10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________

Form 10-K

__________________________________

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2013

Or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from              to             .

Commission file number 0-26844

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RADISYS CORPORATION

(Exact name of registrant as specified in its charter)

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Oregon	93-0945232
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

5435 N.E. Dawson Creek Drive, Hillsboro, OR	97124
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code	(503) 615-1100

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class	Name of each exchange on which registered
Common Stock, No Par Value	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None

____________________________________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.        Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).        Yes  x    No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or in any amendment to this Form 10-K.      o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o	Accelerated Filer x
Non-accelerated filer  o (Do not check if a smaller reporting company)	Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes  o    No  x

The aggregate market value of the voting and non-voting common equity held by non-affiliates (based upon the closing price of the NASDAQ Global Select Market on June 30, 2013 of $4.81) of the registrant as of June 30, 2013 was approximately $115,588,196. For purposes of the calculation executive officers, directors and holders of 10% or more of the outstanding common stock are considered affiliates.

Number of shares of common stock outstanding as of March 11, 2014: 29,457,838

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Proxy Statement for the 2013 Annual Meeting of Shareholders are incorporated by reference into Part III of this report.

RADISYS CORPORATION

FORM 10-K

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Business	3
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	21
Item 2.	Properties	22
Item 3.	Legal Proceedings	22
Item 4.	Mine Safety Disclosures	22
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
Item 6.	Selected Financial Data	25
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 8.	Financial Statements and Supplementary Data	48
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	85
Item 9A.	Controls and Procedures	85
Item 9B.	Other Information	85
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	86
Item 11.	Executive Compensation	86
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	86
Item 13.	Certain Relationships and Related Transactions, and Director Independence	87
Item 14.	Principal Accounting Fees and Services	87
	PART IV
Item 15.	Exhibits and Financial Statement Schedules	88
Signatures		94

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PART I

Item 1. Business

General

Radisys Corporation (NASDAQ: RSYS) is a provider of wireless infrastructure solutions to the telecom market.  Our Media Resource Function ("MRF"), T-Series platform products, and Trillium software coupled with an expert professional services organization enable our customers to bring high-value products and services to the telecom market faster and with lower investment and risk.  By leveraging our telecom expertise, we are also able to deliver our products and capabilities into adjacent markets such as aerospace and defense. These products are targeted throughout the telecommunication network from Radio Access Network ("RAN") to the Evolved Packet Core ("EPC") to the IP Multimedia Subsystem ("IMS") and include the following:

• MRF products, which can be purchased either as a complete product on our own T-Series ATCA platforms (MPX-12000) or as software-only MPX Operating Software ("MPX-OS") when our customers want to leverage other processing platforms, are designed into the IMS core of the network and provide the necessary media processing capabilities required as carriers deploy applications such as audio conferencing, Voice over Long-Term Evolution ("VoLTE"), Rich Communications Services (“RCS”) and video conferencing;

• T-Series ATCA and Network Appliance products provide the platforms necessary to control and move data in the core of the telecom network enabling networks elements within the EPCs as well as providing a platform for applications such as Deep Packet Inspection ("DPI") and policy management. When these products are combined with our professional service organization of network experts, we believe our technology enables our customers to bring to market solutions such as intelligent gateways (security, femto, and Long-Term Evolution ("LTE") gateways) and load balancers, at a cost and time to market advantage when compared to internally developed solutions; and

• Trillium software is the protocol foundation for a complete turn-key application that enables the linkage between end user wireless devices and small cells as carriers seek to optimize radio access spectrum utilization in both the 3G and LTE networks. Additionally, we leverage the same Trillium technology to enable small cell applications in adjacent markets such as aerospace and defense as well as manufacturing and test.

Unless required by context, or as otherwise indicated, “we,” “us,” “our” and similar terms, as well as references to the “Company” and “Radisys” refer to Radisys Corporation and include all of our consolidated subsidiaries.

Market Drivers

By enabling wireless infrastructure solutions, our software and hardware products uniquely position us to capitalize on the significant global deployments of next generation LTE networks as well as the continued refinements and optimization of existing 3G networks. Demand for data and video traffic continues to expand exponentially as a result of increasing usage of smart phones, tablets and other wireless devices. As networks worldwide have evolved from 3G to 4G LTE and beyond, the wireless industry is accelerating into a period of unprecedented innovation and growth. Mobile devices and wireless data are growing explosively, driven by global demand for video and other increasingly data intensive wireless services. In this evolving market, success demands a deep expertise in deploying fully integrated custom wireless applications. Key market drivers which we view as fundamental to our future success include the following:

• Virtualizing the Core Network. Operators are looking to increase average revenue per user and reduce costs while accelerating the deployment of new and exciting revenue-generating features. Network function virtualization ("NFV") and software-defined networking ("SDN") are two capabilities that form the basis for the next generation telecom cloud. Virtualized ATCA is increasingly becoming the platform of choice for the telecom cloud. We believe our T-Series ATCA platforms accelerate time to market by delivering the highest level of integration on the market along with a software suite that enables the interoperability of the various ATCA components and allows our customers to focus on the customer applications themselves. Our T-Series ATCA products also offer scalability starting with the low cost entry R220 Network Appliance all the way up to a 16-slot platform, enabling a quick upgrade of the network for all capacities.

• Maximizing spectrum utilization. Wireless spectrum is a limited resource over which data is transferred. Wireless network providers require continual technology advancements to allow increasing amounts of data to be transferred

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over the same band of wireless spectrum. The deployment of small cells, the emergence of heterogeneous networks ("HetNets") and the leap towards LTE-Advanced promises to further enhance spectrum utilization. The ability to take advantage of the possible spectrum available, such as FDD, TDD and non-continuous bands, is increasingly important for operators as they attempt to deliver increased capacity and performance to their subscribers.  These trends are making networks more efficient, increasing capacity and coverage and enabling operators to more readily monetize mobile broadband usage. Radisys accelerates time to market by providing deployment proven standards compliant protocol and application software for 3G HSPA+, LTE-FDD, LTE-TDD and LTE Advanced wireless and wireline networks.

Radisys Total ENodeB product offers a complete software suite that supports the latest standards (such as LTE-Advanced), is deployment proven for both 3G and LTE networks and is integrated with the leading specialized small cell silicon. Beyond small cell software, Radisys provides an extensive portfolio that spans from the RAN to the core network. Radisys also provides value-added applications that enable the optimization of bandwidth and maximizes the life of networks, such as monitoring traffic offload and load balancing. Radisys customers are able to leverage our proven Trillium software interoperability and stability so they can focus on their own differentiation.

• Monetizing VoLTE and Video. Operators are continuing to advance and deploy revenue generating applications for next generation LTE networks such as VoLTE, RCS, HD Audio, Web based real time communication ("WebRTC"), Multimedia Conferencing, Mobile Video, Video Response and Video Ringback Tones, Mobile Value Added Services, Voice over IP ("VoIP") and Video over IP Communications, Interactive Voice and other applications that require intensive media processing capabilities. Next generation IMS architectures with MRF processing real-time audio and video media streams are the underlying foundation that enables delivery of these customer applications. MPX-OS provides the intelligence required for processing the various audio and video formats used by global service providers. MPX-OS can be installed on a dedicated ATCA platform where high density is required, on commercial off-the-shelf hardware, or as a virtualized deployment in a telecom cloud. The MPX-12000 is an advanced multimedia resource function for LTE IMS providing the scalable IP media processing required for VoLTE, HD video and multimedia transcoding. We also provide audio conferencing solutions with over six million ports deployed to global service providers. Our Session Initiation Protocol application software ("SIPware") on our leading MRF equipment provides a turn-key conferencing solution for collaboration service providers.

In addition to these fundamental market drivers, we believe there are a number of other drivers for growth in our target markets, including:

• As network architectures begin their transition to a cloud-based solution, SDN and NFV specifications require software-based network applications to utilize virtualized common hardware. The data processing requirements of these diversified applications require new hardware with massive input/output capabilities as well as load balancing intelligence to optimize the data flow. Our hardware solutions are uniquely positioned to capitalize on these trends as they combine world-class compute power with high density switching capability and load balancing capabilities.

• The telecommunication industry's ecosystem continues to evolve as telecommunications equipment manufacturers (“TEMs”) focus more on applications and network operators and carriers focus more on applications and content delivery. We expect to benefit from these trends by providing more platforms and solutions such as Femtocell Gateways, Video Gateways, IP Messaging, Network Surveillance, Network Security, Aerospace and Defense, and DPI, all of which are supported by our T-Series platforms and enable the carrier's applications.

Our Strategy

Our strategy is to provide TEMs and other manufacturers with secure, cost-effective, faster, and smarter wireless infrastructure solutions for mobile broadband networks that meet the increasing demands of their consumers. Our top three strategic priories are:

• Providing our carrier grade MRF products, the MPX-12000 and virtualized MPX-OS, that provide the media processing capabilities necessary for our customers' VoLTE deployments, transcoding needs and early WebRTC work, while at the same time maintaining our market position in audio conferencing.

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• Providing a virtualized hardware platform that enables efficient utilization of common hardware by providing high input/output with load balancing capabilities. This unique capability is targeted squarely at carriers and telecom equipment manufacturers who are seeking to deploy next generation SDN and NFV architectures.

• Providing Trillium technology based solutions that optimize the carrier’s utilization of wireless spectrum through the deployment of small cell based wireless access points. We also seek to maximize the market potential of this technology beyond dedicated small cell applications to adjacent markets such as defense and aerospace, manufacturing and test that utilize the same underlying technology.

We believe we are positioned to address the needs of our customers by:

• Providing a comprehensive solution to our customers through a combination of our software, hardware, and professional services offerings. Our technologies enable our customers' wireless infrastructure solutions by providing them with a complete suite of software and hardware capabilities targeted at the wireless industry. We believe these capabilities, when combined with our professional service organization's network expertise, creates a compelling and unique offering that our customers value and that differentiates us in the market.

• Accelerating time-to-market for our customers. We offer standards-based, turn-key products such as our carrier grade MPX-12000, MPX-OS Software, Trillium software, and our T-Series integrated platforms. We believe these products, combined with our strong expert telecom resources, provide our OEM customers with significant time-to-market advantages when compared to solutions developed internally.

• Lowering total cost-of-ownership for our customers. We believe our wireless communications hardware and software products provide a lower total cost-of-ownership to our customers by reducing research and development and support cost, when compared to utilizing their own internal development resources. By leveraging our technology expertise and development, our customers minimize integration risk and can focus their development resources on their own differentiating applications.

Our Products

Our portfolio of products addresses a variety of customer requirements. We have differentiated our products into the following categories:

• T-Series ATCA Platforms. Our T-Series ATCA product family includes a suite of fully integrated, application ready, software-rich hardware products that are largely ATCA based and modular in nature and enable configuration for a wide variety of applications. As a common managed platform, we believe our T-Series ATCA platforms provide carriers with faster time to market as well as reduced service and support costs on the network elements they deploy.

Based on the standard ATCA form factor, the T-Series ATCA platforms integrate a number of key products and applications to enable functions within the wireless network core. These products are comprised of carrier blades, chassis, disk modules, line cards, and processing and switch modules. Specific functionality provided by our ATCA products includes:

◦ Computing/Switching. These blades provide the essential functionality necessary to enable sophisticated applications such as traffic shaping, internet offload, load balancing, and security gateways.

◦ Network Processing. These products allow our customers, through the application of DPI, to analyze packets of data traveling across wireless networks and create protocols to manage the data flow. This functionality is increasingly required by telecommunications and network providers as they seek to improve the efficiency and revenue-generating capability of their networks.

◦ Digital Signal Processing. These products provide the key functionality required for audio, digital, and video signal compression, transcoding and transmission across wireless networks.

◦ Platform Software. This software, embedded within our T-Series ATCA platforms, enables the interoperability of the various elements within our T-Series systems and is an essential strategic element that allows our customers to focus on the value-added applications that utilize T-Series compute power.

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It also provides a single point of management for the entire platform as well as providing switch management, switch redundancy and load balancing.

◦ Network Appliance. With growing demand for appliances in the network infrastructure, we introduced the R220 Network Appliance product line in 2013 which further expands the breadth and scalability of our telecom products. The R220 Network Appliance is a low-end complement to our ATCA products and addresses high growth markets such as DPI, Next Gen Firewall, policy enforcement, media optimization and load balancing across mobile access, edge and core networks.

• Software-Solutions. Our Software-Solutions products provide our customers with a comprehensive suite of solutions to address their network needs. These solutions include the following product families:

◦ MRF. Our line of MRF products are powerful, reusable and highly scalable multimedia processing platforms that enable audio and video conferencing, VoLTE, VoIP and mobile video services across next generation wireless networks. We sell our MRF products to telecommunication service providers, telecom equipment manufacturers, wireless operators, real-time communication solution developers, OEM and enterprise customers. When combined with our SIPware, we offer a turn-key, multimedia conferencing solution to audio conferencing service providers, carriers and mobile operators.

Our MRF products enable the convergence of fixed and mobile networks by delivering a shared media processing resource for any access network, including 4G/LTE wireless, broadband, cable, public switched telephone network ("PSTN") or satellite. The system's multi-service versatility enables service providers, and their application development and network infrastructure partners, to rapidly deploy innovative high-margin telecommunications services including multimedia conferencing, ringback tones, unified communications and contact center applications. Our voice quality enhancement ("VQE") group of features is specifically designed to address noise, packet loss, and echo in VoIP networks, which enhances the usability and differentiation of VoIP services. We believe ongoing investments in our Video over IP capabilities and densities will help grow our business from serving VoIP audio services into high value video enabled and mobile services. We also invest in IP-IP transcoding, transrating, and media conditioning features, to address growing scalability requirements to achieve seamless IP media stream interworking between 3G mobile, VoLTE IMS, Over-The-Top ("OTT"), and emerging WebRTC services and networks.

Our MRF product family consists of the MPX-12000, a hardware-based fault-resilient MRF based on our T-Series ATCA, as well as our Software MRF, designed for Linux servers and virtualized cloud deployments. Our recently announced MPX-OS provides a common media processing foundation for all of our MRF products, ensuring identical media processing features, control interface, and management capabilities across the entire Radisys MRF product family, providing a unique value proposition to our customers.

◦ Trillium Software. Our Trillium software protocols and applications are the underlying signaling and data infrastructure that enables the linkage between wireless end user devices and network base station access points. Today, Trillium software is focused primarily on enabling 3G and LTE wireless network access. In addition, Trillium supports all types of network infrastructure from access to the core of the network and from wireless to wireline networks.

Trillium software is the foundation for many 3G and LTE small cell products. Small cells enable mobile operators to increase network capacity, improve coverage and reduce the cost per bit of data traffic. Our products for 3G (Femtotality) and LTE (TOTALeNodeB) are complete applications that are integrated on specialized small cell silicon platforms and ultimately embedded in wireless base stations. This modular approach accelerates time-to-market and provides Radio Resource Management ("RRM"), Self-Organizing Networks ("SON"), and Operations, Administration and Maintenance ("OA&M") modules critical to customer's deployments. Our TOTALeNodeB software is the foundation for some of the world's first commercial LTE small cell deployments, including mobile operators in South Korea.

In addition, we believe our Trillium software allows customers to simplify their next generation networks, such as IMS and packet core networks, by addressing network providers' common interoperability, security, quality of service and legacy interworking concerns.

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◦ Solutions. Our customers increasingly requirecomprehensive products which combine multiple technologies to deliver complex solutions to their end customers. An example of our solutions-based products includes our load balancing technology which enables mobile operators to enhance the efficiency and effectiveness of data processing within and between the various elements deployed within the core of their wireless networks. Many ATCA-based network elements often utilize a pool of identical servers to process the overall workload required within the wireless network core. Our Load Balancer enables more efficient distribution of traffic throughout this server pool, enabling mobile operators to deliver consistent performance to their end customers.

• COM Express and Rackmount Servers. These products are targeted primarily at the medical imaging, test and measurement, and aerospace and defense markets. We have two primary product families in this category:

◦ Computer-on-Module Express. COM Express products are small form factor compute modules designed for applications that require a standard processor and memory subsystem, but also modular flexibility to retain key design-level IP on a separate carrier board. We believe our standards-based COM Express modules help equipment manufacturers shorten their time to market and reduce development costs. By making processor, chipset and memory independent of the rest of the system design, manufacturers can focus engineering resources on developing differentiating features and avoid the design turnover that comes with implementing new processor generations.

◦ Rack Mount Servers. Our enabling Rackmount Servers specialize in meeting the needs of specific applications that are designed to be the central control point of a larger integrated system. Medical imaging and diagnostic systems are examples of systems that incorporate these enabling servers.

• Other Products. These products comprise our remaining product offerings not specifically included in the above categories. These products are primarily custom built pre-ATCA based telecommunication products based on earlier technology standards.

Our Solutions

We provide end-to-end infrastructure solutions for existing and next-generation wireless communications networks. Our software and hardware products, combined with our professional service capabilities, provide our customers with solutions to meet the rapidly expanding data processing requirements of the global wireless network. Our products and technologies enable solutions from the point at which users access the network to how they manage and control data flow, as well as providing voice, video, and image manipulation capabilities for network providers. Specifically, our products enable us to provide solutions to our customers in the following areas:

• Radio Access Network. RAN is the point at which user equipment, such as mobile phones, access wireless networks via base stations. Our Trillium software provides the signaling protocols that enable end user equipment to access wireless networks through small cell base stations. The use of small cells lowers the overall cost per bit of data transmitted while at the same time increases the efficiency of the wireless spectrum. Trillium protocols provide the communication linkage for both 4G/LTE and 3G wireless networks.

• Evolved Packet Core. The EPC represents the network core within next generation wireless LTE networks. Our technologies address both the essential functionality and compute power within the wireless network core and include our Trillium software, T-Series ATCA platforms and Network Appliance hardware. Our T-Series platforms and Rackmount Servers provides both the necessary compute power as well as enable the essential decision-making capabilities which allow wireless networks to process traffic.

• Policy Control. This function resides in the network core and defines how network data traffic is handled based upon the characteristics of the data itself. As an example, our T-Series ATCA platforms and Network Appliance hardware combined with our customer application software enable the network to block, route, or otherwise process data by analyzing and comparing the data to a predetermined set of criteria. Network providers deploy DPI to increase average revenue per user on their networks by providing different classes of services to customers and optimizing data traffic by enabling networks to be device and application aware.

• Media / Content. Our MRF is an economical real-time media processor that is essential for enabling a myriad of applications that require heavy audio and video processing capabilities such as VoLTE and basic network announcements, as well as more advanced services such as Interactive Voice and Video Response ("IVVR") and

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multimedia Ringback Tones. Our MRF also provides IP to IP transcoding in the IMS, which when combined with our VQE and other media conditioning features, allows carriers to interconnect telecom devices operating with incompatible audio and video codecs. Finally, our MRF acting as the IMS MRF can be packaged with our SIPware conferencing application software to deliver our conferencing service provider customers complete and integrated revenue-generating audio or video conferencing solutions.

In addition, our Trillium software allows customers to simplify their IMS networks by addressing network providers' common interoperability, security, quality of service and legacy interworking concerns. We believe by using our MRF products and Trillium software, the network service providers are able to increase the average revenue per user by offering additional features and functionality to their customers.

Segments

Radisys is one operating segment as determined by the way management makes operating decisions and assesses Radisys’ financial performance. See Note 18 —Segment Information of the Notes to the Consolidated Financial Statements for segment information.

Competition

We face competition from four primary types of competitors:

• Our target customers. Our primary competition is from our existing and potential future customers who choose to remain vertically integrated and internally develop their own network platforms, modules and/or sub-systems.

• Platform providers. Our competitors in the ATCA and Network Appliance product space include Artesyn Embedded Technologies, HP and IBM. In addition, we face competition in the MRF market from Dialogic as well as internal development of MRF products by our largest customers.

• Board providers. Our competitors in the board product space include ADLink Technologies, Advantech Co., Artesyn Embedded Technologies and Kontron AG.

• Enabling software. Our primary competitors in the enabling software solutions market, into which our Trillium software is sold, are Aricent Group, NodeH, Cisco and customers who may choose to develop the technology in-house.

We believe the main competitive factors are product performance, quality, service, time to market, ability to respond to technological change and/or price. Our system level architecture and design expertise, coupled with our broad technology portfolio, flexibility in working intimately with system makers and our ability to combine commercial off the shelf platforms with networking software and services to complete solutions, enable product differentiation when compared to our competition. We believe our rapid design cycles and standards-based solutions coupled with our design and manufacturing presence in low cost geographies will provide customers with a time to market advantage at a lower total cost.

Customers

Our customers include many leading manufacturers which sell their products into a variety of end markets. Examples of these customers include: AAI, Affirmed, Allot, Arris, Arrow Electronics, AT&T (fulfilled through Nokia Solutions and Networks), Cisco Systems, Unicom, Fujitsu (fulfilled through Macnica Networks Corp), G.E. Healthcare, Interdigital, Italtel, Landmark Electronics, Lestina International, Ericsson LG, NEC (fulfilled directly and through Kineto Wireless and Macnica Networks Corp.), Nokia Solutions and Networks, PGi, Philips Healthcare, Viasat, Danaher Corporation, and West Corporation.

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Our five largest customers, accounting for approximately 52% of revenues in 2013, are listed below with an example of the type of application which incorporates our products:

Customer	Application / End Customer
Arrow Electronics	Defense communications / telecommunications applications for various end customers
Danaher Corporation	Network performance monitoring equipment and network security
NEC Corporation	ATCA systems for use in 3G and 4G wireless solutions for use in NEC applications
Nokia Solutions and Networks	2, 2.5, and 3G wireless infrastructure equipment incorporated into Nokia Solutions and Networks as well as conferencing solutions sold through to the carrier AT&T
Philips Healthcare	Medical imaging equipment

Nokia Solutions and Networks was our largest customer in 2013, accounting for 18.7% of 2013 revenues.

Supply Chain Operations

Our manufacturing is fully outsourced to a single contract manufacturing partner in Asia as we believe utilizing a contract manufacturing partner provides product cost advantages. We presently have offices in Shenzhen, China, Penang, Malaysia, and Hillsboro, Oregon which oversee the supply chain management, manufacturing, integration and product testing and quality efforts conducted by our contract manufacturing partner. We also have integration facilities in Burnaby, British Columbia and Shenzhen, China for the final integration, testing and delivery of certain ATCA and MRF systems. We are transferring our contract manufacturing from Penang to Shenzhen in order to realize further operational efficiencies. On November 5, 2013 we announced plans to transition to a new contract manufacturing partner, Ennoconn Corporation, in Shenzhen. This action will allow us to consolidate our Asian footprint into a single internal site within Shenzhen and further enable cost savings by reducing our headcount in support of our contract manufacturing partner. We expect this operations transition to be completed in the second half of 2014.

Professional Services

Our professional services organization actively partners with our customers in the development of software features across our product portfolio to provide next generation architecture, product development engineering and development verification. Integration and testing services include validation, certification and network integration, support and training. In addition we offer deployment services such as branding, cost management and lifecycle management. Total professional services headcount located in our Bangalore, India facility was 138 as of December 31, 2013.

Research and Development

Because the industries in which we compete are characterized by rapid technological advances, our ability to compete successfully depends heavily upon our ability to ensure a continual and timely flow of competitive products, services and technologies to the marketplace. We continue to develop new technologies to enhance existing products and expand the range of our product offerings through research and development, licensing of intellectual property and acquisition of third-party businesses and technology. Our research and development ("R&D") staff consisted of 410 engineers and technicians as of December 31, 2013 located in the U.S, Canada, China, India and Malaysia. R&D expense in 2013, 2012 and 2011 was $45.0 million, $47.7 million and $44.6 million.

Sales, Marketing and Service

Our products are sold through a variety of channels, including direct sales, distributors, sales representatives, and system integrators. Our sales teams, in conjunction with our product marketing and product development teams, collaborate with customers to accelerate product development and achieve higher quality, lower development and product cost and faster time to market for their products. Our total direct sales and marketing headcount was 87 as of December 31, 2013.

We market and sell our products in North America, Europe, Middle East and Africa ("EMEA") and Asia Pacific. In each of these geographic markets, products are sold principally through a direct sales force located in the U.S., Canada, Europe, China, Japan, India, and Korea. In addition, we supplement our direct sales team with indirect sales representatives to cost effectively broaden our coverage area to access additional customers where we do not have a direct presence. In 2013, global revenues were comprised geographically as follows: 44% from North America, 22% from EMEA and 34% from Asia Pacific.

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See Note 18—Segment Information of the Notes to the Consolidated Financial Statements for financial information by geographic area and financial information regarding revenues of classes of similar products.

We have a worldwide service organization focused on meeting our customers' needs for hardware repair, system integration, and training. In addition, if required by our customers, we provide technical support and maintenance service for T-Series ATCA and Software-Solutions products due to the software-rich content of the products. Certain customers enter into technical support and maintenance service agreements which provide access to product upgrades and enhancements over the life of the contract as such releases become generally available.

Backlog

As of December 31, 2013, our backlog was approximately $34.3 million, compared to $36.3 million as of December 31, 2012. We include in our backlog only unshipped purchase orders scheduled for delivery within the next twelve months.

Intellectual Property

We hold 40 U.S. and 25 foreign utility patents, and have 10 U.S. and 11 foreign patent applications pending. We also rely on copyrights, trademarks, trade secrets, know-how and rapid time to market for protection and leverage of our intellectual property. We have from time to time been made aware of others in the industry who assert exclusive rights to certain technologies, usually in the form of an offer to license certain rights for fees or royalties. Our policy is to evaluate such claims on a case-by-case basis. We may seek to enter into licensing agreements with companies having or asserting rights to technologies if we conclude that such licensing arrangements are necessary or desirable in developing specific products.

Employees

As of December 31, 2013, we had 984 employees, comprised of 896 regular employees and 88 temporary employees or contractors. We are not subject to any collective bargaining agreements, have never been subject to a work stoppage, and believe we have maintained good relationships with our employees.

Corporate History

Radisys Corporation was incorporated in March 1987 under the laws of the State of Oregon. Our principal offices are located at 5435 N.E. Dawson Creek Drive, Hillsboro, OR 97124; our telephone number is (503) 615-1100. Our website address is www.radisys.com.

INTERNET INFORMATION

Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) are available free of charge through our website (www.radisys.com) as soon as reasonably practicable after we electronically file the information with, or furnish it to, the Securities and Exchange Commission (the “SEC”). Reports filed with the SEC may be obtained on the SEC website (http://www.sec.gov) or may be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Further information about the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

We have adopted Corporate Governance Guidelines for our Board of Directors and a Code of Conduct and Ethics (“the Code”) for our Board of Directors, our Chief Executive Officer, principal financial and accounting officers and other persons responsible for financial management and our employees generally. We also have charters for the Audit Committee, Compensation and Development Committee, Nominating and Corporate Governance Committee and Technology and Market Development Committee of our Board of Directors. Copies of the above-referenced documents may be obtained on our website (www.radisys.com), and such information is available in print to any shareholder who requests it by contacting us at our corporate headquarters at (503) 615-1100. Information contained on the Company’s website is not included as part of, or incorporated by reference into, this report.

We also utilize a third party compliance website, EthicsPoint^®, to provide our employees with a simple, risk-free way to anonymously and confidentially report actual or suspected activities that may involve financial or criminal misconduct or violations of the Code. This webpage is hosted on EthicsPoint’s secure servers and is not part of our website or intranet.

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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements. Some of the forward-looking statements contained in this report include:

• expectations and goals for revenues, gross margin, R&D expenses, selling, general and administrative ("SG&A") expenses and profits;

• the impact of our restructuring events and potential divestitures on future operating results;

• timing of revenue recognition;

• expected customer orders;

• our projected liquidity;

• future operations and market conditions;

• industry trends or conditions and the business environment;

• future levels of inventory and backlog and new product introductions;

• financial performance, revenue growth, management changes or other attributes of Radisys following acquisition or divestiture activities; and

• other statements that are not historical facts.

All statements that relate to future events or to our future performance are forward-looking statements. In some cases, forward-looking statements can be identified by terms such as “may,” “will,” “should,” “expect,” “plans,” “seeks,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “seek to continue,” “consider,” “intends,” or other comparable terminology. These forward-looking statements are made pursuant to safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or our industries’ actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

These factors include, among others, the Company's high degree of customer concentration, the use of a single contract manufacturer for a significant portion of the production of our products, as well as the success of transitioning contract manufacturing partners, key employee attrition, the anticipated amount and timing of revenues from design wins and product orders due to the Company's customers' product development schedules, cancellations or delays, market conditions, matters affecting the embedded system industry, including changes in industry standards, changes in customer requirements and new product introductions, currency exchange rate fluctuations, changes in tariff and trade policies and other risks associated with foreign operations, actions by regulatory authorities or other third parties, the Company's ability to successfully manage the transition from 10G to 40G ATCA product technologies, cash generation, the Company's ability to successfully complete any restructuring, acquisition or divestiture activities and other factors listed in Item 1A “Risk Factors” and in other reports we file with the SEC. Although forward-looking statements help provide additional information about us, investors should keep in mind that forward-looking statements are only predictions, at a point in time, and are inherently less reliable than historical information.

Forward-looking statements in this report include discussions of our goals, including those discussions set forth in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations". We cannot provide assurance that these goals will be achieved.

We do not guarantee future results, levels of activity, performance or achievements, and we do not assume responsibility for the accuracy and completeness of these statements. The forward-looking statements contained in this report are made and based on information as of the date of this report. We assume no obligation to update any of these statements based on information after the date of this report.

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Item 1A. Risk Factors

There are many factors that affect our business and the results of our operations, many of which are beyond our control. The risks described in this report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Because of the significant percentage of our sales to certain customers, the loss of, or a substantial decline in sales to, a top customer could have a material adverse effect on our revenues and profitability.

For 2013, 2012 and 2011, we derived 52%, 53%, and 59% of our revenues from our five largest customers during these periods. These five customers in 2013 were Arrow Electronics, Danaher Corporation, NEC Corporation, Nokia Solutions and Networks and Philips Healthcare, each of which purchase a variety of products from us. During 2013, 2012 and 2011, revenues attributable to our largest customer, Nokia Solutions and Networks, were 19%, 23% and 35%. Due to our significant customer concentration, our largest customers have additional pricing power over us that can adversely affect revenues and gross margins or cause us to exit lines of business with them that do not meet profitability objectives. Further, a financial hardship experienced by, or a substantial decrease in sales to, any one of these customers could materially affect our revenues and profitability. Generally, our products are components for our customers’ products and in certain instances our customers are not the end-users of our products. If any of these customers’ efforts to market the products we design and manufacture for them or the end products into which our products are incorporated are unsuccessful in the marketplace or if these customers experience a decrease in demand for such products, our design wins, sales and/or profitability will be significantly reduced. Furthermore, if these customers experience adverse economic conditions in the end markets into which they sell our products, we would expect a significant reduction in spending by these customers in addition to increasing our exposure to credit risk, which may limit our ability to collect. Some of these end markets are characterized by intense competition, rapid technological change and economic uncertainty and as such there is no guarantee that the revenues associated with the potential loss of a key customer will be replaced by the establishment of new business relationships. Our exposure to economic cyclicality and any related fluctuation in demand from these customers could have a material adverse effect on our revenues and financial condition.

Our ability to successfully transition from our current Malaysia-based contract manufacturer to a new China-based contract manufacturer could result in a material adverse effect on our business or our profitability if we underestimate the cost of the transfer, experience a delay in shipments, experience quality issues, purchase unneeded excess inventory or our internal measures to mitigate these risks are not effective.

In the fourth quarter of 2013, we announced plans to transition from our current contract manufacturer located in Penang, Malaysia, to a contract manufacturer located near our facilities in Shenzhen, China. The successful transition of our manufacturing is largely dependent upon the cooperation and continued performance of both our current and future contract manufacturers. During the transition period, we must establish procedures to ensure that our current contract manufacturer maintains its high standards of quality and on-time delivery with a reasonable cost structure despite the pending termination of our relationship.

As part of the transition, we plan to increase our inventory to mitigate the risk of not being able to meet customer demand during the transition and to be able to fulfill last time buy orders of products that will not be transferred to our new contract manufacturer. Holding increased levels of inventory could expose us to increased excess and obsolete charges that could negatively impact our operating results. Not maintaining adequate levels of inventory could result in missed sales opportunities and a loss of market share, negatively impacting revenues and our overall operating results.

If the transition does not go as expected, in addition to other issues noted above, each of the following events could have an adverse effect on our business and operating results and our business reputation:

•delayed shipments;

•unexpected costs overruns; and

•quality issues with outsourced products.

If either third party manufacturer fails to adequately perform, our revenues and profitability could be adversely affected. Among other risks, inadequate performance by our contract manufacturer could include the production of products that do not meet our quality standards or schedule and delivery requirements and could cause us to manufacture products internally or seek additional sources of manufacturing. Additionally, our contract manufacturer may decide in the future to discontinue conducting business with us. If we are required to change contract manufacturers or assume internal manufacturing operations due to any termination of the agreements with our contract manufacturer, we may lose revenue, experience manufacturing

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delays, incur increased costs or otherwise damage our customer relationships. We cannot guarantee that we will be able to establish alternative manufacturing relationships on similar terms. Additionally, upon notification of our intent to terminate the relationship with our current contract manufacturer, the manufacturing agreement contractually obligates us to purchase all inventories in excess of ninety days demand. As of December 31, 2013 the contract manufacturer has yet to invoke this clause. If this clause was invoked, the Company could have been required to purchase an estimated $5.1 million of inventory as of December 31, 2013.

Our future performance depends in part on the research and development efforts of third parties.

We purchase technology from a number of third parties that is used in the development of new software and hardware products. If our third party vendors fail to adequately develop new products that meet our specifications, timelines and cost targets, our revenues and profitability could be adversely affected as we may be unable to meet our customer delivery commitments or maintain pace with the development efforts of our competitors.

Our ability, as well as our contract manufacturer's ability, to meet customer demand depends largely on our ability to obtain raw materials and a reduction or disruption in the availability of raw materials could negatively impact our business.

The recent global economic contraction has caused many of our component suppliers to reduce their manufacturing capacity. As the global economy improves, our component suppliers are experiencing and may continue to experience supply constraints until they expand capacity to meet increased levels of demand. These supply constraints may adversely affect the availability and lead times of components for our products. Increased lead times mean we may have to forsake flexibility in aligning our supply to customer demand changes and increase our exposure to excess inventory since we may have to order material earlier and in larger quantities. Further, supply constraints will likely result in increased expediting and overall procurement costs as we attempt to meet customer demand requirements. In addition, these supply constraints may affect our ability, as well as our contract manufacturer's ability to meet customer demand and thus result in missed sales opportunities and a loss of market share, negatively impacting revenues and our overall operating results.

Because of the limited number of direct, and indirect suppliers, or in some cases, one supplier, for some of the components we and our contract manufacturer use, a loss of a supplier, a decline in the quality and/or a shortage in any of these components could have a material adverse effect on our business or our profitability.

There are only a limited number of direct and indirect suppliers, or in some cases, only one supplier, for a continuing supply of the components our contract manufacturer uses in the manufacturing of our products and any disruption in supply could adversely impact our financial performance. For example, certain silicon is solely sourced from large silicon producers. We obtain these components from resellers, integrators and component manufacturers. Alternative sources of components that are procured from one supplier or a limited number of suppliers could be difficult to locate and/or would require a significant amount of time and resources to establish. We have in the past experienced and may in the future experience difficulty obtaining adequate quantities of key components used in certain of our products, which have resulted and may result in delayed or lost sales. Delayed sales can also result from our silicon vendors delays or cancellations of new technologies and products as these technologies and products are often designed into new Radisys products before they are fully available from our suppliers. In addition, current economic conditions expose us to an increased risk of vendor insolvency, which, given our reliance upon a limited supply base, could result in an inability to procure adequate quantities of materials and components to meet our customers’ demand and/or ability to procure the quality of materials and components our customers require.

Political events, war, terrorism, public health issues, natural disasters and other circumstances could have a material adverse effect on our financial condition and operating results

War, terrorism, geopolitical uncertainties, public health issues, and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a strong negative effect on our business and our suppliers, logistics providers, manufacturing vendors and customers, including channel partners. Our business operations are subject to interruption by natural disasters, fire, power shortages, nuclear power plant accidents, terrorist attacks, and other hostile acts, labor disputes, public health issues, and other events beyond our control. Such events could decrease demand for our products, make it difficult or impossible for us to make and deliver products to our customers, including channel partners, or to receive components from our suppliers, and create delays and inefficiencies in our supply chain. Should major public health issues, including pandemics, arise, our business could be negatively affected by more stringent employee travel restrictions, additional limitations in freight services, governmental actions limiting the movement of products between regions, delays in production ramps of new products, and disruptions in the operations of our manufacturing vendors and component suppliers. The majority of our research and development activities and other critical business

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operations, including certain component suppliers and manufacturing vendors, are in locations that could be affected by natural disasters. In the event of a natural disaster, losses, significant recovery time and substantial expenditures could be required to resume operations and our financial condition and operating results could be materially adversely affected.

Our failure to develop and introduce new products on a timely basis could harm our ability to attract and retain customers.

Our industry is characterized by rapidly evolving technology, frequent product introductions and ongoing demands for greater performance and functionality. Therefore, we must continually identify, design, develop and introduce new and updated products with improved features to remain competitive. To introduce these products on a timely basis we must:

• design innovative and performance-improving features that differentiate our products from those of our competitors;

• identify emerging technological trends in our target markets, including new standards for our products in a timely manner;

• accurately define and design new products to meet market needs;

• anticipate changes in end-user preferences with respect to our customers’ products;

• rapidly develop and produce these products at competitive prices;

• anticipate and respond effectively to technological changes or product announcements by others; and

• provide effective technical and post-sales support for these new products as they are deployed.

We intend to develop new products and expand into new markets, which may not be successful and could harm our operating results.

We intend to expand into new markets and develop new products and applications based on our existing technologies integrated with new technologies organically developed or acquired. These efforts have required and will continue to require us to make substantial investments, including but not limited to significant research, development and engineering expenditures. Additionally, many of the new products and applications we are working on may take longer and more resources to develop and commercialize than originally anticipated. Specific risks in connection with expanding into new products and markets include, but are not limited to, the inability to transfer our quality standards and technology into new products, the failure of customers to accept our new products, longer product development cycles and competition and intellectual property disputes. We may not be able to successfully manage expansion into new markets and products and these unsuccessful efforts may harm our financial condition and operating results.

Our projections of future purchase orders, revenues and earnings are highly subjective and may not reflect future results which could negatively affect our financial results and cause volatility in the price of our common stock.

We have several contracts with most of our major customers but these contracts do not typically commit them to purchase a minimum amount of our products. These contracts generally require our customers to provide us with forecasts of their anticipated purchases. However, our experience indicates that customers can change their purchasing patterns quickly in response to market demands, changes in their management or strategy, among other factors, and therefore these forecasts may not be relied upon to accurately forecast sales. From time to time we provide projections to our shareholders and the investment community of our future sales and earnings. Since we do not have long-term purchase commitments from our major customers and the customer order cycle is short, it is difficult for us to accurately predict the amount of our sales and related earnings in any given period. Our projections are based on management’s best estimate of sales using historical sales data, information from customers and other information deemed relevant. These projections are highly subjective since sales to our customers can fluctuate substantially based on the demands of their customers and the relevant markets. Our period to period revenues have varied in the past and may continue to vary in the future.

