SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
RadiSys Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No Fee Required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value transaction:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration number, or
the Form or Schedule and the date of its filing.
1. Amount previously paid:
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 2001
---------------------------------
To the Shareholders of RadiSys Corporation:
The Annual Meeting of Shareholders of RadiSys Corporation, an Oregon
corporation (the "Company"), will be held at the Company's headquarters, located
at 5445 NE Dawson Creek Drive, Hillsboro, Oregon, on May 15, 2001 at 8:30 a.m.
for the following purposes:
1. To elect seven directors, each to serve until the next Annual
Meeting of Shareholders or until a successor has been elected and
qualified;
2. To vote on an amendment to the Company's 1996 Employee Stock
Purchase Plan to increase the number of shares of the Company's
Common Stock that may be issued pursuant to the plan from 1,250,000
to 1,750,000; and
3. To transact any other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 30, 2001 are
entitled to notice of and to vote at the meeting or any adjournments thereof.
Please sign and date the enclosed proxy and return it promptly in the
enclosed reply envelope. If you are able to attend the meeting, you may, if you
wish, revoke the proxy and vote personally on all matters brought before the
meeting.
A list of shareholders will be available for inspection by the
shareholders commencing April 16, 2001 at the corporate headquarters of the
Company, located at 5445 NE Dawson Creek Drive, Hillsboro, Oregon 97124.
By Order of the Board of Directors,
Annette M. Mulee
Corporate Secretary
April 13, 2001
Hillsboro, Oregon
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YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN
PERSON, PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE SO THAT YOUR STOCK WILL BE VOTED. THE ENVELOPE REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
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RADISYS CORPORATION
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PROXY STATEMENT
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SOLICITATION AND REVOCABILITY OF PROXY
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of RadiSys Corporation, an Oregon corporation
(the "Company"), to be voted at the Annual Meeting of Shareholders to be held at
the Company's headquarters, located at 5445 NE Dawson Creek Drive, Hillsboro,
Oregon, on May 15, 2001 at 8:30 a.m. for the purposes set forth in the
accompanying Notice of Annual Meeting. All proxies in the enclosed form that are
properly executed and received by the Company prior to or at the Annual Meeting
and not revoked will be voted at the Annual Meeting or any adjournments thereof
in accordance with the instructions thereon. Any proxy given pursuant to this
solicitation may be revoked by the person giving it at any time before it is
voted. Proxies may be revoked by (i) filing with the Secretary of the Company,
at or before the taking of the vote at the Annual Meeting, a written notice of
revocation bearing a later date than the date of the proxy, (ii) duly executing
a subsequent proxy relating to the same shares and delivering it to the
Secretary of the Company before the Annual Meeting or (iii) attending the Annual
Meeting and voting in person (although attendance at the Annual Meeting will not
in and of itself constitute a revocation of a proxy). Any written notice
revoking a proxy should be sent to RadiSys Corporation, 5445 NE Dawson Creek
Drive, Hillsboro, Oregon 97124, Attention: Corporate Secretary, or hand
delivered to the Secretary at or before the taking of the vote at the Annual
Meeting.
The mailing address of the principal executive offices of the Company is
5445 NE Dawson Creek Drive, Hillsboro, Oregon 97124. This Proxy Statement and
the accompanying Notice of Annual Meeting and the Proxy Card are first being
mailed to the shareholders on or about April 13, 2001.
The cost of preparing, printing and mailing this Proxy Statement and of
the solicitation of proxies by the Company will be borne by the Company.
Solicitation will be made by mail and, in addition, may be made by directors,
officers and employees of the Company personally, or by telephone or telegram.
The Company will request brokers, custodians, nominees and other like parties to
forward copies of proxy materials to beneficial owners of stock and will
reimburse such parties for their reasonable and customary charges or expenses in
this connection. The Company has retained Mellon Investor Services, LLC to
assist in the solicitation of proxies from brokers and other nominees at an
estimated cost to the Company of $7,500.
The record date for determination of shareholders entitled to receive
notice of and to vote at the Annual Meeting is March 30, 2001. At the close of
business on March 30, 2001, 17,166,827 shares of Common Stock of the Company
were outstanding and entitled to vote at the Annual Meeting. Each share of
Common Stock is entitled to one vote with respect to each matter to be voted on
at the Annual Meeting.
THE COMPANY WILL PROVIDE TO ANY PERSON WHOSE PROXY IS SOLICITED BY THIS
PROXY STATEMENT, WITHOUT CHARGE, UPON WRITTEN REQUEST TO 5445 NE DAWSON CREEK
DRIVE, HILLSBORO, OREGON 97124, ATTENTION: DIRECTOR OF INVESTOR RELATIONS, A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2000.
1
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of seven members.
The directors are elected at the Annual Meeting of Shareholders to serve until
the next Annual Meeting of Shareholders and until their successors are elected
and qualified. Proxies received from shareholders, unless directed otherwise,
will be voted FOR the election of the following nominees: Dr. Glenford J. Myers,
James F. Dalton, Richard J. Faubert, C. Scott Gibson, Jean-Pierre D. Patkay,
Jean-Claude Peterschmitt and Carl W. Neun.
If no instructions are given, proxies will be voted for the election of
the seven nominees named below. All of the nominees are currently directors of
the Company. The Company is not aware that any nominee is or will be unable to
stand for reelection. If any nominee is not available as a candidate for
director, the number of directors constituting the Board of Directors may be
reduced prior to the Annual Meeting or the proxies may be voted for such other
candidate or candidates as are nominated by the Board of Directors, in
accordance with the authority conferred in the proxy. Directors shall be elected
by a plurality of the votes of the shares present in person or represented by
proxy at the meeting and entitled to vote on the election of directors.
Abstentions and broker non-votes are counted for purposes of determining whether
a quorum exists at the Annual Meeting, but have no effect on the determination
of whether a plurality exists with respect to a given nominee.
Set forth below is the name, position with the Company, principal
occupation and age of each of the nominees for director of the Company. Certain
of the information about each of the nominees is described below and in
"Security Ownership of Certain Beneficial Owners and Management." There are no
family relationships among the directors and executive officers of the Company.
Name Age Position with the Company
- ---- --- -------------------------
Dr. Glenford J. Myers.............. 54 Chairman of the Board, President
and Chief Executive Officer
James F. Dalton.................... 42 Director
Richard J. Faubert................. 53 Director
C. Scott Gibson.................... 48 Director
Jean-Pierre D. Patkay.............. 50 Director
Jean-Claude Peterschmitt........... 67 Director
Carl W. Neun....................... 57 Director
Dr. Glenford J. Myers founded the Company in March 1987 and has served as
the Company's Chairman of the Board, President and Chief Executive Officer since
that time. From 1981 to 1987, he held various management positions with Intel
Corporation in microprocessor development. From 1968 to 1981, Dr. Myers held
various engineering and management positions with IBM. Dr. Myers holds a Ph.D.
from the Polytechnic Institute of New York, an M.S. from Syracuse University and
a B.S.E.E. from Clarkson College. He is the author of eight books on computer
architecture, software design and software testing.
James F. Dalton has served as a Director since December 1993. Since April
1989, Mr. Dalton has been employed by Tektronix, Inc., a test, measurement and
monitoring technology company. He presently serves as Vice President, Corporate
Development, Law & Information Systems of Tektronix. He also presently serves as
General Counsel and Secretary of Tektronix. Prior to that, he served as Director
of Corporate Development at Tektronix.
Richard J. Faubert has served as a Director since June 1993. From 1986
through 1992, Mr. Faubert served as Vice President of Product Development of
GenRad, Inc. From 1992 through 1998, Mr. Faubert was employed by Tektronix,
first as General Manager of its Instruments Business Unit and then as Vice
President and General Manager of the Television and Communications Business
Unit, Measurement Business Division. Since that time, Mr. Faubert has served as
President and CEO of SpeedFam-IPEC, Inc., a semiconductor capital equipment
manufacturing company. Mr. Faubert also serves on the Board of Directors of
SpeedFam-IPEC, Inc. and the Semiconductor Industry Suppliers Association (SISA).
C. Scott Gibson has served as a Director since June 1993. From January
1983 through February 1992, Mr. Gibson co-founded and served as President of
Sequent Computer Systems, Inc., a computer systems company. Prior to co-founding
Sequent, Mr. Gibson served as General Manager, Memory Components Operation, at
Intel. Since March 1992, Mr. Gibson has been a director and consultant to high
technology companies. Currently,
2
Mr. Gibson is the Chairman of the Board of Trustees of Oregon Graduate
Institute. Mr. Gibson also serves on the boards of several other companies,
including Egghead.com, Inc., Emerald Solutions, Inc., Triquint Semiconductor,
Inc., Integrated Measurement Systems, Inc., Webridge Inc., Cenquest, Inc.,
etrieve, Inc. and LiveBridge, Inc. Mr. Gibson holds a B.S.E.E. and an M.B.A.
from the University of Illinois.
Jean-Pierre D. Patkay has served as a Director since July 1998. From 1973
to 1990, Mr. Patkay held a variety of manufacturing and general management
positions with Hewlett-Packard Company. From 1990 to 1994, Mr. Patkay was Vice
President of Operations for Quantum Corp., a diversified mass storage company.
From 1994 through March 2000, Mr. Patkay was employed by 3Com Corporation, a
computer networking company, serving first as Vice President of Worldwide
Manufacturing and later as Vice President and General Manager, 3Com OEM. Since
April 2000, Mr. Patkay has served as Vice President of Operations of TollBridge
Technologies, Inc., a telecom equipment company.
Jean-Claude Peterschmitt has served as a Director since July 1996. From
1967 to 1987, Mr. Peterschmitt served in various capacities with Digital
Equipment Corporation, a corporate information systems supplier, most recently
as General Manager, Vice President, Europe and Chairman of the European Board of
Directors. Prior to that time, Mr. Peterschmitt was a member of Arthur D.
Little's European Operations Research Group. He currently serves on the advisory
and supervisory boards of Euroventures B.V., a European venture fund, Le RJseau,
a network structure for the creation and development of high-technology
enterprises in Switzerland, and various private American and European companies.
Mr. Peterschmitt received an engineering degree from Eidgenossiche Technische
Hochscule (Zurich) and an M.S. degree from the MIT Sloan School of Business.
Carl W. Neun has served as a Director since June 2000. From March 1993 to
January 2000, Mr. Neun was Senior Vice President and Chief Financial Officer of
Tektronix. Since January 2000, Mr. Neun has served as Chairman of the Board of
Directors of WireX Communications, Inc., a server appliance software com- pany.
Mr. Neun also serves on the Board of Directors of Planar Systems, Inc.,
Powerwave Technologies, Inc., SpeedFam-IPEC, Inc. and Sabrix, Inc.
BOARD COMMITTEES AND MEETINGS
Six meetings of the Board of Directors were held during the fiscal year
ended December 31, 2000. Each director attended or participated in at least 75
percent of the aggregate number of meetings of the Board of Directors and
committees of which the director was a member.
