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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 4, 2000.
REGISTRATION NO. 333-50820
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO.1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
-----------------
THE SECURITIES ACT OF 1933
DMC STRATEX NETWORKS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0016028
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
170 Rose Orchard Way
San Jose, California 95134
(408) 943-0777
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
-----------------
Sam Smookler
President and Chief Executive Officer
DMC Stratex Networks, Inc.
170 Rose Orchard Way
San Jose, California 95134
(408) 943-0777
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------
With a Copy to:
Bruce Alan Mann, Esq.
Morrison & Foerster LLP
425 Market Street
San Francisco, California 94105-2482
(415) 268-7000
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, 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: / /
-----------------
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.
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The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
securities and exchange commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION AND AMENDMENT
PRELIMINARY PROSPECTUS, DATED DECEMBER 4, 2000
PROSPECTUS
[LOGO]
DMC STRATEX NETWORKS, INC.
BY THIS PROSPECTUS, WE MAY OFFER
UP TO $300,000,000 OF:
DEBT SECURITIES, COMMON STOCK,
DEBT WARRANTS AND COMMON STOCK WARRANTS
---------------
WE MAY OFFER, FROM TIME TO TIME, IN AMOUNTS, AT PRICES AND ON TERMS THAT WE WILL
DETERMINE AT THE TIME OF OFFERING, THESE DEBT SECURITIES, COMMON STOCK, DEBT
WARRANTS AND COMMON STOCK WARRANTS WITH AN AGGREGATE PUBLIC OFFERING PRICE OF UP
TO $300,000,000.
WE WILL PROVIDE THE SPECIFIC TERMS OF THESE SECURITIES IN SUPPLEMENTS TO THIS
PROSPECTUS. FOR INFORMATION ON THE GENERAL TERMS OF THESE SECURITIES, SEE
"DESCRIPTION OF DEBT SECURITIES," "DESCRIPTION OF COMMON STOCK" OR "DESCRIPTION
OF SECURITIES WARRANTS." YOU SHOULD READ THIS PROSPECTUS AND THE APPLICABLE
SUPPLEMENTS CAREFULLY BEFORE YOU INVEST.
OUR COMMON STOCK TRADES ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL "STXN."
ON DECEMBER 1, 2000, THE LAST REPORTED SALE PRICE OF OUR COMMON STOCK WAS
$15.125 PER SHARE.
THIS INVESTMENT INVOLVES RISKS. SEE THE "RISK FACTORS" SECTION BEGINNING ON PAGE
4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS IS DATED , 2000.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
Prospectus Summary......................... 3 Description of Common Stock..................... 17
Risk Factors............................... 4 Description of Securities Warrants.............. 19
Forward Looking Statements................. 9 Plan of Distribution............................ 22
Use of Proceeds............................ 9 Legal Opinions.................................. 22
Ratio of Earnings to Fixed Charges......... 9 Experts......................................... 22
Description of Debt Securities............. 10 Where You Can Find More Information About Us.... 23
</TABLE>
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This prospectus, and any prospectus supplements issued in relation to it,
contain trademarks of DMC Stratex Networks, Inc. and its affiliates, and may
contain trademarks, tradenames and service marks of other parties. Unless we
indicate otherwise, references to the "Company", "we" or "us" are to DMC Stratex
Networks, Inc. and its subsidiaries. Information contained on our Internet sites
is not a part of this prospectus or any prospectus supplement issued
subsequently.
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PROSPECTUS SUMMARY
THIS SUMMARY MAY NOT CONTAIN ALL THE INFORMATION THAT MAY BE IMPORTANT TO
YOU. BECAUSE THIS IS ONLY A SUMMARY, YOU SHOULD READ THE ENTIRE PROSPECTUS
BEFORE MAKING AN INVESTMENT DECISION. READ THIS ENTIRE PROSPECTUS CAREFULLY,
ESPECIALLY THE RISKS DESCRIBED IN THE SECTION ENTITLED "RISK FACTORS."
DMC STRATEX NETWORKS, INC.
We design, manufacture and market advanced wireless solutions for worldwide
telephone network interconnection and broadband wireless access. We provide our
customers with a broad product line, which contains products that operate using
a variety of transmission frequencies. Our broad product line allows us to
market and sell our products to service providers in many locations worldwide
with varying interconnection and access requirements. We design our products to
meet the requirements of mobile communications networks and fixed access
networks worldwide. We believe our products enable our customers to deploy and
expand their wireless infrastructure and market their services rapidly to
subscribers, so that service providers can realize a return on their investments
in frequency allocation licenses and networked equipment.
HOW TO REACH US
We are incorporated in Delaware and our principal executive offices are
located at 170 Rose Orchard Way, San Jose, California 95134. Our telephone
number at that address is (408) 943-0777.
THE OFFERING OF SECURITIES UNDER THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC using a "shelf" registration offering process. Under this shelf offering
process, we may sell:
- debt securities;
- common stock;
- debt warrants; and
- common stock warrants.
We can sell these securities either separately or in units, in one or more
offerings up to a total dollar amount of $300,000,000. This prospectus provides
you with a general description of those securities. Each time we sell any
securities described in this prospectus, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained in
this prospectus. You should carefully read this prospectus and the applicable
prospectus supplement together with the additional information described under
the heading "Where You Can Find More Information About Us" on page 23 of this
prospectus.
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RISK FACTORS
AN INVESTMENT IN US INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO THE
OTHER INFORMATION INCLUDED IN THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS IN DETERMINING WHETHER OR NOT TO PURCHASE THE SECURITIES
OFFERED UNDER THIS PROSPECTUS. THESE MATTERS SHOULD BE CONSIDERED IN CONJUNCTION
WITH THE OTHER INFORMATION INCLUDED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS. THIS PROSPECTUS CONTAINS STATEMENTS THAT CONSTITUTE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. THESE STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS PROSPECTUS AND
INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF OUR
MANAGEMENT, DIRECTORS OR OFFICERS PRIMARILY WITH RESPECT TO OUR FUTURE OPERATING
PERFORMANCE. PROSPECTIVE PURCHASERS OF OUR SECURITIES ARE CAUTIONED THAT ANY
SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND
INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. THE
ACCOMPANYING INFORMATION CONTAINED IN THIS PROSPECTUS, INCLUDING THE INFORMATION
SET FORTH BELOW, IDENTIFIES IMPORTANT FACTORS THAT COULD CAUSE SUCH DIFFERENCES.
BECAUSE WE DEPEND ON OUR INTERNATIONAL OPERATIONS, WE ARE SUSCEPTIBLE TO A
NUMBER OF POLITICAL, ECONOMIC AND GEOGRAPHIC RISKS THAT COULD HARM OUR BUSINESS
IF THEY OCCUR.
We are highly dependent on sales to customers outside the United States.
During the fiscal years 1998, 1999, and 2000, sales to international customers
accounted for 93%, 87% and 79% of our net sales. We expect that international
sales will continue to account for the majority of our net product sales for the
foreseeable future. As a result, the occurrence of any negative international
political, economic or geographic events could result in significant revenue
shortfalls. These revenue shortfalls could cause our business, financial
condition and results of operations to be harmed. Some of the risks of doing
business internationally include:
- unexpected changes in regulatory requirements;
- fluctuations in foreign currency exchange rates;
- imposition of tariffs and other barriers and restrictions;
- management and operation of an enterprise spread over various countries;
- burden of complying with a variety of foreign laws; and
- general economic and geopolitical conditions, including inflation and
trade relationships.
THE UNPREDICTABILITY OF OUR QUARTER-TO-QUARTER RESULTS MAY HARM THE TRADING
PRICE OF OUR COMMON STOCK.
Our quarterly operating results may vary significantly in the future for a
variety of reasons, many of which are outside of our control, and any of which
may harm our business. These factors include:
- volume and timing of product orders received and delivered during the
quarter;
- our ability and the ability of our key suppliers to respond to changes
made by customers in their orders;
- timing of new product introductions by us or our competitors;
- changes in the mix of products sold by us;
- cost and availability of components and subsystems;
- price erosion;
- adoption of new technologies and industry standards;
- competitive factors, including pricing, availability and demand for
competing products;
- fluctuations in foreign currency exchange rates;
- regulatory developments; and
- general economic conditions in the United States and internationally.
Each of the above factors is difficult to forecast and thus could
significantly harm our business, financial condition and results of
operations. In addition, we may increase spending in response to competition
or to pursue new market opportunities. Accordingly, there can be no assurance
that we will be able to sustain profitability in the future, particularly on
a quarter-to-quarter basis.
COMPETITION COULD HARM OUR ABILITY TO MAINTAIN OR IMPROVE OUR POSITION IN THE
MARKET AND COULD DECREASE OUR REVENUE.
The wireless interconnection and access business is a specialized segment
of the wireless telecommunications industry and is extremely competitive. We
expect this competition to increase in the future. Our products compete on the
basis of the following key characteristics:
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- breadth of product line;
- customer service and support;
- price and financing terms;
- performance;
- rapid time-to-market delivery capabilities; and
- reliability.
