As filed with the Securities and Exchange Commission on August 6, 2004April 28, 2009.
Registration Statement No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MERCURY COMPUTER SYSTEMS, INC.
(Exact nameName of Registrant as specifiedSpecified in its charter)Its Charter)
| Massachusetts | 04-2741391 | |
(State or
| (I.R.S. Employer Identification Number) |
199201 Riverneck Road
Chelmsford, Massachusetts 01824
(978) 256-1300
(Address, including zip codeIncluding Zip Code, and telephone number, including area code,Telephone Number, Including Area Code, of Registrant’s principal executive offices)Principal Executive Offices)
James R. BertelliAlex A. Van Adzin
Vice President, General Counsel, and Chief Executive OfficerCorporation Secretary
Mercury Computer Systems, Inc.
199201 Riverneck Road
Chelmsford, Massachusetts 01824
(978) 256-1300
(Name, address, including zip code,Address, Including Zip Code, and telephone number, including area codeTelephone Number, Including Area Code, of agentAgent for service)Service)
Copies of all communications should be sentWith copies to:
Anthony J. Medaglia, Jr., P.C. Esq.
Lisa R. Haddad, Esq.
Goodwin ProcterLLP
Exchange Place
Boston, Massachusetts 02109
(617) 570-1000
Approximate date of commencement of proposed sale to the public:public: From time to time after the effective date of this Registration Statement.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, as amended, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x
If this Formform 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 Formform 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 ofthis Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the prospectus is expected to be madeCommission pursuant to Rule 434, please462(e) under the Securities Act, check the following box. ¨
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b- 2 of the Exchange Act.
Large accelerated filer ¨ | Accelerated filer x | |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) | Smaller reporting company ¨ |
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to Be Registered | Amount to Be Registered | Proposed Maximum Offering Price Per Share(1) | Proposed Maximum Aggregate Offering Price(1) | Amount of Registration Fee | ||||
| 2.00% Convertible Senior Notes Due 2024 | $125,000,000 | 100% | $125,000,000 | $15,838 | ||||
| Common Stock, $0.01 par value per share | 4,134,962 shares(2) | (2) | (2) | (3) |
| Title of Each Class of Securities to be Registered | Amount to be Registered (1) | Proposed Maximum Offering Price Per Unit (2) | Proposed Maximum Aggregate Offering Price (3) | Amount of Registration Fee (4) | ||||
Debt Securities (5) | ||||||||
Preferred Stock (6) | ||||||||
Common Stock (7) | ||||||||
Warrants (8) | ||||||||
Units (9) | ||||||||
Preferred Stock Purchase Rights (10) | ||||||||
Total | $100,000,000 | N.A. | $100,000,000 | $5,580 | ||||
| (1) | The amount to be registered consists of up to $100,000,000 of an indeterminate amount of debt securities, preferred stock, common stock, warrants and/or units. There is also being registered hereunder such currently indeterminate number of (i) shares of preferred stock, common stock and warrants as may be issued upon conversion of, or in exchange for, convertible or exchangeable debt securities and/or preferred stock registered hereby, or (ii) shares of preferred stock and common stock as may be issued upon exercise of warrants registered hereby, as the case may be. Any securities registered hereunder may be sold separately or as units with the other securities registered hereunder. |
| (2) | The proposed maximum aggregate offering price per unit will be determined from time to time by the registrant in connection with the issuance by the registrant of the securities registered hereunder and is not specified as to each class of security pursuant to General Instruction II.D. of Form S-3 under the Securities Act. |
| (3) | Estimated solely for purposes of |
| (4) | The registration fee has been calculated in accordance with Rule |
| (6) | Including such indeterminate amount of preferred stock as may be issued from time to time at indeterminate prices or upon conversion of debt securities and/or preferred stock registered hereby, or upon exercise of warrants registered hereby, as the case may be. |
| (7) | Including such indeterminate amount of common stock as may be issued from time to time at indeterminate prices or upon conversion of debt securities and/or preferred stock registered hereby, or upon exercise of warrants registered hereby, as the case may be. |
| (8) | Including such indeterminate number of warrants or other rights, including without limitation share purchase or subscription rights, as may be issued from time to time at indeterminate prices. |
| (9) | Each unit will be issued under a unit agreement and will represent an interest in two or more securities, which may be or may not be separable from one another. |
| (10) | This registration statement also relates to the rights to purchase shares of Series B Junior Participating Cumulative Preferred Stock of the registrant, which are attached to all shares of common stock, |
The Registrantregistrant hereby amends this Registration Statementregistration statement on such date or dates as may be necessary to delay its effective date until the Registrantregistrant shall file a further amendment which specifically states that this Registration Statementregistration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statementregistration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE 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.Prospectus
SUBJECT TO COMPLETION, DATED AUGUST 6, 2004MERCURY COMPUTER SYSTEMS, INC.
$100,000,000
Debt Securities
Preferred Stock
Common Stock
Warrants
Units
PROSPECTUS
$125,000,000
2.00% Convertible Senior Notes due 2024 and
the Common Stock Issuable upon Conversion of the Notes
We issued the notes in a private placement in April 2004. This prospectus covers resalesprovides you with a general description of debt and equity securities that Mercury Computer Systems, Inc. may offer and sell, from time to time, by selling securityholders who may resell their noteseither individually or in units. Each time we sell securities we will provide a prospectus supplement that will contain specific information about the terms of any debt or equity securities we offer and the common stock issuable upon conversionspecific manner in which we will offer the debt or equity securities. The prospectus supplement will also contain information, where appropriate, about material United States federal income tax consequences relating to, and any listing on a securities exchange of, their notes. We will not receive any proceeds from this offering.
We will pay interest on the notes on May 1 and November 1 of each year, beginning on November 1, 2004.debt or equity securities covered by the prospectus supplement. The notes will mature on May 1, 2024.
Youprospectus supplement may convert the notes into shares of our common stock at any time prior to maturity, redemptionalso add, update or repurchase by us, if (1) the price of our common stock issuable upon conversion of a note reaches a specified threshold over a specified period as describedchange information contained in this prospectus, (2) the notes have been called for redemption or (3) specified corporate transactions occur. In addition, you may convert the notes into shares of our common stock at any time prior to May 1, 2019 if the trading price of the notes falls below certain thresholds. The initial conversion rate is 33.0797 shares per each $1,000 principal amount of notes, subject to adjustment in certain circumstances. This is equivalent to a conversion price of approximately $30.23 per share.
We may redeem any of the notes on or after May 1, 2009 at a price equal to 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest and additional interest, if any, to, but excluding, the date of redemption.prospectus. You may require us to repurchase the notes on May 1, 2009, 2014 and 2019 or upon a “change in control” or “termination of trading,” each as described inshould read this prospectus at a price equal to 100% ofand the principal amount of the notes to be redeemed plus accrued and unpaid interest and additional interest, if any, to, but excluding, the date of repurchase.applicable prospectus supplement carefully before you invest in our securities.
The notes are unsecured and rank equally with all existing and future unsecured senior indebtedness. The notes rank senior in right of payment to all existing and future unsecured subordinated debt. The notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries.
The notes are not listed on any securities exchange or included in any automated quotation system. Our common stock is quotedlisted on the Nasdaq NationalNASDAQ Global Select Market under the symbol “MRCY”. On August 5, 2004, the last reported sale price for our common stock on the Nasdaq National Market was $24.57 per share.“MRCY.”
Investing in our securities involves a high degree of risk. You should review carefully the securities offered by this prospectus involves risks that areand uncertainties described inunder the heading “Risk Factors” section beginning on page 7 ofcontained in this prospectus and the applicable prospectus supplement, and under similar headings in the other documents that are incorporated by reference into this prospectus.
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.
The date of this prospectus is , 2004.April 28, 2009
TABLE OF CONTENTSTable of Contents
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You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. The information in this prospectus may only be accurate on the date of this prospectus.
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This summary only highlights the more detailed information appearing elsewhere in this prospectus or incorporated by reference in this prospectus. It may not contain all information that is important to you. You should read this entire prospectus carefully before deciding whether to invest in the notes or shares of our common stock. Unless the context otherwise requires, all references to “Mercury,” “we,” “our,” “us” andor “our company” in this prospectus refer to Mercury Computer Systems, Inc., a Massachusetts corporation, and our consolidated subsidiaries.corporation.
This prospectus is part of a registration statement filed with the Securities and Exchange Commission, or SEC, utilizing a shelf registration process. Under this shelf registration process, we may sell any combination of the securities described in this prospectus, either individually or in units, in one or more offerings, up to a total dollar amount of $100,000,000.
This prospectus provides you with a general description of the securities we may offer. Each time we sell securities, we will provide a prospectus supplement that will contain specific information about the terms of that specific offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read this prospectus and the applicable prospectus supplement together with the additional information described under the heading “Where You Can Find More Information.”
Mercury Computer Systems, Inc.ABOUT MERCURY COMPUTER SYSTEMS, INC.
Mercury Computer Systems, Inc. is a leading supplier of embedded,was incorporated in Massachusetts in 1981. We design, manufacture and market high-performance digitalcomputer, signal and image processing computer systems and software for embedded and other specialized computing markets. In doing so, we work closely with customers to architect comprehensive, purpose-built solutions that transform sensorcapture, process and present data for defense electronics, homeland security, and other computationally challenging commercial markets. Our largest business unit is our Advanced Computing Solutions, or ACS, business unit, which is focused on specialized high performance computing solutions with key market segments including: aerospace and defense—which includes systems for radar, electronic warfare, sonar, C4I (Command, Control, Communications, Computers, and Intelligence) and electro-optical; and semiconductor—which includes systems for semiconductor wafer inspection, reticle inspection and mask writing. Our other businesses include Mercury Federal Systems, which is part of our long-term strategy to visual information for analysisexpand our software and interpretationservices presence and pursue growth in real-time. We currently do businessmarkets adjacent to defense computing. Mercury is based in Chelmsford, Massachusetts, and serves customers worldwide through three business groups:a broad network of direct sales offices, subsidiaries, and distributors.
Our common stock is listed on the Defense Electronics Group,NASDAQ Global Select Market under the Imaging and Visualization Solutions Group (formerly our Medical Imaging Business Group), and the OEM Solutions Group.symbol “MRCY.” Our products are used by defense prime contractors and original equipment manufacturers, or OEMs, in a variety of applications. In air-, sea-, and land-based military platforms, our systems process real-time radar, sonar and signals intelligence data. Our systems also are used in state-of-the-art medical diagnostic devices, including magnetic resonance imaging (MRI), positron emission tomography (PET), and digital x-ray. We also are pursuing opportunities in the semiconductor imaging equipment market, the high-end baggage scanning market, and the communications infrastructure market.
Our principal executive offices are located at 199201 Riverneck Road, Chelmsford, Massachusetts 01824-2820,01824 and our telephone number is (987)(978) 256-1300. Our website is located atwww.mc.com. The information contained
Investing in our website is notsecurities involves a parthigh degree of this prospectus.
Recent Developments
Fourth Quarter and Fiscal 2004 Results
On August 2, 2004, we reportedrisk. Please see the risk factors under the heading “Risk Factors” in our resultsAnnual Report on Form 10-K for the fourth quarter and fiscal year ended June 30, 2004. Total revenues2008, and in our Quarterly Report on Form 10-Q for the quarter were $59.1 million, an increaseended December 31, 2008, each on file with the SEC, which are incorporated by reference into this prospectus. Before you invest in our securities, you should carefully consider these risks as well as other information we include or incorporate by reference into this prospectus and the applicable prospectus supplement. The risks and uncertainties we have described are not the only ones facing our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business operations. The occurrence of 33% comparedany of these risks might cause you to $44.5 million for the same periodlose all or part of your investment in the prior year. Defense electronics revenuesoffered securities. The discussion of $42.8 million increased $10.3 million,risks includes or 32%, fromrefers to forward-looking statements; you should read the same period in fiscal 2003, primarily due to increased shipments of signals intelligence and emerging markets applications. Imaging and visualization solutions revenues of $8.9 million increased $1.6 million, or 22%, from the same period in fiscal 2003 based primarily on the acquisitionexplanation of the TGS Group. OEM solutions revenuesqualifications and limitations on such forward-looking statements discussed elsewhere in this prospectus.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the information incorporated by reference into this prospectus, contains, and any prospectus supplement may contain, statements that are forward-looking statements within the meaning of $7.4 million increased $2.8 million,the federal securities laws. We caution you that any forward-looking statements presented in this prospectus, or 60%,which management may make orally or in writing from time to time, are based on management’s beliefs and assumptions made by, and information currently available to, management. When we use the same period in fiscal 2003, primarily due to increased shipments of systems to semiconductor capital equipment OEMs.words “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “project,” “may,” “will,” “should,” “continue,” “assume” and other similar expressions, they are generally forward-looking statements. These statements include, among other things, statements regarding our intent, belief or expectations with respect to:
For the 2004 fiscal year, revenues were $185.6 million, an increase of 3% compared to the 2003 fiscal year. Defense electronics revenues of $126.0 million increased $1.9 million, or 1%, from fiscal 2003, primarily due to increased shipments of signals intelligence applications. Imaging and visualization solutions revenues of $32.9 million decreased $2.8 million, or 8%, from fiscal 2003 based primarily on the absence of computed tomography (CT) applications partially offset by growth in other modalities. OEM solutions revenues of $26.7 million increased $6.4 million, or 31%, from fiscal 2003, primarily due to increased shipments of systems to semiconductor capital equipment OEMs.
Business Unit Revenues Defense Electronics Imaging and Visualization OEM Solutions Total Three
Months Ended
June 30, 2004 Percent
of Total Fiscal
Year Ended
June 30, 2004 Percent
of Total (in thousands) $ 42,749 72 % $ 125,954 68 % 8,946 15 32,900 18 7,436 13 26,741 14 $ 59,131 100 % $ 185,595 100 %
Our operating income for the fourth quarter of fiscal 2004 was $13.6 million, which represented 23% of revenues, as compared to $5.8 million for the same period in fiscal 2003. Our net income for the fourth quarter of fiscal 2004 was $9.6 million, or 16% of revenues, as compared to $4.2 million during the same period in fiscal 2003. Diluted earnings per share were $0.44 for the fourth quarter of fiscal 2004, as compared to $0.20 for the same period in fiscal 2003.
Our operating income for the 2004 fiscal year was $31.6 million, which represented 17% of revenues, as compared to $25.8 million for fiscal 2003. Our net income for fiscal 2004 was $22.9 million, or 12% of revenues, as compared to $22.7 million during fiscal 2003. Diluted earnings per share were $1.05 for fiscal 2004, as compared to $1.03 for fiscal 2003.
Our cash and marketable securities balance at June 30, 2004 was $238.3 million. Our total backlog at June 30, 2004 was $91.2 million, up from $81.6 million at the beginning of the quarter, representing the fourth consecutive quarter of backlog growth. Of the total backlog at June 30, 2004, $80.9 million represented shipments scheduled over the next 12 months.
Acquisitions
On May 6, 2004, we completed the acquisition of the TGS Group for approximately $18.9 million, consisting of $6.0 million in our common stock and the remainder in cash, subject to post-closing adjustments and excluding acquisition costs. The TGS Group is a leading supplier of three-dimensional (3-D) image processing and visualization software to diverse end markets including life sciences (imaging and visualization and biotechnology), geoscience (earth sciences including oil and gas exploration), and simulation (commercial and defense). The company is headquartered in Bordeaux, France and has operations in Berlin, Germany and San Diego, California.strategic plans;
On June 1, 2004, we acquired Reston, Virginia-based Advanced Radio Corporation, a developer of radio frequency products targeting signals intelligence applications and commercial opportunities such as wireless infrastructure testing. The transaction was structured as the purchase by Mercury of all of the outstanding stock of Advanced Radio Corporation for an aggregate purchase price of approximately $7.0 million in cash.
The Notes
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The notes also are effectively subordinated in right of payment to our existing and future secured debt, to the extent of such security, and to our subsidiaries’ liabilities. At June 30, 2004, the aggregate principal amount of secured debt of Mercury and our subsidiaries was approximately $11.6 million, and our subsidiaries had other liabilities (excluding obligations that are inter-company in nature) of approximately $6.0 million in the aggregate. The indenture under which the notes were issued does not prevent us or our subsidiaries from incurring additional debt or other obligations.
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if we distributeour business outlook; and
our future business and financial performance.
You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and may cause our actual results, performance or achievements to alldiffer materially from anticipated future results, or substantially all holdersthe performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such a difference include, but are not limited to:
general economic and business conditions, including unforeseen economic weakness in our markets;
effects of continued geo-political unrest and regional conflicts;
competition;
changes in technology and methods of marketing;
delays in completing various engineering and manufacturing programs;
changes in customer order patterns;
changes in product mix;
continued success in technological advances and delivering technological innovations;
continued funding of defense programs and the timing of such funding;
changes in the United States government’s interpretation of federal procurement rules and regulations;
market acceptance of our common stock rights, options or warrants entitling them to purchase common stock at less than the closing sale price of our common stock on the trading day immediately preceding the declarationproducts;
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production delays due to performance quality issues with outsourced components;
inability to fully realize the expected benefits from acquisitions or delays in realizing such benefits;
challenges in integrating acquired businesses and achieving anticipated synergies;
inability to identify opportunities to rationalize our business portfolio in a party to a consolidation, mergertimely manner or sale of all or substantiallyat all;
difficulties in retaining key employees and customers; and
various other factors beyond our control.
You should carefully review all of these factors, and you should be aware that there may be other factors that could cause such differences.
We caution you that, while forward-looking statements reflect our assets that constitutes a change in control (as defined in “Description of Notes—Repurchase at the Option of the Holder Upon a Designated Event”), or such an event occurs that would have been a change in control but for one or more of the exceptions to the definition of change in control as specified in “Description of Notes—Conversion Rights,” then you will have such conversion right beginning 15 days prior to the anticipated effective date of the transaction until 15 days following its effective date.
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reflect changes in underlying assumptions or factors, new information, future events or other changes.
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Ratio of Earnings to Fixed ChargesRATIOS OF EARNINGS TO FIXED CHARGES
The computation offollowing table sets forth the ratio of earnings to fixed charges includes Mercury and our consolidated subsidiaries. The ratio of earnings to fixed charges is calculated by dividing:
The following table shows our ratios of earnings to fixed charges for the nine months ended March 31, 2004,periods indicated below (in thousands). We have no preferred shares outstanding and for each ofpaid no dividends on preferred shares during the five most recent fiscal years.
| Fiscal Year Ended June 30, | Nine Months Ended March 31, 2004 | |||||||||||
| 1999 | 2000 | 2001 | 2002 | 2003 | ||||||||
Ratio of earnings to fixed charges | 48.5 | 41.1 | 37.9 | 18.4 | 27.7 | 21.2 | ||||||
To date, we have not issued any preferred stock.periods indicated. Therefore, the ratios of earnings to combined fixed charges and preferred dividends are the same as the ratios of earnings to fixed charges presented above.below.
| Years Ended June 30, | Six Months Ended December 31, 2008 | |||||||||||||||
| 2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||
Coverage deficiency | — | — | (18,360 | ) | (37,182 | ) | (32,975 | ) | (18,112 | ) | ||||||
Ratio of earnings to fixed charges | 18.8 | 10.1 | (2.8 | ) | (6.1 | ) | (5.8 | ) | (6.4 | ) | ||||||
Common Stock
This prospectus may be usedThe ratio of earnings to fixed charges is calculated by the selling securityholders to sell up to 4,134,962 shares of our common stock issuable upon conversiondividing (a) earnings before income taxes and fixed charges by (b) fixed charges. Fixed charges include interest expense (including an estimate of the notes atinterest within rental expense) and amortization of deferred financing fees. Earnings were insufficient to cover fixed charges in fiscal 2006, 2007 and 2008, and the initial conversion ratesix months ended December 31, 2008.
Subsequent to the ratio of 33.0797 shares per each $1,000 principal amountearnings to fixed charges as of notes. Our common stock is quoted on the Nasdaq National Market under the symbol “MRCY.”
You should carefully consider each ofDecember 31, 2008 set forth above, we undertook the following risks and all of the other information set forth in this prospectus before making an investment in the notes or our common stock. The risks and uncertainties described below are not the only ones facing our company. Additional risks and uncertainties not presently known by us or that we currently believe to be immaterial also may adversely affect our business. If any of the events or circumstances described in the following risk factors actually occur, our business, financial condition or results of operations could suffer, the trading price of our common stock and the value of the notes could decline, and you could lose all or part of your investment.
Risks Related to Our Business
We depend heavily on defense electronics programs that incorporate our products,two actions, which may be only partially funded and subject to potential termination and reductions in government spending.
Sales of our computer systems, primarily as an indirect subcontractor or team member with prime contractors and in some cases directly, to the U.S. Government and its agencies, as well as foreign governments and agencies, accounted for approximately 68% of our total revenues in fiscal 2004, 69% of our total revenues in fiscal 2003 and 65% of our total revenues in fiscal 2002. Our computer systems are included in many different domestic and international programs. Over the lifetime of a program, the award of many different individual contracts and subcontracts may implement its requirements. The funding of U.S. Government programs is subject to congressional appropriations. Although multiple-year contracts may be planned in connection with major procurements, Congress generally appropriates funds on a fiscal year basis even though a program may continue for several years. Consequently, programs are often only partially funded initially, and additional funds are committed only as Congress makes further appropriations and prime contracts receive such funding. The reduction in funding or termination of a government program in which we are involved would result in a loss of anticipated future revenues attributable to that program and contracts or orders received by us. The U.S. Government could reduce or terminate a prime contract under which we are a subcontractor or team member irrespective of the quality of our products or services. The termination of a program or the reduction in or failure to commit additional funds to a program in which we are involved could negatively impact our revenues and have a material adverse effect on our financial condition and results of operations.
We face other risks and uncertainties associated with defense-related contracts, which may have a material adverse effect on our business.
Whether our contracts are directly with the U.S. Government, a foreign government or one of their respective agencies, or indirectly as a subcontractor or team member, our contracts and subcontracts are subject to special risks, including:
Because we contract to supply goods and services to the U.S. and foreign governments and their prime and subcontractors, we compete for contracts in a competitive bidding process and, in the event we are
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The loss of one or more of our largest customers could adversely affect our results of operations.
We are dependent on a small number of customers for a large portion of our revenues. A significant decrease in the sales to or loss of any of our major customers would have a material adverse effect on our business and results of operations. Customers in the defense electronics market generally purchase our products in connection with government programs that have a limited duration, leading to fluctuating sales to any particular customer in this market from year to year. In addition, our revenues are largely dependent upon the ability of customers to develop and sell products that incorporate our products. No assurance can be given that our customers will not experience financial, technical or other difficulties that could adversely affect their operations and, in turn, our results of operations.
Our imaging and visualization solutions and OEM solutions revenues currently come from a small number of customers and modalities, and any significant decrease in revenue from one of these customers or modalities could adversely impact our operating results.
If a major imaging and visualization solutions or OEM solutions customer significantly reduces the amount of business it does with us, there would likely be an adverse impact on our operating results. Although we are seeking to broaden our commercial customer base, we expect to continue to depend on sales to a relatively small number of major customers in both the imaging and visualization solutions and OEM solutions markets. Because it often takes significant time and added cost to replace lost business, it is likely that operating results would be adversely affected if one or more of our major customers were to cancel, delay or reduce significant orders in the future. Our customer agreements typically permit the customer to discontinue future purchases without cause after timely notice.
