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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 22, 2000
REGISTRATION NO. 333-49092
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 1 to
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FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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RADISYS CORPORATION
(Exact name of registrant as specified in its charter)
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OREGON 7373 93-0945232
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification
Number)
5445 NE DAWSON CREEK DRIVE, HILLSBORO, OREGON 97124
(503) 615-1100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------------
STEPHEN F. LOUGHLIN
VICE PRESIDENT OF FINANCE AND ADMINISTRATION AND CHIEF FINANCIAL OFFICER
RADISYS CORPORATION
5445 NE DAWSON CREEK DRIVE
HILLSBORO, OREGON 97124
(503) 615-1100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
John R. Thomas
Jason M. Brauser
Stoel Rives LLP
900 SW Fifth Avenue, Suite 2600
Portland, Oregon 97204
(503) 224-3380
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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. The
securities may not be sold 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, Dated November 22, 2000
RADISYS CORPORATION
$100,000,000
5 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2007 AND THE COMMON STOCK
ISSUABLE UPON CONVERSION OF THE NOTES.
We issued the notes in a private placement in August 2000. This
prospectus will be used by selling securityholders to resell their notes and the
common stock issuable upon conversion of their notes.
The notes are convertible before maturity into common stock at an
initial conversion price of $67.8038 per share, subject to adjustment in certain
events. We will pay interest on the notes on February 15 and August 15 of each
year, beginning on February 15, 2001. The notes will mature on August 15, 2007,
unless earlier converted or redeemed.
We may redeem all or a portion of the notes on or after August 20,
2003. In addition, the holders may require us to repurchase the notes upon a
fundamental change before August 15, 2007.
Our common stock is traded on the Nasdaq National Market under the
symbol "RSYS." On November 21, 2000, the last sale price for our common stock as
reported on the Nasdaq National Market was $28.625 per share.
SEE "RISK FACTORS" ON PAGE 8 FOR A DISCUSSION OF RISKS RELATED TO AN
INVESTMENT IN THESE SECURITIES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------------
You should rely only on the information provided in this prospectus or
incorporated by reference. We have not authorized anyone else to provide you
with different information. Neither we, nor any other person on our behalf, is
making an offer to sell or soliciting an offer to buy any of the securities
described in this prospectus in any state where the offer is not permitted by
law. You should not assume that the information in this prospectus is accurate
as of any date other than the date on the front of this prospectus. There may
have been changes in our affairs since the date of the prospectus.
-----------------
The date of this prospectus is ____________, 2000.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Where You Can Find More Information..........................................1
Summary......................................................................3
Risk Factors.................................................................8
Use Of Proceeds.............................................................18
Ratio Of Earnings To Fixed Charges..........................................18
Description Of Notes........................................................19
Description Of Capital Stock................................................40
Certain United States Federal Income Tax Consequences.......................42
Selling Securityholders.....................................................51
Plan Of Distribution........................................................54
Legal Matters...............................................................56
Experts.....................................................................56
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission under the
Securities Exchange Act of 1934. You can inspect and copy our reports, proxy
statements, and other information filed with the SEC at the offices of the SEC's
Public Reference Rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
Public Reference Rooms. The SEC maintains an Internet Web site at
http://www.sec.gov/ where you can obtain some of our SEC filings. In addition,
you can inspect our reports, proxy materials and other information at the
offices of the Nasdaq Stock Market at 1735 K Street NW, Washington D.C. 20006.
We filed a registration statement on Form S-3 to register with the SEC
the notes and common stock issuable on conversion of the notes. This document is
a part of that registration statement and constitutes a prospectus of RadiSys.
As allowed by SEC rules, this document does not contain all the information you
can find in the registration statement or the exhibits to the registration
statement.
The SEC allows us to "incorporate by reference" information into this
document, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. This document
incorporates by reference the documents set forth below that we have previously
filed with the SEC:
- Annual Report on Form 10-K for the year ended December 31, 1999.
- Quarterly Report on Form 10-Q for the quarter ended March 31,
2000.
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- 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.
- Current Report on Form 8-K dated December 28, 1999, as amended.
- Current Reports on Form 8-K dated August 4, 2000, September 7,
2000, October 18, 2000 and October 30, 2000.
- The description of our common stock contained in our registration
statement under the Exchange Act, including any amendment or
report updating the description.
In addition, we incorporate by reference all documents we will file
with the SEC in the future under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act until the termination of this offering. We refer to these
documents, and the documents listed above, in this prospectus as "incorporated
documents." You should consider any statement contained in an incorporated
document to be modified or superseded for purposes of this prospectus to the
extent that a statement contained in this prospectus or in any other
subsequently filed incorporated document modifies or replaces such statement.
Any such statement so modified or replaced will not be deemed to be a part of
this prospectus, except as so modified or superseded. You should consider all
incorporated documents a part of this prospectus.
We have agreed that, whether or not we are required to do so by the
rules and regulations of the SEC, we will deliver to the trustee, to each holder
of notes and to each prospective purchaser of notes identified to us by an
initial purchaser the annual and quarterly financial statements included in
reports we file with the SEC.
You may request, without charge, a copy of any incorporated document
(excluding exhibits, unless we have specifically incorporated an exhibit in an
incorporated document) by writing or telephoning us at our principal executive
offices at the following address:
RadiSys Corporation
5445 NE Dawson Creek Drive
Hillsboro, Oregon 97124
Attention: Chief Financial Officer
Telephone: (503) 615-1100
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SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS AND IN THE INCORPORATED DOCUMENTS. THIS SUMMARY IS NOT COMPLETE
AND DOES NOT CONTAIN ALL THE INFORMATION THAT YOU SHOULD CONSIDER BEFORE
INVESTING IN OUR NOTES OR COMMON STOCK. YOU SHOULD READ THE ENTIRE PROSPECTUS
CAREFULLY, INCLUDING THE RISK OF INVESTING IN OUR SECURITIES DISCUSSED UNDER
"RISK FACTORS," AND YOU SHOULD REVIEW OUR FINANCIAL STATEMENTS IN THE
INCORPORATED DOCUMENTS BEFORE MAKING AN INVESTMENT DECISION.
RADISYS CORPORATION
We are a leading provider of embedded computer solutions for the
next-generation Internet, communications, industrial automation and medical
equipment markets. Embedded computers perform one or more critical system
control functions in a larger system and adhere to specific requirements
regarding size, reliability and ability to withstand the demands of extreme
environmental conditions. Our embedded computer solutions are design-intensive
and require substantial engineering know-how and a comprehensive understanding
of the end product into which they are incorporated.
We sell our embedded computer solutions to original equipment
manufacturers, or OEMs. Our customers include many leading OEMs, such as AG
Communication Systems, Agilent Technologies, Inc., Alcatel, Applied Materials,
Inc., Cisco Systems, Inc., Comverse Technology, Inc., Fuji Machine Manufacturing
Company, International Business Machines Corporation, Lucent Technologies, Inc.,
Nokia Corporation, Nortel Networks Corporation and Philips Medical Systems
N.E.D. B.V. Our customers use our solutions in a broad range of applications
such as:
COMMUNICATIONS INDUSTRIAL AUTOMATION
Voice message systems Semiconductor manufacturing
Cellular base station controllers equipment
Private branch exchange, or PBX, systems Electronics assembly equipment
Voice gateways
Network switches MEDICAL EQUIPMENT
Call centers Blood analyzers
Intelligent network servers Patient monitors
Telecommunications billing systems X-ray machines
In recent years, faster time-to-market requirements, the increasing
complexity of electronic systems and components and a growing trend to
rationalize internal manufacturing resources have led to significant growth in
the outsourcing of design and manufacture of components, electronics subsystems
and complete systems by OEMs. We have responded to this opportunity by offering
embedded computer solutions that incorporate a broad set of layered, electronic
building blocks. We believe these building blocks enable us to meet the diverse
needs of our customers and enable them to achieve a faster time to market. Our
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building blocks incorporate hardware and software and range in terms of their
level of integration from custom-designed chips to single-board computers to
subsystems to complete systems. Our building blocks support both peripheral
component interconnect, or PCI, and CompactPCI, the two dominant bus
architectures of systems within the communications and our other target markets.
We have four categories of building blocks that we believe enable us to build
complete systems in each of our target markets.
- CENTRAL PROCESSING UNIT. Central processing units, or CPUs,
provide the primary logic processing and system control functions
in a system. We have significant expertise in developing CPU
building blocks based on Intel architectures, including the
Celeron, Pentium, Pentium II, Pentium III, IXP and StrongArm
processors, which run industry standard operating systems and
applications. Embedded CPUs have been our heritage since
incorporation in 1987.
- DIGITAL SIGNAL PROCESSING. Digital signal processing, or DSP,
converts analog signals, like voice, video, music and graphics,
to and from digital signals. Our DSP building blocks include both
software and hardware that support the Texas Instruments C6x DSP
architecture.
- WIDE AREA NETWORK CONNECTIVITY. Wide area network, or WAN,
connectivity enables the exchange of information across long
distances using various voice and data communications
technologies. Our WAN connectivity building blocks include
network interface hardware and software designed to enable
applications such as Internet access for electronic commerce
servers. We acquired this expertise through our acquisition of
IBM's ARTIC division.
- SYSTEMS INTEGRATION. We can design, configure, manufacture,
package and test a wide range of components, single-board
computers, subsystems and complete systems to provide products
that meet the requirements of our OEM customers. We acquired this
expertise through our acquisition of Texas Micro Inc., which
added subsystem integration capabilities and expertise in PCI bus
architecture, and our acquisition of IBM's Open Computing
Platform, or OCP, division, which added complete system
integration capabilities.
We believe an increasing portion of embedded computer solutions is and
will continue to be based on Intel processor architecture. We have approximately
230 engineers and technicians with extensive expertise in Intel architecture,
and we are one of only ten applied computer platform providers for Intel
Corporation. We work closely with Intel's Embedded Architecture Division to
develop and market chip-level, board-level, subsystem-level and system-level
products for the embedded computer market to facilitate the implementation of
Intel architecture and Internet eXchange Architecture designs into a broadening
array of new OEM products.
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We intend to capitalize on our position as a leading provider of
embedded computer solutions to become the preeminent supplier of electronic
building blocks to major OEMs in the next-generation Internet, communications,
industrial automation and medical equipment markets. We seek to achieve our goal
by:
- leveraging our broad set of layered, electronic building blocks
to become a complete system provider to a larger number of OEMs,
- capitalizing on our substantial expertise in the Intel
architecture to increase our market share, and
- expanding our "virtual division" presence within an increasing
number of our OEM customers to increase design wins.
We are incorporated under the laws of Oregon. Our principal executive
offices are located at 5445 NE Dawson Creek Drive, Hillsboro, Oregon 97124, and
our telephone number is (503) 615-1100.
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THE OFFERING
The following is a brief summary of some of the terms of this offering.
For a more complete description of the terms of the notes, see "Description of
Notes" in this prospectus.
Securities offered......... $100,000,000 principal amount of 5 1/2%
Convertible Subordinated Notes due 2007 and
shares of our common stock issued upon
conversion of the notes.
Maturity Date.............. The notes will mature on August 15, 2007,
unless earlier redeemed or converted.
Interest................... We will pay 5 1/2% per annum on the principal
amount of notes, payable semiannually on
February 15 and August 15, beginning February
15, 2001.
Conversion rights.......... The notes are convertible, at the option of the
holder, at any time on or before maturity,
unless previously redeemed or repurchased, into
shares of our common stock initially at a
conversion price of $67.8038 per share, which
is equal to a conversion rate of 14.7484 shares
per $1,000 principal amount of notes. The
conversion rate is subject to adjustment.
Ranking.................... The notes are unsecured and subordinated to our
existing and future senior indebtedness, as
defined. In addition, the notes effectively
rank junior to our subsidiaries' liabilities.
At September 30, 2000, we had no senior
indebtedness outstanding, and the aggregate
amount of liabilities of our subsidiaries was
approximately $19.1 million. Because the notes
are subordinated, in the event of bankruptcy,
liquidation, dissolution or acceleration of
payment on the senior indebtedness, holders of
the notes will not receive any payment until
holders of the senior indebtedness have been
paid in full. The indenture under which the
notes are issued does not prevent us or our
subsidiaries from incurring additional senior
indebtedness or other obligations.
Provisional redemption..... The notes will not be redeemable before August
20, 2003. We may redeem all or a portion of the
notes at our option on or after August 20, 2003
at the redemption prices listed in this
prospectus, plus accrued and unpaid interest,
provided that the notes will only be redeemable
if the closing price of our common stock equals
or exceeds 140% of the conversion
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price then in effect for at least 20 trading
days within a period of 30 consecutive trading
days ending on the trading day before the date
of the notice of the provisional redemption.
Change of control repurchase Upon a change of control event, each holder of
the notes may require us to repurchase some or
all of its notes at a purchase price equal to
100% of the principal amount of the notes plus
accrued and unpaid interest.
Form and Denomination...... The notes will be issued in registered form in
the minimum denomination of $1,000 and integral
multiples of $1,000 in excess thereof.
Use of proceeds............ We will not receive any of the proceeds from
the sale by any selling securityholder of the
notes or the underlying common stock.
Registration rights........ We have agreed to file with the Securities and
Exchange Commission a shelf registration
statement for the resale of the notes and the
common stock issuable upon conversion. We have
agreed to use reasonable efforts to keep that
registration statement of which this prospectus
forms a part, effective until August 9, 2002.
If we do not comply with these and other
registration obligations, we will be required
to pay liquidated damages to the holders of the
notes or the common stock issuable upon
conversion.
Trading.................... The notes are designated as eligible for
trading in the PORTAL Market; however, we
provide no assurance as to the liquidity of, or
trading markets for, the notes. Our common
stock is quoted on the Nasdaq National Market
under the symbol "RSYS."
Risk Factors............... See "Risk Factors" and the other information in
this prospectus for a discussion of the factors
you should carefully consider before deciding
to invest in the notes or the common stock
issued upon conversion of the notes.
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RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN EVALUATING AN INVESTMENT IN OUR
COMPANY AND ITS BUSINESS.
OUR PERIOD-TO-PERIOD REVENUE AND OPERATING RESULTS FLUCTUATE SIGNIFICANTLY,
WHICH MAY RESULT IN VOLATILITY IN THE PRICE OF OUR COMMON STOCK.
Our period-to-period revenue and operating results have varied in the
past and we expect they will continue to vary in the future, and any such
fluctuations may cause our stock price to fluctuate. Accordingly, you should not
rely on the results of any past quarterly or annual periods as an indication of
our future performance. In future periods our operating results may be below the
expectations of public market analysts and investors, which could cause the
price of our common stock to decline, perhaps significantly.
A number of factors may contribute to fluctuations in our revenues and
operating results. We may have difficulty predicting the volume and timing of
orders for our products, and delays in closing orders can cause our operating
results to fall substantially short of anticipated levels for any period. Delays
by our OEM customers in producing products that incorporate our products also
could cause our operating results to fall short of anticipated levels. Other
factors that may particularly contribute to fluctuations in our revenue and
operating results include:
- our success in achieving design wins in which our products are
designed into those of our customers;
- the market acceptance of the OEM products that incorporate our
products;
- the rate of adoption of new products;
- competition from new technologies and other companies; and
- the variability of the life cycles of our customers' products.