Several established and emerging companies offer a variety of microwave,
fiber optic and other connectivity products for applications similar to those of
our products. Our competitors may have more extensive engineering, manufacturing
and marketing capabilities and substantially greater financial, technical and
personnel resources than us. In addition, our competitors may have greater name
recognition, broader product lines, a larger installed base of products and
longer-standing customer relationships. We consider our primary competitors to
be Alcatel, L.M. Ericsson, the Microwave Communications Division of Harris
Corporation, NERA, P-COM, Siemens AG, Triton Network Systems and Ceragon
Networks. In addition, other existing competitors presently include NEC, Nokia,
Northern Telecom and SIAE. Some of our competitors have product lines that
compete with ours, and are also original equipment manufacturers (OEMs) through
which we market and sell our products. Some of our largest customers could
develop the capability to manufacture products similar to those manufactured by
us.
OUR AVERAGE SALES PRICES ARE DECLINING, WHICH MAY DECREASE OUR GROSS PROFIT
MARGINS.
Wireless infrastructure suppliers are experiencing, and are likely to
continue to experience, price pressure, which has resulted, and is expected to
continue to result, in downward pricing pressure on our products. As a result,
we have experienced, and expect to continue to experience, declining average
sales prices for our products. Our ability to attain improved gross profit
margins depends upon our ability to continue to improve manufacturing
efficiencies, reduce material costs of products and to continue to introduce new
products and product enhancements. There can be no assurance that we will be
able to offset this downward price pressure through corresponding cost
reductions. Any inability by us to respond to increased price competition would
harm our business, financial condition and results of operations. Since our
customers frequently negotiate supply arrangements far in advance of delivery
dates, we must often commit to price reductions for our products before we are
aware of how, or if, cost reductions can be obtained. As a result, current or
future price reduction commitments could, and any inability by us to respond to
increased price competition would, harm our business, financial condition and
results of operations.
WE MUST DEVELOP NEW PRODUCTS TO KEEP UP WITH RAPID TECHNOLOGICAL CHANGE OR WE
MAY BE UNABLE TO COMPETE IN OUR MARKET AREA.
The wireless communications market is characterized by rapidly changing
technologies and evolving industry standards. Accordingly, our future
performance depends on a number of factors, including our ability to:
- identify emerging technological trends in our target markets;
- develop and maintain competitive products;
- enhance our products by adding innovative features that differentiate
our products from those of our competitors; and
- manufacture and bring products to market quickly at cost-effective
prices.
We believe that to remain competitive in the future we will need to
continue to develop new products, which will require the investment of
significant financial resources in new product development. In the event that
our new products are not timely developed, do not gain market acceptance or are
not manufacturable at competitive prices, our business, financial condition or
results of operations could be harmed.
In some instances, we enter into agreements to supply products to customers
where the products are not fully developed at the time of entering into the
agreement. Our failure to develop products required for timely performance under
these agreements can have a material impact on our business, financial condition
and results of operations.
IMPROPER TESTING OF PRODUCTS COULD RESULT IN DELAYS OR RECALLS OF OUR PRODUCTS,
WHICH COULD REDUCE OUR REVENUES.
Although we extensively test products prior to introduction, design errors
may be discovered after initial product sampling, resulting in delays in volume
production or recalls of products sold. The occurrence of these errors could
harm our business, financial condition and results of operations. Any
significant delay or failure to
5
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develop, manufacture or ship new or enhanced products because of design
errors by us could also harm our business, financial condition and results of
operations.
LACK OF COMPONENT AVAILABILITY OR THE INABILITY OF OUR SUBCONTRACTORS TO
PERFORM, OR OUR KEY SUPPLIERS TO MANUFACTURE AND DELIVER OUR PRODUCTS, COULD
CAUSE OUR PRODUCTS TO BE PRODUCED IN AN UNTIMELY OR UNSATISFACTORY MANNER.
Our manufacturing operations are highly dependent upon the delivery of
materials by outside suppliers in a timely manner. In addition, we depend in
part upon subcontractors to assemble major components and subsystems used in our
products in a timely and satisfactory manner. While we enter into long-term or
volume purchase agreements with a few of our suppliers, no assurance can be
given that materials, components and subsystems will be available in the
quantities we require, if at all. Our inability to develop alternative sources
of supply quickly on a cost-effective basis could materially impair our ability
to manufacture and deliver products in a timely manner, which could harm our
business, financial condition and results of operations. We may experience
material supply problems or component or subsystem delays in the future.
IF WE FAIL TO MANAGE OUR INTERNAL DEVELOPMENT OR SUCCESSFULLY EFFECTUATE OUR
ACQUISITIONS, WE MAY NOT EFFECTIVELY MANAGE OUR GROWTH AND OUR BUSINESS MAY BE
HARMED.
Future growth of our operations depends, in part, on our ability to
introduce new products and product enhancements to meet the emerging trends in
the wireless telecommunications industry. We have pursued, and will continue to
pursue, growth opportunities through internal development and acquisitions of
complementary businesses and technologies. We are unable to predict whether and
when any prospective acquisition candidate will become available or the
likelihood that any acquisition will be completed. We compete for acquisition
and expansion opportunities with many entities that have substantially greater
resources than us. In addition, acquisitions may involve difficulties in the
retention of personnel, diversion of management's attention, unexpected legal
liabilities, and tax and accounting issues. We may not be able to successfully
identify suitable acquisition candidates, complete acquisitions, integrate
acquired businesses into our operations, or expand into new markets. Once
integrated, acquired businesses may not achieve comparable levels of revenues,
profitability or productivity as our existing business or otherwise perform as
expected. Our failure to manage growth effectively could harm our business,
financial condition and results of operations.
IF WE FAIL TO DEVELOP PRODUCTS THAT MEET THE TECHNICAL SPECIFICATIONS OF OUR
CUSTOMERS, WE COULD EXPERIENCE INCREASED COSTS TO REMEDY THESE FAILURES.
Our customers typically require demanding specifications for quality,
performance and reliability. We may face problems with respect to the quality,
performance and reliability of our systems or related software tools. If these
problems occur, we could experience increased costs, delays in or cancellations
or reschedulings of orders or shipments, delays in collecting accounts
receivable and product returns and discounts, any of which would harm our
business, financial condition and results of operations.
BECAUSE A SIGNIFICANT AMOUNT OF OUR REVENUES COMES FROM A FEW CUSTOMERS, THE
TERMINATION OF ANY OF THESE CUSTOMER RELATIONSHIPS MAY HARM OUR BUSINESS.
During any given quarter, a small number of customers may account for a
significant portion of our net sales. For the fiscal year ended March 31, 2000,
the top three customers accounted for approximately 28% of our net sales. At
March 31, 2000, three customers accounted for approximately 59% of our backlog.
In addition, for the quarter ended September 30, 2000, the top three customers
accounted for approximately 35% of our net sales. At September 30, 2000, three
customers accounted for approximately 39% of our backlog. Our current customers
may not continue to place orders with us, orders by existing customers may not
continue to be at levels of previous periods, or we may not be able to obtain
orders from new customers. Our customers typically are not contractually
obligated to purchase any quantity of products in any particular period and
product sales to major customers have varied widely from period to period. The
loss of any existing customer, a significant reduction in the level of sales to
any existing customer, or our failure to gain additional customers could result
in significant revenue shortfalls. If these revenue shortfalls occur, our
business and financial condition would be harmed.
IF WE FAIL TO MAINTAIN OUR OEM RELATIONSHIPS, OUR DISTRIBUTION CHANNELS COULD BE
HARMED, WHICH COULD CAUSE OUR REVENUES TO DECREASE.
We have relationships with OEM base station suppliers and in selected
countries we also market our products through independent agents and
distributors. These relationships increase our ability to pursue the limited
number of major contract awards each year. In addition, these relationships are
intended to provide our customers with easier
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access to financing and to integrated systems providers with a variety of
equipment and service capabilities. We may not be able to continue to
maintain and develop these relationships or, if these relationships are
developed, they may not be successful. The inability to establish or maintain
these distribution relationships could result in significant revenue
shortfalls. If these revenue shortfalls occur, our business, financial
condition or results of operations could be harmed.
IF SUFFICIENT RADIO FREQUENCY SPECTRUM ALLOCATION IS NOT ALLOCATED FOR USE OF
OUR PRODUCTS, IT MAY RESTRICT OUR ABILITY TO MARKET OUR PRODUCTS.
Radio communications are subject to regulation by United States and foreign
laws and international treaties. Generally, our products must conform to a
variety of United States and international requirements established to avoid
interference among users of transmission frequencies and to permit
interconnection of telecommunications equipment. In addition, both in the United
States and internationally, we are affected by the allocation and auction of the
radio frequency spectrum by governmental authorities. Historically, in many
developed countries, the unavailability of frequency spectrum has inhibited the
growth of wireless telecommunications networks. In addition, to operate in a
jurisdiction, we must obtain regulatory approval for our products. Each
jurisdiction in which we market our products has its own regulations governing
radio communications. Products that support emerging wireless telecommunications
services can be marketed in a jurisdiction only if permitted by suitable
frequency allocations, auctions and regulations, and the process of establishing
new regulations is complex and lengthy. Failure by the governmental regulatory
authorities to allocate suitable frequency spectrum or to establish suitable
regulations for emerging wireless telecommunications services could harm our
business, financial condition or results of operations. Governmental
authorities, both in the United States and internationally, may not allocate
sufficient radio frequency spectrum for use by our products or we may not be
successful in obtaining approval for our products from these authorities.
WE NEED TO HIRE, INTEGRATE AND RETAIN QUALIFIED PERSONNEL, BECAUSE THESE
INDIVIDUALS ARE IMPORTANT TO OUR FUTURE SUCCESS.