Our sales to the imaging and visualization solutions market could be adversely affected by changes in technology, strength of the economy, and health care reforms.
The economic and technological conditions affecting our industry in general, or any major imaging OEM customer in particular, may adversely affect our operating results. Imaging OEM customers provide products to markets that are subject to both economic and technological cycles. Any change in the demand for imaging devices that renders any of our products unnecessary or obsolete, or any change in the technology in these devices, could result in a decrease in our revenues. In addition to our imaging OEM customers, the end users of their products and the health care industry generally are subject to extensive federal, state and local regulation in the United States as well as in other countries. Changes in applicable health care laws and regulations or new interpretations of existing laws and regulations could cause these customers or end users to demand fewer
imaging and visualization products. We cannot assure you that future health care regulations or budgetary legislation or other changes in the administration or interpretation of governmental health care programs both in the United States and abroad will not have a material adverse effect on our business.
Competition from existing or new companies in the imaging and visualization solutions business could cause us to experience downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities and the loss of market share.
Imaging and visualization solutions is a highly-competitive industry, and our imaging OEM customers generally extend the competitive pressures they face throughout their respective supply chains. We are subject to competition based upon product design, performance, pricing, quality and services. Our product performance, embedded systems engineering expertise, and product quality have been important factors in our growth. While we try to maintain competitive pricing on those products that are directly comparable to products manufactured by others, in many instances our products will conform to more exacting specifications and carry a higher price than analogous products. Many of our imaging OEM customers and potential imaging OEM customers also have the capacity to design and internally manufacture products that are similar to ours. We face competition from research and product development groups and the manufacturing operationsimpact of current and potential customers, who continually evaluate the benefits of internal research and product development and manufacturing versus outsourcing. This competition could result in fewer customer orders and a loss of market share.
If we are unable to respond adequately to our competition, we may lose existing customers and fail to win future business opportunities.
The markets for our products are highly competitive and are characterized by rapidly changing technology, frequent product performance improvements and evolving industry standards. Competitors may be able to offer more attractive pricing or develop products that could offer performance features that are superior to our products, resulting in reduced demand for our products. Due to the rapidly changing nature of technology, we may not become aware in advance of the emergence of new competitors into our markets. The emergence of new competitors into markets historically targeted by us could result in the loss of existing customers and may have a negative impact on our ability to win future business opportunities. With continued microprocessor evolution, low-end systems could become adequate to meet the requirements of an increased number of the lesser-demanding applications within our target markets. Workstation manufacturers and other low-end single-board computer or merchant board computer companies, or new competitors, may attempt to penetrate the high-performance market for defense electronics systems, which could have a material adverse effect on our business.
We face the continuing impact on our business from the slowdown in worldwide economies.
The future direction of domestic and global economies could have a significant impact on our overall performance. Our business has been, and may continue to be, negatively impacted by the slowdown in the economies of the United States, Europe, Asia and elsewhere that began during fiscal 2001. The uncertainty regarding the growth rate of the worldwide economies has caused companies to reduce capital investment and may cause further reduction of these capital investments. These reductions have been particularly severe in the electronics and semiconductor industries, which we serve. While our business may be performing better than some companies in periods of economic decline, the effects of the economic decline are being felt across all business segments and has been a contributor to the slower than normal customer orders. We cannot predict if or when the growth rate of worldwide economies will rebound, whether the growth rate of customer orders will rebound when the worldwide economies begin to grow. All components of forecasting and budgeting processes are dependent upon estimates of growth in the markets we serve. The prevailing economic uncertainty renders estimates of future income and expenditures even more difficult than usual. As a result, we may make significant investments and expenditures but never realize the anticipated benefits, which could adversely affect our results of operations.
We cannot predict the consequences of future terrorist activities, but they may adversely affect the markets in which we operate, our ability to insure against risks, and our operations or profitability.
The terrorist attacks in the United States on September 11, 2001, as well as the U.S.-led response, including “Operation Enduring Freedom” and “Operation Iraqi Freedom,” the potential for future terrorist activities, and the development of a Homeland Security organization have created economic and political uncertainties that could have a material adverse effect on our business and the price of our common stock. These matters have caused uncertainty in the world’s financial and insurance markets and may increase significantly the political, economic and social instability in the geographic areas in which we operate. These developments may adversely affect our business and profitability and the prices of our securities in ways that cannot be predicted at this time.
Implementation of our growth strategy may not be successful, which could affect our ability to increase revenues.
Our growth strategy includes developing new products and entering new markets. Our ability to compete in new markets will depend upon a number of factors including:
The failure to do any of the foregoing could have a material adverse effect on our business and results of operations. In addition, we may face competition in these new markets from various companies that have substantially greater research and development resources, marketing and financial resources, manufacturing capability and/or customer support organizations.
We may be unable to obtain critical components from suppliers, which could disrupt or delay our ability to deliver products to our customers.
Several components used in our products are currently obtained from sole-source suppliers. We are dependent on key vendors like LSI Logic, Xilinx and Toshiba for custom-designed Application Specific Integrated Circuits (ASICs) and Field Programmable Gate Arrays (FPGAs); Motorola and IBM for PowerPC microprocessors; IBM for a specific Static Random Access Memory (SRAM); and Arrow and Force Computers for chassis and chassis components (Chassis). Generally, suppliers may terminate their contracts with us without cause upon 30-days’ notice and may cease offering our products upon 180-days’ notice. If any of our sole-source suppliers were to limit or reduce the sale of these components, we may be unable to fulfill customer orders in a timely manner or at all. In addition, if these or other component suppliers, some of which are small companies, were to experience financial difficulties or other problems which prevented them from supplying us with the necessary components, we could experience a loss of revenues due to our inability to fulfill orders. These sole-source and other suppliers are each subject to quality and performance issues, materials shortages, excess demand, reduction in capacity and other factors that may disrupt the flow of goods to us or to our customers, which would adversely affect our business and customer relationships. We have no guaranteed supply arrangements with our suppliers and there can be no assurance that these suppliers will continue to meet our requirements. If supply arrangements are interrupted, we may not be able to find another supplier on a timely or satisfactory basis. We may incur significant set-up costs and delays in manufacturing should it become necessary to replace any key vendors due to work stoppages, shipping delays, financial difficulties or other factors.
We may not be able to efficiently manage our relationships with contract manufacturers.
We may not be able to effectively manage our relationship with contract manufacturers, and the contract manufacturers may not meet future requirements for timely delivery. We rely on contract manufacturers to build hardware sub-assemblies for our products in accordance with our specifications. During the normal course of business, we may provide demand forecasts to contract manufacturers up to five months prior to scheduled delivery of our products to customers. If we overestimate requirements, the contract manufacturers may assess cancellation penalties or we may be left with excess inventory, which may negatively impact our earnings. If we underestimate requirements, the contract manufacturers may have inadequate inventory, which could interrupt manufacturing of our products and result in delays in shipment to customers and revenue recognition. Contract manufacturers also build products for other companies, and they may not have sufficient quantities of inventory available or sufficient internal resources to fill our orders on a timely basis or at all.
In addition, there have been a number of major acquisitions within the contract manufacturing industry in recent periods. While there has been no significant impact on our contract manufacturers to date, future acquisitions could potentially have an adverse effect on our working relationships with contract manufacturers. Moreover, as of the date of this prospectus, we currently rely primarily on one contract manufacturer. The failure of this contract manufacturer to fill our orders on a timely basis or in accordance with our customers’ specifications could result in a loss of revenues and damage to our reputation. We may not be able to replace this primary contract manufacturer in a timely manner or without significantly increasing our costs if such contract manufacturer wereratio of earnings to experience financial difficulties or other problems which prevented it from fulfilling our order requirements.
Our performance and stock price may decline iffixed charges by decreasing interest expense. On February 4, 2009, we are unable to retain and attract key personnel.
We are largely dependent upon the skills and efforts of senior management including James R. Bertelli, our President and Chief Executive Officer, as well as our senior managerial, sales and technical employees. None of our senior management or other key employees is subject to any employment contracts or non-competition agreements. The loss of services of any executive or other key personnel could have a material adverse effect on our business and stock price. In addition, our future success will depend to a significant extent on our ability to attract, train, motivate and retain highly skilled technical professionals, particularly project managers, engineers and other senior technical personnel. There can be no assurance that we will be successful in retaining current or future employees.
We are exposed to risks associated with international operations.
We market and sell products in international markets, and have established offices and subsidiaries in the United Kingdom, Japan, the Netherlands and France. There are risks inherent in transacting business internationally, including:
There can be no assurance that one or more of these factors will not have a material adverse effect on our future international activities and, consequently, on our business and results of operations.
We may be unable to successfully integrate acquisitions.
We may acquire or make investments in complementary companies, products or technologies. Acquisitions may pose risks to our operations, including:
In addition, in connection with any acquisitions or investments, we could:
The failure to successfully integrate any acquisition or for acquisitions to yield expected results may negatively impact our financial condition and operating results.
If we are unable to respond to technological developments and changing customer needs on a timely and cost-effective basis, our results of operations may be adversely affected.
Our future success will depend in part on our ability to enhance current products and to develop new products on a timely and cost-effective basis in order to respond to technological developments and changing customer needs. Defense electronics customers, in particular, demand frequent technological improvements as a means of gaining military advantage. Military planners historically have funded significantly more design projects than actual deployments of new equipment, and those systems that are deployed tend to contain the components of the subcontractors selected to participate in the design process. In order to participate in the design of new defense electronics systems, we must demonstrate the ability to deliver superior technological
performance on a timely and cost-effective basis. There can be no assurance that we will secure an adequate number of defense electronics design wins in the future, that the equipment in which our products are intended to function eventually will be deployed in the field, or that our products will be included in such equipment if it eventually is deployed.
Customers in the imaging and visualization solutions and OEM solutions markets, including the semiconductor imaging market, also seek technological improvements through product enhancements and new generations of products. OEMs historically have selected certain suppliers whose products have been included in the OEMs’ machines for a significant portion of the products’ life cycles. We may not be selected to participate in the future design of any medical or semiconductor imaging equipment, or if selected, we may not generate any revenues for such design work.
The design-in process is typically lengthy and expensive, and there can be no assurance that we will be able to continue to meet the product specifications of OEM customers in a timely and adequate manner. In addition, any failure to anticipate or respond adequately to changes in technology and customer preferences, or any significant delay in product developments or introductions, could negatively impact our financial condition and results of operations, including the risk of inventory obsolescence. Because of the complexity of our products, we have experienced delays from time to time in completing products on a timely basis. If we are unable to design, develop or introduce competitive new products on a timely basis, our future operating results may be adversely affected.
We may be unsuccessful in protecting our intellectual property rights.
Our ability to compete effectively against other companies in our industry depends, in part, on our ability to protect our current and future proprietary technology under patent, copyright, trademark, trade secret and unfair competition laws. We cannot assure you that our means of protecting our proprietary rights in the United States or abroad will be adequate, or that others will not develop technologies similar or superior to our technology or design around the proprietary rights we own. In addition, management may be distracted and may incur substantial costs in attempting to protect our proprietary rights.
Also, despite the steps taken by us to protect our proprietary rights, it may be possible for unauthorized third parties to copy or reverse-engineer aspects of our products, develop similar technology independently or otherwise obtain and use information that we regard as proprietary, and we may be unable to successfully identify or prosecute unauthorized uses of our technology. Further, with respect to our issued patents and patent applications, we cannot assure you that any patents from any pending patent applications (or from any future patent applications) will be issued, that the scope of any patent protection will exclude competitors or provide competitive advantages to us, that any of our patents will be held valid if subsequently challenged or that others will not claim rights in or ownership of the patents (and patent applications) and other proprietary rights held by us.
If we become subject to intellectual property infringement claims, we could incur significant expenses and could be prevented from selling specific products.
We may become subject to claims that we infringe the intellectual property rights of others in the future. We cannot assure you that, if made, these claims will not be successful. Any claim of infringement could cause us to incur substantial costs defending against the claim even if the claim is invalid, and could distract management from other business. Any judgment against us could require substantial payment in damages and also could include an injunction or other court order that could prevent us from offering certain products.
Our need for continued investment in research and development may increase expenses and reduce our profitability.
Our industry is characterized by the need for continued investment in research and development. If we fail to invest sufficiently in research and development, our products could become less attractive to potential
customers and our business and financial condition could be materially and adversely affected. As a result of the need to maintain or increase spending levels in this area and the difficulty in reducing costs associated with research and development, our operating results could be materially harmed if our research and development efforts fail to result in new products or if revenues fall below expectations. In addition, as a result of our commitment to invest in research and development, research and development expenses as a percentage of revenues may fluctuate in the future.
Our results of operations are subject to fluctuation from period to period and may not be an accurate indication of future performance.
We have experienced fluctuations in our operating results in large part due to the sale of computer systems in relatively large dollar amounts to a relatively small number of customers. Our quarterly results may be subject to fluctuations resulting from a number of other factors, including:
Results of operations in any period should not be considered indicative of the results to be expected for any future period.
In addition, from time to time, we have entered into contracts, referred to as development contracts, to engineer a specific solution based on modifications to standard products. Gross margins from development contract revenues are typically lower than gross margins from standard product revenues. We intend to continue to enter into development contracts and anticipate that the gross margins associated with development contract revenues will continue to be lower than gross margins from standard product sales.
Another factor contributing to fluctuations in our quarterly results is the fixed nature of expenditures on personnel, facilities and marketing programs. Expense levels for these programs are based, in significant part, on expectations of future revenues. If actual quarterly revenues are below management’s expectations, our results of operations will likely be adversely affected. Our operating results, from time to time, may be below the expectations of public market analysts and investors, which could have a material adverse effect on the market price of our common stock.
We have benefited from certain tax benefits that may expire or be repealed.
In the past, we have benefited from certain tax provisions that have reduced our effective tax rate and the cash taxes paid. One of these benefits, the credit for increasing research activities, expired on June 30, 2004, and, as of the date of this prospectus, had not been extended or reinstated by Congress. There are pending legislative proposals that would extend or make permanent this tax credit, including on a retrospective basis. However, there can be no assurance that the research credit will be made permanent or extended, or if so, for how long, and
whether any such extension will be made retroactive. We have also utilized benefits under the extraterritorial income, or “ETI” tax regime. The ETI regime was ruled an illegal trade subsidy by the World Trade Organization and, as a result, the European Union has recently imposed trade sanctions against the United States that will increase substantially over time if the ETI regime is not repealed. As of the date of this prospectus, legislative proposals to repeal the ETI regime have been passed by both the Senate and House of Representatives, along with proposals that, if enacted, would provide tax benefits that might mitigate at least to some extent our loss of tax benefits if ETI is repealed. While it seems likely that the ETI regime will be repealed upon reconciliation of the bills by the Conference Committee, it is very difficult to predict what, if any, new tax benefits might be enacted, and we cannot assure you that any new tax provisions will be enacted that will benefit us. Our expenses for income taxes could be significantly higher in the future if the research credit is not included and the ETI regime is repealed.
Provisions in our organizational documents and Massachusetts law could make it more difficult for a third party to acquire our company.
Provisions of our charter and by-laws could have the effect of discouraging a third party from making a proposal to acquire our company and could prevent certain changes in control, even if some shareholders might consider the proposal to be in their best interests. These provisions include a classified board of directors, advance notice to our board of directors of shareholder proposals and director nominations, and limitations on the ability of shareholders to remove directors and to call shareholder meetings. In addition, we may issue shares of any class or series of preferred stock in the future without shareholder approval upon such terms as our board of directors may determine. The rights of holders of common stock will be subject to, and may be adversely affected by, the rights of the holders of any such class or series of preferred stock that may be issued. We also are subject to the Massachusetts General Laws which, subject to certain exceptions, prohibit a Massachusetts corporation from engaging in a broad range of business combinations with any “interested shareholder” for a period of three years following the date that such shareholder becomes an interested shareholder. These provisions could discourage a third party from pursuing an acquisition of our company at a price considered attractive by many shareholders.
Risks Related to the Securities
Substantial leverage and debt service obligations may adversely affect our cash flows.
In connection with the initial sale of the notes, we incurred new indebtedness of $125 million. As a result of this indebtedness, our principal and interest payment obligations have increased substantially. The degree to which we are leveraged could, among other things:
Our ability to meet our debt service obligations will depend upon our future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control.
The notes are effectively subordinated to all liabilities of our subsidiaries and to our secured debt.
None of our subsidiaries have guaranteed our obligations under, or have any obligation to pay amounts due on, the notes. As a result, the notes are “structurally subordinated” to all indebtedness and other liabilities, including trade payables and lease obligations, of our existing and future subsidiaries (unless such indebtedness
is by its terms subordinated to the notes). In addition, the notes are not secured by any of our assets or those of our subsidiaries. As a result, the notes are effectively subordinated to any secured debt that we or our subsidiaries may incur. In the event of our bankruptcy, liquidation or reorganization or upon acceleration of the notes, payment on the notes could be less, ratably, than on any secured indebtedness. We may not have sufficient assets remaining to pay amounts due on any or all of the notes then outstanding. At June 30, 2004, therepurchased $119,688,000 aggregate principal amount of secured debt of Mercury and our subsidiaries was approximately $11.6 million, and our subsidiaries had other liabilities (excluding obligations that are inter-company in nature) of approximately $6.0 million in the aggregate.
The notes are not protected by restrictive covenants, including financial covenants.
Neither we nor our subsidiaries are restricted from incurring additional debt, including senior debt, or liabilities under the indenture. In addition, the indenture does not restrict us or any of our subsidiaries from paying dividends or issuing or repurchasing securities. If we or our subsidiaries were to incur additional debt or liabilities, our ability to pay our obligations on the notes could be adversely affected.
We may be unable to repay, repurchase or redeem the notes.
At maturity, the entire outstanding principal amount of the notes will become due and payable by us. Upon a change in control, as defined in the indenture, the holder of the notes may require us to repurchase all or a portion of the notes. We may not have enough funds or be able to arrange for additional financing to pay the principal at maturity or to repurchase the notes upon a change in control. Future credit agreements or other agreements relating to our indebtedness may restrict the redemption or repurchase of the notes and provide that a change in control constitutes an event of default. If the maturity date or a change in control occurs at a time when we are prohibited from repaying or repurchasing the notes, we could seek the consent of our lenders to purchase the notes or could attempt to refinance this debt. If we do not obtain the necessary consents or cannot refinance the debt on favorable terms, if at all, we will be unable to repay or repurchase the notes. Our failure to repay the notes at maturity or repurchase tendered notes would constitute an event of default under the indenture, which might constitute a default under the terms of our other debt. Our obligation to offer to repurchase the notes upon a change in control would not necessarily afford protection in the event of a highly-leveraged transaction, reorganization, merger or similar transaction involving us.
The contingent conversion feature of the notes could result in the holder of the notes receiving less than the value of the common stock into which a note would otherwise be convertible.
The notes are convertible into shares of our common stock only if specified conditions are met. If the specific conditions for conversion are not met, holders of the notes will not be able to convert their notes, and they may not be able to receive the value of the common stock into which the notes would otherwise be convertible.
Conversion of the notes will dilute the ownership interest of existing shareholders.
The conversion of notes into shares of our common stock will dilute the ownership interests of existing shareholders. Any sales in the public market of the common stock issuable upon conversion of the notes could adversely affect prevailing market prices of our common stock. In addition, the existence of the notes may encourage short selling by market participants due to this dilution or facilitate trading strategies involving the notes and our common stock.
There may not be an active public market for the notes.
There is currently no public trading market for the notes. We do not intend to apply for listing of the notes on any securities exchange or for quotation through Nasdaq. At the time of the original issuance of the notes, the
initial purchasers advised us that they intended to make a market in the notes. However, they are not obligated to make a market. In addition, any market-making activity by the initial purchasers will be subject to the limits imposed by the Securities Act and the Exchange Act. As a result, a market for the notes may not develop or, if one does develop, it may not be maintained. If an active market for the notes fails to develop or is not sustained, the trading price of the notes could decline significantly.
There may not be an active, liquid market for our common stock.
There is no guarantee that an active trading market for our common stock will be maintained on the Nasdaq Stock Market’s National Market. Shareholders may not be able to sell their shares quickly or at the latest market price if trading in our stock is not active.
The value of the conversion right associated with the notes may be substantially lessened or eliminated if we are party to a merger, consolidation or other similar transaction.
If we are party to a consolidation, merger or binding share exchange or transfer or lease of all or substantially all of our assets pursuant to which our common stock is converted into cash, securities or other property, at the effective time of the transaction, the right to convert a note into our common stock will be changed into a right to convert it into the kind and amount of cash, securities or other property which the holder would have received if the holder had converted its note immediately prior to the transaction. This change could substantially lessen or eliminate the value of the conversion privilege associated with the notes in the future. For example, if we were acquired in a cash merger, each note would become convertible solely into cash and would no longer be convertible into securities whose value would vary depending on our future prospects and other factors.
The price at which our common stock may be purchased on the Nasdaq National Market is currently lower than the conversion price of the notes and may remain lower in the future.
Prior to electing to convert the notes, a noteholder should compare the price at which our common stock is trading in the market to the conversion price of the notes. Our common stock trades on the Nasdaq National Market under the symbol “MRCY.” On August 5, 2004, the last reported sale price of our common stock was $24.57 per share. The initial conversion price of the notes is approximately $30.23 per share. The market prices of our securities are subject to significant fluctuations. Such fluctuations, as well as economic conditions generally, may adversely affect the market price of our securities, including our common stock and the notes.
The notes may not be rated or may receive a lower rating than anticipated.
We believe it is unlikely that the notes will be rated. However, if one or more rating agencies rates the notes and assigns the notes a rating lower than the rating expected by investors, reduces their rating in the future, withdraws their rating in the future, or indicates that it will have their ratings on the notes under surveillance or review with possible negative implications, the market price of the notes and our common stock could be harmed. In addition, a ratings downgrade could adversely affect our ability to access capital.
Our stock price has been highly volatile, and an investment in our stock could suffer a decline in value, adversely affecting the value of the notes or the shares into which those notes may be converted.
The trading price of our common stock has been highly volatile and could continue to be subject to wide fluctuations in price in response to various factors, many of which are beyond our control, including:
In addition, the stock market in general, and the Nasdaq National Market and the market for technology companies in particular, have experienced significant price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs, potential liabilities and the diversion of management’s attention and resources.
The conversion contingency provisions of the notes may cause a decrease in our earnings per share on a diluted basis or make our reported earnings per share more volatile, potentially affecting our share price and the amount a holder of the notes may receive upon sale or conversion of the notes.
Holders of the notes are entitled to convert the notes into shares of our common stock, among other circumstances, if the price of our common stock for the periods described in this prospectus is more than 120% of the conversion price of the notes. Unless and until this contingency or another conversion contingency is met, the shares of our common stock underlying the notes generally will not be included in the calculation of our basic and diluted earnings per share. If this contingency is met or would have been met if measured instead at the end of the reporting period, diluted earnings per share would be expected to decrease as a result of the inclusion of the underlying shares in the diluted earnings per share calculation. Volatility in our stock price could cause this condition to be met in one quarter and not in a subsequent quarter, increasing the volatility of diluted earnings per share.
