terms favorable to the
Company and its stockholders.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of
Shares by the Selling Stockholders. See "Selling Stockholders."
8
<PAGE> 10
SELLING STOCKHOLDERS
The following table sets forth the number of shares of Common Stock
beneficially owned by each of the Selling Stockholders. Except as indicated,
no Selling Stockholder has had a material relationship with the Company within
the past three years other than as a result of the ownership of the Shares.
Because (i) the Selling Stockholders may offer all or some of the Shares which
they hold pursuant to the offering contemplated hereby, and (ii) there are
currently no agreements, arrangements or understandings with respect to the
sale of any of the Shares, no estimate can be given as to the amount of Shares
that will be held by the Selling Stockholders after completion of this
offering. See "Distribution or Sale of the Shares."
The Shares being offered pursuant to this Prospectus by the Selling
Stockholders were acquired from the Company in connection with its acquisition
of Avidia. [At the time of the acquisition, each Selling Stockholder
represented to the Company that it was acquiring its Shares without any present
intention of effecting a distribution of those Shares.] However, in accordance
with agreements entered into with the Selling Stockholders at the time of the
acquisitions, the Company agreed to effect a shelf registration (of which this
Prospectus is a part) of all Shares in order to permit the Selling Stockholders
to effect sales of such Shares from time to time in the market or in privately-
negotiated transactions. The Company will prepare and file such amendments and
supplements to the Registration Statement as may be necessary in accordance
with the rules and regulations of the Securities Act to keep it effective until
the earlier to occur of the following events: (i) twenty-four (24) months have
elapsed since the Effective Time of the Merger; (ii) all Shares have been sold
pursuant to the Registration Statement; or (iii) all Shares held by each
Selling Stockholder can be sold by such stockholder in a three month period
pursuant to Rule 144 under the Securities Act.
The Shares offered by this Prospectus may be offered from time to time
by the Selling Stockholders named below:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES BEING OUTSTANDING
NUMBER OF SELLING STOCKHOLDER BENEFICIALLY OWNED(1) OFFERED(1)(2) SHARES
- ----------------------------- --------------------- ------------- -----------
<S> <C> <C> <C>
Sun, Paul K. .............................. 427,541 427,541 *
Jenkins, David R. ......................... 264,898 264,898 *
Eaton, Paul ............................... 264,898 264,898 *
McCormack, Charles N. ..................... 221,508 221,508 *
Point Venture Partners, L.P. .............. 118,583 118,583 *
Juliano, Lisa ............................. 117,657 117,657 *
TECOM Co., Ltd. ........................... 104,650 104,650 *
Price, Michael J. ......................... 94,840 94,840 *
Windsong Partners, L.P. ................... 75,217 75,217 *
Mezzacappa, Damon ......................... 75,217 75,217 *
Mainz Holdings Limited .................... 75,217 75,217 *
David-Weill, Michel ....................... 75,217 75,217 *
Gilbertson, Robert ........................ 71,410 71,410 *
Richard Kayne, as trustee under the
Agreement of Trust made as of
November 22, 1996 between Michael B.