The Company maintains an Audit Committee consisting of C. Scott Gibson,
James Dalton and Carl W. Neun. All of the members of the Audit Committee are
"independent directors" within the meaning of Rule 4200(a)(14) of the National
Association of Securities Dealers' listing standards. The Audit Committee
assists the Board of Directors in fulfilling its oversight responsibilities
relating to corporate accounting, the Company's reporting practices and the
quality and integrity of the Company's financial reports; compliance with law
and the maintenance of ethical standards by the Company; and the Company's
maintenance of effective internal controls. The Audit Committee met six times in
the last fiscal year. For additional information about the Audit Committee, see
"Audit Committee Matters."
The Company maintains a Compensation Committee consisting of Richard J.
Faubert, C. Scott Gibson and Jean-Pierre D. Patkay. None of the members of the
Compensation Committee are current or former officers or employees of the
Company. The Compensation Committee assists the Board of Directors in fulfilling
its oversight responsibilities relating to the Company's compensation policies
and benefit plans, particularly policies relating to executive compensation and
performance. The Compensation Committee also establishes executive compensation
levels and makes grants to executive officers under the Company's 1995 Stock
Incentive Plan. The Compensation Committee met eight times in the last fiscal
year.
The Company maintains a Nominating and Governance Committee consisting of
Richard J. Faubert and James Dalton. The Nominating and Governance Committee met
three times in the last fiscal year. The Nominating and Governance Committee
assists the Board of Directors in fulfilling its oversight responsibilities
relating to seeking candidates for membership on the Board of Directors,
assessing the corporate governance policies and processes of the Board of
Directors and reviewing from time to time the policies of the Board of Directors
related
3
to director qualifications, compensation, tenure and retirement. The Nominating
and Governance Committee will consider nominees recommended by shareholders of
the Company. Recommendations for nominees should be sent to 5445 NE Dawson Creek
Drive, Hillsboro, Oregon 97124, Attention: Corporate Secretary.
DIRECTOR COMPENSATION
Each non-employee director of the Company receives an annual cash retainer
of $22,000 for serving on the Board of Directors. For serving on the Audit
Committee, the Compensation Committee or the Nominating and Governance Committee
of the Board of Directors, each non-employee director receives additional annual
cash compensation equal to $2,500 per committee. Directors are also reimbursed
for reasonable expenses incurred in attending meetings. Pursuant to the terms of
the 1995 Stock Incentive Plan, each individual who becomes a non-employee
director of the Company after August 7, 1995 is automatically granted, on the
date the individual joins the Board of Directors, a non-statutory stock option
to purchase 15,000 shares of Common Stock. If the non-employee director's
employer prohibits the non-employee director from receiving such a grant, no
such grant is made until such time, if any, as such employer restrictions are
removed. In addition, each non-employee director of the Company is automatically
granted on an annual basis a non-statutory stock option to purchase 5,000 shares
of Common Stock, beginning in the calendar year subsequent to the year in which
the non-employee director was granted a non-statutory stock option to purchase
15,000 shares of Common Stock. The exercise price of options automatically
granted to non-employee directors is the fair market value of the Common Stock
on the date of grant, the term of each such option is ten years and each such
option is exercisable in full on the date one year following the grant of the
option. Non-employee directors are expected to acquire and hold a minimum of
5,000 shares or $100,000 worth of the Company's Common Stock, whichever is less,
and that minimum amount is expected to be reached within three to five years.
Directors who are employees of the Company receive no separate compensation as
directors.
RECOMMENDATION BY THE BOARD OF DIRECTORS. The Board of Directors
recommends that shareholders vote for the election of the nominees named in this
Proxy Statement.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock of the Company as of March 30, 2001 by
(i) each person known to the Company to be the beneficial owner of more than 5%
of the Company's Common Stock, (ii) each of the Company's directors and nominees
for director, (iii) each individual named in the Summary Compensation Table and
(iv) all directors and executive officers of the Company as a group. Unless
otherwise noted in the footnotes to the table, the persons named in the table
have sole voting and investment power with respect to all outstanding shares of
Common Stock shown as beneficially owned by them.
Shares Beneficially Percentage of
Name Owned Common Stock
- ---- ------------------- -------------
Dr. Glenford J. Myers (1)........................................... 524,854 3.03%
Ronald A. Dilbeck (2)............................................... 37,402 *
Stephen F. Loughlin (3)............................................. 27,108 *
Arif Kareem (4)..................................................... 30,561 *
Stuart Cohen (5).................................................... 37,451 *
John Sonneborn (6).................................................. 20,150 *
James F. Dalton (7)................................................. 27,800 *
Richard J. Faubert (8).............................................. 35,000 *
C. Scott Gibson (8)................................................. 55,442 *
Jean-Pierre D. Patkay (8)........................................... 35,000 *
Jean-Claude Peterschmitt (9)........................................ 30,000 *
Carl W. Neun........................................................ 500 *
Intel Corporation
2200 Mission College Blvd.
Santa Clara, CA 95052.......................................... 1,515,995 8.83%
Lord, Abbett & Co. (10)
767 Fifth Avenue
New York, NY 10153............................................. 1,416,757 8.25%
Lazard Freres & Co. LLC (11)
30 Rockefeller Plaza
New York, NY 10020............................................. 877,200 5.11%
Brown Capital Management, Inc. (12)
1201 N. Calvert Street
Baltimore, MD 21202............................................ 930,950 5.42%
WM High Yield Fund (13)
1201 Third Avenue, 22nd Floor
Seattle, WA 98101.............................................. 872,589 5.08%
All directors and executive officers as a group (12 persons) (14)... 842,318 4.79%
- ----------
* Less than 1%
(1) Includes options to purchase 175,500 shares of Common Stock exercisable
within 60 days after March 30, 2001. Includes 3,425 shares of Common Stock
held by Dr. Myers' minor child.
(2) Includes options to purchase 25,000 shares of Common Stock exercisable
within 60 days after March 30, 2001.
(3) Includes options to purchase 20,001 shares of Common Stock exercisable
within 60 days after March 30, 2001.
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(4) Includes options to purchase 27,600 shares of Common Stock exercisable
within 60 days after March 30, 2001.
(5) Includes options to purchase 35,150 shares of Common Stock exercisable
within 60 days after March 30, 2001.
(6) Includes options to purchase 13,500 shares of Common Stock exercisable
within 60 days after March 30, 2001.
(7) Includes options to purchase 22,500 shares of Common Stock exercisable
within 60 days after March 30, 2001.
(8) Includes options to purchase 35,000 shares of Common Stock exercisable
within 60 days after March 30, 2001.
(9) Includes options to purchase 20,000 shares of Common Stock exercisable
within 60 days after March 30, 2001.
(10) Based solely on information set forth in Schedule 13G/A dated January 19,
2001, filed with the Securities and Exchange Commission.
(11) The beneficial owner has sole voting power with respect to only 835,100 of
the shares of Common Stock shown to be beneficially owned by the
beneficial owner. Based solely on information set forth in Schedule 13G/A
dated February 2001, filed with the Securities and Exchange Commission.
(12) The beneficial owner has sole voting power with respect to only 789,800 of
the shares of Common Stock shown to be beneficially owned by the
beneficial owner. Based solely on information set forth in Schedule 13G
dated February 14, 2001, filed with the Securities and Exchange
Commission.
(13) Includes 44,244 shares of Common Stock issuable upon conversion of 51/2%
Convertible Subordinated Notes due 2007 in the principal amount of
$3,000,000. Includes 40,401 shares of Common Stock held by WMVT Small Cap
Stock Fund, 146,112 shares of Common Stock held by WM Small Cap Stock
Fund, 60,990 shares of Common Stock held by WM VT Growth Fund of the NW
and 580,842 shares of Common Stock held by WM Growth Fund of the NW. Based
solely on information contained in Selling Securityholder Notices and
Questionnaires dated October 24, 2000 and March 1, 2001 provided to the
Company by WM High Yield Fund in connection with the registration for
resale under the Securities Act of 1933 of 51/2% Convertible Subordinated
Notes due 2007 issued by the Company.
(14) Includes options to purchase 430,751 shares of Common Stock exercisable
within 60 days after March 30, 2001. Includes 3,875 shares held by members
of the families of executive officers and directors.
6
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth, for the chief
executive officer, the four remaining most highly compensated executive officers
and one corporate officer of the Company who was formerly considered to be an
executive officer, information concerning compensation paid or accrued for
services to the Company in all capacities for each of the last three fiscal
years.
SUMMARY COMPENSATION TABLE
Annual Compensation Shares
------------------------------------ Underlying All Other
Name and Principal Position Year Salary Bonus(1) Options Compensation(2)
- --------------------------- ---- ------ -------- ------- ---------------
Glenford J. Myers.................. 2000 $349,987 $167,300 65,000(3) $5,100
Chairman of the Board, 1999 $259,692 $216,100 75,000(4) $4,800
President and Chief 1998 $248,846 $ 87,140 75,000(5) $ 0
Executive Officer
Ronald A. Dilbeck.................. 2000 $220,000 $ 84,125 10,000(3) $5,100
Chief Operating Officer 1999 $164,938 $ 73,670 30,000(4) $4,800
1998 $167,154 $ 32,580 75,001(5) $ 0
Stephen F. Loughlin................ 2000 $225,000 $ 73,750 20,000(3) $5,100
Vice President of Finance 1999 $155,769 $ 58,606 60,001(4) $ 751
and Administration and Chief 1998 -- -- -- $ 0
Financial Officer
Arif Kareem........................ 2000 $220,000 $ 67,345 25,000(3) $5,100
Senior Vice President and 1999 $164,769 $119,900 30,000(4) $4,800
General Manager of the 1998 $155,769 $ 25,620 40,800(5) $ 0
Telecommunications Division
Stuart F. Cohen.................... 2000 $191,923 $ 44,265 35,000(3) $ 0
Vice President of Worldwide 1999 $155,481 $ 68,500 60,000(4) $ 0
Sales and Marketing 1998 -- -- -- $ 0
John Sonneborn..................... 2000 $180,000 $ 60,005 20,000(3) $5,100
Vice President Manufacturing 1999 $149,631 $ 51,500 22,500(4) $4,800
and Vice President and 1998 $125,991 $ 30,042 75,001(5) $ 0
General Manager of the
Strategic Networking Division
- ----------
(1) Represents amounts paid under the Incentive Compensation Plan. See
"Compensation Committee Report on Executive Compensation--Incentive
Compensation Plan."
(2) Represents amounts contributed by the Company under the Company's 401(k)
plan.
(3) Represents options issued in 2000.
(4) Represents options issued in 1999.
(5) Represents options issued in 1998.
7
STOCK OPTION GRANTS IN FISCAL 2000. The following table sets forth
information concerning individual grants of stock options made by the Company
during the fiscal year 2000 to each of the officers of the Company named in the
Summary Compensation Table.