Due to the specialized nature of our business, our future performance is
highly dependent upon the continued services of our key engineering personnel
and executive officers, including Charles D. Kissner, who currently serves as
our Chairman of the Board, and Sam Smookler, who currently serves as our Chief
Executive Officer and President. The loss of any key personnel could harm our
business. Our prospects depend upon our ability to attract and retain qualified
engineering, manufacturing, marketing, sales and management personnel for our
operations. Competition for personnel is intense and we may not be successful in
attracting or retaining qualified personnel. The failure of any key employee to
perform in his or her current position or our inability to attract and retain
qualified personnel could harm our business, financial condition and results of
operations.
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS ADEQUATELY, WE MAY
BE DEPRIVED OF LEGAL RECOURSE AGAINST THOSE WHO MISAPPROPRIATE OUR INTELLECTUAL
PROPERTY.
We rely upon a combination of trade secrets, trademarks, copyrights,
patents and contractual rights to protect our intellectual property in the
United States and internationally. We enter into confidentiality and invention
assignment agreements with our employees, and enter into non-disclosure
agreements with our suppliers and appropriate customers so as to limit access to
and disclosure of our proprietary information. The steps taken by us may not be
adequate to deter misappropriation or impede independent third parties from
developing technology that is similar or superior to our proprietary technology,
which could lead to substantial competition in our market area. If we fail to
adequately protect our intellectual property rights and proprietary information
our business could be harmed. Moreover, the protection provided to our
intellectual property by the laws and courts of foreign nations may not be
substantially similar to the remedies available under United States law or third
parties may assert infringement claims against us.
DEFENDING AGAINST INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS COULD BE EXPENSIVE
AND COULD DISRUPT OUR BUSINESS.
The wireless telecommunications industry is characterized by numerous
allegations of patent infringement among competitors and considerable related
litigation. Accordingly, we may in the future be notified that we are infringing
patent or other intellectual property rights of others. Although there are
currently no pending lawsuits regarding intellectual property rights matters
against us or unresolved notices that we are infringing upon intellectual
property rights of others, there can be no assurance that litigation or
infringement claims will not occur in the future. Litigation or claims could
result in substantial costs and diversion of resources and could harm our
business, financial condition and results of operations. In the event of an
adverse result of any intellectual property litigation,
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we could be required to expend significant resources to develop
non-infringing technology or to obtain licenses to the technology that is the
subject of the litigation. We may not be successful in this development or
any license may not be available on commercially reasonable terms.
OUR STOCK PRICE MAY BE VOLATILE, WHICH MAY LEAD TO LOSSES BY INVESTORS AND
SECURITIES LITIGATION.
Announcements of developments related to our business, announcements by
competitors, quarterly fluctuations in our financial results and general
conditions in the telecommunications industry in which we compete, or the
national economies in which we do business and other factors could cause the
price of our common stock to fluctuate, perhaps substantially. In addition, in
recent years the stock market has experienced extreme price fluctuations, which
have often been unrelated to the operating performance of affected companies.
These factors and fluctuations could have a material adverse effect on the
market price of our common stock.
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FORWARD-LOOKING STATEMENTS
The statements contained in this prospectus that are not historical fact
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The safe harbor provisions provided in Section
27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934
apply to forward-looking statements we make. These statements can be identified
by the use of forward-looking terminology, including "believes," "expects,"
"may," "will," "should" or "anticipates" or the negative of these terms or other
variations or comparable terminology, or by discussions of strategy that involve
risks and uncertainties. Numerous factors, including the risk factors discussed
above, economic and competitive conditions, timing and volume of incoming
orders, shipment volumes, product margins, and foreign exchange rates, could
cause actual results to differ materially from those described in these
statements, and prospective investors should carefully consider these factors in
evaluating these forward-looking statements. These forward-looking statements
are based on current expectations, and we assume no obligation to update this
information unless in the course of offering the securities under this
prospectus we provide you with a prospectus supplement.
USE OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, the net
proceeds from the sale of the offered securities will be added to our general
corporate funds for general corporate purposes, including working capital,
increased research and development expenditures and capital expenditures made
in the ordinary course of business. We may also use an unspecified portion of
the net proceeds to acquire or invest in additional businesses, products or
technologies or to establish joint ventures that we believe will complement
our current or future business. The amounts that we actually expend for
working capital purposes, investments or acquisitions will vary significantly
depending on a number of factors, including future revenue growth, if any,
the amount of cash we generate from operations and the progress of our
product development efforts. Accordingly, our management will retain broad
discretion in the allocation of the net proceeds from the sale of the offered
securities. Until the net proceeds have been used, they will be invested in
short-term marketable securities. If we elect at the time of the issuance of
the securities to make different or more specific use of proceeds other than
as described in this prospectus, the change in use of proceeds will be
described in the applicable prospectus supplement.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table shows our ratio of earnings to fixed charges for the
last five fiscal years.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED MARCH 31, SEPTEMBER 30,
------------------------------------ -------------------------
1996 1997 1998 1999 2000 1999 2000
---- ---- ---- ----- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.......... -- 6.7 27.5 -- 21.8 4.8 821.1
Ratio of deficiency earnings to fixed charges (5.5) -- -- (199.7) -- -- --
</TABLE>
For purposes of calculating the ratios, fixed charges consist of:
- interest on debt; and
- the interest portion of rental expense on operating leases.
The ratio of earnings to fixed charges is calculated as follows:
(income before extraordinary charges and income taxes) + (fixed charges)
------------------------------------------------------------------------
(fixed charges)
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DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debentures,
notes, bonds and other evidences of indebtedness that we may issue and that the
trustee named in the applicable prospectus supplement will authenticate and
deliver under an indenture (the "Indenture"). The particular terms of the debt
securities offered by any prospectus supplement and the extent, if any, to which
these general provisions may apply to the debt securities so offered will be
described in the applicable prospectus supplement relating to the debt
securities.
We have summarized various terms and provisions of the form of Indenture in
this section. This summary is not complete. We also have filed the form of the
Indenture as an exhibit to the registration statement. You should read the form
of Indenture for additional information before you buy any debt securities. The
summary that follows includes numerical references in parentheses to section
numbers of the form of Indenture so that you can more easily locate these
provisions. Capitalized terms used but not defined in this summary have the
meanings specified in the Indenture.
GENERAL DESCRIPTION OF THE DEBT SECURITIES
Unless otherwise specified in the applicable prospectus supplement, the
debt securities will represent our direct, senior, unsecured obligations. The
Indenture does not limit the amount of debt securities that we may issue and
permits us to issue debt securities from time to time. Debt securities issued
under the Indenture will be issued as part of a series of securities that has
been established by us pursuant to the Indenture. (Section 301) Unless a
prospectus supplement relating to debt securities states otherwise, the
Indenture and the terms of the debt securities will not contain any covenants
designed to afford holders of any debt securities protection in a highly
leveraged or other transaction involving us that may adversely affect holders of
the debt securities. If we ever issue Bearer Securities, we will summarize
provisions of the Indenture that relate to Bearer Securities in the applicable
prospectus supplement.
A prospectus supplement relating to any series of debt securities being
offered will include specific terms relating to the offering. (Section 301)
These terms will include some or all of the following:
- the title and type of the debt securities;
- any limit on the total principal amount of the debt securities;
- the price at which the debt securities will be issued;
- the date or dates on which the principal of and premium, if any, on the
debt securities will be payable;
- the maturity date of the debt securities;
- any amortization with respect to the debt securities;
- any conversion mechanism whereby the debt securities would convert into
shares of Common Stock;
- if the debt securities will bear interest:
- the interest rate on the debt securities;
- the date from which interest will accrue;
- the record and interest payment dates for the debt securities;
- the first interest payment date;
- any circumstances under which we may defer interest payments;
- any optional redemption provisions that would permit us or the Holders,
as defined below, of debt securities to elect redemption of the debt
securities prior to their final maturity;
- any sinking fund provisions that would obligate us to redeem the debt
securities prior to their final maturity;
- the currency or currencies in which the debt securities will be
denominated and payable, if other than U.S. dollars;
- any provisions that would permit us or the Holders of the debt
securities to elect the currency or currencies in which the debt
securities are paid;
- whether the provisions described under the heading "Defeasance" below
apply to the debt securities;
- any changes to or additional Events of Default or covenants;
- whether the debt securities will be issued in whole or in part in the
form of Global Securities and, if so, the name of the depositary for
those Global Securities (a "Global Security" means a debt security that
we issue in accordance with the Indenture to represent all or part of a
series of debt securities);
- any special tax implications of the debt securities; and
- any other terms of the debt securities.
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A "Holder," with respect to a Registered Security, means the person in
whose name the Registered Security is registered in the Security Register.
(Section 101)
PAYMENT; TRANSFER
In the applicable prospectus supplement, we will designate a place of
payment where you can receive payment of the principal of, and any premium and
interest on, the debt securities, or where you can transfer the debt securities.
Even though we will designate a place of payment, we may elect to pay any
interest on the debt securities by mailing a check to the person listed as the
owner of the debt securities in the Security Register or by wire transfer to an
account designated by that person in writing not less than ten days before the
date of the interest payment. (Sections 305, 307, 1002) There will be no service
charge for any registration of transfer or exchange of the debt securities, but
we may require you to pay any tax or other governmental charge payable in
connection with a transfer or exchange of the debt securities. (Section 305)
DENOMINATIONS
Unless the prospectus supplement states otherwise, the debt securities will
be issued only in registered form, without coupons, in denominations of $1,000
each or multiples of $1,000.