BECAUSE OF OUR DEPENDENCE ON OUR RELATIONSHIP WITH INTEL AND ITS PRODUCTS, ANY
DISRUPTION OF OUR RELATIONSHIP WITH INTEL, OR ANY DOWNTURN IN INTEL'S BUSINESS,
COULD HAVE AN ADVERSE IMPACT ON OUR BUSINESS.
Our success is significantly dependent on Intel's continued commitment
to the embedded computer market. Most of our embedded computer systems are based
on Intel's architecture. Intel's decision to de-emphasize or withdraw support of
the embedded computer segment of the computer market would have a material
adverse effect on our business, financial condition and results of operations.
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In addition, we have designed and manufactured embedded computer
solutions for Intel, received research and development funding from Intel for
the development of various embedded computer systems, engaged in joint planning
and marketing programs with Intel and relied in part on Intel's distributors to
market our products. Any adverse development in our relationships with Intel
could have a material adverse effect on our business, financial condition and
results of operations.
Finally, our reliance on Intel's architecture renders us vulnerable to
changes in microprocessor technology. For example, if the architectures used in
the microprocessors of Intel's competitors, such as Advanced Micro Devices and
Motorola, Inc., become standard in the embedded computer industry, demand for
our embedded computer solutions may decline. Any failure on our part to use the
most current technology in our products could have a material adverse effect on
our business, results of operations and financial condition.
WE DEPEND ON THE COMMUNICATIONS MARKET AND ANY INABILITY TO SELL OUR PRODUCTS TO
THIS MARKET COULD HAVE A SUBSTANTIALLY NEGATIVE IMPACT ON OUR REVENUES.
We derive a substantial portion of our product revenues from sales of
products for communications applications. The communications market is
characterized by intense competition and rapid technological change. In
addition, although the communications market has grown rapidly in the last few
years, this market may not continue to grow or a significant slowdown in this
market may occur.
Products for communications applications are often based on industry
standards, which are continually evolving. Our future success will depend, in
part, upon our ability to successfully develop and introduce new products based
on emerging industry standards. Our failure to conform to the standards could
render our existing products unmarketable or obsolete. If the communications
market develops new standards, we may be unable to successfully design and
manufacture new products that address the needs of our customers or achieve
substantial market acceptance.
IF WE DO NOT ACHIEVE DESIGN WINS WITH KEY OEMS, WE MAY BE UNABLE TO SECURE
DESIGN WINS FROM, AND THEREFORE MAKE SALES OF OUR PRODUCTS TO, THESE CUSTOMERS
IN THE FUTURE, WHICH COULD LIMIT OUR GROWTH.
Once an OEM has designed an embedded computer solution into its
products, the OEM may be reluctant to change its solution source due to the
significant costs associated with qualifying a new supplier. Accordingly, the
failure to achieve design wins with key OEMs who have chosen a competitor's
solution could create barriers to future sales opportunities with such OEMs and
could limit our growth.
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IF LEADING OEMS DO NOT INCORPORATE OUR SOLUTIONS IN SUCCESSFUL PRODUCTS, SALES
OF OUR PRODUCTS WILL DECLINE SIGNIFICANTLY.
We rely on OEMs, such as Nokia and Nortel, to include our solutions in
their products. We further rely on their products to be successful, and if they
are not, we will not sell our solutions in large quantities to these OEMs.
Accordingly, we must correctly anticipate the price, performance and
functionality requirements of the OEMs. We also must successfully develop
products that meet these requirements and make these products available on a
timely basis and in sufficient quantities. Moreover, if there is consolidation
in any of our target markets, especially communications, or if a small number of
OEMs otherwise dominate any of these markets, then our success will depend on
our ability to establish and maintain relationships with these market leaders.
If we do not anticipate trends in any of our markets or fail to meet the
requirements of OEMs, or if we do not successfully establish and maintain
relationships with leading OEMs, then our business, financial condition and
results of operations could be seriously harmed.
IF WE DELIVER PRODUCTS WITH DEFECTS, OUR CREDIBILITY COULD BE HARMED, AND MARKET
ACCEPTANCE AND SALES OF OUR PRODUCTS COULD DECREASE.
Our products are complex and have contained errors, defects and bugs
when introduced. If we deliver products with errors, defects or bugs, our
credibility and the market acceptance and sales of our products could be harmed.
Further, if our products contain errors, defects and bugs, then we may be
required to expend significant capital and resources to alleviate such problems.
Defects could also lead to product liability as a result of product liability
lawsuits against us or against our customers. We have agreed to indemnify our
customers in some circumstances against liability from defects in our products.
Product liability litigation arising from errors, defects or bugs, even if it
resulted in an outcome favorable to us, would be time consuming and costly to
defend. Existing or future laws or unfavorable judicial decisions could negate
any limitation of liability provisions that are included in our license
agreements. A successful product liability claim could seriously harm our
business, financial condition and results of operations.
We maintain $21 million of insurance coverage for product liability
claims. Although we believe this coverage is adequate, we do not assure you that
coverage under insurance policies will be adequate to cover product liability
claims against us. In addition, product liability insurance could become more
expensive and difficult to maintain and in the future may not be available on
commercially reasonable terms or at all. The amount and scope of any insurance
coverage may be inadequate if a product liability claim is successfully asserted
against us.
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OUR STOCK AND THE NOTES WILL LIKELY BE SUBJECT TO SUBSTANTIAL PRICE AND VOLUME
FLUCTUATIONS DUE TO A NUMBER OF FACTORS, MANY OF WHICH WILL BE BEYOND OUR
CONTROL, THAT MAY PREVENT YOU FROM RESELLING OUR NOTES AND STOCK AT A PROFIT.
The securities markets have experienced significant price and volume
fluctuations and the market prices of the securities of technology companies
have been especially volatile. The market price of the notes or our common
stock may experience significant fluctuations in the future. For example, our
common stock price has fluctuated from a high of $65.75 to a low of $21.63
during the 52 weeks ended October 27, 2000. This market volatility, as well
as general economic, market or political conditions, could reduce the market
price of our common stock, or the notes, in spite of our operating
performance. In addition, our operating results could be below the
expectations of public market analysts and investors, and in response, the
market price of our common stock or the notes could decrease significantly.
Investors may be unable to resell the notes at or above the offering price.
BECAUSE WE DEPEND ON A FEW SUPPLIERS OR, IN SOME CASES, ONE SUPPLIER FOR SOME OF
THE COMPONENTS WE USE TO MANUFACTURE OUR PRODUCTS, A LOSS OF THAT SUPPLIER OR A
SHORTAGE OF ANY OF THOSE COMPONENTS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS.
We depend on third parties for a continuous supply of the components we
use in the manufacture of our products. Some of these components are obtained
from a single supplier, or a limited number of suppliers. For example, we are
dependent solely on Intel for the supply of microprocessors and other
components, and we depend on Maxim Integrated Products, Inc., Linear Technology
Corporation, Infineon Technologies A.G. (formerly Siemens Semiconductor) and
Texas Instruments Incorporated as sole source suppliers for other components. We
rely on external suppliers for bare printed-circuit boards, machine-inserted
through-hole circuit boards, semiconductor components and mechanical assemblies.
Although many of the components used in our manufacturing operation are
available from a number of alternative sources, some of the components are
obtained from a single supplier or a limited number of suppliers. We would
encounter difficulty in locating alternative sources of supply for some of these
components. Moreover, suppliers may discontinue or upgrade products, some of
which are incorporated into our products. Any limitation, discontinuance or
upgrade could require us to redesign a product to incorporate newer or
alternative technology. If we were to change any of our sole or limited source
vendors, we would be required to requalify each new vendor. Requalification
could prevent or delay product shipments that could negatively affect our
results of operations. We have no long-term contract with any suppliers of
components. The electronics industry has experienced product shortages, some of
which have been both prolonged and severe. Because of capacity constraints in
the electronic component industry, we have at times experienced supply shortages
of our components. These shortages have adversely affected component prices and
have resulted in the delay of shipments of products incorporating these
components. Our failure to obtain adequate supplies of components or increases
in the cost of components could have a material adverse effect on our business,
financial condition and results of operations.
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ACQUISITIONS MAY BE COSTLY AND DIFFICULT TO INTEGRATE, DIVERT MANAGEMENT
RESOURCES OR DILUTE SHAREHOLDER VALUE.
We have considered and completed strategic acquisitions in the past,
and in the future we expect to acquire or make investments in complementary
companies, products or technologies. We may not be able to integrate these
companies, products or technologies successfully. In connection with these
acquisitions or investments we could
- issue stock that would dilute our existing shareholders'
percentage ownership,
- incur debt and assume liabilities, and
- incur amortization expenses related to goodwill and other
intangible assets or incur large and immediate write-offs.
Our recent acquisitions and future potential acquisitions also may pose
additional risks to our operations, including:
- problems combining the purchased operations, technologies or
products;
- unanticipated costs;
- diversion of management's attention from our core business;
- adverse effects on business relationships with our suppliers
and customers and those of the acquired company;
- entering markets in which we have no, or limited, prior
experience; and
- potential loss of key employees, particularly those of the
acquired organization.
We anticipate that one or more potential acquisition opportunities,
including some that would be material, may become available in the future. If
attractive acquisition opportunities become available, we intend to pursue
them actively. Any failure to successfully integrate a future acquisition may
harm our business.
COMPETITION IN THE MARKET FOR EMBEDDED COMPUTER SOLUTIONS IS INTENSE, AND COULD
REDUCE OUR SALES AND PREVENT US FROM MAINTAINING PROFITABILITY.
The market for embedded computer solutions is intensely competitive,
highly fragmented and rapidly changing. We expect competition to persist and
intensify, which could result in price reductions, reduced gross margins and
loss of market share for our products.
We compete with a number of companies providing embedded computer
solutions, including AudioCodes Ltd., Brooktrout, Inc., Motorola, Inc. and
Natural Microsystems
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<PAGE>
Corporation. Our competitors vary in size and in the scope and breadth of the
products they offer. In addition, because many of our OEM customers have
historically designed and manufactured or contracted for the manufacture of
embedded computer systems in-house and therefore view their embedded computer
requirements from a make-versus-buy perspective, we often compete against our
OEM customers' in-house capabilities. We also compete with off-the-shelf product
manufacturers and electronics contract manufacturers such as Solectron
Corporation. Finally, we compete against embedded computer solutions that rely
on architectures other than Intel architecture, including the PowerPC
architecture manufactured by IBM and Motorola.
Some of our competitors and potential competitors have a number of
significant advantages over us, including:
- a longer operating history,
- more extensive name recognition and marketing power,
- preferred vendor status with our existing and potential
customers and
- significantly greater financial, technical, marketing and
other resources, giving them the ability to respond more
quickly to new or changing opportunities, technologies and
customer requirements.
In addition, existing or potential competitors may establish
cooperative relationships with each other or with third parties, or adopt
aggressive pricing policies to gain market share.
As a result of increased competition, we could encounter significant
pricing pressures. These pricing pressures could result in significantly lower
average selling prices for our products. We may not be able to offset the
effects of any price reductions with an increase in the number of our customers,
cost reductions or otherwise. In addition, many of the industries we serve, such
as the communications industry, are encountering consolidation, or are likely to
encounter consolidation in the near future, which could result in increased
price and other competition.
OUR INTERNATIONAL OPERATIONS EXPOSE US TO ADDITIONAL POLITICAL, ECONOMIC AND
REGULATORY RISKS NOT FACED BY BUSINESSES THAT OPERATE ONLY IN THE UNITED STATES.
We conduct international operations in Europe and Asia. Sales outside
the United States accounted for 29% of our revenues for 1998, 37% of our
revenues for 1999 and 43% of our revenues for the six months ended June 30,
2000. Our international operations are subject to risks similar to those
affecting our U.S. operations, as well as a number of other risks, including:
- longer accounts receivable collection cycles;
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- expenses associated with localizing products for foreign
markets;
- difficulties in managing operations across disparate
geographic areas;
- difficulties in hiring qualified local personnel;
- foreign currency exchange rate fluctuations;
- difficulties associated with enforcing agreements and
collecting receivables through foreign legal systems; and
- unexpected changes in regulatory requirements that impose
multiple conflicting tax laws and regulations.
In addition, various jurisdictions outside the United States have laws
limiting the right and ability of non-United States subsidiaries and affiliates
to pay dividends and remit earnings to affiliated companies unless specified
conditions exist. Our ability to expand the sale of our products internationally
is also limited by the necessity of obtaining regulatory approval in new
countries.
We sell to customers primarily in U.S. dollars. Some portion of our
international sales, however, are denominated in currencies other than U.S.
dollars, and thus we are exposed to risks associated with exchange rate
fluctuations. An increase in the value of the U.S. dollar relative to foreign
currencies could adversely affect our results.
NEW TECHNOLOGIES COULD RENDER OUR PRODUCTS OBSOLETE.
The market for embedded computers is characterized by rapid
technological change, evolving industry standards, changes in consumer demands
and frequent new product introductions. If we are unable to adapt to our rapidly
changing market on a cost-effective and timely basis, our business, financial
condition and results of operations will be materially and adversely affected.
Advances in embedded computer technology could lead to new competitive
technologies and products that have better performance or lower prices than our
products, and could render our products obsolete and unmarketable.
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY, WE MAY LOSE A VALUABLE
COMPETITIVE ADVANTAGE OR BE FORCED TO INCUR COSTLY LITIGATION TO PROTECT OUR
RIGHTS.
Our future success and ability to compete depends in part upon our
proprietary technology, but our protective measures may prove inadequate to
protect our proprietary rights. Sixteen U.S. patents have been issued to us and
we have pending one additional U.S. patent application and one foreign
application covering technology incorporated into our products. We also rely on
a combination of copyright, trademark and trade secret laws and contractual
provisions to establish and protect our proprietary rights.
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<PAGE>
Despite our efforts to protect our intellectual property, a third party
could copy or otherwise obtain our proprietary information without
authorization, or could develop technology competitive to ours. Our competitors
may independently develop similar technology, duplicate our products or design
around our intellectual property rights. In addition, the laws of some foreign
countries do not protect our proprietary rights to as great an extent as do the
laws of the United States, and we expect the use of our products will become
more difficult to monitor if we increase our international presence. We may have
to litigate to enforce our intellectual property rights, to protect our trade
secrets or know-how or to determine their scope, validity or enforceability.
Enforcing or defending our intellectual property rights is expensive, could
cause the diversion of our resources and may not prove successful. If we are
unable to protect our intellectual property, we may lose a valuable competitive
advantage.
IF WE BECOME SUBJECT TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, THESE CLAIMS
COULD BE COSTLY AND TIME CONSUMING TO DEFEND, DIVERT MANAGEMENT ATTENTION OR
CAUSE PRODUCT DELAYS.