Potential Realizable
Value at Assumed
Percent of Annual Rates
Number of Total of Stock Price
Securities Options Appreciation for
Underlying Granted to Exercise Option Term(4)
Options Employees in Price Per Expiration -------------------------
Name Granted(1) Fiscal Year(2) Share Date(3) 5% 10%
- ---- ---------- -------------- ----- --------- ---------- ----------
Glenford J. Myers ...... 65,000 5.71% $49.375 01/03/07 $1,306,538 $3,044,789
Ronald A. Dilbeck ...... 10,000 0.88% $49.375 01/03/07 $ 201,006 $ 468,429
Stephen F. Loughlin .... 20,000 1.76% $49.375 01/03/07 $ 402,012 $ 936,858
Arif Kareem ............ 25,000 2.20% $49.375 01/03/07 $ 502,515 $1,171,073
Stuart F. Cohen ........ 15,000 1.32% $49.375 01/03/07 $ 301,509 $ 702,644
20,000 1.76% $54.000 04/04/05 $ 298,384 $ 659,351
John Sonneborn ......... 20,000 1.76% $49.375 01/03/07 $ 402,012 $ 936,858
- ----------
(1) All option grants were made pursuant to the Company's 1995 Stock Incentive
Plan. All options (other than the option granted to Mr. Dilbeck and the
options to purchase 20,000 shares granted to Mr. Cohen) were granted on
January 3, 2000 for a term of seven years and are not exercisable until
January 3, 2003, on which date all such options shall be exercisable in
full. The option granted to Mr. Dilbeck was granted on January 3, 2000 for
a term of seven years and was not exercisable until January 3, 2001, on
which date the option became exercisable in full. The options to purchase
20,000 shares granted to Mr. Cohen were granted on April 4, 2000 for a
term of five years. On the first anniversary of the grant date of these
options, the options are exercisable for one-half of the total number of
shares covered by the option, and on the second and third anniversaries of
the grant date, the options are exercisable for one-fourth of the total
number of shares covered by the option, so that the options shall be
exercisable in full on April 4, 2003.
(2) In fiscal 2000, the Company granted options for a total of 1,138,606
shares of Common Stock under the 1995 Stock Incentive Plan and this number
was used in calculating the percentages set forth in this column.
(3) Options expire prior to this date (i) if the optionee's employment is
terminated for any reason (other than death or disability), in which case
options vested but unexercised at the date of termination may be exercised
at any time prior to the expiration date of the options or the expiration
of 30 days after the date of termination, whichever is the shorter period,
or (ii) if employment terminates because of death or disability, in which
case options vested but unexercised at the date of termination may be
exercised at any time prior to the expiration date of the options or the
expiration of 12 months after the date of termination, whichever is the
shorter period. If employment (or service as a director, as applicable) is
terminated by death of the optionee, the options generally may be
exercised by persons to whom the optionee's rights pass by will or the
laws of descent or distribution. Remaining vested but unexercised options
terminate at the end of the earliest of the above described periods, as
applicable.
(4) In accordance with the rules of the Securities and Exchange Commission,
these amounts are the hypothetical gains or "option spreads" that would
exist for the respective options based on assumed rates of annual compound
stock price appreciation of 5% and 10% from the date the options were
granted over the full option term.
8
AGGREGATED OPTION EXERCISES. The following table sets forth information
(on an aggregated basis) concerning each exercise of stock options during the
fiscal year 2000 by each of the officers of the Company named in the Summary
Compensation Table and the fiscal year-end value of unexercised options.
Aggregated Option Exercises in Fiscal Year 2000
and Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Number of Options at In-the-Money Options
Shares December 31, 2000 December 31, 2000(1)
Acquired on Value ---------------------------- ---------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
Glenford J. Myers 31,500 $ 912,779 175,500 65,000 $654,143 $ 0
Ronald A. Dilbeck 52,899 $1,828,306 0 93,141 $ 0 $424,102
Stephen F. Loughlin 19,999 $ 678,166 0 60,002 $ 0 $278,214
Arif Kareem 6,600 $ 221,164 12,600 76,600 $169,029 $464,814
Stuart F. Cohen 14,850 $ 367,858 5,150 75,000 $ 33,913 $263,400
John Sonneborn 36,375 $ 867,611 2,250 80,751 $ 30,184 $644,425
- ----------
(1) Options are "in-the-money" at the fiscal year-end if the fair market value
of the underlying securities on such date exceeds the exercise price of
the option. The amounts set forth represent the difference between the
fair market value of the securities underlying the options on December 29,
2000 based on the closing sale price of $25.875 per share of Common Stock
on that date (as reported on the Nasdaq National Market) and the exercise
price of the options, multiplied by the applicable number of shares.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION(1)
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
The Compensation Committee of the Board of Directors (the "Committee") is
composed of three outside directors and, pursuant to authority delegated by the
Board, determines the compensation to be paid to the Chief Executive Officer and
each of the other executive officers of the Company. The Committee is also
responsible for developing and making recommendations to the Board with respect
to the Company's executive compensation policies.
The Company's objectives for executive compensation are to (i) attract and
retain key executives important to the long-term success of the Company; (ii)
reward executives for performance and enhancement of shareholder value; and
(iii) align the interests of the executive officer with the success of the
Company by basing a portion of the compensation upon corporate performance.
Total compensation levels of the Company's executive officers are set
relative to similar companies in the electronics industry. In determining
compensation, the Company also takes into account individual experience, job
responsibilities, and individual performance.
EXECUTIVE OFFICER COMPENSATION PROGRAM. The Company's executive officer
compensation program consists of base salary, annual bonus, and long term
incentive compensation in the form of stock options. Compensation based upon
sales is also part of the compensation program for certain executive officers
with sales responsibility.
- ----------
(1) This section, the section entitled "Report of the Audit Committee" and the
section entitled "Comparison of Cumulative Total Return" are not
"soliciting material," are not deemed "filed" with the Securities and
Exchange Commission and are not to be incorporated by reference in any
filing of the Company under the Securities Act of 1933 or the Securities
Act of 1934, regardless of date or any general incorporation language in
such filing.
9
STOCK OPTIONS. The Company's stock option program is intended as a
long-term incentive plan for executives, managers and other employees within the
Company. The objectives of the program are to align employee and shareholder
long-term interests by creating a strong and direct link between compensation
and shareholder value. The Company's 1995 Stock Incentive Plan provides for the
award of incentive stock options to selected employees and the award of
nonqualified stock options, restricted stock, stock appreciation rights, bonus
rights and other incentive grants to selected employees, independent contractors
and consultants. Each executive is expected to accumulate stock ownership over
time such that, after three years of employment, the executive owns Common Stock
of the Company with an aggregate value at least equal to the executive's base
salary.
INCENTIVE COMPENSATION PLAN. The Company maintains an Incentive
Compensation Plan (the "Compensation Plan") pursuant to which all employees of
the Company in good standing for two pay periods following the plan period are
eligible to receive incentive compensation if certain six-month operational
income and other Company goals are achieved. At its discretion, the Board of
Directors, which administers the Compensation Plan, may reduce the incentive
compensation to be paid pursuant to the Compensation Plan.
CHIEF EXECUTIVE OFFICER COMPENSATION. The Committee determined the Chief
Executive Officer compensation for 2000 based upon a number of factors and
criteria. The Chief Executive Officer's compensation was determined based upon a
review of the compensation of chief executive officers for similar companies of
comparable size and complexity and upon a review by the Committee of the Chief
Executive Officer's performance. The Chief Executive Officer received a bonus
for 2000 based on satisfaction of the Company's performance objectives for the
year established under the Company's Compensation Plan described above and his
individual performance as evaluated by the Committee.
During 2000 the Chief Executive Officer was issued options to purchase
65,000 shares of the Company's Common Stock. These options are part of an
ongoing program to provide Dr. Myers with significant ongoing incentives to
remain with the Company and to further align his long-term interests with
shareholder interests. The number of shares granted in 2000 was based on a
subjective determination of the number of shares needed in 2000 as part of this
long-term program.
DEDUCTIBILITY OF COMPENSATION. Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), limits to $1,000,000 per person the amount
that the Company may deduct for compensation paid to the Company's Chief
Executive Officer and four highest compensated officers (other than the Chief
Executive Officer) in any year. The levels of salary and bonus generally paid by
the Company do not exceed this limit. Many of the options granted under the
Company's 1995 Stock Incentive Plan are intended to qualify as Incentive Stock
Options. The Company receives no tax deduction upon exercise of an Incentive
Stock Option unless the optionee disposes of the acquired shares before
satisfying certain holding period requirements. The $1,000,000 cap on deductible
compensation applies to compensation income recognized by an optionee if the
optionee disposes of the shares acquired upon exercise of an Incentive Stock
Option before satisfying the holding period requirements, as well as
compensation income recognized by the optionee upon exercise of a Nonstatutory
Stock Option, unless the option meets certain requirements. It is the Company's
policy generally to grant options that meet applicable requirements so that any
compensation recognized by an optionee in connection with an option will be
fully deductible. The Committee believes that the grant of Incentive Stock
Options, despite their general nondeductibility, benefits the Company by
encouraging the long-term ownership of the Company's stock by officers and other
employees.
Jean-Pierre Patkay, Chairman
Richard J. Faubert
C. Scott Gibson
10
AUDIT COMMITTEE MATTERS
Pursuant to authority delegated to it by the Board of Directors, the Audit
Committee of the Board of Directors has approved and adopted an updated Audit
Committee Charter, a copy of which is attached to this Proxy Statement as
Appendix A.
REPORT OF THE AUDIT COMMITTEE
In connection with the Company's audited financial statements for the year
ended December 31, 2000, the Audit Committee (1) reviewed and discussed the
audited financial statements with management; (2) discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61; and (3) received the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No. 1 and
discussed with the independent auditors the independent auditors' independence.
Based upon these reviews and discussions, the Audit Committee has recommended to
the Board of Directors, and the Board of Directors has approved, that the
Company's audited financial statements be included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2000 for filing with
the Securities and Exchange Commission.
C. Scott Gibson, Chairman
James F. Dalton
Carl W. Neun
PRINCIPAL ACCOUNTING FIRM FEES
The Company incurred the following fees for services performed by the
Company's principal accounting firm, PricewaterhouseCoopers LLP, in fiscal 2000:
Audit Fees ............................................................... $203,689(1)
Financial Information Systems Design and Implementation Fees ............. $ 0(2)
All Other Fees ........................................................... $701,880(2)(3)
--------
Total ............................................................... $905,569
========
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(1) Fees for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2000 and the reviews of the financial
statements included in the Company's Forms 10-Q for the fiscal year ended
December 31, 2000 are $203,689, of which an aggregate amount of $131,250
has been billed through December 31, 2000.
(2) The Audit Committee has considered whether the provision of the services
covered by these fees is compatible with maintaining the principal
accountant's independence.
(3) Represents the aggregate fees billed for all other services rendered by
PricewaterhouseCoopers LLP for the fiscal year ended December 31, 2000.
Includes fees for statutorily required audits in certain locations outside
the United States where the Company has operations, tax consulting,
acquisition work and assistance with the filing of registration statements
under the Securities Act of 1933.
11
COMPARISON OF CUMULATIVE TOTAL RETURN
The following graph sets forth the Company's total cumulative shareholder
return as compared to the Hambrecht & Quist Computer Hardware Sector Index, the
Nasdaq Composite Index and the Standard and Poor's 500 Index for the period
December 29, 1995 through December 29, 2000. Total shareholder return assumes
$100 invested at the beginning of the period in the Common Stock of the Company,
the stocks represented in the Hambrecht & Quist Computer Hardware Sector Index,
the stocks represented in the Nasdaq Composite Index and the stocks represented
in the Standard and Poor's 500 Index, respectively. Total return also assumes
reinvestment of dividends; the Company has never paid dividends on its Common
Stock.