Unanticipated reductions in purchase orders from our customers may also result in us having to write off excess or obsolete inventory. Conversely, if we underestimate customer demand or if insufficient manufacturing capacity is available or if our customers experience a financial hardship or if we experience unplanned cancellations of customer contracts, the current provision for inventory reserves may be inadequate and as a result we could forego revenue opportunities and potentially lose market share and damage our customer relationships. In addition and as stated above, we have a high degree of customer concentration. Any significant change in purchases by any one of our large customers may significantly affect our sales and profitability.

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If demand for our products fluctuates, our revenues, profitability and financial condition could be adversely affected. Important factors that could cause demand for our products to fluctuate include:

• changes in customer product needs;

• changes in the level of customers’ inventory;

• changes in business and economic conditions;

• changes in the mix of products we sell; and

• market acceptance of our products.

The price of our common stock may be adversely affected by numerous factors, such as general economic and market conditions, changes in analysts’ estimates regarding earnings as well as factors relating to the commercial systems and communication networking markets in general. We cannot accurately forecast all of the above factors. As a result, we believe that period-to-period comparisons may not be indicative of future operating results. Our operating results in any future period may fall below the expectations of public market analysts or investors.

Our business depends on conditions in primary markets into which we sell our products. Demand in these markets can be cyclical and volatile, and any inability to sell products to these markets or forecast customer demand due to unfavorable or volatile market conditions could have a material adverse effect on our revenues and gross margin.

Generally, our products are components for our customers’ products and, in certain instances, our customers are not the end-users of our products. If our customers experience adverse economic conditions in the end markets into which they sell our products, we would expect a significant reduction in spending by our customers. Some of these end markets are characterized by intense competition, rapid technological change, consolidation of providers and economic uncertainty. Our exposure to economic cyclicality and any related fluctuation in customer demand in these end markets could have a material adverse effect on our revenues and financial condition. We are expanding into applications either through new product development projects with our existing customers or through new customer relationships, but no assurance can be given that this strategy will be successful.

In addition, customer demand for our products is subject to significant fluctuation. A prolonged economic downturn in the business or geographic areas in which we sell our products could reduce demand for our products and result in a decline in our revenue, gross margin and overall profitability. Volatility and disruption of financial and credit markets could limit our customers’ ability to obtain adequate financing to maintain operations and invest in network infrastructure and therefore could also reduce demand for our products and result in a decline in our revenue, gross margin and overall profitability. If we overestimate demand, we may experience underutilized capacity and excess inventory levels. As such, if we underestimate demand, we may miss sales opportunities and incur additional costs for labor overtime, equipment overuse and logistical complexities. Additionally, we have adverse purchase commitment liabilities pursuant to which we are contractually obligated to place a deposit with our contract manufacturer for the cost of excess inventory used in the manufacture of our products for which there is no forecasted or alternative use. Unexpected decreases in customer demand or our inability to accurately forecast customer demand could also result in increases in our adverse purchase commitment liability and have a material adverse effect on our gross margins and profitability.

Not all new design wins ramp into production, and even if ramped into production, the timing of such production may not occur as we or our customers had estimated or the volumes derived from such projects may not be as significant as we had estimated, which could have a substantial negative impact on our anticipated revenues and profitability.

Our product revenue growth expectations are highly dependent upon successful ramping of our design wins. The time between when we achieve a design win with a customer and when we begin shipping to that customer at production levels generally has been shortened with our standards-based model. In some cases there is no time between when a design win is achieved and when production level shipments begin. With many new design wins with our ATCA platforms and our COM Express modules, customers may require us to provide customization of our products. In addition, customers may require significant time to port their own applications to our systems. Customization of our products as well as porting of customer specific applications can take six to twelve months and in some circumstances can be as long as 24 months. After that, there is an additional time lag from the start of production ramp to peak revenue. Not all design wins ramp into production and, even if a design win ramps into production, the volumes derived from such projects may be less than we had originally estimated. Customer projects related to design wins are sometimes canceled or delayed, or can perform below original expectations, which can adversely impact anticipated revenues and profitability. In particular, the volumes and time to production ramp associated with new design wins depend on the adoption rate of new technologies in our customers’ end markets, especially in the communications networking sector. Program delays or cancellations could be more frequent during times of meaningful economic downturn or due to the consolidation of one or more of our end customers. Should technologies such as VoLTE, IMS,

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3G and 4G/LTE wireless technologies, advanced multimedia applications, Femtocell applications and other emerging technologies not be adopted as fast as we or our customers anticipate, actual volumes from new design wins may be lower than we are expecting, which could adversely affect our revenue growth and gross margin expectations.

We rely on our key management and depend on the recruitment and retention of qualified personnel, and our failure to attract and retain such personnel could seriously harm our business.

A small number of key executives manage our business. Their departure could have a material adverse effect on our operations. In addition, due to the specialized nature of our business, our future performance is highly dependent upon our ability to attract and retain qualified engineering, manufacturing, marketing, sales and management personnel for our operations. Competition for personnel is intense, and we may not be successful in attracting and retaining qualified personnel. Our failure to compete for these personnel could seriously harm our business, results of operations and financial condition. In addition, if incentive programs we offer are not considered desirable by current and prospective employees, we could have difficulty retaining or recruiting qualified personnel. If we are unable to recruit and retain key employees, our product development, marketing and sales could be harmed.

The success of our business is dependent upon successfully managing our international operations and attracting and retaining key international employees.

Substantially all of our product development and operations centers are located in China and India. This international presence results in risks that are inherent in doing business on an international level. These risks include:

• difficulties in managing operations due to distance, language and cultural differences;

• different or conflicting laws and regulations;

• accounting (including managing internal control over financial reporting in our non-U.S. subsidiaries), tax and legal complexities arising from international operations;

• burdensome regulatory requirements and unexpected changes in these requirements, including data protection requirements;

• political and economic instability;

• fluctuations in currency exchange rates; and

• different laws and regulations surrounding taxes and their potentially adverse consequences.

Our foreign currency exchange risk management program is designed to reduce, but does not eliminate, the impact of currency exchange rate movements. If we cannot manage our international operations successfully, our business, results of operations and financial condition could be adversely affected.

The U.S. Foreign Corrupt Practices Act (“FCPA”) and similar anti-bribery laws and regulations in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials for the purpose of obtaining or retaining business or securing an improper advantage. Our policies mandate compliance with applicable anti-bribery laws worldwide. However, if we are found to be in violation of the FCPA or other similar anti-bribery laws or regulations, whether due to our or others' actions or inadvertence, we could be subject to civil and criminal penalties or other sanctions that could have a material adverse impact on our business, financial condition or results of operations. In addition, actual or alleged violations could damage our reputation or ability to do business.

Acquisition, divestitures and partnerships may be more costly or less profitable than anticipated and may adversely affect the price of our common stock.

As part of our business strategy, we routinely engage in discussions with third parties regarding, and enter into agreements relating to, acquisitions, joint ventures and divestitures in order to manage our product and technology portfolios as part of and to further our strategic objectives. Our strategy may include the divestiture of certain product lines as we seek to maximize shareholder value or improve our cash position. We also continually look for ways to increase the profitability of our operations through restructuring efforts and to consolidate operations across facilities where synergies exist. In order to pursue this strategy successfully, we must identify suitable acquisition, alliance or divestiture candidates, complete these transactions, some of which may be large and complex, and integrate acquired companies. Integration and other risks of acquisitions can be more pronounced for larger and more complicated transactions, or if multiple acquisitions are pursued simultaneously.

The integration of acquisitions may make the completion and integration of subsequent acquisitions more difficult. However, if we fail to identify and complete these transactions, we may be required to expend resources to internally develop products and technology or may be at a competitive disadvantage or may be adversely affected by negative market perceptions,

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which may have a material adverse effect on our business, results of operations and financial condition.

Acquisitions may require us to integrate different company cultures, management teams and business infrastructures and otherwise manage integration risks. Even if an acquisition is successfully integrated, we may not receive the expected benefits of the transaction.

A successful sale or divestiture depends on various factors, including our ability to effectively transfer assets and liabilities, contracts, facilities and employees to the purchaser, identify and separate the intellectual property to be divested from the intellectual property that we wish to keep and reduce fixed costs previously associated with the divested assets of the business.

Managing acquisitions and divestitures requires varying levels of management resources, which may divert management's attention from our other business operations. Acquisitions, including abandoned acquisitions, also may result in significant costs and expenses and charges to earnings.

Restructuring activities may result in business disruptions and may not produce the full efficiency and cost reduction benefits anticipated. Further, the benefits may be realized later than expected and the cost of implementing these measures may be greater than anticipated. If these measures are not successful, we may need to undertake additional cost reduction efforts, which could result in future charges. Moreover, we could experience business disruptions with customers and elsewhere if our cost reduction and restructuring efforts prove ineffective, and our ability to achieve our other strategic goals and business plans as well as our business, results of operations and financial condition could be materially adversely affected.

We operate in intensely competitive industries, and our failure to respond quickly to technological developments and incorporate new features into our products could have an adverse effect on our ability to compete.

We operate in intensely competitive industries that experience rapid technological developments, changes in industry standards, changes in customer requirements, industry migration to the private telecom cloud, and frequent new product introductions and improvements. If we are unable to respond quickly and successfully to these developments, we may lose our competitive position, and our products or technologies may become uncompetitive or obsolete. Similarly, if there are changes to technology requirements, it may render our products and technologies uncompetitive. To compete successfully, we must maintain a successful marketing and R&D effort, develop new products and production processes, and improve our existing products and processes at the same pace or ahead of our competitors. We may not be able to successfully develop and market these new products, the products we invest in and develop may not be well received by customers, and products developed and new technologies offered by others may affect the demand for our products. These types of events could have a variety of negative effects on our competitive position and our profitability and financial condition, such as reducing our revenue, increasing our costs, lowering our gross margin, reducing our profitability and/or requiring us to recognize and record impairments of our assets.

There are a number of trends and factors affecting our markets, including economic conditions in the United States, Europe and Asia, which are beyond our control. These trends and factors may result in increasing upward pressure on the costs of products and an overall reduction in demand.

There are trends and factors affecting our markets and our sources of supply that are beyond our control and may negatively affect our cost of sales. Such trends and factors include: adverse changes in the cost of raw commodities and increasing freight, energy, and labor costs in developing regions such as China and India. Our business strategy has been to provide customers with faster time-to-market and greater value solutions in order to help them compete in an industry that generally faces downward pricing pressure. In addition, our competitors have in the past lowered, and may again in the future lower, prices in order to increase their market share, which would ultimately reduce the price we may realize from our customers. If we are unable to realize prices that allow us to continue to compete on this basis of performance, our profit margin, market share, and overall financial condition and operating results may be materially and adversely affected.

Some of the products or technologies acquired, licensed or developed by us incorporate open source software, and we may incorporate open source software into other products in the future. Any failure to comply with the terms of one or more of open source licenses could negatively affect our business.

The products, services or technologies we acquire, license, provide or develop may incorporate or use open source software. We monitor our use of open source software in an effort to avoid unintended consequences, such as reciprocal license grants, patent retaliation clauses, and the requirement to license our products at no cost. Nevertheless, we may be subject to unanticipated obligations regarding our products which incorporate open source software.

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Competition in the market for enabling software and systems is intense, and if we lose market share, our revenues and profitability could decline.

We face competition in the design of enabling solutions from a number of sources. Our principal competition remains the internal design resources of our own customers. Many of our customers retain the ability to design enabling solutions in-house. In order to achieve design wins and receive subsequent orders from these customers, we must convince them of the benefits associated with using our design services and solutions rather than solutions designed by their in-house personnel. While we believe that many of our customers will increase the proportion of their solutions sourced from merchant suppliers, we will need to continue to demonstrate the benefits of our solutions relative to similar products that could be developed by our customers’ internal personnel in order to successfully execute our strategy. In addition, consolidation of our customers may cause material changes in their use of third parties to realize new product designs.

We also compete with a number of companies and divisions of companies that focus on providing enabling solutions, including, but not limited to, ADLink Technologies, Advantech Co., AudioCodes, Dialogic, Artesyn Embedded Technologies, Hewlett-Packard, IBM and Kontron AG. In addition, our primary competitors in the enabling software solutions market, into which our Trillium software is sold, are Aricent Group, NodeH, Cisco and in-house development by our target customer base.

Because the enabling software and systems market is growing, the market is attracting new non-traditional competitors. These non-traditional competitors include contract manufacturers that provide design services and Asia-based original design manufacturers.

Some of our competitors and potential competitors have a number of significant advantages over us, including:

• a longer operating history;

• greater name recognition and marketing power;

• preferred vendor status with our existing and potential customers;

• significantly greater financial, technical, marketing and other resources, which allow them to respond more quickly to new or changing opportunities, technologies and customer requirements;

• broader product and service offerings to provide more complete and valued solutions; and

• lower cost structures which, among other things, could include different accounting principles relative to U.S. generally accepted accounting principles (“GAAP”).

Furthermore, existing or potential competitors may establish cooperative relationships with each other or with third parties or adopt aggressive pricing policies to gain market share.

As a result of increased competition, we may encounter significant pricing pressures and/or suffer losses in market share. These pricing pressures could result in significantly lower average selling prices for our products. We may not be able to offset the effects of any price reductions with an increase in the number of customers, cost reductions or otherwise. In addition, many of the industries we serve, such as the communications industry, are encountering market consolidation, or are likely to encounter consolidation in the near future, which could result in increased pricing pressure and additional competition thus weakening our position or causing delays in new design wins and their associated production.

We have incurred, and may incur in the future, restructuring and other charges, the amounts of which are difficult to predict accurately.

From time to time, we have sought to optimize our operational capabilities and efficiencies and focus our efforts and expertise through business restructurings. In the future we may decide to engage in discrete restructurings of our operations if business or economic conditions warrant. Possible adverse consequences related to such actions may include various charges for such items as idle capacity, disposition costs, severance costs, loss of propriety information and in-house knowledge. We may be unsuccessful in any of our current or future efforts to restructure our business, which may have a material adverse effect upon our business, financial condition or results of operations.

Our international operations expose us to additional political, economic and regulatory risks not faced by businesses that operate only in the United States.

In 2013, 2012 and 2011, as measured by delivery destination, we derived 22%, 21% and 24% of our revenues from EMEA and 34%, 41% and 44% from Asia Pacific. In 2013, all of our manufacturing was completed by our U.S. contract manufacturer's Asian supply chain and operations. As a result, we are subject to worldwide economic and market conditions

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risks generally associated with global trade such as fluctuating exchange rates, tariff and trade policies, increased protectionism of foreign governments, domestic and foreign tax policies, foreign governmental regulations, political unrest, wars and other acts of terrorism and changes in other economic conditions. These risks, among others, could adversely affect the results of our operations or financial position. Additionally, some of our sales to overseas customers are made under export licenses that must be obtained from the U.S. Department of Commerce. Protectionist trade legislation in either the United States or other countries, such as a change in the current tariff structures, export compliance laws, trade restrictions resulting from war or terrorism or other trade policies could adversely affect our ability to sell or to manufacture in international markets. Additionally, U.S. federal and state agency restrictions imposed by the Buy American Act or the Trade Agreement Act may apply to our products manufactured outside the United States. Furthermore, revenues from outside the United States are subject to inherent risks, including the general economic and political conditions in each country. As a result of tightening credit markets, our customers and suppliers may face issues gaining timely access to sufficient credit, which could impair our customers’ ability to make timely payments to us and could cause key suppliers to delay shipments and face serious risks of insolvency. These risks, among others, could adversely affect our results of operations or financial position.

If we are unable to protect our intellectual property, we may lose a valuable competitive advantage or be forced to endure costly litigation.

We are a technology dependent company, and our success depends on developing and protecting our intellectual property. We rely on patents, copyrights, trademarks, trade secret laws, know-how and rapid time to market to protect our intellectual property. At the same time, our products are complex and are often not patentable in their entirety. We also license intellectual property from third parties and rely on those parties to maintain and protect their technology. We cannot be certain that our actions will protect our proprietary rights. Any patents owned by us may be invalidated, circumvented or challenged. Any of our patent applications, whether or not being currently challenged, may not be issued with the scope of the claims we seek, if at all. If we are unable to adequately protect our technology, or if we are unable to continue to obtain or maintain licenses for protected technology from third parties, it could have a material adverse effect on our results of operations. In addition, some of our products are now designed, manufactured and sold outside of the United States. Despite the precautions we take to protect our intellectual property, this international exposure may reduce or limit protection of our intellectual property, which is more prone to design piracy outside of the United States.

Third parties may also assert infringement claims against us in the future; assertions by third parties may result in costly litigation and we may not prevail in such litigation or be able to license any valid and infringed patents from third parties on commercially reasonable terms. Litigation, regardless of its outcome, could result in substantial costs and diversion of our resources. Any infringement claim or other litigation against us or by us could materially adversely affect our financial condition and results of operations.

We may have additional tax liabilities.

Significant judgments and estimates are required in determining the provision for income taxes and other tax liabilities around the world. Our tax expense may be impacted if our intercompany transactions, which are required to be computed on an arm’s-length basis, are challenged and successfully disputed by the tax authorities. Also, our tax expense could be impacted depending on the applicability of withholding taxes on software licenses and related intercompany transactions in certain jurisdictions. In addition, our ability to offset potential future profits in the U.S. with existing net operating losses may be limited by Section 382 of the Internal Revenue Code dependent upon future changes in the shareholders of our common stock. In determining the adequacy of income taxes, we assess the likelihood of adverse outcomes that could result if our tax positions were challenged by the Internal Revenue Service ("IRS") and other tax authorities. The tax authorities in the U.S. and other countries where we do business regularly may examine our income and other tax returns. The ultimate outcome of these examinations cannot be predicted with certainty. Should the IRS or other tax authorities assess additional taxes as a result of examinations, we may be required to record charges to operations that could have a material impact on our results of operations, financial position, or cash flows.

Our disclosure controls and internal control over financial reporting do not guarantee the absence of error or fraud.

We do not expect that disclosure controls or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Failure of our control systems to prevent error or fraud could materially adversely impact us.

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Increased IT security requirements, vulnerabilities, threats and more sophisticated and targeted computer crime and cyber attacks could pose a risk to our systems, networks, products, solutions, services and data.

Increased global IT security requirements, vulnerabilities, threats and more sophisticated and targeted computer crime and cyber attacks pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. While we attempt to mitigate these risks by employing a number of measures, including employee training, comprehensive monitoring of our networks and systems, and maintenance of backup and protective systems, our systems, networks, products, and solutions remain potentially vulnerable to advanced persistent threats. We also may have access to sensitive, confidential or personal data or information in certain of our businesses that is subject to privacy and security laws, regulations and customer-imposed controls. Despite our efforts to protect sensitive, confidential or personal data or information, our facilities and systems and those of our third-party service providers may be vulnerable to security breaches, theft, misplaced or lost data, programming and/or human errors that could potentially lead to the compromising of sensitive, confidential or personal data or information, improper use of our systems, software solutions or networks, unauthorized access, use, disclosure, modification or destruction of information, defective products, production downtimes and operational disruptions, which in turn could adversely affect our reputation, competitiveness and results of operations.

Oregon corporate law, our articles of incorporation and our bylaws contain provisions that could prevent or discourage a third party from acquiring us even if the change of control would be beneficial to our shareholders.

Our articles of incorporation and our bylaws contain anti-takeover provisions that could delay or prevent a change of control of our company, even if a change of control would be beneficial to our shareholders. These provisions:

• authorize our Board of Directors to issue up to 5,663,952 shares of preferred stock and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without prior shareholder approval, which could adversely affect the voting power or other rights of the holders of outstanding shares of preferred stock or common stock;

• establish advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon by shareholders at shareholder meetings;

• prohibit cumulative voting in the election of directors, which would otherwise allow less than a majority of shareholders to elect director candidates; and

• limit the ability of shareholders to take action by written consent, thereby effectively requiring all common shareholder actions to be taken at a meeting of our common shareholders.

In addition, if our common stock is acquired in specified transactions deemed to constitute “control share acquisitions,” provisions of Oregon law condition the voting rights that would otherwise be associated with those common shares upon approval by our shareholders (excluding, among other things, the acquirer in any such transaction). Provisions of Oregon law also restrict, subject to specified exceptions, the ability of a person owning 15% or more of our common stock to enter into any “business combination transaction” with us.

The foregoing provisions of Oregon law and our articles of incorporation and bylaws could limit the price that investors might be willing to pay in the future for shares of our common stock and value of our convertible notes.

Sales of a significant number of shares of our common stock in the public markets, or the perception of such sales, could depress the market price of our common stock.

Sales of a substantial number of shares of our common stock or other equity-related securities in the public markets could depress the market price of our common stock, and impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that future sales of our common stock or other equity-related securities would have on the market price of our common stock. As of December 31, 2013, we had $18.0 million aggregate principal amount of our 4.50% convertible senior notes due February 2015 (the "2015 convertible senior notes") outstanding. On February 15, 2013, we paid the remaining $16.9 million principal balance of the 2.75% convertible senior notes due 2013. The price of our common stock could be affected by possible sales of our common stock by investors who view convertible notes as a more attractive means of equity participation in our company and by hedging or arbitrage trading activity which we expect to occur involving our common stock.

Conversion of our convertible senior notes will dilute the ownership interest of existing shareholders, including holders who have previously converted their convertible senior notes.

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Our 2015 convertible senior notes have a conversion price equivalent to $8.53 per share. Upon conversion of our 2015 convertible senior notes, some or all of the ownership interests of existing shareholders may be diluted. Any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the anticipated conversion of our 2015 convertible senior notes into shares of our common stock could depress the price of our common stock.

We have a substantial level of indebtedness and future obligations relative to our cash position.

As of December 31, 2013, we had $25.5 million of cash and cash equivalents which consisted of $18.9 million held domestically and $6.6 million held by foreign subsidiaries, and 2015 convertible senior notes outstanding with an aggregate principal amount of $18.0 million. In addition, we have various other short-term obligations which will require use of our cash to satisfy. This level of debt and our ability to repay or refinance this debt prior to maturity could have negative consequences to our business, including:

• increasing the difficulty of our ability to make payments on our outstanding debt;

• requiring a substantial portion of our cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use or cash flow to fund our operations, capital expenditures, acquisitions;

• limiting our ability to pursue our growth strategy;

• limiting our ability to incur additional indebtedness or obtain any necessary financing in the future for working capital, capital expenditures, debt service requirements, acquisitions, or general corporate purposes;

• placing us at a disadvantage compared to our competitors who are less highly leveraged and may be better able to use their cash flow to fund competitive responses to changing industry, market or economic conditions; and

• increasing our vulnerability in the event of an increase in interest rates if we must incur new debt to satisfy our obligations under the 2015 convertible senior notes.

We may also be unable to borrow funds as a result of an inability of financial institutions to lend due to restrictive lending policies and/or institutional liquidity concerns.

If we experience a decline in revenues, we could have difficulty paying amounts due on our indebtedness. Any default under our indebtedness could have a material adverse impact on our business, operating results, and financial condition.

If required to fund operations, refinance debt or for other general corporate purposes, as of December 31, 2013 we had $7.9 million available for borrowing under our secured revolving line of credit agreement with Silicon Valley Bank, which matures on July 28, 2016. The line of credit, however, is subject to certain financial covenants and may not be available, in full or in part, on dates we may attempt to draw on the line in the future. Additionally, we believe that cash generation in the second half of 2014, combined with the borrowing availability under our secured revolving line of credit, will enable us to repay the outstanding balance of the 2015 convertible senior notes when they mature in February 2015.  If available liquidity is not sufficient to repay the outstanding 2015 convertible senior notes upon maturity, we may pursue alternative financing arrangements which may include, among others, extending the maturity date of the 2015 convertible senior notes, selling product lines and other assets, or repaying the outstanding balance with proceeds from sales of securities pursuant to our shelf registration statement.

Item 1B. Unresolved Staff Comments

None.

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Item 2. Properties

Information concerning our principal properties at December 31, 2013 is set forth below:

Location	Type	Principal Use	Square Footage	Ownership
Hillsboro, OR	Office	Headquarters, manufacturing support, marketing, research and engineering	75,760	Leased
San Diego, CA	Office	Sales and marketing	19,904	Leased
Burnaby, Canada	Office	Manufacturing support, marketing, product integration, research and engineering	13,512	Leased
Bangalore, India	Office	Research and engineering and professional services	99,206	Leased
Penang, Malaysia	Office	Manufacturing support	18,164	Leased
Shanghai, China	Office	Sales	13,079	Leased
Shenzhen, China	Office	Manufacturing support, research and engineering	60,612	Leased

We also lease sales and support offices in Des Moines, Iowa, Marlboro, Massachusetts, Gdansk, Poland, Barcelona, Spain, Seongnam, Korea and Tokyo, Japan.

Item 3. Legal Proceedings

In the normal course of business, the Company becomes involved in litigation. As of December 31, 2013, in the opinion of management, Radisys had no pending litigation that would have a material effect on the Company’s financial position, results of operations or cash flows.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded on the NASDAQ Global Select Market under the symbol “RSYS.” The following table sets forth, for the periods indicated, the highest and lowest sale prices for our common stock, as reported by the NASDAQ Global Select Market.

	High		Low
2013
Fourth Quarter	$	3.35	$	2.02
Third Quarter	4.99		3.20
Second Quarter	5.20		4.26
First Quarter	4.95		2.80
2012
Fourth Quarter	$	3.76	$	2.02
Third Quarter	6.50		2.90
Second Quarter	7.49		5.65
First Quarter	8.07		5.09

The closing price as reported on the NASDAQ Global Select Market on March 11, 2014 was $3.91 per share. As of March 11, 2014, there were approximately 475 holders of record of our common stock. We believe that the number of beneficial owners is substantially greater than the number of record holders because a large portion of our outstanding common stock is held of record in “street name” by brokers and other financial institutions for the benefit of individual investors.

Dividend Policy

We have never paid any cash dividends on our common stock and do not expect to declare cash dividends on the common stock in the foreseeable future. Our ability to pay dividends is also restricted by our policy as well as the covenants arising from our line of credit agreement with Silicon Valley Bank, which prohibits the payment of any dividends, distributions or payment in respect of our common stock. As such, we plan to retain all of our earnings to finance future growth.

Stock Price Performance Graph

The following graph sets forth our total cumulative shareholder return as compared to the return of the NASDAQ Composite Index, the S&P 500 Index, and the NASDAQ Telecommunications Index for the period of December 31, 2008 through December 31, 2013. The graph reflects the investment of $100 on December 31, 2008 in our stock, the S&P 500 Index, the NASDAQ Index, and in the published industry indexes.

Total return also assumes reinvestment of dividends. As noted above, we have never paid dividends on our common stock. Historical stock price performance should not be relied upon as indicative of future stock price performance.

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COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among Radisys Corporation, the S&P 500 Index, the NASDAQ Composite Index and the NASDAQ Telecommunications Index

*	$100 invested on 12/31/2008 in the Company's common stock or the applicable index, including reinvestment of dividends.
	Fiscal Year ending December 31.

	Cumulative Total Return
	12/2008	12/2009	12/2010	12/2011	12/2012	12/2013
Radisys	100.00	172.69	160.94	91.50	53.89	41.41
NASDAQ Composite	100.00	143.89	168.22	165.19	191.47	264.84
S&P 500	100.00	123.45	139.23	139.23	157.90	204.63
NASDAQ Telecommunications	100.00	148.24	154.06	134.62	137.31	170.29

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Item 6. Selected Financial Data

	For the Years Ended December 31,
	2013			2012			2011 (A)			2010			2009
	(In thousands, except per share data)
Consolidated Statements of Operations Data
Revenues	$	237,863		$	286,096		$	330,865		$	284,311		$	304,273
Gross margin	64,138			88,039			96,765			87,214			92,822
Income (loss) from operations	(34,766		)	(39,746		)	(11,403		)	699			(2,192		)
Net loss	(49,404		)	(43,474		)	(1,529		)	(369		)	(42,567		)
Net loss per common share:
Basic	$	(1.72	)	$	(1.60	)	$	(0.06	)	$	(0.02	)	$	(1.81	)
Diluted	$	(1.72	)	$	(1.60	)	$	(0.06	)	$	(0.02	)	$	(1.81	)
Weighted average shares outstanding (basic)	28,805			27,174			25,413			24,144			23,493
Weighted average shares outstanding (diluted)	28,805			27,174			25,413			24,144			23,493
	December 31,
	2013			2012			2011 (A)			2010			2009
	(In thousands)
Consolidated Balance Sheet Data
Working capital	$	26,920		$	41,887		$	71,208		$	147,049		$	140,438
Total assets	176,185			232,394			297,273			240,928			277,034
Long term obligations, excluding current portion	21,276			22,851			54,689			50,450			52,565
Total shareholders’ equity	81,136			125,442			166,733			137,394			129,717

__________________________________

(A)  Effective July 8, 2011, we acquired Continuous Computing Corporation ("Continuous Computing"). Continuous Computing's operating results are only included for periods subsequent to the acquisition.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Radisys Corporation (NASDAQ: RSYS) is a provider of wireless infrastructure solutions to the telecom market.  Our Media Resource Function ("MRF"), T-Series platform products, and Trillium software coupled with an expert professional services organization enable our customers to bring high-value products and services to the telecom market faster and with lower investment and risk.  By leveraging our telecom expertise, we are also able to deliver our products and capabilities into adjacent markets such as aerospace and defense. These products are targeted throughout the telecommunication network from Radio Access Network ("RAN") to the Evolved Packet Core ("EPC") to the IP Multimedia Subsystem ("IMS") and include the following:

• MRF products, which can be purchased either as a complete product on our own T-Series ATCA platforms (MPX-12000) or as software-only MPX Operating Software ("MPX-OS") when our customers want to leverage other processing platforms, are designed into the IMS core of the network and provide the necessary media processing capabilities required as carriers deploy applications such as audio conferencing, Voice over Long-Term Evolution ("VoLTE"), Rich Communications Services (“RCS”) and video conferencing;

• T-Series ATCA and Network Appliance products provide the platforms necessary to control and move data in the core of the telecom network enabling networks elements within the EPCs as well as providing a platform for applications such as Deep Packet Inspection ("DPI") and policy management. When these products are combined with our professional service organization of network experts, we believe our technology enables our customers to bring to market solutions such as intelligent gateways (security, femto, and LTE gateways) and load balancers, at a cost and time to market advantage when compared to internally developed solutions; and

• Trillium software is the protocol foundation for a complete turn-key application that enables the linkage between end user wireless devices and small cells as carriers seek to optimize radio access spectrum utilization in both the 3G and LTE networks. Additionally, we leverage the same Trillium technology to enable small cell applications in adjacent markets such as aerospace and defense as well as manufacturing and test.

In July 2011 we acquired Continuous Computing Corporation (“Continuous Computing”), a developer of communications systems consisting of highly integrated ATCA platforms and Trillium protocol software coupled with professional services to enable a full solution offering. Continuous Computing’s key customer applications included 3G and 4G wireless infrastructure, Small Cell base stations, Traffic Management, Internet Offload and Network Security. The acquisition accelerated the Company's strategy to deliver more differentiated platforms and solutions.

2013 Highlights

Our business experienced financial challenges throughout 2013 as a result of continued delays in the roll out of next generation wireless networks and the release of required spectrum in certain geographies to support these networks. Within our product portfolio we did not achieve our expected ATCA growth objectives as a direct result of the aforementioned factors and continued deployment delays in our prior period design wins. Within Software-Solutions our revenues decreased as a direct result of robust customer demand for our MRF products in 2012 due to meaningful customer deployments that were not repeated in 2013 and certain of our largest customers reducing their port redundancy requirements during 2013 to maximize the usage of existing licensed capacities.

While our revenues remained challenged, management initiated a number of actions in 2013 to reduce our cost structure in future periods. Once complete, these actions are expected to reduce our annual combined R&D and SG&A expenses to approximately $65 million to $70 million in 2014, and we expect $6 million of additional annual cost of sales savings resulting from our contract manufacturing partner transition and site consolidations. Taken together, these actions are expected to result in material cash and non-cash restructuring charges. We expect these strategic initiatives, while initially leading to increased losses and cash consumption, will ultimately restore Radisys to profitability and lead to positive long-term cash generation.

The following further describes the cost-reduction actions taken to date:

• On October 17, 2013, we notified employees at our Penang, Malaysia facility that we will be consolidating all Asia Pacific ("APAC") based platform operations and engineering functions into our Shenzhen, China facility. In addition, we plan to transfer our contract manufacturing support from Penang to the Shenzhen area in order to realize further

26

operational efficiencies. Additionally, on November 5, 2013 we announced our new contract manufacturing partner in Shenzhen will be Ennoconn Corporation. This action will result in a reduction in force of 77 employees, of which 49 and 23 are involved in operations and engineering, while the remaining are administrative employees. We expect the transition to our Shenzhen site, including our operations function, contract manufacturing, and Penang site closure, to be complete by September 30, 2014.

• On July 30, 2013, we finalized plans and publicly announced the consolidation of our China development centers to Shenzhen, China. This action resulted in a reduction in force of 63 employees from our Shanghai development facility. The transition of the development function to our Shenzhen site was completed during the fourth quarter of 2013.

• During the year ended December 31, 2013, we made other targeted reductions within the administrative, engineering and marketing groups, which included 44 North American employees.

• During the year ended December 31, 2013 we also consolidated administrative functions from our Dublin, Ireland site to our corporate headquarters. This action resulted in a reduction in force of five general and administrative employees and the closure of our Ireland office.

• We cancelled future product development related to our lower end, value line of Com Express products, resulting in a more efficient use of cash and other resources.

• We finalized the sales agreement for our OS-9 software assets which were sold for a net gain of $1.5 million. Additionally, we exited the Security Gateway ("SEG") product line and thus recorded an asset write off of $2.9 million. The gain and charge for these events are recorded within restructuring and other charges, net in the Consolidated Statements of Operations.

Strategy

Our strategy is to provide TEMs and other manufacturers with secure, cost-effective, faster, and smarter wireless infrastructure solutions for mobile broadband networks that meet the increasing demands of their consumers. Our top three strategic priories are:

• Providing our carrier grade MRF products, the MPX-12000 and virtualized MPX-OS, that provide the media processing capabilities necessary for our customers' VoLTE deployments, transcoding needs and early WebRTC work, while at the same time maintaining our market position in audio conferencing.

• Providing a virtualized hardware platform that enables efficient utilization of common hardware by providing high input/output with load balancing capabilities. This unique capability is targeted squarely at carriers and telecom equipment manufacturers who are seeking to deploy next generation SDN and NFV architectures.

• Providing Trillium technology based solutions that optimize the carrier’s utilization of wireless spectrum through the deployment of small cell based wireless access points. We also seek to maximize the market potential of this technology beyond dedicated small cell applications to adjacent markets such as defense and aerospace, manufacturing and test that utilize the same underlying technology.

We believe we are positioned to address the needs of our customers by:

• Providing a comprehensive solution to our customers through a combination of our software, hardware, and professional services offerings. Our technologies enable our customers' wireless infrastructure solutions by providing them with a complete suite of software and hardware capabilities targeted at the wireless industry. We believe these capabilities, when combined with our professional service organization's network expertise, creates a compelling and unique offering that our customers value and that differentiates us in the market.

• Accelerating time-to-market for our customers. We offer standards-based, turn-key products such as our carrier grade MPX-12000, MPX-OS Software, Trillium software, and our T-Series integrated platforms. We believe these products, combined with our strong expert telecom resources, provide our OEM customers with significant time-to-market advantages when compared to solutions developed internally.

• Lowering total cost-of-ownership for our customers. We believe our wireless communications hardware and software products provide a lower total cost-of-ownership to our customers by reducing research and development

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and support cost, when compared to utilizing their own internal development resources. By leveraging our technology expertise and development, our customers minimize integration risk and can focus their development resources on their own differentiating applications.

Following are highlights and developments within our business for the year ended December 31, 2013:

• Revenues decreased $48.2 million to $237.9 million for the year ended December 31, 2013 from $286.1 million for the year ended December 31, 2012. The decline was caused by an expected decrease in Other Products revenue as these products continue to trend towards end of life. ATCA revenue declined as strong shipments to a top 5 customer and strong APAC deployments in 2012 were not repeated in 2013. Our Software-Solutions revenues declined due to the timing of deployments and a shift of port redundancy strategies by our customers. COM Express and Rackmount Server revenues increased due to non-recurring demand from our mid-tier customers.

• Our gross margin decreased 3.8 percentage points in the year ended December 31, 2013 to 27.0% of revenue from 30.8% of revenue in the year ended December 31, 2012. This decrease was the result of less revenues absorbing operational costs that are fixed in nature and increased charges for excess obsolete inventory specifically associated with product end of life transitions.

• R&D expense decreased $2.7 million to $45.0 million for the year ended December 31, 2013 from $47.7 million for the year ended December 31, 2012. The decrease is related to lower project-related spending for new product introductions specifically related to our T-Series ATCA 40G products, which were substantially released by the end of 2012 and due to cost savings resulting from restructuring actions.

• SG&A expense decreased $4.0 million to $41.2 million for the year ended December 31, 2013 from $45.2 million for the year ended December 31, 2012. This decrease was the result of our cost reduction initiatives which resulted in lower overhead expenses from site consolidation and decreased payroll and related expenses as a result of headcount reductions.

• Cash and cash equivalents decreased $7.7 million to $25.5 million at December 31, 2013 from $33.2 million at December 31, 2012. The decrease was the result of consumption of cash related to the repayment of the 2.75% convertible senior notes due 2013 (the "2013 convertible senior notes") and net consumption from operations and capital expenditures.

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Results of Operations

The following table sets forth certain operating data as a percentage of revenues:

	For the Years Ended December 31,
	2013		2012		2011
Revenues	100.0	%	100.0	%	100.0	%
Cost of sales:
Cost of sales	69.4		65.9		68.3
Amortization of purchased technology	3.6		3.3		2.5
Total cost of sales	73.0		69.2		70.8
Gross margin	27.0		30.8		29.2
Research and development	18.9		16.7		13.5
Selling, general and administrative	17.4		15.8		15.8
Intangible assets amortization	2.2		1.8		0.9
Impairment of goodwill	—		10.4		—
Restructuring and other charges, net	3.1		—		3.0
Gain on the liquidation of a foreign subsidiary	—		—		(0.6	)
Income (loss) from operations	(14.6	)	(13.9	)	(3.4	)
Interest expense	(0.5	)	(0.6	)	(0.6	)
Interest income	—		—		—
Other income, net	0.6		0.2		0.2
Loss before income tax expense (benefit)	(14.5	)	(14.3	)	(3.8	)
Income tax expense (benefit)	6.3		0.9		(3.4	)
Net loss	(20.8	)%	(15.2	)%	(0.4	)%

Revenues

The following table sets forth our revenues by product group (in thousands):

	For the Years Ended December 31,						Change
	2013		2012		2011		2013 vs 2012		2012 vs 2011
ATCA	$	116,537	$	136,572	$	132,530	(14.7	)%	3.0	%
Software-Solutions	44,934		52,666		36,938		(14.7	)	42.6
COM Express and Rackmount Server	56,019		49,538		56,848		13.1		(12.9	)
Other Products	20,373		47,320		104,549		(56.9	)	(54.7	)
Total revenues	$	237,863	$	286,096	$	330,865	(16.9	)%	(13.5	)%

ATCA

Revenues in the ATCA product group decreased $20.0 million to $116.5 million in 2013 from $136.6 million in 2012. This was driven by a $12.4 million decrease in the APAC region which was caused by fewer LTE deployments and the delay of China's 4G wireless spectrum release, that was initially anticipated in early 2013. Additionally, EMEA region sales decreased $5.4 million due to the continued softening of telecom spend in the European markets. We expect ATCA product group revenue will remain relatively flat to down 5% in 2014.