Moreover, as of the date of this prospectus, there is a proposal by the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board (FASB) that, if adopted, would require that the common stock underlying the notes be included in the calculation of our diluted earnings per share regardless of whether any conversion contingency has been met. If adopted, our diluted earnings per share would be expected to decrease.
Future sales of our common stock in the public market could adversely affect the trading price of our common stock, the value of the notes and our ability to raise funds in new stock offerings.
Future sales of substantial amounts of our common stock in the public market, or the perception that such sales are likely to occur, could affect prevailing trading prices of our common stock and the value of the notes. As of June 30, 2004, we had:
Because the notes generally are convertible into common stock only at a conversion price in excess of the recent trading price, a decline in our common stock price may cause the value of the notes to decline.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission under the Securities Exchange Act of 1934. You may read and copy materials that we have filed with the SEC at the SEC public reference room located at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the public from the SEC’s website atwww.sec.gov.
The SEC allows us to “incorporate by reference” the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and later information filed with the SEC will update and supersede this information. We incorporate by reference the documents listed below and any future filings made by us with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than any portions of any such documents that are not deemed “filed” under the Exchange Act in accordance with the Exchange Act and applicable SEC rules) until this offering is completed:
You may request a copy of these filings at no cost, by writing or calling us at the following address or telephone number: Mercury Computer Systems, Inc., Attention: Investor Relations, 199 Riverneck Road, Chelmsford, Massachusetts 01824-2820, (978) 967-1721. Exhibits to the filings will not be sent, however, unless those exhibits have specifically been incorporated by reference in this prospectus.
You should rely only on the information incorporated by reference or provided in this prospectus. We have not authorized anyone to provide you with different information. You should not assume that the information in this prospectus or in the documents incorporated by reference is accurate as of any date other than the date on the front cover of this prospectus or those documents.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “could,” “should” and “continue” or similar words which do not relate to historical matters. We have based these forward-looking statements on our current expectations and projections about future events. Examples of forward-looking statements include statements, estimates and projections concerning the following matters:
These statements are subject to significant risks and uncertainties that could cause actual results to differ materially from those projected in such forward-looking statements due to various factors, some of which are beyond our control, including:
There may be events in the future that we are not able to accurately predict or that we do not fully control that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. All forward-looking statements are made as of the date of this prospectus or as of the date of the information incorporated by reference, and we assume no obligation to update or revise the forward-looking statements contained in this prospectus or the information incorporated by reference to reflect changes in underlying assumptions or factors, new information, future events or other changes.
The selling securityholders will receive all of the net proceeds from sales of notes and shares of our common stock offered by this prospectus. We will not receive any of the proceeds from the resale of these securities.
The 2.00% Convertible Senior Notes due 2024 werefrom the holder of such Notes. In addition, on March 31, 2009, we announced the repurchase of the remaining outstanding aggregate principal amount of such Notes ($5,312,000) effective May 1, 2009.
HOW WE INTEND TO USE THE PROCEEDS
We currently intend to use the net proceeds from the sale of any securities under this prospectus for general corporate purposes, which may include the following:
the acquisition of other companies or businesses;
the repayment and refinancing of debt;
capital expenditures;
working capital; and
other purposes as mentioned in any prospectus supplement.
Pending such uses, we may temporarily invest the net proceeds. The precise amounts and timing of the application of proceeds will depend upon our funding requirements and the availability of other funds. Except as mentioned in any prospectus supplement, specific allocations of the proceeds to such purposes will not have been made at the date of that prospectus supplement.
Based upon our historical and anticipated future growth and our financial needs, we may engage in additional financings of a character and amount that we determine as the need arises.
We may offer, from time to time, in one or more offerings, up to $100,000,000 of the following securities:
senior debt securities;
subordinated debt securities;
preferred stock;
common stock;
warrants;
units; or
any combination of the foregoing securities.
The aggregate initial offering price of the offered securities that we may issue will not exceed $100,000,000. If we issue debt securities at a discount from their principal amount, then, for purposes of calculating the aggregate initial offering price of the offered securities issued under anthis prospectus, we will include only the initial offering price of the debt securities and not the principal amount of the debt securities.
This prospectus contains a summary of the general terms of the various securities that we may offer. The prospectus supplement relating to any particular securities offered will describe the specific terms of the securities, which may be in addition to or different from the general terms summarized in this prospectus. Because the summary in this prospectus and in any prospectus supplement does not contain all of the information that you may find useful, you should read the documents relating to the securities that are described in this prospectus or in any applicable prospectus supplement. Please read “Where You Can Find More Information” to find out how you can obtain a copy of those documents.
The applicable prospectus supplement will also contain the terms of a given offering, the initial offering price and our net proceeds. Where applicable, a prospectus supplement will also describe any material United States federal income tax consequences relating to the securities offered and indicate whether the securities offered are or will be quoted or listed on any quotation system or securities exchange.
DESCRIPTION OF DEBT SECURITIES
This prospectus describes the general terms and provisions of the debt securities we may issue. When we offer to sell a particular series of debt securities, we will describe the specific terms of the securities in a supplement to this prospectus, including any additional covenants or changes to existing covenants relating to such series. The prospectus supplement also will indicate whether the general terms and provisions described in this prospectus apply to a particular series of debt securities. You should read the actual indenture if you do not fully understand a term or the way we use it in this prospectus.
We may offer senior or subordinated debt securities. Each series of debt securities may have different terms. The senior debt securities will be issued under one or more senior indentures, dated as of April 29, 2004a date prior to such issuance, between us as issuer, and U.S. Bank National Association, as trustee.trustee, as amended or supplemented from time to time. We will refer to any such indenture throughout this prospectus as the “senior indenture.” Any subordinated debt securities will be issued under one or more separate indentures, dated as of a date prior to such issuance, between us and U.S. Bank National Association, as trustee, as amended or supplemented from time to time. We will refer to any such indenture throughout this prospectus as the “subordinated indenture” and to the trustee under the senior or subordinated indenture as the “trustee.” The notes and the shares of common stock issuable upon conversion of the notes are covered by a registration rights agreement. You may request a copy of thesenior indenture and the subordinated indenture are sometimes collectively referred to in this prospectus as the “indentures.” The indentures will be subject to and governed by the Trust Indenture Act of 1939, as amended. We included copies of the forms of the indentures as exhibits to our registration rights agreementstatement and they are incorporated into this prospectus by reference.
If we issue debt securities at a discount from their principal amount, then, for purposes of calculating the aggregate initial offering price of the offered securities issued under this prospectus, we will include only the initial offering price of the debt securities and not the principal amount of the debt securities.
We have summarized below the material provisions of the indentures and the debt securities, or indicated which material provisions will be described in the related prospectus supplement. The prospectus supplement relating to any particular securities offered will describe the specific terms of the securities, which may be in addition to or different from the trustee. See alsogeneral terms summarized in this prospectus. Because the summary in this prospectus and in any prospectus supplement does not contain all of the information that you may find useful, you should read the documents relating to the securities that are described in this prospectus or in any applicable prospectus supplement. Please read “Where You Can Find More Information.”Information” to find out how you can obtain a copy of those documents. Except as otherwise indicated, the terms of the indentures are identical. As used under this caption, the term “debt securities” includes the debt securities being offered by this prospectus and all other debt securities issued by us under the indentures.
General
The indentures:
The following description is a summarydo not limit the amount of the material provisions of the notes, the indenture and the registration rights agreement. It doesdebt securities that we may issue;
allow us to issue debt securities in one or more series;
do not purportrequire us to be complete. This summary is subject to and is qualified by reference toissue all of the provisionsdebt securities of a series at the indenture, including the definitions of certain terms used in the indenture. Wherever particular provisions or defined terms of the indenture or form of note are referred to, these provisions or defined terms are incorporated in this prospectus by reference. We urge you to read the indenture because it, and not this description, defines your rights as a holder of notes.same time;
As used in this “Description of Notes” section, referencesallow us to “Mercury,” “we,” “us” or “our company” refer solelyreopen a series to Mercury Computer Systems, Inc., and not to our consolidated subsidiaries, unless the context otherwise requires.
General
The notes are general, unsecured, senior obligations of Mercury, and are effectively subordinated to all of our existing and future securedissue additional debt to the extent of the security, and the liabilities of our subsidiaries as described under “—Ranking,” but are senior in right of payment to all of our existing and future subordinated indebtedness. In addition, the notes rank on a parity with all of our future unsecured senior debt. The notes are not obligations of, or guaranteed by, any of our subsidiaries. The notes are convertible into shares of our common stock as described under “—Conversion of Notes.”
The notes are initially limited to $125 million aggregate principal amount. The notes were issued only in denominations of $1,000 and multiples of $1,000. We use the term “note” in this prospectus to refer to each $1,000 principal amount of notes. The notes will mature on May 1, 2024, unless earlier converted, redeemed or repurchased.
We may,securities without the consent of the holders “reopen”of the debt securities of such series; and
provide that the debt securities will be unsecured, except as may be set forth in the applicable prospectus supplement.
Unless we give you different information in the applicable prospectus supplement, the senior debt securities will be unsubordinated obligations and will rank equally with all of our other unsecured and unsubordinated
indebtedness. Payments on the subordinated debt securities will be subordinated to the prior payment in full of all of our senior indebtedness, as described under “Description of the Debt Securities—Subordination” and in the applicable prospectus supplement.
Each indenture provides that we may, but need not, designate more than one trustee under an indenture. Any trustee under an indenture may resign or be removed and issue additional notesa successor trustee may be appointed to act with respect to the series of debt securities administered by the resigning or removed trustee. If two or more persons are acting as trustee with respect to different series of debt securities, each trustee shall be a trustee of a trust under the applicable indenture withseparate and apart from the same terms and with the same CUSIP numberstrust administered by any other trustee. Except as the notes offered byotherwise indicated in this prospectus, any action described in an unlimitedthis prospectus to be taken by each trustee may be taken by each trustee with respect to, and only with respect to, the one or more series of debt securities for which it is trustee under the applicable indenture.
The prospectus supplement for each offering will provide the following terms, where applicable:
the title of the debt securities and whether they are senior or subordinated;
the aggregate principal amount providedof the debt securities being offered, the aggregate principal amount of the debt securities outstanding as of the most recent practicable date and any limit on their aggregate principal amount, including the aggregate principal amount of debt securities authorized;
the price at which the debt securities will be issued, expressed as a percentage of the principal and, if other than the principal amount thereof, the portion of the principal amount thereof payable upon declaration of acceleration of the maturity thereof or, if applicable, the portion of the principal amount of such debt securities that nois convertible into common stock or preferred stock or the method by which any such additional notesportion shall be determined;
if convertible, the terms on which such debt securities are convertible, including the initial conversion price or rate and the conversion period and any applicable limitations on the ownership or transferability of common stock or preferred stock received on conversion;
the date or dates, or the method for determining the date or dates, on which the principal of the debt securities will be payable;
the fixed or variable interest rate or rates of the debt securities, or the method by which the interest rate or rates is determined;
the date or dates, or the method for determining the date or dates, from which interest will accrue;
the dates on which interest will be payable;
the record dates for interest payment dates, or the method by which we will determine those dates;
the persons to whom interest will be payable;
the basis upon which interest will be calculated if other than that of a 360-day year of twelve 30-day months;
any make-whole amount, which is the amount in addition to principal and interest that is required to be paid to the holder of a debt security as a result of any optional redemption or accelerated payment of such debt security, or the method for determining the make-whole amount;
the place or places where the principal of, and any premium, or make-whole amount, and interest on, the debt securities will be payable;
where the debt securities may be issued unless fungible withsurrendered for registration of transfer or conversion or exchange;
where notices or demands to or upon us in respect of the notes offered by this prospectus for U.S. federal income tax purposes. Wedebt securities and the applicable indenture may also from timebe served;
the times, prices and other terms and conditions upon which we may redeem the debt securities;
any obligation we have to time repurchaseredeem, repay or purchase the notesdebt securities pursuant to any sinking fund or analogous provision or at the option of holders of the debt securities, and the times and prices at which we must redeem, repay or purchase the debt securities as a result of such an obligation;
the currency or currencies in open market purchaseswhich the debt securities are denominated and payable if other than United States dollars, which may be a foreign currency or negotiated transactions without prior notice to holders.
If we experience a change in controlunits of two or more foreign currencies or a terminationcomposite currency or currencies and the terms and conditions relating thereto, and the manner of trading, you will havedetermining the rightequivalent of such foreign currency in United States dollars;
whether the principal of, and any premium, or make-whole amount, or interest on, the debt securities of the series are to require us to repurchase your notes as described below under “—Repurchasebe payable, at our election or at the Optionelection of a holder, in a currency or currencies other than that in which the Holder Upon a Designated Event.” Holdersdebt securities are denominated or stated to be payable, and other related terms and conditions;
whether the amount of notes submitted for repurchasepayments of principal of, and any premium, or make-whole amount, or interest on, the debt securities may be determined according to an index, formula or other method and how such amounts will be entitleddetermined;
whether the debt securities will be in registered form, bearer form or both and (1) if in registered form, the person to convertwhom any interest shall be payable, if other than the notes up to and includingperson in whose name the business day immediately preceding the date fixed for repurchase.
Neither we nor any of our subsidiaries are subject to any financial covenants under the indenture. In addition, neither we nor any of our subsidiaries are restricted under the indenture from paying dividends, making investments, incurring debt, including additional senior indebtedness, granting liens or mortgages, or issuing or repurchasing our securities.
We will pay interest at a rate of 2.00% per annum, and additional interest, if any, semi-annually in arrears on May 1 and November 1 of each year, beginning November 1, 2004, to record holderssecurity is registered at the close of business on the preceding April 15regular record date for such interest, or (2) if in bearer form, the manner in which, or the person to whom, any interest on the security shall be payable if otherwise than upon presentation and October 15,surrender upon maturity;
any restrictions applicable to the offer, sale or delivery of securities in bearer form and the terms upon which securities in bearer form of the series may be exchanged for securities in registered form of the series and vice versa if permitted by applicable laws and regulations;
whether any debt securities of the series are to be issuable initially in temporary global form and whether any debt securities of the series are to be issuable in permanent global form with or without coupons and, if so, whether beneficial owners of interests in any such permanent global security may or shall be required to exchange their interests for other debt securities of the series, and the manner in which interest shall be paid;
the identity of the depositary for securities in registered form, if such series are to be issuable as a global security;
the date as of which any debt securities in bearer form or in temporary global form shall be dated if other than the original issuance date of the first security of the series to be issued;
the applicability, if any, of the defeasance and covenant defeasance provisions described in this prospectus or in the applicable indenture;
whether and under what circumstances we will pay any additional amounts on the debt securities in respect of any tax, assessment or governmental charge and, if so, whether we will have the option to redeem the debt securities in lieu of making such a payment;
whether and under what circumstances the debt securities being offered are convertible into common stock or preferred stock, as the case may be. Interest will be, computed onincluding the basis of a 360-day year composed of twelve 30-day months. In addition,conversion price or rate or manner or calculation thereof;
the circumstances, if any, specified in the eventapplicable prospectus supplement, under which beneficial owners of certain registration defaults, we will pay additional amounts of interest. For a description of these additional amounts, see the section entitled “—Registration Rights of the Noteholders.”
We will maintain an office or agencyinterests in the Borough of Manhattan, The City of New York, where we will payglobal security may obtain definitive debt securities and the principalmanner in which payments on the notes and where you may present the notes for conversion, registration of transfer or exchange for other denominations, which shall initially be an office or agency of the trustee. We may pay interest by check mailed to your address as it appears in the note register, provided that if you are a holder of an aggregate principal amount of notes in excess of $2,000,000, you shall be paid, at your written election, by wire transfer in immediately available funds. However, payments to The Depository Trust Company, New York, New York, which we refer to as DTC,permanent global debt security will be made by wire transferif any debt securities are issuable in temporary or permanent global form;
any provisions granting special rights to holders of immediately available funds tosecurities upon the accountoccurrence of DTC or its nominee.
The notes will not be subject to a sinking fund provision and will not be subject to defeasance or covenant defeasance under the indenture.
Conversion of Notes
The initial conversion rate is equal to 33.0797 shares per $1,000 principal amount of notes subject to adjustmentsuch events as specified below. The initial conversion rate is equivalentin the applicable prospectus supplement;
if the debt securities of such series are to a conversion pricebe issuable in definitive form only upon receipt of approximately $30.23. The conversion price is equalcertain certificates or other documents or satisfaction of other conditions, then the form and/or terms of such certificates, documents or conditions;
the name of the applicable trustee and the nature of any material relationship with us or any of our affiliates, and the percentage of debt securities of the class necessary to $1,000 principal amountrequire the trustee to take action;
any deletions from, modifications of, notes divided by the conversion rate. You will haveor additions to our events of default or covenants and any change in the right of any trustee or any of the holders to convert any portion ofdeclare the principal amount of any note that is an integral multiple of $1,000 into shares of our common stock as follows:
applicable CUSIP numbers; and
any date after May 1, 2019,other terms of such debt securities not inconsistent with the closing sale price of our common stock is more than 120%provisions of the then current conversion price of the notes, then you will have such conversion rightapplicable indenture.
We may issue debt securities at all times thereafter;
We also may issue indexed debt securities. Payments of principal of and premium and interest on, indexed debt securities are determined with reference to the day precedingrate of exchange between the declaration for such distribution, then you will have such conversion rightcurrency or currency unit in which the debt security is denominated and any other currency or currency unit specified by us, to the relationship between two or more currencies or currency units or by other similar methods or formulas specified in the periodprospectus supplement.
Except as described below;
Neither the Massachusetts General Laws nor our governing instruments define the term “substantially all” as defined below under the heading “—Repurchase at the Option of the Holder Upon a Designated Event” or such event occurs that would have been a change in control but for one or more of the exceptionsit relates to the definitionsale of change in control described below underassets. Additionally, Massachusetts cases interpreting the same heading interm “substantially all” rely upon the paragraph immediately following paragraph (3).
A note for whichfacts and circumstances of each particular case. Consequently, to determine whether a holdersale of “substantially all” of our assets has delivered a repurchase notice as described below may be surrendered for conversion only if such notice is withdrawn in accordance with the indenture.
In the case of the fourth and fifth bullet points above, we must notify holders of notes at least 20 days prior to the ex-dividend date for such distribution. Once we have given such notice, holders may surrender their notes for conversion at any time until the earlier of the close of business on the business day prior to the ex-dividend date or our announcement that such distribution will not take place. If in the future we adopt a shareholder rights plan, you will not have any conversion right pursuant to the fourth bullet point above or otherwise, solely as a result of the issuance of rights pursuant to the shareholder rights plan. In the case of a distribution identified in the fourth or fifth bullet points above, the ability ofoccurred, a holder of notesdebt securities must review the financial and other information that we have disclosed to convert would not be triggered if the holder may participatepublic.
We will provide you with more information in the distribution without converting. Inapplicable prospectus supplement regarding any deletions, modifications, or additions to the caseevents of default or covenants that are described below, including any addition of a covenant or other provision providing event risk or similar protection.
Payment
Unless we give you different information in the applicable prospectus supplement, the principal of, and any premium, or make-whole amount, and interest on, any series of the sixth bullet point above, a holder may surrender notes for conversiondebt securities will be payable at any time from and after the date which is 15 days prior to the anticipated effective datecorporate trust office of the transaction until 15 days aftertrustee. We will provide you with the actual date of the transaction. As used in this section, “closing sale price” generally means the last reported sale price regular way of our common stock on the Nasdaq National Market.
In addition, at any time prior to May 1, 2019, you may convert your notes into shares of our common stock for the five business-day period after any five consecutive trading-day period in which the average trading price for the notes in such period was less than 98% of the average conversion value (as defined below) for the notes during that period.
The “trading price” of the notes on any date of determination means the average of the secondary market bid quotations per $1,000 principal amount of the notes obtained by the trustee for $2,000,000 principal amount of the notes at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers we select; provided that if three such bids cannot reasonably be obtained by the trustee, but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid can reasonably be obtained by the trustee, then one bid shall be used. If the trustee cannot reasonably obtain at least one bid for $2,000,000 principal amount of the notes from a nationally recognized securities dealer, then the trading price per $1,000 principal amount of notes will be deemed to be less than 98% of the product of the closing sale price of our common stock and the number of shares issuable upon conversion of $1,000 principal amount of the notes.
In connection with any conversion upon satisfaction of the above trading price condition, the trustee shall have no obligation to determine the trading price of the notes unless we have requested such determination; and we shall have no obligation to make such request unless you provide us with reasonable evidence that the trading price per $1,000 principal amount of notes would be less than 98% of the product of the closing sale price of our common stock and the number of shares of common stock issuable upon conversion of $1,000 principal amount of the notes. At such time, we shall instruct the trustee to determine the trading price of the notes beginning on the next trading date and on each successive trading day until the trading price per $1,000 principal amount of notes is greater than or equal to 98% of the product of the closing sale price of our common stock and the number of shares issuable upon conversion of $1,000 principal amount of the notes.
We define conversion value in the indenture to be equal to the product of the closing sale price of our shares of common stock on a given day multiplied by the then current conversion rate, which is the number of shares of common stock into which each $1,000 principal amount of the notes is convertible.
You may convert all or part of any note that is an integral multiple of $1,000 as permitted above by delivering the note at the Corporate Trust Officeaddress of the trustee in the Boroughapplicable prospectus supplement. We may also pay interest by mailing a check to the address of Manhattan, The Citythe person entitled to it as it appears in the applicable register for the debt securities or by wire transfer of New York, accompanied byfunds to that person at an account maintained within the United States.
All monies that we pay to a duly signed and completed irrevocable conversion notice,paying agent or a copytrustee for the payment of which may be obtained by the trusteeprincipal of, and any applicable payments, includingpremium, or make-whole amount, or interest payments and payments in respect of taxes, if any. The conversion dateon, any debt security will be repaid to us if unclaimed at the date on which the note and the duly signed and completed conversion notice are so delivered.
As promptly as practicable on orend of two years after the conversion date, we will issueobligation underlying payment becomes due and deliverpayable. After funds have been returned to us, the trustee a certificate or certificates for the number of full shares of our common stock issuable upon conversion, together
with payment in lieu of any fraction of a share. The certificate will then be sent by the trustee to the conversion agent for delivery to the holder. The shares of our common stock issuable upon conversionholder of the notes will be fully paid and nonassessable and will rank equally with the other sharesdebt security may look only to us for payment, without payment of our common stock.
If you surrender a note for conversion on a date that is not an interest payment date, you will not be entitled to receive any interest for the period fromwhich we hold the immediately preceding interest payment datefunds.
Denomination, Interest, Registration and Transfer
Unless otherwise described in the applicable prospectus supplement, the debt securities of any series will be issuable in denominations of $1,000 and integral multiples of $1,000.
Subject to the conversion date, except as described belowlimitations imposed upon debt securities that are evidenced by a computerized entry in this paragraph. In the caserecords of a depository company rather than by physical delivery of a note, a holder of debt securities of any noteseries may:
exchange them for any authorized denomination of other debt securities of the same series and of a like aggregate principal amount and kind upon surrender of such debt securities at the corporate trust office of the applicable trustee or at the office of any transfer agent that has beenwe designate for such purpose; and
surrender them for registration of transfer or exchange at the corporate trust office of the applicable trustee or at the office of any transfer agent that we designate for such purpose.