Historical stock price performance should not be relied upon as indicative
of future stock price performance.
[PERFORMANCE GRAPH OMITTED]
TOTAL RETURN ANALYSIS
12/29/95 12/31/96 12/31/97 12/31/98 12/1/99 12/29/00
-------- -------- -------- -------- ------- --------
RadiSys Corp. ............ $100.00 $414.91 $317.03 $255.33 $651.09 $330.33
H&Q Computer Hardware .... $100.00 $132.43 $180.16 $345.89 $630.70 $478.29
NASDAQ Composite ......... $100.00 $122.71 $149.25 $208.40 $386.77 $234.81
S&P 500 .................. $100.00 $122.94 $163.95 $210.80 $255.15 $231.91
- ----------
Source: Carl Thompson Associates www.ctaonline.com (800) 959-9677. Data from
BRIDGE Information Systems, Inc.
12
PROPOSAL 2: AMENDMENT OF THE COMPANY'S 1996 EMPLOYEE STOCK
PURCHASE PLAN TO INCREASE THE NUMBER OF SHARES OF THE
COMPANY'S COMMON STOCK THAT MAY BE ISSUED PURSUANT TO
THE PLAN FROM 1,250,000 TO 1,750,000.
The Employee Stock Purchase Plan ("ESPP") provides a convenient and
practical means by which employees may own stock of the Company. The Board of
Directors believes that the opportunity to acquire a proprietary interest in the
success of the Company through the acquisition of shares of Common Stock
pursuant to the ESPP is an important aspect of the Company's ability to attract
and retain highly qualified and motivated employees. As of March 30, 2001, out
of a total of 1,250,000 shares reserved for issuance under the ESPP, 630,897
shares had been issued leaving 619,103 shares available for issuance under the
ESPP. The Board of Directors believes additional shares will be needed under the
ESPP to provide appropriate incentives to key employees and others. Accordingly,
on January 23, 2001, the Board of Directors approved an amendment to the ESPP,
subject to shareholder approval, to reserve an additional 500,000 shares for
issuance under the ESPP, thereby increasing the total number of shares of the
Company's Common Stock reserved for issuance under the ESPP from 1,250,000 to
1,750,000.
Certain provisions of the ESPP are summarized below. The complete text of
the ESPP, marked to show the proposed amendment, is attached to this document as
Appendix B.
The ESPP is administered by the Board of Directors. The Board has the
power to make and interpret all rules and regulations it deems necessary to
administer the ESPP and has broad authority to amend the ESPP, subject to the
requirement that certain amendments be approved by shareholders.
All employees of the Company, including the Company's officers, are
eligible to participate in the ESPP. Each participant may enroll in an 18-month
offering in which shares of Common Stock are purchased on the last day of each
three-month period of an offering. A separate offering commences on February 15,
May 15, August 15 and November 15 of each calendar year under the ESPP. The
first day of each offering is the "enrollment date" of the offering. The
purchase price per share is equal to 85% of the lower of (a) the fair market
value of the Common Stock on the enrollment date of the offering or (b) the fair
market value on the date of purchase. Participants may elect to contribute from
1% to 15% of compensation paid to the participant during each pay period in the
offering.
No participant may obtain a right to purchase shares under the ESPP if,
immediately after the right is granted, the participant owns or is deemed to own
shares of the Company's Common Stock possessing five percent or more of the
combined voting power or value of all classes of stock of the Company or any
subsidiary of the Company. The maximum number of shares that a participant may
purchase in an offering is 10,000. In addition, no participant may obtain a
right to purchase shares under the ESPP that permits the participant's rights to
purchase shares under the ESPP to accrue at a rate which exceeds $25,000 in fair
market value of the Company's Common Stock (determined as of the enrollment
date) for each calendar year of the offering.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the purchase of shares under the ESPP may be assigned,
transferred, pledged or otherwise disposed of in any way by the participant.
Upon termination of a participant's employment for any reason other than death,
the payroll deductions credited to the participant's account will be returned to
the participant. Upon termination of a participant's employment because of that
person's death, the payroll deductions credited to the participant's account
will be used to purchase shares on the next purchase date. Any shares purchased
and any remaining balance will be returned to the deceased participant's
beneficiary or, if none, to the participant's estate.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES. The ESPP is intended to qualify
as an "employee stock purchase plan" within the meaning of Section 423 of the
Code. Under the Code, employees generally will not recognize taxable income or
gain with respect to shares purchased under the ESPP either at an enrollment
date or at a purchase date. If an employee disposes of shares purchased under
the ESPP more than two years after the enrollment date and more than one year
after the purchase date, or in the event of the employee's death at any time,
the employee or the employee's estate generally will be required to report as
ordinary compensation income, for the taxable year in which the disposition or
death occurs, an amount equal to the lesser of the excess of the fair market
value of the shares at the time of disposition or death over the purchase price,
or 15 percent of the fair
13
market value of the shares on the enrollment date. Any gain on disposition in
excess of the amount treated as ordinary compensation income generally will be
taxed as capital gain to the employee. In the case of such a disposition or
death, the Company will not be entitled to any federal income tax deduction.
If a current or former employee disposes of shares purchased under the
ESPP within two years after the enrollment date or within one year after the
purchase date, the employee will be required to report the excess of the fair
market value of the shares on the purchase date over the purchase price as
ordinary compensation income for the year of disposition. If the disposition is
by sale, any difference between the fair market value of the shares on the
purchase date and the disposition price generally will be taxed as capital gain
or loss. In the event of a disposition within two years after the enrollment
date or within one year after the purchase date, the Company generally will be
entitled to a deduction in the year of such disposition equal to the amount that
the employee is required to report as ordinary compensation income. For
dispositions made by the Company's Chief Executive Officer or any of the
Company's four highest compensated officers (other than the Chief Executive
Officer), the Company's deduction may be limited pursuant to Section 162(m) of
the Code, as discussed above.
Under the terms of the ESPP, participants are required to pay to the
Company any amounts necessary to satisfy any tax withholding determined by the
Company to be required in connection with either the purchase or sale of shares
acquired under the ESPP.
RECOMMENDATION BY THE BOARD OF DIRECTORS. The Board of Directors
recommends that the proposed amendment to the ESPP be approved. The amendment to
the ESPP requires the approval of a majority of the votes cast on the proposal,
provided a quorum is present. Abstentions will count as votes cast on the
proposal, but will not count as votes cast in favor of the proposal and,
therefore, will have the same effect as votes against the proposal. Broker
non-votes are counted for purposes of determining whether a quorum exists at the
Annual Meeting, but will not be considered to have voted on the proposal. The
proxies will be voted for or against the proposal or as an abstention, in
accordance with the instructions specified on the proxy form. If no instructions
are given, proxies will be voted for approval of the amendment to the ESPP.
EMPLOYMENT CONTRACTS AND SEVERANCE ARRANGEMENTS
On February 8, 2000, the Company entered into an Executive Severance
Agreement with Dr. Myers providing for severance pay in a cash amount equal to
12 months of Dr. Myers' annual base pay at the rate in effect immediately prior
to the date of termination. Dr. Myers is entitled to receive the severance pay
in the event that his employment with the Company is terminated by the Company
other than for cause, death or disability. Upon such termination, and in
addition to the severance pay, Dr. Myers is also entitled to receive COBRA
benefits and an amount equal to a prorated portion of Dr. Myers' target bonus
amount under any cash incentive plans in effect at the time of termination. In
addition, all stock options granted to Dr. Myers under the Company's 1995 Stock
Incentive Plan or any other equity plan that would vest during the 12-month
period following the date of termination shall become immediately exercisable in
full.
If Dr. Myers' employment with the Company is terminated by the Company
(other than for cause, death or disability) within 18 months following a change
of control of the Company, Dr. Myers is entitled to receive severance pay in a
cash amount equal to 24 months of Dr. Myers' annual base pay at the rate in
effect immediately prior to the date of termination. Upon such termination, and
in addition to the severance pay, Dr. Myers is also entitled to receive COBRA
benefits and an amount equal to Dr. Myers' full target bonus amount for the year
and any partial year period in which the termination occurred under any cash
incentive plans in effect at the time of termination. In addition, all stock
options granted to Dr. Myers under the Company's 1995 Stock Incentive Plan or
any other equity plan shall become immediately exercisable in full.
On December 27, 2000, the Company entered into Executive Change of Control
Agreements with each of Ronald A. Dilbeck, Stephen F. Loughlin, Arif Kareem,
Stuart F. Cohen and John Sonneborn providing for severance pay in a cash amount
equal to 12 months of the executive officer's annual base pay at the rate in
effect immediately prior to the date of termination. Each of these executive
officers is entitled to receive the severance pay in the event that his
employment with the Company is terminated by the Company (other than for cause,
death or disability) within three months before, or within twelve months after,
a change in control of the Company. Upon such termination, and in addition to
the severance pay, each of these executive officers is also entitled to receive
14
COBRA benefits. Additionally upon such termination, all stock options granted to
each of these executive officers under the Company's 1995 Stock Incentive Plan
or any other equity plan shall become immediately exercisable in full. The
Executive Change of Control Agreement executed with Mr. Dilbeck also provides
that if Mr. Dilbeck's employment with the Company is terminated by the Company
(other than for cause, death or disability) before January 1, 2003, all stock
options granted to Mr. Dilbeck under the Company's 1995 Stock Incentive Plan or
any other equity plan shall become immediately exercisable in full.
Mr. Loughlin is party to a letter agreement dated March 31, 1999 with the
Company providing for severance pay equal to one year of Mr. Loughlin's annual
base pay in the event that Mr. Loughlin's employment with the Company is
terminated by the Company without cause.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Tektronix are parties to multiple design agreements
pursuant to which the Company agreed to design and develop certain products as
specified and required by Tektronix. One of the Company's directors, Mr. Dalton,
is an officer of Tektronix. Sales to Tektronix accounted for less than one
percent of the Company's revenues in 2000.
The Company and Intel are parties to multiple design agreements and a
master framework agreement pursuant to which the Company agreed to design and
develop certain products as specified and required by Intel. Royalty payments
from and sales to Intel accounted for less than one percent of the Company's
revenues in 2000. In connection with the master framework agreement, Intel
entered into a lock-up agreement relating to 1,779,251 shares of the Company's
Common Stock then owned by Intel. Pursuant to the terms of the lock-up agreement
and subject to certain exceptions, Intel agreed that it would not publicly sell
or transfer, on a cumulative basis, more than 37,068 shares per month during the
twelve-month period beginning June 28, 2000, more than 44,489 shares per month
during the twelve-month period beginning June 28, 2001 or more than 66,722
shares per month during the twelve-month period beginning June 28, 2002.
Additionally, Intel is a key supplier of components to the Company. The Company
received approximately $13.3 million worth of components from Intel in 2000. As
of March 30, 2001, Intel beneficially owns approximately 8.83 percent of the
Company's outstanding Common Stock.