Revenues in the ATCA product group increased $4.1 million to $136.6 million in 2012 from $132.5 million in 2011. Increased revenues from the July 2011 acquisition of Continuous Computing combined with strong sales into the Japanese market more than offset the effects of a broad softening in capital spending throughout the macro telecom market.

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Software-Solutions

Revenues in the Software-Solutions product group decreased $7.7 million to $44.9 million in 2013 from $52.7 million in 2012. Strong MRF deployments for use in audio conferencing applications during 2012 were not repeated during the comparable period of 2013 primarily due to a top five customer shifting its port redundancy strategy, resulting in more efficient utilization of previously licensed ports throughout their network. Despite these challenges, we have made meaningful strategic and operational progress in developing the market for our MPX 12000 and virtualized MPX-OS in support of VoLTE and RCS applications. We expect Software-Solutions product group revenue to increase approximately 20% in 2014.

Revenues in the Software-Solutions product group increased $15.8 million to $52.7 million in 2012 from $36.9 million in 2011. Robust demand for our MRF products, targeted at the audio conferencing market, led to increased deployments throughout our customer base when compared to 2011. Additionally, Trillium software products were added to our revenue profile in July 2011 as a result of the acquisition of Continuous Computing, and contributed to a $9.5 million increase during the first half of 2012. These increases were offset by slower than expected Trillium-based small cell deployments as the adoption of small cell technology in next generation networks has been slower than our initial expectations.

COM Express and Rackmount Server

Revenues in the COM Express and Rackmount Server product group increased $6.5 million to $56.0 million in 2013 from $49.5 million in 2012. The increase in revenue is related to deployments by a specific end-customer and last time buy activity during the first half of 2013, which we expect to be one-time in nature. We expect an approximate 30% reduction in COM Express and Rackmount Server revenue in 2014 that results from our strategic decision to manage for cash the value-line of our Com Express modules.

Revenues in the COM Express and Rackmount Server products group decreased $7.3 million to $49.5 million in 2012 from $56.8 million in 2011. Revenues decreased due to a 2010 strategic decision to de-emphasize development and sales of these products.

Other Products

Revenues in the Other Products product group decreased $26.9 million to $20.4 million in 2013 from $47.3 million in 2012. This decrease is the result of these hardware centric products reaching their end of life and our largest customer transitioning to ATCA-based products. We expect an approximate 50% reduction in revenue from our Other Products product group in 2014.

Revenues in the Other Products product group decreased $57.2 million to $47.3 million in 2012 from $104.5 million in 2011. This decrease was the result of these hardware centric products reaching their end of life and our largest customer transitioning to ATCA-based products.

Revenue by Geography

The following tables outline overall revenue dollars (in thousands) and the percentage of revenues, by geographic region:

	For the Years Ended December 31,						Change
	2013		2012		2011		2013 vs 2012		2012 vs 2011
North America	$	103,822	$	109,168	$	107,042	(4.9	)%	2.0	%
EMEA	52,511		60,379		79,858		(13.0	)	(24.4	)
APAC	81,530		116,549		143,965		(30.0	)	(19.0	)
Total	$	237,863	$	286,096	$	330,865	(16.9	)%	(13.5	)%

	For the Years Ended December 31,
	2013		2012		2011
North America	43.6	%	38.2	%	32.4	%
EMEA	22.1		21.1		24.1
APAC	34.3		40.7		43.5
Total	100.0	%	100.0	%	100.0	%

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North America. North American revenues decreased by $5.4 million to $103.8 million in 2013 from $109.2 million in 2012. This decrease was due to a $6.2 million decrease in revenues from our Software-Solutions product group related to the timing of audio conferencing product deployments by our largest customers, and a $2.2 million decrease in sales of our ATCA product group driven by a last time buy from a North American customer in 2012 that was not repeated in 2013. The decrease was offset by $4.5 million of increases of COM Express and Rackmount Server revenues as a result of shipments to support a specific customer's deployments and product last time buys made in 2013.

North American revenues increased by $2.2 million to $109.2 million in 2012 from $107.0 million in 2011. Revenues from Software-Solutions products increased $10.5 million over 2011 resulting from our acquisition of Continuous Computing and increased deployments by our MRF customers. These increases were offset by decreased revenues from our ATCA product group of $1.8 million due to timing of deployments by our largest customers in this geography and decreased revenues from Other Products of $4.1 million as our customers transition to ATCA-based products.

EMEA. Revenues from the EMEA region decreased $7.9 million to $52.5 million in 2013 from $60.4 million in 2012 due to the continued softening of telecom spend in the European markets. Decreased revenues of $5.4 and $2.2 million from our ATCA and Other product groups in EMEA are the result of stagnant telecom infrastructure development and older hardware centric products reaching their end of life.

Revenues from the EMEA region decreased $19.5 million to $60.4 million in 2012 from $79.9 million in 2011. Revenue from our Other Products product group decreased $21.2 million as these hardware centric products near end of life as customers transition to next generation technologies.

Asia Pacific. Revenues from the Asia Pacific region decreased $35.0 million to $81.5 million in 2013 from $116.5 million in 2012. Revenues from our Other product group decreased by $24.3 million as these hardware centric products near end of life and our largest customer transitions to next generation technologies. Additionally, the ATCA product group decreased by $12.4 million as 2012 LTE deployments both in the Japanese and Korean markets did not repeat and a delay in the release of China's LTE wireless spectrum materially impacted our anticipated revenue ramp from existing design wins in this geography.

Revenues from the Asia Pacific region decreased $27.5 million to $116.5 million in 2012 from $144.0 million in 2011. Softening in the macro telecom spending environment and timing of deployments within the remainder of our customer base was offset by strong deployments by our Japanese customers.

We currently expect continued fluctuations in the percentage of revenue from each geographic region. Additionally, we expect non-U.S. revenues to remain a significant portion of our revenue profile.

Gross Margin

Gross margin as a percentage of revenues decreased 380 basis points to 27.0% in 2013 from 30.8% in 2012. This decrease was the result of our lower revenue levels absorbing a lesser percentage of our fixed costs as well as increased charges for excess and obsolete inventory specifically associated with product end of life transitions. Additionally, unfavorable product mix resulting from sales and last time buys in our low margin COM Express and Rackmount Server product group and decreased revenue from our higher margin Software-Solutions product group had an unfavorable impact on gross margin.

Gross margin as a percentage of revenues increased 160 basis points to 30.8% in 2012 from 29.2% in 2011. Gross margin was favorably impacted as our higher margin ATCA and Software-Solutions products comprised 66% of our revenues in 2012 as compared to 51% during 2011. This increase in gross margin was offset by an increase in cost of sales as the amortization of purchased technology increased to $9.5 million in 2012 from $8.3 million in 2011 and a decrease in gross margin from our Other Products product group to 11% in 2012 from 22% in 2011.

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Operating Expenses

The following table summarizes our operating expenses (in thousands):

	For the Years Ended December 31,								Change
	2013		2012			2011			2013 vs 2012		2012 vs 2011
Research and development	$	45,000	$	47,739		$	44,625		(5.7	)%	7.0	%
Selling, general and administrative	41,210		45,200			52,722			(8.8	)	(14.3	)
Intangible assets amortization	5,215		5,215			2,922			—		78.5
Impairment of goodwill	—		29,748			—			(100.0	)	100.0
Restructuring and other charges, net	7,479		(117		)	9,980			(6,492.3	)	(101.2	)
Gain on the liquidation of a foreign subsidiary	—		—			(2,081		)	—		100.0
Total	$	98,904	$	127,785		$	108,168		(22.6	)%	18.1	%

Research and Development

R&D expenses consist primarily of salary, bonuses and benefits for product development staff, and cost of design and development supplies and equipment, net of reimbursements for nonrecurring engineering services. R&D expenses decreased $2.7 million to $45.0 million in 2013 from $47.7 million in 2012. R&D product development expenses decreased due to lower project-related spending for new product introductions specifically related to our ATCA T-Series 40G products, which were substantially released by the end of 2012. In addition, we significantly reduced our Shanghai development site in the second half of 2013. R&D headcount decreased to 410 at December 31, 2013 from 454 at December 31, 2012.

R&D expenses increased $3.1 million to $47.7 million in 2012 from $44.6 million in 2011. The increase was attributable to higher product development costs associated with the development and introduction of our 40G T-Series ATCA products and continued development of both our Trillium small cell and MPX-12000 MRF products. R&D headcount increased to 454 at December 31, 2012 from 440 at December 31, 2011.

Selling, General, and Administrative

SG&A expenses consist primarily of salary, commissions, bonuses and benefits for sales, marketing, executive and administrative personnel, as well as professional services and costs of other general corporate activities. SG&A expenses decreased $4.0 million to $41.2 million in 2013 from $45.2 million in 2012. The decrease is attributable to facility and headcount restructuring actions, which resulted in $3.0 million in cost savings associated with payroll and facilities costs. In addition, we recorded a $1.3 million reversal of expense in 2013 as the result of licensing infringement settlement where the company was awarded legal fees reimbursements. SG&A headcount decreased to 180 at December 31, 2013 from 200 at December 31, 2012.

SG&A expenses decreased $7.5 million to $45.2 million in 2012 from $52.7 million in 2011. The decrease is the result of restructuring actions that reduced overall headcount and resulted in a decrease in payroll, commissions, and related expenses of $1.7 million in 2012 from 2011 and lower incentive compensation of $1.9 million as a result of the Company's performance. The decrease was also affected by a reduction in stock-based compensation expense of $2.7 million as a result of the reversal of expense associated with the Radisys Corporation Long-Term Incentive Plan (as amended and restated, as further amended, the "LTIP") of $1.6 million, as discussed further under stock-based compensation expense. SG&A headcount decreased to 200 at December 31, 2012 from 230 at December 31, 2011.

Intangible Assets Amortization

Intangible assets amortization was $5.2 million for both 2013 and 2012. The amortization charges for each year were associated with the amortization of previously acquired intangible assets.

Intangible assets amortization increased $2.3 million to $5.2 million in 2012 from $2.9 million in 2011. The increase in amortization was the result of our July 2011 acquisition of Continuous Computing.

We perform reviews for impairment of the purchased intangible assets whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. There have been no impairments of intangible assets (other than goodwill, as discussed below) recorded to date.

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Impairment of Goodwill

In 2013, we had no remaining goodwill.

In 2012, we completed an impairment analysis of goodwill pursuant to ASC 350-20-35 during the second quarter of 2012 as we determined that a triggering event occurred during the second quarter that required analysis of both our goodwill and long-lived assets for impairment. We concluded at that time that we passed the first step of the two-step impairment test and therefore no impairment of goodwill was recorded. However, during the third quarter of 2012, we observed additional impairment indicators, including a further deterioration in the market in which we operate and a decrease in our market capitalization. Accordingly, in connection with the preparation of our third quarter financial statements, we completed an interim goodwill impairment test and recorded a goodwill impairment charge of $29.7 million, representing all of our goodwill.

We estimated the fair value of our single reporting unit using a market approach. The market approach estimates fair value in part on market capitalization plus an estimated control premium paid in acquisitions of publicly traded companies with similar characteristics to Radisys. Based upon our analysis, the implied fair value of goodwill was lower than its carrying value.

Restructuring and Other Charges, Net

Restructuring and other charges, net includes expenses associated with restructuring activities and other non-recurring gains and losses. We evaluate the adequacy of the accrued restructuring charges on a quarterly basis. As a result, we record reversals to the accrued restructuring in the period in which we determine that expected restructuring and other obligations are less than the amounts accrued.

Restructuring and other charges, net increased $7.6 million to $7.5 million in 2013 from $(0.1) million in 2012. The increase is due to restructuring actions primarily associated with our Shanghai and Malaysia site reductions and lease abandonment charges incurred in 2013.

During the year ended December 31, 2013, the Company recorded the following restructuring and other charges:

• $5.5 million net expense for the severance of 203 employees, primarily as a result of our Shanghai and Penang site reductions and severance for named executives, net of reductions resulting from changes in previously estimated amounts for employee severance and associated payroll costs;

• $2.9 million expense relating to the write off of the Company's Security Gateway ("SEG") purchased computer software resulting from management's decision to abandon this technology;

• $1.7 million gain resulting from the decrease in fair value of the Continuous Computing contingent consideration liability;

• $1.5 million net gain from the sale of the Company's OS-9 software assets;

• $1.0 million net expense principally associated with asset write-offs, personnel overlap resulting from resource consolidation primarily associated with our Shanghai and Penang site reductions;

• $0.6 million net lease abandonment expense primarily resulting from a lease abandonment charge resulting from the downsizing of our San Diego office; and

• $0.8 million in legal expenses associated with a non-operating strategic projects.

Restructuring and other charges, net decreased $10.1 million to $(0.1) million in 2012 from $10.0 million in 2011. The decrease was due to activities associated with our acquisition of Continuous Computing, which were largely completed in 2011. The following is the composition of charges during 2012:

• $2.8 million net expense for the severance of employees, including a $0.9 million contractual severance benefit provided to our former Chief Executive Officer, and severance paid to other executive officers, net of reductions resulting from changes in previously estimated amounts for employee severance and associated payroll costs;

• $5.1 million gain due to the decrease in fair value of the Continuous Computing contingent consideration liability;

• $1.6 million net expense resulting from facilities rationalization in certain North American sites; and

• $0.6 million expense related to expenses incurred related to the integration and acquisition of Continuous Computing.

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Gain on Liquidation of a Foreign Subsidiary

During 2011, as part of an update to our tax planning strategy, we completed the liquidation of Radisys Technology Ireland Limited (“RTIL”). As a result of this liquidation, we recorded a $2.1 million gain to reflect the realization of accumulated foreign currency translation adjustments related to RTIL. This gain represents the net unrealized foreign currency translation gains accumulated from changes in exchange rates and the related effects from the translation of assets and liabilities of RTIL.

Stock-based Compensation Expense

Included within costs of sales, R&D and SG&A are expenses associated with stock-based compensation. Stock-based compensation expense consists of amortization of stock-based compensation associated with unvested stock options, restricted stock units issued to employees under the 2007 stock plan, the 1998 Continuous Computing plan, the Continuous Computing inducement stock plan, long-term incentive plan (as amended and restarted, the "LTIP"), and the employee stock purchase plan (“ESPP”).

We incurred and recognized stock-based compensation expense as follows (in thousands):

	For the Years Ended December 31,						Change
	2013		2012		2011		2013 vs 2012		2012 vs 2011
Cost of sales	$	550	$	25	$	838	2,100.0	%	(97.0	)%
Research and development	1,170		601		1,434		94.7		(58.1	)
Selling, general and administrative	3,578		765		3,445		367.7		(77.8	)
Total	$	5,298	$	1,391	$	5,717	280.9	%	(75.7	)%

Stock-based compensation expense increased $3.9 million in 2013 to $5.3 million in 2013 compared to $1.4 million in 2012. This was the result of $2.4 million previously recognized LTIP expense being reversed in 2012 and $1.6 million LTIP and Overlay performance based stock awards expense being recognized in 2013. The reversal occurred as it was determined the Plan's performance targets were not met.

Stock-based compensation expense decreased $4.3 million to $1.4 million in 2012 compared to $5.7 million in 2011. The decrease was primarily due to the $2.4 million net reversal of LTIP expense in 2012 that was previously recognized in 2011.

Non-Operating Expenses

The following table summarizes our non-operating expenses (in thousands):

	For the Years Ended December 31,									Change
	2013			2012			2011			2013 vs 2012		2012 vs 2011
Interest expense	$	(1,220	)	$	(1,722	)	$	(1,870	)	(29.2	)%	(7.9	)%
Interest income	26			39			99			(33.3	)	(60.6	)
Other income, net	1,511			545			513			177.2		6.2
Total	$	317		$	(1,138	)	$	(1,258	)	(127.9	)%	(9.5	)%

Interest Expense

Interest expense includes interest incurred on our convertible notes and outstanding balances on our line of credit plus the amortization of debt issuance costs. In 2013 interest expense decreased $0.5 million to $1.2 million from $1.7 million in 2012 due to the $16.9 million repayment of our 2013 convertible senior notes in February 2013.

In 2012, interest expense included interest incurred on our convertible notes and outstanding balances on our line of credit plus the amortization of debt issuance costs. In 2012 interest expense decreased $0.2 million to $1.7 million in 2012 from $1.9 million in 2011 due to the repurchase of $5.0 million and $10.1 million of our 2013 convertible senior notes in December 2011 and August 2012.

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Interest Income and Other Income (Expense), Net

Interest income decreased $13,000 to $26,000 in 2013 from $39,000 in 2012 as the result of a decrease in our average cash balance.

In 2012, interest income decreased $60,000 to $39,000 in 2012 from $99,000 in 2011 as the result of a decrease in our average cash balance resulting from our July 2011 acquisition of Continuous Computing.

Other income, net increased $1.0 million to $1.5 million in 2013 from $0.5 million in 2012. This improvement was primarily the result of a $0.8 million gain that was realized from the sale of land adjacent to our Corporate Headquarters in Hillsboro, Oregon during the fourth quarter of 2013.

In 2012, other income, net did not materially change from 2011. We experienced an increase in the amortization of forward points expense associated with our Indian Rupee ("INR") foreign currency hedges which was offset by a decrease in the foreign exchange impact of our entities which do not use the US Dollar ("USD") as their functional currency.

Income Tax Provision

We recorded tax expense of $15.0 million and $2.6 million for the years ended December 31, 2013 and 2012, as compared to a tax benefit of $11.1 million for the year ended December 31, 2011. Our current effective tax rate differs from the statutory rate in all periods due to a full valuation allowance provided against our U.S. net deferred tax assets. In addition, our effective rate in 2013 was impacted by the establishment of a $12.5 million valuation allowance against certain of our foreign deferred tax assets during the year ended December 31, 2013 and the effective tax rate for 2011 was impacted by a partial release of our valuation allowance provided against U.S. net deferred tax assets as a result of the purchase of Continuous Computing. Purchase accounting includes the establishment of a deferred tax liability due to the book tax basis differences related to specifically identified non-goodwill intangibles resulting from the acquisition. The net deferred tax liability from the acquisition created an additional source of income to utilize our deferred tax assets which resulted in a reduction of our valuation allowance. As such, due to this additional source of income an income tax benefit of $10.4 million was recognized upon the partial valuation allowance release.

At December 31, 2013 and 2012, we had net deferred tax assets of $3.8 million and $16.5 million. We had valuation allowances of $83.0 million and $50.2 million as of December 31, 2013 and 2012, which represents a full valuation allowance against our U.S. deferred tax assets in both periods and a partial valuation allowance against certain of our foreign deferred tax assets established during the year ended December 31, 2013. In evaluating our valuation allowance, we considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. In the event we were to determine that we would not be able to realize all or part of our foreign net deferred tax assets in the future, we would increase the valuation allowance, resulting in a charge to earnings in the period in which we make such determination. Likewise, if we later determine that we are more likely than not to realize all or a portion of the U.S. or foreign net deferred tax assets, we would reverse the previously provided valuation allowance. All future reversals of the valuation allowance would result in a benefit in the period recognized. Although realization is not assured, management believes that it is more likely than not that the balance of the deferred tax assets, net of the valuation allowance, as of December 31, 2013 will be realized.

We are subject to income taxes in the U.S. and various foreign countries, and on occasion, we have been subject to corporate income tax audits. In determining the amount of income tax liabilities for uncertain tax positions, we have evaluated whether certain tax positions are more likely than not to be sustained by taxing authorities. We believe that we have adequately provided in our financial statements for additional taxes that may result from examination. To the extent the ultimate outcome of an examination differs from the amounts provided for as uncertain tax positions either additional expense or benefit will be recognized in the period in which the examination is effectively settled.

During 2011 the Canada Revenue Agency (“CRA”) completed an examination of our tax years 2006 through 2008. We agreed to the proposed adjustments and effectively settled the examination during 2011. The effective settlement did not have a significant impact on our financial statements.

We are currently under tax examination in India. The periods covered under examination are assessment years 2006 through 2008 and 2010. The examination is in various stages of appellate proceedings and all material uncertain tax positions associated with the examination have been taken into account in the ending balance of the unrecognized tax benefits at December 31, 2013.

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Liquidity and Capital Resources

The following table summarizes selected financial information (in thousands):

	For the Years Ended December 31,
	2013		2012		2011
Cash and cash equivalents	$	25,482	$	33,182	$	47,770
Working capital	26,920		41,887		71,208
Accounts receivable, net	41,359		51,881		49,212
Inventories, net	24,928		20,071		27,011
Accounts payable	35,081		41,191		37,874
Line of credit	15,000		—		—
2013 convertible senior notes	—		16,919		45,000
2015 convertible senior notes	18,000		18,000		—

Cash Flows

Cash and cash equivalents decreased by $7.7 million to $25.5 million at December 31, 2013 from $33.2 million at December 31, 2012. As of December 31, 2013, the amount of cash held by our foreign subsidiaries was $6.6 million and the remaining $18.9 million was held in the US. During 2012, we repatriated $21.3 million with the intent of using these funds for the repayment of our February 2013 convertible senior notes in the amount of $17.5 million of principal and accrued interest and for continued working capital usage. It is no longer our intent to permanently reinvest funds in certain of our foreign entities and we expect to continue to repatriate cash from these foreign entities on an ongoing basis in future periods. Repatriation of funds from these foreign entities is not expected to result in actual cash tax payments due to the utilization of previously generated operating losses and credits of our U.S. entity.

Activities impacting cash and cash equivalents are as follows (in thousands):

	For the Years Ended December 31,
	2013			2012			2011
Operating Activities
Net loss	$	(49,404	)	$	(43,474	)	$	(1,529	)
Non-cash adjustments	44,422			57,191			14,226
Changes in working capital	2,891			(8,106		)	2,111
Cash provided by (used in) operating activities	(2,091		)	5,611			14,808
Cash used in investing activities	(3,495		)	(11,160		)	(87,969		)
Cash used in financing activities	(2,034		)	(9,022		)	(8,072		)
Effects of exchange rate changes	(80		)	(17		)	(75		)
Net decrease in cash and cash equivalents	$	(7,700	)	$	(14,588	)	$	(81,308	)

Operating Activities

Cash used in operating activities in 2013 was $2.1 million and consisted of a net loss of $49.4 million, adjustments for non-cash items of $44.4 million and an increase in working capital items of $2.9 million. For the year ended December 31, 2013 principal drivers to changes in our working capital consisted of the following:

• Net trade accounts receivable decreased largely as the result of a reduction in our revenues from prior year.

• Net inventories and inventory deposits remained constant year over year as a result of a decrease in our finished goods inventory resulting from increased operational focus to reduce our inventory levels which was offset by an increase in consigned inventory held at our contract manufacturer associated with products in excess of one hundred eighty days demand.

• Accounts payable decreased as a direct result of timing of vendor payments and reduced customer orders.

• Deferred income decreased as a result of the timing of customer billings not recognized as revenues due to undelivered elements or acceptance provisions contained in certain arrangements.

• Other accrued liabilities decreased as a result of timing of payments. Specifically, accrued wages and bonuses decreased due to a decrease in our variable compensation provision for 2013 as compared to 2012. Accrued

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restructuring increased as a result of the timing of our restructuring activities. Finally, the contingent consideration liability resulting from our acquisition of Continuous Computing decreased due to a decline in projected revenues earned during the arrangement.

Cash provided by operating activities in 2012 was $5.6 million and consisted of a net loss of $43.5 million, adjustments for non-cash items of $57.2 million and decrease in working capital items of $8.1 million. For the year ended December 31, 2012 primary drivers to changes in our working capital consisted of the following:

• Net trade accounts receivable increased as the result of the timing of our shipments and customer payments.

• Inventories decreased due to the sale of previously built buffer stock and end of life products associated with our consolidation of contract manufacturing providers and the decrease of MRF stock held resulting from an increase in shipment activity.

• Accounts payable increased as a direct result of our timing of vendor payments.

• Deferred income decreased as a result of the timing of customer billings not recognized as revenues due to undelivered elements or acceptance provisions contained in certain arrangements.

• Other accrued liabilities decreased as a result of timing of payments. Specifically, accrued wages and bonuses decreased due to a decrease in our variable compensation provision for 2012 as compared to 2011. Accrued restructuring decreased as a result of payments in 2012 associated with 2011 activities. Finally, the contingent consideration liability resulting from our acquisition of Continuous Computing decreased due to a decline in projected revenues earned during the arrangement.

Investing Activities

Cash used in investing activities in 2013 of $3.5 million was attributable to $6.0 million used for capital expenditures offset by $1.1 million of proceeds from the sale of our OS-9 software asset and $1.4 million of proceeds received for the sale of land previously held for sale.

Cash used in investing activities in 2012 of $11.2 million was attributable to $11.1 million used for capital expenditures related to integration activities, including the build out of our new facilities in Shenzhen, China and Bangalore, India, as well as purchases of development and test equipment associated with our introduction of 40G T-Series ATCA products.

Financing Activities

Cash used in financing activities in 2013 of $2.0 million was the result of our payment of $16.9 million aggregate principal amount of our 2013 convertible senior notes, offset by $15.0 million in borrowings against our revolving line of credit.

Cash used in financing activities in 2012 of $9.0 million was the result of our repurchase of $10.1 million aggregate principal amount of our 2013 convertible senior notes, which was offset by cash received for net payments related to stock-based award activities of $1.3 million.

As of December 31, 2013 and December 31, 2012, our working capital was $26.9 million and $41.9 million. The decrease in our working capital is principally the result of $15.0 million in outstanding borrowings against our revolving line of credit which were used to repay $16.9 million in convertible senior notes. We believe our existing cash and working capital levels are sufficient to meet our interim and long term operating needs. In addition, we had $7.9 million remaining availability under our revolving line of credit at December 31, 2013.

Line of Credit

Silicon Valley Bank

We have a $35.0 million secured revolving line of credit agreement (as amended, the "Agreement") with Silicon Valley Bank ("SVB") with a stated maturity date of July 28, 2016. On November 1, 2013 the Agreement was amended to reduce the total size of the secured revolving credit facility from $40.0 million to $35.0 million, revise the minimum two quarter rolling EBITDA financial covenant for the quarters ended September 30, 2013, December 31, 2013, and March 31, 2014 and modify certain terms within the liquidity ratio, all of which revisions are reflected herein. On February 11, 2014 the Agreement was further amended to revise the minimum two quarter rolling EBITDA financial covenant for the quarter ended December 31, 2013, which revisions are reflected herein.

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The secured revolving credit facility is available for cash borrowings and is subject to a borrowing formula based upon eligible accounts receivable and EBITDA (as defined in the Agreement) non-formula thresholds. Eligible accounts receivable include 80% of domestic and 65% of foreign accounts receivable (70% in certain cases) for our U.S. companies, limited to concentration by certain customers, not greater than 60 days past due and not greater than 120 days from original invoice date. EBITDA non-formula availability is $15.0 million when two rolling quarters EBITDA is $9.0 million or greater and $10.0 million when two rolling quarters EBITDA is $6.0 million or greater but less than $9.0 million. Borrowings under the Agreement bear interest based on a debt to EBITDA ratio where EBITDA is calculated on a rolling four quarter basis. The calculation of interest under the Agreement is as follows:

• Debt to EBITDA ratio less than 2.0:1.0 - LIBOR, which was 0.18% as of December 31, 2013, plus 2.00%;

• Debt to EBITDA ratio less than 3.0:1.0, but more than or equal to 2.0:1.0 - LIBOR plus 2.25%;

• Debt to EBITDA more than or equal to 3.0:1.0 - LIBOR plus 2.50%.

We are required to make interest payments monthly. We were further required to pay a commitment fee equal to $35,000 on the original closing date of the Agreement and annually thereafter and to pay quarterly in arrears an unused facility fee based on the debt to EBITDA ratio as follows: debt to EBITDA ratio less than 2.0:1.0 - 0.375% per year of the unused amount of the facility; and debt to EBITDA ratio of 2.0:1.0 or greater - 0.50% per year of the unused amount of the facility.

The Agreement requires us to make and maintain certain financial covenants, representations, warranties and other agreements that are customary in credit agreements of this type. The Agreement also requires us to maintain the following specific financial covenants:

• Minimum monthly liquidity ratio of 1.25 at the end of intra-quarter months and 1.50 at the end of quarter end months. The liquidity ratio is defined as cash, cash equivalents and short term investments (with cash and cash equivalents held by our foreign subsidiaries not to exceed $10.0 million and excluding any investments held by our foreign subsidiaries) plus eligible accounts receivable, divided by the sum of obligations owing to SVB under the Agreement;

• Beginning September 30, 2014 until the 2015 convertible senior notes are repaid, (i) minimum cash balance of $18.0 million held at either SVB or in an account held with a financial institution where SVB shall have received a Qualifying Control Agreement (as defined in the Agreement) and (ii) immediately after giving pro forma effect to the payment of the 2015 convertible senior notes as if such payment occurred on September 30, 2014, compliance with the liquidity covenant noted above;

• Minimum two quarter rolling EBITDA (earnings before interest, taxes, depreciation, amortization, stock based compensation, non-cash restructuring charges (as defined in the Agreement) and cash restructuring charges not to exceed $12.0 million cumulatively during 2013 and 2014 combined) of $2.0 million for the quarter ending September 30, 2013, $(4.0) million for the quarter ending December 31, 2013, $2.0 million for the quarter ending March 31, 2014, $6.0 million for the quarters ending June 30, 2014, September 30, 2014 and December 31, 2014 and $9.0 million in subsequent quarters; and

• Capital expenditures may not exceed $11.0 million during the period January 1, 2013 to December 31, 2013 and $8.0 million in subsequent years.

As of December 31, 2013 and 2012, the Company had outstanding balances of $15.0 million and $0.0 million issued on its behalf under the Agreement. At December 31, 2013, the Company had $7.9 million of total borrowing availability remaining under the Agreement. After giving effect to the amendment to the Agreement, the Company was in compliance with all covenants under the Agreement.

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On March 14, 2014, we entered into an amended and restated $25.0 revolving line of credit agreement with SVB ("the 2014 Agreement") that replaces the Agreement and has a stated maturity date of July 28, 2016. The secured revolving credit facility under the 2014 Agreement is available for cash borrowings and is subject to a borrowing formula based upon eligible accounts receivable. Eligible accounts receivable include 80% of domestic and 65% of foreign accounts receivable (80% in certain cases), in each case, not greater than 60 days past original invoice date. The secured revolving credit facility also includes a letter of credit sublimit (subject to the borrowing formula) of $1,000,000. The interest rate is dependent upon a liquidity threshold (the "Liquidity Threshold"), which is defined in the 2014 Agreement as $15.0 million, with the exception of the last month end of each quarter, where it is defined as $20.0 million. Liquidity is calculated under the 2014 Agreement as unrestricted cash plus unused availability on the revolving line of credit; however if the 2015 convertible senior notes are not renewed or refinanced 120 days prior to their maturity date, which is February 15, 2015, Liquidity (for purposes of testing against the Liquidity Threshold) will be reduced by the outstanding principal amount of the 2015 convertible senior notes. The calculation of interest under the 2014 Agreement is as follows:

• When Liquidity is above the Liquidity Threshold, the interest rate is the prime rate (as published in Wall Street Journal) plus 0.75%;

• When Liquidity is below the Liquidity Threshold, the interest rate is the prime rate (as published in Wall Street Journal) plus 2.25%;

We are required to make interest payments monthly. We were further required to pay a loan modification fee of $35,000 and will be required to pay a commitment fee equal to $35,000 on July 29, 2014 and annually thereafter. Under the 2014 Agreement we are required to pay the higher of actual monthly interest incurred or the interest equivalent of $10.0 million in average monthly borrowings. If we terminate the commitment under the 2014 Agreement prior to the maturity date, we are required to pay a cancellation fee equal to 1.5% of the commitment under the 2014 Agreement.

The 2014 Agreement requires us to make certain representations, warranties and other agreements that are customary in credit agreements of this type. The 2014 Agreement also includes a financial covenant that requires us to maintain minimum Liquidity of $10.0 million tested monthly. Under the terms of the 2014 agreement, our Liquidity would have been $29.4 million at December 31, 2013.

2013 Convertible Senior Notes

On February 15, 2013, we repaid at maturity the entire outstanding balance of the 2.75% convertible senior notes due 2013 (the "2013 convertible senior notes") in accordance with the terms thereof.

2015 Convertible Senior Notes

On June 20, 2012, we entered into subscription agreements with certain holders of the 2013 convertible senior notes. Pursuant to the subscription agreements, on June 29, 2012 we exchanged $18.0 million aggregate principal amount of the 2013 convertible senior notes for $18.0 million aggregate principal amount of the new 2015 convertible senior notes. The 2015 convertible senior notes mature on February 15, 2015 and have a coupon rate of 4.5%. Holders of the 2015 convertible senior notes may convert their notes into a number of shares of our common stock determined as set forth in the indenture governing the notes at their option on any day to and including the business day prior to the maturity date. The 2015 convertible senior notes are initially convertible into 117.2333 shares of our common stock per $1,000 principal amount of the notes (which is equivalent to a conversion price of approximately $8.53 per share), subject to adjustment upon the occurrence of certain events. Upon the occurrence of a fundamental change, holders of the 2015 convertible senior notes may require us to repurchase some or all of their notes for cash at a price equal to 100% of the principal amount of the notes being repurchased, plus accrued and unpaid interest, if any. In addition, if certain fundamental changes occur, we may be required in certain circumstances to increase the conversion rate for any 2015 convertible senior notes converted in connection with such fundamental changes by a specified number of shares of our common stock. The 2015 convertible senior notes are general unsecured obligations and rank equal in right of payment to all of our existing and future senior indebtedness, and senior in right of payment to any future subordinated debt. Our obligations under the 2015 convertible senior notes are not guaranteed by, and are effectively subordinated in right of payment to all existing and future obligations of its subsidiaries and are effectively subordinated in right of payment to its future secured indebtedness to the extent of the assets securing such debt.

As of December 31, 2013 and 2012 we had outstanding 2015 convertible senior notes with a face value of $18.0 million. As of December 31, 2012, the estimated fair value of our 2015 convertible senior notes was $17.8 million.

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Derivatives

We enter into forward foreign currency exchange contracts for the Indian Rupee to reduce the impact of foreign currency exchange risks where natural hedging strategies could not be effectively employed.

We do not hold or issue derivative financial instruments for trading purposes. The purpose of our hedging activities is to reduce the risk that the eventual cash flows of the underlying assets, liabilities and firm commitments will be adversely affected by changes in exchange rates. In general, our hedging activities do not create foreign currency exchange rate risk because fluctuations in the value of the instruments used for hedging purposes are offset by fluctuations in the value of the underlying exposures being hedged. Counterparties to derivative financial instruments expose us to credit-related losses in the event of non-performance. We do not believe there is a significant credit risk associated with our hedging activities because the counterparties are all large financial institutions with high credit ratings.

All derivatives, including foreign currency exchange contracts are recognized on the balance sheet at fair value. Unrealized gain positions are recorded as other current assets and unrealized loss positions are recorded as other current liabilities. Changes in the fair values of the outstanding derivatives that are highly effective are recorded in other comprehensive income (loss) until net income (loss) is affected by the variability of the cash flows of the hedged transaction. Hedge ineffectiveness could result when the amount of our hedge contracts exceed our forecasted or actual transactions for which the hedge contracts were designed to hedge. Once a hedge contract matures the associated gain (loss) on the contract will remain in other comprehensive income until the underlying hedged transaction affects net income (loss), at which time the gain (loss) will be recorded to the expense line item being hedged, which is primarily Cost of Sales and R&D. One of the criteria for this accounting treatment is that the forward foreign currency exchange contract amount should not be in excess of specifically identified anticipated transactions. By their nature, estimates of anticipated transactions may fluctuate over time and may ultimately vary from actual transactions. If anticipated transaction estimates or actual transaction amounts decrease below hedged levels, or when the timing of transactions change significantly, we would reclassify a portion of the cumulative changes in fair values of the related hedge contracts from other comprehensive income (loss) to other income (expense) during the quarter in which the changes occur.

Contractual Obligations

The following summarizes our contractual obligations at December 31, 2013 and the effect of such on our liquidity and cash flows in future periods (in thousands):

	Total		2014		2015-2016		2017-2018		2019 & Thereafter
Operating leases	$	9,308	$	2,802	$	4,458	$	1,279	$	769
Capital leases	25		25		—		—		—
Purchase obligations (A)	632		632		—		—		—
Contingent consideration (B)	390		390		—		—		—
2015 convertible senior notes(c)	18,000		—		18,000		—		—
Line of credit	15,000		15,000		—		—		—
Interest on convertible senior notes	1,215		810		405		—		—
Total	$	44,570	$	19,659	$	22,863	$	1,279	$	769

(A)	Purchase obligations include agreements or purchase orders to purchase goods or services that are enforceable and legally binding and specify all significant terms, including: fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. These purchase obligations are entered into in the ordinary course of business and are expected to be funded by cash flows from continuing operations.
(B)	Contingent consideration reflects the earn-out payments we agreed to pay in connection with the acquisition of Continuous Computing. The amounts are based on forecasted revenues at December 31, 2013 and will change based on the actual revenues at each payout date. See Note 4 - Fair Value of Financial Instruments of the Notes to the Consolidated Financial Statements for additional information regarding the contingent consideration.
(C)	The secured revolving line of credit agreement has a stated maturity date of July 28, 2016.

In addition to the above, we have approximately $3.4 million in liabilities associated with unrecognized tax benefits. We are not able to reasonably estimate when we would make any cash payments required to settle these liabilities, but do not believe that the ultimate settlement of our obligations will materially affect our liquidity.

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Contract Manufacturing Agreement Termination

We are in the process of transitioning our single source contract manufacturer and are contractually obligated to reimburse our existing contract manufacturer for the cost of excess inventory used in the manufacture of the our products, if there is no alternative use. This liability, referred to as adverse purchase commitments, is provided for in other accrued liabilities in the accompanying Consolidated Balance Sheets. In November 2013, we notified our existing contract manufacturer of our intent to transition manufacturing to another contract manufacturer co-located with our Shenzhen site. Upon notification of our intent to terminate the relationship, the manufacturing agreement contractually obligates us to purchase all inventories in excess of ninety days demand. As of December 31, 2013 our existing contract manufacturer has yet to invoke this clause and therefore an inventory deposit and offsetting liability have not been reflected on our balance sheet to account for the additional potential inventory deposit. The value of the potential liability in excess of the current adverse purchase commitment was $5.1 million at December 31, 2013.