ORIGINAL ISSUE DISCOUNT
Debt securities may be issued under the Indenture as Original Issue
Discount Securities and sold at a substantial discount below their stated
principal amount. If a debt security is an "Original Issue Discount Security,"
that means that an amount less than the principal amount of the debt security
will be due and payable upon a declaration of acceleration of the maturity of
the debt security pursuant to the Indenture. (Section 101) The applicable
prospectus supplement will describe the federal income tax consequences and
other special factors which should be considered prior to purchasing any
Original Issue Discount Securities.
CLASSIFICATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Indenture contains restrictive covenants that apply to us and all of
our Restricted Subsidiaries. Those covenants do not apply to our Unrestricted
Subsidiaries. For example, (1) the assets and indebtedness of Unrestricted
Subsidiaries and (2) investments by us or our Restricted Subsidiaries in
Unrestricted Subsidiaries are not included in the calculations described under
the heading "Restrictions on Secured Funded Debt" below. The Indenture does not
require us to maintain any Restricted Subsidiaries and, if we do not, the
Indenture will not provide any limitations on the amount of secured debt created
or incurred by our Subsidiaries.
A "Subsidiary" is any corporation of which we own more than 50% of the
outstanding shares of Voting Stock directly or through one or more of our other
Subsidiaries. "Voting Stock" means stock that is entitled to vote in an election
for directors.
"Restricted Subsidiaries" are all of our Subsidiaries other than
Unrestricted Subsidiaries. A "Wholly Owned Restricted Subsidiary" is a
Restricted Subsidiary of which we own all of the outstanding capital stock
directly or through our other Wholly Owned Restricted Subsidiaries.
Our "Unrestricted Subsidiaries" are:
- any Subsidiaries listed in a schedule to the Indenture;
- any Subsidiary that our Board of Directors in the future designates as
an Unrestricted Subsidiary pursuant to the Indenture; and
- any other Subsidiary if a majority of its Voting Stock is owned by an
Unrestricted Subsidiary.
Our Board of Directors can at any time change a Subsidiary's designation
from an Unrestricted Subsidiary to a Restricted Subsidiary if (1) the majority
of that Subsidiary's Voting Stock is not owned by an Unrestricted Subsidiary and
(2) after the change of designation, we would be in compliance with the
restrictions contained in the Secured Funded Debt covenant described under the
heading "Restrictions on Secured Funded Debt" below. (Sections 101, 1010(a))
RESTRICTIONS ON SECURED FUNDED DEBT
The Indenture limits the amount of Secured Funded Debt that we and our
Restricted Subsidiaries may incur or otherwise create, including by guarantee.
Neither we nor our Restricted Subsidiaries may incur or otherwise create any new
Secured Funded Debt unless immediately after the incurrence or creation of the
new Secured Funded Debt, the sum of:
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- the aggregate principal amount of all of our outstanding Secured Funded
Debt and that of our Restricted Subsidiaries (other than categories of
Secured Funded Debt discussed below); plus
- the aggregate amount of our Attributable Debt and that of our Restricted
Subsidiaries relating to sale and lease-back transactions; and
- does not exceed a percentage of our Consolidated Net Tangible Assets to
be determined prior to execution of the Indenture.
This limitation does not apply if the outstanding debt securities are
secured equally and ratably with or prior to the new Secured Funded Debt.
(Sections 1008(a), 1008(c))
"Secured Funded Debt" means Funded Debt which is secured by a mortgage,
lien or other similar encumbrance upon any of our assets or those of our
Restricted Subsidiaries. (Section 101)
"Funded Debt" means:
- Indebtedness maturing, or which we may extend or renew to mature, more
than 12 months after the time the amount of Secured Funded Debt is
computed; plus
- guarantees of Indebtedness or of dividends, except guarantees in
connection with the sale or discount of accounts receivable, trade
acceptances and other paper arising in the ordinary course of business;
plus
- in the case of a Subsidiary, all preferred stock of that Subsidiary.
Funded Debt does not include any amount relating to obligations under leases or
guarantees of leases whether or not those obligations would be included as
liabilities on our consolidated balance sheet. (Section 101)
"Indebtedness" means, except as set forth in the next sentence:
- all items of indebtedness or liability, except capital and surplus,
which under GAAP would be included in total liabilities on the
liability side of a balance sheet as of the date that indebtedness is
being determined;
- indebtedness secured by a mortgage, lien or other similar encumbrance
on property owned subject to that mortgage, lien or other similar
encumbrance, regardless of whether the indebtedness secured by that
mortgage, lien or other similar encumbrance was assumed; and
- guarantees, endorsements, other than for purposes of collection, and
other contingent obligations relating to, or to purchase or otherwise
acquire, indebtedness of others, unless the amount is included in the
preceding two bullet points.
Indebtedness does not include any obligations or guarantees of obligations
relating to lease rentals, even if these kinds of obligations or guarantees of
obligations would be included as liabilities on the consolidated balance sheet
of our Company and our Restricted Subsidiaries. (Section 101)
"Attributable Debt" means:
- the balance sheet liability amount of capital leases as determined by
GAAP; plus
- the amount of future minimum operating lease payments required to be
disclosed by GAAP, less any amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments, water rates and
similar charges, discounted using the methodology used to calculate the
present value of operating lease payments in our most recent Annual
Report to Shareholders reflecting that calculation.
The amount of Attributable Debt relating to an operating lease that can be
terminated by the lessee with the payment of a penalty will be calculated based
on the lesser of (1) the aggregate amount of lease payments required to be made
until the first date the lease can be terminated by the lessee plus the amount
of the penalty or (2) the aggregate amount of lease payments required to be made
during the remaining term of the lease. (Section 101)
"Consolidated Net Tangible Assets" means the total consolidated amount of
our assets and those of our Restricted Subsidiaries, minus applicable reserves
and other properly deductible items and after excluding any investments made in
Unrestricted Subsidiaries or in corporations while they were Unrestricted
Subsidiaries but which are not Subsidiaries at the time of the calculation,
minus
- all liabilities and liability items, including capital leases, or
guarantees of capital leases, which under GAAP would be included in the
balance sheet, except Funded Debt, capital stock and surplus, surplus
reserves and provisions for deferred income taxes; and
- goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other similar intangibles. (Section 101)
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The following categories of Secured Funded Debt will not be considered in
determining whether we are in compliance with the covenant described in the
first paragraph under the heading "Restrictions on Secured Funded Debt":
- Secured Funded Debt of a Restricted Subsidiary owing to us or to one of
our Wholly Owned Restricted Subsidiaries;
- Secured Funded Debt resulting from a mortgage, lien or other similar
encumbrance in favor of the U.S. Government or any State or any
instrumentality thereof to secure various payments;
- Secured Funded Debt resulting from a mortgage, lien or other similar
encumbrance on property, shares of stock or Indebtedness of any company
existing at the time that the respective company becomes one of our
Subsidiaries;
- Secured Funded Debt resulting from a mortgage, lien or other similar
encumbrance on property, shares of stock or Indebtedness which (1)
exists at the time that the property, shares of stock or Indebtedness
is acquired by us or one of our Restricted Subsidiaries, including
acquisitions by merger or consolidation, (2) secures the payment of
any part of the purchase price of or construction cost for the
respective property, shares of stock or Indebtedness or (3) secures
any indebtedness incurred prior to, at the time of, or within 120 days
after, the acquisition of the respective property, shares of stock or
Indebtedness or the completion of any construction of the respective
property for the purpose of financing all or a part of the purchase
price or construction cost of the respective property, shares of stock
or Indebtedness, provided that, in all cases, we continue to comply
with the covenant relating to mergers and consolidations discussed
under the heading "Consolidation, Merger or Sale" below;
- Secured Funded Debt secured by a mortgage, lien or other similar
encumbrance in connection with the issuance of revenue bonds on which
the interest is exempt from federal income tax pursuant to the Internal
Revenue Code of 1986; and
- any extension, renewal or refunding of (1) any Secured Funded Debt
permitted under the first paragraph under the heading "Restrictions on
Secured Funded Debt," (2) any Secured Funded Debt outstanding at a date
to be determined, of any then Restricted Subsidiary or (3) any Secured
Funded Debt of any company outstanding at the time the respective
company became a Restricted Subsidiary. (Section 1008(b))
RESTRICTIONS ON SALE AND LEASE-BACK TRANSACTIONS
The Indenture provides that neither we nor any of our Restricted
Subsidiaries may enter into any sale and lease-back transaction involving any
Operating Property as defined below, more than 120 days after its acquisition or
the completion of its construction and commencement of its full operation,
unless either:
- we or the relevant Restricted Subsidiary could (1) create Secured
Funded Debt on the respective property equal to the Attributable Debt
with respect to the sale and lease-back transaction and (2) still be in
compliance with the restrictions on Secured Funded Debt discussed in
the "Restrictions on Secured Funded Debt" section above; or
- we apply an amount, subject to credits for various voluntary
retirements of debt securities and/or Funded Debt, equal to the greater
of (1) the fair value of the respective property or (2) the net
proceeds of the respective sale, within 120 days, to the retirement of
Secured Funded Debt.