The Company is party to a Consulting Services Agreement dated January 21,
2000 with John Leonardo, a former executive officer of the Company, providing
for the provision of consulting services by Mr. Leonardo to the Company for the
six-month period following the date of Mr. Leonardo's retirement from employment
with RadiSys. Mr. Leonardo retired effective January 28, 2000. The agreement
provides for a monthly consulting fee of $50,000.
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons who own more than 10% of the
outstanding Common Stock of the Company to file with the Securities and Exchange
Commission reports of changes in ownership of the Common Stock of the Company
held by such persons. Officers, directors and greater than 10% shareholders are
also required to furnish the Company with copies of all forms they file under
this regulation. Based solely on a review of the copies of the reports received
by the Company during and with respect to fiscal 2000 and on written
representations of certain reporting persons, the Company believes that Ronald
Dilbeck, Stuart Cohen, John Sonneborn, Diane Williams, Jean-Claude Peterschmitt,
William Lattin, C. Scott Gibson, James Dalton, Richard Faubert and Jean-Pierre
Patkay failed to file on a timely basis reports required by Section 16(a) of the
Securities Exchange Act of 1934. Mr. Dilbeck filed late a Form 4 for January
2000. As a result, two transactions in securities of the Company occurring in
that month were not reported on a timely basis. Mr. Dilbeck also filed late a
Form 4 for February 2000. As a result, fourteen transactions in securities of
the Company occurring in that month were not reported on a timely basis. Mr.
Cohen filed late a Form 4 for February 2000. As a result, eight transactions in
securities of the Company occurring in that month were not reported on a timely
basis. Mr. Sonneborn filed late a Form 4 for February 2000. As a result, ten
transactions in securities of the Company occurring in that month were not
reported on a timely basis. Ms. Williams filed late a Form 4 for February 2000.
As a result, three transactions in securities of the Company occurring in that
month were not reported on a timely basis. Mr. Peterschmitt filed an amended
Form 4 to report
15
one transaction in securities of the Company occurring in June of 2000 that, to
be timely, should have been reported on the Form 4 when it was initially filed.
Mr. Lattin filed late a Form 4 for February 2000. As a result, four transactions
in securities of the Company occurring in that month were not reported on a
timely basis. Mr. Lattin also filed late a Form 4 for May 2000. As a result, ten
transactions in securities of the Company occurring in that month were not
reported on a timely basis. Each of Messrs. Peterschmitt, Gibson and Lattin also
filed late a Form 5 for each of the years ended December 31, 1999, 1998 and
1997, and each of Messrs. Dalton, Faubert and Patkay filed late a Form 5 for the
year ended December 31, 1999, reporting an automatic option grant made to each
non-employee director on an annual basis under the Company's 1995 Stock
Incentive Plan. Mr. Dalton's Form 5 for the year ended December 31, 1999 also
reported beneficial ownership of 300 shares of the Company's Common Stock held
by Mr. Dalton that should have been reported on the Form 3 filed by Mr. Dalton
at the time of the Company's initial public offering. Mr. Gibson also filed late
a Form 4 for October 1995. As a result, six transactions in securities of the
Company occurring in that month were not reported on a timely basis.
INDEPENDENT ACCOUNTANTS
Representatives of PricewaterhouseCoopers LLP, the Company's independent
accountants, will be present at the Annual Meeting and will be available to
respond to appropriate questions. They do not plan to make any statement, but
will have the opportunity to make a statement if they wish.
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
The Company's bylaws require shareholders to give the Company advance
notice of any proposal or director nomination to be submitted at an annual
meeting of shareholders. A copy of the relevant provisions of the bylaws will be
provided to any shareholder upon written request to 5445 NE Dawson Creek Drive,
Hillsboro, Oregon, Attention: Annette M. Mulee, Corporate Secretary. The bylaws
prescribe the information to be contained in any such notice. To be timely, a
shareholder's notice must be delivered to or mailed and received by the
Secretary not less than 50 days nor more than 75 days prior to the annual
meeting, provided, however, that if less than 65 days' notice or prior public
disclosure of the date of the meeting is given to shareholders, notice by the
shareholder, to be timely, must be received by the Secretary not later than the
close of business on the tenth day following the earlier of the day on which
such notice of the date of the meeting was mailed or public disclosure was made.
The Company's 2002 annual meeting of shareholders is expected to be held on May
21, 2002. Any notice relating to a shareholder proposal for the 2002 annual
meeting, to be timely, must be received by the Company between March 7, 2002 and
April 1, 2002. Shareholders wishing to submit proposals for inclusion in the
Company's proxy statement for the 2002 annual meeting of shareholders must
submit the proposals for receipt by the Company not later than December 14,
2001.
16
DISCRETIONARY AUTHORITY
Although the Notice of the Annual Meeting of Shareholders provides for
transaction of any other business that properly comes before the meeting, the
Board of Directors has no knowledge of any matters to be presented at the
meeting other than the matters described in this proxy statement. The enclosed
proxy, however, gives discretionary authority to the proxy holders to vote in
accordance with their judgment if any other matters are presented.
For this year's annual meeting of shareholders, if notice of a shareholder
proposal to be raised at the annual meeting of shareholders is received at the
principal executive offices of the Company after March 26, 2001 or before March
1, 2001, proxy voting on that proposal when and if raised at the annual meeting
will be subject to the discretionary voting authority of the designated proxy
holders. For the 2002 annual meeting of shareholders, if notice of a shareholder
proposal to be raised at the meeting is received at the principal executive
offices of the Company after April 1, 2002 or before March 7, 2002, proxy voting
on that proposal when and if raised at the annual meeting will be subject to the
discretionary voting authority of the designated proxy holders.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS
WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO EXECUTE AND
RETURN THE ENCLOSED PROXY IN THE REPLY ENVELOPE PROVIDED.
By Order of the Board of Directors,
Annette M. Mulee
Corporate Secretary
April 13, 2001
Hillsboro, Oregon
17
APPENDIX A
RADISYS CORPORATION
AUDIT COMMITTEE CHARTER
March 20, 2001
The Audit Committee is a committee of the Board of Directors. Its primary
function is to assist the board in fulfilling its oversight responsibilities
relating to:
A. Corporate accounting, reporting practices of the Company, and the
quality and integrity of the Company's financial reports;
B. Compliance with law and the maintenance of ethical standards by the
Company; and
C. The maintenance by the Company of effective internal controls.
In meeting its responsibilities, the Audit Committee is expected to:
1. Provide an open avenue of communication between the independent
accountant and the Board of Directors.
2. Recommend to the Board of Directors the independent accountants to
be selected, approve the compensation of the independent accountant,
and review and approve any change in the independent accountants.
3. Review and approve the appointment of internal auditors, if any.
4. Review the independence, objectivity, effectiveness and relevant
quality controls of the independent accountant, including (a)
receipt of periodic reports from the independent accountant
regarding such auditor's independence consistent with Independence
Standards Board Standard 1, discussion of such reports with the
auditor, and if so determined by the Audit Committee, taking or
recommending that the full Board of Directors take appropriate
action to oversee the independence of the auditor, which firm is
ultimately accountable to the Audit Committee and the Board of
Directors, and (b) a review of management consulting services
provided by and related fees paid to the independent accountant.
5. Inquire of management and the independent accountant about
significant risks or exposures and review the steps management has
taken to minimize such risk to the Company.
6. Review, in consultation with management and the independent
accountant, the audit scope, plan and areas of audit focus.
7. Review periodically with the independent accountant:
a. The adequacy of the Company's internal financial controls
including computerized information systems controls and
security.
b. Any related significant findings and recommendations of the
independent accountant together with management's responses
thereto.
c. Any significant changes in the Company's accounting principles
or the methods of applying the Company's accounting
principles.
d. The independent accountant's judgements about the quality and
appropriateness of the Company's accounting principles as
applied in its financial reporting.
8. Review with management and the independent accountant at the
completion of the annual examination:
a. The Company's annual financial statements and related
footnotes.
b. The independent accountant's audit of the financial statements
and its report thereon.
c. Any significant changes required in the independent
accountant's audit plan.
A-1
d. Any significant difficulties or disputes with management
encountered during the course of the audit.
e. Other matters related to the conduct of the audit which are to
be communicated to the committee under generally accepted
auditing standards.
9. Review with management:
a. Significant findings during the year and management's
responses thereto.
b. Any difficulties encountered in the course of their audits,
including any restrictions on the scope of their work or
access to required information.
c. Any changes required in the planned scope of their audit plan.
10. Review the procedures employed by the Company in preparing published
financial statements and related management commentaries and review
filings with the SEC containing the Company's financial statements.
11. Review with financial management and the independent accountants the
Company's quarterly earnings release prior to its public disclosure.
The Chair (or the Chair's designee) of the committee may represent
the entire committee for purposes of this review.
12. Periodically review the Company's major financial risk exposures and
insurance coverages.
13. Periodically review policies and procedures with respect to the
CEO's expense accounts and perquisites, and consider the results of
any review of these areas by the independent accountant.
14. Review periodically the Company's code of conduct and recommend
changes to the Board of Directors. Review with the independent
accountant the results of their review of the Company's monitoring
of compliance with the code of conduct.
15. Review legal and regulatory matters that may have a material impact
on the financial statements, related company compliance policies and
significant reports received from regulators.
16. Meet periodically with the independent accountant and management in
separate executive sessions to discuss any matters that the
committee or these groups believe should be discussed privately with
the Audit Committee.
17. Maintain minutes or other records of meetings and activities of the
Audit Committee and report committee actions to the Board of
Directors with such recommendations as the committee may deem
appropriate.
18. Prepare a letter for inclusion in the annual report that describes
the committee's composition and general responsibilities.
19. Periodically review and update the committee's charter.
20. The Audit Committee shall have the power to conduct or authorize
investigations into any matters within the committee's scope of
responsibilities. The committee shall be empowered to retain
independent counsel, accountants, or others to assist it in the
conduct of any investigation.
21. The committee shall meet at least four times per year or more
frequently as circumstances require. The committee may ask members
of management or others to attend the meeting and provide pertinent
information as necessary.
22. The committee will perform such other functions as assigned by law,
the Company's charter or bylaws, or the Board of Directors.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct
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investigations, to resolve disagreements, if any, between management and the
independent auditor or to assure compliance with laws and regulations and the
Company's business conduct guidelines.
The membership of the Audit Committee shall consist of at least three (3)
"financially literate" independent* members of the Board of Directors who shall
serve at the pleasure of the Board of Directors. At least one member of the
Audit Committee will have past employment experience in finance or accounting,
requisite professional certification in accounting, or any other comparable
experience or background which results in the individual's financial
sophistication. No inside directors will serve on the Audit Committee. Audit
Committee members and the committee chairman shall be designated by the full
board of directors.
The duties and responsibilities of a member of the Audit Committee are in
addition to those duties set out for a member of the Board of Directors.
* "independent", for purposes of serving as a member of the Audit
Committee, includes, among other things:
o The member has not been employed by RadiSys or its affiliates in the
current or past three years;
o The member has not accepted any compensation from RadiSys or its
affiliates in excess of $60,000 during the previous fiscal year
(except for board service, tax-qualified retirement plan benefits,
or non-discretionary compensation);
o The member is not an immediate family member of an individual who
is, or has been in the past three years, employed by RadiSys or its
affiliates as an executive officer;
o The member has not been a partner, controlling shareholder or an
executive officer of any for-profit business organization to which
RadiSys made, or from which it received, payments (other than those
which arise solely from investments in RadiSys' securities) that
exceed five percent of RadiSys' or the business organization's
consolidated gross revenues for that year, or $200,000, whichever is
more, in any of the past three years; or
o The member has not been employed as an executive of another entity
where any of RadiSys' executives serve on that entity's compensation
committee.