Off-Balance Sheet Arrangements

We do not engage in any activity involving special purpose entities or off-balance sheet financing.

Shelf Registration Statement

On September 18, 2013, we filed an unallocated shelf registration statement on Form S-3 for the offering from time to time of up to $100 million in securities consisting of common stock, preferred stock, depositary shares, warrants, debt securities or units consisting of one or more of these securities. The SEC declared the shelf registration statement effective on October 16, 2013, and it will expire in October 2016. Except as may be stated in a prospectus supplement for any particular offering, we intend to use the net proceeds from the sale of any securities for general corporate purposes, which may include acquiring companies in our industry and related businesses, repaying existing debt, providing additional working capital and procuring capital assets.

Liquidity Outlook

At December 31, 2013, our cash and cash equivalents amounted to$25.5 million.We believe our current cash and cash equivalents, cash expected to be generated from operations and borrowings under the 2014 Agreement will satisfy our short and long-term expected working capital needs, capital expenditures, acquisitions, stock repurchases, and other liquidity requirements associated with our present business operations. We believe our current working capital, plus availability under the line of credit, provides sufficient liquidity to operate the business at normal levels; however, if available liquidity is not sufficient to meet our operating and debt service obligations as they come due, we plan to, among others things, pursue alternative financing arrangements or reduce expenditures as necessary to meet our cash requirements throughout 2014. Additionally, we believe that cash generation in the second half of 2014, combined with the borrowing availability under the 2014 Agreement, will enable us to repay the outstanding balance of the 2015 convertible senior notes when they mature in February 2015.  If available liquidity is not sufficient to repay the outstanding 2015 convertible senior notes upon maturity, we may pursue alternative financing arrangements which may include, among others, extending the maturity date of the 2015 convertible senior notes or repaying the outstanding balance with proceeds from sales of securities under our shelf registration statement. We may also divest of certain product lines as we seek to maximize shareholder value or improve our cash position.

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Critical Accounting Policies and Estimates

Management’s discussion and analysis of our financial condition and results of operations is based upon the Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and judgments that may affect the reported amounts of assets, liabilities, and revenues and expenses. On an on-going basis, management evaluates its estimates. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements. Management believes the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of the Consolidated Financial Statements.

Revenue Recognition

Multiple Element Arrangements

A significant portion of our revenue relates to product sales for which revenue is recognized upon shipment, with limited judgment required related to product returns. Title transfer for substantially all product sales occurs upon delivery of products to our customer's freight forwarders. The software elements included in certain components of ATCA systems and MRF products are considered to be functioning together with the non-software elements to provide the tangible product's essential functionality and these arrangements generally include multiple elements such as hardware, technical support services as well as software upgrades or enhancements on a when and if available basis. Arrangements that include multiple elements require significant management judgment to evaluate the effective terms of agreements, our performance commitments and determination of fair value of the various deliverables under the arrangement.

ASU 2009−13 provides a fair value hierarchy in order to determine the appropriate relative fair value for each element of an arrangement. When available, we use vendor specific objective evidence (“VSOE”) to determine the estimated selling price. In the absence of VSOE or third−party evidence ("TPE") for a delivered element, we then use an estimated selling price in order to determine fair value. Estimated selling prices represent our best estimate of the price at which it would transact if the deliverables were sold on a standalone basis. For technical support services, we generally determine our selling price based on VSOE as supported by substantive renewal rates in the related service agreements. In certain instances where VSOE cannot be established, we then rely upon the estimated selling price for such deliverables as TPE is generally not available due to the unique company specific terms surrounding such service agreements. In establishing an appropriate estimated selling price for these technical support agreements, we considered entity specific factors such as its historical and projected costs, historical and projected revenues, and profit objectives. We also considered market specific factors when establishing reasonable profit objectives.

Hardware

Revenue from hardware products is recognized in accordance with ASC 605 Revenue Recognition. Under our standard terms and conditions of sale, we transfer title and risk of loss to the customer at the time product is shipped to the customer and revenue is recognized accordingly, unless customer acceptance is uncertain or significant obligations remain. We reduce revenue for estimated customer returns resulting from rotation rights according to agreements with our distributors. The amount of revenues derived from these distributors as a percentage of total revenues was 14.3%, 16.0% and 24.3% for the years ended December 31, 2013, 2012 and 2011. We accrue the estimated cost of product warranties based on historical failure rates and the cost of fixing or replacing defective units at the time we recognize revenue.

The software elements included in certain components of ATCA systems and MRF products are considered to be functioning together with the non-software elements to provide the tangible product's essential functionality and our MRF arrangements generally include multiple elements such as hardware and technical support services.

Software licenses and royalties

Revenue from software licenses and royalties is recognized in accordance with ASC 985 Software. We recognize software license revenue at the time of shipment or upon delivery of the software master provided that the revenue recognition

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criteria have been met and VSOE exists to allocate the total fee to all undelivered elements of the arrangement. We defer revenue on arrangements including specified software upgrades until the specified upgrade has been delivered. Revenue from customers for prepaid, non-refundable software royalties is recorded when the revenue recognition criteria have been met. Revenue for non-prepaid royalties is recognized at the time we receive reporting from our customers as we have not established an ability to reliably estimate customer royalties prior to time contractually obligated reporting is received.

Technical support services

Technical support services revenue is recognized as earned on the straight-line basis over the term of the contract in accordance with applicable GAAP for revenue recognition. The fair value of our post-contract support has been determined by renewal rates within our support agreements, the actual amounts charged to customers for renewal of their support services or based on an estimated selling price.

Professional and other services

Professional services revenue is recognized upon completion of certain contractual milestones and customer acceptance of the services rendered. Other services revenues include hardware repair services and custom software implementation projects. Hardware repair services revenues are recognized when the services are complete. Software implementation revenues are recognized upon completion of certain contractual milestones and customer acceptance of the services rendered or as services are performed under the percentage-of-completion method when we are reasonably able to estimate the total effort required to complete the contract.

Deferred income

Deferred income represents amounts received or billed for the following types of transactions:

• Undelivered elements of an arrangement—Certain arrangements include specified software upgrades and enhancements to an existing product. Revenue for such arrangements is deferred until the future obligation is fulfilled.

• Technical support services—We have a number of technical support agreements with our customers for hardware and software maintenance. Generally, these services are billed in advance and recognized over the term of the agreement.

Allowance for Doubtful Accounts

We have a relatively small set of multinational customers that typically make up the majority of our accounts receivable balance. Our allowance for doubtful accounts is determined using a combination of factors to ensure that our trade receivables balances are not overstated. We record reserves for individual accounts when we become aware of a customer’s inability to meet its financial obligations to us, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position. If circumstances related to customers change, our estimates of the recoverability of receivables would be further adjusted. At December 31, 2013, 20.7% of our accounts receivable was due from our largest customer. If one of our large customers or a number of our smaller customers files for bankruptcy or otherwise is unable to pay the amounts due to us, the current allowance for doubtful accounts may not be adequate. During the years ended December 31, 2013 and 2012, there were no significant account balances reserved.

We maintain a non-specific bad debt reserve for all customers. This non-specific bad debt reserve is calculated based on our historical pattern of bad debt write offs as a percentage of annual revenues, which percentage is then applied to the current rolling four-quarter's revenue.

Inventory Valuation

We record an inventory valuation allowance for estimated obsolete or unmarketable inventories as the difference between the cost of inventories and the estimated net realizable value based upon assumptions about future demand and market conditions. Our inventory valuation allowances establish a new cost basis for inventory. Factors influencing the provision include: changes in demand; rapid technological changes; product life cycle and development plans; component cost trends; product pricing; regulatory requirements affecting components; and physical deterioration. If actual market conditions are less favorable than those projected by management, additional provisions for inventory reserves may be required. Our estimate for

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the allowance is based on the assumption that our customers comply with their current contractual obligations. We provide long-life support to our customers and therefore we have material levels of customer specific inventory. If our customers experience a financial hardship or if we experience unplanned cancellations of customer contracts, the current provision for the inventory reserves may be inadequate. Additionally, we may incur additional expenses associated with any non-cancelable purchase obligations to our suppliers if they provide customer-specific components.

Long-Lived Assets

Our long-lived assets include definite-lived intangible assets and property and equipment. The net balance of our definite-lived intangible assets and property and equipment at December 31, 2013 and December 31, 2012 amounted to $71.4 million and $88.0 million.

Intangible assets, net of accumulated amortization, primarily consist of acquired patents, completed technology, technology licenses, trade names and customer lists. Intangible assets are being amortized on a straight-line basis over estimated useful lives with remaining lives of one to eight years as of December 31, 2013. Property and equipment, net of accumulated depreciation, primarily consists of office equipment and software, manufacturing equipment, leasehold improvements and other physical assets owned by us. Property and equipment are being depreciated or amortized on a straight-line basis over estimated useful lives ranging from one to fifteen years. We assess impairment of intangible assets and property and equipment whenever conditions indicate that the carrying values of the assets may not be recoverable.

Conditions that would trigger a long-lived asset impairment assessment include, but are not limited to, a significant adverse change in legal factors or in the business climate that could affect the value of an asset or an adverse action or assessment by a regulator. If we determine that a long-lived asset impairment assessment is required, we must determine the fair value of the asset. Impairments would be recognized in operating results to the extent that the carrying value exceeds this calculated fair value of the long-lived assets. We determined a triggering event occurred during the third quarter of 2013 and required an analysis of the recoverability of its long-lived assets. After finalizing its analysis, we concluded our long-lived assets were not impaired.

Considerable management judgment is required in determining if and when a condition would trigger an impairment assessment of our long-lived assets and once such a determination has been made, considerable management judgment is required to determine the expected future cash flows and the fair market value of the long-lived asset. If and when a condition has triggered an impairment analysis of our long-lived assets, we may incur substantial impairment losses due to the write-down or the write-off of our long-lived assets.

Accrued Restructuring

Because we have a history of paying severance benefits, expenses associated with exit or disposal activities are recognized when probable and estimable.

We have engaged, and may continue to engage, in restructuring actions, which require us to make significant estimates in several areas including: realizable values of assets made redundant or obsolete; expenses for severance and other employee separation costs; the ability and timing to generate sublease income, as well as our ability to terminate lease obligations at the amounts we have estimated; and other exit costs. Should the actual amounts differ from our estimates, the amount of the restructuring charges could be materially impacted. For a description of our restructuring actions, refer to our discussion of restructuring and other charges, net in the Results of Operations section.

Accrued Warranty

We provide for the estimated cost of product warranties at the time revenue is recognized. Our standard product warranty terms generally include repairs or replacement of a product at no additional charge for a specified period of time, which is generally 12 or 24 months after shipment. The workmanship of our products produced by our contract manufacturer is covered under warranties provided by the contract manufacturer for 12 months. We engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers. Our estimated warranty obligation is based upon ongoing product failure rates, internal repair costs, contract manufacturing repair charges for repairs not covered by the contract manufacturer’s warranty, average cost per repair and current period product shipments. If actual product failure rates, repair rates, service delivery costs, or post-sales support costs differ from our estimates, revisions to the estimated warranty liability would be required. Additionally, we accrue warranty costs for specific customer product repairs that are in excess of our warranty obligation calculation described above. Accrued warranty reserves are included in short-term and long-term other accrued liabilities in the accompanying Consolidated Balance Sheets.

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Income Taxes

Income tax accounting requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and tax bases of the assets and liabilities. We record a valuation allowance to reduce deferred tax assets if it is “more likely than not” that all or a portion of the asset will not be realized due to inability to generate sufficient taxable income in the relevant period to utilize the deferred tax asset. Our net deferred tax assets amounted to $3.8 million as of December 31, 2013. We have considered future market growth, forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which we operate and prudent and feasible tax planning strategies in determining the need for a valuation allowance. In the event we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future, we would increase the valuation allowance and make a corresponding charge to earnings in the period in which we make such determination. Likewise, if we later determine that we are more likely than not to realize the net deferred tax assets, we would reverse the applicable portion of the previously provided valuation allowance. All future reversals of the valuation allowance would result in a benefit in the period recognized.

We evaluate liabilities for estimated tax exposures in all of our operational jurisdictions. The calculation of our tax liabilities includes addressing uncertainties in the application of complex tax regulations. We recognize liabilities for uncertain tax positions in the U.S. and other tax jurisdictions based on recognition and measurement criteria that allow financial statement benefits to be recognized only for tax positions that are more-likely-than-not to be sustained upon tax audit, administrative appeals or final court determination. The liabilities are reviewed for their adequacy and appropriateness. Changes to our assumptions could cause a revision of past estimates. Such a change in measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.

Stock-based Compensation

We measure stock-based compensation at the grant date, based on the fair value of the award, and recognize expense on a straight-line basis over the employee's requisite service period. For performance-based restricted stock unit awards under the LTIP or the Overlay Plan of the 2007 Stock Plan ("Overlay") the requisite service period is equal to the period of time over which performance objectives underlying the award are expected to be achieved and vested. The number of shares that ultimately vest depends on the achievement of certain performance criteria over the measurement period. Quarterly, we reevaluate the period during which the performance objective will be met and the number of shares expected to vest. The amount of expense recorded each period is based on our estimate of the number of awards that will ultimately vest.

We estimate the fair value of stock options and purchase rights under our employee stock purchase plans using a Black-Scholes option-pricing model. The Black-Scholes option-pricing model incorporates several highly subjective assumptions including expected volatility, expected term and interest rates.

In reaching our determination of expected volatility, we use the historic volatility of our shares of common stock. We base the expected term of our stock options on historic experience. The expected term for purchase rights under our employee stock plans is based on the 18 month offering period. The risk-free rate is based on the U.S. Treasury constant maturities in effect at the time of grant for the expected term of the option or share.

The calculation includes several assumptions that require management's judgment. The expected term of the option or share is determined based on assumptions about patterns of employee exercises and represents a probability-weighted average time-period from grant until exercise of stock options, subject to information available at time of grant. Determining expected volatility generally begins with calculating historical volatility for a similar long-term period and then considers the ways in which the future is reasonably expected to differ from the past.

The input factors used in the valuation model are based on subjective future expectations combined with management judgment. If there is a difference between the assumptions used in determining stock-based compensation cost and the actual factors which become known over time, we may change the input factors used in determining stock-based compensation costs. These changes may materially impact the results of operations in the event such changes are made. In addition, if we were to modify any awards, additional charges would be taken. If our actual forfeiture rate is materially different from our estimate the stock-based compensation expense could be significantly different from what we have recorded in the current period. See Note 17 — Employee Benefit Plans of the Notes to the Consolidated Financial Statements for a further discussion on stock-based compensation.

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Contingent Consideration

Contingent consideration is recorded at the acquisition date based upon the estimated fair value of the contingent payment for all acquisitions. The fair value of the contingent consideration is remeasured each reporting period with any adjustments in fair value included in our Consolidated Statements of Operations.

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board's ("FASB") Emerging Issues Task Force ("EITF") reached final consensus with regard to the "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists". The update is intended to eliminate diversity in practice in the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Current GAAP does not include explicit guidance on this topic. The main provisions of the update provide that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. An exception exists if such deferred tax asset is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from a disallowance of a tax position or if the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose. In such cases the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this update will be applied prospectively. The update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. We have historically used this method of accounting; consequently, the change will have no effect on our financial position, results of operations or cash flows.

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Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from changes in interest rates, foreign currency exchange rates, and equity trading prices, which could affect our financial position and results of operations.

Foreign Currency Risk. We pay the expenses of our international operations in local currencies, namely, the Canadian Dollar, Euro, Chinese Yuan, Indian Rupee, Japanese Yen, Malaysian Ringgit and British Pound Sterling. Our international operations are subject to risks typical of an international business, including, but not limited to: differing economic conditions, changes in political climate, differing tax structures, foreign exchange rate volatility and other regulations and restrictions. Accordingly, future results could be materially and adversely affected by changes in these or other factors. We are also exposed to foreign exchange rate fluctuations as the balance sheets and income statements of our foreign subsidiaries are translated into U.S. Dollars during the consolidation process. Because exchange rates vary, these results, when translated, may vary from expectations and adversely affect overall expected profitability.

Based on our policy, we have established a foreign currency exposure management program which uses derivative foreign exchange contracts to address nonfunctional currency exposures. In order to reduce the potentially adverse effects of foreign currency exchange rate fluctuations, we have entered into forward exchange contracts. These hedging transactions limit our exposure to changes in the U.S. Dollar to the Indian Rupee exchange rates, and as of December 31, 2013 the total notional or contractual value of the contracts we held was $15.3 million. These contracts will mature over the next 17 months.

Holding other variables constant, a 10% adverse fluctuation, in relation to our hedge positions, of the U.S. Dollar relative to the Indian Rupee would require an adjustment of $1.4 million and increase our Indian Rupee hedge liability as of December 31, 2013, to $1.6 million. A 10% favorable fluctuation, in relation to our hedge positions, of the U.S. Dollar relative to the Indian Rupee would result in an adjustment of $1.7 million, reversing our Indian Rupee hedge liability and creating a hedge asset as December 31, 2013, in the amount of $1.6 million. We do not expect a 10% fluctuation to have any impact on our operating results as the underlying hedged transactions will move in an equal and opposite direction. If there is an unfavorable movement in the Indian Rupee relative to our hedged positions this would be offset by reduced expenses, after conversion to the U.S. Dollar, associated with obligations paid for in the Indian Rupee.

Convertible Notes. The fair value of the 2015 convertible senior notes is sensitive to interest rate changes as well as changes in our stock price. Interest rate changes would result in an increase or decrease in the fair value of the convertible senior notes due to differences between market interest rates and rates in effect at the inception of the obligation. Fluctuations in our stock price would result in an increase or decrease in the fair value of the convertible senior notes due to the value of the notes derived from the conversion feature. Unless we elect to repurchase our convertible senior notes in the open market, changes in the fair value of the convertible senior notes have no impact on our cash flows or Consolidated Financial Statements. The estimated fair value of the 2015 convertible senior notes was $17.8 million at December 31, 2013.

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Item 8. Financial Statements and Supplementary Data

Quarterly Financial Data (unaudited)

	For the Year Ended December 31, 2013												For the Year Ended December 31, 2012
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			First Quarter			Second Quarter		Third Quarter			Fourth Quarter
	(In thousands, except per share data)
Revenues	$	68,178		$	65,438		$	54,109		$	50,138		$	75,487		$	77,584	$	63,725		$	69,300
Gross margin	19,655			19,464			14,166			10,853			23,040			26,651		17,648			20,700
Income (loss) from operations (A)	(5,550		)	(3,273		)	(11,996		)	(13,947		)	(4,254		)	2,422		(34,324		)	(3,590		)
Net income (loss) (A)	(6,557		)	(4,112		)	(12,720		)	(26,015		)	(4,815		)	1,307		(35,111		)	(4,855		)
Net income (loss) per share:
Basic	$	(0.23	)	$	(0.14	)	$	(0.44	)	$	(0.89	)	$	(0.18	)	$	0.05	$	(1.28	)	$	(0.18	)
Diluted	$	(0.23	)	$	(0.14	)	$	(0.44	)	$	(0.89	)	$	(0.18	)	$	0.05	$	(1.28	)	$	(0.18	)

(A) The comparability of our income (loss) from operations and net income (loss) per share was affected by the following unusual income or expense items:

• During the fourth quarter of 2013, the Company incurred a $12.5 million loss associated with the establishment of a valuation allowance against certain of the Company's foreign deferred tax assets.

• During the first quarter of 2013, the Company recorded a $2.9 million loss associated to the write off of the Company's Security Gateway ("SEG") purchased computer software due to management's decision to abandon future development of this technology.

• During the first quarter of 2013, the Company recorded a $1.5 million gain associated with the the sale of the Company's OS-9 software assets.

• The balance of goodwill was determined to be impaired during the third quarter of 2012, resulting in an impairment charge of $29.7 million. In addition, the Company recorded a $5.9 million gain associated with a decrease in fair value of the contingent consideration related to our acquisition of Continuous Computing.

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding reliability of financial reporting and the preparation and fair presentation of published financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the Internal Control—Integrated Framework (1992). Based on our assessment, we conclude that, as of December 31, 2013 the Company’s internal control over financial reporting is effective based on those criteria to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The effectiveness of internal control over financial reporting as of December 31, 2013, has been audited by KPMG, LLP, the independent registered public accounting firm who also audited the Company’s Consolidated Financial Statements included in this Item 8, as stated in the report which appears on page 50 hereof.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Radisys Corporation:

We have audited the accompanying consolidated balance sheets of Radisys Corporation and subsidiaries (the Company) as of December 31, 2013 and 2012, and the related consolidated statements of operations and comprehensive loss, changes in shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2013. We also have audited Radisys Corporation's internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Radisys Corporation's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company's internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Radisys Corporation and subsidiaries as of December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles. Also in our opinion, Radisys Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/ KPMG LLP

Portland, Oregon

March 14, 2014

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RADISYS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

	For the Years Ended December 31,
	2013			2012			2011
Revenues	$	237,863		$	286,096		$	330,865
Cost of sales:
Cost of sales	165,166			188,513			225,752
Amortization of purchased technology	8,559			9,544			8,348
Total cost of sales	173,725			198,057			234,100
Gross margin	64,138			88,039			96,765
Research and development	45,000			47,739			44,625
Selling, general and administrative	41,210			45,200			52,722
Intangible assets amortization	5,215			5,215			2,922
Impairment of goodwill	—			29,748			—
Restructuring and other charges, net	7,479			(117		)	9,980
Gain on the liquidation of a foreign subsidiary	—			—			(2,081		)
Loss from operations	(34,766		)	(39,746		)	(11,403		)
Interest expense	(1,220		)	(1,722		)	(1,870		)
Interest income	26			39			99
Other income	1,511			545			513
Loss before income tax expense	(34,449		)	(40,884		)	(12,661		)
Income tax expense (benefit)	14,955			2,590			(11,132		)
Net loss	$	(49,404	)	$	(43,474	)	$	(1,529	)
Net loss per share:
Basic	$	(1.72	)	$	(1.60	)	$	(0.06	)
Diluted	$	(1.72	)	$	(1.60	)	$	(0.06	)
Weighted average shares outstanding:
Basic	28,805			27,174			25,413
Diluted	28,805			27,174			25,413

The accompanying notes are an integral part of these financial statements.

51

RADISYS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

	For the Years Ended December 31,
	2013			2012			2011
Net loss	$	(49,404	)	$	(43,474	)	$	(1,529	)
Other comprehensive loss:
Translation adjustments	(438		)	(325		)	(164		)
Gain on liquidation of foreign subsidiary	—			—			(2,081		)
Adjustment for fair value of hedge derivatives, net of tax	(110		)	9			(1,167		)
Other comprehensive loss	(548		)	(316		)	(3,412		)
Comprehensive loss	$	(49,952	)	$	(43,790	)	$	(4,941	)

The accompanying notes are an integral part of these financial statements.

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RADISYS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31, 2013			December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	25,482		$	33,182
Accounts receivable, net	41,359			51,881
Other receivables	2,634			2,394
Inventories, net	24,928			20,071
Inventory deposit, net	481			8,836
Other current assets	4,688			4,248
Deferred tax assets, net	1,121			5,376
Total current assets	100,693			125,988
Property and equipment, net	14,854			17,713
Intangible assets, net	56,510			70,284
Long-term deferred tax assets, net	2,686			11,161
Other assets	1,442			7,248
Total assets	$	176,185		$	232,394
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	35,081		$	41,191
Accrued wages and bonuses	5,547			7,168
Deferred income	8,167			9,222
Convertible senior notes	—			16,919
Line of credit	15,000			—
Other accrued liabilities	9,978			9,601
Total current liabilities	73,773			84,101
Long-term liabilities:
Convertible senior notes	18,000			18,000
Other long-term liabilities	3,276			4,851
Total long-term liabilities	21,276			22,851
Total liabilities	95,049			106,952
Commitments and contingencies (Note 14)
Shareholders’ equity:
Preferred stock — $0.01 par value, 5,664 shares authorized; none issued or outstanding at December 31, 2013 and December 31, 2012	—			—
Common stock — no par value, 100,000 shares authorized; 29,198 and 28,471 shares issued and outstanding at December 31, 2013 and December 31, 2012	309,370			303,724
Accumulated deficit	(229,090		)	(179,686		)
Accumulated other comprehensive income:
Cumulative translation adjustments	1,731			2,169
Unrealized loss on hedge instruments	(875		)	(765		)
Total accumulated other comprehensive income	856			1,404
Total shareholders’ equity	81,136			125,442
Total liabilities and shareholders’ equity	$	176,185		$	232,394

The accompanying notes are an integral part of these financial statements.

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RADISYS CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands)

	Common Stock					Accumulated Deficit			Accumulated Other Comprehensive Income			Total
	Shares		Amount
Balances, December 31, 2010	24,351		$	266,945		$	(134,683	)	$	5,132		$	137,394
Shares issued pursuant to benefit plans	335		1,960			—			—			1,960
Stock based compensation associated with employee benefit plans	—		5,717			—			—			5,717
Vesting of restricted stock units	161		—			—			—			—
Restricted share forfeitures for tax settlements	(45	)	(295		)	—			—			(295		)
Repurchases of common stock	(518	)	(3,920		)	—			—			(3,920		)
Shares issued for acquisition	3,665		30,818			—			—			30,818
Net adjustment for fair value of hedge derivatives, net of taxes	—		—			—			(1,167		)	(1,167		)
Gain on liquidation of foreign subsidiary	—		—			—			(2,081		)	(2,081		)
Translation adjustments	—		—			—			(164		)	(164		)
Net loss for the period	—		—			(1,529		)	—			(1,529		)
Balances, December 31, 2011	27,949		$	301,225		$	(136,212	)	$	1,720		$	166,733
Shares issued pursuant to benefit plans	384		1,272			—			—			1,272
Stock based compensation associated with employee benefit plans	—		1,391			—			—			1,391
Vesting of restricted stock units	176		—			—			—			—
Restricted share forfeitures for tax settlements	(38	)	(164		)	—			—			(164		)
Net adjustment for fair value of hedge derivatives, net of taxes	—		—			—			9			9
Translation adjustments	—		—			—			(325		)	(325		)
Net loss for the period	—		—			(43,474		)	—			(43,474		)
Balances, December 31, 2012	28,471		$	303,724		$	(179,686	)	$	1,404		$	125,442
Shares issued pursuant to benefit plans	424		806			—			—			806
Stock based compensation associated with employee benefit plans	—		5,298			—			—			5,298
Vesting of restricted stock units	417		—			—			—			—
Restricted share forfeitures for tax settlements	(114	)	(458		)	—			—			(458		)
Net adjustment for fair value of hedge derivatives, net of taxes	—		—			—			(110		)	(110		)
Translation adjustments	—		—			—			(438		)	(438		)
Net loss for the period	—		—			(49,404		)	—			(49,404		)
Balances, December 31, 2013	29,198		$	309,370		$	(229,090	)	$	856		$	81,136

The accompanying notes are an integral part of these financial statements.

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RADISYS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Years Ended December 31,
	2013			2012			2011
Cash flows from operating activities:
Net loss	$	(49,404	)	$	(43,474	)	$	(1,529	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	21,748			22,079			16,864
Impairment of goodwill	—			29,748			—
Inventory valuation allowance	3,302			1,232			2,668
Deferred income taxes	703			1,531			(842		)
Deferred tax valuation allowance provision (reversal)	12,476			—			(10,350		)
Write off of purchased computer software	2,868			—			—
Gain on the sale of purchased computer software	(1,532		)	—			—
Gain on the liquidation of a foreign subsidiary	—			—			(2,081		)
Gain on sale of property held for sale	(771		)	—			—
Stock-based compensation expense	5,298			1,391			5,717
Other	330			1,210			2,250
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	11,119			(2,082		)	7,146
Other receivables	(303		)	1,005			(1,202		)
Inventories	(10,192		)	4,864			(9,221		)
Inventory deposit	10,349			352			(2,249		)
Other current assets	(1,197		)	744			451
Accounts payable	(6,013		)	3,718			2,629
Accrued wages and bonuses	(1,640		)	(3,608		)	1,317
Accrued restructuring	1,551			(3,014		)	2,148
Deferred income	(1,145		)	(2,733		)	4,269
Other accrued liabilities	362			(7,352		)	(3,177		)
Net cash provided by (used in) operating activities	(2,091		)	5,611			14,808
Cash flows from investing activities:
Acquisitions, net of cash acquired	—			—			(79,298		)
Capital expenditures	(6,047		)	(11,092		)	(8,171		)
Proceeds from sale of software assets	1,137			—			—
Proceeds from sale of land	1,415			—			—
Other	—			(68		)	(500		)
Net cash used in investing activities	(3,495		)	(11,160		)	(87,969		)
Cash flows from financing activities:
Borrowings on line of credit	15,000			—			—
Payments on contingent consideration liability	(447		)	—			—
Repayment of convertible notes	(16,919		)	(10,081		)	(4,875		)
Repurchases of common stock	—			—			(3,920		)
Proceeds from issuance of common stock	806			1,272			1,646
Other financing activities	(474		)	(213		)	(923		)
Net cash used in financing activities	(2,034		)	(9,022		)	(8,072		)
Effect of exchange rate changes on cash	(80		)	(17		)	(75		)
Net decrease in cash and cash equivalents	(7,700		)	(14,588		)	(81,308		)
Cash and cash equivalents, beginning of period	33,182			47,770			129,078
Cash and cash equivalents, end of period	$	25,482		$	33,182		$	47,770
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$	1,090		$	1,347		$	1,424
Income taxes	$	1,415		$	1,202		$	806
Supplemental disclosure of non-cash investing and financing activities:
Issuance of common stock for acquisitions	$	—		$	—		$	30,818

The accompanying notes are an integral part of these financial statements.

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Note 1 — Nature of Operations

Radisys Corporation (NASDAQ: RSYS) is a provider of wireless infrastructure solutions to the telecom market.  The Company's Media Resource Function ("MRF"), T-Series platform products, and Trillium software coupled with an expert professional services organization enable the Company's customers to bring high-value products and services to the telecom market faster and with lower investment and risk.  By leveraging this telecom expertise, the Company is also able to deliver its products and capabilities into adjacent markets such as aerospace and defense. These products are targeted throughout the telecommunication network from Radio Access Network ("RAN") to the Evolved Packet Core ("EPC") to the IP Multimedia Subsystem ("IMS") and include the following:

• MRF products, which can be purchased either as a complete product on our own T-Series ATCA platforms (MPX-12000) or as software-only MPX Operating Software ("MPX-OS") when the Company's customers want to leverage other processing platforms, are designed into the IMS core of the network and provide the necessary media processing capabilities required as carriers deploy applications such as audio conferencing, Voice over Long-Term Evolution ("VoLTE"), Rich Communications Services (“RCS”) and video conferencing;

• T-Series ATCA and Network Appliance products provide the platforms necessary to control and move data in the core of the telecom network enabling networks elements within the EPCs as well as providing a platform for applications such as Deep Packet Inspection ("DPI") and policy management. When these products are combined with the Company's professional service organization of network experts, we believe this technology enables customers to bring to market solutions such as intelligent gateways (security, femto, and LTE gateways) and load balancers, at a cost and time to market advantage when compared to internally developed solutions; and

• Trillium software is the protocol foundation for a complete turn-key application that enables the linkage between end user wireless devices and small cells as carriers seek to optimize radio access spectrum utilization in both the 3G and LTE networks. Additionally, the Company leverages the same Trillium technology to enable small cell applications in adjacent markets such as aerospace and defense as well as manufacturing and test.

Certain prior year balances have been reclassified to conform to the current year’s presentation. Such reclassifications did not affect total cash flows, total net revenues, operating loss, net loss, total assets, total liabilities or shareholders’ equity.

Note 2 — Significant Accounting Policies

Principles of Consolidation

The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All inter-company accounts and transactions have been properly eliminated in consolidation.

Management Estimates

The Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these Consolidated Financial Statements requires management to make estimates and judgments that may affect the amounts reported in its Consolidated Financial Statements and accompanying notes. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

Multiple Element Arrangements

A significant portion of the Company's revenue relates to product sales for which revenue is recognized upon shipment, with limited judgment required related to product returns. Title transfer for substantially all product sales occurs upon delivery of products to our customer's freight forwarders. The software elements included in certain components of ATCA systems and MRF products are considered to be functioning together with the non-software elements to provide the tangible product's essential functionality and these arrangements generally include multiple elements such as hardware, technical support services as well as software upgrades or enhancements on a when and if available basis. Arrangements that include multiple elements require significant management judgment to evaluate the effective terms of agreements, the Company's performance commitments and determination of fair value of the various deliverables under the arrangement.

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For hardware sales which may include software, ASU 2009-13 provides a fair value hierarchy in order to determine the appropriate relative fair value for each element of an arrangement. When available, the Company uses vendor specific objective evidence (“VSOE”) to determine the estimated fair value of each element of the arrangement. In the absence of VSOE or third−party evidence ("TPE") for a delivered element, the Company then uses an estimated selling price in order to determine fair value. Estimated selling prices represent the Company's best estimate of the price at which it would transact if the deliverables were sold on a standalone basis. For technical support services, the Company generally determines its selling price based on VSOE as supported by substantive renewal rates in the related service agreements. In certain instances where VSOE cannot be established, the Company then relies upon its estimated selling price for such deliverables as TPE is generally not available due to the unique company-specific terms surrounding such service agreements. In establishing an appropriate estimated selling price for these technical support agreements, the Company considered entity specific factors such as its historical and projected costs, historical and projected revenues, and profit objectives. The Company also considered market specific factors when establishing reasonable profit objectives.

Hardware

Revenue from hardware products is recognized in accordance with ASC 605 Revenue Recognition. Under the Company’s standard terms and conditions of sale, the Company transfers title and risk of loss to the customer at the time product is shipped to the customer and revenue is recognized accordingly, unless customer acceptance is uncertain or significant obligations remain. We reduce revenue for estimated customer returns for rotation rights according to agreements with our distributors. The amount of revenues derived from distributors as a percentage of revenues was 14.3%, 16.0% and 24.3% for the years ended December 31, 2013, 2012 and 2011. Revenues associated with distributors are generally recognized upon shipment as the Company has established a sell-to model with distributors. The Company accrues the estimated cost of product warranties, based on historical experience at the time the Company recognizes revenue.

The software elements included in certain components of ATCA systems and MRF products are considered to be functioning together with the non-software elements to provide the tangible product's essential functionality and the Company’s MRF arrangements generally include multiple elements such as hardware and technical support services.

Software licenses and royalties

Revenue from software licenses and royalties is recognized in accordance with ASC 985 Software. The Company recognizes software license revenue at the time of shipment or upon delivery of the software master provided that the revenue recognition criteria have been met and VSOE exists to allocate the total fee to all undelivered elements of the arrangement. The Company defers revenue on arrangements, including specified software upgrades, until the specified upgrade has been delivered. Revenue from customers for prepaid, non-refundable software royalties is recorded when the revenue recognition criteria have been met. Revenue for non-prepaid royalties is recognized at the time we receive reporting from customers as the Company has not established an ability to reliably estimate customer royalties prior to time contractually obligated reporting is received.

Technical support services

Technical support services revenue is recognized as earned on the straight-line basis over the term of the contract. The fair value of the Company’s post-contract support has been determined by renewal rates within the Company’s support agreements, the actual amounts charged to customers for renewal of their support services or based on an estimated selling price.

Professional and other services

Professional services revenue is recognized upon completion of certain contractual milestones and customer acceptance of the services rendered. Other services revenues include hardware repair services and custom software implementation projects. Hardware repair services revenues are recognized when the services are complete. Software implementation revenues are recognized upon completion of certain contractual milestones and customer acceptance of the services rendered or as services are performed under the percentage-of-completion method when the Company is reasonably able to estimate the total effort required to complete the contract.

Deferred income

Deferred income represents amounts received or billed for the following types of transactions:

57

• Undelivered elements of an arrangement—Certain software sales include specified upgrades and enhancements to an existing product. Revenue for such products is deferred until the future obligation is fulfilled.

• Technical support services—The Company has a number of technical support agreements with customers for hardware and software maintenance. Generally, these services are billed in advance and recognized over the term of the agreement.

Capitalized Software Development Costs

The Company does not capitalize internal software development costs incurred in the production of computer software as the Company does not incur any material costs between the point of technological feasibility and general release of the product to customers in the future. As such software development costs are expensed as research and development (“R&D”) costs.

Shipping Costs

The Company’s shipping and handling costs for product sales are included under cost of sales for all periods presented. For the years ended December 31, 2013, 2012 and 2011, shipping and handling costs represented approximately 1% of cost of sales.

Advertising Costs

The Company expenses advertising costs as incurred. Advertising costs consist primarily of media, display, web, and print advertising, along with trade show costs and product demos and brochures. For the years ended December 31, 2013, 2012 and 2011 advertising costs were $2.0 million, $2.1 million and $2.2 million.

Cash Equivalents

The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents.

Accounts Receivable

Trade accounts receivable are stated net of an allowance for doubtful accounts. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of customers to make required payments. Management reviews the allowance for doubtful accounts quarterly for reasonableness and adequacy. If the financial condition of the Company’s customers were to deteriorate resulting in an impairment of their ability to make payments, additional provisions for uncollectible accounts receivable may be required. In the event the Company determined that a smaller or larger reserve was appropriate, it would record a credit or a charge in the period in which such determination is made. In addition to specific customer reserves, the Company maintains a non-specific bad debt reserve for all customers. This non-specific bad debt reserve is calculated based on the Company's historical pattern of bad debt write-offs as a percentage of annual revenues, which percentage is then applied to the current rolling four-quarters revenue. The Company’s customers are concentrated in the technology industry and the collection of its accounts receivable are directly associated with the operational results of the industry.

Inventories

Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) basis, or market, net of an inventory valuation allowance. The Company uses a standard cost methodology to determine the cost basis for its inventories. The Company evaluates inventory on a quarterly basis for obsolete or slow-moving items to ascertain if the recorded allowance is reasonable and adequate. Inventory is written down for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. The Company's inventory valuation allowances establish a new cost basis for inventory.

Long-Lived Assets

Long-lived assets, such as property and equipment and definite-life intangible assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The Company

58

assesses the impairment of the assets based on the undiscounted future cash flow the assets are expected to generate compared to the carrying value of the assets. If the carrying amount of the assets is determined not to be recoverable, a write-down to fair value is recorded. Management estimates future cash flows using assumptions about expected future operating performance. Management’s estimates of future cash flows may differ from actual cash flow due to, among other things, technological changes, economic conditions or changes to the Company’s business operations.

Intangible assets with estimable useful lives are amortized on a straight-line basis over their respective estimated life and reviewed for impairment when certain triggering events suggest impairment has occurred. The Company determined a triggering event occurred during the third quarter of 2013 and required an analysis of the recoverability of its long-lived assets. After finalizing its analysis, the Company concluded its long-lived assets were not impaired.