Any intellectual property infringement claims against us, with or
without merit, could be costly and time consuming to defend, divert our
management's attention or cause product delays. We expect that embedded computer
manufacturers will be increasingly subject to infringement claims as the number
of products and competitors in our industry grows and the functionality of
products overlaps. In addition, from time to time we have received
correspondence claiming that some of our products may be infringing one or more
patents. None of these allegations has resulted in litigation. We believe we
have credible arguments that these patents are either invalid, not infringed or
would not be enforced by a court. If, however, our products were found to
infringe a third party's proprietary rights, we could be required to enter into
royalty or licensing agreements to be able to sell our products and be subject
to claims for damages. Royalty and licensing agreements, if required, may not be
available on terms acceptable to us or at all. We cannot assure you that any of
the foregoing actions, if successful, would not have a material adverse effect
on our business.
WE HAVE INCREASED OUR INDEBTEDNESS SUBSTANTIALLY.
As a result of the sale of the notes, we incurred $100 million of
additional indebtedness, increasing our long-term debt to equity ratio
(expressed as a percentage) from 0% to approximately 62.5% as of June 30,
2000, on an as adjusted basis to give effect to the sale of the notes. Our
indebtedness presents risks to investors, including the possibility that we
may be unable to generate cash sufficient to pay the principal of and
interest on the indebtedness. Our ability to make principal and interest
payments on our indebtedness will be dependent on our future operating
performance, which is dependent on a number of factors, many of which are
beyond our control. These factors include prevailing economic conditions and
financial, competitive, regulatory and other factors affecting our business
and operations, and may be dependent on the availability of borrowings. If we
do not have sufficient available resources to repay any indebtedness when it
becomes due and payable, we may find it necessary to
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<PAGE>
refinance our indebtedness, and any refinancing may not be available, or
available on reasonable terms. Additionally, our indebtedness could have a
material adverse effect on our future operating performance, including the
following:
- a significant portion of our cash flow from operations will be
dedicated to debt service payments, thereby reducing the funds
available for other purposes;
- our ability to obtain additional financing in the future for
working capital, capital expenditures, acquisitions or general
corporate purposes or other purposes may be impaired;
- our leverage may place us at a competitive disadvantage;
- our leverage may limit our ability to expand and otherwise
meet our growth objectives; and
- our leverage may hinder our ability to adjust rapidly to
changing market conditions, and could make us more vulnerable
in the event of a downturn in general economic conditions or
our business.
We do not assure you that we will be able to meet our debt service
obligations, including our obligation under the notes.
TO REMAIN COMPETITIVE, WE MAY NEED ADDITIONAL FINANCING, WHICH MAY NOT BE
AVAILABLE ON SATISFACTORY TERMS OR AT ALL.
We expect the net proceeds from the sale of the notes in August 2000,
together with existing cash and available borrowings under our credit
facilities, will be sufficient for us to meet our working capital and capital
expenditure requirements for at least the next 12 months. We may, however, need
additional financing sooner if we
- expand faster than planned,
- develop services or products ahead of schedule,
- need to respond to competition or
- decide to acquire complementary products, businesses or
technologies.
We may not be able to raise additional funds on terms satisfactory to
us or at all. Furthermore, if we raise additional funds through the sale of
equity or convertible or other debt securities, these transactions may dilute
the value of our common stock. We may issue securities with rights, preferences
and privileges senior to our common stock or the notes.
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<PAGE>
THE NOTES ARE SUBORDINATED TO OTHER INDEBTEDNESS.
The notes are general unsecured obligations and subordinate in right
of payment to all senior indebtedness. As of September 30, 2000, we had no
senior indebtedness outstanding. The notes also are effectively subordinated
to all indebtedness and other liabilities of our subsidiaries, including
trade payables. As of September 30, 2000, our subsidiaries had aggregate
liabilities of $19.1 million, excluding intercompany liabilities. The
indenture permits us and our subsidiaries to incur additional senior
indebtedness and we expect from time to time to incur additional
indebtedness, including senior indebtedness. By reason of the subordination
provisions in the indenture, in the event of the insolvency, liquidation,
reorganization, dissolution or other winding-up of RadiSys, the creditors who
are holders of senior indebtedness, as well as creditors with secured
obligations that are not defined as indebtedness under the indenture, must be
paid in full before payment of amounts due on the notes. Accordingly,
insufficient assets may be remaining to pay amounts due on the notes after
payments to these creditors.
WE MAY NOT BE ABLE TO SATISFY A CHANGE OF CONTROL OFFER.
The indenture governing the notes contains provisions that apply to a
change of our control. If someone triggers a change of control as defined in the
indenture, we must offer to purchase the notes with cash, subject to the terms
and conditions of the indenture. If we have to make that offer, we cannot be
sure that we will have enough funds or that we will be able to arrange for
additional financing to pay all of the notes that the holders could tender.
The indenture permits us and our subsidiaries to incur additional
senior indebtedness and we expect from time to time to incur additional
indebtedness, including senior indebtedness. A change of control may constitute
an event of default under any additional senior indebtedness that would permit
the lenders to accelerate the debt under the senior indebtedness.
THERE IS NO PUBLIC MARKET FOR THE NOTES.
The notes are eligible for trading on the PORTAL Market. Although the
initial purchasers of the notes have advised us that they intend to make a
market in the notes, they are not obligated to do so. The initial purchasers
could stop making a market at any time without notice. Accordingly, no market
for the notes may develop, and any market that develops may not last. If an
active market for the notes fails to develop or continue, the trading price of
the notes could be harmed. We do not intend to apply for listing of the notes on
any securities exchange or other stock market.
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<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sale by any selling
securityholder of the notes or the underlying common stock.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods
indicated is as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended December 31, Nine Months Ended
---------------------------------------------------------- ---------------------------
September 30, September 30,
1995 1996 1997 1998 1999 1999 2000
--------- ------- ------- ------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges.................... 8.4x 6.9x 28.4x 9.9x 14.0x 10.2x 13.2x
</TABLE>
We have calculated the ratio of earnings to fixed charges by dividing
(a) earnings before taxes adjusted for fixed charges by (b) fixed charges, which
include interest expense plus the portion of interest expense under operating
leases we deemed to be representative of the interest factor.
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<PAGE>
DESCRIPTION OF NOTES
We issued 5 1/2% Convertible Subordinated Notes due 2007 under an
indenture dated August 9, 2000 between us and U.S. Trust Company, N.A., as
trustee. The terms of the notes include those provided in the indenture and
those provided in the registration rights agreement, which we entered into with
the initial purchasers.
The following description is only a summary of portions of the
indenture and the registration rights agreement. We urge you to read these
documents in their entirety because they, and not this description, define your
rights as holders of the notes. You may request copies of the indenture and the
registration rights agreement from the trustee.
GENERAL
The notes are:
- Limited to $100,000,000 aggregate principal amount;
- general unsecured obligations, junior in right of payment to
all of our existing and future senior debt and are effectively
subordinated to all indebtedness and liabilities of our
subsidiaries;
- convertible into our common stock at a conversion price of
$67.8038 per share, subject to adjustment as described under
"-Conversion Rights;"
- redeemable at our option, in whole or in part, on or after
August 20, 2003 at the redemption prices set forth under and
subject to the conditions described in "-Optional Redemption,"
plus accrued and repaid interest to and excluding the
redemption date;
- subject to repurchase by us at your option if a change of
control occurs; and
- due on August 15, 2007 unless earlier converted, redeemed by
us at our option or repurchased by us at your option.
The notes are in denominations of $1,000 and integral denominations of
$1,000 in fully registered form.
The notes bear interest at an annual rate of 5 1/2% on the principal
amount from August 9, 2000 or from the most recent date to which interest has
been paid. We will pay interest in arrears on each February 15 and each August
15 of each year, commencing on February 15, 2001. Interest will be payable to
holders of record at the close of business on the February 1 and August 1
(whether or not a business day) immediately preceding each respective interest
payment date, except that interest payable upon redemption, unless the date of
redemption is an interest payment date, will be payable to persons to whom
principal is
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<PAGE>
payable. Each payment of interest on the notes will include interest accrued
through the day prior to the applicable interest payment date or the date of
maturity (or earlier purchase, redemption or, in some circumstances,
conversion), as the case may be. Any payment of principal and interest scheduled
to be made on any day that is not a business day will be made on the next
succeeding business day. Interest will be computed on the basis of a 360-day
year composed of twelve 30-day months.
We will pay principal, interest and premium, if any, on global notes to
DTC in immediately available funds. We will pay interest prior to maturity on:
- definitive notes having an aggregate principal amount of
$5,000,000 or less by check mailed to the holders of these
notes and
- definitive notes having an aggregate principal amount of more
than $5,000,000 by wire transfer in immediately available
funds at the election of the holders of these notes.
We will pay principal, premium, if any, and interest at maturity on
definitive notes at our office or agency in New York City, which initially will
be the office or agency of the trustee in New York City.
The indenture does not contain any financial covenants and does not
restrict us from paying dividends, incurring senior debt or any other
indebtedness or issuing or repurchasing our other securities. The indenture also
does not protect you in the event of a highly leveraged transaction or a change
of control of RadiSys except to the extent described under "-Repurchase at
Option of Holders upon a Change of Control" below.
You may present definitive notes for conversion, registration of
transfer and exchange, without service charge, at our office or agency in New
York City, which shall initially be the office or agency of the trustee in New
York City. For information regarding conversion, registration of transfer and
exchange of global notes, see "-Form, Denomination and Registration."
CONVERSION RIGHTS
You may convert any outstanding notes into shares of common stock at
any time on or prior to the maturity date unless a note is called for
redemption, in which case you may convert such note at any time before the close
of business on the last business day prior to the redemption date. You may
convert notes only in denominations of $1,000 and integral multiples of $1,000.
The initial conversion rate for the notes is 14.7484 shares per $1,000
principal amount of notes, which is equivalent to a conversion price of $67.8038
per share. The conversion price and, as a result, the conversion rate are
subject to adjustment in certain events as described below. A holder otherwise
entitled to a fractional share of common stock upon
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<PAGE>
conversion of notes will receive cash in an amount equal to the market value of
that fractional share based upon the closing sale price of our common stock on
the business day immediately preceding the conversion date.
Except as provided below, you will not receive any interest that has
accrued on your notes if you convert your notes into common stock on any day
other than an interest payment date. By delivering to you the number of shares
issuable upon conversion, together with a cash payment, if any, in lieu of
fractional shares, we will satisfy our obligation with respect to the notes.
Thus, accrued but unpaid interest will be deemed to be paid in full rather than
canceled, extinguished or forfeited. If you convert your notes after a record
date for an interest payment but prior to the corresponding interest payment
date, you will receive on the interest payment date interest accrued and paid on
such notes, notwithstanding the conversion of such notes prior to such interest
payment date, because you will have been the holder of record on the
corresponding record date. However, at the time you surrender such notes for
conversion, you must pay us an amount equal to the interest that will be paid on
the notes being converted on the interest payment date. The preceding sentence
does not apply to notes that are converted after being called by us for
redemption. If we call your notes for redemption on a date that is after a
record date for an interest payment but prior to the corresponding interest
payment date, and prior to the redemption date you choose to convert your notes,
you will not be required to pay us at the time you surrender such notes for
conversion the amount of interest on such notes you will receive on the date
that has been fixed for redemption. Furthermore, if we call your notes for
redemption on a date that is prior to a record date for an interest payment
date, and prior to the redemption date you choose to convert your notes, you
will receive on the date that has been fixed for redemption the amount of
interest you would have received if you had not converted your notes. Accrued
but unpaid interest will be payable upon any conversion of notes made
concurrently with or after acceleration of the notes following an event of
default described under "-Events of Default" below.
You will not be required to pay any taxes or duties relating to the
issuance or delivery of our common stock if you exercise your conversion rights,
but you will be required to pay any tax or duty which may be payable relating to
any transfer involved in the issuance or delivery of the common stock in a name
other than yours. Certificates representing shares of common stock will be
issued or delivered only after all applicable taxes and duties, if any, payable
by you have been paid.
To convert interests in a Rule 144A global note, you must deliver to
DTC the appropriate instruction form for conversion pursuant to DTC's conversion
program. To convert a definitive note, you must:
- complete and execute the conversion notice on the back of the
note (or a facsimile thereof),
- deliver the completed conversion notice and the notes to be
converted to the specified office of the conversion agent,
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<PAGE>
- pay all funds required, if any, relating to interest on the
notes to be converted to which you are not entitled, as
described in the second preceding paragraph, and
- pay all taxes or duties, if any, as described in the preceding
paragraph.
The conversion date will be the date on which all of the foregoing
requirements have been satisfied. The notes will be deemed to have been
converted immediately prior to the close of business on the conversion date. A
certificate for the number of shares of common stock into which the notes are
converted (and cash in lieu of any fractional shares) will be delivered as soon
as practicable on or after the conversion date but in no event later than the
seventh business day following the conversion date.
We will adjust the initial conversion price for certain events,
including:
(1) issuances of our common stock as a dividend or
distribution on our common stock;
(2) certain subdivisions and combinations of our common stock;
(3) issuances to all holders of our common stock of certain
rights or warrants to purchase our common stock (or securities convertible into
our common stock) at less than (or having a conversion price per share less
than) the current market price of our common stock;
(4) distributions to all holders of our common stock of shares
of our capital stock (other than our common stock and the rights and warrants
referred to clause (3)), evidences of our indebtedness or assets (including
securities, but excluding:
(A) any dividends and distributions in connection
with a reclassification, consolidation, merger, combination, sale or conveyance
resulting in a change in the conversion consideration pursuant to the second
succeeding paragraph or
(B) any dividends or distributions paid exclusively
in cash);
(5) distributions consisting exclusively of cash to all
holders of our common stock to the extent that such distributions, combined
together with:
(A) all other such all-cash distributions made within
the preceding 12 months for which no adjustment has been made, plus
(B) any cash and the fair market value (as of the
expiration of any tender offer) of other consideration paid for any tender or
exchange offers by us or any of our subsidiaries for our common stock expiring
within the preceding 12 months for which no adjustment has been made;
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<PAGE>
exceeds 10% of our market capitalization on the record date for such
distribution where market capitalization is the product of the then current
market price of our common stock and the number of shares of our common stock
then outstanding; and
(6) purchases of our common stock pursuant to a tender or
exchange offer made by us or any of our subsidiaries to the extent that the same
involves an aggregate consideration that, together with:
(A) any cash and the fair market value of any other
consideration paid in any other tender or exchange offer by us or any of our
subsidiaries for our common stock expiring within the 12 months preceding such
tender offer for which no adjustment has been made, plus
(B) the aggregate amount of any all-cash
distributions referred to in clause (5) above to all holders of our common stock
within 12 months preceding the expiration of a tender offer for which no
adjustments have been made,
exceeds 10% of our market capitalization on the expiration of such tender or
exchange offer.