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APPENDIX B
RADISYS CORPORATION
1996 EMPLOYEE STOCK PURCHASE PLAN*
(AS AMENDED THROUGH [JUNE 6, 2000] MAY 15, 2001)
============
I. PURPOSE OF PLAN
As a means by which Employees may share in the Company's growth and
success, RadiSys Corporation (the "Company") believes that ownership of shares
of its Common Stock by its Employees is desirable. To this end, and as an
incentive to better performance and improved profits, the Company has
established the RadiSys Corporation 1996 Employee Stock Purchase Plan (the
"Plan").
The Company intends that the Plan will constitute an "employee stock
purchase plan" within the meaning of Section 423 of the Code.
II. DEFINITIONS
Terms that are capitalized within this document shall have the meanings as
set forth in Exhibit A, unless otherwise specified within the text.
III. EMPLOYEE PARTICIPATION
PARTICIPATION
Subject to the provisions of this Section III, an Employee may elect to
participate in the Plan effective as of any Enrollment Date by completing and
filing a Payroll Deduction Authorization Form as provided in Section IV. As of
each Enrollment Date, the Company hereby grants a right to purchase Shares under
the terms of the Plan to each eligible Employee who has elected to participate
in the Offering commencing on that Enrollment Date.
REQUIREMENTS FOR PARTICIPATION
A person shall become eligible to participate in the Plan on the first
Enrollment Date on which that person meets the following requirements:
a) The person is an Employee, and
b) The person's customary period of Employment is more than
twenty (20) hours per week.
Any eligible Employee may enroll in the Plan as of the Enrollment Date of
any Offering by filing timely written notice of such participation, subject to
the following provisions:
(i) In order to enroll in the Plan initially, an eligible Employee must
complete, sign and submit to the Company the following forms:
(A) Payroll Deduction Authorization Form Must be received by the
Company prior to 4:00 p.m., Pacific Time on the Enrollment
Date of an Offering to be effective for that Offering.
(B) ESPP New Account Form This form must accompany the Payroll
Deduction Authorization Form submitted for enrollment in the
Plan. An ESPP New Account Form must be received by the Company
prior to 4:00 p.m., Pacific Time on the Enrollment Date of an
Offering to be effective for that Offering.
- ----------
* Note: Double underscored text is new; text in brackets is to be deleted.
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(ii) A Participant in an ongoing Offering may elect as of any Enrollment
Date to enroll in the new Offering commencing on that Enrollment
Date by filing a Payroll Deduction Authorization Form making such
election prior to 4:00 p.m. Pacific Time on the Enrollment Date. An
election by a current Participant to enroll in a new Offering shall
constitute a withdrawal, effective as of such Enrollment Date, from
the ongoing Offering and simultaneous reenrollment in the new
Offering. A reenrollment shall not affect the purchase of Shares
under the ongoing Offering occurring on the Purchase Date
immediately preceding the Enrollment Date. A Participant may make an
ongoing election to reenroll on any Enrollment Date as of which the
fair market value of the Shares for purposes of Section VI is less
than it was as of the Enrollment Date for the Offering in which the
Participant is currently participating. Unless otherwise specified
by the Participant, any such ongoing reenrollment election shall be
subject to revocation; provided, however, that to be effective to
prevent reenrollment on any Enrollment Date, such revocation must be
received by the Company prior to 4:00 p.m. Pacific Time on the
Enrollment Date.
(iii) Absent withdrawal from the Plan pursuant to Section VII, a
Participant will automatically be re-enrolled in the Offering
commencing on the Enrollment Date immediately following the
expiration of the Offering of which that person is then a
Participant.
A Participant shall become ineligible to participate in the Plan and shall
cease to be a Participant when the Participant ceases to meet the eligibility
requirements as defined above.
LIMITATIONS ON PARTICIPATION
No Employee may obtain a right to purchase Shares under the Plan if,
immediately after the right is granted, the Employee owns or is deemed to own
Shares possessing five percent (5%) or more of the combined voting power or
value of all classes of stock of the Company or any parent or subsidiary of the
Company. For purposes of determining share ownership, the rules of Section
424(d) of the Code shall apply and Shares that the Employee may purchase under
any options or rights to purchase, whether or not Vested, shall be treated as
Shares owned by the Employee.
No Employee may obtain a right to purchase Shares under the Plan that
permits the Employee's rights to purchase Shares under the Plan and any other
employee stock purchase plan within the meaning of Section 423 of the Code of
the Company or any parent or subsidiary of the Company to accrue at a rate which
exceeds $25,000 in fair market value of Shares (determined as of the Enrollment
Date) for each calendar year of the Offering. This section shall be interpreted
to permit an Employee to purchase the maximum number of Shares permitted under
Section 423(b)(8) of the Code and regulations and interpretations adopted
thereunder.
The maximum number of Shares that an Employee may purchase in an Offering
shall not exceed 10,000 shares, no more than one-third of which may be purchased
on any Purchase Date on or prior to August 15, 2000, and no more than one-sixth
of which may be purchased on any Purchase Date after August 15, 2000.
VOLUNTARY PARTICIPATION
Participation in the Plan shall be strictly voluntary.
IV. PAYROLL DEDUCTIONS
PAYROLL DEDUCTION AUTHORIZATION
An Employee may contribute to the Plan only by means of payroll
deductions. A Payroll Deduction Authorization Form must be filed with the
Company's stock administrator prior to 4:00 p.m. Pacific Time on the Enrollment
Date as of which the payroll deductions are to take effect.
AMOUNT OF DEDUCTIONS
A Participant may specify that the person desires to make contributions to
the Plan at a rate not less than 1% and not more than 15% of the Compensation
paid to the Participant during each pay period in the Offering, or other
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such minimum or maximum percentages as the Plan Administrator shall establish
from time to time; provided, however, that a Participant in any Offering that
commenced prior to August 15, 2000 may not specify during that Offering
contributions to the Plan of more than 10% of Compensation. Such specification
shall apply during any period of continuous participation in the Plan, unless
otherwise modified or terminated as provided in this Section IV or as otherwise
provided in the Plan. If a payroll deduction cannot be made in whole or in part
because the Participant's pay for the period in question is insufficient to fund
the deduction after having first withheld all other amounts deductible from that
person's pay, the amount that was not withheld cannot be made up by the
Participant nor will it be withheld from subsequent pay checks.
COMMENCEMENT OF DEDUCTIONS
Payroll deductions for a Participant shall commence on the Enrollment Date
of the Offering for which that person's Payroll Deduction Authorization Form is
effective and shall continue indefinitely, unless modified or terminated as
provided in this Section IV or as otherwise provided in the Plan.
ACCOUNTS
All payroll deductions made for a Participant shall be credited to his or
her Account under the Plan. Following each Purchase Date, the Plan Administrator
shall promptly deliver a report to each Participant setting forth the aggregate
payroll deductions credited to such Participant's Account since the last
Purchase Date and the number of Shares purchased and delivered to the Custodian
for deposit into the Participant's Custodial Account.
MODIFICATION OF AUTHORIZED DEDUCTIONS
A Participant may at any time increase or decrease the amount of that
person's payroll deduction effective for all applicable payroll periods, by
completing an amended Payroll Deduction Authorization Form and filing it with
the Company's stock administrator in accordance with this Section IV; provided,
however, that a Participant in any Offering that commenced prior to August 15,
2000 may not change the amount of that person's payroll deduction more than
three times during that Offering.
A Participant may at any time discontinue the Participant's payroll
deductions, without withdrawing from the Plan, by completing an amended Payroll
Deduction Authorization Form and filing it with the Company's stock
administrator. Previous payroll deductions will then be retained in the
Participant's Account for application to purchase Shares on the next Purchase
Date, after which the Participant's participation in the Offering and in the
Plan will terminate unless the participant has timely filed another Payroll
Deduction Authorization Form to resume payroll deductions.
For purposes of the above, an amended Payroll Deduction Authorization form
shall be effective for a specific pay period when filed 7 days prior to the last
day of such payroll period; provided, however, that for a Participant in any
Offering that commenced prior to August 15, 2000 an amended Payroll Deduction
Authorization form shall be effective for a specific pay period during that
Offering when filed 15 days prior to the last day of such payroll period.
V. CUSTODY OF SHARES
DELIVERY AND CUSTODY OF SHARES
Shares purchased pursuant to the Plan shall be delivered to and held by
the Custodian.
CUSTODIAL ACCOUNT
As soon as practicable after each Purchase Date, the Company shall deliver
to the Custodian the full Shares purchased for each Participant's Account. The
Shares will be held in a Custodial Account specifically established for this
purpose. An Employee must open a Custodial Account with the Custodian in order
to be eligible to purchase Shares under the Plan. In order to open a Custodial
Account, the Participant must complete an ESPP New Account Form and file it with
the stock administrator prior to 4:00 p.m. Pacific Time on the Enrollment Date
of
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the Offering as of which the enrollment is to take effect; provided, however,
that an ESPP New Account Form that effects a change in the status of the
Custodial Account may be filed at any time during participation in the Plan.
TRANSFER OF SHARES
Upon receipt of appropriate instructions from a Participant on forms
provided for that purpose, the Custodian will transfer into the Participant's
own name all or part of the Shares held in the Participant's Custodial Account
and deliver such Shares to the Participant.
STATEMENTS
The Custodian will deliver to each Participant a semi-annual statement
showing the activity of the Participant's Custodial Account and the balance as
to both Shares and cash. Participants will be furnished such other reports and
statements, and at such intervals, as the Custodian and Plan Administrator shall
determine from time to time.
VI. PURCHASE OF SHARES
PURCHASE OF SHARES
Subject to the limitations of Section VII, on each Purchase Date in an
Offering, the Company shall apply the amount credited to each Participant's
Account to the purchase of as many full Shares that may be purchased with such
amount at the price set forth in this Section VI, and shall promptly deliver
such Shares to the Custodian for deposit into the Participant's Custodial
Account. Payment for Shares purchased under the Plan will be made only through
payroll withholding deductions in accordance with Section IV.
PRICE
The price of Shares to be purchased on any Purchase Date shall be the
lower of:
(a) Eighty-five percent (85%) of the fair market value of the Shares on the
Enrollment Date of the Offering; or
(b) Eighty-five percent (85%) of the fair market value of the Shares on the
Purchase Date.
FAIR MARKET VALUE
The fair market value of the Shares on any date shall be equal to the
closing trade price of such shares on the Valuation Date, as reported on the
NASDAQ National Market System or such other quotation system that supersedes it.
UNUSED CONTRIBUTIONS
Any amount credited to a Participant's Account and remaining therein
immediately after a Purchase Date because it was less than the amount required
to purchase a full Share shall be carried forward in such Participant's Account
for application on the next succeeding Purchase Date.