Every debt security surrendered for conversion after any regular record date but before the next succeeding interest payment date:
No other payment or adjustment for interest, or any dividends in respect of our common stock, will be made upon conversion. Holders of our common stock issued upon conversiona service charge will not be entitled to receiverequired for any dividends payable to holdersregistration of our common stock astransfer or exchange of any recorddebt securities, but we or the trustee may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. If in addition to the applicable trustee, the applicable prospectus supplement refers to any transfer agent initially designated by us for any series of debt securities, we may at any time rescind the designation of any such transfer agent or dateapprove a change in the location through which any such transfer agent acts, except that we will be required to maintain a transfer agent in each place of payment for such series. We may at any time designate additional transfer agents for any series of debt securities.
Neither we, nor any trustee, will be required to:
issue, register the transfer of or exchange debt securities of any series during a period beginning at the opening of business 15 days before the closeday that the notice of business on the conversion date. We will not issue fractional shares upon conversion. Instead, we will pay cash based on the closing sale priceredemption of our common stockany debt securities selected for redemption is mailed and ending at the close of business on the conversion date.
You will not be required to pay any taxes or duties relating to the issue or delivery of our common stock on conversion, but you will be required to pay any tax with respect to cash received in lieu of fractional shares and any tax or duty relating to any transfer involved in the issue or delivery of our common stock in a name other than yours. Certificates representing shares of our common stock will not be issued or delivered unless all taxes and duties, if any, payable by you have been paid.
The conversion rate will be subject to adjustment for, among other things:
mailing;
if we or oneregister the transfer of our subsidiaries purchase our common stock (for the avoidance of doubt, excluding options, warrants, purchase rights and other securities convertible, exchangeable or exercisable for common stock) pursuant to a tender or exchange offerany debt security, or portion thereof, so selected for our common stock to the extent that the cash
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To the extent that we have a shareholder rights plan in effect upon conversion of the notes into common stock, you will receive, in addition to the common stock, the rights under the rights plan unless the rights have separated from the common stock before the time of conversion, in which case the conversion rate will be adjusted as if we distributed to all holders of our common stock, shares of our capital stock, evidences of indebtedness or assets as described above, subject to readjustment in the event of the expiration, termination or redemption, of such rights.
We reserve the right to effect such increases in the conversion rate in addition to those required by the foregoing provisions as we consider to be advisable in order that any event treated for U.S. federal income tax purposes as a dividend of stock or stock rights will not be taxable to the recipients. We will not be required to make any adjustment to the conversion rate until the cumulative adjustments amount to 1.0% or more of the conversion rate. We will compute all adjustments to the conversion rate and will give notice by mail to holders of the registered notes of any adjustments.
In the event that we consolidate or merge with or into another entity or another entity is merged into us, or in case of any sale or transfer of all or substantially all of our assets, each note then outstanding will become convertible only into the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer by a holder of the number of shares of common stock into which the notes were convertible immediately prior to the consolidation or merger or sale or transfer. The preceding sentence will not apply to a merger or sale of all or substantially all of our assets that does not result in any reclassification, conversion, exchange or cancellation of our common stock.
We may increase the conversion rate if our board of directors determines that the increase would be in our best interest. The board of directors’ determination in this regard will be conclusive. We will give holders of notes notice of such an increase in the conversion rate. We will comply with the Exchange Act and the rules and regulations promulgated under the Exchange Act, to the extent applicable, in connection with any such notice.
If at any time we make a distribution of property to our shareholders that would be taxable to such shareholders as a dividend for U.S. federal income tax purposes, such as distributions of evidences of indebtedness or assets by us, but generally not stock dividends on common stock or rights to subscribe for common stock, and, pursuant to the anti-dilution provisions of the indenture, the number of shares into which notes are convertible is increased, that increase may be deemed for U.S. federal income tax purposes to be the payment of a taxable dividend to holders of notes. See “Certain U.S. Federal Income Tax Considerations.”
Optional Redemption by Mercury
On or after May 1, 2009, we may redeem the notes, in whole or in part, at 100%except the unredeemed portion of the principal amount of the notes, plus accrued and unpaid interest and additional interest, if any to, but excluding, the redemption date. If we elect to redeem all or part of the notes, we will give at least 30, but no more than 60, days’ prior notice to you.
If we do not redeem all of the notes, the trustee will select the notes to bedebt security being redeemed in principal amountspart; and
issue, register the transfer of $1,000 or whole multiples of $1,000 by lot, on a pro rata basis or otherwise in accordance with the applicable procedures of the depository. Ifexchange 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.
No sinking fund is provided for the notes, which meansdebt security that the indenture does not require us to redeem or retire the notes periodically.
We may not redeem the notes if we have failed to pay any interest on the notes and such failure to pay is continuing, or if the principal amount of the notes has been accelerated.
Repurchase at the Option of the Holder on Specified Dates
On the repurchase date of each of May 1, 2009, 2014 and 2019, we will,surrendered for repayment at the option of the holder, be required to repurchase for cash any outstanding note for which a written repurchase notice has been properly delivered byexcept the holder and not withdrawn, subject to certain additional conditions. Holders may submit their notes for repurchase to the paying agent at any time from the opening of business on the date that is 20 business days prior to such repurchase date until the close of business on such repurchase date. The repurchase price of a note will be 100% of the principal amount of the note, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the repurchase date. Interest and additional interest, if any, will be paid to the record holder as of the related record date.
We will be required to give notice on a date not less than 20 business days prior to the repurchase date to all holders at their addresses shown in the register of the registrar, and to beneficial owners as required by applicable law, stating among other things, the procedures that holders must follow to require us to repurchase their notes.
The repurchase notice given by each holder electing to require us to repurchase notes shall state:
Any repurchase notice may be withdrawn by the holder by a written notice of withdrawal delivered to the paying agent prior to the close of business on the repurchase date. The notice of withdrawal shall state:
Merger, Consolidation or Sale of Assets
The indentures provide that we may, without the notes that remains subject to the repurchase notice.
Paymentconsent of the repurchase price for a note for which a repurchase notice has been delivered and not validly withdrawn is conditioned upon delivery (including by book entry transfer) of the note, together with necessary endorsements, to the paying agent at any time after delivery of the repurchase notice. Payment of the repurchase price for the note will be made promptly following the later of the repurchase date or the time of delivery of the note.
If the paying agent holds money or securities sufficient to pay the repurchase price of the note on the business day following the repurchase date in accordance with the terms of the indenture, then, immediately after
the repurchase date, the note will cease to be outstanding whether or not the note has been delivered to the paying agent. Thereafter, all other rights of the holder shall terminate, other than the right to receive the repurchase price upon delivery of the note.
Our ability to repurchase notes with cash may be limited by the terms of our then existing borrowing and other financing agreements. Also, as described in the “Risk Factors” section of this prospectus, we may not have sufficient funds to repurchase the notes when we are required to do so. We will comply with the Exchange Act and the rules and regulations promulgated under the Exchange Act, to the extent applicable, in connection with any such notice.
Repurchase at the Option of the Holder Upon a Designated Event
If a designated event occurs at any time prior to the maturity of the notes, you may require us to repurchase your notes, in whole or in part, on a repurchase date that is not less than 20 nor more than 35 business days after the date of our notice of the designated event. The notes will be repurchased only in integral multiples of $1,000 principal amount (or the entire principal amount of the notes held by any holder).
We will repurchase the notes at a price equal to 100% of the principal amount to be repurchased, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the repurchase date. If such repurchase date falls after a record date and on or prior to the corresponding interest payment date, we will pay the full amount of accrued and unpaid interest payable on such interest payment date to the holder of record on the close of business on the corresponding record date.
We will mail to all record holders a notice of a designated event within 20 days after it has occurred. We also are required to deliver to the trustee a copy of the designated event notice. If you elect to require us to repurchase your notes, you must deliver to us or our designated agent, prior to the close of business on the repurchase date specified in our designated event notice, your repurchase notice and any notes to be repurchased, duly endorsed for transfer (or, if your notes are not certificated, your repurchase notice must comply with appropriate DTC procedures). We will promptly pay the repurchase price for notes surrendered for repurchase following the repurchase date.
You may withdraw any written repurchase notice by delivering a written notice of withdrawal to the paying agent prior to the close of business on the repurchase date. The withdrawal notice must state:
Payment of the repurchase price for a note for which a repurchase notice has been delivered and not withdrawn is conditioned upon book-entry transfer or delivery of the note, together with necessary endorsements, to the paying agent at its corporate trust office in the Borough of Manhattan, The City of New York, or any other office of the paying agent, at any time after delivery of the repurchase notice. Payment of the repurchase price for the note will be made promptly following the later of the repurchase date and the time of book-entry transfer or delivery of the note. If the paying agent holds money sufficient to pay the repurchase price of the note on the repurchase date, then, on and after the business day following the repurchase date:
This will be the case whether or not book-entry transfer of the note has been made or the note has been delivered to the paying agent.
A “designated event” will be deemed to have occurred upon a change in control or a termination of trading.
A “change in control” will be deemed to have occurred at the time after the notes are originally issued that any of the following occurs:
outstanding debt securities, (1) any person acquires beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of our capital stock entitling the person to exercise 50% or more of the total voting power of all shares of our capital stock that are entitled to vote generally in elections of directors, other than an acquisition by us, any of our subsidiaries or any of our employee benefit plans; or
(2) we merge or consolidate with, (2) sell, lease or into any other person, any merger of another person into us or we convey sell, transfer or lease all or substantially all of our assets to, another person, other than:
(3) any transaction or event (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, binding share exchange, combination, reclassification, recapitalization or otherwise) in connection with which all or substantially all of our common stock is exchanged for, converted into, acquired for or constitutes solely the right to receive, consideration which is not all or substantially all common stock that:
However, a change in control will not be deemed to have occurred if either:
For purposes of this definition:
A “termination of trading” will be deemed to have occurred if our common stock (or other common stock into which the notes are then convertible) is neither listed for trading on a U.S. national or regional securities exchange nor approved for trading on the Nasdaq National Market or any successor thereto.
We will comply with any applicable provisions of Rule 13e-4 and any other applicable tender offer rules under the Exchange Act in the event of a designated event.
These designated event repurchase rights could discourage a potential acquirer of Mercury. However, this designated event repurchase feature is not the result of management’s knowledge of any specific effort to obtain control of us by means of a merger, tender offer or solicitation, or part of a plan by management to adopt a series of anti-takeover provisions. The term “designated event” is limited to specified transactions and may not include other events that might adversely affect our financial condition or business operations. Our obligation to offer to repurchase the notes upon a designated event would not necessarily afford you protection in the event of a highly leveraged transaction, reorganization, merger or similar transaction involving us. No notes may be repurchased by us at the option of holders upon a designated event if the principal amount of the notes has been accelerated and such acceleration has not been rescinded.
We may be unable to repurchase the notes in the event of a designated event. If a designated event were to occur, we may not have enough funds to pay the repurchase price for all tendered notes. Any future credit or financing agreements or other agreements relating to our indebtedness may contain provisions prohibiting repurchase of the notes under certain circumstances, or expressly prohibit our repurchase of the notes upon a designated event or may provide that a designated event constitutes an event of default under that agreement. If a designated event occurs at a time when we are prohibited from repurchasing notes, we could seek the consent of our lenders to repurchase the notes or attempt to refinance this debt. If we do not obtain consent, we would not be permitted to repurchase the notes. Our failure to repurchase tendered notes would constitute an event of default under the indenture, which might constitute a default under the terms of our other indebtedness.
The definition of change in control includes a phrase relating to the conveyance, transfer, sale, lease or disposition of all or substantially all of our assets. There is no precise, established definition of the phrase “substantially all” under applicable law. Accordingly, your ability to require us to repurchase your notes as a result of conveyance, transfer, sale, lease or other disposition of less than all of our assets may be uncertain.
Ranking
The notes are:
The notes are effectively subordinated in right of payment to our existing and future secured debt, to the extent of such security, and to all existing and future indebtedness (including trade payables) of our subsidiaries (unless such indebtedness is by its terms subordinated to the notes). The indenture does not limit our ability to incur debt, including secured debt, or the amount of indebtedness or other liabilities our subsidiaries may incur. Our ability to make required interest, principal, repurchase 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 current and future subsidiaries upon that subsidiary’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 June 30, 2004, the aggregate principal amount of secured debt of Mercury and our subsidiaries was approximately $11.6 million, and our subsidiaries had other liabilities (excluding obligations that are inter-company in nature) of approximately $6.0 million in the aggregate.
We are obligated to pay reasonable compensation to the trustee and to indemnify the trustee against certain losses, liabilities or expenses incurred by it in connection with its duties relating to the notes. The trustee’s claims for such payments are senior to those of holders of the notes in respect of all funds collected or held by the trustee.
Merger and Sale of Assets by Mercury
The indenture provides that we may not consolidate with or merge with or into, any other person or convey, transfer or lease all or substantially all of our properties or assets to another person, unless among other things:entity provided that:
either we are the surviving person,continuing entity, or the resulting, surviving or transferee person, if other than us, is organized and existing under the laws of the United States, any state thereof or the District of Columbia;
after giving effect to suchthe transaction, there is no event of default under the indenture,indentures and no event which, after notice or passagethe lapse of time, or both, would become such an event of default;default, occurs and continues; and
an officers’ certificate statingand legal opinion covering such conditions are delivered to each applicable trustee.
Covenants
Existence. Except as permitted under “—Merger, Consolidation or Sale of Assets,” the indentures require us to do or cause to be done all things necessary to preserve and keep in full force and effect our existence, rights and franchises. However, the indentures do not require us to preserve any right or franchise if we determine that any right or franchise is no longer desirable in the conduct of our business.
Payment of taxes and other claims. The indentures require us to pay, discharge or cause to be paid or discharged, before they become delinquent (1) all taxes, assessments and governmental charges levied or imposed on us, our subsidiaries or our subsidiaries’ income, profits or property, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon our property or the property of our subsidiaries. However, we will not be required to pay, discharge or cause to be paid or discharged any such transaction compliestax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings.
Provision of financial information. The indentures require us to (1) within 15 days of each of the respective dates by which we are required to file our annual reports, quarterly reports and other documents with these requirementsthe SEC, file with the trustee copies of the annual report, quarterly report and an opinionother documents that we file with the SEC under Section 13 or 15(d) of counsel as to the first two items above.
When such a person assumes our obligations in such circumstances, subject to certain exceptions, we shall be discharged from all obligations underExchange Act, (2) file with the notestrustee and the indenture.
SEC any additional information, documents and reports regarding compliance by us with the conditions and covenants of the indentures, as required, (3) within 30 days after the filing with the trustee, mail to all holders of debt securities, as their names and addresses appear in the applicable register for such debt securities, without cost to such holders, summaries of any documents and reports required to be filed by us pursuant to (1) and (2) above, and (4) supply, promptly upon written request and payment of the reasonable cost of duplication and delivery, copies of such documents to any prospective holder.
Additional covenants. The applicable prospectus supplement will set forth any additional covenants of Mercury relating to any series of debt securities.
Events of Default;Default, Notice and Waiver
The following will be eventsUnless the applicable prospectus supplement states otherwise, when we refer to “events of defaultdefault” as defined in the indentures with respect to the notes under the indenture:any series of debt securities, we mean:
default in the payment of any installment of interest on the notes;any debt security of such series continuing for 30 days;
default in the payment of principal of, or any interestpremium, or additional interest, ifmake-whole amount, on any on the notes, when due anddebt security of such failure continuesseries for a period of 30 consecutive days;five business days at its stated maturity;
default in making any sinking fund payment as required for any debt security of such series for five business days;
default in the performance or observebreach of any ofcovenant or warranty in the covenantsdebt securities or in the indenture by Mercury continuing for 60 consecutive days after written notice as provided in the applicable indenture, but not of a covenant added to the indenture solely for the benefit of a series of debt securities issued thereunder other than such series;
a default under any bond, debenture, note, mortgage, indenture or instrument:
| (1) | having an aggregate principal amount of at least $30,000,000; or |
| (2) | under which there may be issued, secured or evidenced any existing or later created indebtedness for money borrowed by us or our subsidiaries, if we are directly responsible or liable as obligor or guarantor, |
if the default results in the indebtedness becoming or being declared due and payable prior to the date it otherwise would have, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within 30 days after notice to the issuing company specifying such default. Such notice shall be given to us fromby the trustee, (oror to us and the trustee by the holders of at least 10% in principal amount of the outstanding debt securities of that series. The written notice specifying such default and requiring us to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and shall state that such notice is a “Notice of Default” under such indenture;
bankruptcy, insolvency or reorganization, or court appointment of a receiver, liquidator or trustee of Mercury or any significant subsidiary of Mercury; and
any other event of default provided with respect to a particular series of debt securities.
When we use the term “significant subsidiary,” we refer to the meaning ascribed to such term in Rule 1-02 of Regulation S-X promulgated under the Securities Act of 1933, as amended, or Securities Act.
If an event of default occurs and is continuing with respect to debt securities of any series outstanding, then the applicable trustee or the holders of 25% or more in principal amount of the debt securities of that series will have the right to declare the principal amount of all the debt securities of that series to be due and payable. If the debt securities of that series are original issue discount securities or indexed securities, then the applicable trustee or the holders of 25% or more in principal amount of the debt securities of that series will have the right to declare the portion of the principal amount as may be specified in the terms thereof to be due and payable. However, at any time after such a declaration of acceleration has been made, but before a judgment or decree for payment of the money due has been obtained by the applicable trustee, the holders of at least a majority in principal amount of outstanding debt securities of such series or of all debt securities then outstanding under the applicable indenture may rescind and annul such declaration and its consequences if:
we have deposited with the applicable trustee all required payments of the principal, any premium, or make-whole amount, interest and, to the extent permitted by law, interest on overdue installment of interest, plus applicable fees, expenses, disbursements and advances of the applicable trustee; and
all events of default, other than the non-payment of accelerated principal, or a specified portion thereof, and any premium, or make-whole amount, have been cured or waived.
The indentures also provide that the holders of at least a majority in principal amount of the outstanding debt securities of any series or of all debt securities then outstanding under the applicable indenture may, on behalf of all holders, waive any past default with respect to such series and its consequences, except a default:
in the payment of the principal, any premium, or make-whole amount, or interest;
in respect of a covenant or provision contained in the applicable indenture that cannot be modified or amended without the consent of the holders of the outstanding debt security that is affected by the default; or
in respect of a covenant or provision for the benefit or protection of the trustee, without its express written consent.
The indentures require each trustee to give notice to the holders of debt securities within 90 days of a default unless such default has been cured or waived. However, the trustee may withhold notice if specified persons of such trustee consider such withholding to be in the interest of the holders of debt securities. The trustee may not withhold notice of a default in the payment of principal, any premium or interest on any debt security of such series or in the payment of any sinking fund installment in respect of any debt security of such series.
The indentures provide that holders of debt securities of any series may not institute any proceedings, judicial or otherwise, with respect to such indenture or for any remedy under the indenture, unless the trustee fails to act for a period of 60 days after the trustee has received a written request to institute proceedings in respect of an event of default from the holders of 25% or more in principal amount of the outstanding debt securities of such series, as well as an offer of indemnity reasonably satisfactory to the trustee. However, this provision will not prevent any holder of debt securities from instituting suit for the enforcement of payment of the principal of, and any premium, or make-whole amount, and interest on, such debt securities at the respective due dates thereof.
The indentures provide that, subject to provisions in each indenture relating to its duties in the case of a default, a trustee has no obligation to exercise any of its rights or powers at the request or direction of any holders of any series of debt securities then outstanding under the indenture, unless the holders have offered to the trustee reasonable security or indemnity. The holders of at least a majority in principal amount of the outstanding debt securities of any series or of all debt securities then outstanding under an indenture shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the applicable trustee, or of exercising any trust or power conferred upon such trustee. However, a trustee may refuse to follow any direction which:
is in conflict with any law or the applicable indenture;
may involve the trustee in personal liability; or
may be unduly prejudicial to the holders of debt securities of the series not joining the proceeding.
Within 120 days after the close of each fiscal year, we will be required to deliver to each trustee a certificate, signed by one of our several specified officers, stating whether or not that officer has knowledge of any default under the applicable indenture. If the officer has knowledge of any default, the notice must specify the nature and status of the default.
Modification of the Indentures
The indentures provide that modifications and amendments may be made only with the consent of the affected holders of at least a majority in principal amount of all outstanding debt securities issued under that indenture. However, no such modification or amendment may, without the consent of the holders of the debt securities affected by the modification or amendment:
change the stated maturity of the principal of, or any premium, or make-whole amount, on, or any installment of principal of or interest on, any such debt security;
reduce the principal amount of, the rate or amount of interest on or any premium, or make-whole amount, payable on redemption of any such debt security;
reduce the amount of principal of an original issue discount security that would be due and payable upon declaration of acceleration of the maturity thereof or would be provable in bankruptcy, or adversely affect any right of repayment of the holder of any such debt security;
change the place of payment or the coin or currency for payment of principal of, or any premium, or make-whole amount, or interest on, any such debt security;
impair the right to institute suit for the enforcement of any payment on or with respect to any such debt security;
reduce the percentage in principal amount of any outstanding debt securities necessary to modify or amend the applicable indenture with respect to such debt securities, to waive compliance with particular provisions thereof or defaults and consequences thereunder or to reduce the quorum or voting requirements set forth in the applicable indenture; and
modify any of the foregoing provisions or any of the provisions relating to the waiver of particular past defaults or covenants, except to increase the required percentage to effect such action or to provide that some of the other provisions may not be modified or waived without the consent of the holder of such debt security.
The holders of a majority in aggregate principal amount of the outstanding debt securities of each series may, on behalf of all holders of debt securities of that series, waive, insofar as that series is concerned, our compliance with material restrictive covenants of the applicable indenture.
We and our respective trustee may make modifications and amendments of an indenture without the consent of any holder of debt securities for any of the following purposes:
to evidence the succession of another person to us as obligor under such indenture;
to add to our covenants for the benefit of the holders of all or any series of debt securities or to surrender any right or power conferred upon us in such indenture;
to add events of default for the benefit of the holders of all or any series of debt securities;
to add or change any provisions of an indenture (1) to change or eliminate restrictions on the payment of principal of, or premium, or make-whole amount, or interest on, debt securities in bearer form, or (2) to permit or facilitate the issuance of debt securities in uncertificated form, provided that such action shall not adversely affect the interests of the holders of the debt securities of any series in any material respect;
to change or eliminate any provisions of an indenture, provided that any such change or elimination shall become effective only when there are no debt securities outstanding of any series created prior thereto which are entitled to the benefit of such provision;
to secure the debt securities;
to establish the form or terms of debt securities of any series;
to provide for the acceptance of appointment by a successor trustee or facilitate the administration of the trusts under an indenture by more than one trustee;
to cure any ambiguity, defect or inconsistency in an indenture, provided that such action shall not adversely affect the interests of holders of debt securities of any series issued under such indenture; and
to supplement any of the provisions of an indenture to the extent necessary to permit or facilitate defeasance and discharge of any series of such debt securities, provided that such action shall not adversely affect the interests of the holders of the outstanding debt securities of any series.