However, adjustment is not necessary if holders may participate in the
transactions otherwise giving rise to an adjustment on a basis and with notice
that our board of directors determines to be fair and appropriate, or in some
other cases specified in the indenture.
We will not make an adjustment in the conversion price unless such
adjustment would require a change of at least 1% in the conversion price in
effect at such time. We will carry forward and take into account in any
subsequent adjustment any adjustment that would otherwise be required to be
made. Except as stated above, we will not adjust the conversion price for the
issuance of our common stock or any securities convertible into or exchangeable
for our common stock or carrying the right to purchase any of the foregoing.
If we:
- reclassify or change our common stock (other than changes
resulting from a subdivision or combination but including as a
result of a compulsory share exchange) or
- consolidate or combine with or merge into any person or sell
or convey to another person all or substantially all of our
property and assets,
and the holders of our common stock receive stock, other securities or other
property or assets (including cash or any combination thereof) with respect to
or in exchange for their common stock, the holders of the notes may convert the
notes into the consideration they would have received if they had converted
their notes immediately prior to such reclassification, change, consolidation,
combination, merger, sale or conveyance. We may not become a party to any such
transaction unless its terms are consistent with the foregoing.
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<PAGE>
If a taxable distribution to holders of our common stock or other
transaction occurs which results in any adjustment of the conversion price,
including an adjustment at our option, you may, in certain circumstances, be
deemed to have received a distribution subject to U.S. income tax as a dividend.
In certain other circumstances, the absence of an adjustment may result in a
taxable dividend to the holders of our common stock. See "Certain United States
Federal Income Tax Consequences."
We may, from time to time and to the extent permitted by law, reduce
the conversion price of the notes by any amount for any period of at least 20
days, in which case, we will give at least 15 days' notice of such decrease, if
our board of directors has made the determination that such decrease would be in
our best interests, which determination shall be conclusive. We may make such
reductions in the conversion price, in addition to those set forth above, as we
deem advisable to avoid or diminish any income tax to holders of our common
stock resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. No such
decreases will be taken into account when calculating the conversion price for
purposes of determining whether the closing price of our common stock exceeds
140% of the conversion price in connection with "-Optional Redemption."
OPTIONAL REDEMPTION
We may not redeem the notes before August 20, 2003. On or after August
20, 2003 we may redeem the notes on at least 30 days' but not more than 60 days'
notice to the holders of the notes, in whole at any time or in part from time to
time, at the following redemption prices (expressed in percentages of the
principal amount), together with accrued and unpaid interest to, but excluding,
the redemption date:
<TABLE>
<CAPTION>
Redemption
Period Price
------ -----
<S> <C>
August 20, 2003 to August 14, 2004........................ 103.143%
August 15, 2004 to August 14, 2005........................ 102.357%
August 15, 2005 to August 14, 2006........................ 101.571%
August 15, 2006 to August 14, 2007........................ 100.786%
</TABLE>
provided, however, we may only redeem the notes if the closing price of our
common stock equals or exceeds 140% of the conversion price then in effect for
at least 20 trading days within a period of 30 consecutive trading days ending
on the trading day prior to the date the notice of the provisional redemption is
mailed.
If we do not redeem all of the notes, the trustee will select the notes
to be redeemed in principal amounts of $1,000 or whole multiples of $1,000 by
lot or on a pro rata basis. If any notes are to be redeemed in part only, we
will issue a new note or notes in principal amount equal to the unredeemed
principal portion thereof. If a portion of your notes is selected for
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<PAGE>
partial redemption and you convert a portion of your notes, the converted
portion will be deemed to be taken from the portion selected for redemption.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE OF CONTROL
If a change of control (as defined below) occurs at any time prior to
the maturity of the notes, you will have the right to require us to repurchase,
in integral multiples of $1,000 of principal amount, any or all of your notes
not previously called for redemption.
We will repurchase the notes at a price equal to 100% of the principal
amount to be repurchased plus interest accrued and unpaid to, but excluding, the
repurchase date. If the repurchase date falls after an interest record date and
before the corresponding interest payment date, interest will be paid to the
record holder of the notes. The repurchase date is 30 days after the date we
give notice of a change of control.
We will mail to you a notice of the occurrence of a change of control
and of your resulting repurchase right arising as a result of the change of
control within 20 days following the occurrence of a change of control. To
exercise the repurchase right, you must deliver on or before the 29th day after
we give notice of a change of control irrevocable written notice to the trustee
of your exercise of your repurchase right, together with the notes with respect
to which your right is being exercised.
A "change of control" means an event or series of events in which:
- any "person," including any syndicate or group deemed to be a
"person" under Section 13(d)(3) of the Exchange Act of 1934,
acquires beneficial ownership, directly or indirectly, of
shares of our capital stock entitling that person to exercise
more than 50% of the total voting power of all shares of our
capital stock entitled to vote generally in elections of
directors, other than any acquisition by us, any of our
subsidiaries or any of our employee benefit plans or
- we consolidate or merge with or into any other corporation or
business entity, or we convey, transfer, lease or otherwise
dispose of all or substantially all of our properties and
assets to another person, unless holders of our capital stock
immediately prior to the transaction have the entitlement to
exercise, directly or indirectly, 50% or more of the total
voting power of all shares of our capital stock entitled to
vote generally in the election of directors of the continuing
or surviving person immediately after the transaction.
Beneficial ownership shall be determined in accordance with Rules 13d-3
and 13d-5 promulgated by the SEC under the Exchange Act (except that a person
will be deemed to have beneficial ownership of all shares that such person has
the right to acquire, either immediately or with the passage of time). The term
"person" includes any syndicate or group which would be deemed to be a "person"
under Section 13(d)(3) of the Exchange Act.
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No quantitative or other established meaning has been given to the
phrase "all or substantially all," which appears in the definition of change of
control, by courts that have interpreted this phrase in various contexts. In
interpreting this phrase, courts, among other things, make a subjective
determination as to the portion of assets conveyed, considering such factors as
the value of assets conveyed, the proportion of an entity's income derived from
the assets conveyed and the significance of those assets to the ongoing business
of the entity. To the extent the meaning of such phrase is uncertain,
uncertainty will exist as to whether or not a change of control may have
occurred and, accordingly, as to whether or not holders of the notes will have
the right to require us to repurchase their notes.
Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders if an issuer tender offer occurs and may apply
if the repurchase option becomes available to holders of the notes. We will
comply with this rule to the extent applicable at that time.
The foregoing provisions would not necessarily protect holders of the
notes if highly leveraged or other transactions involving us occur that may
adversely affect holders.
Our ability to repurchase notes upon the occurrence of a change of
control is subject to important limitations. The occurrence of a change of
control could cause an event of default under, or be prohibited or limited by,
the terms of senior debt that we have incurred or that we may incur in the
future. As a result, any repurchase of the notes would, absent a waiver, be
prohibited under the subordination provisions of the indenture until the senior
debt is paid in full. Further, we do not assure you that we would have the
financial resources, or would be able to arrange financing, to pay the
repurchase price for all the notes that might be delivered by holders of notes
seeking to exercise the repurchase right. Any failure by us to repurchase the
notes when required following a change of control would result in an event of
default under the indenture, whether or not such repurchase is permitted by the
subordination provisions of the indenture. Any such default may, in turn, cause
a default under senior debt that we have incurred or that we may incur in the
future. See "-Subordination" below.
We may, to the extent permitted by applicable law, at any time purchase
the notes in the open market or by tender at any price or by private agreement.
Any note so purchased by us may, to the extent permitted by applicable law, be
reissued or resold or may be surrendered to the trustee for cancellation. Any
notes surrendered to the trustee may not be reissued or resold and will be
canceled promptly.
SUBORDINATION
The notes will be subordinated in right of payment to the prior payment
in full of all of our existing and future senior debt. The indenture provides
that in the event of any distribution of our assets upon our dissolution,
winding up, liquidation or reorganization, the holders of our senior debt will
first be paid in respect of all senior debt in full in cash or other payment
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satisfactory to the holders of senior debt before we make any payments of
principal of, or premium, if any, and interest (including liquidated damages, if
any) on the notes. In addition, if the notes are accelerated because of an event
of default, the holders of any senior debt would be entitled to payment in full
in cash or other payment satisfactory to the holders of senior debt of all
obligations in respect of senior debt before the holders of the notes are
entitled to receive any payment or distribution. Under the indenture, we must
promptly notify holders of senior debt if payment of the notes is accelerated
because of an event of default.
The indenture further provides if any default by us has occurred and is
continuing in the payment of principal of or premium, if any, or interest on,
rent or other payment obligations in respect of, any senior debt, no payment may
be made on account of principal of, premium, if any, or interest on the notes
(including any liquidated damages), until all such payments due in respect of
that senior debt have been paid in full in cash or other payment satisfactory to
the holders of that senior debt. During the continuance of any event of default
with respect to any senior debt (other than a default in payment of the
principal of or premium, if any, or interest on, rent or other payment
obligations in respect of any senior debt), permitting the holders thereof to
accelerate the maturity thereof (or, in the case of any lease, permitting the
landlord either to terminate the lease or to require us to make an irrevocable
offer to terminate the lease following an event of default thereunder), no
payment may be made by us, directly or indirectly, with respect to principal of
or premium, if any, or interest on the notes (including any liquidated damages,
if any) for 179 days following written notice to us, from any holder,
representative or trustee under any agreement pursuant to which that senior debt
may have been issued, that such an event of default has occurred and is
continuing, unless such event of default has been cured or waived or that senior
debt has been paid in full in cash or other payment satisfactory to the holders
of that senior debt. However, if the maturity of that senior debt is accelerated
(or, in the case of a lease, as a result of such events of default, the landlord
under the lease has given us notice of its intention to terminate the lease or
to require us to make an irrevocable offer to terminate the lease following an
event of default thereunder), no payment may be made on the notes until that
senior debt has been paid in full in cash or other payment satisfactory to the
holders of that senior debt or such acceleration (or termination, in the case of
the lease) has been cured or waived. Not more than one 179-day payment blockage
period may occur in any consecutive 365-day period, irrespective of the number
of defaults with respect to the senior debt during such period.
By reason of such subordination provisions, in the event of insolvency,
funds which we would otherwise use to pay the holders of notes will be used to
pay the holders of senior debt to the extent necessary to pay senior debt in
full in cash or other payment satisfactory to the holders of senior debt. As a
result of these payments, our general creditors may recover less, ratably, than
holders of senior debt and such general creditors may recover more, ratably,
than holders of notes.
"Senior debt" means the principal of, premium, if any, interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent
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payable on or termination payment with respect to or in connection with, and all
fees, costs, expenses and other amounts accrued or due on or in connection with,
our indebtedness, whether outstanding on the date of the indenture or
subsequently created, incurred, assumed, guaranteed or in effect guaranteed by
us (including all deferrals, renewals, extensions or refundings of, or
amendments, modifications or supplements to, the foregoing), unless in the case
of any particular indebtedness, the instrument creating or evidencing such
indebtedness or the assumption or guarantee thereof expressly provides that
indebtedness shall not be senior in right of payment to the notes or expressly
provides that such indebtedness is equal with or junior to the notes. However,
the term "senior debt" does not include our indebtedness to any of our
subsidiaries of which we own, directly or indirectly, a majority of the voting
stock.
"Indebtedness" means, with respect to any person:
(1) all indebtedness, obligations and other liabilities
(contingent or otherwise) of that person for borrowed money
(including obligations in respect of overdrafts, foreign
exchange contracts, currency exchange agreements, interest
rate protection agreements, and any loans or advances from
banks, whether or not evidenced by notes or similar
instruments) or evidenced by bonds, notes, or other
instruments for the payment of money, or incurred in
connection with the acquisition of any property, services or
assets (whether or not the recourse of the lender is to the
whole of the assets of such person or to only a portion
thereof), other than any account payable or other accrued
current liability or obligation to trade creditors incurred in
the ordinary course of business in connection with the
obtaining of materials or services;
(2) all reimbursement obligations and other liabilities
(contingent or otherwise) of that person with respect to
letters of credit, bank guarantees, bankers' acceptances,
surety bonds, performance bonds or other guarantees of
contractual performance;
(3) all obligations and liabilities (contingent or otherwise) in
respect of (A) leases of such person required, in conformity
with generally accepted accounting principles, to be accounted
for as capitalized lease obligations on the balance sheet of
such person, and (B) any lease or related documents (including
a purchase agreement) in connection with the lease of real
property which provides that such person is contractually
obligated to purchase or cause a third party to purchase the
leased property and thereby guarantee a minimum residual value
of the leased property to the landlord and the obligations of
such person under such lease or related document to purchase
or to cause a third party to purchase the leased property;
(4) all obligations of such person (contingent or otherwise) with
respect to an interest rate or other swap, cap or collar
agreement or other similar instrument
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or agreement or foreign currency hedge, exchange, purchase or
similar instrument oragreement;
(5) all direct or indirect guaranties or similar agreements by
that person in respect of, and obligations or liabilities
(contingent or otherwise) of that person to purchase or
otherwise acquire or otherwise assure a creditor against loss
in respect of, indebtedness, obligations or liabilities of
another person of the kind described in clauses (1) through
(4);
(6) any indebtedness or other obligations described in clauses (1)
through (4) secured by any mortgage, pledge, lien or other
encumbrance existing on property which is owned or held by
such person, regardless of whether the indebtedness or other
obligation secured thereby shall have been assumed by such
person; and
(7) any and all deferrals, renewals, extensions and refundings of,
or amendments, modifications or supplements to, any
indebtedness, obligation or liability of the kind described in
clauses (1) through (6).
At September 30, 2000, we had no senior debt. The indenture does not
restrict the creation of senior debt or any other indebtedness in the future.
The notes are effectively subordinated to all existing and future
indebtedness (including trade payables) of our subsidiaries. The indenture
does not limit the amount of indebtedness or other liabilities our
subsidiaries may incur. Our ability to make required interest, principal,
repurchase, cash conversion or redemption payments on the notes may be
impaired as a result of the obligations of our subsidiaries. Our subsidiaries
are separate and distinct legal entities and have no obligation, contingent
or otherwise, to pay any amounts due pursuant to the notes or to make any
funds available therefor, whether by dividends, loans or other payments. Any
right we have to receive assets of any of our future subsidiaries upon the
latter's liquidation or reorganization (and the consequent right of the
holders of the notes to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors, except to the
extent that we are ourselves recognized as a creditor of that subsidiary, in
which case our claims would still be subordinate to any security interests in
the assets of that subsidiary and any indebtedness of that subsidiary senior
to that held by us. At September 30, 2000, our subsidiaries had aggregate
indebtedness and other liabilities (excluding obligations that would not
appear on a consolidating balance sheet of any of our subsidiaries or that
are inter-company in nature) of approximately $19.1 million.
We are obligated to pay reasonable compensation to the trustee and to
indemnify the trustee against any losses, liabilities or expenses incurred by it
in connection with its duties relating to the notes. The trustee's claims for
such payments will be senior to those of holders of the notes in respect of all
funds collected or held by the trustee.