This restriction will not apply to any sale and lease-back transaction (1)
between us and one of our Restricted Subsidiaries, (2) between any of our
Restricted Subsidiaries or (3) involving a lease for a period, including
renewals, of three years or less. (Section 1009)
"Operating Property" means a parcel of real property owned by us or any
Subsidiary and primarily used in the operation of its business. If we acquire a
new Subsidiary that already owns and operates the respective property, then the
respective property will not be considered Operating Property until 90 days
after the relevant acquisition. (Section 101)
CONSOLIDATION, MERGER OR SALE
The Indenture generally permits a consolidation or merger between us and
another corporation. It also permits the sale or transfer by us of all or
substantially all of our property and assets and the purchase by us of all or
substantially all of the property and assets of another corporation. These
transactions are permitted if:
- the resulting or acquiring corporation, if other than us, assumes all
of our responsibilities and liabilities under the Indenture, including
the payment of all amounts due on the debt securities and performance
of the covenants in the Indenture;
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- immediately after the transaction, no Event of Default exists; and
- except in the case of a consolidation or merger of a Restricted
Subsidiary with or into us, either (1) we have obtained the consent of
the Holders of a majority in aggregate principal amount of the
outstanding debt securities of each series or (2) immediately after the
transaction, the resulting or acquiring corporation could incur
additional Secured Funded Debt and still be in compliance with the
restrictions on Secured Funded Debt as described in the "Restrictions
on Secured Funded Debt" section above. (Section 801) Even though the
Indenture contains the provisions described above, we are not required
by the Indenture to comply with those provisions if we sell all of our
property and assets to another corporation if, immediately after the
sale:
- that corporation is one of our Wholly Owned Restricted Subsidiaries;
and
- we could incur additional Secured Funded Debt and still be in
compliance with the restrictions on Secured Funded Debt, as
described in the "Restrictions on Secured Funded Debt" section above.
(Section 803)
If we consolidate or merge with or into any other corporation or sell all
or substantially all of our assets according to the terms and conditions of the
Indenture, the resulting or acquiring corporation will be substituted for us in
the Indenture with the same effect as if it had been an original party to the
Indenture. As a result, the relevant successor corporation may exercise our
rights and powers under the Indenture, in our name or in its own name, and we
will be released from all our liabilities and obligations under the Indenture
and under the debt securities. (Section 802)
MODIFICATION AND WAIVER
Under the Indenture, our specified rights and obligations and the specified
rights of Holders of the debt securities may be modified or amended with the
consent of the Holders of a majority of the aggregate principal amount of the
outstanding debt securities of each series of debt securities affected by the
modification or amendment. The following modifications and amendments will not
be effective against any Holder without its consent:
- a change in various payments due on the debt securities;
- a change in the Place of Payment or currency in which any payment on the
debt securities is payable;
- a limitation of a Holder's right to sue us for the enforcement of various
payments due on the debt securities;
- a reduction in the percentage of outstanding debt securities required to
consent to a modification or amendment of the Indenture;
- a limitation of a Holder's right, if any, to repayment of debt
securities at he respective Holder's option; and
- a modification of any of the foregoing requirements or a reduction in the
percentage of outstanding debt securities required to waive compliance
with specified provisions of the Indenture or to waive various defaults
under the Indenture. (Section 902) Under the Indenture, the Holders of a
majority of the aggregate principal amount of the outstanding debt
securities of any series of debt securities may, on behalf of all Holders
of that series:
- waive compliance by us with specified restrictive covenants of the
Indenture; and
- waive any past default under the Indenture, except:
- a default in the payment of the principal of, or any premium or
interest on, any debt securities of that series; or
- a default under any provision of the Indenture which itself cannot
be modified or amended without the consent of the Holders of each
outstanding debt security of that series. (Sections 1012, 513)
EVENTS OF DEFAULT
"Event of Default," when used in the Indenture with respect to any series
of debt securities, means any of the following:
- failure to pay interest on any debt security of that series for 30 days
after the payment is due;
- failure to pay the principal of, or any premium on, any debt security of
that series when due;
- failure to deposit any sinking fund payment when due on debt securities
of that series;
- failure to perform any other covenant in the Indenture that applies to
debt securities of that series for 90 days after we have received
written notice of the failure to perform in the manner specified in the
Indenture;
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- default under any Indebtedness for borrowed money, including other
series of debt securities, or under any mortgage, lien or other similar
encumbrance, indenture or instrument, including the Indenture, which
secures any Indebtedness for borrowed money, and which results in
acceleration of the maturity of an outstanding principal amount of
Indebtedness greater than an aggregate dollar amount to be determined
prior to the execution of the Indenture, unless the acceleration is
rescinded or the Indebtedness is discharged within 10 days after we
have received written notice of the default in the manner specified in
the Indenture;
- specified events in bankruptcy, insolvency or reorganization; or
- any other Event of Default that may be specified for the debt securities
of that series when that series is created. (Section 501)
If an Event of Default for any series of debt securities occurs and
continues, the Trustee or the Holders of a percentage to be determined prior to
the execution of the Indenture, or higher, of the aggregate principal amount of
the outstanding debt securities of the series may declare the entire principal
of all the debt securities of that series to be due and payable immediately. If
a declaration occurs, the Holders of a majority of the aggregate principal
amount of the outstanding debt securities of that series can, subject to various
conditions, rescind the declaration. (Sections 502, 513)
The prospectus supplement relating to each series of debt securities which
are Original Issue Discount Securities will describe the particular provisions
that relate to the acceleration of maturity of a portion of the principal amount
of the respective series when an Event of Default occurs and continues.
An Event of Default for a particular series of debt securities does not
necessarily constitute an Event of Default for any other series of debt
securities issued under the Indenture. The Indenture requires us to file an
officers' certificate with the Trustee each year that states that certain
defaults do not exist under the terms of the Indenture. (Section 1011) The
Trustee may withhold notice to the Holders of debt securities of any default,
except defaults in the payment of principal, premium, interest or any sinking
fund installment, if it considers the withholding of notice to be in the best
interests of the Holders. (Section 602)
Other than its duties in the case of a default, a Trustee is not obligated
to exercise any of its rights or powers under the Indenture at the request,
order or direction of any Holders, unless the Holders offer the Trustee
reasonable indemnification. (Sections 601, 603) If reasonable indemnification is
provided, then, subject to other rights of the Trustee, the Holders of a
majority in principal amount of the outstanding debt securities of any series
may, with respect to the debt securities of that series, direct the time, method
and place of:
- conducting any proceeding for any remedy available to the Trustee; or
- exercising any trust or power conferred upon the Trustee. (Sections 512,
603)
The Holder of a debt security of any series will have the right to begin
any proceeding with respect to the Indenture or for any remedy only if:
- the Holder has previously given the Trustee written notice of a
continuing Event of Default with respect to that series;
- the Holders of at least a percentage to be determined prior to the
execution of the Indenture, or higher, in aggregate principal amount of
the outstanding debt securities of that series have made a written
request of, and offered reasonable indemnification to, the Trustee to
begin a proceeding;
- the Trustee has not started a proceeding within 60 days after receiving
the request; and
- the Trustee has not received directions inconsistent with the relevant
request from the Holders of a majority in aggregate principal amount of
the outstanding debt securities of that series during those 60 days.
(Section 507)
However, the Holder of any debt security will have an absolute right to
receive payment of principal of and any premium and interest on the debt
security when due and to institute suit to enforce payment. (Section 508)
DEFEASANCE
DEFEASANCE AND DISCHARGE. At the time that we establish a series of debt
securities under the Indenture, we can provide that the debt securities of that
series are subject to the defeasance and discharge provisions of the Indenture.
If we so provide, we will be discharged from our obligations on the debt
securities of that series if we deposit with the Trustee, in trust, sufficient
money or Government Obligations, as defined below, to pay the principal,
interest, any premium and any other sums due on the debt securities of that
series, such as sinking fund payments, on the
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dates the relevant payments are due under the Indenture and the terms of the
debt securities. (Section 403) As used above, "Government Obligations" mean:
- securities of the same government which issued the currency in which
the series of debt securities are denominated and in which interest is
payable; or
- securities of government agencies backed by the full faith and credit of
the respective government. (Section 101)
In the event that we deposit funds in trust and discharge our obligations
under a series of debt securities as described above, then:
- the Indenture will no longer apply to the debt securities of that
series, except for obligations to compensate, reimburse and indemnify
the Trustee, to register the transfer and exchange of debt securities,
to replace lost, stolen or mutilated debt securities and to maintain
paying agencies and the trust funds; and
- Holders of debt securities of that series can only look to the trust
fund for payment of principal, any premium and interest on the debt
securities of that series. (Section 403)
Under federal income tax law, a deposit and discharge may be treated as an
exchange of the related debt securities for an interest in the trust mentioned
above. Each holder might be required to recognize gain or loss equal to the
difference between (1) the holder's cost or other tax basis for the debt
securities and (2) the value of the holder's interest in the trust. Holders
might be required to include in income a share of the income, gain or loss of
the trust, including gain or loss recognized in connection with any substitution
of collateral, as described in this section under the heading "Substitution of
Collateral" below. You are urged to consult your own tax advisers as to the
specific consequences of a deposit and discharge, including the applicability
and effect of tax laws other than federal income tax law.
DEFEASANCE OF CERTAIN COVENANTS AND CERTAIN EVENTS OF DEFAULT. At the time
that we establish a series of debt securities under the Indenture, we can
provide that the debt securities of that series are subject to the covenant
defeasance provisions of the Indenture. If we so provide and we make the deposit
described in this section under the heading "Defeasance and Discharge" above:
- we will not have to comply with the following restrictive covenants:
- consolidation, merger or sale (Sections 801, 803);
- restrictions on Secured Funded Debt (Section 1008);
- restrictions on sale and lease-back transactions (Section 1009);
- classification of Restricted and Unrestricted Subsidiaries
(Section 1010); and
- any other covenant we designate when we establish the series of debt
securities; and
- we will not have to treat the events described in the fourth bullet
point under the heading "Events of Default" above as they relate to the
covenants listed above that have been defeased and no longer are in
effect and the events described in the fifth, sixth and seventh bullet
points under the heading "Events of Default" as Events of Default under
the Indenture in connection with that series.