Voting
The indentures provide that in determining whether the holders of the requisite principal amount of outstanding debt securities of a series have given any request, demand, authorization, direction, notice, consent or waiver under the indentures or whether a quorum is present at a meeting of holders of debt securities:
the principal amount of an original issue discount security that shall be deemed to be outstanding shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon declaration of acceleration of the maturity thereof;
the principal amount of any debt security denominated in a foreign currency that shall be deemed outstanding shall be the United States dollar equivalent, determined on the issue date for such debt security, of the principal amount or, in the case of an original issue discount security, the United States dollar equivalent on the issue date of such debt security of the amount determined as provided in the preceding bullet point;
the principal amount of an indexed security that shall be deemed outstanding shall be the principal face amount of such indexed security at original issuance, unless otherwise provided for such indexed security under such indenture; and
debt securities owned by us or any other obligor upon the debt securities or by any affiliate of ours or of such other obligor shall be disregarded.
The indentures contain provisions for convening meetings of the holders of debt securities of a series. A meeting will be permitted to be called at any time by the applicable trustee, and also, upon request, by us or the holders of at least 25% in principal amount of the outstanding notes);
The trustee may withhold notice to the holders of the notes of any default, except defaults in payment of principal, interest or additional interest, if any, on the notes. However, the trustee must consider it to be in the interest of the holders of the notes to withhold this notice.
If an event of default occurs and continues, the trustee or the holders of at least 25% in principal amount of the notes then outstanding may declare the principal and accrued interest and additional interest, if any, on the outstanding notes to be immediately due and payable. In case of certain events of bankruptcy or insolvency involving us, the principal and accrued interest and additional interest, if any, on the notes will automatically become due and payable. However, if we cure all defaults, except the nonpayment of principal, interest or additional interest, if any, that became due as a result of the acceleration, and meet certain other conditions, with certain exceptions, this declarationpresent may be cancelled andadopted by the affirmative vote of the holders of a majority of the principal amount of outstanding notes may waive these past defaults on behalf of all holders of the notes.
Payments of principal, interest or additional interest, if any, on the notes that are not made when due will accrue interest from the required payment date at the annual rate of 1% above the then applicable interest rate for the notes.
The holders of a majority of outstanding notes will have the right to direct the time, method and place of any proceedings for any remedy available to the trustee, subject to limitations specified in the indenture.
No holder of the notes may pursue any remedy under the indenture, except in the case of a default in the payment of principal, interest or additional interest, unless:
Notwithstanding the preceding paragraph, except as referred to above, any resolution relating to a written request, to the trustee to pursue the remedy;
Any resolution passed or decision taken at any properly held meeting of indemnity.
Modification and Waiver
The consent of the holders of debt securities of any series will be binding on all holders of such series. The quorum at any meeting called to adopt a resolution, and at any reconvened meeting, will be persons holding or representing a majority in principal amount of the outstanding notesdebt securities of a series. However, if any action is to be taken relating to a consent or waiver which may be given by the holders of at least a specified percentage in principal amount of the outstanding debt securities of a series, the persons holding such percentage will constitute a quorum.
Notwithstanding the foregoing provisions, the indentures provide that if any action is to be taken at a meeting with respect to any request, demand, authorization, direction, notice, consent, waiver or other action that such indenture expressly provides may be made, given or taken by the holders of a specified percentage in principal amount of all outstanding debt securities affected by such action, or of the holders of such series and one or more additional series:
there shall be no minimum quorum requirement for such meeting; and
the principal amount of the outstanding debt securities of such series that vote in favor of such request, demand, authorization, direction, notice, consent, waiver or other action shall be taken account in determining whether such request, demand, authorization, direction, notice, consent, waiver or other action has been made, given or taken under such indenture.
Subordination
Unless otherwise provided in the applicable prospectus supplement, subordinated securities will be subject to the following subordination provisions.
Upon any distribution to our creditors in a liquidation, dissolution or reorganization, the payment of the principal of and interest on any subordinated securities will be subordinated to the extent provided in the applicable indenture in right of payment to the prior payment in full of all senior debt. However, our obligation to make payments of the principal of and interest on such subordinated securities otherwise will not be affected. No payment of principal or interest will be permitted to be made on subordinated securities at any time if a default on senior debt exists that permits the holders of such senior debt to accelerate its maturity and the default is the subject of judicial proceedings or we receive notice of the default. After all senior debt is paid in full and until the
subordinated securities are paid in full, holders of subordinated securities will be subrogated to the rights of holders of senior debt to the extent that distributions otherwise payable to holders of subordinated securities have been applied to the payment of senior debt. The subordinated indenture will not restrict the amount of senior debt or other indebtedness of Mercury and its subsidiaries. As a result of these subordination provisions, in the event of a distribution of assets upon insolvency, holders of subordinated securities may recover less, ratably, than our general creditors.
The term “senior debt” will be defined in the applicable indenture as the principal of and interest on, or substantially similar payments to be made by us in respect of, other outstanding indebtedness, whether outstanding at the date of execution of the applicable indenture or subsequently incurred, created or assumed. The prospectus supplement may include a description of additional terms implementing the subordination feature.
No restrictions will be included in any indenture relating to subordinated securities upon the creation of additional senior debt.
If this prospectus is being delivered in connection with the offering of a series of subordinated securities, the accompanying prospectus supplement or the information incorporated in this prospectus by reference will set forth the approximate amount of senior debt outstanding as of the end of our most recent fiscal quarter.
Discharge, Defeasance and Covenant Defeasance
Unless otherwise indicated in the applicable prospectus supplement, the indentures allow us to discharge our obligations to holders of any series of debt securities issued under any indenture when:
either (1) all securities of such series have already been delivered to the applicable trustee for cancellation; or (2) all securities of such series have not already been delivered to the applicable trustee for cancellation but (A) have become due and payable, (B) will become due and payable within one year, or (C) if redeemable at our option, are to be redeemed within one year, and we have irrevocably deposited with the applicable trustee, in trust, funds in such currency or currencies, currency unit or units or composite currency or currencies in which such debt securities are payable, an amount sufficient to pay the entire indebtedness on such debt securities in respect of principal and any premium, or make-whole amount, and interest to the date of such deposit if such debt securities have become due and payable or, if they have not, to the stated maturity or redemption date;
we have paid or caused to be paid all other sums payable; and
an officers’ certificate and an opinion of counsel stating the conditions to discharging the debt securities have been satisfied has been delivered to the trustee.
Unless otherwise indicated in the applicable prospectus supplement, the indentures provide that, upon our irrevocable deposit with the applicable trustee, in trust, of an amount, in such currency or currencies, currency unit or units or composite currency or currencies in which such debt securities are payable at stated maturity, or government obligations, or both, applicable to such debt securities, which through the scheduled payment of principal and interest in accordance with their terms will provide money in an amount sufficient to pay the principal of, and any premium, or make-whole amount, and interest on, such debt securities, and any mandatory sinking fund or analogous payments thereon, on the scheduled due dates therefor, the issuing company may elect either:
to defease and be discharged from any and all obligations with respect to such debt securities; or
to be released from its obligations with respect to such debt securities under the applicable indenture or, if provided in the applicable prospectus supplement, its obligations with respect to any other covenant, and any omission to comply with such obligations shall not constitute an event of default with respect to such debt securities.
Notwithstanding the above, we may not elect to defease and be discharged from the obligation to pay any additional amounts upon the occurrence of particular events of tax, assessment or governmental charge with respect to payments on such debt securities and the obligations to register the transfer or exchange of such debt securities, to replace temporary or mutilated, destroyed, lost or stolen debt securities, to maintain an office or agency in respect of such debt securities, or to hold monies for payment in trust.
The indentures only permit us to establish the trust described in the paragraph above if, among other things, it has delivered to the applicable trustee an opinion of counsel to the effect that the holders of such debt securities will not recognize income, gain or loss for United States federal income tax purposes as a result of such defeasance or covenant defeasance and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance or covenant defeasance had not occurred. Such opinion of counsel, in the case of defeasance, will be required to modifyrefer to and be based upon a ruling received from or amendpublished by the Internal Revenue Service or a change in applicable United States federal income tax law occurring after the date of the indenture. However,In the event of such defeasance, the holders of such debt securities would be able to look only to such trust fund for payment of principal, any premium, or make-whole amount, and interest.
When we use the term “government obligations,” we mean securities that are:
direct obligations of the United States or the government that issued the foreign currency in which the debt securities of a modificationparticular series are payable, for the payment of which its full faith and credit is pledged; or amendment requires
obligations of a person controlled or supervised by and acting as an agency or instrumentality of the consentUnited States or other government that issued the foreign currency in which the debt securities of such series are payable, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States or such other government, which are not callable or redeemable at the option of the issuer thereof and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such government obligation or a specific payment of interest on or principal of any such government obligation held by such custodian for the account of the holder of each outstanding note if it would:
Unless otherwise provided in the applicable prospectus supplement, if any,after we have deposited funds and/or government obligations to effect defeasance or covenant defeasance with respect to debt securities of any note;series, (1) the holder of a debt security of such series is entitled to, and does, elect under the terms of the applicable indenture or the terms of such debt security to receive payment in a currency, currency unit or composite currency other than that in which such deposit has been made in respect of such debt security, or (2) a conversion event occurs in respect of the currency, currency unit or composite currency in which such deposit has been made, the indebtedness represented by such debt security will be deemed to have been, and will be, fully discharged and satisfied through the payment of the principal of, and premium, or make-whole amount, and interest on, such debt security as they become due out of the proceeds yielded by converting the amount so deposited in respect of such debt security into the currency, currency unit or composite currency in which such debt security becomes payable as a result of such election or such cessation of usage based on the applicable market exchange rate.
When we use the term “conversion event,” we mean the cessation of use of:
a currency, currency unit or composite currency both by the government of the country that issued such currency and for the settlement of transactions by a central bank or other public institutions of or within the international banking community;
the European Currency Unit both within the European Monetary System and for the settlement of transactions by public institutions of or within the European Communities; or
any currency unit or composite currency other than the European Currency Unit for the purposes for which it was established.
Unless otherwise provided in the applicable prospectus supplement, all payments of principal of, and any premium, or make-whole amount, and interest on, any debt security that is payable in a foreign currency that ceases to be used by its government of issuance shall be made in United States dollars.
In the event that (1) we effect covenant defeasance with respect to any note;
The applicable prospectus supplement may further describe the provisions, if any, permitting such defeasance or covenant defeasance, including any modifications to the provisions described above, with respect to the debt securities of or within a holder to convertparticular series.
Conversion Rights
The terms and conditions, if any, noteupon which the debt securities are convertible into common stock or reducepreferred stock will be set forth in the number ofapplicable prospectus supplement. The terms will include whether the debt securities are convertible into shares of common stock or preferred stock, the amountconversion price, or manner of any other property receivable upon conversion;
In addition, a modification or amendment that would, prior to the occurrence of a designated event, adversely change our obligation to repurchase any note upon a designated event requires the consent of two-thirdsoption of the holders, the events requiring an adjustment of the outstanding notes.
We are permitted to modify certainconversion price and provisions affecting conversion in the event of the indenture without the consentredemption of the holders of the notes.
debt securities and any restrictions on conversion.
Form, Denomination and RegistrationGlobal Securities
The notes were issued:
Global Note, Book-Entry Form
Notes are evidenced by one global note. We deposited the global note with DTC and registered the global notes in the name of Cede & Co. as DTC’s nominee. Except as set forth below, a global noteseries may be transferred,issued in whole or in part in the form of one or more global securities that will be deposited with, or on behalf of, a depository identified in the applicable prospectus supplement relating to such series. Global securities, if any, issued in the United States are expected to be deposited with The Depository Trust Company, or DTC, as depository. We may issue global securities in either registered or bearer form and in either temporary or permanent form. We will describe the specific terms of the depository arrangement with respect to a series of debt securities in the applicable prospectus supplement relating to such series. We expect that unless the applicable prospectus supplement provides otherwise, the following provisions will apply to depository arrangements.
Once a global security is issued, the depository for such global security or its nominee will credit on its book-entry registration and transfer system the respective principal amounts of the individual debt securities represented by such global security to the accounts of participants that have accounts with such depository. Such accounts shall be designated by the underwriters, dealers or agents with respect to such debt securities or by us if we offer such debt securities directly. Ownership of beneficial interests in such global security will be limited to participants with the depository or persons that may hold interests through those participants.
We expect that, under procedures established by DTC, ownership of beneficial interests in any global security for which DTC is the depository will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee, with respect to another nomineebeneficial interests of participants with
the depository, and records of participants, with respect to beneficial interests of persons who hold through participants with the depository. Neither we nor the trustee will have any responsibility or liability for any aspect of the records of DTC or to a successorfor maintaining, supervising or reviewing any records of DTC or any of its nominee.
Beneficialparticipants relating to beneficial ownership interests in a global note may be held directly through DTC if such holder is a participant in DTC, or indirectly through organizations that are participants in DTC (called “participants”). Transfers between participants will be effected in the ordinary way in accordance with DTC rules and will be settled in clearing house funds.debt securities. The laws of some states require that certain personspurchasers of securities take physical delivery of such securities in definitive form. As a result,Such limits and laws may impair the ability to own, pledge or transfer beneficial interests in the global note to such persons may be limited.
Holders who are not participants may beneficially own interestsinterest in a global note held by DTC only through participants, or certain banks, brokers, dealers, trust companies and other parties that clear through or maintain a custodial relationship with a participant, either directly or indirectly (called “indirect participants”). security.
So long as Cede & Co., as the depository for a global security or its nominee of DTC, is the registered owner of asuch global note, Cede & Co. for all purposessecurity, such depository or such nominee, as the case may be, will be considered the sole owner or holder of suchthe debt securities represented by the global note.security for all purposes under the applicable indenture. Except as provideddescribed below or in the applicable prospectus supplement, owners of beneficial interestsinterest in a global note are:
Payments of principal of, and any premium, or make-whole amount, and interest on, individual debt securities represented by a global security registered in certificated form).
We will pay interest, and additional interest, if any, and the redemption price and the repurchase pricename of a global notedepository or its nominee will be made to Cede & Co.,or at the direction of the depository or its nominee, as the case may be, as the registered owner of the global note, by wire transfersecurity under the applicable indenture. Under the terms of immediately available funds on each interest payment date or the redemption or repurchase date,applicable indenture, we and the trustee may treat the persons in whose name debt securities, including a global security, are registered as the owners thereof for the purpose of receiving such payments. Consequently, neither we nor the trustee have or will have any responsibility or liability for the payment of such amounts to beneficial owners of debt securities including principal, any premium, or make-whole amount, or interest. We believe, however, that it is currently the policy of DTC to immediately credit the accounts of relevant participants with such payments, in amounts proportionate to their respective holdings of beneficial interests in the relevant global security as shown on the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in such global security held through such participants will be governed by standing instructions and customary practices, as is the case may be.with securities held for the account of customers in bearer form or registered in street name, and will be the responsibility of such participants. Redemption notices with respect to any debt securities represented by a global security will be sent to the depository or its nominee. If less than all of the debt securities of any series are to be redeemed, we expect the depository to determine the amount of the interest of each participant in such debt securities to be redeemed to be determined by lot. Neither we, the trustee, nor any paying agent nor the security registrar for such debt securities will be responsiblehave any responsibility or liable:
with respect thereto.
Neither we nor the trustee registrar, paying agent nor conversion agent will havebe liable for any responsibilitydelay by the holders of a global security or the depository in identifying the beneficial owners of debt securities, and we and the trustee may conclusively rely on, and will be protected in relying on, instructions from the holder of a global security or the depository for the performance byall purposes. The rules applicable to DTC orand its participants or indirect participants of their respective obligations underare on file with 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 the presentation of notes for exchange, only at the direction of one or more participantsSEC.
to whose account with DTC interests in the global note are credited, and only in respect of the principal amount of the notes represented by the global note as to which the participant or participants has or have given such direction. DTC has advised us that it is:
DTC was created to holddepository for any debt securities for its participants and to facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes to the accounts of its participants. Participants include securities brokers, dealers, banks, trust companies and clearing corporations and other organizations. Some of the 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.
DTC has agreed to the foregoing procedures to facilitate transfers of interests in a global note among participants. However, DTC is under no obligation to perform or continue to perform these procedures, and may discontinue these procedures at any time.
We will issue the notes in definitive certificated form if DTC notifies us that it istime unwilling, unable or unableineligible to continue as depositary or DTC ceases to be a clearing agency registered under the Exchange Actdepository and we do not appoint a successor depositary is not appointed by usdepository within 90 days.days, we will issue individual debt securities in exchange for the global security representing such debt securities. In addition, beneficial interests in a global notewe may be exchanged for definitive certificated notes upon request by or on behalf of DTC in accordance with customary procedures. We may determine at any time and in ourtheir sole discretion, that notes shall no longer besubject to any limitations described in the applicable prospectus supplement relating to such debt securities, determine not to have any of such debt securities represented by one or more global notes,securities and in which case wesuch event will issue certificates in definitive formindividual debt securities in exchange for the global notes.security or securities representing such debt securities. Individual debt securities so issued will be issued in denominations of $1,000 and integral multiples of $1,000.
Registration RightsThe debt securities of a series may also be issued in whole or in part in the form of one or more bearer global securities that will be deposited with a depository, or with a nominee for such depository, identified in the applicable prospectus supplement. Any such bearer global securities may be issued in temporary or permanent form. The specific terms and procedures, including the specific terms of the Noteholders
In connection with the initial placement of the notes, we entered into a registration rights agreement with the initial purchasers. In the registration rights agreement, we agreed to file a shelf registration statement with the SEC covering resale of the registrable securities within 120 days after the closing date and to use our reasonable best efforts to cause the shelf registration statement to become effective within 210 days of the closing. This prospectus is a part of that shelf registration statement. We also agreed to use our reasonable best efforts to keep the shelf registration statement effective until the date there are no longer any registrable securities.
When we use the term “registrable securities” in this section, we are referring to the notes and the common stock issuable upon conversion of the notes until the earliest of:
We may suspend the use of this prospectus under certain circumstances relating to pending corporate developments, public filings with the SEC and similar events. Any suspension period shall not exceed:
Notwithstanding the foregoing, we more bearer global securities will be permitted to suspend the use of this prospectus for up to 60 days in any three-month period under certain circumstances, relating to possible acquisitions, financings or other similar transactions.
We will pay predetermined additional interest on the interest payment dates for the notesdescribed in the event thisapplicable prospectus supplement.
No Recourse
There is unavailable for periodsno recourse under any obligation, covenant or agreement in excess of those permitted above. Those additional amounts will accrue until such unavailability is cured:
We will have no other liabilities for monetary damagesapplicable indenture or with respect to our registration obligations.
A holder who elects to sell registrable securities pursuant to the shelf registration statement will be required to:
Under the registration rights agreement, we agreed to:
This summary of the registration rights agreement is not complete. This summary is subject to, and is qualified in its entirety by reference to, all of the provisions of the registration rights agreement.
Information Concerning the Trustee
We have appointed U.S. Bank National Association, the trustee under the indenture, as paying agent, conversion agent, note registrar and custodian for the notes. The trustee or its affiliates may provide banking and other services to us in the ordinary course of their business. Subject to certain conditions, we have the right to replace the trustee.
The indenture contains certain limitations on the rights of the trustee, if it orany security against any of its affiliates is then our creditor, to obtain payment of claims in certain cases or to realize on certain property received on any claim as securityour successor’s past, present or otherwise. The trustee and its affiliates are permitted to engage in other transactions with us. However, if the trusteefuture stockholders, employees, officers or any affiliate continues to have any conflicting interest and a default occurs with respect to the notes, the trustee must eliminate such conflict or resign.
Governing Law
The notes and the indenture are governed by, and shall be construed in accordance with, the laws of the State of New York.directors.
DESCRIPTION OF CAPITALPREFERRED STOCK
The following is a description of the material terms and provisions of our preferred stock. It may not contain all the information that is important to you. You can access complete information by referring to our articles of organization and bylaws and to any applicable amendment to the articles of organization designating terms of a series of preferred stock. See “Description of Common Stock” for additional terms of our capital stock.
Our authorized capital stock consistsGeneral
Under our articles of 65,000,000 shares of common stock and 1,000,000organization, we have authority to issue 875,000 shares of preferred stock, par value $.01 per share. We also have authority to issue 125,000 shares of Series B preferred stock, par value $.01 per share, all of which shares are designated as “Series B Junior Participating Cumulative Preferred Stock.” The powers, preferences, rights, qualifications, limitations and restrictions of shares of our preferred stock and our Series B preferred stock have been fixed in amendments to our articles of organization. As of August 4, 2004, we had 21,289,655 shares of common stock outstanding andMarch 31, 2009, no shares of preferred stock or Series B preferred stock were issued and outstanding.
Shares of preferred stock or Series B preferred stock may be issued from time to time, in one or more series, as authorized by our board of directors. Prior to the issuance of shares of each series, the board of directors is required by the Massachusetts General Laws and our articles of organization to fix, for each series, the designations, powers, including voting powers, full or limited, or no voting powers, preferences and the relative, participating, optional or other special rights of the shares of each series and any qualifications, limitations and restrictions thereof, as are permitted by Massachusetts law. Our board of directors could authorize the issuance of shares of preferred stock or Series B preferred stock with terms and conditions that could have the effect of discouraging a takeover or other transactions that holders of common stock might believe to be in their best interests or in which holders of some, or a majority, of the shares of common stock might receive a premium for their shares over the then market price of such shares of common stock. When issued, the preferred stock or Series B preferred stock will be fully paid and nonassessable.
Terms
You should refer to the applicable prospectus supplement relating to the preferred stock offered thereby for specific terms, including, where applicable, the following terms:
the distinctive serial designation and the number of shares constituting such series;
the dividend rates or the amount of dividends to be paid on the shares of such series, whether dividends shall be cumulative and, if so, from which date or dates, the payment date or dates for dividends, and the participating and other rights, if any, with respect to dividends;
the voting powers, full or limited, if any, of the shares of such series;
whether the shares of such series shall be redeemable and, if so, the price or prices at which, and the terms and conditions on which, such shares may be redeemed;
the amount or amounts payable upon the shares of such series and any preferences applicable thereto in the event of voluntary or involuntary liquidation, dissolution or winding up of the company;
whether the shares of such series shall be entitled to the benefit of a sinking or retirement fund to be applied to the purchase or redemption of such shares, and if so entitled, the amount of such fund and the manner of its application, including the price or prices at which such shares may be redeemed or purchased through the application of such fund;
whether the shares of such series shall be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the company and, if so convertible or exchangeable, the conversion price or prices, or the rate or rates of exchange, and the adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;
the price or other consideration for which the shares of such series shall be issued;
whether the shares of such series which are redeemed or converted shall have the status of authorized but unissued shares of undesignated preferred stock (or series thereof) and whether such shares may be reissued as shares of the same or any other class or series of stock; and
such other powers, preferences, rights, qualifications, limitations and restrictions thereof as the board of directors may deem advisable.