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EVENTS OF DEFAULT
Each of the following constitutes an event of default under the
indenture:
(1) our failure to pay when due the principal of or premium, if
any, on any of the notes at maturity, upon redemption or
exercise of a repurchase right or otherwise, whether or not
such payment is prohibited by the subordination provisions of
the indenture;
(2) our failure to pay an installment of interest (including
liquidated damages, if any) on any of the notes for 30 days
after the date when due, whether or not such payment is
prohibited by the subordination provisions of the indenture;
(3) our failure to perform or observe any other term, covenant or
agreement contained in the notes or the indenture for a period
of 60 days after written notice of such failure, requiring us
to remedy the same, shall have been given to us by the trustee
or to us and the trustee by the holders of at least 25% in
aggregate principal amount of the notes then outstanding;
(4) a default under any indebtedness for money borrowed by us or
any of our subsidiaries that is a "significant subsidiary"
(within the meaning of Rule 1-02 of Regulation S-X promulgated
by the Securities and Exchange Commission) or any group of two
or more subsidiaries that, taken as a whole, would constitute
a significant subsidiary, the aggregate outstanding principal
amount of which is in an amount in excess of $15 million, for
a period of 30 days after written notice to us by the trustee
or to us and the trustee by holders of at least 25% in
aggregate principal amount of the notes then outstanding,
which default:
- is caused by a failure to pay when due principal or
interest on such indebtedness by the end of the
applicable grace period, if any, unless such
indebtedness is discharged or
- results in the acceleration of such indebtedness,
unless such acceleration is waived, cured, rescinded
or annulled;
(5) certain events of bankruptcy, insolvency or reorganization
with respect to us or any of our subsidiaries that is a
significant subsidiary or any group of two or more
subsidiaries that, taken as a whole, would constitute a
significant subsidiary; and
(6) failure by us to deliver shares of common stock, together with
cash instead of fractional shares, when those shares of common
stock, or cash instead of fractional shares, are required to
be delivered following conversion of a note, and that default
continues for 10 days.
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The indenture will provide that the trustee shall, within 90 days of
the occurrence of a default, give to the registered holders of the notes notice
of all uncured defaults known to it, but the trustee shall be protected in
withholding such notice if it, in good faith, determines that the withholding of
such notice is in the best interest of such registered holders, except in the
case of a default in the payment of the principal of, or premium, if any, or
interest on, any of the notes when due or in the payment of any redemption or
repurchase obligation.
If an event of default specified in clause (5) above occurs and is
continuing, then automatically the principal of all the notes and the interest
thereon shall become immediately due and payable. If an event of default shall
occur and be continuing, other than with respect to clause (5) above (the
default not having been cured or waived as provided under "-Modifications,
Amendments, Waivers and Meetings" below), the trustee or the holders of at least
25% in aggregate principal amount of the notes then outstanding may declare the
notes due and payable at their principal amount together with accrued interest,
and thereupon the trustee may, at its discretion, proceed to protect and enforce
the rights of the holders of notes by appropriate judicial proceedings. Except
as provided below, such declaration may be rescinded or annulled either with the
written consent of the holders of a majority in aggregate principal amount of
the notes then outstanding or a majority in aggregate principal amount of the
notes represented at a meeting at which a quorum (as specified under
"-Modifications, Amendments, Waivers and Meetings" below) is present, in each
case upon the conditions provided in the indenture.
No holder of any note will have any right to pursue any remedy with
respect to the indenture or the notes unless, among other things,
- the holders of at least 25% in aggregate principal amount of
the outstanding notes have made a written request to the
trustee to pursue the relevant remedy and
- the holders of a majority in aggregate principal amount of the
outstanding notes have not given the trustee a direction
inconsistent with that request within 60 days after receipt of
that request.
However, the right of any holder to bring suit for the enforcement of any
payment of principal, any redemption or repurchase amounts or interest in
respect of those notes held by that holder on or after the respective due dates
expressed in the notes, or the right to convert will not be impaired or
adversely affected without that holder's consent. Accrued but unpaid interest
will be payable upon any conversion of notes made concurrently with or after
acceleration of the notes following an event of default.
The indenture contains a provision entitling the trustee, subject to
the duty of the trustee during default to act with the required standard of
care, to be indemnified by the holders of notes before proceeding to exercise
any right or power under the indenture at the request of such holders. The
indenture provides that the holders of a majority in aggregate principal amount
of the notes then outstanding through their written consent, or the holders of a
majority
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in aggregate principal amount of the notes then outstanding represented at a
meeting at which a quorum is present by a written resolution, may 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.
We are required to furnish annually to the trustee a statement as to
the fulfillment of our obligations under the indenture.
CONSOLIDATION, MERGER OR ASSUMPTION
Subject to your right to require us to repurchase the notes in the
event of a change of control, we may, without the consent of the holders of
notes, consolidate with, merge into or transfer or lease all or substantially
all of our assets to any other corporation organized under the laws of the
United States or any of its political subdivisions provided that:
- the surviving corporation assumes all our obligations under
the indenture and the notes,
- at the time of such transaction, no event of default, and no
event which, after notice or lapse of time, would become an
event of default, shall have happened and be continuing, and
- an officer's certificate and an opinion of counsel is
delivered to the trustee stating that the consolidation,
merger, transfer or lease complies with the provisions of the
indenture.
MODIFICATIONS, AMENDMENTS, WAIVERS AND MEETINGS
The indenture (including the terms and conditions of the notes) may be
modified or amended by us and the trustee, without the consent of the holder of
any note, for the purposes of, among other things:
- adding to our covenants for the benefit of the holders of
notes;
- surrendering any right or power conferred upon us;
- providing for conversion rights of holders of notes if any
reclassification or change of our common stock or any
consolidation, merger or sale of all or substantially all of
our assets occurs;
- providing for the assumption of our obligations to the holders
of notes in the case of a merger, consolidation, conveyance,
transfer or lease;
- reducing the conversion price, provided that the reduction
will not adversely affect the interests of the holders of
notes;
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- complying with the requirements of the SEC in order to effect
or maintain the qualification of the indenture under the Trust
Indenture Act of 1939, as amended;
- making any changes or modifications necessary in connection
with the registration of the notes under the Securities Act of
1933 as contemplated in the registration rights agreement;
provided that such change or modification does not, in the
good faith opinion of our board of directors and the trustee,
adversely affect the interests of the holders of notes in any
material respect;
- curing any ambiguity or correcting or supplementing any
defective provision contained in the indenture; provided that
such modification or amendment does not, in the good faith
opinion of our board of directors and the trustee, adversely
affect the interests of the holders of notes in any material
respect; or
- adding or modifying any other provisions with respect to
matters or questions arising under the indenture which we and
the trustee may deem necessary or desirable and which will not
adversely affect the interests of the holders of notes.
The indenture (including the terms and conditions of the notes) may
also be modified or amended, and past defaults by us may be waived (other than a
default of any payment on the notes or with respect to conversion rights of the
notes, which may only be waived with the consent of each affected holder of
notes), either:
- with the written consent of the holders of at least a majority
in aggregate principal amount of the notes then outstanding or
- by the adoption of a resolution at a meeting of holders by at
least a majority in aggregate principal amount of the notes
represented at such meeting. (The quorum at any meeting called
to adopt a resolution will be persons holding or representing
a majority in aggregate principal amount of the notes at the
time outstanding and, at any reconvened meeting adjourned for
lack of a quorum, 25% of the aggregate principal amount.)
However, without the consent or the affirmative vote of each holder
affected thereby, no modification or amendment to the indenture (including the
terms and conditions of the notes) shall:
- change the maturity of the principal of or any installment of
interest on any note (including any payment of liquidated
damages);
- reduce the principal amount of, or any premium or interest on
(including any payment of liquidated damages), any note;
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- change the currency of payment of any note or interest
thereon;
- impair the right to institute suit for the enforcement of any
payment on or with respect to any note;
- modify our obligations to maintain an office or agency in New
York City;
- except as otherwise permitted or contemplated by provisions
concerning corporate reorganizations, adversely affect the
repurchase option of holders upon a change of control or the
conversion rights of holders of the notes;
- modify the subordination provisions of the indenture in a
manner adverse to the holders of notes;
- modify the redemption provisions of the indenture in a manner
adverse to the holders of notes;
- reduce the percentage in aggregate principal amount of notes
outstanding necessary to modify or amend the indenture or to
waive any past default; or
- reduce the percentage in aggregate principal amount of notes
outstanding required for the adoption of a resolution or the
quorum required at any meeting of holders of notes at which a
resolution is adopted.
SATISFACTION AND DISCHARGE
We may satisfy and discharge our obligations under the indenture
- by delivering to the trustee for cancellation all outstanding
notes or
- by depositing with the trustee, after the notes have become
due and payable, whether at stated maturity or any other
redemption date, or upon conversion or otherwise, cash or
common stock (as applicable under the terms of the indenture)
sufficient to pay all of the outstanding notes and all other
sums payable by us under the indenture.
GOVERNING LAW
The indenture and the notes will be governed by, and construed in
accordance with, the laws of the State of New York.
INFORMATION CONCERNING THE TRUSTEE
U.S. Trust Company, N.A., as trustee under the indenture, has been
appointed by us as paying agent, conversion agent, registrar and custodian with
regard to the notes. ChaseMellon Shareholder Services, L.L.C. is the transfer
agent and registrar for our common stock. The
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trustee or its affiliates may from time to time in the future provide banking
and other services to us in the ordinary course of their business.
REGISTRATION RIGHTS
We have filed a registration statement, of which this prospectus forms
a part, pursuant to a registration rights agreement we entered into with the
initial purchasers in the initial private placement of the notes. Pursuant to
the agreement, we will, at our expense, use our reasonable efforts to keep the
shelf registration statement effective until the earliest of:
- August 9, 2002;
- the date when the holders of the notes and the common stock
issuable upon conversion of the notes are able to sell all
such securities immediately without restriction pursuant to
the volume limitation provisions of Rule 144 under the
Securities Act; and
- the date when all of the notes and the common stock into which
the notes are convertible that are owned by the holders who
complete and deliver in a timely manner the selling
securityholder election and questionnaire described below are
registered under the shelf registration statement and disposed
of in accordance with the shelf registration statement.
Each holder who sells securities pursuant to the shelf registration
statement generally will be:
- required to be named as a selling shareholder in the related
prospectus,
- required to deliver a prospectus to purchasers,
- subject to certain of the civil liability provisions under the
Securities Act in connection with such holder's sales and
- bound by the provisions of the registration rights agreement
which are applicable to such holder (including certain
indemnification rights and obligations).
We may suspend the use of the prospectus that is part of the shelf
registration statement for a reasonable period not to exceed 60 days in any
90-day period, and not to exceed an aggregate of 90 days in any 360-day period,
if:
- the prospectus would, in our judgment, contain a material
misstatement or omission as a result of an event that has
occurred and is continuing and
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- we reasonably determine that the disclosure of this material
non-public information would have a material adverse effect on
us and our subsidiaries taken as a whole.
If,
- we have not filed the shelf registration statement with the
SEC prior to or on the 90th day following the earliest date of
original issuance of any of the notes;
- the shelf registration statement has not been declared
effective prior to or on the 180th day following the earliest
date of original issuance of any of the notes; or
- the registration statement ceases to be effective or fails to
be usable and (1) we do not cure the registration statement
within five business days by a post-effective amendment or a
report filed pursuant to the Exchange Act or (2) if
applicable, we do not terminate the suspension period,
described in the preceding paragraph, by the 60th day (each, a
"registration default"),
additional interest as liquidated damages will accrue on the notes, from and
including the day following the registration default to but excluding the day on
which the registration default has been cured. Liquidated damages will be paid
semiannually in arrears, with the first semiannual payment due on the first
interest payment date, as applicable, following the date on which such
liquidated damages begin to accrue, and will accrue at a rate per year equal to:
- an additional 0.50% of the principal amount to and including
the 90th day following such registration default,
- an additional 0.25% of the principal amount from the 91st to
and including the 180th day following such registration
default, and
- an additional 0.25% of the principal amount from and after the
181st day following such registration default.
In no event will liquidated damages accrue at a rate per year exceeding
1.00%. If a holder has converted some or all of its notes into common stock, the
holder will be entitled to receive equivalent amounts based on the principal
amount of the notes converted.
This summary of certain provisions of the registration rights agreement
is not complete and is subject to, and qualified in its entirety by reference
to, all the provisions of the registration rights agreement, a copy of which
will be made available to beneficial owners of the notes upon request to us.
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FORM, DENOMINATION AND REGISTRATION
DENOMINATION AND REGISTRATION. The notes will be issued in fully
registered form, without coupons, in denominations of $1,000 principal amount
and whole multiples of $1,000.
GLOBAL NOTES: BOOK-ENTRY FORM. Except as provided below, notes sold to
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act ("QIBs")) will be evidenced by one or more global notes deposited with the
trustee as custodian for DTC, and registered in the name of Cede & Co. as DTC's
nominee.
Record ownership of the global notes may be transferred, in whole or in
part, only to another nominee of DTC or to a successor of DTC or its nominee,
except as set forth below. A QIB may hold its interests in the Rule 144A global
notes directly through DTC if such QIB is a participant in DTC, or indirectly
through organizations which are direct DTC participants if such QIB is not a
participant in DTC. Transfers between direct DTC participants will be effected
in the ordinary way in accordance with DTC's rules and will be settled in
same-day funds. QIBs may also beneficially own interests in the Rule 144A global
notes held by DTC through certain banks, brokers, dealers, trust companies and
other parties that clear through or maintain a custodial relationship with a
direct DTC participant, either directly or indirectly.
So long as Cede & Co., as nominee of DTC, is the registered owner of
the global notes, Cede & Co. for all purposes will be considered the sole holder
of the global notes. Except as provided below, owners of beneficial interests in
the global notes:
- will not be entitled to have certificates registered in their
names,
- will not receive or be entitled to receive physical delivery
of certificates in definitive form, and
- will not be considered holders of the global notes.
The laws of some states require that certain persons take physical
delivery of securities in definitive form. Consequently, the ability of an owner
of a beneficial interest in a global note to transfer the beneficial interest in
the global note to such persons may be limited.
We will wire, through the facilities of the trustee, payments of
principal, premium, if any, and interest payments on the global notes to Cede &
Co., the nominee of DTC, as the registered owner of the global notes. None of
RadiSys, the trustee and any paying agent will have any responsibility or be
liable for paying amounts due on the global notes to owners of beneficial
interests in the global notes.
It is DTC's current practice, upon receipt of any payment of principal
of and premium, if any, and interest on the global notes, to credit
participants' accounts on the payment date in amounts proportionate to their
respective beneficial interests in the notes represented by the global notes, as
shown on the records of DTC, unless DTC believes that it will not receive
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payment on the payment date. Payments by DTC participants to owners of
beneficial interests in notes represented by the global notes held through DTC
participants will be the responsibility of DTC participants, as is now the case
with securities held for the accounts of customers registered in "street name."