VII. TERMINATION AND WITHDRAWAL
TERMINATION OF EMPLOYMENT
Upon termination of a Participant's Employment for any reason other than
death, the payroll deductions credited to such Participant's Account shall be
returned to the Participant. A Participant shall have no right to accrue Shares
upon termination of the person's Employment.
TERMINATION UPON DEATH
Upon termination of the Participant's Employment because of that person's
death, the payroll deductions credited to that person's Account shall be used to
purchase Shares as provided in Section VI on the next Purchase
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Date. Any Shares purchased and any remaining balance shall be transferred to the
deceased Participant's Beneficiary, or if none, to that person's estate.
DESIGNATION OF BENEFICIARY
Each Participant may designate, revoke, and redesignate Beneficiaries. All
changes to designation of Beneficiary shall be in writing and will be effective
upon delivery to the Plan Administrator.
WITHDRAWAL
A Participant may withdraw the entire amount credited to that individual's
Account under the Plan and thereby terminate participation in the current
Offering at any time by giving written notice to the Company, but in no case may
a Participant withdraw accounts within the 15 days immediately preceding a
Purchase Date for the Offering. Any amount withdrawn shall be paid to the
Participant promptly after receipt of proper notice of withdrawal and no further
payroll deductions shall be made from the person's Compensation unless a Payroll
Deduction Authorization Form directing further deductions is or has been
submitted.
STATUS OF CUSTODIAL ACCOUNT
Upon termination of a Participant's Employment for any reason other than
death, the Participant may,
(a) Elect to retain with the Custodian the Shares held in the Participant's
Custodial Account. The Participant will bear the cost of any annual fees
resulting from maintaining such an account.
(b) Request issuance of the Shares held in the Participant's Custodial Account
by submitting to the Custodian the appropriate forms provided for that purpose.
Upon termination of a Participant's Employment as a result of death, any
Shares held by the Custodian for the Participant's Account shall be transferred
to the person(s) entitled thereto under the laws of the state of domicile of the
Participant upon a proper showing of authority.
VIII. SHARES PURCHASED UNDER THE PLAN
SOURCE AND LIMITATION OF SHARES
The Company has reserved for sale under the Plan [1,250,000] 1,750,000
=========
shares of common stock, subject to adjustment upon changes in capitalization of
the Company as provided in Section X. Shares sold under the Plan may be newly
issued Shares or Shares reacquired in private transactions or open market
purchases, but all Shares sold under the Plan regardless of source shall be
counted against the [1,250,000] 1,750,000 Share limitation.
=========
If there is an insufficient number of Shares to permit the full exercise
of all existing rights to purchase Shares, or if the legal obligations of the
Company prohibit the issuance of all Shares purchasable upon the full exercise
of such rights, the Plan Administrator shall make a pro rata allocation of the
Shares remaining available in as nearly a uniform and equitable manner as
possible, based pro rata on the aggregate amounts then credited to each
Participant's Account. In such event, payroll deductions to be made shall be
reduced accordingly and the Plan Administrator shall give written notice of such
reduction to each Participant affected thereby. Any amount remaining in a
Participant's Account immediately after all available Shares have been purchased
will be promptly remitted to such Participant. Determination by the Plan
Administrator in this regard shall be final, binding and conclusive on all
persons. No deductions shall be permitted under the Plan at any time when no
Shares are available.
DELIVERY OF SHARES
As promptly as practicable after each Purchase Date, the Company shall
deliver to the Custodian the full Shares purchased for each Participant's
Account.
B-5
INTEREST IN SHARES
The rights to purchase Shares granted pursuant to this Plan will in all
respects be subject to the terms and conditions of the Plan, as interpreted by
the Plan Administrator from time to time. The Participant shall have no interest
in Shares purchasable under the Plan until payment for the Shares has been
completed at the close of business on the relevant Purchase Date. The Plan
provides only an unfunded, unsecured promise by the Company to pay money or
property in the future. Except with respect to the Shares purchased on a
Purchase Date, an Employee choosing to participate in the Plan shall have no
greater rights than an unsecured creditor of the Company. After the purchase of
Shares, the Participant shall be entitled to all rights of a stockholder of the
Company.
IX. ADMINISTRATION
PLAN ADMINISTRATOR
At the discretion of the Board of Directors, the Plan shall be
administered by the Board of Directors or by a Committee appointed by the Board
of Directors. Each member of the Committee shall be either a director, an
officer or an Employee of the Company. Each member shall serve for a term
commencing on a date specified by the Board of Directors and continuing until
that person dies, resigns or is removed by the Board of Directors.
POWERS
The Plan Administrator shall be vested with full authority to make,
administer and interpret the rules and regulations as it deems necessary to
administer the Plan. Any determination, decision or act of the Plan
Administrator with respect to any action in connection with the construction,
interpretation, administration or application of the Plan shall be final,
binding and conclusive upon all Participants and any and all other persons
claiming under or through any Participant. The provisions of the Plan shall be
construed in a manner consistent with the requirements of Section 423 of the
Code.
X. CHANGES IN CAPITALIZATION, MERGER, ETC.
RIGHTS OF THE COMPANY
The grant of a right to purchase Shares pursuant to this Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or other changes in its capital or business
structure or to merge, consolidate or dissolve, liquidate or transfer all or any
part of its divisions, subsidiaries, business or assets.
RECAPITALIZATION
Subject to any required action by stockholders, the number of Shares
covered by the Plan as provided in Section VIII and the price per Share shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares of the Company resulting from a subdivision or consolidation of Shares or
the payment of a stock dividend or any other increase or decrease in the number
of such Shares effected without receipt or payment of consideration by the
Company.
CONSOLIDATION OR MERGER
In the event of the consolidation or merger of the Company with or into
any other business entity, or sale by the Company of substantially all of its
assets, the successor may at its discretion continue the Plan by adopting the
same by resolution of its Board of Directors or agreement of its partners or
proprietors. If, within 90 days after the effective date of a consolidation,
merger, or sale of assets, the successor corporation, partnership or
proprietorship does not adopt the Plan, the Plan shall be terminated in
accordance with Section XIII.
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XI. TERMINATION OF EMPLOYMENT
LEAVE
A person's Employment shall not terminate on account of an authorized
leave of absence or sick leave, or on account of a military leave described in
this Section XI, or a direct transfer between Employers, provided such leave
does not exceed 90 days or, if longer, so long as the person's right to
reemployment is guaranteed by statute or by contract. Failure to return to work
upon expiration of any leave of absence or sick leave shall be considered a
resignation effective as of the expiration of such leave of absence or sick
leave.
MILITARY LEAVE
Any Employee who leaves the Employer directly to perform services in the
Armed Forces of the United States or in the United States Public Health Service
under conditions entitling the Employee to reemployment rights provided by the
laws of the United States, shall be on military leave. An Employee's military
leave shall expire if the Employee voluntarily resigns from the Employer during
the leave or if that person fails to make an application for reemployment within
a period specified by such law for preservation of employment rights. In such
event, the individual's Employment shall terminate by resignation on the day the
military leave expires.
XII. STOCKHOLDER APPROVAL AND RULINGS
The Plan is expressly made subject to (a) the approval of the Plan within
twelve (12) months after the Plan is adopted by the stockholders of the Company
and (b) at the Company's election, to the receipt by the Company from the
Internal Revenue Service of a ruling in scope and content satisfactory to
counsel to the Company, affirming qualification of the Plan within the meaning
of Section 423 of the Code. If the Plan is not so approved by the stockholders
within 12 months after the date the Plan is adopted and if, at the election of
the Company a ruling from the Internal Revenue Service is sought but not
received on or before one year after this Plan's adoption by the Board of
Directors, this Plan shall not come into effect. In that case, the Account of
each Participant shall forthwith be paid to the Participant.
XIII. MISCELLANEOUS PROVISIONS
AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors of the Company may at any time amend the Plan.
Except as otherwise provided herein, no amendment may adversely affect or change
any right to purchase Shares without prior approval of the stockholders of the
Company if the amendment would:
(i) Permit the sale of more Shares than are authorized under Section
VIII;
(ii) Permit the sale of Shares to employees of entities which are not
Employers;
(iii) Materially increase the benefits accruing to Participants under the
Plan; or
(iv) Materially modify the requirements as to eligibility for
participation in the Plan.
The Plan is intended to be a permanent program, but the Company reserves
the right to declare the Plan terminated at any time. Upon such termination,
amounts credited to the Accounts of the Participants with respect to whom the
Plan has been terminated shall be returned to such Participants.
NON-TRANSFERABILITY
Neither payroll deductions credited to a Participant's Account nor any
rights with regard to the purchase of Shares under the Plan may be assigned,
transferred, pledged or otherwise disposed of in any way by the Participant
except as provided in Section VII, and any attempted assignment, transfer,
pledge, or other disposition shall be null and void. The Company may treat any
such act as an election to withdraw funds in accordance with Section VII. A
Participant's rights to purchase Shares under the Plan are exercisable during
the Participant's lifetime only by the Participant.
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USE OF FUNDS
All payroll deductions received or held by the Company under the Plan may
be used by the Company for any corporate purposes and the Company shall not be
obligated to segregate the payroll deductions.
EXPENSES
All expenses of administering the Plan shall be borne by the Company. The
Company will not pay expenses, commissions or taxes incurred in connection with
sales of Shares by the Custodian at the request of a Participant. Expenses to be
paid by a Participant will be deducted from the proceeds of sale prior to
remittance.
TAX WITHHOLDING
Each Participant who has purchased Shares under the Plan shall immediately
upon notification of the amount due, if any, pay to the Employer in cash amounts
necessary to satisfy any applicable federal, state and local tax withholding
determined by the Employer to be required. If the Employer determines that
additional withholding is required beyond any amounts deposited at the time of
purchase, the Participant shall pay such amount to the Employer on demand. If
the Participant fails to pay the amount demanded, the Employer may withhold that
amount from other amounts payable by the Employer to the Participant, including
salary, subject to applicable law.
NO INTEREST
No Participant shall be entitled, at any time, to any payment or credit
for interest with respect to or on the payroll deductions contemplated herein,
or on any other assets held hereunder for the Participant's Account.
REGISTRATION AND QUALIFICATION OF SHARES
The offering of Shares hereunder shall be subject to the effecting by the
Company of any registration or qualification of the Shares under any federal or
state law or the obtaining of the consent or approval of any governmental
regulatory body which the Company shall determine, in its sole discretion, is
necessary or desirable as a condition to, or in connection with, the offering or
the issue or purchase of the Shares covered thereby. The Company shall make
every reasonable effort to effect such registration or qualification or to
obtain such consent or approval.
RESPONSIBILITY AND INDEMNITY
Neither the Company, its Board of Directors, the Custodian, nor any
member, officer, agent or employee of any of them, shall be liable to any
Participant under the Plan for any mistake of judgment or for any omission or
wrongful act unless resulting from gross negligence, willful misconduct or
intentional misfeasance. The Company will indemnify and save harmless its Board
of Directors, the Custodian and any such member, officer, agent or employee
against any claim, loss, liability or expense arising out of the Plan, except
such as may result from the gross negligence, willful misconduct or intentional
misfeasance of such entity or person.