Rank
Unless otherwise specified in the prospectus supplement, the preferred stock will, with respect to dividend rights and rights upon our liquidation, dissolution or winding up our affairs, rank:
senior to all classes or series of our common stock and to all equity securities ranking junior to such preferred stock with respect to dividend rights or rights upon our liquidation, dissolution or winding up our affairs;
on a parity with all equity securities issued by us, the terms of which specifically provide that such equity securities rank on a parity with the preferred stock with respect to dividend rights or rights upon our liquidation, dissolution or winding up of our affairs; and
junior to all equity securities issued by us, the terms of which specifically provide that such equity securities rank senior to the preferred stock with respect to dividend rights or rights upon our liquidation, dissolution or winding up of our affairs.
The term “equity securities” does not include convertible debt securities.
Dividends
Holders of the preferred stock of each series will be entitled to receive cash dividends, when, as and if declared by our board of directors. We will pay dividends out of assets which are legally available for payment of dividends. We will specify the rate(s) of dividends and the dates that we will pay dividends in the applicable prospectus supplement. Dividends will be payable to holders of record as they appear on our stock transfer books on such record dates as shall be fixed by our board of directors.
Dividends on any series of the preferred stock may be cumulative or non-cumulative, as provided in the applicable prospectus supplement. Dividends, if cumulative, will be cumulative from and after the date set forth in the applicable prospectus supplement. If our board of directors fails to declare a dividend payable on a dividend payment date on any series of the preferred stock for which dividends are non-cumulative, then the holders of such series of the preferred stock will have no right to receive a dividend in respect of the dividend period ending on that dividend payment date. Accordingly, we will have no obligation to pay the dividend accrued for that period, whether or not dividends on that series are declared payable on any future dividend payment date.
If preferred stock of any series is outstanding, we will not declare, pay or set aside funds to pay dividends on any other series of our capital stock ranking, as to dividends, on parity with or junior to the preferred stock of such series for any period unless:
if that series of preferred stock has a cumulative dividend, we have declared and paid or contemporaneously declare and pay or set aside funds to pay full cumulative dividends on the preferred stock of such series for all past dividend periods and the then current dividend period; or
if that series of preferred stock does not have a cumulative dividend, we have declared and paid or contemporaneously declare and pay or set aside funds to pay full dividends on the preferred stock of such series for the then current dividend period.
We must declare all dividends pro rata on all series of preferred stock that rank on parity with the series of preferred stock upon which we paid dividends if we did not pay or set aside funds to pay dividends on the series of preferred stock in full. We must declare dividends pro rata to ensure that the amount of dividends declared per share of preferred stock bear in all cases the same ratio that accrued dividends per share of preferred stock bears to each other. We will not accumulate unpaid dividends for prior dividend periods with respect to accrued dividends on preferred stock that do not have cumulative dividends. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on preferred stock of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless:
if such series of preferred stock has a cumulative dividend, we have declared and paid or contemporaneously declare and pay or set aside funds to pay full cumulative dividends for all past dividend periods and the then current dividend period; or
if such series of preferred stock does not have a cumulative dividend, we have declared and paid or contemporaneously declare and pay or set aside funds to pay full dividends for the then current dividend period;
we will not: (1) declare or pay or set aside funds to pay dividends; (2) declare or make any other distribution upon the common stock or any other shares of our stock ranking junior to or on parity with the preferred stock of such series as to dividends or upon liquidation; (3) redeem, purchase or otherwise acquire for any consideration any common stock, or any other shares of our stock ranking junior to or on parity with the preferred stock of such series as to dividends; nor (4) pay any monies to or make any monies available for a sinking fund to redeem of any such shares, except by conversion into or exchange for other of our shares of our capital stock ranking junior to the preferred stock of such series as to dividends or liquidation. Notwithstanding the preceding sentence, we may declare or set aside dividends in common stock or other shares of capital stock ranking junior to the preferred stock of such series as to dividends and upon liquidation.
Any dividend payment we make on a series of preferred stock shall first be credited against the earliest accrued but unpaid dividend due with respect to shares of such series which remain payable.
Redemption
If so provided in the applicable prospectus supplement, the preferred stock will be subject to mandatory redemption or redemption at our option, as a whole or in part, in each case upon the terms, at the times and at the redemption prices set forth in such prospectus supplement.
The prospectus supplement relating to a series of preferred stock that is subject to mandatory redemption will specify the number of shares of preferred stock that shall be redeemed by us in each year commencing after a date to be specified, at a redemption price per share to be specified, together with an amount equal to all accrued and unpaid dividends thereon to the date of redemption. Unless the shares have a cumulative dividend, such accrued dividends will not include any accumulation in respect of unpaid dividends for prior dividend periods. We may pay the redemption price in cash or other property, as specified in the applicable prospectus supplement. If the redemption price for preferred stock of any series is payable only from the net proceeds of the issuance of shares of our capital stock, the terms of such preferred stock may provide that, if no such shares of our capital stock shall have been issued or to the extent the net proceeds from any issuance are insufficient to pay in full the aggregate redemption price then due, such preferred stock shall automatically and mandatorily be converted into the applicable shares of our capital stock pursuant to conversion provisions specified in the applicable prospectus supplement.
Notwithstanding the foregoing, we will not redeem any preferred stock of a series unless:
if that series of preferred stock has a cumulative dividend, we have declared and paid or contemporaneously declare and pay or set aside funds to pay full cumulative dividends on the preferred stock for the past and current dividend period; or
if such series of preferred stock does not have a cumulative dividend, we have declared and paid or contemporaneously declare and pay or set aside funds to pay full dividends for the current dividend period.
However, in no case will we redeem any preferred stock of a series unless we redeem all outstanding preferred stock of such series simultaneously.
In addition, we will not acquire any preferred stock of a series unless:
if that series of preferred stock has a cumulative dividend, we have declared and paid or contemporaneously declare and pay or set aside funds to pay full cumulative dividends on all outstanding shares of such series of preferred stock for all past dividend periods and the then current dividend period; or
if that series of preferred stock does not have a cumulative dividend, we have declared and paid or contemporaneously declare and pay or set aside funds to pay full dividends on the preferred stock of such series for the then current dividend period.
However, at any time we may purchase or acquire preferred stock of that series (1) pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding preferred stock of such series or (2) by conversion into or exchange for shares of our capital stock ranking junior to the preferred stock of such series as to dividends and upon liquidation.
If fewer than all of the outstanding shares of preferred stock of any series are to be redeemed, we will determine the number of shares that may be redeemed pro rata from the holders of record of such shares in proportion to the number of such shares held or for which redemption is requested by such holder or by any other equitable manner that we determine. Such determination will reflect adjustments to avoid redemption of fractional shares.
We will mail a notice of redemption at least 30 days but not more than 60 days before the redemption date to each holder of record of preferred stock to be redeemed at the address shown on our stock transfer books. Each notice shall state:
the redemption date;
the number of shares and series of the preferred stock to be redeemed;
the redemption price;
the place or places where certificates for such preferred stock are to be surrendered for payment of the redemption price;
that dividends on the shares to be redeemed will cease to accrue on such redemption date;
the date upon which the holder’s conversion rights, if any, as to such shares shall terminate; and
the specific number of shares to be redeemed from each such holder if fewer than all the shares of any series are to be redeemed.
If a notice of redemption has been given and we have set aside the funds necessary for such redemption in trust for the benefit of the holders of any shares so called for redemption, then from and after the redemption date, dividends will cease to accrue on such shares, and all rights of the holders of such shares will terminate, except the right to receive the redemption price.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, then, before we make any distribution or payment to the holders of any common stock or any other class or series of our capital stock ranking junior to the preferred stock in the distribution of assets upon any liquidation, dissolution or winding up of our affairs, the holders of each series of preferred stock shall be entitled to receive out of assets legally available for distribution to stockholders, liquidating distributions in the amount of the liquidation preference per share set forth in the applicable prospectus supplement, plus any accrued and unpaid dividends thereon. Such dividends will not include any accumulation in respect of unpaid noncumulative dividends for prior dividend periods. After payment of the full amount of their liquidating distributions, the holders of preferred stock will have no right or claim to any of our remaining assets. Upon any such voluntary or involuntary liquidation, dissolution or winding up, if our available assets are insufficient to pay the amount of the liquidating distributions on all outstanding preferred stock and the corresponding amounts payable on all other classes or series of our capital stock ranking on parity with the preferred stock and all other such classes or series of shares of capital stock ranking on parity with the preferred stock in the distribution of assets, then the holders of the preferred stock and all other such classes or series of capital stock will share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be entitled.
Upon liquidation, dissolution or winding up and if we have made liquidating distributions in full to all holders of preferred stock, we will distribute our remaining assets among the holders of any other classes or series of capital stock ranking junior to the preferred stock according to their respective rights and preferences and, in each case, according to their respective number of shares. For such purposes, our consolidation or merger with or into any other corporation, trust or entity, or the sale, lease or conveyance of all or substantially all of our property or business will not be deemed to constitute a liquidation, dissolution or winding up of our affairs.
Voting Rights
Holders of preferred stock will not have any voting rights, except as described in the next paragraph, as otherwise from time to time required by law or as indicated in the applicable prospectus supplement.
Unless otherwise provided for any series of preferred stock, so long as any preferred stock of a series remains outstanding, we will not, without the affirmative vote or consent of the holders of at least two-thirds of the preferred stock of such series outstanding at the time, given in person or by proxy, either in writing or at a meeting with each of such series voting separately as a class:
authorize, or create, or increase the authorized or issued amount of, any class or series of shares of capital stock ranking senior to such series of preferred stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, or reclassify any of our authorized shares of capital stock into such shares, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such shares; or
amend, alter or repeal the provisions of our articles of organization or the amendment to our articles of organization designating the terms for such series of preferred stock, whether by merger, consolidation or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of such series of preferred stock or the holders thereof.
Notwithstanding the preceding bullet point, if the preferred stock remains outstanding with the terms thereof materially unchanged, the occurrence of any of the events described above shall not be deemed to materially and adversely affect the rights, preferences, privileges or voting power of holders of preferred stock, even if upon the occurrence of such an event we may not be the surviving entity. In addition, any increase in the amount of (1) authorized preferred stock or the creation or issuance of any other series of preferred stock, or (2) authorized shares of such series or any other series of preferred stock, in each case ranking on parity with or junior to the preferred stock of such series with respect to payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required will be effected, we have redeemed or called for redemption all outstanding shares of such series of preferred stock and, if called for redemption, have deposited sufficient funds in trust to effect such redemption.
Conversion Rights
The terms and conditions, if any, upon which any series of preferred stock is convertible into common stock will be set forth in the applicable prospectus supplement relating thereto. Such terms will include the number of shares of common stock into which the shares of preferred stock are convertible, the conversion price, rate or manner of calculation thereof, the conversion period, provisions as to whether conversion will be at our option or at the option of the holders of the preferred stock, the events requiring an adjustment of the conversion price and provisions affecting conversion in the event of the redemption.
Transfer Agent
The transfer agent and registrar for the preferred stock will be set forth in the applicable prospectus supplement.
The following is a description of the material terms and provisions of our common stockstock. It may not contain all the information that is EquiServe Trust Company, N.A., 250 Royall Street, Canton, Massachusetts. In additionimportant to the summary of our capital stock that follows, we encourage youyou. You can access complete information by referring to review our articles of organization and bylaws, whichbylaws.
General
Under our articles of organization, we have filed withauthority to issue 85,000,000 shares of common stock, par value $.01 per share. As of April 3, 2009, 22,653,523 shares of common stock were issued and outstanding. All shares of common stock will, when issued, be duly authorized, fully paid and nonassessable. Thus, the SEC.
full price for the outstanding shares of common stock will have been paid at issuance and any holder of our common stock will not be later required to pay us any additional money for such common stock.
Common StockDividends
TheSubject to preferential rights of any other class or series of stock, holders of common stock may receive dividends out of assets that we can legally use to pay dividends, when, as and if they are declared by our board of directors. In the event we are liquidated, dissolved or our affairs are wound up, after we pay or make adequate provision for all of our known debts and liabilities, each holder of common stock will receive dividends pro rata out of assets that we can legally use to pay distributions, subject to any rights that are granted to the holders of any class or series of preferred stock.
Voting Rights
Holders of common stock will have the exclusive power to vote on all matters presented to our stockholders, including the election of directors, except as otherwise provided by Massachusetts law or as provided with respect to any other class or series of stock. Holders of common stock are entitled to one vote for each share heldper share. There is no cumulative voting in the election of record on all matters voted upon by our shareholders and may not cumulate votes. directors, which means that, subject to any rights to elect directors that are granted to the holders of any class or series of preferred stock, a plurality of the votes cast at a meeting of stockholders at which a quorum is present is sufficient to elect a director.
Other Rights
Subject to the preferential rights of holders of any futureother class or series of undesignated preferred stock, which may be designated, each share of the outstanding common stock is entitled to participate equally in any distribution of net assets made to the shareholders in the liquidation, dissolution or winding up of our company and is entitled to participate equally in dividends as and when declared by our board of directors. There are no redemption, sinking fund, conversion or preemptive rights with respect toall shares of our common stock. All shares of our common stock have equal rights and preferences.
Preferred Stock
Our board of directors has the authority, without further shareholder approval, to issue 1,000,000 shares of preferred stock where defined in one or more series and to fix the relative rights, preferences, privileges, qualifications, limitations and restrictions of such preferred stock, including dividend, rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices,distribution, liquidation preferences and the number of shares constituting any series or the designation of such series. The issuance of preferred stock, while potentially providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of delaying, deferring or preventing a change in control of our company, which may discourage bids for our 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 theand have no preference, appraisal or exchange rights, except for any appraisal rights provided by Massachusetts law. Furthermore, holders of common stock have no conversion, sinking fund or redemption rights, or preemptive rights to subscribe for any of our common stock.
securities.
Classified Board and Other Matters
Our board of directors is divided into three classes, each of which serves until the third annual meeting of shareholders after their election, with one class being elected each year. Under the Massachusetts General Laws, in a corporation with a classified board, shareholders may remove a director only for cause. Our bylaws require that shareholders provide the Secretary of our company with 60 days advance notice prior to the date set forth in the bylaws for an annual meeting of shareholders or special meeting in lieu thereof for the purpose of any director nominations or within ten days after notice of a special meeting not in lieu of an annual meeting. Our bylaws provide that special meetings of shareholders of our company may be called only by a majority of the board of directors, the President or 30% in interest of the shareholders. Our bylaws, as well as applicable provisions of the Massachusetts General Laws, provide that no action required or permitted to be taken at any annual or special meeting of our shareholders may be taken without a meeting, unless the unanimous consent of shareholders entitled to vote on the matter is obtained. These provisions may diminish the likelihood that a potential acquiror would make an offer for our common stock or that there would otherwise be a change in control of our company.
Massachusetts Anti-takeover Laws
We are subject to the provisions of Chapter 110F of the Massachusetts General Laws, an anti-takeover law. In general, this statute prohibits a publicly-held Massachusetts corporation with sufficient ties to Massachusetts from engaging in a “business combination” with an “interested shareholder” for a period of three years after the
date of the transaction in which the person becomes an interested shareholder, unless either (1) the interested shareholder obtains the approval of the board of directors prior to becoming an interested shareholder, (2) the interested shareholder acquires 90% of the outstanding voting stock of the corporation (excluding shares held by certain affiliates of the corporation) at the time he becomes an interested shareholder or (3) the business combination is approved by both the board of directors and two-thirds of the outstanding voting stock of the corporation (excluding shares held by the interested shareholder) at an annual or special meeting of shareholders, but not by written consent. An interested shareholder is a person who, together with affiliates and associates, owns 5% or more of the corporation’s outstanding voting stock or who as an affiliate at any time within the prior three years did own 5% or more of the corporation’s voting stock. A “business combination” includes mergers, stock and asset sales and other transactions resulting in a financial benefit to the shareholder. We may at any time amend our articles of organization or bylaws, by vote of the holders of a majority of our voting stock, to elect not to be governed by Chapter 110F, but such an amendment would not be effective for 12 months and would not apply to a business combination with any person who became an interested shareholder prior to the date of the amendment.
We also are subject to the provisions of Chapter 110D of the Massachusetts General Laws, entitled “Regulation of Control Share Acquisitions.” This statute provides, in general, that any shareholder who acquires 20% or more of the outstanding voting stock of a corporation subject to this statute may not vote that stock unless the shareholders of the corporation so authorize. Voting control obtained by means of a revocable proxy will not trigger the implications of Chapter 110D of the Massachusetts General Laws. In addition, Chapter 110D permits a corporation to provide in its articles of organization or bylaws that the corporation may redeem (for fair value) all the shares thereafter acquired in a control share acquisition if voting rights for those shares were not authorized by the shareholders or if no control share acquisition statement was delivered. Our articles of organization include a provision which permits us to effect such redemptions.
Shareholder Rights Plan
We have adopted a Shareholder Rights Plan, the purpose of which is, among other things, to enhance the ability of our board of directors to protect the interests of our shareholders and to ensure that shareholders receive fair treatment in the event any coercive takeover attempt of Mercury is made in the future. The Shareholder Rights Plan could make it more difficult for a third party to acquire, or could discourage a third party from acquiring, Mercury or a large block of Mercury’s common stock. The following summary description of the Shareholder Rights Plan does not purport to be complete and is qualified in its entirety by reference to our Shareholder Rights Plan, which has been previously filed with the SEC.
In connection with the adoption of the Shareholder Rights Plan, the board of directors declared a dividend distribution of one preferred stock purchase right, or a Right, for each outstanding share of common stock to shareholders of record as of the close of business on December 23, 2005. The Rights currently are not exercisable and are attached to and trade with the outstanding shares of common stock. Under the Shareholder Rights Plan, the Rights become exercisable if a person becomes an “acquiring person” by acquiring 15% or more of the outstanding shares of common stock or if a person commences a tender offer that would result in that person owning 15% or more of the common stock. If a person becomes an “acquiring person,” each holder of a Right (other than the acquiring person) would be entitled to purchase, at the then-current exercise price, such number of shares of our preferred stock which are equivalent to shares of common stock having a value of twice the exercise price of the Right. If we are acquired in a merger or other business combination transaction after any such event, each holder of a Right would then be entitled to purchase, at the then-current exercise price, shares of the acquiring company’s common stock having a value of twice the exercise price of the Right.
Transfer Agent
The transfer agent and registrar for our common stock is Computershare Investor Services.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONSDESCRIPTION OF WARRANTS
We have no warrants outstanding. We may issue warrants for the purchase of preferred stock or common stock. Warrants may be issued independently, together with any other securities offered by any prospectus supplement or through a dividend or other distribution to our stockholders and may be attached to or separate from such securities. We may issue warrants under a warrant agreement to be entered into between us and a warrant agent. We will name any warrant agent in the applicable prospectus supplement. The warrant agent will act solely as our agent in connection with the warrants of a particular series and will not assume any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants.
The following is a summarydescription of certainthe general terms and provisions of any warrants we may issue and may not contain all the information that is important to you. You can access complete information by referring to the applicable prospectus supplement. In the applicable prospectus supplement, we will describe the terms of the warrants and applicable warrant agreement, including, where applicable, the following:
the title of such warrants;
the aggregate number of warrants offered and the aggregate number of warrants outstanding as of the most practicable date;
the price or prices at which we will issue the warrants;
the designation, number and terms of the preferred stock or common stock that can be purchased upon exercise of the warrants and the procedures and conditions relating to the exercise of the warrants;
the designation and terms of the other securities, if any, with which the warrants are issued and the number of warrants issued with each of those securities;
the date, if any, on and after which the warrants and the related preferred stock or common stock, if any, will be separately transferable;
the price at which each share of preferred stock or common stock that can be purchased upon exercise of such warrants may be purchased;
the date on which the right to exercise the warrants shall commence and the date on which such right shall expire;
the minimum or maximum amount of such warrants which may be exercised at any one time;
whether the warrants represented by warrant certificates will be issued in registered or bearer form, and, if registered, where they may be transferred and registered;
information with respect to any book-entry procedures;
a discussion of applicable United States federal income tax consequences;
redemption or call provisions of the debt warrants, if any; and
any other terms of such warrants, including terms and additional rights, preferences, privileges, procedures and limitations relating to the transferability, exchange and exercise of such warrants.
This section outlines some of the provisions of the units and the unit agreements. This information may not be complete in all respects and is qualified entirely by reference to the unit agreement with respect to the units of any particular series. The specific terms of any series of units will be described in the applicable prospectus supplement. If so described in a particular supplement, the specific terms of any series of units may differ from the general description of terms presented below.
We may issue units comprised of shares of preferred stock, shares of common stock, warrants and other securities in any combination. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date.
The applicable prospectus supplement may describe:
the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;
any provisions of the governing unit agreement;
the price or prices at which such units will be issued;
the applicable U.S. federal income tax considerations relating to the purchase, ownership and dispositionunits;
any provisions for the issuance, payment, settlement, transfer or exchange of the notesunits or of the securities comprising the units; and common stock into which
any other terms of the notes are convertible, but does not purportunits and of the securities comprising the units.
The provisions described in this section, as well as those described under “Description of Preferred Stock,” “Description of Common Stock” and “Description of Warrants” will apply to the securities included in each unit, to the extent relevant.
Issuance in Series
We may issue units in such amounts and in as many distinct series as we wish. This section summarizes terms of the units that apply generally to all series. Most of the financial and other specific terms of your series will be described in the applicable prospectus supplement.
Unit Agreements
We will issue the units under one or more unit agreements to be entered into between us and a complete analysisbank or other financial institution, as unit agent. We may add, replace or terminate unit agents from time to time. We will identify the unit agreement under which each series of units will be issued and the unit agent under that agreement in the applicable prospectus supplement.
The following provisions will generally apply to all unit agreements unless otherwise stated in the applicable prospectus supplement.
Modification Without Consent
We and the applicable unit agent may amend any unit or unit agreement without the consent of any holder:
to cure any ambiguity; any provisions of the governing unit agreement that differ from those described below;
to correct or supplement any defective or inconsistent provision; or
to make any other change that we believe is necessary or desirable and will not adversely affect the interests of the affected holders in any material respect.
We do not need any approval to make changes that affect only units to be issued after the changes take effect. We may also make changes that do not adversely affect a particular unit in any material respect, even if they adversely affect other units in a material respect. In those cases, we do not need to obtain the approval of the holder of the unaffected unit; we need only obtain any required approvals from the holders of the affected units.
Modification With Consent
We may not amend any particular unit or a unit agreement with respect to any particular unit unless we obtain the consent of the holder of that unit, if the amendment would:
impair any right of the holder to exercise or enforce any right under a security included in the unit if the terms of that security require the consent of the holder to any changes that would impair the exercise or enforcement of that right; or
reduce the percentage of outstanding units or any series or class the consent of whose holders is required to amend that series or class, or the applicable unit agreement with respect to that series or class, as described below.
Any other change to a particular unit agreement and the units issued under that agreement would require the following approval:
If the change affects only the units of a particular series issued under that agreement, the change must be approved by the holders of a majority of the outstanding units of that series; or
If the change affects the units of more than one series issued under that agreement, it must be approved by the holders of a majority of all outstanding units of all series affected by the change, with the units of all the potential tax considerations relating thereto. This summary is based uponaffected series voting together as one class for this purpose.