If you would like to convert your notes into common stock pursuant to
the terms of the notes, you should contact your broker or other direct or
indirect DTC participant to obtain information on procedures, including proper
forms and cut-off times, for submitting those requests.
Because DTC can only act on behalf of DTC participants, who in turn act
on behalf of indirect DTC participants and other banks, your ability to pledge
your interest in the notes represented by global notes to persons or entities
that do not participate in the DTC system, or otherwise take actions in respect
of such interest, may be affected by the lack of a physical certificate.
Neither we nor the trustee (nor any registrar, paying agent or
conversion agent under the indenture) will have any responsibility for the
performance by DTC or direct or indirect DTC participants of their obligations
under the rules and procedures governing their operations. DTC has advised us
that it will take any action permitted to be taken by a holder of notes,
including, without limitation, the presentation of notes for conversion as
described below, only at the direction of one or more direct DTC participants to
whose account with DTC interests in the global notes are credited and only for
the principal amount of the notes for which directions have been given.
DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created
to hold securities for DTC participants and to facilitate the clearance and
settlement of securities transactions between DTC participants through
electronic book-entry changes to the accounts of its participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include certain other organizations, such as the initial purchasers of
the notes. Certain DTC participants or their representatives, together with
other entities, own DTC. Indirect access to the DTC system is available to
others such as banks, brokers, dealers and trust companies that clear through,
or maintain a custodial relationship with, a participant, either directly or
indirectly.
Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the global notes among DTC participants, it
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. If DTC is at any time unwilling
or unable to continue as depositary and a successor depositary is not appointed
by us within 90 days, we will cause notes to be issued in definitive form in
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exchange for the global notes. None of RadiSys, the trustee or any of their
respective agents will have any responsibility for the performance by DTC, or
direct or indirect DTC participants of their obligations under the rules and
procedures governing their operations, including maintaining, supervising or
reviewing the records relating to, or payments made on account of, beneficial
ownership interests in global notes.
According to DTC, the foregoing information with respect to DTC has
been provided to its participants and other members of the financial community
for informational purposes only and is not intended to serve as a
representation, warranty or contract modification of any kind.
DEFINITIVE NOTES. Definitive notes may be issued in exchange for notes
represented by the global notes if we do not appoint a successor depositary as
set forth above under "-Global Notes: Book-Entry Form" or in certain other
circumstances set forth in the indenture.
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DESCRIPTION OF CAPITAL STOCK
We are authorized to issue 100,000,000 shares of common stock and
10,000,000 shares of preferred stock.
COMMON STOCK
As of November 17, 2000, 17,346,874 shares of our common stock were
outstanding and were held of record by 491 shareholders.
Holders of common stock are entitled to receive dividends as may from
time to time be declared by our board of directors out of legally available
funds. Holders of common stock are entitled to one vote per share on all matters
on which the holders of common stock are entitled to vote, and do not have any
cumulative voting rights. Holders of common stock have no preemptive,
conversion, redemption or sinking fund rights. If we are liquidated, dissolved
or wound up, holders of common stock are entitled to share equally and ratably
in our assets, if any, remaining after the payment of all our liabilities and
the liquidation preference of any outstanding class or series of preferred
stock. The outstanding shares of common stock are fully paid and nonassessable.
The rights, preferences and privileges of holders of common stock are subject to
any series of preferred stock that we may issue in the future, as described
below.
PREFERRED STOCK
As of November 17, 2000, no shares of our preferred stock were
outstanding. The board of directors has the authority to issue preferred
stock in one or more series and to fix the number of shares constituting any
series and the preferences, limitations and relative rights, including
dividend rights, dividend rate, voting rights, terms of redemption,
redemption price or prices, conversion rights and liquidation preferences of
the shares constituting any series, without any further vote or action by our
shareholders. The issuance of preferred stock by the board of directors could
adversely affect the rights of holders of common stock.
The potential issuance of preferred stock may have the effect of
delaying, deterring or preventing a change in control, may discourage bids for
the common stock at a premium over the market price of the common stock and may
adversely affect the market price of, and the voting and other rights of the
holders of, common stock. We have no plans to issue shares of preferred stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is ChaseMellon
Shareholder Services, L.L.C.
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OREGON CONTROL SHARE AND BUSINESS COMBINATION STATUTES
Oregon law may restrict the ability of our significant shareholders to
exercise voting rights. The law generally applies to a person who acquires
voting stock of an Oregon corporation in a transaction that results in that
person holding more than 20%, 33 1/3% or 50% of the total voting power of the
corporation. If such a transaction occurs, the person cannot vote the shares
unless voting rights are restored to those shares by:
- a majority of the outstanding voting shares, including
acquired shares and
- the holders of a majority of the outstanding voting shares,
excluding the acquired shares and shares held by the
corporation's officers and inside directors.
This law is construed broadly and may apply to persons acting as a group.
The restricted shareholder may, but is not required to, submit to the
corporation a statement setting forth information about itself and its plans
with respect to the corporation. The statement may request that the corporation
call a special meeting of shareholders to determine whether voting rights will
be granted to the shares acquired. If a special meeting of shareholders is not
requested, the issue of voting rights of the acquired shares will be considered
at the next annual or special meeting of shareholders. If the acquired shares
are granted voting rights and they represent a majority of all voting power,
shareholders who do not vote in favor of granting voting rights will have the
right to receive the appraised fair value of their shares. The appraised fair
value will, at a minimum, be equal to the highest price paid per share by the
person for the shares acquired in the transaction subject to this law.
We are also subject to provisions of Oregon law that govern business
combinations between corporations and interested shareholders. These provisions
generally prohibit a corporation from entering into a business combination
transaction with a person, or affiliate of that person, for a period of three
years from the date the person acquires 15% or more of the voting stock of the
corporation. For the purpose of this law, the prohibition generally applies to
the following:
- a merger or plan of share exchange,
- any sale, lease, mortgage, or other disposition of 10% or more
of the assets of the corporation, and
- transactions that result in the issuance of capital stock of
the corporation to the 15% shareholder.
The general prohibition does not apply, however, if
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- the 15% shareholder, as a result of the transaction in which
the person acquired 15% of the shares, owns at least 85% of
the outstanding voting stock of the corporation,
- the board of directors approves the share acquisition or
business combination before the shareholder acquired 15% or
more of the corporation's outstanding voting stock, or
- the board of directors and the holders of at least two-thirds
of the outstanding voting stock of the corporation, excluding
shares owned by the 15% shareholder, approve the transaction
after the shareholder acquires 15% or more of the
corporation's voting stock.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
This section discusses the material U.S. federal income tax
consequences relating to the purchase, ownership, and disposition of the notes
and of the common stock into which the notes may be converted. This section
addresses only beneficial owners who hold the notes or common stock as capital
assets. This section does not address holders that may be subject to special tax
rules, such as financial institutions, insurance companies, dealers in
securities, persons that mark-to-market their securities, persons that hold
notes or common stock as part of a "straddle," "hedge" or "synthetic security
transaction" (including a "conversion" transaction), persons with a "functional
currency" other than the U.S. dollar, some retirement plans, and tax-exempt
organizations. This section is based upon U.S. federal tax laws and Treasury
regulations as now in effect and interpreted and does not take into account
possible changes in these tax laws or interpretations, any of which may be
applied retroactively. It does not include any description of the tax laws of
any state, local or foreign government or the alternative minimum tax
consequences, if any, that may be applicable to the notes or common stock or a
holder of the notes or common stock. If a partnership holds the notes or common
stock, the tax treatment of a partner in the partnership generally will depend
upon the status of the partner and the activities of the partnership. A partner
in a partnership holding the notes or common stock should consult the partner's
own tax advisor.
THIS SECTION IS FOR GENERAL INFORMATION ONLY AND DOES NOT DISCUSS ALL
ASPECTS OF U.S. FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR
HOLDER OF THE NOTES OR COMMON STOCK IN LIGHT OF THE HOLDER'S PARTICULAR
CIRCUMSTANCES AND INCOME TAX SITUATION. HOLDERS OF THE NOTES OR COMMON STOCK
SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING APPLICATION OF U.S. FEDERAL
INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE CONSEQUENCES OF FEDERAL
ESTATE OR GIFT TAX LAWS, FOREIGN, STATE, OR LOCAL LAWS, AND TAX TREATIES.
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U.S. TAXATION OF U.S. HOLDERS
The following is a summary of the material U.S. federal income tax
consequences that will apply to a holder that is a U.S. holder of the notes or
common stock. For purposes of this discussion, "U.S. holder" means a beneficial
owner of a note that is:
- a citizen or resident of the United States;
- a corporation or partnership created or organized in or under
the laws of the United States or any state or political
subdivision of the United States;
- an estate, the income of which is subject to United States
federal income taxation regardless of its source;
- a trust that (i) is subject to the primary supervision of a
court within the United States and for which one or more
United States persons have the authority to control all
substantial decisions of the trust or (ii) is treated as a
United States person pursuant to a valid election in effect
under applicable United States Treasury regulations; or
- a person whose worldwide income or gain is otherwise subject
to U.S. federal income taxation on a net income basis with
respect to the notes or common stock.
PAYMENT OF INTEREST. Interest on a note generally will be taxable as
ordinary income at the time it is paid or accrued in accordance with the
holder's method of accounting for tax purposes. In general, if the terms of a
debt instrument entitle a holder to receive payments other than fixed periodic
interest that exceed the issue price of the instrument, the holder may be
required to recognize additional interest income as "original issue discount"
over the term of the instrument. The notes were not issued with original issue
discount. We may be required to make additional payments to holders of the notes
as liquidated damages, however, if we do not file or cause to be declared
effective the shelf registration of which this prospectus is a part, as
described under "Description of Notes--Registration Rights." The original issue
discount rules allow contingent payments such as these to be disregarded in
computing a holder's interest income if, as of the date the notes were issued,
the contingency was "remote." We believe that as of the date the notes were
issued, the possibility that we would pay liquidated damages was remote. Our
determination in this regard is binding on U.S. holders unless they disclose
their contrary position. If, contrary to expectations, we pay liquidated
damages, U.S. holders would be required to recognize additional interest income.
CONVERSION OF NOTES. Conversion of the notes into common stock will not
be treated as a taxable "exchange" for U.S. federal income tax purposes because
the conversion will occur by operation of the terms of the notes. As a result,
there generally will be no gain or loss recognized by holders who choose to
convert notes into common stock pursuant to the notes' terms, except to the
extent of cash received in lieu of a fractional share of common stock. The
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amount of gain or loss on the deemed sale of such fractional conversion share
will be equal to the difference between the amount of cash received in respect
of such fractional share of common stock and the portion of the holder's tax
basis in the note that is allocable to the fractional conversion share. The tax
basis of the common stock received upon a conversion will be equal to the
adjusted tax basis of the note that was converted, reduced by the portion of the
tax basis that is allocable to any fractional share of common stock. A holder's
holding period for shares of common stock will include the period during which
such holder held the notes.
ADJUSTMENT OF CONVERSION RATE. The conversion price of the notes will
be adjusted in certain circumstances. Under Section 305(c) of the Internal
Revenue Code of 1986, as amended (the "Code"), adjustments (or failures to make
adjustments) that have the effect of increasing a holder's proportionate
interest in our assets or earnings may in some circumstances result in a deemed
distribution to that holder, regardless of whether the holder receives any cash
or property. Similarly, a failure to adjust the conversion price of the notes to
reflect a stock dividend or other event increasing the proportionate interest of
shareholders of outstanding common stock can in some circumstances give rise to
deemed distributions to such shareholders. Deemed distributions will be treated
as a dividend, return of capital or capital gain in accordance with the earnings
and profits rules discussed under "--Distributions on Common Stock" below.
DISTRIBUTIONS ON COMMON STOCK. Distributions on common stock will
constitute dividends for U.S. federal income tax purposes to the extent of our
current or accumulated earnings and profits as determined according to U.S.
federal income tax principles. Dividends paid to U.S. holders that are U.S.
corporations may qualify for the dividends-received deduction. Noncorporate
taxpayers and certain corporations are not entitled to the dividends-received
deduction.
To the extent, if any, that a U.S. holder receives a distribution on
common stock that otherwise would constitute a dividend for U.S. federal income
tax purposes but that exceeds our current and accumulated earnings and profits,
the distribution will be treated first as a nontaxable return of capital
reducing the U.S. holder's tax basis in the common stock. Any excess of the
distribution over the U.S. holder's tax basis in the common stock will be
treated as capital gain.
SALE OR EXCHANGE OF NOTES OR COMMON STOCK. In general, subject to the
discussion under "--Market Discount and Bond Premium" below:
- A U.S. holder of a note will recognize capital gain or loss
upon the sale, redemption, retirement or other disposition of
the note measured by the difference between the amount of cash
and the fair market value of any property received (except to
the extent attributable to the payment of accrued interest)
and such U.S. holder's adjusted tax basis in the note, and
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- A U.S. holder of common stock received upon conversion of a
convertible note will recognize capital gain or loss upon the
sale, exchange, redemption or other disposition of the common
stock under rules similar to the computation of gain or loss
on the disposition of the notes. However, special rules may
apply to a redemption of common stock that may cause the
proceeds of the redemption to be treated as a dividend.
In general, the maximum tax rate for noncorporate taxpayers on
long-term capital gain is 20% with respect to capital assets, including the
notes and common stock, but only if the capital assets have been held for more
than 12 months at the time of disposition. Deductibility of capital losses is
subject to limitations.
MARKET DISCOUNT AND BOND PREMIUM Resale of notes may be affected by the
impact on a purchaser of the market discount and bond premium provisions of the
Code. For this purpose, market discount on a note generally will be equal to the
amount, if any, by which the stated redemption price at maturity of the note
immediately after its acquisition exceeds the U.S. holder's adjusted tax basis
in the note. Subject to a DE MINIMUS exception, a U.S. holder who acquires a
note at a market discount generally will be required to treat as ordinary income
(i) any gain recognized on a taxable disposition of the note to the extent of
the accrued market discount on the note at the time of disposition, and (ii)
unrealized appreciation on certain non-taxable dispositions, unless the U.S.
holder elects to include accrued market discount in income currently. If a U.S.
holder makes a gift of a note, accrued market discount, if any, will be
recognized as if the U.S. holder had sold the note for a price equal to its fair
market value. In general, market discount will be treated as accruing on a
straight-line basis over the portion of the term of the note remaining at the
time of acquisition, or, at the election of the U.S. holder, under a constant
yield method. A U.S. holder who acquires a note at a market discount and who
does not elect to include accrued market discount in income currently may be
required to defer deduction of a portion of the interest on any indebtedness
incurred or maintained to purchase or carry the note until the note (or common
stock received upon conversion) is disposed of in a taxable transaction. An
election to include accrued market discount currently will apply to all debt
instruments acquired by the U.S. holder on or after the first day of the taxable
year to which the election applies, and may be revoked only with the consent of
the Internal Revenue Service ("IRS"). If a U.S. holder acquires a note with a
market discount and receives common stock upon conversion of the note, the
amount of accrued market discount not previously included in income with respect
to the note through the date of conversion will be treated as ordinary income
upon the disposition of the common stock.