In the event of a defeasance, our obligations under the Indenture and the
debt securities, other than with respect to the covenants and the Events of
Default specifically referred to above, will remain in effect. (Section 1501)
If we exercise our option not to comply with the covenants listed above and
the debt securities of the relevant series become immediately due and payable
because an Event of Default has occurred, other than as a result of an Event of
Default specifically referred to above, the amount of money and/or Government
Obligations on deposit with the Trustee will be sufficient to pay the principal,
interest, any premium and any other sums due on the debt securities of the
relevant series, such as sinking fund payments, on the date payments are due
under the Indenture and the terms of the debt securities, but may not be
sufficient to pay amounts due at the time of acceleration. However, we would
remain liable for the balance of the payments. (Section 1501)
SUBSTITUTION OF COLLATERAL. At the time that we establish a series of debt
securities under the Indenture, we can provide for our ability to, at any time,
withdraw any money or Government Obligations deposited pursuant to the
defeasance provisions described above if we simultaneously substitute other
money and/or Government Obligations which would satisfy our payment obligations
on the debt securities of that series pursuant to the defeasance provisions
applicable to those debt securities. (Section 402)
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DESCRIPTION OF COMMON STOCK
This section describes the general terms and provisions of the shares of
our common stock. Any prospectus supplement will describe the specific terms of
the common stock offered through that prospectus supplement and any general
terms outlined in this section that will not apply to that common stock.
We have summarized terms and provisions of our common stock in this
section. This summary is not complete. You should read our Restated Certificate
of Incorporation and our Bylaws and the Certificate of Designation relating to
the Series A Preferred Stock for additional information before you buy any of
our common stock.
GENERAL DESCRIPTION OF OUR COMMON STOCK
SHARES OUTSTANDING. We are authorized to issue up to 150,000,000 shares
of common stock. As of November 22, 2000, 73,625,410 shares were issued and
outstanding.
VOTING. Holders of shares of our common stock are entitled to one vote
per share on all matters to be voted on by stockholders.
DIVIDENDS. Holders of our common stock are entitled to receive
dividends, if any, as may be declared from time to time by our Board of
Directors out of legally available funds.
LIQUIDATION. Upon our liquidation or dissolution, holders of our common
stock are entitled to share ratably in the distribution of assets, subject to
the rights of the holders of our preferred stock.
PREEMPTIVE, SUBSCRIPTION OR CONVERSION RIGHTS; SINKING FUND. Holders of
our common stock have no preemptive rights, subscription rights or conversion
rights. There are no redemption or sinking fund provisions with respect to
our common stock.
LISTING. Our outstanding shares of common stock are listed on the
Nasdaq National Market under the symbol "STXN." ChaseMellon Shareholder
Services L.L.C. serves as the transfer agent and registrar for our common
stock.
OUR CERTIFICATE OF INCORPORATION AND BYLAWS CONTAIN ANTI-TAKEOVER PROVISIONS
Provisions of our Restated Certificate of Incorporation and Bylaws could
discourage potential acquisition proposals and could delay or prevent a change
in control of our company. These provisions could diminish the opportunities for
a stockholder to participate in tender offers, including tender offers at a
price above the then current market value of our common stock. These provisions
may also inhibit fluctuations in the market price of our common stock that could
result from takeover attempts.
PREFERRED STOCK. Under our Restated Certificate of Incorporation, we have
authority to issue 5,000,000 shares of preferred stock in one or more series as
determined by our Board of Directors. Currently, no shares of preferred stock
are issued and outstanding. Our Board of Directors may, without further action
by our stockholders, issue an additional series of preferred stock and fix the
rights and preferences of those shares, including the dividend rights, dividend
rates, conversion rights, exchange rights, voting rights, terms of redemption,
redemption price or prices, liquidation preferences and the number of shares
constituting any series or the designation of any series. The rights of the
holders of our common stock will be subject to, and may be adversely affected
by, the rights of the holders of any preferred stock issued by us in the future.
NOMINATION PROCEDURES. In addition to members of our Board of Directors,
stockholders can nominate candidates for our Board of Directors. However, a
stockholder must follow the advance notice procedures described in Section 14 of
our Bylaws. In general, a stockholder must submit a written notice of the
nomination to our Corporate Secretary at least 60 days before a scheduled
meeting of our stockholders.
PROPOSAL PROCEDURES. Stockholders can propose that business other than
nominations to our Board of Directors be considered at an annual meeting of
stockholders only if a stockholder follows the advance notice procedures
described in our Bylaws. In general, a stockholder must submit a written notice
of the proposal and the stockholder's interest in the proposal at least 60 days
before the date set for the annual meeting of our stockholders.
AMENDMENT OF BYLAWS. Under our Bylaws, our Board of Directors can adopt,
amend or repeal the Bylaws, subject to limitations under the Delaware General
Corporation Law. Our stockholders also have the power to change or repeal our
Bylaws.
BUSINESS COMBINATION STATUTE. We are subject to Section 203 of the Delaware
General Corporation Law. Section 203 restricts specified transactions and
business combinations between a corporation and an "Interested Stockholder"
owning 15% or more of the corporation's outstanding voting stock for a period of
three years from the
17
<PAGE>
date the stockholder becomes an Interested Stockholder. Subject to specified
exceptions, unless the transaction is approved by our Board of Directors and
the holders of at least 66.67% of the outstanding voting stock of the
corporation, excluding shares held by the Interested Stockholder, Section 203
prohibits significant business transactions such as a merger with,
disposition of assets to, or receipt of disproportionate financial benefits
by, the Interested Stockholder, or any other transaction that would increase
the Interested Stockholder's proportionate ownership of any class or series
of the corporation's stock. The statutory ban does not apply if, upon
consummation of the transaction in which any person becomes an Interested
Stockholder, the Interested Stockholder owns at least 85% of the outstanding
voting stock of the corporation, excluding shares held by persons who are
both directors and officers or by specified employee stock plans.
RIGHTS AGREEMENT. In October 1991, we adopted a Stockholder's Rights
Agreement pursuant to which one Preferred Share Purchase Right (a "Right") was
distributed for each outstanding share of our common stock. Each Right, as
adjusted to give effect to a stock dividend, which effected a two-for-one stock
split, in November 1997, entitles our stockholders to buy one two-hundredth of a
share of Series A Junior Participating preferred stock at an exercise price of
$50.00 upon specified events. The Rights expire on October 23, 2001, unless
earlier redeemed by us.
The Rights become exercisable if a person acquires 15% or more of our
common stock or announces a tender offer that would result in the person owning
15% or more of our common stock, other than a person who has reported or is
required to report beneficial ownership of our common stock on Schedule 13G
under the Exchange Act of 1934, with respect to whom the threshold is 20%. If
the Rights become exercisable, the holder of each Right, other than the person
whose acquisition triggered the exercisability of the Rights, will be entitled
to purchase, at the Right's then-current exercise price, a number of shares of
our common stock having a market value of twice the exercise price. In addition,
if we were to be acquired in a merger or business combination after the Rights
became exercisable, each Right would entitle its holder to purchase, at the
Right's then-current exercise price, stock of the acquiring company having a
market value of twice the exercise price. The Rights, as adjusted to give effect
to a stock dividend, which effected a two-for-one stock split, in November 1997,
are redeemable by us at a price of $0.005 per Right at any time within ten days
after a person has acquired 15%, or 20% in the case of a Schedule 13G filer, or
more of our common stock.
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<PAGE>
DESCRIPTION OF SECURITIES WARRANTS
This section describes the general terms and provisions of the warrants for
the purchase of debt securities or common stock, or the Securities Warrants,
that we may issue. The particular terms of the Securities Warrants offered by
any prospectus supplement and the extent, if any, to which these general
provisions may apply to the Securities Warrants so offered will be described in
the applicable prospectus supplement relating to the Securities Warrants.
Securities Warrants may be issued alone or together with debt securities or
common stock offered by any prospectus supplement and may be attached to or
separate from those securities. Each series of Securities Warrants will be
issued under a separate warrant agreement, or a Securities Warrant Agreement,
between us and a bank or trust company, as warrant agent, or the Securities
Warrant Agent, which will be described in the applicable prospectus supplement.
The Securities Warrant Agent will act solely as our agent in connection with the
Securities Warrants and will not act as an agent or trustee for any holders of
Securities Warrants.
We have summarized general terms and provisions of the Securities Warrant
Agreements and Securities Warrants in this section. The summary is not complete.
We have also filed the forms of Securities Warrant Agreements and the
certificates representing the Securities Warrants, or Securities Warrant
Certificates, as exhibits to the registration statement. You should read the
applicable forms of Securities Warrant Agreement and Securities Warrant
Certificate for additional information before you buy any Securities Warrants.