These provisions regarding changes with majority approval also apply to changes affecting any securities issued under a unit agreement, as the provisionsgoverning document.
In each case, the required approval must be given by written consent.
Unit Agreements Will Not Be Qualified Under Trust Indenture Act
No unit agreement will be qualified as an indenture, and no unit agent will be required to qualify as a trustee, under the Trust Indenture Act. Therefore, holders of units issued under unit agreements will not have the protections of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, Treasury Regulations promulgated under the Code, administrative rulings and judicial decisions, all as of the date of this prospectus. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income tax consequences different from those set forth below. We have not sought any ruling from the Internal Revenue Service, or IRS,Trust Indenture Act with respect to the statements madetheir units.
Mergers and the conclusions reached in the following summary, and there can be no assurance that the IRSSimilar Transactions Permitted; No Restrictive Covenants or Events of Default
The unit agreements will agreenot restrict our ability to merge or consolidate with, such statements and conclusions.
This summary is limitedor sell our assets to, holders who hold the notes and any common stock received in conversion of notes as capital assets. This summary also does not address the tax considerations arising under the laws of any foreign, state or local jurisdiction. In addition, this discussion does not address tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:
In addition, if a holder is an entity treated as a partnership for U.S. federal income tax purposes, the tax treatment of each partner of such partnership will generally depend upon the status of the partner and upon the activities of the partnership. Partners in partnerships which hold the notes or common stock are urged to consult their tax advisors.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES AND COMMON STOCK ARISING UNDER THE FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
For purposes of this summary, a “U.S. holder” means a beneficial owner of a note that is for U.S. federal income tax purposes:
The unit agreements will not include any restrictions on our ability to put liens on our assets, including our interests in our subsidiaries, nor will they restrict our ability to sell our assets. The unit agreements also will not provide for any events of default or remedies upon the occurrence of any events of default.
Governing Law
The unit agreements and the units will be governed by Massachusetts law.
Form, Exchange and Transfer
We will issue each unit in global—i.e., book-entry—form only. Units in book-entry form will be represented by a corporation created or organizedglobal security registered in the United States or undername of a depositary, which will be the lawsholder of all the units represented by the global security. Those who own beneficial interests in a unit will do so through participants in the depositary’s system, and the rights of these indirect owners will be governed solely by the applicable procedures of the United States, any state thereof, ordepositary and its participants. We will describe book-entry securities, and other terms regarding the District of Columbia;
A beneficial owner of the notes that is not a U.S. holder is referred to in this section as a “non-U.S. holder.”
Consequences to U.S. Holders
Interest
Interest paid on the notes will be includable as ordinary income at the time it is received or accrued, in accordance with your regular method of accounting for U.S. federal income tax purposes.
Registration Rights; Additional Interest; Certain Payments on Notes
The registration of the notes pursuantunits in the applicable prospectus supplement.
Each unit and all securities comprising the unit will be issued in the same form.
If we issue any units in registered, non-global form, the following will apply to our obligations under “Descriptionthem.
The units will be issued in the denominations stated in the applicable prospectus supplement. Holders may exchange their units for units of smaller denominations or combined into fewer units of larger denominations, as long as the total amount is not changed.
Holders may exchange or transfer their units at the office of the Notes—Registration Rights of the Noteholders” doesunit agent. Holders may also replace lost, stolen, destroyed or mutilated units at that office. We may appoint another entity to perform these functions or perform them ourselves.
Holders will not constitutebe required to pay a taxable event for U.S. federal income tax purposes. Weservice charge to transfer or exchange their units, but they may be required to pay additional interestfor any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange, and any replacement, will be made only if our transfer agent is satisfied with the holder’s proof of legal ownership. The transfer agent may also require an indemnity before replacing any units.
If we have the right to redeem, accelerate or settle any units before their maturity, and we exercise our right as to less than all those units or other securities, we may block the exchange or transfer of those units during the period beginning 15 days before the day we mail the notice of exercise and ending on the notes if we failday of that mailing, in order to comply with our obligationsfreeze the list of holders to prepare the mailing. We may also refuse to register transfers of or exchange any unit selected for early settlement, except that we will continue to permit transfers and exchanges of the notes. Also, under certain circumstances, weunsettled portion of any unit being partially settled. We may allow noteholdersalso block the transfer or exchange of any unit in this manner if the unit includes securities that are or may be selected for early settlement.
Only the depositary will be entitled to participatetransfer or exchange a unit in certain extraordinary distributionsglobal form, since it will be the sole holder of the unit.
Payments and Notices
In making payments and giving notices with respect to our shareholders that would otherwise causeunits, we will follow the notes to become convertible. Any cashprocedures as described in the applicable prospectus supplement.
HOW WE PLAN TO SELL THE SECURITIES
We may sell the securities in any one or other consideration received by noteholders would likely be treated as additional interest on the notes. We intend to take the position that the possibility of additional interest becoming due under either of these provisions is a remote or incidental contingency asmore of the issue datefollowing methods from time to time:
directly to investors, directly to agents, or to investors through agents;
through underwriting syndicates led by one or more managing underwriters, or through one or more underwriters acting alone, for resale to the public or investors;
purchases by a broker or dealer as principal and resale by such broker or dealer for its own account;
through a block trade (which may involve crosses) in which the broker or dealer so engaged will attempt to sell the securities as agent but may position and resell a portion of the notes,block as principal to facilitate the transaction;
ordinary brokerage transactions and transactions in which the broker solicits purchasers;
in “at the market offerings,” within the meaning of Treasury Regulation Sections 1.1275-2(h) and 1.1275-4(a)(5). Our determination is binding on holdersRule 415(a)(4) of the notes, unlessSecurities Act, to or through a holder properly disclosesmarket maker or into an existing trading market, on their income tax returnan exchange or otherwise;
transactions not involving market makers or established trading markets, including direct sales or privately negotiated transactions;
exchange distributions and/or secondary distributions;
by delayed delivery contracts or by remarketing firms;
transactions in options, swaps or other derivatives that they are takingmay or may not be listed on an exchange; or
through a contrary position. Althoughcombination of any such methods of sale.
The distribution of the matter is not freesecurities may be effected from doubt, any additional interest should be taxabletime to U.S. holders as ordinary interest income at the time it accruesin one or is received in accordance with a U.S. holder’s normal method of accounting for tax purposes.more transactions:
Constructive Dividendsat a fixed price or prices, which may be changed;
Holders of convertible debt instruments such as the notes may, in certain circumstances, be deemed to have received distributions of stock if the conversion price of such instruments is adjusted. Adjustments to the conversion price made pursuant to a bona fide reasonable adjustment formula which has the effect of preventing the dilution of the interest of the holders of the debt instruments, however, will generally not be deemed to result in a constructive distribution of stock. Certain of the possible adjustments provided in the notes (including, without limitation, adjustments in respect of taxable dividends to our shareholders) may not qualify as being pursuant to a bona fide reasonable adjustment formula. If such adjustments are made, you will be deemed to have received constructive distributions includible in your income in the manner described under “—Dividends” below even though you have not received any cash or property as a result of such adjustments. In certain circumstances, the failure to provide for such an adjustment may also result in a constructive distribution to you.
Sale, Exchange or Other Taxable Disposition of Notes or Common Stock
Upon the sale, exchange (other than a conversion) or other taxable disposition of a note or our common stock, you generally will recognize capital gain or loss equal to the difference between (1) the amount of cash proceeds and the fairat market value of any property received on the sale, exchange or other taxable disposition (except to the extent such amount is attributable to accrued interest income on a note not previously included in
income, which will be taxable as ordinary income) and (2) your adjusted tax basis in the note or common stock, as the case may be. Your adjusted tax basis in a note generally will equal the cost of the note to you. Your tax basis in common stock received on conversion of a note is described below. Such capital gain or loss will be long-term if you have held the note or common stock for more than one yearprices prevailing at the time of sale, exchange or other disposition. Long-term capital gain recognized by certain noncorporate U.S. holders, including individuals, will generally be subject to a reduced tax rate. The deductibility of capital losses is subject to limitations.sale;
Conversionat prices related to such prevailing market prices; or
at negotiated prices.
Any of Notesthe prices may represent a discount from the prevailing market prices.
You generally will not recognize any income, gainAny underwritten offering may be on a best efforts or loss upon conversion of a note into shares of common stock except with respect to cash received in lieu of a fractional share of common stock. Your aggregate tax basisfirm commitment basis. If underwriters are used in the shares of common stock received on conversion of a notesale, the securities acquired by the underwriters will be for their own account. The underwriters may resell the same as your aggregate tax basissecurities in the noteone or more transactions, including without limitation negotiated transactions, at a fixed public offering price or at a varying price determined at the time of conversion (reduced bysale. The obligations, if any, basis allocable to a fractional share interest for which you received cash), and the holding period for such shares received on conversion will generally include the holding period of the note converted.
You will recognize capital gain or loss for U.S. federal income tax purposes upon the receipt of cash in lieu of a fractional share of common stock in an amount equalunderwriter to the difference between the amount of cash received and the holder’s tax basis in such fractional share. See “—Sale, Exchange or Other Disposition of Notes” above.
Dividends
Distributions, ifpurchase any made on our common stock generally will be included in your income as ordinary dividend income to the extent of our current or accumulated earnings and profits. Under recently enacted legislation, however, with respect to noncorporate taxpayers for taxable years beginning after December 31, 2002 and before January 1, 2009, such dividends are subject to tax at the lower applicable capital gain rate provided certain holding period requirements are satisfied. Distributions in excess of our current and accumulated earnings and profits will be treated as a return of capital to the extent of your adjusted tax basis in the common stock and thereafter as capital gain. Dividends received by a corporate U.S. holder may be eligible for a dividends received deduction subject to certain holding period requirements and other requirements and limitations.
Certain Payments on our Common Stock
If we fail to comply with our obligations described under “Description of Notes—Registration Rights of the Noteholders,” we may be required to make payments to noteholders who have converted their notes into common stock. The tax treatment of any such payments for U.S. federal income tax purposes is unclear. However, any such payments would most likely constitute ordinary income to investors at the time it accrues or is received in accordance with their normal method of accounting. Those payments likely would not qualify for the reduced rate of tax applicable to dividends as described above.
Backup Withholding and Information Reporting
We are required to furnish to the record holders of the notes and common stock, other than corporations and other exempt holders, and to the IRS, information with respect to interest paid on the notes and dividends paid on the common stock.
You may be subject to backup withholding, currently at a 28% rate, with respect to interest paid on the notes, dividends paid on the common stock or with respect to proceeds received from a disposition of the notes or shares of common stock. Certain holders (including, among others, corporations and certain tax-exempt organizations) are generally not subject to backup withholding provided that they properly certify their qualification for exemption. Yousecurities will be subject to backup withholdingcertain conditions. We may offer the securities to the public through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate. Subject to certain conditions, the underwriters will be obligated to purchase all of the securities if youany are not otherwise exemptpurchased, other than securities covered by any over-allotment option. Any public offering price and you:any discounts or concessions allowed, reallowed or paid to dealers may be changed from time to time.
We may sell securities directly or through agents we designate from time to properly report paymentstime. We will name any agent involved in the offering and sale of interest or dividends; or
We may also sell securities directly to certify, under penalties of perjury, that you have furnished a correct TIN and that the IRS has not notified you that you are subject to backup withholding. Backup withholding is not an additional tax but, rather, is a method of tax collection. You generally will be entitled to credit any amounts withheld under the backup withholding rules against your U.S. federal income tax liability (or in some cases you may be entitled to a refund) provided that the required information is furnished to the IRS in a timely manner.
Consequences to Non-U.S. Holders
Interest
Except as described below, you will not be subject to the 30% U.S. federal withholding tax with respect to payments of interest on the notes provided that either such interest is effectively connected with the conduct of a United States trade or business, or it is not effectively connected with the conduct of a United States trade or business and:
Special certification rules apply to non-U.S. holders that are pass-through entities rather than corporations or individuals. Prospective investors are urged to consult their tax advisors regarding the certification requirements for non-U.S. holders.
If you cannot satisfy the requirements enumerated in the bullet points described above, you will be subject to the 30% U.S. federal withholding tax with respect to payments of interest on the notes, unless you provide us with a properly executed (1) IRS Form W-8BEN (or successor form) claiming an exemption from or reduction in withholding under the benefit of an applicable U.S. income tax treaty or (2) IRS Form W-8ECI (or successor form) stating that interest paid on the note is not subject to withholding tax because it is effectively connected with the conduct of a United States trade or business.
Under certain circumstances, we may allow noteholders to participate in certain extraordinary distributionssubscription rights distributed to our stockholders that would otherwise cause the notes to become convertible. Any cash or other consideration received by noteholders under these provisions would likely be treated as “contingent interest” and would be subject to withholding tax aton a rate of 30% notwithstanding the general rules above. Depending on the terms of any applicable income tax treaty, these paymentspro rata basis, which may or may not qualify as “interest”be transferable. In any distribution of subscription rights to stockholders, if all of the underlying securities are not subscribed for, we may then sell the unsubscribed securities directly to third parties or “dividends” for purposesmay engage the services of determining the applicability of any exemption from or reduced rate of withholding tax under the treaty.
If you are engaged in a trade or business in the United States and interest on a note is effectively connected with your conduct of that trade or business, you will be subject to U.S. federal income tax on that interest on a net income basis (although you will be exempt from the 30% withholding tax, provided the certification requirements described above are satisfied) in the same manner as if you were a U.S. person as defined under the
Code. In addition, if you are a foreign corporation, you may be subject to a branch profits tax equal to 30% (or lower rate as may be prescribed under an applicable U.S. income tax treaty) of your earnings and profits for the taxable year, subject to adjustments, that are effectively connected with your conduct of a trade or business in the United States.
Sale, Exchange or Other Disposition of Notes or Common Stock
Any gain realized by you on the sale, exchange or other disposition of a note (except with respect to accrued and unpaid interest, which would be taxable as described above) or a share of common stock generally will not be subject to U.S. federal income tax unless:
If your gain is described in the first bullet point above, you generally will be subjectagents, including standby underwriters, to U.S. federal income tax on the net gain derived from the sale. If you are a corporation, then any such effectively connected gain received by you may also, under certain circumstances, be subject to the branch profits tax at a 30% rate (or such lower rate as may be prescribed under an applicable U.S. income tax treaty).
If you are an individual described in the second bullet point above, you will be subject to a flat 30% U.S. federal income tax on the gain derived from the sale, which may be offset by United States source capital losses, even though you are not considered a resident of the United States.
Conversion of Notes
You generally will not recognize any income, gain or loss on the conversion of a note into common stock. To the extent you receive cash in lieu of fractional shares of common stock upon conversion of a note, you generally would be subject to the rules described under “—Consequences to Non-U.S. Holders—Sale, Exchange or Other Disposition of Notes or Common Stock” above.
Dividends
In general, dividends, if any, received by you with respect to our common stock (and any deemed distributions to you as a note holder that result from certain adjustments, or failures to make certain adjustments, to the conversion price of the notes, see “—Consequences to U.S. Holders—Constructive Dividends” above) will be subject to withholding of U.S. federal income tax at a 30% rate, unless such rate is reduced by an applicable U.S. income tax treaty. Dividends that are effectively connected with your conduct of a trade or business in the United States are generally subject to U.S. federal income tax on a net income basis and are exempt from the 30% withholding tax (assuming compliance with certain certification requirements). Any such effectively connected dividends received by a non-U.S. holder that is a corporation may also, under certain circumstances, be subject to the branch profits tax at a 30% rate or such lower rate as may be prescribed under an applicable U.S. income tax treaty.
In order to claim the benefit of a U.S. income tax treaty or to claim exemption from withholding because dividends paid to you on our common stock are effectively connected with your conduct of a trade or business in the United States, you must provide a properly executed IRS Form W-8BEN for treaty benefits or W-8ECI for effectively connected income (or such successor form as the IRS designates), prior to the payment of dividends. These forms must be periodically updated. You may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund.
Certain Payments on our Common Stock
If we fail to comply with our obligations described under “Description of Notes—Registration Rights of the Noteholders,” we may be required to make payments to noteholders who have converted their notes into common stock. The U.S. tax treatment of any such payments is unclear. We intend to withhold tax at a rate of 30% on any such payments made to non-U.S. shareholders unless the shareholder is entitled to a reduction or elimination of withholding under the “other income” provision of an applicable income tax treaty or because the payment is effectively connected with a trade or business conducted by the shareholder in the U.S. and the shareholder provides us with the appropriate Form W-8BEN or W-8ECI, as applicable.
Backup Withholding and Information Reporting
Backup withholding generally will not apply to interest payments made to you in respect of the notes and dividends paid to you on our common stock if you furnish us or our paying agent with appropriate documentation of your non-U.S. status. However, certain information reporting may still apply with respect to interest and dividend payments even if certification is provided. The payment of proceeds from your disposition of notes (including a redemption) or common stock to or through the U.S. office of any broker, domestic or foreign, will be subject to information reporting and possible backup withholding unless you certify as to your non-U.S. status under penalties of perjury or otherwise establish an exemption. The payment of the proceeds from your disposition of notes or common stock to or through a non-U.S. office of either a U.S. broker or a non-U.S. broker that is a U.S.-related person will be subject to information reporting, but not backup withholding, unless such broker has documentary evidence in its files that you are not a U.S. person and the broker has no knowledge to the contrary, or you establish an exemption. For this purpose, a “U.S.-related person” is (a) a controlled foreign corporation for U.S. federal income tax purposes, (b) a foreign 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 payment (or for such part of the period that the broker has been in existence) is derived from activities that are effectively connected with the conduct of a United States trade or business or (c) a foreign partnership that is either engaged in the conduct of a trade or business in the United States or of which 50% or more of its income or capital interests are held by U.S. persons. Neither information reporting nor backup withholding will apply to a payment of the proceeds of your disposition of notes or common stock by or through a non-U.S. office of a non-U.S. broker that is not a U.S.-related person. Copies of any information returns filed with the IRS may be made available by the IRS, under the provisions of a specific treaty or agreement, to the taxing authorities of the country in which you reside.
You generally will be entitled to credit any amounts withheld under the backup withholding rules against your U.S. federal income tax liability (or in some cases you may be entitled to a refund), provided that the required information is furnished to the IRS in a timely manner.
We originally issued the notes in a private placement to the initial purchasers in April 2004. The initial purchasers resold the notes to purchasers, including the selling securityholders listed below, in transactions exempt from registration pursuant to Rule 144A under the Securities Act of 1933. Selling securityholders may offer and sell the notes and the underlying common stock pursuantunsubscribed securities to this prospectus.third parties.
The following table sets forth information with respect to the selling securityholders and the respective principal amounts of notes and shares of common stock beneficially owned by each selling securityholder that may be offered under this prospectus. The information is based on information that has been provided to us by or on behalf of the selling securityholders. None of the selling securityholders has, or has had within the past three years, any position, office or other material relationship with us or any of our predecessors or affiliates. Because the selling securityholders may from time to time use this prospectus to offer all or some portion of the notes or the shares of common stock offered by this prospectus, we cannot provide an estimate as to the amount or percentage of any such type of security that will be held by the selling securityholder upon termination of any particular offering or sale under this prospectus. In addition, the selling securityholders may have sold, transferred or otherwise disposed of all or a portion of any of these securities since the date on which they provided us information regarding their holdings, in transactions which are exempt from the registration requirements of the Securities Act.
Accordingly, the term “selling securityholders” as used in this prospectus means those persons listed in the table below, as well as their transferees, pledgees, donees and/or successors. Information about the selling securityholders may change over time. Any updated information given to us by the selling securityholders will be set forth in prospectus supplements if and when necessary.