Property and Equipment

Property and equipment is recorded at historical cost and generally depreciated or amortized on a straight-line basis according to the table below. In certain circumstances where the Company is aware that an asset’s life differs from the general guidelines set forth in its policy, management adjusts its depreciable life accordingly, to ensure expense is being recognized over the appropriate future periods. Ordinary maintenance and repair expenses are expensed when incurred.

Machinery, equipment, furniture and fixtures	5 years
Software, computer hardware and manufacturing test fixtures	3 years
Engineering demonstration products and samples	1 year
Leasehold improvements	Lesser of the lease term or estimated useful lives

Leases

The Company leases all of its facilities, certain office equipment and vehicles under non-cancelable operating leases that expire at various dates through 2020, along with options that permit renewals for additional periods. Rent escalations are considered in the determination of straight-line rent expense for operating leases. Leasehold improvements made at the inception of or during the lease are amortized over the shorter of the asset life or the lease term.

Accrued Restructuring

Expenses associated with exit or disposal activities are recognized when probable and estimable because the Company has a history of paying severance benefits. The Company has engaged, and may continue to engage, in restructuring actions, which require the Company to make significant estimates in several areas including: realizable values of assets made redundant or obsolete; expenses for severance and other employee separation costs; the ability and timing to generate sublease income, as well as the Company's ability to terminate lease obligations at the amounts estimated; and other exit costs. Should the actual amounts differ from the estimates, the amount of the restructuring charges could be materially impacted.

Warranty

The Company provides for the estimated cost of product warranties at the time it recognizes revenue. Products are generally sold with warranty coverage for a period of 12 or 24 months after shipment. On a quarterly basis the Company assesses the reasonableness and adequacy of the warranty liability and adjusts such amounts as necessary. Warranty reserves are included in other accrued liabilities and other long-term liabilities in the accompanying Consolidated Balance Sheets as of December 31, 2013 and 2012.

Research and Development

Research, development and engineering costs are expensed as incurred. R&D expenses consist primarily of salary, bonuses and benefits for product development staff, and cost of design and development supplies and equipment, net of reimbursements for non-recurring engineering services.

Income Taxes

Income tax accounting requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities. Valuation allowances are established to reduce deferred tax assets if it is “more likely than not” that all or portion of the asset

59

will not be realized due to inability to generate sufficient taxable income in the relevant period to utilize the deferred tax asset. Tax law and rate changes are reflected in the period such changes are enacted. The Company recognizes uncertain tax positions after evaluating whether certain tax positions are more likely than not to be sustained by taxing authorities. In addition, the Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.

Fair Value of Financial Assets and Liabilities

The Company measures at fair value certain financial assets and liabilities, including cash equivalents, short-term investments, contingent consideration, and the cash surrender value of life insurance contracts. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:

Level 1—Quoted prices for identical instruments in active markets;

Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Comprehensive Income (Loss)

The Company reports accumulated other comprehensive income (loss) in its Consolidated Balance Sheets. Comprehensive income (loss) includes net income (loss), translation adjustments and unrealized gains (losses) on hedging instruments net of their tax effect. The cumulative translation adjustments consist of unrealized gains (losses) for foreign currency translation.

Stock-Based Compensation

The Company measures stock-based compensation at the grant date, based on the fair value of the award, and recognizes expense on a straight-line basis over the employee's requisite service period. For LTIP and Overlay awards the requisite service period is equal to the period of time over which performance objectives underlying the award are expected to be achieved and vested. The number of LTIP and Overlay shares that ultimately vest depends on the achievement of certain performance criteria over the measurement period. Quarterly, the Company reevaluates the probability that the performance objectives will be met and the number of LTIP and Overlay shares expected to vest. The amount of expense recorded each period for LTIP and Overlay awards is based on the Company's estimate of the number of awards that will ultimately vest.

Net income (loss) per share

Basic earnings (loss) per share amounts are computed based on the weighted average number of common shares outstanding. Diluted earnings per share incorporates the incremental shares issuable upon the assumed exercise of stock options, incremental shares associated with the assumed vesting of restricted stock and the assumed conversion of the Company’s convertible notes, as if the conversion to common shares had occurred at the beginning of the fiscal year and when such conversion would have a dilutive effect. When the conversion of the Company’s convertible notes are dilutive, earnings have been adjusted for interest expense incurred on the convertible notes.

Derivatives

The Company hedges exposure to changes in exchange rates from the US Dollar to the Indian Rupee. These derivatives are recognized on the balance sheet at their fair value. Unrealized gain positions are recorded as other current assets and unrealized loss positions are recorded as other accrued liabilities. Changes in the fair values of the outstanding derivatives that are highly effective are recorded in other comprehensive income until net income (loss) is affected by the variability of the cash flows of the hedged transaction. Hedge ineffectiveness could result when the amount of the Company’s hedge contracts exceed the Company’s forecasted or actual transactions for which the hedge contracts were designed to hedge. Once a hedge contract matures the associated gain (loss) on the contract will remain in other comprehensive income until the underlying hedged transaction affects net income (loss), at which time the gain (loss) will be recorded to the expense line item being hedged, which is primarily cost of sales and R&D. The Company only enters into derivative contracts in order to hedge foreign

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currency exposure. If the Company entered into a contract for speculative reasons or if the Company’s current hedge position becomes ineffective, changes in the fair values of the derivatives would be recognized in earnings in the current period.

Foreign currency translation

Assets and liabilities of international operations using a functional currency other than the U.S. dollar are translated into U.S. dollars at exchange rates as of December 31, 2013 and 2012. Income and expense accounts are translated into U.S. dollars at the average daily rates of exchange prevailing during the period. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are recorded as a separate component in shareholders’ equity. Foreign exchange transaction gains and losses are included in other income (expense), net, in the Consolidated Statements of Operations.

Contingent Consideration

Contingent consideration is recorded at the acquisition date based upon the estimated fair value of the contingent payment for all acquisitions. The fair value of the contingent consideration is remeasured each reporting period with any adjustments in fair value included in the Company’s Consolidated Statements of Operations.

Liquidity Outlook

The Company believes that current working capital, plus availability under the line of credit, provides sufficient liquidity to operate the business at normal levels; however, if available liquidity is not sufficient to meet the Company's operating and debt service obligations as they come due, the Company plans to, among others things, pursue alternative financing arrangements or reduce expenditures as necessary to meet cash requirements throughout 2014. Additionally, the Company believes that cash generation in 2014, combined with the borrowing availability under the 2014 Agreement, will enable the Company to repay the outstanding balance of the 2015 convertible senior notes when they mature in February 2015.  If available liquidity is not sufficient to repay outstanding 2015 convertible senior notes, the Company may pursue alternative financing arrangements which may include, extending the maturity date of the 2015 convertible senior on existing notes or repaying the outstanding balance with proceeds from sales of securities under the Company's shelf registration statement. The Company may also divest of certain product lines as it seeks to maximize shareholder value or improve the Company's cash position.

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board's ("FASB") Emerging Issues Task Force ("EITF") reached final consensus with regard to the "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The update is intended to eliminate diversity in practice in the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Current GAAP does not include explicit guidance on this topic. The main provisions of the update provide that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. An exception exists if such deferred tax asset is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from a disallowance of a tax position or if the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose. In such cases the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this update will be applied prospectively. The update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company has historically used this method of accounting; consequently, the change will have no effect on the Company's financial position, results of operations or cash flows.

Note 3 — Goodwill

The Company had no Goodwill recorded at December 31, 2013 or 2012. During the third quarter of 2012, the Company determined that indicators of potential impairment existed to require an interim goodwill impairment assessment. These indicators included the recent trading value of the Company's common stock, coupled with overall telecommunications market conditions. As a result, the Company compared its book value to its market capitalization, adjusted for factors such as a control premium and concluded step two of the impairment test should be performed.

The Company estimated the fair value of its single reporting unit using a market approach. The market approach estimates fair value in part on market capitalization plus an estimated control premium paid in acquisitions of publicly traded companies

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with similar characteristics to the Company. Based on the Company's analysis, the implied fair value of goodwill was lower than its carrying value. As a result, the Company recorded a full impairment charge of $29.7 million against the carrying amount of goodwill and as of December 31, 2012 the Company had no goodwill. The impairment charge is included in "Impairment of goodwill" in the Consolidated Statements of Operations.

Note 4 — Fair Value of Financial Instruments

The Company measures at fair value certain financial assets and liabilities. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs have created the following fair-value hierarchy:

Level 1— Quoted prices for identical instruments in active markets;

Level 2— Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3— Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Foreign currency forward contracts are measured at fair value using models based on observable market inputs such as foreign currency exchange rates; therefore, they are classified within Level 2 of the valuation hierarchy. The cash surrender value of life insurance contracts and deferred compensation liability are measured at fair value using quoted market prices for similar instruments; therefore, they are classified within Level 2 of the valuation hierarchy.

The Company has obligations ("contingent consideration"), to be paid in cash, related to the acquisition of Continuous Computing Corporation ("Continuous Computing") based on the amount of product royalty revenues to be generated by a specified set of contracts associated with certain of Continuous Computing's products over a period of 36 months after closing, which occurred on July 8, 2011. The contingent consideration liability was established at the time of acquisition and is evaluated at the end of each reporting period. As the significant inputs used in determining the fair value are unobservable, this liability is classified within Level 3 of the fair value hierarchy.

The fair value of this contingent consideration is determined by calculating the net present value of the expected payments using significant inputs that are not observable in the market, including revenue projections and discount rates consistent with the level of risk of achievement. The Company developed its own assumptions for the expected product royalty revenues generated under the arrangement. The fair value of the contingent consideration is affected most significantly by changes in the amount and timing of the revenue projections. If the revenue projections increase or decrease the fair value of the contingent consideration will increase or decrease accordingly in amounts that will vary based on the timing of the projected revenues and the timing of the expected payments.

The following table summarizes the fair value measurements as of December 31, 2013 for the Company's financial instruments (in thousands):

	Fair Value Measurements as of December 31, 2013
	Total			Level 1		Level 2			Level 3
Cash surrender value of life insurance contracts (A)	$	1,866		$	—	$	1,866		$	—
Deferred compensation liability (A)	(1,276		)			(1,276		)
Foreign currency forward contracts	(169		)	—		(169		)	—
Contingent consideration liability	(390		)	—		—			(390		)
Total	$	31		$	—	$	421		$	(390	)

(A) During the year ended December 31, 2013, the company terminated its Deferred Compensation Plan. The distribution of plan assets and participant balances and will occur through January 2015 based on participant elections.

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The following table summarizes the fair value measurements as of December 31, 2012, for the Company’s financial instruments (in thousands):

	Fair Value Measurements as of December 31, 2012
	Total			Level 1		Level 2			Level 3
Cash surrender value of life insurance contracts	$	3,398		—		$	3,398		$	—
Deferred compensation liability	(1,395		)			(1,395		)
Foreign currency forward contracts	(297		)	—		(297		)	—
Contingent consideration liability	(2,541		)	—		—			(2,541		)
Total	$	(835	)	$	—	$	1,706		$	(2,541	)

The following table summarizes level 3 activity for the Company's contingent consideration liability (in thousands):

	Fair Value
	Contingent Consideration
Balance at December 31, 2011	$	7,594
Additions	—
Decrease in liability due to re-measurement	(5,910		)
Accretion	857
Balance at December 31, 2012	$	2,541
Additions	—
Decrease in liability due to re-measurement	(1,891		)
Payments	(447		)
Accretion	187
Balance at December 31, 2013	$	390

The Company records all changes in estimates and accretion on the contingent consideration liability to restructuring and other charges, net in the Consolidated Statements of Operations. At December 31, 2013, the entire contingent consideration liability of $0.4 million was recorded in other accrued liabilities on the Consolidated Balance Sheet.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company assessed long-lived assets for impairment during the third quarter of 2013, comparing the undiscounted future cash flow the assets are expected to generate to the carrying value of the assets. The probability-weighted analysis of expected undiscounted future cash flows exceeded the book value of the long lived assets by $63.3 million, or 84%. Key assumptions used in this analysis included revenue growth for the Company's technologies as well as general economic and business conditions.

Note 5 — Accounts Receivable and Other Receivables

Accounts receivable balances consisted of the following (in thousands):

	December 31, 2013			December 31, 2012
Accounts receivable, gross	$	41,707		$	52,660
Less: allowance for doubtful accounts	(348		)	(779		)
Accounts receivable, net	$	41,359		$	51,881

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Accounts receivable at December 31, 2013 and 2012 consisted of sales to the Company’s customers which are generally based on standard terms and conditions. The Company recorded the following activity in allowance for doubtful accounts (in thousands):

	For the Years Ended December 31,
	2013			2012			2011
Allowance for doubtful accounts, beginning of the year	$	779		$	828		$	933
Charged to costs and expenses	(310		)	—			51
Less: write-offs, net of recoveries	(121		)	(49		)	(156		)
Remaining allowance, end of the year	$	348		$	779		$	828

As of December 31, 2013 and 2012, other receivables were 2.6 million and $2.4 million. Other receivables consisted primarily of non-trade receivables including receivables for inventory transferred to the Company’s contract manufacturing partners on which the Company does not recognize revenue.

Note 6 — Inventories

Inventories consisted of the following (in thousands):

	December 31, 2013			December 31, 2012
Raw materials	$	21,127		$	10,420
Work-in-process	1,194			605
Finished goods	9,644			11,245
	31,965			22,270
Less: inventory valuation allowance	(7,037		)	(2,199		)
Inventories, net	$	24,928		$	20,071

	December 31, 2013			December 31, 2012
Inventory deposit (A)	$	1,289		$	11,637
Less: inventory deposit valuation allowance	(808		)	(2,801		)
Inventory deposit, net	$	481		$	8,836

(A) Beginning in the third quarter of 2013 the Company modified the inventory deposit arrangement with its contract manufacturing partner. Prior to the modification, the Company was obligated to place a deposit with its contract manufacturer for the cost of excess inventory that had been purchased as a result of the Company's forecasted demand when there was no alternative use. Under the new arrangement, rather than place a deposit with the contract manufacturer, the Company is now obligated to purchase the inventory on consignment. The calculation of excess inventory and its impact on the Company’s cash and reported aggregate inventory levels is the same under the consignment arrangement as it was under the prior deposit arrangement. As of December 31, 2013, the balance of consigned inventory at the Company’s contract manufacturing partner was $10.3 million with the remaining inventory deposit associated with inventory held at the Company’s outsourced hardware repair service provider. The remaining deposit is recorded net of adverse purchase commitment liabilities, and therefore the net balance of the deposit represents inventory the Company believes will be utilized. The deposit will be applied against future adverse purchase commitments owed to the Company's contract manufacturer or reduced based on the usage of inventory. See Note 14 - Commitments and Contingencies for additional information regarding the Company's adverse purchase commitment liability.

Consigned inventory is held at third-party locations, including the Company's contract manufacturing partner and customers. The Company retains title to the inventory until purchased by the third-party. Consigned inventory, consisting of raw materials and finished goods, was $12.0 million and $0.7 million at December 31, 2013 and 2012.

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The Company recorded the following charges associated with the valuation of inventory, inventory deposit and the adverse purchase commitment liability for the years ended December 31 (in thousands):

	2013		2012		2011
Inventory, net	$	3,302	$	1,080	$	2,668
Inventory deposit, net	945		926		1,096
Adverse purchase commitments	327		31		733

The following is a summary of the change in the Company’s inventory valuation allowance for the years ended December 31 (in thousands):

	2013			2012
Inventory valuation allowance, beginning of the year	$	2,199		$	4,640
Usage:
Inventory scrapped	(956		)	(3,397		)
Inventory utilized	(363		)	(696		)
Subtotal—usage	(1,319		)	(4,093		)
Write-downs of inventory valuation	3,665			1,928
Transfer from other liabilities (A)	35			29
Transfer from (to) inventory deposit valuation allowance	2,457			(305		)
Inventory valuation allowance, end of the year	$	7,037		$	2,199

(A) Transfer from other liabilities is related to obsolete inventory purchased from contract manufacturers during the year which was previously reserved for as an adverse purchase commitment. (Note 10—Other Accrued and Other Long-Term Liabilities and Note 14—Commitments and Contingencies.)

Note 7 — Property and Equipment

Property and equipment consisted of the following (in thousands):

	December 31, 2013			December 31, 2012
Manufacturing equipment	$	26,779		$	26,560
Office equipment and software	30,745			32,905
Leasehold improvements	5,973			7,155
Property and equipment, gross	63,497			66,620
Less: accumulated depreciation and amortization	(48,643		)	(48,907		)
Property and equipment, net	$	14,854		$	17,713

Depreciation expense associated with property and equipment for the years ended December 31, 2013, 2012 and 2011 was $8.0 million, $7.3 million and $5.4 million.

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Note 8 — Intangible Assets

The following tables summarize the Company’s total purchased intangible assets (in thousands):

	Gross		Accumulated Amortization			Net
December 31, 2013
Purchased technology	$	114,754	$	(79,189	)	$	35,565
Patents	6,472		(6,472		)	—
Customer lists	37,000		(21,997		)	15,003
Trade names	11,536		(5,594		)	5,942
Backlog	2,127		(2,127		)	—
Total intangible assets	$	171,889	$	(115,379	)	$	56,510
December 31, 2012
Purchased technology	$	114,754	$	(70,815	)	$	43,939
Patents	6,472		(6,450		)	22
Customer lists	37,000		(17,543		)	19,457
Trade names	11,536		(4,670		)	6,866
Backlog	2,127		(2,127		)	—
Total intangible assets	$	171,889	$	(101,605	)	$	70,284

Intangible assets amortization expense was $13.8 million, $14.8 million and $11.3 million for the years ended December 31, 2013, 2012 and 2011. The Company’s purchased intangible assets have remaining useful lives of one to eight years as of December 31, 2013. The Company reviews for impairment all of its purchased intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The estimated future amortization expense of purchased intangible assets as of December 31, 2013 is as follows (in thousands):

For the Years Ending December 31,	Estimated Intangible Amortization Amount
2014	$	13,281
2015	12,901
2016	12,747
2017	10,714
2018	4,870
Thereafter	1,997
Total estimated future amortization expense	$	56,510

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Note 9 — Restructuring and Other Charges

The following table summarizes the Company's restructuring and other gains and charges as presented in the Consolidated Statement of Operations (in thousands):

	December 31, 2013			December 31, 2012
Employee-related restructuring expenses	$	5,463		$	2,769
Fair value adjustments to contingent consideration liability	(1,740		)	(5,052		)
Facility reductions	602			1,590
Write off of purchased computer software	2,868			—
Net gain from sale of OS-9 software assets	(1,532		)	—
Integration-related expenses	1,039			576
Non-recurring legal expenses	779			—
Restructuring and other charges, net	$	7,479		$	(117	)

Restructuring and other charges may include costs from non-recurring events such as costs incurred for employee severance, acquisition or divestiture activities, excess facility costs, certain legal costs, asset related charges and other expenses associated with business restructuring activities.

During the year ended December 31, 2013, the Company recorded the following restructuring and other charges:

• $5.5 million net expense for the severance of 203 employees, primarily related to Shanghai and Penang site reductions and severance for named executives, net of reductions resulting from changes in previously estimated amounts for employee severance and associated payroll costs;

• $2.9 million expense relating to the write off of the Company's Security Gateway ("SEG") purchased computer software resulting from management's decision to abandon this technology;

• $1.7 million gain resulting from the decrease in fair value of the Continuous Computing contingent consideration liability;

• $1.5 million net gain from the sale of the Company's OS-9 software assets;

• $1.0 million net expense principally associated with asset write-offs, legal fees, and personnel overlap resulting from resource consolidation primarily associated with our Shanghai and Penang site reductions;

• $0.6 million net lease abandonment expense primarily resulting from a lease abandonment charge resulting from the shuttering of our San Diego facility; and

• $0.8 million legal expenses associated with a non-operating strategic project.

During the year ended December 31, 2012, the Company recorded the following restructuring and other charges:

• $2.8 million net expense for the severance of employees, including a $0.9 million contractual severance benefit provided to our former Chief Executive Officer, and severance paid to other executive officers, net of reductions resulting from changes in previously estimated amounts for employee severance and associated payroll costs;

• $5.1 million gain due to the decrease in fair value of the Continuous Computing contingent consideration liability;

• $1.6 million net expense resulting from facilities rationalization in certain North American sites; and

• $0.6 million expense related to expenses incurred related to the integration and acquisition of Continuous Computing.

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Accrued restructuring, which is included in other accrued liabilities and other long-term liabilities in the accompanying Consolidated Balance Sheets as of December 31, 2013 and 2012, consisted of the following (in thousands):

	Severance, payroll taxes and other employee benefits			Facility reductions			Total
Balance accrued as of December 31, 2012	$	198		$	990		$	1,188
Additions	5,599			943			6,542
Reversals	(136		)	(341		)	(477		)
Expenditures	(3,875		)	(631		)	(4,506		)
Balance accrued as of December 31, 2013	$	1,786		$	961		$	2,747

Of the$2.7 million and $1.2 million accrued restructuring balance atDecember 31, 2013and2012,$0.6 millionis included in other long-term liabilities on the Consolidated Balance Sheets as of December 31, 2013. These amounts represent the long-term portion of accrued lease abandonment charges. The remaining balances are presented in other accrued liabilities on the Consolidated Balance Sheets.

The Company evaluates the adequacy of the accrued restructuring charges on a quarterly basis. Reversals are recorded in the period in which the Company determines that expected restructuring obligations are less than the amounts accrued.

Note 10 — Other Accrued and Other Long-Term Liabilities

Other accrued liabilities consisted of the following (in thousands):

	December 31, 2013		December 31, 2012
Accrued restructuring	$	2,105	$	567
Accrued warranty reserve	2,599		3,148
Contingent consideration liability	390		836
Deferred compensation plan liability	1,276		1,395
Adverse purchase commitments	632		375
Income tax payable, net	508		318
Other	2,468		2,962
Other accrued liabilities	$	9,978	$	9,601

Other long-term liabilities consisted of the following (in thousands):

	December 31, 2013		December 31, 2012
Accrued restructuring	$	642	$	621
Accrued warranty reserve	729		806
Contingent consideration liability	—		1,705
Other	1,905		1,719
Other long-term liabilities	$	3,276	$	4,851

Note 11 — Short-Term Borrowings

Silicon Valley Bank

The Company has a $35.0 million secured revolving line of credit agreement (as amended, the "Agreement") with Silicon Valley Bank ("SVB") with a stated maturity date of July 28, 2016. On November 1, 2013 the Agreement was amended to reduce the total size of the secured revolving credit facility from $40.0 million to $35.0 million, revise the minimum two quarter rolling EBITDA financial covenant for the quarters ended September 30, 2013, December 31, 2013, and March 31,

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2014 and modify certain terms within the liquidity ratio, all of which revisions are reflected herein. On February 11, 2014 the Agreement was amended to revise the minimum two quarter rolling EBITDA financial covenant for the quarter ended December 31, 2013 which revisions are reflected herein.

The secured revolving credit facility is available for cash borrowings and is subject to a borrowing formula based upon eligible accounts receivable and EBITDA (as defined in the Agreement) non-formula thresholds. Eligible accounts receivable include 80% of domestic and 65% of foreign accounts receivable (70% in certain cases) for our U.S. companies, limited to concentration by certain customers, not greater than 60 days past due and no greater than 120 days from original invoice date. EBITDA non-formula availability is $15.0 million when two rolling quarters EBITDA is $9.0 million or greater and $10.0 million when two rolling quarters EBITDA is $6.0 million or greater but less than $9.0 million. Borrowings under the Agreement bear interest based on a debt to EBITDA ratio where EBITDA is calculated on a rolling four quarter basis. The calculation of interest under the Agreement is as follows:

• Debt to EBITDA ratio less than 2.0:1.0 - LIBOR, which was 0.18% as of December 31, 2013, plus 2.00%;

• Debt to EBITDA ratio less than 3.0:1.0, but more than or equal to 2.0:1.0 - LIBOR plus 2.25%;

• Debt to EBITDA more than or equal to 3.0:1.0 - LIBOR plus 2.50%.

The Company is required to make interest payments monthly. The Company was further required to pay a commitment fee equal to $35,000 on the original closing date of the Agreement and annually thereafter and to pay quarterly in arrears an unused facility fee based on the debt to EBITDA ratio as follows: debt to EBITDA ratio less than 2.0:1.0 - 0.375% per year of the unused amount of the facility; and debt to EBITDA ratio of 2.0:1.0 or greater - 0.50% per year of the unused amount of the facility.

The Agreement requires the Company to make and maintain certain financial covenants, representations, warranties and other agreements that are customary in credit agreements of this type. The Agreement also requires the Company to maintain the following specific financial covenants:

• minimum monthly liquidity ratio of 1.25 at the end of intra-quarter months and 1.50 at the end of quarter end months. The liquidity ratio is defined as cash, cash equivalents and short term investments (with cash and cash equivalents held by the Company's foreign subsidiaries not to exceed $10.0 million and excluding any investments held by the Company's foreign subsidiaries) plus eligible accounts receivable, divided by the sum of obligations owing to SVB under the Agreement;

• beginning September 30, 2014 until the 2015 convertible senior notes are repaid, (i) minimum cash balance of $18.0 million held at either SVB or in an account held with a financial institution where SVB shall have received a Qualifying Control Agreement (as defined in the Agreement) and (ii) immediately after giving pro forma effect to the payment of the 2015 convertible senior notes as if such payment occurred on September 30, 2014, compliance with the liquidity covenant noted above;

• minimum two quarter rolling EBITDA (earnings before interest, taxes, depreciation, amortization, stock based compensation, non-cash restructuring charges (as defined in the Agreement) and cash restructuring charges not to exceed $12.0 million cumulatively during 2013 and 2014 combined) of $2.0 million for the quarter ending September 30, 2013, $(4.0) million for the quarter ending December 31, 2013, $2.0 million for the quarter ending March 31, 2014, $6.0 million for the quarters ending June 30, 2014, September 30, 2014 and December 31, 2014 and $9.0 million in subsequent quarters; and

• capital expenditures may not exceed $11.0 million during the period January 1, 2013 to December 31, 2013 and $8.0 million in subsequent years.

As of December 31, 2013 and 2012, the Company had outstanding balances of $15.0 million and $0.0 million issued on its behalf under the Agreement. At December 31, 2013, the Company had $7.9 million of total borrowing availability remaining under the Agreement. After giving effect to the amendment to the Agreement, the Company was in compliance with all covenants under the Agreement.

On March 14, 2014, the Company entered into an amended and restated $25.0 revolving line of credit agreement with SVB (the "2014 Agreement") that replaces the Agreement and has a stated maturity date of July 28, 2016. The secured revolving credit facility under the 2014 Agreement is available for cash borrowings and is subject to a borrowing formula based upon eligible accounts receivable. Eligible accounts receivable include 80% of domestic and 65% of foreign accounts receivable(80% in certain cases), in each case, not greater than 60 days past original invoice date. The secured revolving credit facility also includes a letter of credit sublimit (subject to the borrowing formula) of $1,000,000. The interest rate is dependent upon a liquidity threshold (the "Liquidity Threshold"), which is defined in the 2014 Agreement as $15.0 million, with the exception of the last month end of each quarter, where it is defined as $20.0 million. Liquidity is calculated under the 2014

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Agreement as unrestricted cash plus unused availability on the revolving line of credit; however if the 2015 convertible senior notes are not renewed or refinanced 120 days prior to their maturity date, which is February 15, 2015, Liquidity (for purposes of testing against the Liquidity Threshold) will be reduced by the outstanding principal amount of the 2015 convertible senior notes. The calculation of interest under the 2014 Agreement is as follows:

• When Liquidity is above the Liquidity Threshold, the interest rate is the prime rate (as published in Wall Street Journal) plus 0.75%;

• When Liquidity is below the Liquidity Threshold, the interest rate is the prime rate (as published in Wall Street Journal) plus 2.25%;

The Company is required to make interest payments monthly. The Company was further required to pay a loan modification fee of $35,000 and will be required to pay a commitment fee equal to $35,000 on July 29, 2014 and annually thereafter. Under the 2014 Agreement the Company is required to pay the higher of actual monthly interest incurred or the interest equivalent of $10.0 million in average monthly borrowings. If the Company terminates the commitment under the 2014 Agreement prior to the maturity date, the Company is required to pay a cancellation fee equal to 1.5% of the commitment under the 2014 Agreement.

The 2014 Agreement requires the Company to make certain representations, warranties and other agreements that are customary in credit agreements of this type. The 2014 Agreement also includes a financial covenant that requires the Company to maintain minimum Liquidity of $10.0 million tested monthly.

Note 12 — Convertible Debt

2013 Convertible Senior Notes

On February 15, 2013, the Company repaid at maturity the entire outstanding balance of the 2.75% convertible senior notes due 2013 (the "2013 convertible senior notes") in accordance with the terms thereof.

2015 Convertible Senior Notes

On June 20, 2012, the Company entered into subscription agreements with certain holders of the Company's 2013 convertible senior notes. Pursuant to the subscription agreements, on June 29, 2012 the Company exchanged $18.0 million aggregate principal amount of the 2013 convertible senior notes for $18.0 million aggregate principal amount of the Company's 2015 convertible senior notes. The 2015 convertible senior notes mature on February 15, 2015 and have a coupon rate of 4.5%. Holders of the 2015 convertible senior notes may convert their notes into a number of shares of the Company's common stock determined as set forth in the indenture governing the notes at their option on any day to and including the business day prior to the maturity date. The 2015 convertible senior notes are initially convertible into 117.2333 shares of the Company's common stock per $1,000 principal amount of the notes (which is equivalent to a conversion price of approximately $8.53 per share), subject to adjustment upon the occurrence of certain events. Upon the occurrence of a fundamental change, holders of the 2015 convertible senior notes may require the Company to repurchase some or all of their notes for cash at a price equal to 100% of the principal amount of the notes being repurchased, plus accrued and unpaid interest, if any. In addition, if certain fundamental changes occur, the Company may be required in certain circumstances to increase the conversion rate for any 2015 convertible senior notes converted in connection with such fundamental changes by a specified number of shares of the Company's common stock. The 2015 convertible senior notes are the Company's general unsecured obligations and rank equal in right of payment to all of its existing and future senior indebtedness, and senior in right of payment to the Company's future subordinated debt. The Company's obligations under the 2015 convertible senior notes are not guaranteed by, and are effectively subordinated in right of payment to all existing and future obligations of its subsidiaries and are effectively subordinated in right of payment to its future secured indebtedness to the extent of the assets securing such debt.

As of December 31, 2013 and 2012, the Company had outstanding 2013 and 2015 convertible senior notes with a combined face value of $18.0 million and $34.9 million. Of these balances $0.0 million and $16.9 million were classified as current liabilities in the Consolidated Balance Sheets at December 31, 2013 and 2012. As of December 31, 2013 and 2012, the estimated fair value of the Company's 2015 convertible senior notes was $17.8 million and $17.7 million.

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The following table outlines the effective interest rate, contractually stated interest costs, and costs related to the amortization of issuance costs for the Company's 2013 and 2015 convertible senior notes:

	Years Ended
	December 31,
	2013			2012			2011
Effective interest rate of 2013 convertible senior notes	NA			3.73		%	3.64		%
Effective interest rate of 2015 convertible senior notes	4.50		%	4.50		%	NA
Contractually stated interest costs	$	810		$	1,289		$	1,372
Amortization of interest costs	$	43		$	398		$	501

Note 13 — Hedging

The Company’s business activities expose it to a variety of market risks, including the effects of changes in foreign currency exchange rates. The Company manages these risks through the use of forward exchange contracts, designated as foreign-currency cash flow hedges, in an attempt to reduce the potentially adverse effects of foreign currency exchange rate fluctuations that occur in the normal course of business. As such, the Company’s hedging activities are employed solely for risk management purposes. All hedging transactions are conducted with, in the opinion of management, financially stable and reputable financial institutions. As of and for the years ended December 31, 2013 and 2012, the only hedge instruments executed by the Company were associated with its exposure to fluctuations in the Indian Rupee which result from obligations such as payroll and rent paid in Rupees.

These derivatives are recognized on the balance sheet at their fair value. Unrealized gain positions are recorded as other current assets and unrealized loss positions are recorded as other current liabilities. Changes in the fair values of the outstanding derivatives that are highly effective are recorded in other comprehensive income until net income is affected by the variability of the cash flows of the hedged transaction. Hedge ineffectiveness could result when the amount of the Company’s hedge contracts exceed the Company’s forecasted or actual transactions for which the hedge contracts were designed to hedge. Once a hedge contract matures, the associated gain (loss) on the contract will remain in other comprehensive income until the underlying hedged transaction affects net income (loss), at which time the gain (loss) will be recorded to the expense line item being hedged, which is primarily within Cost of Sales and R&D. The Company only enters into derivative contracts in order to hedge foreign currency exposure, which contracts do not exceed two years from inception. If the Company entered into a contract for speculative reasons or if the Company’s current hedge position becomes ineffective, changes in the fair values of the derivatives would be recognized in earnings in the current period.

The Company assesses, both at the inception of the hedge and on an ongoing basis, whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the cash flows of hedged items and whether those derivatives are expected to remain highly effective in future periods. For the years ended December 31, 2013 and 2012 the Company had no hedge ineffectiveness.

During the year ended December 31, 2013, the Company entered into 33 new foreign currency forward contracts, with total contractual values of $12.8 million. During the year ended December 31, 2012, the Company entered into 83 new foreign currency forward contracts, with total contractual values of $13.3 million.

A summary of the aggregate contractual or notional amounts, balance sheet location and estimated fair values of derivative financial instruments designated as cash flow hedges at December 31, 2013 is as follows (in thousands):

	Contractual / Notional Amount		Consolidated Balance Sheet Classification	Estimated Fair Value
				Asset		(Liability)
Foreign currency forward exchange contracts	$	15,328	Other accrued liabilities	$	—	$	(169	)

A summary of the aggregate contractual or notional amounts, balance sheet location and estimated fair values of derivative financial instruments designated as cash flow hedges at December 31, 2012 is as follows (in thousands):

	Contractual / Notional Amount		Consolidated Balance Sheet Classification	Estimated Fair Value
				Asset		(Liability)
Foreign currency forward exchange contracts	$	13,986	Other current assets	$	—	$	(297	)

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The effect of derivative instruments on the Consolidated Financial Statements for the year ended December 31, 2013 was as follows (in thousands):

			Ineffective Portion
Consolidated Statements of Operations Classification of Gain Reclassified from Accumulated Other Comprehensive Income	Hedge Gain  Reclassified from Accumulated Other Comprehensive Income		Consolidated Statement of Operations Classification of Gain (Loss) Recognized	Hedge Gain (Loss) Recognized
Cost of sales	$	498	None	$	—
Research and development	544		None	—
Selling, general and administrative	158		None	—

The effect of derivative instruments on the Consolidated Financial Statements for the year ended December 31, 2012 was as follows (in thousands):

Effective Portion			Ineffective Portion
Consolidated Statements of Operations Classification of Gain Reclassified from Accumulated Other Comprehensive Income	Hedge Gain  Reclassified from Accumulated Other Comprehensive Income		Consolidated Statement of Operations Classification of Gain (Loss) Recognized	Hedge Gain (Loss) Recognized
Cost of sales	$	286	None	$	—
Research and development	183		None	—
Selling, general and administrative	87		None	—

The effect of derivative instruments on the Consolidated Financial Statements for the year ended December 31, 2011 was as follows (in thousands):

Effective Portion			Ineffective Portion
Consolidated Statements of Operations Classification of Gain Reclassified from Accumulated Other Comprehensive Income	Hedge Gain  Reclassified from Accumulated Other Comprehensive Income		Consolidated Statement of Operations Classification of Gain (Loss) Recognized	Hedge Gain (Loss) Recognized
Cost of sales	$	41	None	$	—
Research and development	322		None	—
Selling, general and administrative	123		None	—

The following is a summary of changes to comprehensive income (loss) associated with the Company's hedging activities (in thousands):

	December 31, 2013			December 31, 2012			December 31, 2011
Beginning balance of unrealized loss on forward exchange contracts	$	(765	)	$	(774	)	$	393
Other comprehensive loss before reclassifications	(1,310		)	(547		)	(1,653		)
Amounts reclassified from other comprehensive income	1,200			556			486
Other comprehensive income (loss)	(110		)	9			(1,167		)
Ending balance of unrealized loss on forward exchange contracts	$	(875	)	$	(765	)	$	(774	)

Over the next twelve months, the Company expects to reclassify into earnings a loss of approximately $0.8 million currently recorded as other comprehensive income, as a result of the maturity of currently held forward exchange contracts.

The bank counterparties in these contracts expose the Company to credit-related losses in the event of their nonperformance. However, to mitigate that risk, the Company only contracts with counterparties who meet its minimum requirements regarding counterparty credit worthiness. In addition, the Company monitors credit ratings, credit spreads and potential downgrades prior to entering into any new hedging contracts.

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Note 14 — Commitments and Contingencies

Operating Leases

Radisys is obligated under non-cancelable operating leases for certain facilities, office equipment, and vehicles. Future minimum lease payments with initial or remaining non-cancelable lease terms in excess of one year, at December 31, 2013, were as follows (in thousands):

For the Years Ending December 31,	Future Minimum Lease Payments
2014	$	2,802
2015	2,764
2016	1,694
2017	782
2018	497
2019 and thereafter (through 2020)	769
Total future minimum lease commitments	$	9,308

Rent expense totaled $4.2 million, $5.4 million and $4.8 million for the years ended December 31, 2013, 2012 and 2011.

Adverse Purchase Commitments

The Company is contractually obligated to place a deposit with its contract manufacturer for the cost of excess inventory used in the manufacture of the Company’s products, if there is no alternative use. This liability, referred to as adverse purchase commitments, is provided for in other accrued liabilities in the accompanying Consolidated Balance Sheets. Estimates for adverse purchase commitments are derived from reports received on a quarterly basis from the Company’s contract manufacturer. Increases to this liability are charged to cost of goods sold. When and if the Company takes possession of inventory reserved for in this liability, the liability is transferred from other accrued liabilities (Note 10 — Other Accrued and Other Long-Term Liabilities) to the excess and obsolete inventory valuation allowance (Note 6 — Inventories).

In November 2013, the Company notified its existing contract manufacturer of the Company's intent to transition manufacturing to another contract manufacturer co-located with the Company's Shenzhen site. Upon notification of intent to terminate the relationship, the manufacturing agreement contractually obligates the Company to purchase all inventories in excess of ninety days demand. As of December 31, 2013 the existing contract manufacturer has yet to invoke this clause and therefore an inventory deposit and offsetting liability have not been reflected on the Consolidated Balance Sheets to account for the additional potential inventory deposit. The value of the potential liability in excess of the current adverse purchase commitment was $5.1 million at December 31, 2013.

Guarantees and Indemnification Obligations

As permitted under Oregon law, the Company has agreements whereby it indemnifies its officers, directors and certain finance employees for certain events or occurrences while the officer, director or employee is or was serving in such capacity at the request of the Company. The term of the indemnification period is for the officer’s, director’s or employee’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a Director and Officer insurance policy that limits its exposure and enables the Company to recover a portion of any future amounts paid. To date, the Company has not incurred any costs associated with these indemnification agreements and, as a result, management believes the estimated fair value of these indemnification agreements is minimal. Accordingly, the Company has not recorded any liabilities for these agreements as of December 31, 2013.