PROVISIONS OF THE SECURITIES WARRANTS
If we offer Securities Warrants, the applicable prospectus supplement will
describe their terms. If Securities Warrants for the purchase of debt securities
are offered, the applicable prospectus supplement will describe the terms of
these Securities Warrants, including the following if applicable:
- the offering price;
- the currencies in which these Securities Warrants are being offered;
- the designation, aggregate principal amount, currencies, denominations
and terms of the series of the debt securities that can be purchased if
a holder exercises these Securities Warrants;
- the designation and terms of any series of debt securities with which
these Securities Warrants are being offered and the number of
Securities Warrants offered with each debt security or share of common
stock;
- the date on and after which the holder of these Securities Warrants can
transfer them separately from the related common stock or series of
debt securities;
- the principal amount of the series of debt securities that can be
purchased if a holder exercises these Securities Warrants and the price
and currencies in which the principal amount may be purchased upon
exercise;
- the date on which the right to exercise these Securities Warrants begins
and the date on which the right expires;
- United States federal income tax consequences; and
- any other terms of these Securities Warrants.
Securities Warrants for the purchase of debt securities will be in
registered form only.
If Securities Warrants for the purchase of common stock are offered, the
applicable prospectus supplement will describe the terms of these Securities
Warrants, including the following where applicable:
- the offering price;
- the total number of shares that can be purchased if a holder of these
Securities Warrants exercises them;
- the designation and terms of the series of debt securities with which
these Securities Warrants are being offered and the number of Securities
Warrants being offered with each debt security or share of common stock;
- the date on and after which the holder of these Securities Warrants can
transfer them separately from the related common stock or series of
debt securities;
- the number of shares of common stock that can be purchased if a holder
exercises these Securities Warrants and the price at which the common
stock may be purchased upon each exercise;
- the date on which the right to exercise these Securities Warrants begins
and the date on which the right expires;
- United States federal income tax consequences; and
- any other terms of these Securities Warrants.
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<PAGE>
Securities Warrants for the purchase of Common Stock will be in registered
form only.
A holder of Securities Warrant Certificates may (1) exchange them for new
certificates of different denominations, (2) present them for registration of
transfer and (3) exercise them at the corporate trust office of the Securities
Warrant Agent or any other office indicated in the applicable prospectus
supplement. Until any Securities Warrants to purchase debt securities are
exercised, the holder of Securities Warrants will not have any of the rights of
Holders of the debt securities that can be purchased upon exercise, including
any right to receive payments of principal, premium or interest on the
underlying debt securities or to enforce covenants in the Indenture. Until any
Securities Warrants to purchase common stock are exercised, holders of
Securities Warrants will not have any of the rights of holders of the underlying
common stock, including any right to receive dividends or to exercise any voting
rights.
EXERCISE OF SECURITIES WARRANTS
Each holder of a Securities Warrant is entitled to purchase the principal
amount of debt securities or number of shares of common stock, as the case may
be, at the exercise price described in the applicable prospectus supplement.
After the close of business on the day when the right to exercise terminates, or
a later date if we extend the time for exercise, unexercised Securities Warrants
will become void.
A holder of Securities Warrants may exercise them by following the general
procedure outlined below:
- delivering to the Securities Warrant Agent the payment required by the
applicable prospectus supplement to purchase the underlying security;
- properly completing and signing the reverse side of the Securities
Warrant Certificate representing the Securities Warrants; and
- delivering the Securities Warrant Certificate representing the
Securities Warrants to the Securities Warrant Agent within five
business days of the Securities Warrant Agent receiving payment of the
exercise price.
If you comply with the procedures described above, your Securities Warrants
will be considered to have been exercised when the Securities Warrant Agent
receives payment of the exercise price. After you have completed those
procedures, we will, as soon as practicable, issue and deliver to you the debt
securities or common stock that you purchased upon exercise. If you exercise
fewer than all of the Securities Warrants represented by a Securities Warrant
Certificate, a new Securities Warrant Certificate will be issued to you for the
unexercised amount of Securities Warrants. Holders of Securities Warrants will
be required to pay any tax or governmental charge that may be imposed in
connection with transferring the underlying securities in connection with the
exercise of the Securities Warrants.
AMENDMENTS AND SUPPLEMENTS TO SECURITIES WARRANT AGREEMENTS
We may amend or supplement a Securities Warrant Agreement without the
consent of the holders of the applicable Securities Warrants if the changes are
not inconsistent with the provisions of the Securities Warrants and do not
materially adversely affect the interests of the holders of the Securities
Warrants. We, along with the Securities Warrant Agent, may also modify or amend
a Securities Warrant Agreement and the terms of the Securities Warrants if a
majority of the then outstanding unexercised Securities Warrants affected by the
modification or amendment consent. However, no modification or amendment that
accelerates the expiration date, increases the exercise price, reduces the
majority consent requirement for any modification or amendment, or otherwise
adversely affects the rights of the holders of the Securities Warrants may be
made without the consent of each holder affected by the modification or
amendment.
COMMON STOCK WARRANT ADJUSTMENTS
Unless the applicable prospectus supplement states otherwise, the exercise
price of, and the number of shares of common stock covered by, a Common Stock
Warrant will be adjusted in the manner set forth in the applicable prospectus
supplement if specified events occur, including:
- if we issue capital stock as a dividend or distribution on the common
stock;
- if we subdivide, reclassify or combine the common stock;
- if we issue rights or warrants to all holders of common stock entitling
them, for a period expiring 45 days after the date fixed for
determining the stockholders entitled to receive the rights or
warrants, to purchase common stock at less than the current market
price as will be defined in the Warrant Agreement for the applicable
series of Common Stock Warrants; or
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<PAGE>
- if we distribute to all holders of common stock evidences of our
indebtedness or our assets, excluding specified cash dividends and
distributions described below, or rights or warrants, excluding rights
or warrants referred to above.
Except as stated above, the exercise price and number of shares of common
stock covered by a Common Stock Warrant will not be adjusted if we issue common
stock or any securities convertible into or exchangeable for common stock, or
securities carrying the right to purchase common stock or securities convertible
into or exchangeable for common stock.
Holders of Common Stock Warrants may have additional rights under the
following circumstances:
- a reclassification or change of the common stock;
- a consolidation or merger involving us; or
- a sale or conveyance to another corporation of all or substantially all
of our property and assets.
If one of the above transactions occurs and holders of our common stock are
entitled to receive stock, securities, other property or assets, including cash,
with respect to or in exchange for our common stock, the holders of the Common
Stock Warrants then outstanding will be entitled to receive upon exercise of
their Common Stock Warrants the kind and amount of shares of stock and other
securities or property that they would have received upon the reclassification,
change, consolidation, merger, sale or conveyance if they had exercised their
Common Stock Warrants immediately before the transaction.
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<PAGE>
PLAN OF DISTRIBUTION
We may sell the securities under this prospectus through agents,
underwriters or dealers or directly to one or more purchasers.
Underwriters, dealers and agents that participate in the distribution of
the securities under this prospectus may be underwriters as defined in the
Securities Act of 1933 and any discounts or commissions received by them from
us, and any profit on the resale of these securities by them, may be treated as
underwriting discounts and commissions under the Securities Act. Any
underwriters or agents will be identified and their compensation, including
their underwriting discount, will be described in the applicable prospectus
supplement. The prospectus supplement also will describe other terms of the
offering, including any discounts or concessions allowed or reallowed or paid to
dealers and any securities exchanges on which these securities may be listed.
If underwriters are used in the sale, the securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. These
securities may be either offered to the public through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate. The
obligations of the underwriters to purchase these securities will be subject to
specified conditions precedent and the underwriters will be obligated to
purchase all the securities of a series if any are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
The distribution of these securities may occur from time to time in one or
more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to the prevailing
market prices or at negotiated prices.
If the applicable prospectus supplement indicates, we will authorize
dealers or our agents to solicit offers by particular institutions to purchase
these securities from us pursuant to contracts that provide for payment and
delivery on a future date. We must approve all institutions, but they may
include, among others:
- commercial and savings banks;
- insurance companies;
- pension funds;
- investment companies; and
- educational and charitable institutions.
The institutional purchaser's obligations under the contract are only
subject to the condition that the purchase of these securities under this
prospectus at the time of delivery is allowed by the laws that govern the
purchaser. The dealers and our agents will not be responsible for the validity
or performance of the contracts.
We may have agreements with the underwriters, dealers and agents to
indemnify them against specific civil liabilities, including liabilities under
the Securities Act, or to contribute with respect to payments which the
underwriters, dealers or agents may be required to make as a result of those
specific civil liabilities.
Except for shares of common stock, when we issue the securities under this
prospectus, they may be new securities without an established trading market. If
we sell securities to an underwriter for public offering and sale, the
underwriter may make a market for the relevant securities, but the underwriter
will not be obligated to do so and could discontinue any market-making without
notice at any time. Therefore, we cannot give any assurances to you concerning
the liquidity of any security under this prospectus.
Underwriters and agents and their affiliates may be customers of, engage in
transactions with, or perform services for us or our subsidiaries in the
ordinary course of their businesses.
LEGAL OPINIONS
Morrison & Foerster LLP, San Francisco, California, will issue an opinion
about the legality of the securities offered by this prospectus. Any
underwriters will be represented by their own legal counsel.
EXPERTS
The audited financial statements and schedules incorporated by reference in
this prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto. The consolidated financial statements are, and
consolidated financial statements included in subsequent filings with the SEC
will be, incorporated by reference in this prospectus in reliance upon the
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<PAGE>
report given upon the authority of said firm as experts in accounting and
auditing to the extent consolidated financial statements included in
subsequent filings are covered by consents executed by said firm and filed
with the SEC.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You also may read and copy
any document we file with the SEC at its public reference facilities at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices at
7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You also can
obtain copies of the documents at prescribed rates by writing to the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of its public reference facilities. Our SEC filings also are available at the
offices of the Nasdaq Stock Market, located at 1735 K Street, N.W., Washington,
D.C. 20006.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is an important part of this prospectus and
information that we file subsequently with the SEC will automatically update
this prospectus. We incorporate by reference the documents listed below that we
previously filed with the SEC. These documents contain important information
about us and our finances.