Name | Principal May Be Sold | Percentage of Notes Outstanding | Number of Shares of Common Stock Issuable upon Conversion of the Notes that May Be Sold (1)(2) | ||||
Advisory Convertible Arbitrage Fund (I) L.P. | 1,500,000 | 1.20 | % | 49,619 | |||
Alexandra Global Master Fund, Ltd. | 6,000,000 | 4.80 | % | 198,478 | |||
AllState Insurance Company (3) | 2,000,000 | 1.60 | % | 66,159 | |||
Argent Classic Convertible Arbitrage Fund (Bermuda) Ltd. (4) | 4,810,000 | 3.85 | % | 159,113 | |||
Argent Classic Convertible Arbitrage Fund L.P. (4) | 1,140,000 | 0.91 | % | 37,710 | |||
Argent Classic Convertible Arbitrage Fund II, L.P. (4) | 250,000 | 0.20 | % | 8,269 | |||
Arkansas PERS (5) | 675,000 | 0.54 | % | 22,328 | |||
Astrazeneca Holdings Pension (5) | 200,000 | 0.16 | % | 6,615 | |||
BNP Paribas Equity Strategies, SNC (6) | 635,000 | 0.51 | % | 21,005 | |||
Boilermakers Blacksmith Pension Trust (5) | 825,000 | 0.66 | % | 27,290 | |||
CALAMOS® Market Neutral Fund – CALAMOS® Investment Trust (7) | 3,000,000 | 2.40 | % | 99,239 | |||
Cheyne Leveraged Fund LP | 1,026,000 | 0.82 | % | 33,939 | |||
Chrysler Corporation Master Retirement Trust (8) | 1,700,000 | 1.36 | % | 56,235 | |||
CIP Limited Duration Co. | 134,000 | 0.11 | % | 4,432 | |||
CNH CA Master Account, L.P. (9) | 250,000 | 0.20 | % | 8,269 | |||
Context Convertible Arbitrage Offshore, Ltd. (10) | 1,200,000 | 0.96 | % | 39,695 | |||
CooperNeff Convertible Strategies (Cayman) Master Fund, LP (6) | 684,000 | 0.55 | % | 22,626 | |||
CS Alternative Strategy Ltd. | 74,000 | 0.06 | % | 2,447 | |||
DBAG London (11) | 10,850,000 | 8.68 | % | 358,914 | |||
Delaware PERS (5) | 380,000 | 0.30 | % | 12,570 |
Name Principal May Be Sold Delta Airlines Master Trust (5) Delta Airlines Master Trust – CV (8) Delta Pilots Disability & Survivorship Trust – CV (8) Deutsche Bank Securities Inc. (12) DKR SoundShore Opportunity Holding Fund Ltd. (13) Duke Endowment (5) F.M. Kirby Foundation, Inc. Fore Convertible Master Fund, Ltd. (14) Fore Plan Asset Fund, Ltd. (14) Froley Revy Investment Convertible Security Fund (5) Guggenheim Portfolio Company VIII (Cayman), Ltd. (15) ICI American Holdings Trust (5) Institutional Benchmark Master Fund International Truck & Engine Corporation Non-Contributory Retirement Plan Trust (8) International Truck & Engine Corporation Retiree Health Benefit Trust (8) International Truck & Engine Corporation Retirement Plan for Salaried Employees Trust (8) Louisiana CCRF (5) Lyxor/Context Fund Ltd. (10) Lyxor/Convertible Arbitrage Fund Limited (6) Man Convertible Bond Master Fund, Ltd. (16) Man Mac 1 Ltd. (17) Microsoft Corporation (8) Motion Picture Industry Health Plan - Active Member Fund (8) Motion Picture Industry Health Plan - Retiree Member Fund (8) Nuveen Preferred & Convertible Fund (5) Nuveen Preferred & Convertible Income Fund JPL (5) OCLO Online Computer Library Center Inc. (5) OCM Convertible Trust (8) OCM Global Convertible Securities Fund (8) Partner Reinsurance Company Limited (8) Piper Jaffray & Co. Prudential Insurance Co. of America (5) Qwest Occupational Health Trust (8) Royal Bank of Canada (Northfield) (10) SG Americas Securities, LLC Singlehedge US Convertible Arbitrage Fund Southern Farm Bureau Life Insurance (5) St. Thomas Trading, Ltd. (16) State Employees Retirement Fund of the State of Delaware (8) State of Oregon/Equity (5) Sturgeon Limited (6) Syngenta AG (5) The St. Paul Travelers Companies, Inc. - Commercial Lines (8) The St. Paul Travelers Companies, Inc. - Personal Lines (8)
Amount of Notes
Beneficially
Owned that Percentage of
Notes
Outstanding Number of Shares
of Common Stock
Issuable upon
Conversion of the
Notes that May
Be Sold (1)(2) 210,000 0.17 % 6,946 430,000 0.34 % 14,224 215,000 0.17 % 7,112 125,000 0.10 % 4,134 2,250,000 1.80 % 74,429 175,000 0.14 % 5,788 845,000 0.68 % 27,952 1,236,000 0.99 % 40,886 124,000 0.10 % 4,101 50,000 0.04 % 1,653 216,000 0.17 % 7,145 150,000 0.12 % 4,961 1,000,000 0.80 % 33,079 515,000 0.41 % 17,036 200,000 0.16 % 6,615 225,000 0.18 % 7,442 75,000 0.06 % 6,615 150,000 0.12 % 4,961 123,000 0.10 % 4,068 5,683,000 4.55 % 187,991 424,000 0.34 % 14,025 590,000 0.47 % 19,517 105,000 0.08 % 3,473 70,000 0.06 % 2,315 3,250,000 2.60 % 107,509 2,500,000 2.00 % 82,699 25,000 0.02 % 826 840,000 0.67 % 27,786 55,000 0.04 % 1,819 370,000 0.30 % 12,239 1,000,000 0.80 % 33,079 50,000 0.04 % 1,653 95,000 0.08 % 3,142 125,000 0.10 % 4,134 5,000,000 4.00 % 165,398 178,000 0.14 % 5,888 330,000 0.26 % 10,916 7,317,000 5.85 % 242,044 490,000 0.39 % 16,209 2,000,000 1.60 % 66,159 130,000 0.10 % 4,300 115,000 0.09 % 3,804 35,000 0.03 % 1,157 25,000 0.02 % 826
Name Principal May Be Sold TQA Special Opportunities Master Fund Ltd. (18) Tribeca Investments Ltd. UnumProvident Corporation (8) Vanguard Convertible Securities Fund (8) Whitebox Diversified Convertible Arbitrage Partners LP (19) Xavex Convertible Arbitrage 10 Fund (4) Any other holder of notes or future transferee, pledgee, donee or successor of any holder (20) TOTAL
Amount of Notes
Beneficially
Owned that Percentage of
Notes
Outstanding Number of Shares
of Common Stock
Issuable upon
Conversion of the
Notes that May
Be Sold (1)(2) 1,000,000 0.80 % 33,079 3,000,000 2.40 % 99,239 155,000 0.12 % 5,127 9,665,000 7.73 % 319,715 3,000,000 2.40 % 99,239 630,000 0.50 % 20,840 31,101,000 24.88 % 1,028,851 $ 125,000,000 100 % 4,134,962
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:
The selling securityholders and any such broker-dealers or agents whothat participate in the distribution of the notes and the underlying common stocksecurities may be deemed to be “underwriters.” As a result, any profits onunderwriters under the sale of the notes and underlying common stock by selling securityholdersSecurities Act and any discounts or commissions or concessions received bythey receive from us and any such broker-dealers or agents mightprofit on the resale of securities they realize may be deemed to be underwriting discounts and commissions under the Securities Act. IfThe applicable prospectus supplement will, where applicable:
identify any such underwriter or agent;
describe any compensation in the selling securityholders are deemedform of discounts, concessions, commissions or otherwise received from us by each of such underwriter, dealer or agent and in the aggregate to beall underwriters, dealers and agents;
identify the selling securityholderspurchase price and proceeds from such sale;
identify the amounts underwritten;
identify the nature of the underwriter’s obligation to take the securities;
identify any over-allotment option under which the underwriters may purchase additional securities from us; and
identify any quotation systems or securities exchanges on which the securities may be quoted or listed.
Unless otherwise specified in the related prospectus supplement, each series of securities will be a new issue with no established trading market, other than the common stock, which is listed on the NASDAQ Global Select Market. Any common stock sold pursuant to a prospectus supplement will be listed on the NASDAQ Global Select Market, subject to certain statutory liabilitiesapplicable notices. We may elect to apply for quotation or listing of including,any other class or series of our securities, on a quotation system or an exchange but we are not limitedobligated 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 indo so. It is possible that one or more transactions at:underwriters may make a market in a class or series of our securities, but such underwriters will not be obligated to do so and may discontinue any market making at any time without notice. Therefore, no assurance can be given as to the liquidity of, or the trading market for, any other class or series of our securities.
These salesIn connection with an offering, an underwriter may be effected in transactions:
open market. These transactions may include block trades or crosses. Crosses are transactions in which the same broker acts as 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, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of the notes and underlying common stocka greater number of securities than they are required to purchase in the courseoffering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional securities, if any, from us in the offering. If the underwriters have an over-allotment option to purchase additional securities from us, the underwriters may close out any covered short position by either exercising their over-allotment option or purchasing securities in the open market. In determining the source of hedging their positions. The selling securityholders may also sell the notes and underlying common stock and deliver notes and underlying common stocksecurities to close out the covered short position, the underwriters may consider, among other things, the price of securities available for purchase in the open market as compared to the price at which they may purchase securities through the over-allotment option. “Naked” short sales are any sales in excess of such option or where the underwriters do not have an over-allotment option. The underwriters must close out any naked short position by purchasing securities in the open market. A naked short position is more likely to be created if the
underwriters are concerned that there may be downward pressure on the price of the securities in the open market after pricing that could adversely affect investors who purchase in the offering.
Accordingly, to cover these short sales positions or loanto otherwise stabilize or pledge notes and underlying common stock to broker-dealers that in turn may sellmaintain the notes and underlying common stock.
To our knowledge, asprice of the datesecurities, the underwriters may bid for or purchase securities in the open market and may impose penalty bids. If penalty bids are imposed, selling concessions allowed to syndicate members or other broker-dealers participating in the offering are reclaimed if securities previously distributed in the offering are repurchased, whether in connection with stabilization transactions or otherwise. The effect of this prospectus, there are no plans, arrangementsthese transactions may be to stabilize or understandings between any selling securityholders and any underwriter, broker-dealer or agent regardingmaintain the salemarket price of the notessecurities at a level above that which might otherwise prevail in the open market. The impositions of a penalty bid may also affect the price of the securities to the extent that it discourages resale of the securities. The magnitude or effect of any stabilization or other transactions is uncertain. These transactions may be effected on the NASDAQ Global Select Market or otherwise and, if commenced, may be discontinued at any time.
We do not make any representation or prediction as to the underlying common stock bydirection or magnitude of any effect that the selling securityholders. Selling securityholders may sell any or alltransactions described above might have on the price of the
notes and the underlying common stock offered by them pursuant to this prospectus. securities. In addition, we cannot assure youdo not make any representation that anyunderwriters will engage in such selling securityholdertransactions or that such transactions, once commenced, will not transfer, devise or gift the notesbe discontinued without notice at any time.
Under agreements into which we may enter, underwriters, dealers and the underlying common stock by other means not described in this prospectus.
Our common stock is quoted on the Nasdaq National Market under the symbol “MRCY.” We do not intend to apply for listing of the notes on any securities exchange or for quotation through Nasdaq. Accordingly, we cannot assure you that the notes will be liquid or that any trading market for the notes will develop.
There can be no assurance 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.
The selling securityholders and any other person participating in such distribution will be subject to the Exchange Act. The Exchange Act includes, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the notes and the underlying common stock by the selling securityholders and any other such person. In addition, Regulation M of the Exchange Act may restrict the ability of any person engagedagents who participate in the distribution of the notes and the underlying common stocksecurities may be entitled to engage in market-making activities with respect to the particular notes and the underlying common stock being distributed for a period of up to five business days prior to the commencement of such distribution. This may affect the marketability of the notes and the underlying common stock and the ability of any person or entity to engage in market-making activities with respect to the notes and the underlying common stock.
Under interpretations of the SEC, any selling securityholder who is a “broker-dealer” will be deemed to be an “underwriter” within the meaning of Section 2(11) of the Securities Act with respect to the securities they are offering for resale under this prospectus. To our knowledge, the following selling securityholders are registered broker-dealers: Piper Jaffray & Co., SG Americas Securities, LLC and Deutsche Bank Securities Inc. Other than with respect to the initial purchasers, these securityholders purchased their notes in the open market, not directly fromindemnification by us and we are not aware of any underwriting plan or agreement, underwriters’ or dealers’ compensation, or passive market making or stabilizing transactions involving the purchase or distribution of these securities by these securityholders. To our knowledge, none of the selling securityholders who are affiliates of broker-dealers purchased the notes outside the ordinary course of business or, at the time of the purchase of the notes, had any agreement or understanding, directly or indirectly, with any person to distribute the securities.
Pursuant to the registration rights agreement filed as an exhibit to the registration statement of which this prospectus is a part, we and the selling securityholders will be indemnified by the other against certain civil liabilities, including certain liabilities under the Securities Act, or willcontribution from us to payments which the underwriters, dealers or agents may be entitledrequired to contributionmake.
Underwriters, dealers and agents may engage in transactions with us or perform services for us in the ordinary course of business.
If indicated in the applicable prospectus supplement, securities may also be offered or sold by a “remarketing firm” in connection with a remarketing arrangement contemplated by the terms of the securities. Remarketing firms may act as principals for their own accounts or as agents. The applicable prospectus supplement will identify any remarketing firm and the terms of its agreement, if any, with us. It will also describe the remarketing firms compensation. Remarketing firms may be deemed to be underwriters in connection with the remarketing of the securities.
If indicated in the applicable prospectus supplement, we will authorize underwriters, dealers or other persons acting as our agents to solicit offers by particular institutions to purchase securities from us at the public offering price set forth in such prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on such future date or dates stated in such prospectus supplement. Each delayed delivery contract will be for an amount no less than, and the aggregate principal amounts of securities sold under delayed delivery contracts shall be not less nor more than, the respective amounts stated in the applicable prospectus supplement. Institutions with which such delayed delivery contracts, when authorized, may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others, but will in all cases be subject to our approval. The obligations of any purchaser under any such contract will be subject to the conditions that (1) the purchase of the securities shall not at the time of delivery be prohibited under the laws of any jurisdiction in the United States to which the purchaser is subject, and (2) if the securities are being sold to underwriters, we shall have sold to the underwriters the total principal amount of the securities less the principal amount thereof covered by the delayed delivery contracts. The underwriters and such other agents will not have any responsibility in respect of the validity or performance of such delayed delivery contracts.
To comply with applicable state securities laws, the securities offered by this prospectus will be sold, if necessary, in such jurisdictions only through registered or licensed brokers or dealers. In addition, securities may not be sold in some states unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference the information and reports we file with it, which means that we can disclose important information to you by referring you to these liabilities.
documents. Our SEC file number is 0-23599. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede the information already incorporated by reference. We are incorporating by reference the documents listed below, which we have agreedalready filed with the SEC, and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, except as to pay substantiallyany portion of any future report or document that is not deemed filed under such provisions, until we sell 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.securities:
Certain legal matters relating to the validity of the securities offered hereby will be passed upon for us by Goodwin ProcterLLP, Boston, Massachusetts.
The consolidated financial statements incorporated in this Registration Statement by reference to the Annual Report on Form 10-K for the year ended June 30, 20032008;
Quarterly Report on Form 10-Q for the quarter ended September 30, 2008;
Quarterly Report on Form 10-Q for the quarter ended December 31, 2008;
Portions of our Proxy Statement filed with the SEC on October 17, 2008 that have been incorporated by reference into our Annual Report on Form 10-K;
Current Reports on Form 8-K dated July 30, 2008 (accepted at 17:25:04), September 18, 2008, October 24, 2008, November 20, 2008, January 6, 2009, January 28, 2009 (accepted at 07:17:18), February 2, 2009, February 4, 2009 and April 24, 2009;
The description of our common stock contained in our registration statement on Form 8-A, which was filed on January 7, 1998, including any amendment or report filed for the purpose of updating such description; and
The description of our preferred stock purchase rights contained in our registration statement on Form 8-A, which was filed on December 15, 2005, including any amendment or report filed for the purpose of updating such description.
Upon request, we will provide, without charge, to each person to whom a copy of this prospectus is delivered a copy of the documents incorporated by reference into this prospectus. You may request a copy of these filings, and any exhibits we have specifically incorporated by reference as an exhibit in this prospectus, at no cost by writing or telephoning us at the following address:
Mercury Computer Systems, Inc.
201 Riverneck Road
Chelmsford, Massachusetts 01824
(978) 256-1300
Attention: Secretary
This prospectus is part of a registration statement we filed with the SEC. We have incorporated exhibits into this registration statement. You should read the exhibits carefully for provisions that may be important to you.
You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this prospectus or in the documents incorporated by reference is accurate as of any date other than the date on the front of this prospectus or those documents.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and in accordance with the Exchange Act, file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. These documents also may be accessed through the SEC’s electronic data gathering, analysis and retrieval system, or EDGAR, via electronic means, including the SEC’s home page on the Internet (www.sec.gov).
We have the authority to designate and issue more than one class or series of stock having various preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption. See “Description of Preferred Stock” and “Description of Common Stock.” We will furnish a full statement of the relative rights and preferences of each class or series of our stock which has been so designated and any restrictions on the ownership or transfer of our stock to any stockholder upon request and without charge. Written requests for such copies should be directed to Mercury Computer Systems, Inc., 201 Riverneck Road, Chelmsford, Massachusetts 01824, Attention: Secretary. Our telephone number is (978) 256-1300. Our website is located atwww.mc.com. Information contained on our website is not incorporated by reference into this prospectus and, therefore, is not part of this prospectus or any accompanying prospectus supplement.
The consolidated financial statements and schedule of Mercury Computer Systems, Inc. as of June 30, 2008 and 2007, and for each of the years in the three-year period ended June 30, 2008, have been incorporated by reference herein in reliance onupon the report of PricewaterhouseCoopersKPMG LLP, an independent registered public accounting firm, given onincorporated by reference herein, and upon the authority of said firm as experts in auditingaccounting and accounting.auditing. The audit report covering the June 30, 2008 financial statements refers to a change in accounting for share-based payments.
Certain legal matters, including the legality of the securities offered, will be passed upon for us by Goodwin Procter LLP, Boston, Massachusetts.
You should only rely on the information contained in this prospectus, any prospectus supplement or any document incorporated by reference. We have not authorized anyone else to provide you with different or additional information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of those documents.
$125,000,000TABLE OF CONTENTS
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2.00% Convertible Senior Notes due 2024
MERCURY COMPUTER SYSTEMS, INC.
and the $100,000,000
Debt Securities
Preferred Stock
Common Stock Issuable upon Conversion of the Notes
Warrants
Units
PROSPECTUS
April 28, 2009
PROSPECTUS
, 2004
PART II
II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and DistributionDistribution.
Mercury will pay allThe expenses incident toin connection with the offeringissuance and sale to the publicdistribution of the notes and sharessecurities being registered other than any commissionswill be borne by Mercury Computer Systems, Inc. and discounts of underwriters, dealers or agents and any transfer taxes. Such expenses are set forth in the following table. All ofamounts except the amounts shownregistration fee are estimates except for the Securities and Exchange Commission registration fee.estimated.
SEC registration fee | $ | 15,838 | ||||
Registration fee | $ | 5,580 | ||||
Legal fees and expenses | * | |||||
Accounting fees and expenses | 190,000 | * | ||||
Legal fees and expenses | 190,000 | |||||
Printing costs | 50,000 | |||||
Printing fees and expenses | * | |||||
Transfer agent and trustee fees | * | |||||
Miscellaneous | 10,000 | * | ||||
Total | $ | 455,838 | $ | 5,580 | ||
| * | Estimated expenses not presently known. |
Item 15. Indemnification of Directors and OfficersOfficers.
Section 2.02(b)(4) of Chapter 156D of the Massachusetts General Laws allows a corporation to eliminate or limit the personal liability of a director of a corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of an improper distribution or obtained an improper personal benefit. Mercury has included a similar provision in its articles of organization.
Section 8.51(a) of Chapter 156D of the Massachusetts General Laws provides that a corporation may indemnify its directors against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement reasonably incurred in connection with any litigation or other legal proceeding brought against any director by virtue of his position as a director of the corporation unless he is deemed to have not acted in good faith in the reasonable belief that his action was in the best interest of the corporation. As noted below, Mercury has provided for director indemnification in its articles of organization and bylaws.
Section 8.52 of Chapter 156D of the Massachusetts General Laws provides that a corporation must indemnify a director who is wholly successful, on the merits or otherwise, in the defense of any proceeding to which the director was a party because he was a director of the corporation against reasonable expenses incurred by him in connection with the proceeding.
Section 8.56(a) of Chapter 156D of the Massachusetts General Laws (“Section 8.56”) provides that a corporation may indemnify its officers to the same extent as its directors and, for officers that are not directors, to the extent provided by (i) the articles of organization, (ii) the bylaws, (iii) a vote of the board of directors or (iv) a contract. In all instances, the extent to which a corporation provides indemnification to its officers under Section 8.56 is optional. As noted below, Mercury has provided for officer indemnification in its bylaws.
Mercury’s bylaws, as amended, provide that, except as limited by law or otherwise provided in the bylaws, each director or officer of Mercury (and his heirs and personal representatives) shall be indemnified by the Company against any expense incurred in connection with each proceeding in which he is involved as a result of his serving or having served as a director or officer. The bylaws further provide that no indemnification shall be provided to a director or officer with respect to a proceeding as to which it shall have been adjudicated that he did not act in good faith in the reasonable belief that his action was in the best interests of Mercury. Mercury will pay sums on account of indemnification in advance of a final disposition of a proceeding upon receipt of an
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undertaking by the director/officer to repay such sums if it subsequently established that he is not entitled to indemnification.
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The bylaws do not limit the power of the board of directors to authorize the purchase and maintenance of insurance on behalf of any director or officer against any expense whether or not Mercury would have the power to indemnify such director or officer against such expense under the bylaws. Mercury maintains directors’ and officers’ liability insurance.
Mercury has entered into indemnification agreements with its directors. The indemnification agreements require, among other matters, that Mercury indemnify its directors to the fullest extent provided by law and advance to directors certain expenses, subject to reimbursement if it is subsequently determined that indemnification is not permitted.
Item 16. ExhibitsExhibits.
A list of exhibits filed with this registration statement on Form S-3 is set forth on the Exhibit Index and is incorporated herein by reference.
Item 17. Undertakings.
| (a) | |||
| |||
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Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any actsfacts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent20% 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), (a)(1)(ii) and (a)(1)(ii)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Securities and Exchange Commission 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.statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of 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 initialbona fide offering thereof.
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.offering;
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(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
The(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;provided,however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date;
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant hereby undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser;
(6) 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 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to 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 initialbona fide offering thereof.thereof;
(7) 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 Securities Act of 1933 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
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action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.issue;
(8) That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective;
(9) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and
(10) To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Securities and Exchange Commission under Section 305(b)2 of the Trust Indenture Act.
II-3II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf ofby the undersigned, thereunto duly authorized, in the City of Chelmsford, Commonwealth of Massachusetts, on August 6, 2004.this 28th day of April, 2009.
| MERCURY COMPUTER SYSTEMS, INC. | ||
By: | /s/ R | |
| ||
| Senior Vice President and Chief | ||
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each personindividual whose signature appears below hereby severally constitutes and appoints James R. Bertelli,Mark Aslett, Robert E. Hult and Joseph M. Hartnett,Karl D. Noone and each of them singly, as such person’s true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for such person in such person’s name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement (or any registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) underof the Securities Act of 1933), and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that any said attorney-in-fact and agent, or any substitute or substitutes of any of them, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature | Title | Date | ||
/s/ MARK ASLETT Mark Aslett | President, Chief Executive Officer and Director (Principal Executive Officer) | April 28, 2009 | ||
/s/ R
| Senior Vice President and Chief | |||
/s/ K
|
(Principal Accounting Officer) | |||
/s/ R
|
| |||
/
|
| |||
Albert P. Belle Isle | Director | |||
/ George W. Chamillard | Director | |||
II-4
Signature | Title | Date | ||
/s/ WILLIAM K. O’BRIEN William K. O’Brien | Director | April 28, 2009 | ||
/s/ L
| Director | |||
/s/ V
| Director | |||
/
|
| |||
Richard P. Wishner | Director | |||
II-5
EXHIBIT INDEX
Exhibit | Description | ||
| Form of Underwriting Agreement | |||
| 3.1.1 | Articles of Organization | ||
| 3.1.3 | Articles of Amendment (incorporated herein by reference to Exhibit 1 of the registrant’s registration statement on Form 8-A filed on December 15, 2005) | ||
| 3.2.1 | Bylaws, as amended through September 22, 2004 (incorporated herein by reference to Exhibit 3.2 of the registrant’s quarterly report on Form 10-Q for the quarter ended September 30, 2004) | ||
| 3.2.2 | Amendment No. 1 to Bylaws, dated December 17, 2007 (incorporated herein by reference to Exhibit 3.1 of the registrant’s current report on Form 8-K filed on December 20, 2007) | ||
| 3.2.3 | Amendment No. 2 to Bylaws, dated January 21, 2008 (incorporated herein by reference to Exhibit 3.1 of the registrant’s current report on Form 8-K filed on January 24, 2008) | ||
| 4.1 | Form of Indenture for Senior Debt Securities | ||
| 4.2 | Form of Senior Debt Security (included in Exhibit 4.1 hereto) | ||
| 4.3 | Form of Indenture for Subordinated Debt Securities | ||
| 4.4 | Form of Subordinated Debt Security (included in Exhibit 4.3 hereto) | ||
| 4.5 | Form of Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 | ||
| Form of Certificate of Designations | |||
| 4.8* | Form of Preferred Stock Certificate | ||
| 4.9* | Form of Warrant Agreement | ||
| 4.10* | Form of Warrant Certificate | ||
| 4.11* | Form of Unit Agreement | ||
| 4.12* | Form of Unit Certificate | ||
| 5.1 | Opinion of Goodwin ProcterLLP as to the legality of the Securities being registered | ||
| 12.1 | |||
| 23.1 | Consent of | ||
| 23.2 | Consent of | ||
| 24.1 | Power of Attorney (included | ||
| 25.1 | Form T-1 Statement of Eligibility of Trustee for Senior Indenture | ||
| 25.2 | Form T-1 Statement of Eligibility of Trustee for Subordinated Indenture under the Trust Indenture Act of 1939 | ||
| * |