The Company enters into standard indemnification agreements in its ordinary course of business. Pursuant to these agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners or customers, in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to the Company’s current products, as well as claims relating to property damage or personal injury resulting from the performance of services by us or the Company’s subcontractors. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is generally limited. Historically, the Company’s costs to defend lawsuits or settle claims

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relating to such indemnity agreements have been minimal and accordingly management believes the estimated fair value of these agreements is immaterial.

Accrued Warranty

The Company provides for the estimated cost of product warranties at the time it recognizes revenue. Products are generally sold with warranty coverage for a period of 12 or 24 months after shipment. Parts and labor are covered under the terms of the warranty agreement. The workmanship of the Company’s products produced by the contract manufacturer is covered under warranties provided by the contract manufacturer for 12 months. The warranty provision is based on historical experience by product family. The Company engages in product quality programs and processes, including actively monitoring and evaluating the quality of its components suppliers; however ongoing failure rates, material usage and service delivery costs incurred in correcting product failure, as well as specific product class failures out of the Company’s baseline experience, affect the estimated warranty obligation. If actual product failure rates, material usage or service delivery costs differ from estimates, revisions to the estimated warranty liability would be required.

The following is a summary of the change in the Company’s warranty accrual reserve (in thousands):

	For the Years Ended December 31,
	2013			2012
Warranty liability balance, beginning of the year	$	3,954		$	3,438
Product warranty accruals	3,131			5,332
Adjustments for payments made	(3,757		)	(4,816		)
Warranty liability balance, end of the year	$	3,328		$	3,954

At December 31, 2013 and 2012, $2.6 million and $3.1 million of the warranty liability balance are included in other accrued liabilities and $0.7 million and $0.8 million are included in other long-term liabilities in the accompanying Consolidated Balance Sheets.

Note 15 — Basic and Diluted Loss per Share

A reconciliation of the numerator and the denominator used to calculate basic and diluted loss per share is as follows (in thousands, except per share amounts):

	For the Years Ended December 31,
	2013			2012			2011
Numerator—Basic
Net loss, basic	$	(49,404	)	$	(43,474	)	$	(1,529	)
Numerator—Diluted
Net loss, basic	$	(49,404	)	$	(43,474	)	$	(1,529	)
Interest on convertible senior notes, net of tax benefit (B)	—			—			—
Net loss, diluted	$	(49,404	)	$	(43,474	)	$	(1,529	)
Denominator—Basic
Weighted average shares used to calculate net loss per share, basic	28,805			27,174			25,413
Denominator—Diluted
Weighted average shares used to calculate net loss per share, basic	28,805			27,174			25,413
Effect of escrow shares (A)	—			—			—
Effect of convertible notes (B)	—			—			—
Effect of dilutive restricted stock (C)(D)	—			—			—
Effect of dilutive stock options (C)	—			—			—
Weighted average shares used to calculate net loss per share, diluted	28,805			27,174			25,413
Net loss per share:
Basic	$	(1.72	)	$	(1.60	)	$	(0.06	)
Diluted	$	(1.72	)	$	(1.60	)	$	(0.06	)

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(A) For the year ended December 31, 2013 there were no contingently issuable escrow shares outstanding. For the years ended December 31, 2012 and 2011, 0.7 million and 1.3 million contingently issuable escrow shares were excluded from the calculation as their effect would have been anti-dilutive.

(B) The following as-if converted shares associated with the Company’s 2013 and 2015 convertible senior notes were excluded from the calculation as their effect would be anti-dilutive (in thousands):

	For the Years Ended December 31,
	2013	2012	2011
2013 convertible senior notes	—	2,450	3,454
2015 convertible senior notes	2,110	1,067	—
Total as-if converted shares excluded	2,110	3,517	3,454

(C) The following shares, by equity award type, were excluded from the calculation, as their effect would have been anti-dilutive (in thousands):

	For the Years Ended December 31,
	2013	2012	2011
Stock options	3,465	2,555	2,900
Restricted stock units	335	527	510
Performance based restricted stock units (D)	193	—	—
Total equity award shares excluded	3,993	3,082	3,410

(D) For the years ended December 31, 2013, 2012 and 2011 the Company excluded restricted shares of 1.5 million, 2.3 million, and 0.8 million granted under the LTIP as the performance criteria required for issuance of the awards was not satisfied as of these dates.

Note 16 — Income Taxes

The income tax provision consists of the following (in thousands):

	For the Years Ended December 31,
	2013			2012			2011
Current provision:
Federal	$	—		$	—		$	—
State	(70		)	122			38
Foreign	2,299			1,252			271
Total current provision	2,229			1,374			309
Deferred provision (benefit):
Federal	—			(65		)	(9,451		)
State	—			(3		)	(74		)
Foreign	12,726			1,284			(1,916		)
Total deferred provision (benefit)	12,726			1,216			(11,441		)
Total income tax provision (benefit)	$	14,955		$	2,590		$	(11,132	)

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The income tax provision (benefit) differs from the amount computed by applying the statutory federal income tax rate to pretax income as a result of the following differences (dollar amounts in thousands):

	For the Years Ended December 31,
	2013					2012					2011
	$			%		$			%		$			%
Statutory federal tax (benefit) rate	$	(12,057	)	35.0	%	$	(14,309	)	35.0	%	$	(4,431	)	35.0	%
Increase (decrease) in rates resulting from:
State taxes	(347		)	1.0		(266		)	0.7		(131		)	1.0
Foreign dividend	1,938			(5.6	)	6,754			(16.5	)	—			—
Goodwill impairment expense and (benefit) from acquisitions	—			—		9,377			(22.9	)	(81		)	0.6
Valuation allowance	32,784			(95.2	)	3,725			(9.1	)	(5,524		)	43.6
Taxes on foreign income that differ from U.S. tax rate	(8,507		)	24.7		(2,796		)	6.8		(2,888		)	22.8
Tax credits	(252		)	0.7		(304		)	0.7		(737		)	5.8
Non-deductible stock-based compensation expense	1,596			(4.6	)	1,812			(4.4	)	1,275			(10.1	)
Earnout liability fair value adjustment	(596		)	1.7		(1,768		)	4.3		—			—
Transaction costs	—			—		—			—		1,183			(9.3	)
Other	396			(1.2	)	365			(0.9	)	202			(1.5	)
Effective tax rate	$	14,955		(43.5	)%	$	2,590		(6.3	)%	$	(11,132	)	87.9	%

The components of deferred taxes consist of the following (in thousands):

	December 31, 2013			December 31, 2012
Deferred tax assets:
Accrued warranty	$	1,166		$	1,136
Inventory	2,952			1,734
Restructuring accrual	317			119
Net operating loss carryforwards	52,248			40,547
Tax credit carryforwards	24,692			25,256
Stock-based compensation	2,490			2,696
Capitalized research and development	144			556
Fixed assets	2,437			2,179
Goodwill	3,358			4,464
Other	5,005			5,723
Total deferred tax assets	94,809			84,410
Less: valuation allowance	(82,995		)	(50,200		)
Net deferred tax assets	11,814			34,210
Deferred tax liabilities:
Intangible assets	(7,514		)	(17,286		)
Other	(493		)	(387		)
Total deferred tax liabilities	(8,007		)	(17,673		)
Total net deferred tax assets	$	3,807		$	16,537

At December 31, 2013, the Company's unrecognized tax benefits associated with uncertain tax positions were $3.4 million, of which $3.0 million, if recognized, would favorably affect the effective tax rate.

The Company's ongoing practice is to recognize potential accrued interest and penalties related to unrecognized tax benefits within its global operations in income tax expense. During 2013, the Company recognized a net increase of approximately $22,000 in potential interest and penalties associated with uncertain tax positions in the Consolidated Statements

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of Operations. The Company had approximately $0.4 million and $0.3 million of interest and penalties associated with uncertain tax positions at December 31, 2013, which are excluded from the unrecognized tax benefits table below.

The Company’s total amounts of unrecognized tax benefits at the beginning and end of the period are as follows (in thousands):

	Total
Balance as of December 31, 2011	$	2,878
Additions based on tax positions related to the current year	42
Additions for tax positions of prior years	260
Reductions for tax positions of prior years	(169		)
Reductions as a result of a lapse of applicable statute of limitations	—
Other	—
Balance as of December 31, 2012	$	3,011
Additions based on tax positions related to the current year	532
Additions for tax positions of prior years	281
Reductions for tax positions of prior years	(102		)
Reductions as a result of a lapse of applicable statute of limitations	(70		)
Other	(206		)
Balance as of December 31, 2013	$	3,446

The Company and its subsidiaries are subject to federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company's statutes of limitations are closed for all federal and state income tax years before 2010 and 2009. The statutes of limitations for the Company's other foreign subsidiaries are closed for all income tax years before 2006. However, to the extent allowed by law, the taxing authorities may have the right to examine prior periods where net operating losses and credits were generated and carried forward, and make adjustments up to the net operating loss and credit carryforward amounts. It is reasonably possible that the Company's uncertain tax positions, including interest and penalties, could decrease by approximately $0.4 million in the next twelve months.

During 2011 a Canada Revenue Agency (“CRA”) examination was effectively settled when the Company agreed to the proposed adjustments issued by that CRA. The effective settlement did not have a significant impact on the Company's financial statements.

The Company is currently under examination in India. The periods covered by the examination are the Company's assessment years 2006 through 2008 and 2010. The examination is in various stages of appellate proceedings and all material uncertain tax positions associated with the examination have been taken into account in the ending balance of the unrecognized tax benefits at December 31, 2013.

The Company has recorded valuation allowances of $83.0 million and $50.2 million as of December 31, 2013 and 2012. This represents a full valuation allowance against the Company's U.S. net deferred tax assets as well as a partial valuation allowance against the Company's Canadian net deferred tax assets. During 2013 the Company recognized the partial valuation allowance against Company's Canadian net deferred tax assets in the amount of $12.5 million due to expected changes in the nature of the Company's operations in Canada. In evaluating its valuation allowance, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance.

At December 31, 2013 the Company had total available federal and state net operating loss carryforwards of approximately $144.8 million and $84.0 million. The federal and state net operating loss carryforwards expire between 2017 and 2033. The net operating losses from acquisitions are stated net of limitations pursuant to Section 382 of the Internal Revenue Code. The Company also had net operating loss carryforwards of approximately $3.6 million from the United Kingdom (“U.K.”) and China. The U.K. tax losses may be carried forward indefinitely provided certain requirements are met. The Chinese tax losses may be carried forward 5 years.

The Company had federal and state research and development tax credit and other federal credit carryforwards of approximately $17.6 million at December 31, 2013, to reduce future income tax liabilities.  The federal and Oregon credits expire between 2014 and 2013.  The California research and development credits do not expire.  The credits from acquisitions are stated net of limitations pursuant to Section 383 of the Internal Revenue Code.  The Company's Canadian subsidiary also

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had approximately $5.5 million in investment tax credit, $15.3 million of unclaimed scientific research and experimental expenditures to be carried forward and applied against future income in Canada.

Realization of the Company's foreign deferred tax assets is dependent on generating sufficient taxable income prior to the expiration of the net operating loss and tax credit carryforwards. Although realization is not assured, management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the balance of the deferred tax assets, net of the valuation allowance, as of December 31, 2013. The amount of the net deferred tax assets that is considered realizable, however, could be reduced if estimates of future taxable income during the carryforward periods are reduced. Should management determine that the Company would not be able to realize all or part of the net deferred tax assets in the future, adjustments to the valuation allowance for deferred tax assets may be required.

During 2013, the Company repatriated $0.8 million in cash from certain foreign subsidiaries. The company has provided a deferred tax liability of $0.8 million related to $2.2 million of unremitted earnings of certain foreign subsidiaries. The Company plans to indefinitely reinvest the earnings of certain foreign subsidiaries. Should the Company repatriate any foreign earnings from the remaining subsidiaries in the future, it may be required to establish an income tax liability and recognize additional income tax expense related to such earnings. The Company has indefinitely reinvested approximately $13.2 million of undistributed earnings from the foreign subsidiaries at December 31, 2013. Such earnings would be subject to U.S. taxation if repatriated to the U.S.

Pretax book loss from domestic operations for the fiscal years 2013, 2012, and 2011 was $46.5 million, $55.8 million, and $23.2 million. Pretax book income from foreign operations for the fiscal years 2013, 2012, and 2011 was $12.0 million, $14.9 million, and $10.5 million.

Note 17 — Employee Benefit Plans

Stock-Based Employee Benefit Plans

Equity instruments are granted to employees, directors and consultants in certain instances, as defined in the respective plan agreements.

Stock Options and Restricted Stock Awards

On May 15, 2007, the Company's shareholders approved the 2007 Stock Plan (as amended, the "2007 Stock Plan") which provides for issuance of stock options, restricted shares, restricted stock units and performance-based awards. Under the 2007 Stock Plan, 6,200,000 shares have been reserved and authorized for issuance to any non-employee directors and employees. The 2007 Stock Plan provides the Board of Directors discretion in creating employee equity incentives. Unless otherwise stipulated in the plan document, the Board of Directors determines stock option exercise prices, which may not be less than the fair value of Radisys common stock at the date of grant, vesting periods and the expiration periods which are a maximum of 10 years from the date of grant for certain awards.

On August 17, 2010, the shareholders approved the LTIP. The LTIP provides for the grants of awards payable in shares of common stock upon the achievement of performance goals set by the Company’s Compensation and Development Committee (“the Committee”). The number of shares of the Company’s common stock initially reserved for issuance under the LTIP is 2,000,000 shares with a maximum of 500,000 shares in any calendar year to one participant.

On May 3, 2011 the Company registered 600,000 shares of its common stock under the Radisys Corporation Inducement Stock Plan for CCPU Employees (the "CCPU Plan"). The CCPU Plan was adopted without shareholder approval in reliance upon the exception provided under NASDAQ Listing Rule 5635(c)(4) relating to awards granted in connection with the hiring of new employees, including grants to transferred employees in connection with a merger or acquisition. Awards under the CCPU Plan are made only to employees of Continuous Computing or its subsidiaries and became effective upon the completion of the Continuous Computing acquisition. The CCPU Plan provides for the issuance of stock options, restricted shares and restricted stock units. In 2011, the Company issued 368,000 shares under the CCPU Plan and no future awards will be granted.

The Company assumed the stock plans of Continuous Computing on July 8, 2011. Under the terms of the Company's merger agreement with Continuous Computing, options outstanding under these plans were converted to options to purchase shares of the Company's common stock. Options issued under these plans vest over four years from the original grant date and have an expiration date of 10 years from the original grant date. The exercise price of each converted option is equal to the product of the original exercise price and the original number of options granted divided by the number of converted options

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received. These stock plans have been suspended and no future awards will be granted under these plans. A total of 319,000 shares of common stock were issued under the Continuous Computing stock plans.

In accordance with the Continuous Computing merger agreement, unvested options pursuant to the Continuous Computing plans were required to be converted into multiple awards on the acquisition date, with the resulting awards becoming non-contingent and contingent options of the Company. Both the non-contingent and contingent awards continue to vest under the original service conditions of the awards. However, the contingent awards contain post-vesting restrictions tied to payment of certain merger contingencies such as the earn-out and indemnification agreements. The assumed options were valued using a Black-Scholes option-pricing model. In addition, the Company utilized the Finnerty Asian Put Option Approach to estimate the discount associated with the post-vesting restrictions for the contingent options. The resulting discount applied was 10%.

On September 4, 2012, the Committee approved 291,375 performance based restricted stock awards under the Overlay Plan based on attainment of the performance goals at maximum levels. The Overlay provides for the grants of awards payable in shares of common stock upon the achievement of performance goals set by the Committee. The awards had four separate quarterly performance achievement dates in 2013 and vest one year after they are earned.

Effective September 10, 2012, the Committee canceled all outstanding awards under the LTIP, resulting in the shares underlying such awards becoming eligible for grants of additional awards under the LTIP.

Following such cancellation of awards, on September 10, 2012, the Committee approved 799,975 performance based restricted stock awards under the LTIP based on attainment of 100% of the performance goals being met. The LTIP provides for the grants of awards payable in shares of common stock upon the achievement of performance goals set by the Committee. The awards have four separate semi-annual performance achievement dates in 2013 and 2014 and vest upon attainment of the performance conditions. In addition to the performance conditions, the awards contain market-based multipliers based on the average price of the Company's common stock thirty days prior to each semi-annual performance period. The maximum multiplier for a given semi-annual performance period is 2.75x the original grant and limited to a maximum of 2.5x (or 1,999,938 shares) over the entire performance period.

As of December 31, 2013, the Company had 482,613 common shares available for future grant under its equity plans.

The following table summarizes stock option activity for 2013 (in thousands, except average prices and weighted average remaining contractual lives):

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Balance, December 31, 2012	2,555		$	7.84	3.76	$	482
Granted	1,746		3.46
Exercised	(43	)	0.67
Forfeited	(119	)	4.06
Expired	(674	)	11.59
Balance, December 31, 2013	3,465		$	5.15	4.65	$	211
Options exercisable at December 31, 2013	1,301		$	7.75	2.87	$	203
Options vested as of December 31, 2013 and expected to vest after December 31, 2013	3,339		$	5.21	4.61	$	211

The aggregate intrinsic value in the table above represents the total pretax value, based on the Company's closing common stock price of $2.29 at December 31, 2013 that would have been received by the option holders had all option holders exercised their in-the-money options on December 31, 2013.

Total intrinsic value of options exercised for the years ended December 31, 2013, 2012 and 2011 was $0.2 million, $0.1 million, and $0.1 million. The total amount of cash received from the exercise of options in 2013, 2012 and 2011 was $0.1 million, $0.1 million and $0.5 million

As of December 31, 2013, the Company had $3.2 million in unrecognized compensation expense related to stock options which is expected to be recognized over a weighted average period of 2.3 years.

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The following table summarizes nonvested stock activity for 2013:

	Restricted Stock Units				LTIP and Overlay Awards
	Restricted Shares		Weighted Average Fair Value		Restricted Shares		Weighted Average Fair Value
Balance, December 31, 2012	527		$	5.65	1,003		$	2.19
Granted	102		3.71		130		4.37
Vested	(231	)	6.15		(186	)	2.27
Forfeited	(63	)	5.28		(151	)	4.19
Balance, December 31, 2013	335		$	4.73	796		$	5.00

The total fair value of restricted stock units that vested in 2013, 2012 and 2011 was $1.4 million, $1.0 million and $1.5 million. As of December 31, 2013, the Company had $1.0 million in unrecognized compensation expense related to restricted stock units which is expected to be recognized over a weighted average period of 1.4 years. The LTIP and Overlay awards are separated into four performance periods which range from September 10, 2012 to December 31, 2014. Expense associated with each service period is measured on the date the respective service period begins. At December 31, 2013, the Company had $0.3 million in unrecognized compensation expense associated with all of the performance periods of the Overlay awards which is expected to be recognized over a weighted average period of 0.6 years. There was no unrecognized compensation expense associated with the first two performance periods of LTIP as both performance periods ended and the shares vested at or prior to December 31, 2013. The final two performance periods are both in 2014 and expense measurement and recognition will occur during 2014.

Employee Stock Purchase Plan

In December 1995, the Company established an Employee Stock Purchase Plan (“ESPP”). All employees of Radisys and its subsidiaries who customarily work 20 or more hours per week, including all officers, are eligible to participate in the ESPP. Separate offerings of common stock to eligible employees under the ESPP (an “Offering”) commence on February 15, May 15, August 15 and November 15 of each calendar year (“Enrollment Dates”) and continue for a period of 18 months. Multiple separate Offerings are in operation under the ESPP at any given time. An employee may participate in only one Offering at a time and may purchase shares only through payroll deductions permitted under the provisions stipulated by the ESPP. The purchase price is the lesser of 85% of the fair market value of the common stock on date of grant or that of the purchase date (“look-back feature”). Pursuant to the provisions of the ESPP, as amended, the Company is authorized to issue up to 6.7 million shares of common stock under the ESPP. At December 31, 2013, 833,857 shares were available for issuance under the ESPP.

During the second quarter of 2009, the Board of Directors approved an amendment to the Company’s ESPP to provide for a one-year holding period with respect to common stock shares purchased by participants under the ESPP. The one-year holding period took effect during the fourth quarter of 2009. Due to the holding period, the Company applies a discount to the ESPP stock compensation to reflect the decreased liquidity. The Company utilizes the Finnerty Asian Put Option Approach to estimate the discount. Inputs for the model include the length of the holding period, volatility and risk-free rate. The discount applied in the fourth quarter of 2013 was 13.0%.

The following table summarizes shares issued under the ESPP (in thousands, except per share amounts):

	Year Ended December 31,
	2013		2012		2011
Shares issued pursuant to the ESPP	381		352		251
Cash received for the purchase of shares pursuant to the ESPP	$	767	$	1,225	$	1,572
Weighted average purchase price per share	$	2.01	$	3.48	$	6.27

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Stock-Based Compensation Expense

The Company uses the Black-Scholes model to measure the grant-date fair value of stock options and ESPP shares. The grant-date fair value of stock options that are expected to vest is recognized on a straight-line basis over the requisite service period, generally, three years. The grant date fair value of ESPP shares that are expected to vest is recognized on a straight-line basis over the requisite service period, generally, 18 months, subject to modification at the date of purchase due to the ESPP look-back feature. The estimate of the number of options, ESPP shares and restricted stock units granted under the 2007 Stock Plan expected to vest is determined based on historical experience.

The Company estimates the fair value of stock options and purchase rights under the ESPP using a Black-Scholes option-pricing model. The calculation includes several assumptions that require management’s judgment. The expected term of the option or share is determined based on assumptions about patterns of employee exercises, and represents a probability-weighted average time period from grant until exercise of stock options, subject to information available at time of grant. Determining expected volatility generally begins with calculating historical volatility for a similar long-term period and then considering the ways in which the future is reasonably expected to differ from the past.

The Company uses one employee population. The expected term computation is based on historical vested option exercise and post-vest forfeiture patterns and is also factored by an estimate of the expected term for fully vested and outstanding options. The estimate of the expected term for options that were fully vested and outstanding was determined as the midpoint between the evaluation date and the contractual term date of the option.

The risk free interest rate is based on the U.S. Treasury constant maturities in effect at the time of grant for the expected term of the option or share.

The fair value of nonvested stock is the market value as of the grant date. The grant-date fair value of the restricted stock units that are expected to vest is recognized on a straight-line basis over the requisite service period, which is three years. The grant-date fair value of the LTIP and Overlay awards is recognized ratably over the service period which equals the measurement period of the award. The measurement period is the period of time over which performance objectives are expected to be achieved. Since the number of shares that may be issued under the LTIP and Overlay and the service period are both variable, the Company evaluates the LTIP and Overlay awards on a quarterly basis and adjusts the number of shares expected to be awarded based upon financial results of the Company as compared to the performance goals set for the award. Adjustments to the number of shares awarded, and to the corresponding compensation expense, are made on a cumulative basis at the date of adjustment based upon the estimated probable number of shares to be awarded. Adjustments made to compensation expense resulting from a change in the estimated probable vesting date of the awards are made on a prospective basis. Additionally, under the 2012 LTIP the Company is required to measure the fair value of the market-based condition contained in the awards. This fair value of this feature is measured at the outset of each semi-annual performance period and recognized over the service period of the respective performance period.

The fair value calculations for stock options and ESPP shares used the following assumptions for the years ended December 31:

	Stock Options									Assumed Options			Employee Stock Purchase Plan
	2013			2012			2011			2011			2013			2012			2011
Estimated fair value	$	3.45		$	2.10		$	4.23		$	7.77		$	1.79		$	2.05		$	2.09
Expected life (in years)	4.5			4.5			4.4			2.7			1.5			1.5			1.5
Interest rate	1.33		%	0.65		%	0.91		%	0.66		%	0.15		%	0.18		%	0.12		%
Volatility	57		%	71		%	70		%	64		%	52		%	53		%	42		%
Dividend yield	—			—			—			—			—			—			—

For the years ended December 31, 2013, 2012 and 2011, stock-based compensation was recognized and allocated in the Consolidated Statements of Operations as follows (in thousands):

	2013		2012		2011
Cost of sales	$	550	$	25	$	838
Research and development	1,170		601		1,434
Selling, general and administrative	3,578		765		3,445
Total stock-based compensation expense	$	5,298	$	1,391	$	5,717

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401(k) Savings Plan

The Company established a 401(k) Savings Plan (“401(k) Plan”), a defined contribution plan, as of January 1, 1989 and amended through January 1, 2007, in compliance with Section 401(k) and other related sections of the Internal Revenue Code and corresponding regulations issued by the Department of Treasury and Section 404(c) of Employee Retirement Income Security Act of 1974 (“ERISA”), to provide retirement benefits for its U.S employees. Under the provisions of the plan, eligible employees are allowed pre-tax contributions of up to 30% of their annual compensation or the maximum amount permitted by the applicable statutes. Additionally, eligible employees can elect to make catch-up contributions, within the limits set forth by pre-tax contributions, or to the maximum amount permitted by the applicable statutes. Pursuant to the provisions of the 401(k) Plan, the Company may contribute 50% of pre-tax contributions made by eligible employees, adjusted for loans and withdrawals, up to 6% of annual compensation for each eligible employee. The Company may elect to make supplemental contributions as periodically determined by the Board of Directors at their discretion. The contributions made by the Company on behalf of eligible employees become 100% vested after three years of service, or 33% per year after one year of service. The Company’s total contributions to the 401(k) Plan amounted to $0.7 million, $0.7 million, and $0.7 million in 2013, 2012 and 2011. In addition, some of the Company’s employees outside the U.S are covered by various defined contribution plans, in compliance with the statutes of respective countries. The participants pay for the 401(k) Plan administrative expenses.

Deferred Compensation Plan

The Company terminated its Deferred Compensation Plan during 2013. The distribution of plan assets and participant balances began during 2013 and will continue through January 2015 based on participant elections. The Deferred Compensation Plan provided its directors and certain eligible employees with opportunities to defer a portion of their compensation as defined by the provisions of the plan. The Company credited additional amounts to the Deferred Compensation Plan to make up for reductions of Company contributions under the 401(k) Plan. The deferred amounts were credited with earnings and losses under investment options chosen by the participants. The Company set aside deferred amounts, which were then invested in long-term insurance contracts. All deferred amounts and earnings are 100% vested at all times, but are subject to the claims of creditors of the Company under a bankruptcy proceeding. Benefits were payable to a participant upon retirement, death, and termination of employment and paid as elected by the participant in accordance with the terms of the plan.

Note 18 — Segment Information

The Company's Chief Operating Decision Maker (CODM), Radisys' Chief Executive Officer, reviews the Company's results of operations on a consolidated level and executive staff is structured by function rather than by product category. Therefore, the Company is one operating segment. Key resources, decisions, and assessment of performance are also analyzed on a company-wide level.

Generally, the Company's customers are not the end-user of its products. The Company ultimately derives its revenues from following product groups as follows for the years ended December 31 (in thousands):

	2013		2012		2011
ATCA	$	116,537	$	136,572	$	132,530
Software-Solutions	44,934		52,666		36,938
COM Express and Rackmount Server	56,019		49,538		56,848
Other Products	20,373		47,320		104,549
Total revenues	237,863		286,096		330,865

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Geographic Revenues

	For the Years Ended December 31,
	2013		2012		2011
United States	$	100,780	$	105,858	$	105,671
Other North America	3,042		3,310		1,371
China	29,818		45,419		69,503
Japan	30,724		39,435		29,337
Other APAC	20,988		31,695		45,125
Total APAC	81,530		116,549		143,965
Germany	11,770		18,580		39,266
Other EMEA	40,741		41,799		40,592
Total EMEA	52,511		60,379		79,858
Foreign Countries	137,083		180,238		225,194
Total revenues	$	237,863	$	286,096	$	330,865

Long-lived assets by Geographic Area

	For the Years Ended December 31,
	2013		2012
Property and equipment, net
United States	$	7,421	$	8,572
Other North America	942		953
China	3,396		4,685
Other APAC	185		358
Total APAC	3,581		5,043
India	2,893		3,110
Other EMEA	17		35
Total EMEA	2,910		3,145
Foreign Countries	7,433		9,141
Total property and equipment, net	$	14,854	$	17,713
Intangible assets, net
United States	$	56,474	$	68,903
Other North America	36		211
EMEA	—		1,170
Foreign Countries	36		1,381
Total intangible assets, net	$	56,510	$	70,284

The following customers accounted for more than 10% of total revenues for the years ended December 31:

	2013	2012	2011
Nokia Solutions and Networks	18.7%	22.5%	35.1	%
NEC	NA	11.1%	NA

The following customer accounted for more than 10% of accounts receivable for the years ended December 31:

	2013	2012
Nokia Solutions and Networks	20.7%	24.7%

Note 19 — Legal Proceedings

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In the normal course of business, the Company becomes involved in litigation. As of December 31, 2013, in the opinion of management, Radisys had no pending litigation that would have a material effect on the Company’s financial position, results of operations or cash flows.

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Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures. Based on their evaluation as of the end of the period covered by this Annual Report on Form 10-K, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective.

During the Company’s fiscal quarter ended December 31, 2013, no change occurred in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

For Management’s Report on Internal Control Over Financial Reporting and the Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting, see Item 8, Financial Statements and Supplementary Data.

Item 9B. Other Information

On March 14, 2014, we entered into an amended and restated $25.0 revolving line of credit agreement with SVB (the "2014 Agreement") that replaces the Agreement and has a stated maturity date of July 28, 2016. The secured revolving credit facility under the 2014 Agreement is available for cash borrowings and is subject to a borrowing formula based upon eligible accounts receivable. Eligible accounts receivable include 80% of domestic and 65% of foreign accounts receivable (80% in certain cases), in each case, not greater than 60 days past original invoice date. The secured revolving credit facility also includes a letter of credit sublimit (subject to the borrowing formula) of $1,000,000. The interest rate is dependent upon a liquidity threshold (the "Liquidity Threshold"), which is defined in the 2014 Agreement as $15.0 million, with the exception of the last month end of each quarter, where it is defined as $20.0 million. Liquidity is calculated under the 2014 Agreement as unrestricted cash plus unused availability on the revolving line of credit; however if the 2015 convertible senior notes are not renewed or refinanced 120 days prior to their maturity date, which is February 15, 2015, Liquidity (for purposes of testing against the Liquidity Threshold) will be reduced by the outstanding principal amount of the 2015 convertible senior notes. The calculation of interest under the 2014 Agreement is as follows:

• When Liquidity is above the Liquidity Threshold, the interest rate is the prime rate (as published in Wall Street Journal) plus 0.75%;

• When Liquidity is below the Liquidity Threshold, the interest rate is the prime rate (as published in Wall Street Journal) plus 2.25%;

We are required to make interest payments monthly. We were further required to pay a loan modification fee of $35,000 and will be required to pay a commitment fee equal to $35,000 on July 29, 2014 and annually thereafter. Under the 2014 Agreement we are required to pay the higher of actual monthly interest incurred or the interest equivalent of $10.0 million in average monthly borrowings. If we terminate the commitment under the 2014 Agreement prior to the maturity date, we are required to pay a cancellation fee equal to 1.5% of the commitment under the 2014 Agreement.

The 2014 Agreement requires us to make certain representations, warranties and other agreements that are customary in credit agreements of this type. The 2014 Agreement also includes a financial covenant that requires us to maintain minimum Liquidity of $10.0 million tested monthly.

The foregoing description of the 2014 Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the 2014 Agreement, which is attached to this report as Exhibit 10.63 and is incorporated herein by reference.

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PART III

The Company will file its definitive proxy statement for the Annual Meeting of Shareholders pursuant to Regulation 14A of the Exchange Act (the “Proxy Statement”), not later than 120 days after the end of the fiscal year covered by this Annual Report. This Annual Report incorporates by reference specified information included in the Proxy Statement.

Item 10. Directors, Executive Officers and Corporate Governance

The information with respect to the Company’s directors and officers and corporate governance is included under the proposal to elect directors, "Executive Officers," "Section 16(a) Beneficial Ownership Reporting Compliance" and "Corporate Governance" in the Company’s Proxy Statement and is incorporated herein by reference. The information with respect to the Company’s code of ethics is included in Item 1. "Business" in this Annual Report on Form 10-K.

Item 11. Executive Compensation

Information with respect to executive compensation is included under “Director Compensation,” “Executive Officer Compensation,” “Compensation and Development Committee Report,” and “Potential Post-Employment Payments” in the Company’s Proxy Statement and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information with respect to security ownership of certain beneficial owners and management and equity compensation plan information is included under “Security Ownership of Certain Beneficial Owners and Management” in the Company’s Proxy Statement and is incorporated herein by reference.

EQUITY COMPENSATION PLAN INFORMATION

The following table summarizes information about the Company’s equity compensation plans as of December 31, 2013. All outstanding awards relate to the Company’s common stock.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights ($)		Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by security holders	5,303,407	(1)	$	5.25	1,316,470	(2)
Equity compensation plans not approved by security holders (3)	231,721	(4)	3.59		—
Total	5,535,128		$	5.15	1,316,470

_____________________________

(1) Includes 313,817 restricted stock units and 193,855 performance-based restricted stock units which will vest only if specific service measures are met. Also includes 1,540,595 performance-based restricted stock units which represents the maximum number of shares that might be earned upon attaining certain performance goals. The number of shares subject to performance-based restricted stock units at threshold levels is 616,238.

(2) Includes 833,857 of securities authorized and available for issuance in connection with the RadiSys Corporation 1996 Employee Stock Purchase Plan. Includes performance-based restricted stock units reserved at the maximum number of shares that might be earned upon attaining certain performance goals.

(3) Includes 100,530 shares granted under the Radisys Corporation Inducement Stock Plan for CCPU Employees. The CCPU Plan is intended to comply with the National Association of Securities Dealers, Inc.’s (“NASD”) Marketplace Rule 4350 which provides an exception to the NASD stockholder approval requirement for the issuance of securities with regard to grants to new Employees of the Company, including grants to transferred Employees in connection with a merger or other acquisition.

(4) Includes 131,191 stock options assumed as part of the acquisition of Continuous Computing Corporation. The exercisability of some shares may be subject to contingencies as provided in Section 6.11 of the Agreement and Plan of Merger dated May 2, 2011.

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Description of Equity Compensation Plans Not Adopted by Shareholders

Additional information required by this item is included in the Company’s Proxy Statement and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information with respect to certain relationships and related transactions and director independence is included under “Certain Relationships and Related Transactions”, "Related Party Transactions Policy", and "Corporate Governance" in the Company’s Proxy Statement and is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

The information with respect to principal accountant fees and services is included under “Principal Accountant Fees and Services” and "Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm" in the Company’s proxy statement and is incorporated herein by reference.

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PART IV

Item 15. Exhibits and Financial Statement and Schedules

(a) (1) Financial Statements

Index to Financial Statements

	Form 10-K Page No.
Report of Independent Registered Public Accounting Firm	50
Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011	51
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2013, 2012 and 2011	52
Consolidated Balance Sheets as of December 31, 2013 and 2012	53
Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2013, 2012 and 2011	54
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011	55
Notes to the Consolidated Financial Statements	56

(a) (2) Financial Statement Schedule

None.

(a) (3) Exhibits

Exhibit No	Description
2.1	Amended and Restated Asset Purchase Agreement, dated September 12, 2007, by and between the Company and Intel Corporation. Incorporated by reference from Exhibit 2.1 to the Company’s Current Report on Form 8-K/A, filed on November 1, 2007 (SEC File No. 000-26844).
2.2	Transition Services Agreement, dated September 12, 2007, by and between the Company and Intel Corporation (portions of the exhibit have been omitted pursuant to a request for confidential treatment to the Commission). Incorporated by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2007, filed on November 8, 2007 (SEC File No. 000-26844).
2.3	Warranty Services Agreement, dated September 12, 2007, by and between the Company and Intel Corporation (portions of the exhibit have been omitted pursuant to a request for confidential treatment to the Commission). Incorporated by reference from Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2007, filed on November 8, 2007 (SEC File No. 000-26844).
2.4	Arrangement Agreement among the Company, Convedia Corporation and RadiSys Canada Inc., effective as of July 26, 2006. Incorporated by reference from Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on July 28, 2006 (SEC File No. 000-26844).
2.5	Agreement and Plan of Merger, dated May 2, 2011, by and among the Company, RadiSys Holdings, Inc., Continuous Computing Corporation and Shareholder Representative Services LLC. Incorporated by reference from Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on May 3, 2011 (SEC File No. 000-26844).
2.6	Amendment No. 1 to Agreement and Plan of Merger, dated June 22, 2011, by and among the Company, RadiSys Holdings, Inc., Continuous Computing Corporation and Shareholder Representative Services LLC. Incorporated by reference from Exhibit 2.2 to the Company’s Current Report on Form 8-K filed on July 11, 2011 (SEC File No. 000-26844).
3.1	Second Restated Articles of Incorporation and amendments thereto. Incorporated by reference from Exhibit 4.1 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060), as amended by the Articles of Amendment incorporated by reference from Exhibit 3.1 in the Company’s Current Report on Form 8-K filed on January 30, 2008 (SEC File No. 000-26844).
3.2	Amended and Restated Bylaws and amendments thereto. Incorporated by reference from Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, filed on August 3, 2012 (SEC File No. 000-26844).