- Annual Report on Form 10-K for the fiscal year ended March 31, 2000;
- Definitive Proxy Statement for the fiscal year ended March 31, 2000;
- Quarterly Report on Form 10-Q for the quarter ended June 30, 2000;
- Quarterly Report on Form 10-Q for the quarter ended September 30, 2000;
and
- The description of our common stock contained in the Registration
Statements on Form 8-A filed with the SEC on May 29, 1987 and November 5,
1991, as amended on December 27, 1996.
We also incorporate by reference additional documents that we may file with
the SEC after the initial filing of the registration statement that contains
this prospectus and prior to the time that we sell all the securities offered by
this prospectus. These additional documents include periodic reports, such as
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K, as well as proxy statements.
We will provide without charge to each person to whom a copy of this
prospectus is delivered, upon written or oral request, a copy of the information
that has been or may be incorporated by reference in this prospectus, including
the exhibits to the relevant documents. Direct any request for copies to Carl A.
Thomsen, Senior Vice President, Chief Financial Officer and Secretary, at our
corporate headquarters, located at 170 Rose Orchard Way, San Jose, California
95134 (telephone number (408) 943-0777).
You should rely only on the information contained or incorporated by
reference in this prospectus or any applicable prospectus supplement. We have
not authorized anyone to provide you with any other information. We may only use
this prospectus to sell securities if it is accompanied by a prospectus
supplement. We are only offering these securities in states where the offer is
permitted. You should not assume that the information in this prospectus or any
applicable prospectus supplement is accurate as of any date other than the dates
on the front of those documents.
23
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an estimate, subject to future contingencies, of the
expenses to be incurred by the Registrant in connection with the issuance and
distribution of the securities being registered:
<TABLE>
<CAPTION>
<S> <C>
Registration Fee................................ $ 79,200
Legal Fees and Expenses*........................ 30,000
Accounting Fees and Expenses*................... 10,000
Printing and Engraving Fees*.................... 35,000
Listing Fees*................................... 17,500
Miscellaneous*.................................. 20,000
------
Total........................................... $191,700
--------
</TABLE>
* Estimated pursuant to instruction to Item 511 of Regulation S-K.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the Delaware General Corporation Law, or the DGCL,
provides in relevant part that "[a] corporation may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interest of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
such person's conduct was unlawful." With respect to derivative actions, Section
145(b) of the DGCL provides in relevant part that "[a] corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor ... [by reason of such person's
service in one of the capacities specified in the preceding sentence] against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interest of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper."
The Registrant's Restated Certificate of Incorporation provides that a
director of the corporation will not be personally liable to the corporation or
its stockholders for monetary damages for breach of his or her fiduciary duties
as a director, except for liability
- for any breach of the director's duty of loyalty to the corporation;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- under Section 174 of the DGCL; or
- for any transaction for which the director derived an improper personal
benefit.
Such Restated Certificate of Incorporation further provides that if the DGCL is
amended to authorize further reductions in the liability of the corporation's
directors for breach of fiduciary duty, then, subject to the approval of the
stockholders, a director of the corporation shall not be liable for such breach
to the fullest extent permitted by the DGCL, as so amended.
II-1
<PAGE>
The Registrant's Bylaws provide that the Registrant shall indemnify to the
full extent authorized by Delaware law any person made, or threatened to be
made, a party to an action or a proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that he, his testator or
intestate was or is a director or officer of the Registrant or any predecessor
of the Registrant or serves or served any other enterprise as a director or
officer at the request of the Registrant or any predecessor of the Registrant.
The Registrant has entered into indemnification agreements with its
directors and certain of its officers. The Registrant has purchased and
maintains insurance on behalf of any person who is or was a director or officer
against loss arising from any claim asserted against him and incurred by him in
any such capacity, subject to certain exclusions.
See also the undertakings set out in response to Item 17 herein.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
<S> <C>
1.1 Form of Underwriting Agreement for Debt Securities.+
1.2 Form of Underwriting Agreement for Common Stock.+
3.1 Restated Certificate of Incorporation of DMC Stratex Networks,
Inc., dated April 10, 1987, as amended (incorporated by
reference to Exhibit 3.1 to the Registrant's Annual Report on
Form 10-K for the year ended March 31, 1998).
3.2 Amended and Restated Bylaws dated as of August 8, 2000
(incorporated by reference to Exhibit 3.2 of the Registrant's
Quarterly Report on Form 10-Q for the quarter ended September
30, 2000).
4.1 Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 of the Registrant's Quarterly Report on Form 10-Q
for the quarter ended December 31, 1998).
4.2 Amended and Restated Rights Agreement, dated as of November 3,
1998, between the Registrant and ChaseMellon Shareholder
Services, L.L.C., including the form of the Certificate of
Designations for the Series A Junior Participating Stock
(incorporated by reference to Exhibit 4.1 of the Registrant's
Quarterly Report on Form 10-Q for the quarter ended December 31,
1998).
4.3 Form of Indenture.+
4.4 Form of Debt Warrant Agreement, including form of Debt Warrant
Certificate.+
4.5 Form of Common Stock Warrant Agreement, including form of Common
Stock Warrant Certificate.+
4.6 Form of Senior Debenture.+
5.1 Opinion of Morrison & Foerster LLP together with consent.+
12.1 Computations of ratio of earnings to fixed charges.+
23.1 Consent of Morrison & Foerster LLP (contained in the opinion of
counsel filed as Exhibit 5.1 to this Registration Statement).+
23.2 Consent of Arthur Andersen LLP, independent public accountants.
24.1 Powers of Attorney (see page II-4 of the Registration
Statement).+
</TABLE>
+ Previously filed
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement; provided, however, that paragraphs
(a)(1)(i) and (a)(1)(ii) do not apply if the information required
to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in
the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer, or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer,
or controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that 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 upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act of 1933 shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(e) The undersigned Registrant hereby undertakes that 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>
(f) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Act.
II-4
<PAGE>
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 San Jose and the State of California, on this 4th
day of December, 2000.
DMC STRATEX NETWORKS, INC.
By: /s/ SAM SMOOKLER
----------------------
Sam Smookler
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
CHARLES D. KISSNER*
------------------------------ Chairman of the Board December 4, 2000
Charles D. Kissner
RICHARD C. ALBERDING*
------------------------------ Director December 4, 2000
Richard C. Alberding
PAUL S. BACHOW*
------------------------------ Director December 4, 2000
Paul S. Bachow
JOHN W. COMBS*
------------------------------ Director December 4, 2000
John W. Combs
JAMES D. MEINDL*
------------------------------ Director December 4, 2000
James D. Meindl, Ph.D.
V. FRANK MENDICINO*
------------------------------ Director December 4, 2000
V. Frank Mendicino
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ SAM SMOOKLER
------------------------------ Chief Executive Officer, December 4, 2000
Sam Smookler President and Director
HOWARD ORINGER*
------------------------------ Director December 4, 2000
Howard Oringer
/s/ CARL A. THOMSEN
------------------------------ Senior Vice President, December 4, 2000
Carl A. Thomsen Chief Financial Officer
and Secretary
(Principal Financial and
Accounting Officer)
</TABLE>
*By: /s/ Carl A. Thomsen
-------------------
Carl A. Thomsen
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
<S> <C>
1.1 Form of Underwriting Agreement for Debt Securities.+
1.2 Form of Underwriting Agreement for Common Stock.+
3.1 Restated Certificate of Incorporation of DMC Stratex Networks,
Inc., dated April 10, 1987, as amended (incorporated by
reference to Exhibit 3.1 to the Registrant's Annual Report on
Form 10-K for the year ended March 31, 1998).
3.2 Amended and Restated Bylaws dated as of August 8, 2000
(incorporated by reference to Exhibit 3.2 of the Registrant's
Quarterly Report on Form 10-Q for the quarter ended September
30, 2000).
4.1 Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 of the Registrant's Quarterly Report on Form 10-Q
for the quarter ended December 31, 1998).
4.2 Amended and Restated Rights Agreement, dated as of November 3,
1998, between the Registrant and ChaseMellon Shareholder
Services, L.L.C., including the form of the Certificate of
Designations for the Series A Junior Participating Stock
(incorporated by reference to Exhibit 4.1 of the Registrant's
Quarterly Report on Form 10-Q for the quarter ended December 31,
1998).
4.3 Form of Indenture.+
4.4 Form of Debt Warrant Agreement, including form of Debt Warrant
Certificate.+
4.5 Form of Common Stock Warrant Agreement, including form of Common
Stock Warrant Certificate.+
4.6 Form of Senior Debenture.+
5.1 Opinion of Morrison & Foerster LLP together with consent.+
12.1 Computations of ratio of earnings to fixed charges.+
23.1 Consent of Morrison & Foerster LLP (contained in the opinion of
counsel filed as Exhibit 5.1 to this Registration Statement).+
23.2 Consent of Arthur Andersen LLP, independent public accountants.
24.1 Powers of Attorney (see page II-4 of the Registration
Statement).+
</TABLE>
+ Previously filed