Bond premium on a note generally will be equal to the amount, if any,
by which the U.S. holder's adjusted tax basis in the note immediately after its
acquisition exceeds all amounts payable on the note, excluding stated interest.
In general, a U.S. holder may elect to amortize bond premium over the remaining
term of the convertible note on a constant yield method. For the purpose of
computing the amount of bond premium allocable to any accrual period, we will be
presumed to exercise our call option if, using the call date as the maturity
date and the corresponding redemption price as the stated redemption price at
maturity, there is
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a smaller amortizable bond premium for the period ending on the call date. See
"Description of Notes--Optional Redemption." The amount of bond premium
allocable to any accrual period is offset against the stated interest allocable
to that accrual period (any excess may be deducted, subject to certain
limitations). An election to amortize bond premium applies to all taxable debt
instruments held at the beginning of the first day of the taxable year to which
such election applies and thereafter acquired by the U.S. holder and may be
revoked only with the consent of the IRS.
U.S. TAXATION OF NON-U.S. HOLDERS
The following is a summary of the material U.S. federal income tax
consequences resulting from the ownership of the notes or common stock by a
beneficial owner that is a non-U.S. holder. The term "non-U.S. holder" means a
beneficial owner of a note or common stock that is not a U.S. holder. The
discussion below does not address non-U.S. holders that hold the notes or common
stock in connection with a U.S. trade or business or non-U.S. holders that have
a functional currency other than the U.S. dollar.
INTEREST. In general, payments of interest to, or on behalf of, a
non-U.S. holder will not be subject to U.S. federal withholding tax if all of
the following requirements are satisfied:
- the non-U.S. holder does not actually or constructively own
10% or more of the total combined voting power of all classes
of our stock,
- the non-U.S. holder is not
- a controlled foreign corporation related to us
through stock ownership or
- a bank whose receipt of interest on a note is
described in Section 881(c)(3)(A) of the Code and
- the non-U.S. holder provides a statement signed under
penalties of perjury that includes the non-U.S. holder's name
and address and certifies that the holder is not a U.S.
person, in compliance with applicable requirements of U.S.
Treasury regulations, or an exemption is otherwise
established.
If these requirements cannot be satisfied, a non-U.S. holder will be
subject to U.S. federal withholding tax at a rate of 30%, or a lower treaty
rate, if applicable, on interest payments on the notes.
CONVERSION OF NOTES. Non-U.S. holders generally will not recognize any
income, gain or loss on converting the notes into common stock. Any gain
recognized as a result of the receipt of cash in lieu of a fractional share of
stock also will generally not be subject to U.S. federal income tax. See "--Sale
or Exchange of Notes or Common Stock."
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ADJUSTMENT OF CONVERSION RATE. The conversion price of the notes is
subject to adjustment in certain circumstances. Any such adjustment could, in
certain circumstances, give rise to a deemed distribution to non-U.S. holders of
the notes. In such case, the deemed distribution would be subject to the rules
below regarding withholding of U.S. federal tax on dividends in respect of
common stock. See "--Distributions on Common Stock" below.
DISTRIBUTIONS ON COMMON STOCK. Distributions on common stock will
constitute dividends for U.S. federal income tax purposes to the extent of our
current or accumulated earnings and profits as determined under U.S. federal
income tax principles. Dividends on common stock held by a non-U.S. holder
generally will be subject to U.S. federal withholding tax at a rate of 30%, or
lower treaty rate, if applicable. Dividends that are effectively connected with
conduct of a trade or business within the United States and, where a tax treaty
applies, are attributable to a United States permanent establishment, however,
are not subject to the withholding tax, but instead are subject to U.S. federal
income tax on a net income basis at applicable rates. If the non-U.S. holder is
a foreign corporation, any such effectively connected dividends may, under
certain circumstances, be subject to an additional "branch profits tax" at a 30%
rate or such lower rate as may be specified by an applicable income tax treaty.
To be eligible for a reduced treaty rate or an exemption from withholding
pursuant to any of the foregoing rules, non-U.S. holders may be required to make
certain certifications and provide certain forms.
SALE OR EXCHANGE OF NOTES OR COMMON STOCK. Except as described below,
and subject to the discussion concerning backup withholding below, any gain
realized by a non-U.S. holder on sale, exchange, retirement or other disposition
of a note or common stock generally will not be subject to U.S. federal income
tax, unless:
- the gain is effectively connected with conduct by the non-U.S.
holder of a trade or business within the United States,
- the non-U.S. holder is present in the United States for 183
days or more in the taxable year of the disposition and
certain other conditions are satisfied,
- the non-U.S. holder is subject to tax pursuant to the
provisions of U.S. tax law applicable to certain United States
expatriates or
- the rules of the Foreign Investment in U.S. Real Property Tax
Act ("FIRPTA") (described below) treat the gain as effectively
connected with a U.S. trade or business.
The FIRPTA rules may apply to a sale, exchange or other disposition of
the notes or common stock if we are, or were within five years before the sale,
exchange or other disposition, a "U.S. real property holding corporation"
("USRPHC"). In general, we would be a USRPHC if interests in U.S. real estate
comprised most of our assets. We do not believe that we are a USRPHC or that we
will become one in the future. Even if we were a USRPHC, the FIRPTA rules would
apply to a disposition of the notes or common stock by a
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non-U.S. holder only if the holder owned, directly or indirectly, 5% of our
common stock at some time within the five-year period before the holder's
disposition of the notes or common stock. For this purpose, the non-U.S. holder
would be treated as owning the stock that the holder could acquire upon
conversion of the notes. If all of these conditions were met, and the FIRPTA
rules applied to the sale, exchange or other disposition of the notes or common
stock by a non-U.S. holder, then any gain recognized by the holder would be
treated as effectively connected with a U.S. trade or business, and would thus
be subject to U.S. federal income tax.
INCOME OR GAINS EFFECTIVELY CONNECTED WITH A U.S. TRADE OR BUSINESS.
The preceding discussion of the tax consequences of purchase, ownership or
disposition of the notes or common stock by a non-U.S. holder assumes that the
holder is not engaged in a U.S. trade or business. If any interest on the notes,
dividends on common stock, or gain from sale, exchange or other disposition of
the notes or common stock is effectively connected with a U.S. trade or business
conducted by the non-U.S. holder, then the income or gain will be subject to
U.S. federal income tax at the regular graduated rates. If the non-U.S. holder
is eligible for the benefits of a tax treaty between the United States and the
holder's country of residence, any effectively connected income or gain will be
subject to U.S. federal income tax only if it is also attributable to a
permanent establishment maintained by the holder in the United States. Payments
of dividends that are effectively connected with a U.S. trade or business, and
therefore are included in the gross income of a non-U.S. holder, will not be
subject to the 30% withholding tax. To claim exemption from withholding, the
non-U.S. holder must certify its qualification, which can be done by filing a
Form W-8ECI. If the non-U.S. holder is a corporation, that portion of its
earnings and profits that is effectively connected with its U.S. trade or
business generally is subject to a "branch profits tax." The branch profits tax
rate generally is 30%, although an applicable tax treaty might provide for a
lower rate.
FEDERAL ESTATE TAXES. A note held by an individual who is a non-U.S.
holder at the time of his or her death will not be subject to U.S. federal
estate tax if any interest received on the note, had it been received by the
holder before death, would not have been effectively connected with the conduct
of a trade or business in the United States and the individual did not own,
actually or constructively at the date of death, 10% or more of the total voting
power of all our voting stock.
IRS REPORTING AND BACKUP WITHHOLDING
IN GENERAL. Certain noncorporate U.S. holders may be subject to IRS
reporting and backup withholding at a rate of 31% on payments of interest on the
notes, dividends on common stock and proceeds from sale or other disposition of
the notes or common stock. Backup withholding will only be imposed where the
noncorporate U.S. holder:
- fails to furnish the noncorporate U.S. holder's taxpayer
identification number ("TIN"), which ordinarily would be his
or her social security number,
- furnishes an incorrect TIN,
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- is notified by the IRS that he or she has failed to properly
report payments of interest or dividends or
- in certain circumstances, fails to certify, under penalties of
perjury, that he or she has furnished a correct TIN and has
not been notified by the IRS that he or she is subject to
backup withholding.
We also must institute backup withholding on payments made to a
noncorporate U.S. holder if instructed to do so by the IRS. Failure to provide
us with a correct TIN may subject the holder to penalties imposed by the IRS.
We will report annually to the IRS and to each non-U.S. holder any
interest and dividends paid with respect to a note or common stock,
respectively, that is subject to U.S. federal withholding tax or that is exempt
from such tax under an applicable treaty or the Code. We also will report to the
IRS and to each non-U.S. holder any such income paid that is exempt from U.S
federal withholding tax because it is effectively connected with that non-U.S.
holder's U.S. trade or business. However, a non-U.S. holder will not be subject
to IRS reporting or backup withholding if we have received appropriate
certification statements from or on behalf of the non-U.S. holder, unless we
have actual knowledge that the non-U.S. holder is a U.S. person. Payment of
proceeds from disposition of the notes or common stock to or through the U.S.
office of any U.S. or foreign broker will be subject to IRS reporting and
possibly backup withholding if the broker has actual knowledge that the holder
is a U.S. person or that the conditions of any other exemption are not, in fact,
satisfied, or if the owner does not certify as to its non-U.S. status under
penalties of perjury or otherwise establish an exemption. Payment of proceeds
from disposition of a note or common stock to or through a non-U.S. office of a
non-U.S. broker that is not a U.S. related person will not be subject to IRS
reporting or backup withholding. For this purpose, a U.S. related person is:
- a controlled foreign corporation for U.S. federal income tax
purposes,
- a non-U.S. person 50% or more of whose gross income from all
sources for the three-year period ending with the close of its
taxable year preceding the payment, or for such part of the
period that the broker has been in existence, is derived from
activities that are effectively connected with conduct of a
U.S. trade or business, or
- with respect to payments made after December 31, 2000, a
foreign partnership, if, at any time during its tax year, one
or more of its partners are U.S. persons, as defined in
Treasury regulations, who in the aggregate hold more than 50%
of the income or capital interest in the partnership or if, at
any time during its tax year, the foreign partnership is
engaged in a U.S. trade or business.
In the case of payment of proceeds from disposition of notes or common
stock to or through a non-U.S. office of a broker that is a U.S. related person,
Treasury regulations require the payment to be reported to the IRS, unless the
broker has documentary evidence in
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its files that the owner is a non-U.S. holder and the broker has no knowledge to
the contrary. Backup withholding will not apply to payments made through foreign
offices of a broker that is a U.S. person or a U.S. related person, absent
actual knowledge that the payee is a U.S. person.
Any amounts withheld under the backup withholding rules from a payment
to a holder will be allowed as a credit against the holder's U.S. federal income
tax liability, if any, or otherwise will be refundable, if the requisite
procedures are followed. Holders should consult their own tax advisors regarding
their qualification for exemption from backup withholding and the procedure for
obtaining such an exemption, if applicable.
PROSPECTIVE FINAL REGULATIONS. Final regulations were published on
October 14, 1997 and amended on May 15, 2000 that modify the requirements
imposed on a non-U.S. holder and certain intermediaries for establishing the
recipient's status as a non-U.S. holder eligible for exemption from U.S. federal
withholding tax and backup withholding described above. The new regulations
generally are effective for payments made after January 1, 2001, subject to
certain transitional rules. In general, the new regulations do not significantly
alter the substantive withholding and IRS reporting requirements, but, rather,
unify current certification procedures and forms and clarify reliance standards.
In addition, the new regulations impose more stringent conditions on the ability
of a financial intermediary acting for a non-U.S. holder to provide
certifications on behalf of the non-U.S. holder, which may require such
intermediary to enter into an agreement with the IRS providing, among other
things, for periodic audits by an IRS-approved external auditor or the IRS of
certain documentation with respect to such certifications. The new regulations
also specify procedures for documenting eligibility for benefits under tax
treaties. Non-U.S. holders should consult their own tax advisors to determine
the application of the new regulations to their particular circumstances.
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SELLING SECURITYHOLDERS
We originally issued the notes in a private placement in August 2000.
Selling securityholders may offer and sell the notes and the underlying common
stock pursuant to this prospectus.
The following table contains information obtained by RadiSys pursuant
to a request made to the selling securityholders on September 27, 2000, with
respect to the selling securityholders and the principal amount of notes and the
underlying common stock beneficially owned by each selling securityholder that
may be offered using this prospectus.
<TABLE>
<CAPTION>
Principal Number of
amount of shares of
notes common Percentage of
beneficially Percentage of stock that common
owned that notes may be stock
Name of selling securityholder may be sold outstanding sold(1) outstanding(2)
------------------------------------------- ----------------- ----------------- --------------- --------------
<S> <C> <C> <C> <C>
AAM/Zazove Institutional Income Fund, L.P. $ 1,100,000 1.10% 16,223 *
Aftra Health Fund $ 250,000 * 3,687 *
AIG/National Union Fire Insurance $ 850,000 * 12,536 *
Alta Partners Holdings, LDC $ 2,000,000 2.00% 29,496 *
Argent Classic Convertible Arbitrage Fund $ 6,500,000 6.50% 95,864 *
(Bermuda) L.P.
Banc of America Securities, LLC(3) $ 6,275,000 6.28% 92,546 *
BP Amoco Corporation Master Trust for $ 950,000 * 14,011 *
Employee Pension Plans
Brown & Williamson Tobacco Master $ 250,000 * 3,687 *
Retirement Trust
CALAMOS-Registered Trademark- Market $ 1,250,000 1.25% 18,435 *
Neutral Fund-CALAMOS-Registered Trademark-
Investment Trust
CIBC World Markets International $ 1,500,000 1.50% 22,122 *
Arbitrage Corp
Clinton Riverside Convertible Portfolio $ 4,500,000 4.50% 66,367 *
Limited
Consulting Group Capital Markets Funds $ 300,000 * 4,424 *
Continental Assurance Company $ 4,730,000 4.73% 69,760 *
Deam Convertible Arbitrage $ 2,000,000 2.00% 29,496 *
Deutsche Bank Securities $ 3,875,000 3.88% 57,150 *
Grace Brothers, Ltd. $ 1,750,000 1.75% 25,809 *
Highbridge International LLC $ 5,500,000 5.50% 81,116 *
Island Holdings $ 50,000 * 737 *
JMG Capital Partners, LP $ 5,500,000 5.50% 81,116 *
KBC Financial Products $ 200,000 * 2,949 *
Kentfield Trading, Ltd. $ 7,125,000 7.13% 105,082 *
51
<PAGE>
Principal Number of
amount of shares of
notes common Percentage of
beneficially Percentage of stock that common
owned that notes may be stock
Name of selling securityholder may be sold outstanding sold(1) outstanding(2)
------------------------------------------- ----------------- ----------------- --------------- --------------
Lipper Convertibles, L.P. $ 6,000,000 6.00% 88,490 *
Mainstay Convertible Fund $ 7,250,000 7.25% 106,926 *
Mainstay VP Convertible Portfolio $ 750,000 * 11,061 *
McMahan Securities Co. L.P. $ 1,000 * 14 *
Nalco Chemical Company $ 325,000 * 4,793 *
Palladin Securities $ 1,000,000 1.00% 14,748 *
Peoples Benefit Life Insurance $ 3,000,000 3.00% 44,245 *
Peoples Benefit Life Insurance Company $ 1,500,000 1.50% 22,122 *
TEAMSTERS
PGEP III LLC $ 1,000,000 1.00% 14,748 *
Retail Clerks Pension Trust $ 2,500,000 2.50% 36,871 *
SG Cowen Securities(3) $ 10,449,000 10.45% 154,106 *
St. Albans Partners Ltd. $ 3,000,000 3.00% 44,245 *
San Diego County Employees Retirement $ 2,800,000 2.80% 41,295 *
Association
Starvest Combined Portfolio $ 1,050,000 1.05% 15,485 *
WM High Yield Fund $ 2,000,000 2.00% 29,496 4.66%
Zurich HFR Master Hedge Fund Index Ltd. $ 220,000 * 3,244 *
Any other holder of Notes or future $ 700,000 * 10,323 *
transferee, pledgee, donee or successor
of any holder (4) (5)
</TABLE>
---------------
*Less than 1%
(1) Assumes conversion of all of the holder's notes at a conversion price
of $67.8038 per share of common stock. However, this conversion price
will be subject to adjustment as described under "Description of
Notes--Conversion Rights." As a result, the amount of common stock
issuable upon conversion of the notes may increase or decrease in the
future.