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4.1	Second Restated Articles of Incorporation and amendments thereto. See Exhibit 3.1.
4.2	Amended and Restated Bylaws and amendments thereto. See Exhibit 3.2.
4.3	Specimen Common Stock Certificate. Incorporated by reference from Exhibit 4.3 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
4.4	Indenture, dated February 12, 2008, by and between the Company and The Bank of New York Trust Company, N.A. Incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 12, 2008 (SEC File No. 000-26844).
4.5	First Supplemental Indenture, dated February 12, 2008, by and between the Company and The Bank of New York Trust Company, N.A. Incorporated by reference from Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on February 12, 2008 (SEC File No. 000-26844).
4.6	Form of Global Security for the 2.75% Convertible Senior Notes due 2013 (included in Exhibit 4.5).
4.7	Second Supplemental Indenture, dated June 29, 2012, by and between the Company and The Bank of New York Mellon Trust Company, N.A. Incorporated by reference from Exhibit 4.1 to the Company's Current Report on Form 8-K filed on July 2, 2012 (SEC File No. 000-26844).
4.8	Form of Global Security for the 4.50% Convertible Senior Notes due 2015 (included in Exhibit 4.7).
4.9	Form of Debt Securities Indenture. Incorporated by reference from Exhibit 4.5 to the Company’s Registration Statement on Form S-3, filed on October 26, 2010 (SEC File No. 333-170148).
10.1	Amended and Restated Asset Purchase Agreement, dated September 12, 2007, by and between the Company and Intel Corporation. See Exhibit 2.1.
10.2	Transition Services Agreement, dated September 12, 2007, by and between the Company and Intel Corporation. See Exhibit 2.2
10.3	Warranty Services Agreement, dated September 12, 2007, by and between the Company and Intel Corporation. See Exhibit 2.3
10.4*	RadiSys Corporation 1995 Stock Incentive Plan, as amended. Incorporated by reference from Exhibit (d)(1) to the Tender Offer Statement filed by the Company on Schedule TO-I, filed July 31, 2003 (SEC File No. 005-49160).
10.5*	Form of Notice of Stock Option Grant for the 1995 Stock Incentive Plan. Incorporated by reference from Exhibit (d)(3) to the Tender Offer Statement filed by the Company on Schedule TO-I, filed July 31, 2003 (SEC File No. 005-49160).
10.6*	Form of Restricted Stock Grant Agreement for the 1995 Stock Incentive Plan. Incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006, filed on May 9, 2006 (SEC File No. 000-26844).
10.7*	RadiSys Corporation 1996 Employee Stock Purchase Plan, as amended through June 26, 2012. Incorporated by reference from Appendix D to the Company’s Proxy Statement on Schedule 14A, filed on May 17, 2012 (SEC File No. 000-26844).
10.8*	RadiSys Corporation 2001 Nonqualified Stock Option Plan, as amended. Incorporated by reference from Exhibit (d)(2) to the Tender Offer Statement filed by the Company on Schedule TO-I, filed July 31, 2003 (SEC File No. 005-49160).
10.9*	Form of Notice of Stock Option Grant for the 2001 Nonqualified Stock Option Plan. Incorporated by reference from Exhibit (d)(4) to the Tender Offer Statement filed by the Company on Schedule TO-I, filed July 31, 2003 (SEC File No. 005-49160).
10.10*/**	Amended and Restated Radisys Corporation Deferred Compensation Plan, dated January 1, 2008.
10.11*/**	Amendment No. 1 to Amended and Restated Radisys Corporation Deferred Compensation Plan, effective January 1 2009.
10.12*/**	Amendment No. 2 to Amended and Restated Radisys Corporation Deferred Compensation Plan, effective January 1 2009.
10.13*/**	Amendment No. 3 to Amended and Restated Radisys Corporation Deferred Compensation Plan, effective January 1 2009.

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10.14*	RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.4 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
10.15*	Form of Notice of Option Grant for United States employees for the RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.5 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
10.16*	Form of Notice of Option Grant for Canada employees for the RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.6 to the Company’s Registration Statement on Form S-8 filed on September 1, 2006 (SEC File No. 333-137060).
10.17*	Form of Notice of Option Grant for international employees for the RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.7 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
10.18*	Form of Notice of Option Grant for China employees for the RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.8 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
10.19*	Form of Restricted Stock Grant Agreement for the RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.9 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
10.20*	Form of Restricted Stock Unit Grant Agreement for the RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.10 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
10.21*	RadiSys Corporation 2007 Stock Plan, as amended through June 26, 2012. Incorporated by reference from Appendix C to the Company’s Proxy Statement on Schedule 14A, filed on May 17, 2012 (SEC File No. 000-26844).
10.22*	Form of Overlay Plan Award Agreement for Performance-Based Restricted Stock Units under the RadiSys Corporation 2007 Stock Plan. Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 10, 2012 (SEC File No. 000-26844).
10.23*	Form of Notice of Option Grant for United States employees for the RadiSys Corporation 2007 Stock Plan. Incorporated by reference from Exhibit 4.5 to the Company’s Registration Statement on Form S-8, filed on May 15, 2007 (SEC File No. 333-142968).
10.24*	Form of Notice of Option Grant for Canada employees for the RadiSys Corporation 2007 Stock Plan. Incorporated by reference from Exhibit 4.6 to the Company’s Registration Statement on Form S-8, filed on May 15, 2007 (SEC File No. 333-142968).
10.25*	Form of Notice of Option Grant for China employees for the RadiSys Corporation 2007 Stock Plan. Incorporated by reference from Exhibit 4.7 to the Company’s Registration Statement on Form S-8, filed on May 15, 2007 (SEC File No. 333-142968).
10.26*	Form of Notice of Option Grant for international employees for the RadiSys Corporation 2007 Stock Plan. Incorporated by reference from Exhibit 4.8 to the Company’s Registration Statement on Form S-8, filed on May 15, 2007 (SEC File No. 333-142968).
10.27*	Form of Restricted Stock Unit Grant Agreement for the RadiSys Corporation 2007 Stock Plan. Incorporated by reference from Exhibit 4.9 to the Company’s Registration Statement on Form S-8, filed on May 15, 2007 (SEC File No. 333-142968).
10.28*	RadiSys Corporation Long-Term Incentive Plan (as amended and restated). Incorporated by reference from Appendix C to the Company’s Proxy Statement on Schedule 14A, filed on July 6, 2010 (SEC File No. 000-26844).
10.29*	First Amendment to RadiSys Corporation Long-Term Incentive Plan (as amended and restated). Incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on September 10, 2012 (SEC File No. 000-26844).
10.30*	Form of LTIP Tranche #2 Award Agreement for Performance-Based Restricted Stock Units under the RadiSys Corporation Long-Term Incentive Plan (as amended and restated). Incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 10, 2012 (SEC File No. 000-26844).
10.31*	RadiSys Corporation Inducement Stock Plan for CCPU Employees. Incorporated by reference from Exhibit 4.4 to the Company’s Registration Statement on Form S-8, filed on May 3, 2011 (SEC File No. 333-173885).

90

10.32*	Form of Notice of Option Grant for United States employees for the RadiSys Corporation Inducement Stock Plan for CCPU Employees. Incorporated by reference from Exhibit 4.5 to the Company’s Registration Statement on Form S-8, filed on May 3, 2011 (SEC File No. 333-173885).
10.33*	Form of Notice of Option Grant for international employees for the RadiSys Corporation Inducement Stock Plan for CCPU Employees. Incorporated by reference from Exhibit 4.6 to the Company’s Registration Statement on Form S-8, filed on May 3, 2011 (SEC File No. 333-173885).
10.34*	Form of Restricted Stock Unit Grant Agreement for United States employees for the RadiSys Corporation Inducement Stock Plan for CCPU Employees. Incorporated by reference from Exhibit 4.7 to the Company’s Registration Statement on Form S-8, filed on May 3, 2011 (SEC File No. 333-173885).
10.35*	Form of Restricted Stock Unit Grant Agreement for international employees for the RadiSys Corporation Inducement Stock Plan for CCPU Employees. Incorporated by reference from Exhibit 4.8 to the Company’s Registration Statement on Form S-8, filed on May 3, 2011 (SEC File No. 333-173885).
10.36*	Sixth Amended and Restated Continuous Computing Corporation 1998 Stock Incentive Plan. Incorporated by reference from Exhibit 4.4 to the Company’s Registration Statement on Form S-8, filed on July 13, 2011 (SEC File No. 333-175510).
10.37*	Amendment to Sixth Amended and Restated Continuous Computing Corporation 1998 Stock Incentive Plan, dated June 23, 2011. Incorporated by reference from Exhibit 4.5 to the Company’s Registration Statement on Form S-8, filed on July 13, 2011 (SEC File No. 333-175510).
10.38*	Amendment to Sixth Amended and Restated Continuous Computing Corporation 1998 Stock Incentive Plan, dated July 6, 2011. Incorporated by reference from Exhibit 4.6 to the Company’s Registration Statement on Form S-8, filed on July 13, 2011 (SEC File No. 333-175510).
10.39*	Notice of Option Assumption and Conversion under the Sixth Amended and Restated Continuous Computing Corporation 1998 Stock Incentive Plan for U.S. employees. Incorporated by reference from Exhibit 4.7 to the Company’s Registration Statement on Form S-8, filed on July 13, 2011 (SEC File No. 333-175510).
10.40*	Notice of Option Assumption and Conversion under the Sixth Amended and Restated Continuous Computing Corporation 1998 Stock Incentive Plan for non-U.S. employees. Incorporated by reference from Exhibit 4.8 to the Company’s Registration Statement on Form S-8, filed on July 13, 2011 (SEC File No. 333-175510).
10.41*	Amended and Restated Executive Change of Control Agreement, dated October 1, 2012, between the Company and Brian Bronson. Incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 2, 2012 (SEC File No. 000-26844).
10.42*	Amended and Restated Executive Severance Agreement, dated October 1, 2012, between the Company and Brian Bronson. Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 2, 2012 (SEC File No. 000-26844).
10.43*	Amended and Restated Executive Change of Control Agreement, dated February 1, 2013, between the Company and Allen Muhich. Incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 6, 2013 (SEC File No. 000-26844).
10.44*	Amended and Restated Executive Severance Agreement, dated February 1, 2013, between the Company and Allen Muhich. Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 6, 2013 (SEC File No. 000-26844).
10.45*	Executive Change of Control Agreement, dated August 2, 2012, between the Company and Fred Barden. Incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 2, 2012 (SEC File No. 000-26844).
10.46*	Amended and Restated Executive Severance Agreement, dated August 2, 2012, between the Company and Fred Barden. Incorporated by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 2, 2012 (SEC File No. 000-26844).
10.47*	Executive Change of Control Agreement, dated August 1, 2012, between the Company and Keate Despain. Incorporated by reference from Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 2, 2012 (SEC File No. 000-26844).
10.48*	Executive Severance Agreement, dated August 1, 2012, between the Company and Keate Despain. Incorporated by reference from Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 2, 2012 (SEC File No. 000-26844).

91

10.49*	Amended and Restated Executive Change of Control Agreement, dated August 3, 2012, between the Company and Amit Agarwal. Incorporated by reference from Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 2, 2012 (SEC File No. 000-26844).
10.50*	Amended and Restated Executive Severance Agreement, dated August 3, 2012, between the Company and Amit Agarwal. Incorporated by reference from Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 2, 2012 (SEC File No. 000-26844).
10.51*	Form of Indemnity Agreement for directors and officers of the Company. Incorporated by reference from Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, filed on March 2, 2007.
10.52*/**	Transition Agreement, dated January 10, 2014, between the Company and Amit Agarwal.
10.53*/**	Executive Change of Control Agreement, dated October 23, 2013, between the Company and Stephen T. Collins.
10.54*/**	Executive Severance Agreement, dated October 23, 2013, between the Company and Stephen T. Collins.
10.55	Form of Indemnification Agreement (for directors and the CEO/CFO). Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 14, 2011 (SEC File No. 000-26844).
10.56	Form of Indemnification Agreement (for certain executive officers). Incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 14, 2011 (SEC File No. 000-26844).
10.57	Dawson Creek II Lease, dated March 21, 1997, incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997, filed on August 13, 1997 (SEC File No. 000-26844).
10.58	Form of Subscription Agreement, dated June 20, 2012, by and between the Company and each participating holder. Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 26, 2012 (SEC File No. 000-26844).
10.59	Form of Registration Rights Agreement, dated June 29, 2012, by and between the Company and each participating holder. Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 2, 2012 (SEC File No. 000-26844).
10.60	Second Amended and Restated Loan and Security Agreement, dated July 29, 2013, between Radisys Corporation and Silicon Valley Bank. Incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 30, 2013 (SEC File No. 000-26844).
10.61	Amendment No. 1 to Second Amended and Restated Loan and Security Agreement, dated November 4, 2013, between Radisys Corporation and Silicon Valley Bank. Incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on November 4, 2013 (SEC File No. 000-26844).
10.62	Amendment No. 2 to Second Amended and Restated Loan and Security Agreement, dated February 10, 2014, between Radisys Corporation and Silicon Valley Bank. Incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 11, 2014 (SEC File No. 000-26844).
10.63*/**	Third Amended and Restated Loan and Security Agreement, dated March 14, 2014, between Radisys Corporation and Silicon Valley Bank.
12**	Computation of Ratio of Earnings to Fixed Charges.
21.1**	List of Subsidiaries.
23.1**	Consent of KPMG LLP.
31.1**	Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**	Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

92

32.1***	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2***	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Presentation Linkbase
101.DEF**	XBRL Taxonomy Definition Linkbase

*	This Exhibit constitutes a management contract or compensatory plan or arrangement.
**	Filed herewith.
***	Furnished herewith.

(b) See (a) (3) above.

(c) See (a) (2) above.

93

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RADISYS CORPORATION
By:	/s/ Brian Bronson
	Brian Bronson
	Chief Executive Officer and President

Dated: March 14, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 14, 2014.

Signature	Title
/s/ Brian Bronson	Chief Executive Officer, President, and Director
Brian Bronson	(Principal Executive Officer)
/s/ Allen Muhich	Chief Financial Officer, Vice President of Finance, and Secretary
Allen Muhich	(Principal Financial and Accounting Officer)
Directors:
/s/ C. Scott Gibson	Chairman of the Board and Director
C. Scott Gibson
/s/ Hubert de Pesquidoux	Director
Hubert de Pesquidoux
/s/ Kevin C. Melia	Director
Kevin C. Melia
/s/ Niel Ransom	Director
Niel Ransom
/s/ Lorene K. Steffes	Director
Lorene K. Steffes
/s/ Vincent H. Tobkin	Director
Vincent H. Tobkin

94

EXHIBIT INDEX

Exhibit No	Description
2.1	Amended and Restated Asset Purchase Agreement, dated September 12, 2007, by and between the Company and Intel Corporation. Incorporated by reference from Exhibit 2.1 to the Company’s Current Report on Form 8-K/A, filed on November 1, 2007 (SEC File No. 000-26844).
2.2	Transition Services Agreement, dated September 12, 2007, by and between the Company and Intel Corporation (portions of the exhibit have been omitted pursuant to a request for confidential treatment to the Commission). Incorporated by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2007, filed on November 8, 2007 (SEC File No. 000-26844).
2.3	Warranty Services Agreement, dated September 12, 2007, by and between the Company and Intel Corporation (portions of the exhibit have been omitted pursuant to a request for confidential treatment to the Commission). Incorporated by reference from Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2007, filed on November 8, 2007 (SEC File No. 000-26844).
2.4	Arrangement Agreement among the Company, Convedia Corporation and RadiSys Canada Inc., effective as of July 26, 2006. Incorporated by reference from Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on July 28, 2006 (SEC File No. 000-26844).
2.5	Agreement and Plan of Merger, dated May 2, 2011, by and among the Company, RadiSys Holdings, Inc., Continuous Computing Corporation and Shareholder Representative Services LLC. Incorporated by reference from Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on May 3, 2011 (SEC File No. 000-26844).
2.6	Amendment No. 1 to Agreement and Plan of Merger, dated June 22, 2011, by and among the Company, RadiSys Holdings, Inc., Continuous Computing Corporation and Shareholder Representative Services LLC. Incorporated by reference from Exhibit 2.2 to the Company’s Current Report on Form 8-K filed on July 11, 2011 (SEC File No. 000-26844).
3.1	Second Restated Articles of Incorporation and amendments thereto. Incorporated by reference from Exhibit 4.1 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060), as amended by the Articles of Amendment incorporated by reference from Exhibit 3.1 in the Company’s Current Report on Form 8-K filed on January 30, 2008 (SEC File No. 000-26844).
3.2	Amended and Restated Bylaws and amendments thereto. Incorporated by reference from Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, filed on August 3, 2012 (SEC File No. 000-26844).
4.1	Second Restated Articles of Incorporation and amendments thereto. See Exhibit 3.1.
4.2	Amended and Restated Bylaws and amendments thereto. See Exhibit 3.2.
4.3	Specimen Common Stock Certificate. Incorporated by reference from Exhibit 4.3 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
4.4	Indenture, dated February 12, 2008, by and between the Company and The Bank of New York Trust Company, N.A. Incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 12, 2008 (SEC File No. 000-26844).
4.5	First Supplemental Indenture, dated February 12, 2008, by and between the Company and The Bank of New York Trust Company, N.A. Incorporated by reference from Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on February 12, 2008 (SEC File No. 000-26844).
4.6	Form of Global Security for the 2.75% Convertible Senior Notes due 2013 (included in Exhibit 4.5).
4.7	Second Supplemental Indenture, dated June 29, 2012, by and between the Company and The Bank of New York Mellon Trust Company, N.A. Incorporated by reference from Exhibit 4.1 to the Company's Current Report on Form 8-K filed on July 2, 2012 (SEC File No. 000-26844).
4.8	Form of Global Security for the 4.50% Convertible Senior Notes due 2015 (included in Exhibit 4.7).
4.9	Form of Debt Securities Indenture. Incorporated by reference from Exhibit 4.5 to the Company’s Registration Statement on Form S-3, filed on October 26, 2010 (SEC File No. 333-170148).
10.1	Amended and Restated Asset Purchase Agreement, dated September 12, 2007, by and between the Company and Intel Corporation. See Exhibit 2.1.

95

10.2	Transition Services Agreement, dated September 12, 2007, by and between the Company and Intel Corporation. See Exhibit 2.2
10.3	Warranty Services Agreement, dated September 12, 2007, by and between the Company and Intel Corporation. See Exhibit 2.3
10.4*	RadiSys Corporation 1995 Stock Incentive Plan, as amended. Incorporated by reference from Exhibit (d)(1) to the Tender Offer Statement filed by the Company on Schedule TO-I, filed July 31, 2003 (SEC File No. 005-49160).
10.5*	Form of Notice of Stock Option Grant for the 1995 Stock Incentive Plan. Incorporated by reference from Exhibit (d)(3) to the Tender Offer Statement filed by the Company on Schedule TO-I, filed July 31, 2003 (SEC File No. 005-49160).
10.6*	Form of Restricted Stock Grant Agreement for the 1995 Stock Incentive Plan. Incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006, filed on May 9, 2006 (SEC File No. 000-26844).
10.7*	RadiSys Corporation 1996 Employee Stock Purchase Plan, as amended through June 26, 2012. Incorporated by reference from Appendix D to the Company’s Proxy Statement on Schedule 14A, filed on May 17, 2012 (SEC File No. 000-26844).
10.8*	RadiSys Corporation 2001 Nonqualified Stock Option Plan, as amended. Incorporated by reference from Exhibit (d)(2) to the Tender Offer Statement filed by the Company on Schedule TO-I, filed July 31, 2003 (SEC File No. 005-49160).
10.9*	Form of Notice of Stock Option Grant for the 2001 Nonqualified Stock Option Plan. Incorporated by reference from Exhibit (d)(4) to the Tender Offer Statement filed by the Company on Schedule TO-I, filed July 31, 2003 (SEC File No. 005-49160).
10.10*/**	Amended and Restated Radisys Corporation Deferred Compensation Plan, dated January 1, 2008.
10.11*/**	Amendment No. 1 to Amended and Restated Radisys Corporation Deferred Compensation Plan, effective January 1 2009.
10.12*/**	Amendment No. 2 to Amended and Restated Radisys Corporation Deferred Compensation Plan, effective January 1 2009.
10.13*/**	Amendment No. 3 to Amended and Restated Radisys Corporation Deferred Compensation Plan, effective January 1 2009.
10.14*	RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.4 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
10.15*	Form of Notice of Option Grant for United States employees for the RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.5 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
10.16*	Form of Notice of Option Grant for Canada employees for the RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.6 to the Company’s Registration Statement on Form S-8 filed on September 1, 2006 (SEC File No. 333-137060).
10.17*	Form of Notice of Option Grant for international employees for the RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.7 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
10.18*	Form of Notice of Option Grant for China employees for the RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.8 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
10.19*	Form of Restricted Stock Grant Agreement for the RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.9 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
10.20*	Form of Restricted Stock Unit Grant Agreement for the RadiSys Corporation Stock Plan for Convedia Employees. Incorporated by reference from Exhibit 4.10 to the Company’s Registration Statement on Form S-8, filed on September 1, 2006 (SEC File No. 333-137060).
10.21*	RadiSys Corporation 2007 Stock Plan, as amended through June 26, 2012. Incorporated by reference from Appendix C to the Company’s Proxy Statement on Schedule 14A, filed on May 17, 2012 (SEC File No. 000-26844).

96

10.22*	Form of Overlay Plan Award Agreement for Performance-Based Restricted Stock Units under the RadiSys Corporation 2007 Stock Plan. Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 10, 2012 (SEC File No. 000-26844).
10.23*	Form of Notice of Option Grant for United States employees for the RadiSys Corporation 2007 Stock Plan. Incorporated by reference from Exhibit 4.5 to the Company’s Registration Statement on Form S-8, filed on May 15, 2007 (SEC File No. 333-142968).
10.24*	Form of Notice of Option Grant for Canada employees for the RadiSys Corporation 2007 Stock Plan. Incorporated by reference from Exhibit 4.6 to the Company’s Registration Statement on Form S-8, filed on May 15, 2007 (SEC File No. 333-142968).
10.25*	Form of Notice of Option Grant for China employees for the RadiSys Corporation 2007 Stock Plan. Incorporated by reference from Exhibit 4.7 to the Company’s Registration Statement on Form S-8, filed on May 15, 2007 (SEC File No. 333-142968).
10.26*	Form of Notice of Option Grant for international employees for the RadiSys Corporation 2007 Stock Plan. Incorporated by reference from Exhibit 4.8 to the Company’s Registration Statement on Form S-8, filed on May 15, 2007 (SEC File No. 333-142968).
10.27*	Form of Restricted Stock Unit Grant Agreement for the RadiSys Corporation 2007 Stock Plan. Incorporated by reference from Exhibit 4.9 to the Company’s Registration Statement on Form S-8, filed on May 15, 2007 (SEC File No. 333-142968).
10.28*	RadiSys Corporation Long-Term Incentive Plan (as amended and restated). Incorporated by reference from Appendix C to the Company’s Proxy Statement on Schedule 14A, filed on July 6, 2010 (SEC File No. 000-26844).
10.29*	First Amendment to RadiSys Corporation Long-Term Incentive Plan (as amended and restated). Incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on September 10, 2012 (SEC File No. 000-26844).
10.30*	Form of LTIP Tranche #2 Award Agreement for Performance-Based Restricted Stock Units under the RadiSys Corporation Long-Term Incentive Plan (as amended and restated). Incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 10, 2012 (SEC File No. 000-26844).
10.31*	RadiSys Corporation Inducement Stock Plan for CCPU Employees. Incorporated by reference from Exhibit 4.4 to the Company’s Registration Statement on Form S-8, filed on May 3, 2011 (SEC File No. 333-173885).
10.32*	Form of Notice of Option Grant for United States employees for the RadiSys Corporation Inducement Stock Plan for CCPU Employees. Incorporated by reference from Exhibit 4.5 to the Company’s Registration Statement on Form S-8, filed on May 3, 2011 (SEC File No. 333-173885).
10.33*	Form of Notice of Option Grant for international employees for the RadiSys Corporation Inducement Stock Plan for CCPU Employees. Incorporated by reference from Exhibit 4.6 to the Company’s Registration Statement on Form S-8, filed on May 3, 2011 (SEC File No. 333-173885).
10.34*	Form of Restricted Stock Unit Grant Agreement for United States employees for the RadiSys Corporation Inducement Stock Plan for CCPU Employees. Incorporated by reference from Exhibit 4.7 to the Company’s Registration Statement on Form S-8, filed on May 3, 2011 (SEC File No. 333-173885).
10.35*	Form of Restricted Stock Unit Grant Agreement for international employees for the RadiSys Corporation Inducement Stock Plan for CCPU Employees. Incorporated by reference from Exhibit 4.8 to the Company’s Registration Statement on Form S-8, filed on May 3, 2011 (SEC File No. 333-173885).
10.36*	Sixth Amended and Restated Continuous Computing Corporation 1998 Stock Incentive Plan. Incorporated by reference from Exhibit 4.4 to the Company’s Registration Statement on Form S-8, filed on July 13, 2011 (SEC File No. 333-175510).
10.37*	Amendment to Sixth Amended and Restated Continuous Computing Corporation 1998 Stock Incentive Plan, dated June 23, 2011. Incorporated by reference from Exhibit 4.5 to the Company’s Registration Statement on Form S-8, filed on July 13, 2011 (SEC File No. 333-175510).
10.38*	Amendment to Sixth Amended and Restated Continuous Computing Corporation 1998 Stock Incentive Plan, dated July 6, 2011. Incorporated by reference from Exhibit 4.6 to the Company’s Registration Statement on Form S-8, filed on July 13, 2011 (SEC File No. 333-175510).

97

10.39*	Notice of Option Assumption and Conversion under the Sixth Amended and Restated Continuous Computing Corporation 1998 Stock Incentive Plan for U.S. employees. Incorporated by reference from Exhibit 4.7 to the Company’s Registration Statement on Form S-8, filed on July 13, 2011 (SEC File No. 333-175510).
10.40*	Notice of Option Assumption and Conversion under the Sixth Amended and Restated Continuous Computing Corporation 1998 Stock Incentive Plan for non-U.S. employees. Incorporated by reference from Exhibit 4.8 to the Company’s Registration Statement on Form S-8, filed on July 13, 2011 (SEC File No. 333-175510).
10.41*	Amended and Restated Executive Change of Control Agreement, dated October 1, 2012, between the Company and Brian Bronson. Incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 2, 2012 (SEC File No. 000-26844).
10.42*	Amended and Restated Executive Severance Agreement, dated October 1, 2012, between the Company and Brian Bronson. Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 2, 2012 (SEC File No. 000-26844).
10.43*	Amended and Restated Executive Change of Control Agreement, dated February 1, 2013, between the Company and Allen Muhich. Incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 6, 2013 (SEC File No. 000-26844).
10.44*	Amended and Restated Executive Severance Agreement, dated February 1, 2013, between the Company and Allen Muhich. Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 6, 2013 (SEC File No. 000-26844).
10.45*	Executive Change of Control Agreement, dated August 2, 2012, between the Company and Fred Barden. Incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 2, 2012 (SEC File No. 000-26844).
10.46*	Amended and Restated Executive Severance Agreement, dated August 2, 2012, between the Company and Fred Barden. Incorporated by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 2, 2012 (SEC File No. 000-26844).
10.47*	Executive Change of Control Agreement, dated August 1, 2012, between the Company and Keate Despain. Incorporated by reference from Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 2, 2012 (SEC File No. 000-26844).
10.48*	Executive Severance Agreement, dated August 1, 2012, between the Company and Keate Despain. Incorporated by reference from Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 2, 2012 (SEC File No. 000-26844).
10.49*	Amended and Restated Executive Change of Control Agreement, dated August 3, 2012, between the Company and Amit Agarwal. Incorporated by reference from Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 2, 2012 (SEC File No. 000-26844).
10.50*	Amended and Restated Executive Severance Agreement, dated August 3, 2012, between the Company and Amit Agarwal. Incorporated by reference from Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, filed on November 2, 2012 (SEC File No. 000-26844).
10.51*	Form of Indemnity Agreement for directors and officers of the Company. Incorporated by reference from Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, filed on March 2, 2007.
10.52*/**	Transition Agreement, dated January 10, 2014, between the Company and Amit Agarwal.
10.53*/**	Executive Change of Control Agreement, dated October 23, 2013, between the Company and Stephen T. Collins.
10.54*/**	Executive Severance Agreement, dated October 23, 2013, between the Company and Stephen T. Collins.
10.55*	Form of Indemnification Agreement (for directors and the CEO/CFO). Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 14, 2011 (SEC File No. 000-26844).
10.56	Form of Indemnification Agreement (for certain executive officers). Incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 14, 2011 (SEC File No. 000-26844).

98

10.57	Dawson Creek II Lease, dated March 21, 1997, incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997, filed on August 13, 1997 (SEC File No. 000-26844).
10.58	Form of Subscription Agreement, dated June 20, 2012, by and between the Company and each participating holder. Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 26, 2012 (SEC File No. 000-26844).
10.59	Form of Registration Rights Agreement, dated June 29, 2012, by and between the Company and each participating holder. Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 2, 2012 (SEC File No. 000-26844).
10.60	Second Amended and Restated Loan and Security Agreement, dated July 29, 2013, between Radisys Corporation and Silicon Valley Bank. Incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 30, 2013 (SEC File No. 000-26844).
10.61	Amendment No. 1 to Second Amended and Restated Loan and Security Agreement, dated November 4, 2013, between Radisys Corporation and Silicon Valley Bank. Incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on November 4, 2013 (SEC File No. 000-26844).
10.62	Amendment No. 2 to Second Amended and Restated Loan and Security Agreement, dated February 10, 2014, between Radisys Corporation and Silicon Valley Bank. Incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 11, 2014 (SEC File No. 000-26844).
10.63*/**	Third Amended and Restated Loan and Security Agreement, dated March 14, 2014, between Radisys Corporation and Silicon Valley Bank.
12**	Computation of Ratio of Earnings to Fixed Charges.
21.1**	List of Subsidiaries.
23.1**	Consent of KPMG LLP.
31.1**	Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**	Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1***	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2***	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Presentation Linkbase
101.DEF**	XBRL Taxonomy Definition Linkbase

*	This Exhibit constitutes a management contract or compensatory plan or arrangement.
**	Filed herewith.
***	Furnished herewith.

99

EX-10.10

RADISYS CORPORATION

DEFERRED COMPENSATION PLAN

As Amended and Restated Effective as of January 1, 2008

ARTICLE I-PURPOSE AND Effective Date...............................................................................................................1

ARTICLE II-DEFINITIONS.........................................................................................................................................1

2.1Account................................................................................................................................................1

2.2Administrative Committee...................................................................................................................1

2.3Beneficiary...........................................................................................................................................1

2.4Board....................................................................................................................................................2

2.5Bonus...................................................................................................................................................2

2.6Company..............................................................................................................................................2

2.7Compensation......................................................................................................................................2

2.8Deferral Commitment..........................................................................................................................2

2.9Deferral Period.....................................................................................................................................2

2.10Delay Period.........................................................................................................................................2

2.11Determination Date..............................................................................................................................2

2.12Director Fees........................................................................................................................................2

2.13Earnings Index.....................................................................................................................................3

2.14Elective Deferred Compensation.........................................................................................................3

2.15Employer..............................................................................................................................................3

2.16IRC.......................................................................................................................................................3

2.17Participant............................................................................................................................................3

2.18Participation Agreement......................................................................................................................3

2.19Plan......................................................................................................................................................3

2.20Rate of Return......................................................................................................................................3

2.21Retirement............................................................................................................................................4

2.22Salary....................................................................................................................................................4

2.23Sales Commissions..............................................................................................................................4

2.24Separation from Service......................................................................................................................4

2.25Stock....................................................................................................................................................4

2.26Unforeseen Emergency........................................................................................................................4

ARTICLE III-PARTICIPATION AND DEFERRAL COMMITMENT........................................................................5

3.1Eligibility and Participation.................................................................................................................5

3.2Form of Deferral..................................................................................................................................5

3.3Limitations on Deferral Commitments................................................................................................6

ARTICLE IV-DEFERRED COMPENSATION ACCOUNTS......................................................................................6

4.1Accounts..............................................................................................................................................6

4.2Elective Deferred Compensation.........................................................................................................6

4.3Matching Contribution.........................................................................................................................6

4.4Allocation of Elective Deferred Compensation...................................................................................7

4.5Determination of Accounts..................................................................................................................7

4.6Vesting of Accounts.............................................................................................................................7

4.7Statement of Accounts.........................................................................................................................7

ARTICLE V-PLAN BENEFITS....................................................................................................................................7

5.1Distributions Prior to Separation from Service....................................................................................7

5.2Distributions Following Separation from Service...............................................................................8

5.3Change in Form of Payment................................................................................................................9

5.4Benefit Commencement......................................................................................................................9

5.5Withholding for Taxes..........................................................................................................................9

5.6Valuation and Settlement.....................................................................................................................9

5.7Payment to Guardian............................................................................................................................9

ARTICLE VI-BENEFICIARY DESIGNATION.........................................................................................................10

6.1Beneficiary Designation.....................................................................................................................10

6.2Changing Beneficiary.........................................................................................................................10

6.3No Beneficiary Designation...............................................................................................................10

6.4Effect of Payment..............................................................................................................................10

ARTICLE VII-ADMINISTRATION...........................................................................................................................10

7.1Committee Duties..............................................................................................................................10

7.2Agents................................................................................................................................................11

7.3Binding Effect of Decisions...............................................................................................................11

7.4Indemnity of Committee....................................................................................................................11

ARTICLE VIII-CLAIMS PROCEDURE....................................................................................................................11

8.1Claims................................................................................................................................................11

8.2Appeal Procedures.............................................................................................................................12

ARTICLE IX-AMENDMENT AND TERMINATION OF PLAN.............................................................................12

9.1Amendment........................................................................................................................................12

9.2Company’s Right to Terminate..........................................................................................................13

ARTICLE X-MISCELLANEOUS..............................................................................................................................13

10.1Unfunded Plan...................................................................................................................................13

10.2Unsecured General Creditor...............................................................................................................14

10.3Trust Fund..........................................................................................................................................14

10.4Nonassignability.................................................................................................................................14

10.5Not a Contract of Employment..........................................................................................................14

10.6Protective Provisions.........................................................................................................................14

10.7Section 409A Compliance..................................................................................................................14

10.8Governing Law...................................................................................................................................15

10.9Validity...............................................................................................................................................15

10.10Notice..............................................................................................................................................................15

10.11Successors.......................................................................................................................................................15

RADISYS CORPORATION

DEFERRED COMPENSATION PLAN

ARTICLE I-PURPOSE AND EFFECTIVE DATE

The purpose of this Deferred Compensation Plan is to provide current tax planning opportunities as well as supplemental funds upon the retirement or death of certain employees and Board members of Employer. It is intended that the Plan will aid in attracting and retaining employees of exceptional ability by providing them with these benefits. The Plan was established by the Company effective as of January 1, 2001.

As of January 1, 2008 the Plan document is amended and restated for the purpose of permitting deferrals of compensation earned and vested after December 31, 2004 and any amounts credited thereon, including pursuant to Article IV. All amounts deferred under the Plan prior to January 1, 2005, that were earned and vested prior to January 1, 2005, and any amounts credited thereon (including pursuant to Article IV), shall be governed by the terms of the Plan as in effect on October 3, 2004 and nothing in this amended and restated Plan document shall affect deferred amounts under the Plan that were earned and vested prior to January 1, 2005 and any amounts credited thereon. It is intended that all amounts deferred under the Plan that were earned and vested prior to January 1, 2005, and any amounts credited thereon, shall be grandfathered from the application of IRC Section 409A. The determination of whether amounts deferred under the Plan, or any amounts credited thereon, were earned and vested prior to January 1, 2005 shall be made in accordance with IRC Section 409A and the guidance and Treasury regulations issued thereunder.

ARTICLE II-DEFINITIONS

For the purposes of this Plan, the following terms shall have the meanings indicated, unless the context clearly indicates otherwise:

2.1Account

“Account” means the device used by Employer to measure and determine the amounts to be paid to a Participant under the Plan. Separate subaccounts may be maintained to properly reflect the Participant’s balance and earnings thereon. A Participant’s Account shall not constitute or be treated as a trust fund of any kind.

2.2Administrative Committee

“Administrative Committee” means the committee appointed to administer the Plan pursuant to Article VII.

2.3Beneficiary

“Beneficiary” means the person, persons or entity entitled under Article VI to receive any Plan benefits payable after a Participant’s death.

2.4Board

“Board” means the Board of Directors of the Company.

2.5Bonus

“Bonus” means any incentive compensation (including executive incentive compensation and MBO bonus payments) that is payable to a Participant in addition to the Participant’s Salary. Bonus does not include ad hoc or unforeseeable special incentive awards.

2.6Company

“Company” means RadiSys Corporation, an Oregon corporation, or any successor to the business thereof.

2.7Compensation

“Compensation” means the Salary, Director Fees, Bonus, and Sales Commissions that the Participant earns for services rendered to the Company.

2.8Deferral Commitment

“Deferral Commitment” means an election to defer Compensation made by a Participant pursuant to Article III and for which a separate Participation Agreement has been submitted by the Participant to the Administrative Committee.

2.9Deferral Period

“Deferral Period” means a calendar year.

2.10Delay Period

“Delay Period” means the period from the Participant’s Separation from Service until the earlier to occur of the Participant’s death or the date that is six months and one day following the Participant’s Separation from Service.

2.11Determination Date

“Determination Date” means the last day of each calendar month.

2.12Director Fees

“Director Fees” means all Board and committee meeting fees payable to a Participant (before reduction for amounts deferred under the Plan). Director Fees do not include expenses, reimbursements, or any form of noncash compensation or benefits.

2.13Earnings Index

“Earnings Index” means a portfolio or fund selected by the Administrative Committee from time to time to be used as an index in calculating Rate of Return.

2.14Elective Deferred Compensation

“Elective Deferred Compensation” means the amount of Compensation that a Participant elects to defer pursuant to a Deferral Commitment.

2.15Employer

“Employer” means the Company or any successor to the business thereof, and any affiliated or subsidiary corporations designated by the Administrative Committee.

2.16IRC

“IRC” means the Internal Revenue Code of 1986, as amended.

2.17Participant

“Participant” means any eligible individual who has elected to defer Compensation under this Plan.

2.18Participation Agreement

“Participation Agreement” means the agreement submitted by a Participant (including the Benefit Payment Election Form) to the Administrative Committee prior to the beginning of the Deferral Period, with respect to a Deferral Commitment made for such Deferral Period.

2.19Plan

“Plan” means this RadiSys Corporation Deferred Compensation Plan, as amended from time to time.

2.20Rate of Return

“Rate of Return” means the rate used to determine the monthly adjustment for earnings and losses to a Participant’s Account under Article IV. Such rate shall be determined by the Administrative Committee based upon the net performance of the Earnings Indices selected by the Participant.

2.21Retirement

“Retirement” means a Separation from Service, in which a Participant’s employment with Employer is voluntarily terminated by the Participant for a reason other than death, or a Participant’s Board Service is terminated, on or after the earlier to occur of the Participant’s attainment of age fifty (50) or completion of five (5) years of service.

2.22Salary

“Salary” means the employee’s base salary for the Deferral Period from Employer, prior to reduction for elective deferrals under IRC Sections 402(g)(3), 125 and 132(f)(4), employment tax deductions, wage withholding and any other payroll deduction. Salary excludes any other form of compensation such as restricted stock, proceeds from stock options or stock appreciation rights, severance payments, moving expenses, and car or other special allowance.

2.23Sales Commissions

“Sales Commissions” means any sales commissions, as defined in Treasury Regulation Section 1.409A-2(a)(12)(i), earned by an employee from Employer as a result of sales that occur during the Deferral Period.

2.24Separation from Service

“Separation from Service” means a Participant’s termination of employment with Employer or separation from the Board that qualifies as a Separation from Service for purposes of IRC Section 409A and the guidance and Treasury regulations issued thereunder.

2.25Stock

“Stock” means RadiSys Corporation Common Stock.

2.26Unforeseen Emergency

“Unforeseen Emergency” means a severe financial hardship within the meaning of IRC Section 409A to the Participant resulting from a sudden and unexpected illness or accident of the Participant, the Participant’s spouse or

Beneficiary, or of a dependent (as defined in IRC Section 152, without regard to IRC Section 152(b)(1), (b)(2) and (d)(1)(B)) of the Participant, loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster), or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The imminent foreclosure of or eviction from the Participant’s primary residence may constitute an Unforeseen Emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the costs of prescription drug medication, may constitute an Unforeseen Emergency. Finally, the need to pay for the funeral expenses of the Participant’s spouse or Beneficiary, or of a dependent (as defined in IRC Section 152, without regard to IRC Section 152(b)(1), (b)(2), and (d)(1)(B)) of the Participant may also constitute an Unforeseen Emergency. The circumstances that will constitute an Unforeseen Emergency will depend upon the facts of each case, but in any case, payment may not be made to the extent that such hardship is or may be relieved:

(a)Through reimbursement or compensation by insurance or otherwise,

(b)By liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or

(c)By cessation of deferrals under the Plan.