Targoff, as grantor, and the trustee .... 30,087 30,087 *
J. Ira Harris, as trustee under the Trust
Agreement dated June 8, 1983, as amended
and restated, creating the "J. Ira
Harris Living Trust" .................... 30,087 30,087 *
Firstmark Telluride Group ................. 30,087 30,087 *
Audrey MacLean and Michael M. Clair, as
Trustees, or their successors, of the
Audrey MacLean and Michael Clair Trust
Agreement UAO 12/1/90 ................... 30,087 30,087 *
Centrella, Michael S. ..................... 25,574 25,574 *
Lazard Freres & Co. LLC ................... 19,622 19,622 *
Rock Ventures LLC(3) ...................... 18,051 18,051 *
</TABLE>
9
<PAGE> 11
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Aguis, Marcus ............................. 15,043 15,043 *
Rice, L. Gregory .......................... 15,043 15,043 *
Golman, Jeffrey A. ........................ 15,043 15,043 *
Friedman, Dennis .......................... 15,043 15,043 *
Emerson, Richard P. ....................... 15,043 15,043 *
Araskog, William R. ....................... 15,043 15,043 *
Cinq Partners ............................. 12,034 12,034 *
Wasserman, Harvey ......................... 7,848 7,848 *
Lee, David C. ............................. 7,521 7,521 *
Lacoff, Dan ............................... 7,521 7,521 *
Abramson, Marc ............................ 7,521 7,521 *
Point Venture Partners Pennsylvania, L.P. . 6,642 6,642 *
Lederman, Dr. Sanford ..................... 6,016 6,016 *
Skrzypczak, Casimir ....................... 3,008 3,008 *
Parten, Adam P. ........................... 3,008 3,008 *
Meskin, Melvin ............................ 3,008 3,008 *
Lacoff, David ............................. 3,008 3,008 *
Kahan, James S. ........................... 3,008 3,008 *
Hoffman, Scott ............................ 3,008 3,008 *
Ha, Gil ................................... 3,008 3,008 *
Wells Fargo Bank, N.A., as Escrow Agent
under the Indemnity Escrow Agreement
dated February 27, 1997 by and among
the Company, Abalone Corporation,
Wells Fargo Bank, N.A., and Derek Minno . 29,987(4) 29,987(4) *
--------- ---------
2,366,852 2,366,852
</TABLE>
-------------
* Less than 1%.
(1) Except with respect to Wells Fargo Bank, N.A., each Selling
Stockholder's Shares (i) include the maximum number of Shares that may
be distributed to the Selling Stockholder from an escrow fund
established pursuant to that certain Indemnity Escrow Agreement dated
as of February 27, 1997 by and among the Company, Abalone Corporation,
Wells Fargo Bank, N.A., and Derek Minno (the "Indemnity Escrow
Agreement") to pay for potential indemnification claims that may be
asserted against such stockholder pursuant to the Indemnity Escrow
Agreement and that certain Agreement and Plan of Reorganization dated
as of February 19, 1997 by and among the Company, Abalone Corporation
and Avidia, but (ii) exclude that number of Shares held in escrow
pursuant to the Indemnity Escrow Agreement to be used to reimburse the
Company for certain transaction expenses paid by the Company on behalf
of the Selling Stockholder.
(2) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable in connection with the Shares
registered for sale hereby by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected without
the receipt of consideration which results in an increase in the
number of the Company's outstanding shares of Common Stock.
(3) Subsequent to the date of this Prospectus, the Shares held by Rock
Ventures LLC may be distributed to the following members thereof:
Richard J. Malone; Rosemary M. Cochran.
(4) These Shares are beneficially owned by the Selling Stockholders pro
rata according to the number of Shares held by all such stockholders,
but are to be used to reimburse the Company for certain transaction
expenses paid by the Company on behalf of the Selling Stockholders.
Pursuant to the Indemnity Escrow Agreement, the Company shall instruct
Wells Fargo Bank, N.A. to liquidate these shares on the Company's
behalf or deliver them directly to the Company.
The Company has agreed to bear certain expenses (other than selling
commissions and fees and expenses of counsel and other advisors to certain of
the Selling Stockholders) in connection with the registration of the Shares.
10
<PAGE> 12
DISTRIBUTION OR SALE OF THE SHARES
The Shares offered hereby are being offered directly by the Selling
Stockholders. The Company will not receive any proceeds from the sale of any
of the Shares by the Selling Stockholders. The sale of the Shares may be
effected by the Selling Stockholders, or by pledgees, donees, transferees or
other successors in interest, from time to time in transactions in the
over-the-counter market, on the Nasdaq National Market, in negotiated
transactions, or a combination of such methods of sale, at fixed prices which
may be changed, at market prices prevailing at the time of sale, at prices
related to prevailing market prices or at negotiated prices. The Selling
Stockholders, or their pledgees, donees, transferees or other successors in
interest, may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders, their
pledgees, donees, transferees or other successors in interest, and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they sell as principals (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
At the time a particular offer of Shares is made, to the extent
required, a supplemental Prospectus will be distributed which will set forth
the number of Shares being offered and the terms of the offering including the
name or names of any underwriters, dealers or agents, the purchase price paid
by any underwriter for the Shares purchased from the Selling Stockholders, any
discounts, commissions and other items constituting compensation from the
Selling Stockholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration or qualification
requirement is available and is complied with by the Company and the Selling
Stockholders.