(2) Calculated based on Rule 13d-3(d)(1) of the Exchange Act using
17,346,874 shares of common stock outstanding as of November 17, 2000.
In calculating this amount, we treated as outstanding the number of
shares of common stock issuable upon conversion of all of that
particular holder's notes. However, we did not assume the conversion of
any other holder's notes. Except for WM High Yield Fund, none of the
selling securityholders beneficially owns any common stock of RadiSys
other than the common stock issuable upon conversion of the notes. In
addition to the common stock issuable upon conversion of the notes held
by WM High Yield Fund as set forth in this table, WM High Yield Fund
also beneficially owns 779,045 shares of common stock of RadiSys.
(3) Banc of America Securities, LLC and SG Cowen Securities were among the
initial purchasers of the notes when the notes were originally issued
in August 2000.
(4) Information about other selling securityholders will be set forth in
prospectus supplements, if required.
52
<PAGE>
(5) Assumes that any other holders of notes, or any future transferees,
pledgees, donees or successors of or from any such other holders of
notes, do not beneficially own any common stock other than the common
stock issuable upon conversion of the notes at the initial conversion
rate.
We prepared this table based on the information supplied to us by the
selling securityholders named in the table.
The selling securityholders listed in the above table may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of their notes since the dates as of which the
information in the above table was supplied to us. Information about the selling
securityholders may change over time. Any changed information will be set forth
in prospectus supplements, if required.
Because the selling securityholders may offer all or some of their
notes or the underlying common stock from time to time, we cannot estimate the
amount of the notes or underlying common stock that will be held by the selling
securityholders upon the termination of any particular offering. See "Plan of
Distribution."
53
<PAGE>
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the notes and
the underlying common stock offered by this prospectus. The notes and the
underlying common stock may be sold from time to time to purchasers:
- directly by the selling securityholders or
- through underwriters, broker-dealers or agents who may receive
compensation in the form of discounts, concessions or
commissions from the selling securityholders or the purchasers
of the notes and the underlying common stock.
The selling securityholders and any such broker-dealers or agents who
participate in the distribution of the notes and the underlying common stock may
be deemed to be "underwriters." As a result, any profits on the sale of the
notes and underlying common stock by selling securityholders and any discounts,
commissions or concessions received by any such broker-dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.
If the selling securityholders were deemed underwriters, the selling
securityholders may be subject to certain statutory liabilities of, including,
but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5
under the Exchange Act.
If the notes and underlying common stock are sold through underwriters
or broker-dealers, the selling securityholders will be responsible for
underwriting discounts or commissions or agent's commissions.
The notes and underlying common stock may be sold in one or more
transactions at:
- fixed prices,
- prevailing market prices at the time of sale,
- varying prices determined at the time of sale or
- negotiated prices.
These sales may be effected in transactions:
- on any national securities exchange or quotation service on
which the underlying common stock may be listed or quoted at
the time of the sale, including the Nasdaq National Market, in
the case of the common stock,
- in the over-the-counter market,
- in transactions otherwise than on such exchanges or services
or in the over-the-counter market or
54
<PAGE>
- through the writing of options.
These transactions may include block transactions or crosses. Crosses
are transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with sales of the notes and underlying common stock or
otherwise, the selling securityholders may enter into hedging transactions with
broker-dealers. These broker-dealers may in turn engage in short sales of the
notes and underlying common stock in the course of hedging their positions. The
selling securityholders may also sell the notes and underlying common stock
short and deliver notes and underlying common stock to close out short
positions, or loan or pledge notes and underlying common stock to broker-dealers
that in turn may sell the notes and underlying common stock.
We are not aware of any plans, arrangements or understandings between
any selling securityholders and any underwriter, broker-dealer or agent
regarding the sale of the notes and the underlying common stock by the selling
securityholders. Selling securityholders may not sell any or all of the notes
and the underlying common stock offered by them pursuant to this prospectus. In
addition, we do not assure you that any selling securityholder will not
transfer, devise or gift the notes and the underlying common stock by other
means not described in this prospectus.
Our common stock trades on the Nasdaq National Market under the symbol
"RSYS." We do not intend to apply for listing of the notes on any securities
exchange or for quotation through Nasdaq. Accordingly, we give you no assurance
as to the development of liquidity or any trading market for the notes. See
"Risk Factors--There is no public market for the notes."
We do not assure you that any selling securityholder will sell any or
all of the notes or underlying common stock pursuant to this prospectus. In
addition, any notes or underlying common stock covered by this prospectus that
qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be
sold under Rule 144 or Rule 144A rather than pursuant to this prospectus.
Pursuant to the registration rights agreement filed as an exhibit to
this registration statement, we and the selling securityholders will be
indemnified by the other against specified liabilities, including various
liabilities under the Securities Act, or will be entitled to contribution in
connection with these liabilities.
We have agreed to pay substantially all of the expenses incidental to
the registration, offering and sale of the notes and underlying common stock to
the public other than commissions, fees and discounts of underwriters, brokers,
dealers and agents.
55
<PAGE>
LEGAL MATTERS
The validity of the issuance of the securities offered by this
prospectus will be passed upon for us by Stoel Rives LLP, Portland, Oregon,
and the enforceability of the notes offered by the prospectus will be passed
upon for us by Simpson Thacher & Bartlett, New York, New York.
EXPERTS
The consolidated financial statements incorporated in this
prospectus by reference to the Annual Report on Form 10-K for the year ended
December 31, 1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
56
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by
RadiSys Corporation (the "Company") in connection with the offer and sale of the
securities being registered. All amounts are estimates except the registration
fee.
<TABLE>
<S> <C>
Registration fee.................................... $ 26,400
Trustee fees and expenses........................... 2,500
Accounting fees and expenses........................ 10,000
Legal fees and expenses............................. 10,000
Miscellaneous....................................... 4,100
--------
Total...................................... $ 53,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article VII of the Company's Second Restated Articles of Incorporation
and Article V of the Company's Restated Bylaws require indemnification of
current or former directors of the Company to the fullest extent permitted by
law. The right to and amount of indemnification will ultimately be subject to
determination by a court that indemnification in the circumstances presented is
consistent with public policy and other provisions of law. It is likely,
however, that Article VII of the Company's Second Restated Articles of
Incorporation and Article V of the Company's Restated Bylaws would require
indemnification at least to the extent that indemnification is authorized by the
Oregon Business Corporation Act. The effect of the indemnification provisions
contained in Article VII of the Company's Second Restated Articles of
Incorporation, Article V of the Company's Restated Bylaws and the Oregon
Business Corporation Act (the "Indemnification Provisions") is summarized as
follows:
(a) The Indemnification Provisions grant a right of indemnification in
respect of any action, suit or proceeding (other than an action by or in the
right of the Company) against expenses (including attorney fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred, if the
person concerned acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the Company, was not
adjudged liable on the basis of receipt of an improper personal benefit and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe the conduct was unlawful. The termination of an action, suit or
proceeding by judgment, order, settlement, conviction or plea of nolo contendere
does not, of itself, create a presumption that the person did not meet the
required standards of conduct.
(b) The Indemnification Provisions grant a right of indemnification in
respect of any action or suit by or in the right of the Company against the
expenses (including attorney fees) actually and reasonably incurred if the
person concerned acted in good faith and in a manner
II-1
<PAGE>
the person reasonably believed to be in or not opposed to the best interests of
the Company, except that no right of indemnification will be granted if the
person is adjudged to be liable to the Company.
(c) Every person who has been wholly successful on the merits of a
controversy described in (a) or (b) above is entitled to indemnification as a
matter of right.
(d) The Company may not indemnify a director unless it is determined by
(1) a majority of a quorum of disinterested directors or a committee of
disinterested directors, (2) independent legal counsel or (3) the shareholders
that indemnification is proper because the applicable standard of conduct has
been met. Indemnification can also be ordered by a court if the court determines
that indemnification is fair in view of all of the relevant circumstances.
(e) The Company will advance to a director the expenses incurred in
defending any action, suit or proceeding in advance of its final disposition if
the director affirms in good faith that he or she has met the standard of
conduct to be entitled to indemnification as described in (a) or (b) above and
undertakes to repay any amount advanced if it is determined that the person did
not meet the required standard of conduct.
Under the Oregon Business Corporation Act, an officer of the Company is
entitled to mandatory indemnification to the same extent as a director of the
Company if he or she was wholly successful on the merits of a controversy
described in (a) or (b) above.
The Company has obtained insurance for the protection of its directors
and officers against any liability asserted against them in their official
capacities. The Company has also entered into indemnification agreements with
certain of the Company's directors. The indemnification agreements in part
incorporate the indemnification provisions of the Oregon Business Corporation
Act as described above. The indemnification provisions also alter or clarify the
statutory indemnity in certain respects. The most significant effects of the
indemnification agreements are to add indemnification for settlements of
derivative lawsuits and for proceedings involving a breach of fiduciary duty,
subject to specified exceptions. The indemnification agreements also set forth
certain procedures that apply in the event of a claim for indemnification or
advancement of expenses.
The rights of indemnification described above are not exclusive of any
other rights of indemnification to which the persons indemnified may be entitled
under any bylaw, agreement, vote of shareholders or otherwise.
II-2
<PAGE>
ITEM 16. EXHIBITS
(a) Exhibits
4.1 Second Restated Articles of Incorporation and
amendments thereto. Incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on
Form S-1 (Registration No. 33-95892), and by reference
to Exhibit 3.2 to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2000.
4.2 Restated Bylaws. Incorporated by reference to Exhibit
4.3 to the Company's Registration Statement on Form S-8
(Registration No. 333-38966).
*4.3 Resale Registration Rights Agreement dated August 9,
2000 among the Company and SG Cowen Securities
Corporation, Banc of America Securities LLC, J.P.
Morgan & Co. and First Security Van Kasper.
*4.4 Indenture dated August 9, 2000 between the Company and
U.S. Trust Company, National Association.
*4.5 Form of Note.
**5.1 Opinion of Stoel Rives LLP.
**5.2 Opinion of Simpson Thacher & Bartlett.
**12.1 Computation of Ratio of Earnings to Fixed Charges.
**23.1 Consent of PricewaterhouseCoopers LLP.
**23.2 Consent of Stoel Rives LLP (included in Exhibit 5.1).
**23.3 Consent of Simpson Thacher & Bartlett (included in
Exhibit 5.2).
*24.1 Powers of Attorney (included in signature page).
*25.1 Form T-1 Statement of Eligibility of Trustee for
Indenture under the Trust Indenture Act of 1939.
-------------------------------------------------------------------------------
* Previously filed.
** Filed herewith.
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
II-3
<PAGE>
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act 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:
II-4
<PAGE>
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-5
<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
Amendment No. 1 to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Hillsboro, State
of Oregon, on November 21, 2000.
RADISYS CORPORATION
By: /s/ STEPHEN F. LOUGHLIN
------------------------------------------
Stephen F. Loughlin
Vice President of Finance and
Administration and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the
following persons in the following capacities on November 21, 2000.
SIGNATURE TITLE
/s/ GLENFORD J. MYERS* Chairman of the Board, President and
--------------------------- Chief Executive Officer (Principal Executive
Glenford J. Myers Officer)
/s/ STEPHEN F. LOUGHLIN Vice President of Finance and Administration
--------------------------- and Chief Financial Officer (Principal Financial
Stephen F. Loughlin and Accounting Officer)
II-6
<PAGE>
/s/ JAMES F. DALTON* Director
---------------------------
James F. Dalton
/s/ RICHARD J. FAUBERT* Director
---------------------------
Richard J. Faubert
/s/ C. SCOTT GIBSON* Director
---------------------------
C. Scott Gibson
/s/ CARL W. NEUN* Director
---------------------------
Carl W. Neun
/s/ JEAN-PIERRE D. PATKAY* Director
---------------------------
Jean-Pierre D. Patkay
Director
----------------------------
Jean-Claude Peterschmitt
*By: /s/ STEPHEN F. LOUGHLIN
-------------------------
Stephen F. Loughlin
Attorney-in-Fact
II-7
<PAGE>
EXHIBIT INDEX
EXHIBIT
4.1 Second Restated Articles of Incorporation and amendments
thereto. Incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1 (Registration
No. 33-95892), and by reference to Exhibit 3.2 to the
Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2000.
4.2 Restated Bylaws. Incorporated by reference to Exhibit 4.3 to
the Company's Registration Statement on Form S-8
(Registration No. 333-38966).
*4.3 Resale Registration Rights Agreement dated August 9, 2000
among the Company and SG Cowen Securities Corporation, Banc
of America Securities LLC, J.P. Morgan & Co. and First
Security Van Kasper.
*4.4 Indenture dated August 9, 2000 between the Company and U.S.
Trust Company, National Association.
*4.5 Form of Note.
**5.1 Opinion of Stoel Rives LLP.
**5.2 Opinion of Simpson Thacher & Bartlett.
**12.1 Computation of Ratio of Earnings to Fixed Charges.
**23.1 Consent of PricewaterhouseCoopers LLP.
**23.2 Consent of Stoel Rives LLP (included in Exhibit 5.1).
**23.3 Consent of Simpson Thacher & Bartlett (included in
Exhibit 5.2).
*24.1 Powers of Attorney (included in signature page).
*25.1 Form T-1 Statement of Eligibility of Trustee for Indenture
under the Trust Indenture Act of 1939.
-------------------------------------------------------------------------------
* Previously filed.
** Filed herewith.