PLAN NOT A CONTRACT OF EMPLOYMENT
The Plan is strictly a voluntary undertaking on the part of the Employer
and shall not constitute a contract between the Employer and any Employee, or
consideration for or an inducement or a condition of employment of an Employee.
Except as otherwise required by law, or any applicable collective bargaining
agreement, nothing contained in the Plan shall give any Employee the right to be
retained in the service of the Employer or to interfere with or restrict the
right of the Employer, which is hereby expressly reserved, to discharge or
retire any Employee at any time, with or without cause and with or without
notice. Except as otherwise required by law, inclusion under the Plan will not
give any Employee any right or claim to any benefit hereunder except to the
extent such right has specifically become fixed under the terms of the Plan. The
doctrine of substantial performance shall have no application to any Employee,
Participant, or Beneficiary. Each condition and provision, including numerical
items, has been carefully considered and constitutes the minimum limit on
performance which will give rise to the applicable right.
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SERVICE OF PROCESS
The Secretary of the Company is hereby designated agent for service or
legal process on the Plan.
NOTICE
All notices or other communications by a Participant to the Company under
or in connection with the Plan shall be deemed to have been duly given when
received by the Plan Administrator. Any notice required by the Plan to be
received by the Company prior to an Enrollment Date, payroll period or other
specified date, and received by the Plan Administrator subsequent to such date
shall be effective on the next occurring Enrollment Date, payroll period or
other specified date to which such notice applies.
GOVERNING LAW
The Plan shall be interpreted, administered and enforced in accordance
with the Code, and the rights of Participants, former Participants,
Beneficiaries and all other persons shall be determined in accordance with it.
To the extent state law is applicable, the laws of the State of Oregon shall
apply.
REFERENCES
Unless the context clearly indicates to the contrary, reference to a Plan
provision, statute, regulation or document shall be construed as referring to
any subsequently enacted, adopted or executed counterpart.
B-9
EXHIBIT A
DEFINITIONS
ACCOUNT shall mean each separate account maintained for a
Participant under the Plan collectively or singly as
the context requires. Each Account shall be credited
with a Participant's contributions, and shall be
charged for the purchase of Shares. A Participant
shall be fully vested in the cash contributions to
that person's Account at all times. The Plan
Administrator may create special types of Accounts for
administrative reasons, even though the Accounts are
not expressly authorized by the Plan.
BENEFICIARY shall mean a person or entity entitled under Section
VII of the Plan to receive Shares purchased by, and
any remaining balance in, a Participant's Account on
the Participant's death.
BOARD OF shall mean the Board of Directors of the Company.
DIRECTORS
CODE shall mean the Internal Revenue Code of 1986, as
amended, or the corresponding provisions of any future
tax code.
COMMITTEE shall mean the Committee appointed by the Board of
Directors in accordance with Section IX of the Plan.
COMPENSATION shall mean the total cash compensation (except as
otherwise set forth below), before tax withholding,
paid to an Employee in the period in question for
services rendered to the Employer by the Employee.
Compensation shall include the earnings waived by an
Employee pursuant to a salary reduction arrangement
under any cash or deferred or cafeteria plan that is
maintained by the Employer and that is intended to be
qualified under Section 401(k) or 125 of the Code. An
Employee's Compensation shall not include severance
pay, hiring or relocation bonuses, or pay in lieu of
vacations or sick leave.
COMMON STOCK shall mean the common stock of the Company.
COMPANY shall mean RadiSys Corporation, an Oregon Corporation.
CUSTODIAN shall mean the investment or financial firm appointed
by the Plan Administrator to hold all Shares pursuant
to the Plan.
CUSTODIAL shall mean the account maintained by the Custodian for
ACCOUNT a Participant under the Plan.
DISABILITY shall refer to a mental or physical impairment which
is expected to result in death or which has lasted or
is expected to last for a continuous period of twelve
(12) months or more and which causes the Employee to
be unable, in the opinion of the Company and two
independent physicians, to perform his or her duties
as an Employee of the Company. Disability shall be
deemed to have occurred on the first day after the
Company and two independent physicians have furnished
their opinion of Disability to the Plan Administrator.
EMPLOYEE shall mean an individual who renders services to the
Employer pursuant to an employment relationship with
such Employer. A person rendering services to an
Employer purportedly as an independent consultant or
contractor shall not be an Employee for purposes of
the Plan.
EMPLOYER shall mean, collectively, the Company and its
Subsidiaries or any successor entity that continues
the Plan. All Employees of entities which constitute
the Employer shall be treated as employed by a single
company for all purposes of the Plan.
B-10
EMPLOYMENT shall mean the period during which an individual is an
Employee. Employment shall commence on the day the
individual first performs services for the Employer as
an Employee and shall terminate on the day such
services cease, except as determined under Section XI.
ENROLLMENT DATE shall mean the first day of each Offering.
ESPP NEW shall mean the form provided by the Company on which a
ACCOUNT FORM Participant shall elect to open an Account with the
Custodian and authorize delivery to the Custodian of
all Shares issued for the Participant's Account.
OFFERING until August 15, 2000 shall mean any one of the
separate overlapping eighteen (18) month periods
commencing on February 15 and August 15 of each
calendar year under the Plan other than calendar year
1999; in calendar year 1999, the first Offering shall
be a period commencing on June 12, 1999 and ending on
August 15, 2000, and the second Offering shall be the
eighteen (18) month period commencing on August 15,
1999. Beginning with the Offering that commences on
August 15, 2000, Offering shall mean any one of the
separate overlapping eighteen (18) month periods
commencing on February 15, May 15, August 15 and
November 15 of each calendar year under the Plan.
PARTICIPANT shall mean any Employee who is participating in any
Offering under the Plan pursuant to Section III.
PAYROLL shall mean the form provided by the Company on which a
DEDUCTION Participant shall elect to participate in the Plan and
AUTHORIZATION the Offering under the Plan and designate the
FORM percentage of that individual's Compensation to be
contributed to that individual's Account through
payroll deductions.
PLAN shall mean this document.
PLAN shall mean the Board of Directors or the Committee,
ADMINISTRATOR whichever shall be administering the Plan from time to
time in the discretion of the Board of Directors, as
described in Section IX.
PURCHASE DATE until August 15, 2000 shall mean the last day of the
sixth, twelfth and eighteenth one-month periods of the
Offering, except for the Offering beginning on June
12, 1999, in which Offering the Purchase Dates shall
be August 14, 1999, February 14, 2000 and August 14,
2000. Beginning on August 15, 2000, for all then
pending Offerings and any Offerings commenced on or
after that date, Purchase Date shall mean the last day
of the third, sixth, ninth, twelfth, fifteenth and
eighteenth one-month periods of each Offering.
Accordingly, since after August 15, 2000 the
Enrollment Dates occur on February 15, May 15, August
15 and November 15 of each year, Purchase Dates shall
occur on February 14, May 14, August 14 and November
14 of each year beginning with November 14, 2000.
RETIREMENT shall mean a Participant's termination of Employment
on or after attaining the age of 65 or after the Plan
Administrator has determined that the individual has
suffered a Disability.
SHARE shall mean one share of Common Stock.
SUBSIDIARIES shall mean any corporation in which at least eighty
percent (80%) or more of the total combined voting
power of all classes of stock are owned directly or
indirectly by RadiSys Corporation.
B-11
VALUATION shall mean the date upon which the fair market value
DATE of Shares is to be determined for purposes of setting
the price of Shares under Section VI (that is, the
Enrollment Date or the applicable Purchase Date). If
the Enrollment Date or the Purchase Date is not a date
on which the fair market value may be determined in
accordance with Section VI, the Valuation Date shall
be the first day prior to the Enrollment Date or the
Purchase Date, as applicable, for which such fair
market value may be determined.
VESTED shall mean non-forfeitable.
- ----------
Initial Adoption: December 5, 1995
Last amended: May 16, 2000 (shareholders approved increase in shares
in Article VIII to 1,250,000)
June 6, 2000 (board approved revisions to Articles
III, IV, and V and to the definitions of Employee,
Offering and Purchase Date in Exhibit A)
May 15, 2001 (shareholders approved increase in shares
======================================================
in Article VIII to 1,750,000)
=============================
B-12
PROXY
RADISYS CORPORATION
ANNUAL MEETING, MAY 15, 2001
PROXY SOLICITED BY BOARD OF DIRECTORS
PLEASE SIGN AND RETURN THIS PROXY
The undersigned hereby appoints Dr. Glenford J. Myers and Stephen Loughlin, and
each of them, proxies with power of substitution to vote on behalf of the
undersigned all shares that the undersigned may be entitled to vote at the
annual meeting of shareholders of RadiSys Corporation (the "Company") on May 15,
2001 and any adjournments thereof, with all powers that the undersigned would
possess if personally present, with respect to the following:
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE.)
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
Please mark
your votes as |X|
indicated in
this example
THE ANNUAL MEETING OF SHAREHOLDERS OF RADISYS CORPORATION WILL BE HELD ON MAY
15, 2001 AT 8:30 A.M., PACIFIC DAYLIGHT TIME, AT THE CORPORATE HEADQUARTERS AT
5445 NE DAWSON CREEK DRIVE, HILLSBORO, OREGON.
1. Election of Directors:
FOR ALL NOMINEES EXCEPT AS WITHHOLD AUTHORITY TO VOTE
MARKED TO THE CONTRARY BELOW. FOR ALL NOMINEES LISTED BELOW.
|_| |_|
(Instruction: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, STRIKE A LINE
THROUGH THE NOMINEE'S NAME BELOW.)
Dr. Glenford J. Myers, James F. Dalton, Richard J. Faubert, C. Scott Gibson,
Jean-Pierre D. Patkay, Jean-Claude Peterschmitt and Carl W. Neun
2. Amendment of the Company's 1996 Employee Stock Purchase Plan to increase
the number of shares of the Company's Common Stock that may be issued
pursuant to the plan from 1,250,000 to 1,750,000.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. Transaction of any business that properly comes before the meeting or any
adjournments thereof. A majority of the proxies or substitutes at the
meeting may exercise all the powers granted hereby.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED
ABOVE, BUT IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF ALL DIRECTORS AND FOR THE PROPOSAL TO AMEND THE
COMPANY'S 1996 EMPLOYEE STOCK PURCHASE PLAN. THE PROXIES MAY VOTE IN
THEIR DISCRETION AS TO OTHER MATTERS THAT MAY COME BEFORE THIS
MEETING.
Please Note: Any shares of stock of the Company held in the name of
fiduciaries, custodians or brokerage houses for the benefit of their
clients may only be voted by the fiduciary, custodian or brokerage
house itself--the beneficial owner may not directly vote or appoint
a proxy to vote the shares and must instruct the person or entity in
whose name the shares are held how to vote the shares held for the
beneficial owner. Therefore, if any shares of stock of the Company
are held in "street name" by a brokerage house, only the brokerage
house, at the instructions of its client, may vote or appoint a
proxy to vote the shares.
SIGNATURE OR SIGNATURES ___________________ DATE:___________, 2001 SHARES:
Please date and sign as name in imprinted hereon, including designation as
executor, trustee, etc., if applicable. A corporation must sign its name by the
president or other authorized officer.
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^