The Selling Stockholders and any broker-dealers, agents or
underwriters that participate with the Selling Stockholders in the distribution
of the Shares may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, and any commissions 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.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the Shares may not simultaneously engage
in market making activities with respect to the Common Stock of the Company for
a period of two business days prior to the commencement of such distribution.
In addition and without limiting the foregoing, each Selling Stockholder will
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Stockholders.
The Shares were originally issued to former stockholders of Avidia in
connection with the statutory merger of a wholly-owned subsidiary of the
Company with and into Avidia pursuant to an exemption from the registration
requirements of the Securities Act. The Company has agreed to register the
Shares under the Securities Act and to indemnify and hold certain Selling
Stockholders harmless against certain liabilities under the Securities Act that
could arise in connection with the sale by the Selling Stockholders of the
Shares.
There can be no assurance that the Selling Stockholders will sell all
or any of the shares of Common Stock offered hereunder.
11
<PAGE> 13
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
the Company by Brobeck, Phleger & Harrison LLP, Newport Beach, California.
EXPERTS
The Consolidated Financial Statements and related Financial Statement
Schedule of PairGain Technologies, Inc. as of December 31, 1995 and for the
year then ended appearing in the Company's Annual Report on Form 10-K/A for the
year ended December 31, 1995, which are incorporated by reference, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports which are incorporated by reference, and have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
The Consolidated Financial Statements and related Financial Statement
Schedule of PairGain Technologies, Inc. as of December 31, 1994 and for each of
the two years in the period ended December 31, 1994 appearing in the Company's
Annual Report on Form 10-K/A for the year ended December 31, 1995 have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
Consolidated Financial Statements and related Financial Statement Schedule are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
12
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with
the sale or the distribution of the securities being registered, other than
underwriting discounts and commissions and finder's fees. All of the amounts
shown are estimates except for the Securities and Exchange Commission
registration fee and the Nasdaq National Market additional listing fee.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee ............ $22,100
Nasdaq National Market additional listing fee .................. 17,500
Accounting fees and expenses ................................... 7,500
Legal fees and expenses ........................................ 15,000
Miscellaneous .................................................. 5,400
-------
Total....................................................... $67,500
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("Section 145")
authorizes a court to award, or a corporation's Board of Directors to grant,
indemnity to directors and officers in terms sufficiently broad to permit
indemnification (including reimbursement of expenses incurred) under certain
circumstances for liabilities arising under the Securities Act. The
Registrant's Bylaws, as amended, provide for indemnification of any director,
officer, or employee to the maximum extent permitted by such Section 145.
The Company's Certificate of Incorporation provides that its directors
shall not be personally liable to the corporation or its stockholders for
monetary damages for breach of the director's fiduciary duty. Each director
will continue to be subject to liability for breach of the director's duty of
loyalty to the Company, for acts or omissions not in good faith or involving
intentional misconduct, or knowing violations of law, or actions lending to
improper personal benefit to the director, and for payment of dividends or
approval of stock repurchases or redemptions that are unlawful under Delaware
law.
II-1
<PAGE> 15
ITEM 16. EXHIBITS.
Exhibit No.
5.1 Opinion of Brobeck, Phleger & Harrison LLP
23.1 Consent of Deloitte & Touche LLP, independent auditors
23.2 Consent of Ernst & Young LLP, independent auditors
23.3 Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1)
24.1 Power of Attorney. Reference is made to page II-4.
ITEM 17. UNDERTAKINGS.
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, as amended (the "Securities
Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or
the most recent post-effective amendment hereof) which, individually
or in the aggregate, represent a fundamental change in the information
set forth in this 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 price may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement.
Provided, however, that paragraphs (i) and (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 Company pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") that are
incorporated by reference in this 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 herein, 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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Company's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference into this Registration Statement
shall be deemed to be a new
II-2
<PAGE> 16
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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 provisions described under Item 15 above, 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 of 1933, as amended, 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.
The undersigned Registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance under 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 this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 17
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 Tustin, State of California, on March 10, 1997.
PAIRGAIN TECHNOLOGIES, INC.
By: /s/ CHARLES S. STRAUCH
------------------------------------
Charles S. Strauch
Chairman and Chief Executive Officer
We, the undersigned officers and directors of PairGain Technologies,
Inc. do hereby constitute and appoint Charles S. Strauch and Charles W.
McBrayer, and each of them, our true and lawful attorneys-in-fact and agents,
each with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments and any amendment pursuant to
Rule 462(b) of the Securities Act of 1933 which may be deemed to be a new
registration statement) to this Registration Statement, and to file the same,
with exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that each of said attorneys-in-fact and agents, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed below by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Charles S. Strauch Chairman, Chief Executive Officer March 10, 1997
--------------------------------------- and Director
Charles S. Strauch (Principal Executive Officer)
/s/ Charles W. McBrayer Vice President, Finance and March 10, 1997
--------------------------------------- Administration, and Chief Financial
Charles W. McBrayer Officer
(Principal Financial Officer)
/s/ Robert R. Price Corporate Controller March 10, 1997
--------------------------------------- (Principal Accounting Officer)
Robert R. Price
/s/ Howard S. Flagg President and Director March 10, 1997
---------------------------------------
Howard S. Flagg
/s/ Benedict A. Itri Chief Technical Officer March 10, 1997
--------------------------------------- and Director
Benedict A. Itri
/s/ Robert C. Hawk Director March 10, 1997
---------------------------------------
Robert C. Hawk
</TABLE>
II-4
<PAGE> 18
<TABLE>
<S> <C> <C>
/s/ Robert A. Hoff Director March 10, 1997
---------------------------------------
Robert A. Hoff
/s/ B. Allen Lay Director
---------------------------------------
B. Allen Lay March 10, 1997
</TABLE>
II-5
<PAGE> 19
PAIRGAIN TECHNOLOGIES, INC.
Index to Exhibits
5.1 Opinion of Brobeck, Phleger & Harrison LLP
23.1 Consent of Deloitte & Touche LLP, independent auditors
23.2 Consent of Ernst & Young LLP, independent auditors
23.3 Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1)
24.1 Power of Attorney. Reference is made to page II-4.
II-6
<PAGE> 1
Exhibit 5.1
March 10, 1997
PairGain Technologies, Inc.
14402 Franklin Avenue
Tustin, California 92780
Ladies and Gentlemen:
We have acted as counsel to PairGain Technologies, Inc., a
Delaware corporation (the "Company"), in connection with its registration of
2,366,852 shares of Common Stock (the "Common Stock") as described in the
Company's Registration Statement on Form S-3 filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the
"Registration Statement").
We are familiar with the corporate proceedings taken by the
Company in connection with the issuance and sale of the Common Stock and it is
our opinion that the Common Stock is duly authorized and will be, upon
conclusion of the proceedings being taken by the Company prior to the issuance
of all such Common Stock pursuant to the Agreement and Plan of Reorganization
dated as of February 19, 1997 by and among the Company, Abalone Corporation,
and Avidia Systems, Inc. and upon completion of the proceedings being taken in
order to permit such transactions to be carried out in accordance with the
various states where required, validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus which is part of the Registration Statement.
Very truly yours,
\s\ BROBECK, PHLEGER & HARRISON LLP
-----------------------------------
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
PairGain Technologies, Inc. on Form S-3 of our reports dated January 23, 1996,
appearing in the Annual Report on Form 10-K/A of PairGain Technologies, Inc.
for the year ended December 31, 1995 and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
/s/ DELOITTE & TOUCHE LLP
Costa Mesa, California
March 10, 1997
<PAGE> 1
Exhibit 23.2
Consent of 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 PairGain
Technologies, Inc. for the registration of 2,366,852 shares of its common stock
and to the incorporation by reference therein of our reports dated February 17,
1995, with respect to the consolidated financial statements and schedule of
PairGain Technologies, Inc. included in its Annual Report (Form 10-K/A) for the
year ended December 31, 1995, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Orange County, California
March 10, 1997