ARTICLE III-PARTICIPATION AND DEFERRAL COMMITMENTS

3.1Eligibility and Participation

(a)Eligibility. Eligibility to participate in the Plan is limited to Board members and executives who are Vice Presidents, Directors, Director Equivalents, or as selected by the Administrative Committee.

(b)Participation. Eligible employees and Board members may elect to participate in the Plan with respect to any Deferral Period by submitting a Participation Agreement to the Administrative Committee by December 31 of the calendar year immediately preceding the Deferral Period.

(c)Part-Year Participation. When an employee or Board member first becomes eligible to defer Compensation during a Deferral Period, a Participation Agreement must be submitted to the Administrative Committee no later than thirty (30) calendar days following notification to the employee or Board member of eligibility to defer, and such Participation Agreement shall be effective only with regard to Compensation paid for services to be performed following the submission of the Participation Agreement to the Administrative Committee.

3.2Form of Deferral

A Participant may elect Deferral Commitments in the Participation Agreement as follows:

(a)Salary Deferral Commitment. A Salary Deferral Commitment shall be related to the Salary earned by a Participant during the Deferral Period. The amount to be deferred shall be stated as a flat percentage or dollar amount.

(b)Bonus Deferral Commitment. A Bonus Deferral Commitment shall be related to any Bonus earned by the Participant with respect to any performance period beginning in the Deferral Period. The amount to be deferred shall be stated as a flat percentage or dollar amount. Bonus is prorated for purposes of applying the initial Bonus deferral election for Participants who enter the Plan mid-year. The pro-rata portion of any Bonus earned during the first 30 calendar days of Plan eligibility will not be included in the amount subject to the Participant’s Bonus deferral election.

(c)Sales Commission Deferral Commitment. A Sales Commission Deferral Commitment shall be related to any Sales Commissions earned by the Participant during the Deferral Period based on sales that occur during the Deferral Period. The amount to be deferred shall be stated as a flat percentage or dollar amount.

(d)Director Fees Deferral Commitment. A Director Fees Deferral Commitment shall relate to the Director Fees earned by a Participant during the Deferral Period. The amount to be deferred shall be stated as a flat percentage or dollar amount.

All Deferral Commitment elections shall be irrevocable as of December 31 of the year preceding the Deferral Period in which the Compensation sought to be deferred is to be earned.

3.3Limitations on Deferral Commitments

The following limitations shall apply to Deferral Commitments:

(a)Minimum. The minimum Salary, Bonus, and Sales Commissions deferral amount shall be five thousand dollars ($5,000) per Deferral Period, and the minimum Director Fees deferral amount shall be two thousand four hundred dollars ($2,400) per Deferral Period. When a Participant elects to defer a percentage of Salary, Bonus, Sales Commissions or Director Fees, the amount deferred must equal or exceed these minimum annual deferral amounts. The minimum deferral amounts are pro-rated for eligible new hires, new Board members, or newly promoted employees who become Participants after the beginning of a Deferral Period.

(b)Maximum. The maximum deferral amount shall be ninety percent (90%) of Salary and one hundred percent (100%) of Bonus, Sales Commissions or Director Fees. Notwithstanding the foregoing, effective as of January 1, 2009, the maximum deferral amount shall be seventy-five percent (75%) of Salary and seventy-five percent (75%) of Bonus, Sales Commissions or Director Fees.

(c)Changes in Minimum or Maximum. The Administrative Committee may change the minimum or maximum deferral amounts from time to time by giving written notice to all Participants. No such change may affect a Deferral Commitment made prior to the Administrative Committee’s action.

ARTICLE IV-DEFERRED COMPENSATION ACCOUNTS

4.1Accounts

For record keeping purposes only, an Account shall be maintained for each Participant. Separate subaccounts shall be maintained to the extent necessary to properly reflect the Participant’s election of Earnings Indices and total vested or nonvested Account balances. The Account shall be a bookkeeping device utilized for the sole purpose of determining the benefits payable under the Plan and shall not constitute a separate fund of assets.

4.2Elective Deferred Compensation

A Participant’s Elective Deferred Compensation shall be credited to the Participant’s Account at the same time the corresponding nondeferred portion of the Compensation becomes or would have become payable.

4.3Matching Contribution

If a Participant defers the maximum elective percentage into the qualified 401(k) Savings Plan, Employer shall credit a matching contribution to the Participant’s Account equal to any matching contribution which would have been credited to the Participant’s 401(k) Savings Plan but for the Participant’s participation in this Plan.

4.4Allocation of Elective Deferred Compensation

(a)At the time a Participant completes a Deferral Commitment for a Deferral Period, the Participant shall also select the Investment Index or Indices in which the Participant wishes to have the deferrals deemed invested. The Participant may select any combination of Investment Indices as long as at least five percent (5%) of actual deferrals, in whole percentages, is credited to each of the Investment Indices selected.

(b)A Participant may change the amounts allocated to the Investment Indices effective the last business day of the month in which the authorization was submitted, provided that the Participant submitted notice of the change on or before the last business day of such month. The change may apply to prospective deferrals only or may include current account balances. However, any amount allocated to the Participant’s Stock subaccount may not be reallocated.

(c)Changes in Notice and Frequency. The Administrative Committee may change the notice requirement and frequency by which Participants can reallocate their Accounts from time to time by giving written notice to all Participants.

4.5Determination of Accounts

Each Participant’s Account shall be adjusted on a daily basis. Each Participant’s Account as of any day shall consist of the balance of the Participant’s Account as of the immediately preceding day, minus the amount of any distributions made since the immediately preceding day, plus or minus the Rate of Return, as applicable, plus the Participant’s Elective Deferred Compensation and matching contributions under Section 4.3 credited since the immediately preceding day.

4.6Vesting of Accounts

Each Participant shall be one hundred percent (100%) vested at all times in the Participant’s Elective Deferred Compensation as adjusted for earnings and losses thereon. Any matching contributions under Section 4.3 shall vest pursuant to the vesting schedule of the underlying qualified plan.

4.7Statement of Accounts

The Administrative Committee shall give to each Participant a statement setting forth the balances in the Participant’s Account on a quarterly basis and at such other times as may be determined by the Administrative Committee.

ARTICLE V-PLAN BENEFITS

5.1Distributions Prior to Separation from Service

A Participant’s Account may be distributed to the Participant prior to Separation from Service as follows:

(a)Scheduled Early Withdrawals. A Participant may elect in a Participation Agreement to withdraw all or any portion of the vested amount deferred and vested matching contributions thereon, if any, as adjusted for earnings and losses, pursuant to that Participation Agreement in two (2) to five (5) substantially equal annual installments or a single lump sum commencing the first January 1 and on each subsequent January 1 following the date specified in the election, until fully paid. Such date shall not be sooner than two (2) years after the date the Deferral Period commences.

(b)Severe FinancialHardship Withdrawals. A Participant may request a hardship withdrawal due to an Unforeseen Emergency. Upon a finding that a Participant has suffered an Unforeseen Emergency, the Administrative Committee may, in its sole discretion, make distributions from the Participant’s vested Account. The amount of such a withdrawal shall be limited to the amount the Administrative Committee determines to be reasonably necessary to meet the Participant’s needs resulting

from the Unforeseen Emergency. If any payment is made due to Unforeseen Emergency, any existing Deferral Commitment shall be null and void and the Participant shall not be permitted to make any Deferral Commitment for twelve (12) months. Any hardship withdrawal distribution shall be payable in a single lump sum within thirty (30) calendar days after the Administrative Committee approves such payment.

5.2Distributions Following Separation from Service

(a)Retirement Benefit

(i)Benefit Amount. If a Participant has a Separation from Service due to Retirement, Employer shall pay to the Participant a benefit equal to the vested balance in the Participant’s Account.

(ii)Form of Benefit. Benefits under this Section 5.2(a) shall be paid in the form selected by the Participant in the Participation Agreement with respect to each Deferral Period. Optional forms of payment include a lump-sum payment or substantially equal annual installments of the Account amortized over a period of up to fifteen (15) years. The initial payment shall be within sixty (60) calendar days of Separation from Service and all subsequent payments, if any, shall be in January of each subsequent year following the date of the initial payment, until fully paid. As of each January 1, the amount to be distributed in installment payments for that year shall be determined by dividing the Participant’s Account balance as of the preceding December 31 by the remainder of the installment periods.

(iii)Small Accounts. Notwithstanding Section 5.2(a)(ii), if a Participant’s Account balance is less than fifty thousand dollars ($50,000) on the Retirement date, the Administrative Committee shall pay the benefit under Section 5.2(a) in a lump sum, provided that such payment results in the termination and liquidation of the entirety of such Participant’s interest under the Plan, including all agreements, methods, programs or other arrangements which would be aggregated with the Plan under Treasury Regulation Section 1.409A-1(c)(2).

(b)Death Benefit

(i)Preretirement. If a Participant has a Separation from Service due to death, Employer shall pay to the Participant’s Beneficiary a lump-sum benefit equal to the vested balance in the Participant’s Account.

(ii)Postretirement. If a Participant dies following the Participant’s Retirement, Employer shall continue to pay any remaining benefit payments to the Participant’s Beneficiary in the form previously elected by the Participant for Retirement benefits.

(c)Termination Benefit. If a Participant has a Separation from Service for any reason other than Retirement or death, Employer shall pay to the Participant a lump-sum benefit equal to the vested balance in the Participant’s Account.

(d)Form of Payment. All balances in a Participant’s Stock subaccount shall be paid in Stock. All other Participant subaccounts shall be paid in cash.

5.3Change in Form of Payment

The distribution election made for the Deferral Period at the time of enrollment for such Deferral Period shall be irrevocable. Notwithstanding the foregoing, such Participant may elect on or prior to December 31, 2008 to change their distribution election under Section 5.1(a) or 5.2(a)(ii). Such election may not modify any amount payable within the Deferral Period in which such election is made.

5.4Benefit Commencement

Benefits shall commence as soon as practical after Separation from Service but in no case more than sixty (60) calendar days after Separation from Service. Notwithstanding the foregoing, if a Participant is a “specified employee” for purposes of IRC Section 409A, distribution on account of Separation from Service shall be delayed until the expiration of the Delay Period. Upon the expiration of the Delay Period, the payment delayed pursuant to this Section 5.4 shall be paid to the Participant, and any remaining installment payments due under Section 5.2 shall be payable in accordance with their original payment schedule.

5.5Withholding for Taxes

To the extent required by the law in effect at the time payments are made, Employer shall withhold from payments made hereunder any taxes required to be withheld by the federal or any state or local government. A Beneficiary, however, may elect not to have withholding of federal income tax pursuant to IRC Section 3405, or any successor provision thereto.

5.6Valuation and Settlement

The amount of a lump-sum payment and any installment payment shall be based on the value of the Participant’s vested Account balance on the Determination Date immediately preceding the lump-sum payment or installment payment.

5.7Payment to Guardian

The Administrative Committee may direct payment to the duly appointed guardian, conservator, or other similar legal representative of a Participant or Beneficiary to whom payment is due. In the absence of such a legal representative, the Administrative Committee may, in it sole and absolute discretion, make payment to a person having the care and custody of a minor, incompetent or person incapable of handling the disposition of property upon proof satisfactory to the Administrative Committee of incompetency, status as a minor, or incapacity. Such distribution shall completely discharge the Administrative Committee from all liability with respect to such benefit.

5.8Prohibition on Acceleration of Payments

The time or schedule of any payment or amount subject to IRC Section 409A scheduled to be paid pursuant to the terms of the Plan may not be accelerated except as otherwise permitted under IRC Section 409A and the guidance and Treasury regulations issued thereunder, including, without limitation, an acceleration of payment in accordance with Treasury Regulation Section 1.409A-3(j)(v)(vi) to pay the Federal Insurance Contributions Act tax or the Railroad Retirement Act tax or an acceleration of payment in accordance with Treasury Regulation Section 1.409A-3(j)(v)(xi) to pay state, local, or foreign tax obligations.

ARTICLE VI-BENEFICIARY DESIGNATION

6.1Beneficiary Designation

Each Participant shall have the right, at any time, to designate a Beneficiary (both primary as well as contingent) to whom benefits under this Plan shall be paid if a Participant dies prior to complete distribution to the Participant of the benefits due under the Plan. Each Beneficiary designation shall be in a written form prescribed by the Administrative Committee, and will be effective only when filed with the Administrative Committee during the Participant’s lifetime.

6.2Changing Beneficiary

Any Beneficiary designation may be changed by a Participant without the consent of the previously named Beneficiary by the filing of a new Beneficiary designation with the Administrative Committee. The filing of a new Beneficiary designation shall cancel all Beneficiary designations previously filed. If a Participant’s Compensation is community property, any Beneficiary designation shall be valid or effective only as permitted under applicable law.

6.3No Beneficiary Designation

In the absence of an effective Beneficiary designation, or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, the Participant’s designated Beneficiary shall be deemed to be the Participant’s estate.

6.4Effect of Payment

Payment to the Beneficiary shall completely discharge Employer’s obligations under this Plan.

ARTICLE VII-ADMINISTRATION

7.1Committee Duties

The Plan shall be administered by an Administrative Committee consisting of three (3) members as may be appointed from time to time by the Board or the Chief Executive Officer of the Company. The Administrative Committee shall have the authority, in its sole discretion, to interpret and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including determination of eligibility and interpretations of the Plan, as may arise in such administration. A majority vote of the Administrative Committee members in office at the time of the vote shall control any decision. The required majority action may be taken either by a vote at a meeting or without a meeting by a signed memorandum. Meetings may be conducted by telephone conference call. The Administrative Committee may, by majority action, delegate to one or more of its members the authority to execute and deliver in the name of the Administrative Committee all communications and documents which the Administrative Committee is required or authorized to provide under this Plan. Any party shall accept and rely upon any document executed in the name of the Administrative Committee. Members of the Administrative Committee may be Participants under this Plan.

7.2Agents

The Administrative Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Company.

7.3Binding Effect of Decisions

The decision or action of the Administrative Committee with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

7.4Indemnity of Committee

The Company shall indemnify and hold harmless the members of the Administrative Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to this Plan on account of such person’s service on the Administrative Committee, except in the case of gross negligence or willful misconduct.

ARTICLE VIII-CLAIMS PROCEDURE

8.1Claims

Any person claiming a benefit, requesting an interpretation or ruling under the Plan, or requesting information under the Plan shall present the request in writing to the Administrative Committee. The claimant shall be notified in writing of any adverse decision with respect to his claim within ninety (90) calendar days after its submission. The notice shall be written in a manner calculated to be understood by the claimant and shall include:

(a)The reason for denial, with specific reference to the Plan provisions on which the denial is based.

(b)A description of any additional material or information required and an explanation of why it is necessary.

(c)An explanation of the Plan’s claim review procedure.

(d)A statement of the claimant’s right to bring civil action under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

If special circumstances require an extension of time for processing the initial claim, a written notice of the extension and the reason therefore shall be furnished to the claimant before the end of the initial ninety (90) calendar day period. In no event shall such extension exceed ninety (90) calendar days.

8.2Appeal Procedures

In the event a claim for benefit is denied, the claimant or his duly authorized representative, at the claimant’s expense, may appeal the denial to the Administrative Committee within sixty (60) days of the receipt of written notice of denial. In pursuing such appeal, the claimant or his duly authorized representative may:

(a)request in writing that the Administrative Committee review the denial;

(b)review all relevant documents, records, and other information relevant to the claim; and

(c)submit issues and comments in writing.

The decision on review shall be made within sixty (60) calendar days of receipt of the request for review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than one hundred twenty (120) calendar days after receipt of a request for review. If such an extension of time is required, written notice of the extension shall be furnished to the claimant before the end of the original sixty (60) calendar day period which explains the reasons for the extension and the date a decision is expected. The decision on review shall be written in a manner calculated to be understood by the claimant, and shall include specific references to the pertinent Plan provisions on which such denial is based, a statement that claimants can receive free of charge copies of all documents, records, and other information relevant to the claim; a statement describing the claimant’s right to bring civil action under ERISA; and a description of voluntary appeals procedures, if any, offered by the Plan. All decisions on review shall be final and bind all parties concerned.

ARTICLE IX-AMENDMENT AND TERMINATION OF PLAN

9.1Amendment

(a)The Company may amend the Plan at any time and from time to time by written instrument. Except as provided in (b) below, the power to amend may be executed only by the Board.

(b)The Administrative Committee may adopt any technical, clerical, conforming or clarifying amendment or other change, provided:

(i)The Administrative Committee deems it necessary or advisable to:

(A)Correct any defect, supply any omission or reconcile any inconsistency in order to carry out the intent and purposes of the Plan;

(B)Maintain the Plan’s status as a “top-hat” plan for purposes of ERISA; or

(C)Facilitate the administration of the Plan;

(ii)The amendment or change does not, without the consent of the Board, materially increase the cost to Employer of maintaining the Plan; and

(iii)Any amendment adopted by the Administrative Committee shall be in writing, signed by a member of the Administrative Committee and promptly reported to the Board.

(c)To the extent permitted under subsection (e) below, amendments may have an immediate, prospective or retroactive effective date.

(d)Amendments do not require the consent of any Participant or Beneficiary.

(e)Amendments are subject to the following limitations:

(i)Preservation of Account Balance. No amendment shall reduce the balance of any Account, except for adjustment pursuant to Section 4.5, as of the date notice of the amendment is given to Participants.

(ii)Changes in Earnings Rate. If the Plan is amended so that the Earnings Index is not used to calculate the Rate of Return, the rate used to determine the monthly adjustment for earnings and losses to be credited to the Participant’s Account shall not be less than the monthly equivalent of the average nominal annual yield on three (3) month Treasury bills for the applicable Determination Period.

9.2Company’s Right to Terminate

The Board may at any time terminate the Plan if, in its judgment, the tax, accounting or other effects of the continuance of the Plan, or potential payments thereunder would not be in the best interests of Employer. The Board may terminate the Plan by instructing the Administrative Committee not to accept any additional Deferral Commitments. If such a termination occurs, the Plan shall continue to operate and be effective with regard to Deferral Commitments entered into prior to the effective date of such partial termination. Participant Accounts shall continue to be distributed in the time and form as elected in Sections 5.1 and 5.2.

ARTICLE X-MISCELLANEOUS

10.1Unfunded Plan

This plan is an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly-compensated employees” within the meaning of Sections 201, 301 and 401 of ERISA, and therefore is intended to be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.

10.2Unsecured General Creditor

Participants and Beneficiaries shall be unsecured general creditors, with no secured or preferential right to any assets of Employer or any other party for payment of benefits under this Plan. Any life insurance policies, annuity contracts or other property purchased by Employer in connection with this Plan shall remain its general, unpledged and unrestricted assets. Employer’s obligation under the Plan shall be an unfunded and unsecured promise to pay money in the future.

10.3Trust Fund

Employer has established an irrevocable grantor trust, with such trustees as Employer shall approve from time to time, for the purpose of providing for the payment of benefits owed under the Plan in the event Employer does not make such payment of benefits when due. Although the trust is irrevocable, its assets shall be held for payment of Employer’s general creditors in the event of insolvency or bankruptcy. Employer shall contribute to the trust amounts deferred if such amounts are needed to make the assets in the trust at least equal to the Plan’s liabilities. To the extent any benefits provided under the Plan are paid from any such trust, Employer shall have no further obligation to pay them. If not paid from the trust, such benefits shall remain the obligation of Employer.

10.4Nonassignability

Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

10.5Not a Contract of Employment

This Plan shall not constitute a contract of employment between Employer and the Participant. Nothing in this Plan shall give a Participant the right to be retained in the service of Employer or to interfere with the right of Employer to discipline or discharge a Participant at any time.

10.6Protective Provisions

A Participant will cooperate with Employer by furnishing any and all information requested by Employer in order to facilitate the payment of benefits hereunder, and by such action as may be requested by Employer.

10.7Section 409A Compliance

The Plan and the benefits provided hereunder are intended to comply with IRC Section 409A and the guidance and Treasury regulations issued thereunder, to the extent applicable thereto. Notwithstanding any provision of the Plan to the contrary, the Plan shall be interpreted and construed consistent with this intent. Notwithstanding the foregoing, Employer shall not be required to assume any increased economic burden in connection therewith. Although Employer and the Administrative Committee intend to administer the Plan so that it will comply with the requirements of IRC Section 409A, neither Employer nor the Administrative Committee represents or warrants that the Plan will comply with IRC Section 409A or any other provision of federal, state, local, or non-United States law. In no event shall Employer, its subsidiaries, or any director, officer, employee or adviser of Employer or its subsidiaries be liable for any tax, interest, or penalty incurred by a Participant or Beneficiary as a result of participation in the Plan, and Employer and its subsidiaries shall have no obligation to indemnify or otherwise protect any Participant or Beneficiary from the obligation to pay any taxes pursuant to IRC Section 409A.

10.8Governing Law

The provisions of this Plan shall be construed and interpreted according to the laws of the State of Oregon, except as preempted by federal law.

10.9Validity

In case any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted herein.

10.10Notice

Any notice required or permitted under the Plan shall be sufficient if in writing and hand delivered or sent by registered or certified mail. Such notice shall be deemed as given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Mailed notice to the Administrative Committee shall be directed to the Company’s address. Mailed notice to a Participant or Beneficiary shall be directed to the individual’s last known address in Employer’s records.

10.11Successors

The provisions of this Plan shall bind and inure to the benefit of Employer and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of Employer, and successors of any such corporation or other business entity.

	RADISYS CORPORATION
By:
	Its:
Dated:

EX-10.11

RADISYS CORPORATION

DEFERRED COMPENSATION PLAN

ADMINISTRATIVE COMMITTEE RESOLUTION

TO ADOPT

AMENDMENT NO. 1

The following Resolution was adopted by the Administrative Committee of the RadiSys Corporation Deferred Compensation Plan:

WHEREAS, RadiSys Corporation (the “Company”) adopted the RadiSys Corporation Deferred Compensation Plan (the “Plan”), amended and restated effective January 1, 2008; and

WHEREAS, Section 9.1(b) of the Plan provides the Administrative Committee may adopt any technical, clerical, conforming or clarifying amendment or other change that it deems it necessary or advisable; and

WHEREAS, the Administrative Committee deems it advisable to remove inoperative language from the Plan’s definition of Retirement in order to clarify the intended meaning of Retirement.

NOW, THEREFORE, the Plan is hereby amended as follows:

1. Sections 2.21 of the Plan is amended to read as follows:

"Retirement" means a Separation from Service for a reason other than death on or after the earlier to occur of the Participant's attainment of age fifty (50) or completion of five (5) years of service.

SIGNATURE

This Amendment shall be effective January 1, 2009.

		RADISYS CORPORATION
Date:	August 26, 2009	By:	/s/ Cheryl Spencer
			Cheryl Spencer
			Sr. Director of Human Resources
		Its:	Authorized Member of the Administrative Committee

EX-10.12

RADISYS CORPORATION

DEFERRED COMPENSATION PLAN

ADMINISTRATIVE COMMITTEE RESOLUTION

TO ADOPT

AMENDMENT NO. 2

The following Resolution was adopted by the Administrative Committee of the RadiSys Corporation Deferred Compensation Plan:

WHEREAS, RadiSys Corporation (the “Company”) maintains the RadiSys Corporation Deferred Compensation Plan (the “Plan”), as amended and restated effective January 1, 2008;

WHEREAS, Section 9.1(b) of the Plan provides that the Administrative Committee may adopt certain technical, clerical, conforming or clarifying amendments or other changes to the Plan that it deems necessary or advisable; and

WHEREAS, the Administrative Committee deems it advisable to formalize the amendment to the Plan with respect to the maximum deferral percentage for director fees made by its acceptance of a director fees deferral commitment effective as of January 1, 2009, in order to reconcile an inconsistency between the Plan document and other operative documents, including various participant materials.

NOW, THEREFORE, the second sentence of Section 3.3(b) of the Plan is amended to read as follows:

“Notwithstanding the foregoing, effective as of January 1, 2009, the maximum deferral amount shall be seventy-five percent (75%) of Salary, Bonus or Sales Commissions and one hundred percent (100%) of Director Fees.”

SIGNATURE

This Amendment shall be effective January 1, 2009.

		RADISYS CORPORATION
Date:	November 11, 2009	By:	/s/ Cheryl Spencer
			Cheryl Spencer
			Sr. Director of Human Resources
		Its:	Authorized Member of the Administrative Committee

EX-10.13

RADISYS CORPORATION

DEFERRED COMPENSATION PLAN

ADMINISTRATIVE COMMITTEE RESOLUTION

TO ADOPT

AMENDMENT NO. 3

The following Resolution was adopted by the Administrative Committee of the RadiSys Corporation Deferred Compensation Plan:

WHEREAS, RadiSys Corporation (the “Company”) adopted the RadiSys Corporation Deferred Compensation Plan (the “Plan”), amended and restated effective January 1, 2008; and

WHEREAS, Section 9.1(b) of the Plan provides the Administrative Committee may adopt any technical, clerical, conforming or clarifying amendment or other change that it deems necessary or advisable and that does not increase the cost of the Plan; and

WHEREAS, the Administrative Committee deems it advisable to provide a default payment provision in the event a Participant fails to make a distribution election in order to avoid an inadvertent violation of Internal Revenue Code Section 409A; and

WHEREAS, the Administrative Committee finds that such a provision will not increase the cost of the Plan;

NOW, THEREFORE, the Plan is hereby amended as follows:

1. Section 5.2(a)(ii) of the Plan is amended to read as follows:

(ii)Form of Benefit. Benefits under this Section 5.2(a) shall be paid in the form selected by the Participant in the Participation Agreement with respect to each Deferral Period. Optional forms of payment include a lump-sum payment or substantially equal annual installments of the Account amortized over a period of up to fifteen (15) years. If no form is selected by the Participant, the form of payment shall be a lump sum. The initial payment shall be within sixty (60) calendar days of Separation from Service and all subsequent payments, if any, shall be in January of each subsequent year following the date of the initial payment, until fully paid. As of each January 1, the amount to be distributed in installment payments for that year shall be determined by dividing the Participant’s Account balance as of the preceding December 31 by the remainder of the installment periods.

SIGNATURE

This Amendment shall be effective January 1, 2009.

		RADISYS CORPORATION
Date:	November 8, 2010	By:	/s/ Cheryl Spencer
			Cheryl Spencer
			Sr. Director of Human Resources
		Its:	Authorized Member of the Administrative Committee

EX-10.52

Exhibit 10.50

To:Amit Agarwal

From: Brian Bronson

Date:December 12, 2013

Re:Transition Agreement

Amit,

On December 11, 2013 we discussed that your employment with Radisys Corporation (the “Company”) will end on January 17, 2014 (the “Termination Date”). This transition agreement (the “Transition Agreement”) contains the details and terms of this transition.

Your continued employment during the transition period will be conditioned as follows:

• You will transition from your current role effective December 20, 2013 and remain actively at work and perform your work as assigned satisfactorily to ensure a smooth transition through January 17, 2014.

• You agree to remain available from December 20, 2013 through the Termination Date to provide specific information to the Company as requested in a reasonable, timely and clear manner and to respond to inquiries as needed by telephone or email.

As provided in your Amended and Restated Severance Agreement dated October 10, 2012, you will be provided with the benefits set forth in Section 3.1 of such Severance Agreement in exchange for your execution of the Release of Claims provided to you, without revocation, and your compliance with the other terms and conditions set forth in your Severance Agreement. Before signing the Release of Claims, you are advised to consult an attorney. You may take 21 days from the last day of your active employment to consider whether you wish to sign the Release of Claims and receive your severance benefits. The “Effective Date” of your Release of Claims will be the eighth calendar day after you sign and return it. Under your Severance Agreement, your severance benefits, if you elect to receive such benefits, will be as follows:

• Pursuant to Section 3.1(a) of your Severance Agreement, your severance amount is equal to six months of base salary, which will be $144,198 (i.e. six times your monthly base salary of $24,033). This amount will be paid out in one lump sum (less taxes and other applicable deductions) within 5 days following the “Effective Date” of the Release of Claims. The severance check is to be delivered to you directly and not direct deposited.

• Pursuant to Section 3.1(b) of your Severance Agreement, the Company will pay the COBRA premiums due for you and your currently enrolled dependents for six months beginning February 2014.

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• Pursuant to Section 3.1(c) of your Severance Agreement, you will receive any payment for which you are eligible based upon the announced payouts of the 2^nd Half 2013 Bonus Plan and the 2^nd Half 2013 LTIP for the performance period if and when paid pursuant to the applicable plan, except that your payout, if any, under the 2^nd Half 2013 Bonus Plan shall not exceed the payout at target performance. These amounts, if any, will be paid on the date you would otherwise have received each such payment if your employment had not been terminated. As provided under the terms and conditions of the 2007 Stock Plan, all RSU awards that have not vested on the Termination Date, including the performance RSUs granted under the Overlay Plan, shall be forfeited.

In addition, if you comply with the terms described above, the Company will provide you with the following additional benefits:

• The Company does not intend to contest any unemployment claims as long as you are otherwise eligible and the above stated conditions are met.

• The Company will reimburse you for up to $5,000 of eligible outplacement services upon presentation of acceptable documentation.

There is no obligation, by either party, to engage in future consulting framework / agreement.

This agreement supersedes and replaces that certain agreement dated December 12, 2013, which agreement is of no further force and effect.

Please sign this agreement to acknowledge and agree to the above details and terms.

		RADISYS CORPORATION
Date:	January 10, 2014	By:	/s/ Amit Agarwal
			Amit Agarwal
			Vice President of Software Solutions

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EX-10.53

Exhibit 10.51

EXECUTIVE CHANGE OF CONTROL AGREEMENT

October 23, 2013

Stephen T. Collins     Executive

RadiSys Corporation, an Oregon corporation
5435 NE Dawson Creek Parkway
Hillsboro, OR 97124    the Company

1.Employment Relationship. Executive is currently employed by the Company as Vice President of Global Sales. Executive and the Company acknowledge that either party may terminate this employment relationship at any time and for any or no reason, provided that each party complies with the terms of this Agreement.

2.    Release of Claims. In consideration for and as a condition precedent to receiving the severance benefits outlined in this Agreement, Executive agrees to execute a Release of Claims in the form attached as Exhibit A ("Release of Claims"). Executive promises to execute and deliver the Release of Claims to the Company within 21 days (or, if required by applicable law, 45 days) from the last day of Executive's active employment. Executive shall forfeit the severance benefits outlined in this Agreement in the event that he fails to execute and deliver the Release of Claims to the Company in accordance with the timing and other provisions of the preceding sentence or revokes such Release of Claims prior to the "Effective Date" (as such term is defined in the Release of Claims) of the Release of Claims.

3.    Additional Compensation Upon Certain Termination Events.

3.1    Change of Control. In the event of a Termination of Executive's Employment (as defined in Section 6.1), and provided such Termination of Executive's Employment occurs within twelve (12) months following a Change of Control (as defined in Section 6.3 of this Agreement) or within three (3) months preceding a Change of Control, and contingent upon Executive's execution of the Release of Claims without revocation within the time period described in Section 2 above and compliance with Section 9, Executive shall be entitled to the following benefits:

(a)    As severance pay and in lieu of any other compensation for periods subsequent to the date of termination, the Company shall pay Executive, in a lump sum, an amount equal to nine (9) months of Executive's annual base pay at the highest annual rate in effect at any time within the 12-month period preceding the date of termination. Severance pay that is payable under this Agreement shall be paid to Executive within five (5) days following the effective date of the Release of Claims, and no later than two and one-half months following the last day of the calendar year of the Termination of Executive's Employment.

(b)    As an additional severance benefit, the Company will provide Executive with up to nine (9) months of continued coverage (100% paid by the Company) pursuant to COBRA under the Company's group health plan at the level of benefits (whether single or family coverage) previously elected by Executive immediately before the Termination of Executive's Employment and to the extent that Executive elects to continue coverage during such 9-month period. Each month for which the Company pays COBRA premiums directly reduces the total number of months of Executive’s COBRA continuation entitlement.

(c)    The Company shall pay Executive his stock-based incentive compensation plan payout under the Radisys Corporation Long Term Incentive Plan pursuant to the terms of and within the periods specified in the Long Term Incentive Plan and shall pay Executive his stock-based incentive compensation plan payout under

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each other stock-based incentive compensation plan maintained by the Company pursuant to the terms of and within the periods specified in each such other stock-based incentive compensation plan that may then be applicable. The Company shall also pay Executive his cash-based incentive compensation plan payout earned but not yet received under each cash-based incentive compensation plan maintained by the Company, if any, for any performance period completed prior to the Termination of Executive's Employment. In addition, the Company shall pay Executive his cash-based incentive compensation plan payout for any then current performance period under each such cash-based incentive compensation plan, provided that such payout, if any, shall be based on actual performance results for the performance period, shall not exceed the payout at target performance, and shall be pro-rated through the date of the Termination of Executive's Employment. The amounts described in this Section (c), if any, shall be paid on the date Executive would otherwise have received each such payment if his employment had not been terminated and, in any event, no later than two and one-half months following the last day of the calendar year for which the cash-based incentive compensation plan payout was earned.

3.2    Parachute Payments. Notwithstanding the foregoing, if the total payments and benefits to be paid to or for the benefit of Executive under this Agreement (the "Payment") would cause any portion of those payments and benefits to be "parachute payments" as defined in Code Section 280G(b)(2), or any successor provision, the total payments and benefits to be paid to or for the benefit of Executive under this Agreement shall be reduced by the Company to the Reduced Amount. The "Reduced Amount" shall be either (x) the largest portion of the Payment that would otherwise result in no portion of the Payment being subject to the excise tax imposed by Code Section 4999 (the "Excise Tax") or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Executive's receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order: first by reducing or eliminating the portion of the Payment that is payable in cash, second by reducing or eliminating the portion of the Payment that is not payable in cash (other than Payments as to which Treasury Regulations Section 1.280G-1 Q/A – 24(c) (or any successor provision thereto) applies (“Q/A-24(c) Payments”)), and third by reducing or eliminating Q/A-24(c) Payments. In the event that any Q/A-24(c) Payment or acceleration is to be reduced, such Q/A-24(c) Payment shall be reduced or cancelled in the reverse order of the date of grant of the awards. The independent public accounting firm serving as the Company's auditing firm immediately prior to the effective date of the Change of Control (the "Accountants") shall make in writing in good faith, subject to the terms and conditions of this Section 3.2, all calculations and determinations under this Section, including the assumptions to be used in arriving at such calculations and determinations, whether any payments are to be reduced, and the manner and amount of any reduction in the payments. For purposes of making the calculations and determinations under this Section, the Accountants may make reasonable assumptions and approximations concerning the application of Code Sections 280G and 4999. Executive shall furnish to the Accountants and the Company such information and documents as the Accountants or the Company may reasonably request to make the calculations and determinations under this Section. The Company shall bear all fees and costs the Accountants may reasonably charge or incur in connection with any calculations contemplated by this Section. The Accountants shall provide its determination, together with detailed supporting calculations regarding any relevant matter, both to the Company and to Executive by no later than ninety (90) days following the Termination of Executive's Employment.

4.    Withholding; Subsequent Employment.

4.1    Withholding. All payments provided for in this Agreement are subject to applicable withholding obligations imposed by federal, state and local laws and regulations.

4.2    Offset. The amount of any payment provided for in this Agreement shall not be reduced, offset or subject to recovery by the Company by reason of any compensation earned by Executive as the result of employment by another employer after termination.

5.    Other Agreements. Any cash severance pay paid to Executive under any other agreement with the Company or any of its subsidiaries or affiliates (including but not limited to any employment agreement, but

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excluding for this purpose any stock option, stock appreciation right, restricted stock, restricted stock unit, performance share, performance unit or other similar award agreement that may provide for accelerated vesting or related benefits) shall reduce the amount of cash severance pay payable under this Agreement.

6.    Definitions.

6.1    Termination of Executive's Employment. Termination of Executive's Employment means that (i) the Company has terminated Executive's employment with the Company (including any subsidiary of the Company) other than for Cause (as defined in Section 6.2), death or Disability (as defined in Section 6.4), or (ii) Executive, by written notice to the Company, has terminated his employment with the Company (including any subsidiary of the Company) for Good Reason (as defined below). For purposes of this Agreement, "Good Reason" means:

(a)    a material reduction by the Company or the surviving company in Executive's base pay from the highest annual rate in effect at any time within the 12-month period preceding the Change of Control, other than a salary reduction that is part of a general salary reduction affecting employees generally; or

(b)    a material change in the geographic location where Executive is based, provided that such change is more than 25 miles from where Executive's office is located immediately prior to the Change of Control, except for required travel on Company business to an extent substantially consistent with the business travel obligations which Executive undertook on behalf of the Company immediately prior to the Change of Control.

An event described above will not constitute Good Reason unless Executive provides written notice to the Company of Executive's intention to resign for Good Reason and specifying in reasonable detail the breach or action giving rise thereto within 90 days of its initial existence and the Company does not cure such breach or action within 30 days after the date of Executive's notice. In no instance will a resignation by Executive be deemed to be for Good Reason if it is made more than 24 months following the initial occurrence of any of the events that otherwise would constitute Good Reason hereunder.

A Termination of Executive's Employment is intended to mean a termination of employment which constitutes a "separation from service" under Code Section 409A. If any payments are to be made within a specified period of time or during a calendar year, the date of such payment shall be in the sole discretion of the Company, and Executive shall not be permitted, directly or indirectly, to designate the taxable year of payment.

6.2    Cause. Termination of Executive's Employment for "Cause" shall mean termination upon (a) the willful and continued failure by Executive to perform substantially Executive's reasonably assigned duties with the Company (other than any such failure resulting from Executive's incapacity due to physical or mental illness) after a demand for substantial performance is delivered to Executive by the Board of Directors, the Chief Executive Officer or the President of the Company, which specifically identifies the manner in which the Board of Directors, Chief Executive Officer or the President of the Company believes that Executive has not substantially performed Executive's duties or (b) the willful engaging by Executive in illegal conduct which is materially and demonstrably injurious to the Company. No act, or failure to act, on Executive's part shall be considered "willful" unless done, or omitted to be done, by Executive without reasonable belief that Executive's action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors shall be conclusively presumed to be done, or omitted to be done, by Executive in the best interests of the Company.

6.3    Change of Control. A Change of Control shall mean that one of the following events has taken place:

(a)    The shareholders of the Company approve one of the following:

(i)    Any merger or statutory plan of exchange involving the Company ("Merger") in which the Company is not the continuing or surviving corporation or pursuant to which Common

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Stock would be converted into cash, securities or other property, other than a Merger involving the Company in which the holders of Common Stock immediately prior to the Merger continue to represent more than 50 percent of the voting securities of the surviving corporation after the Merger; or

(ii)    Any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; provided that a sale, lease, exchange or other transfer of assets (in one transaction or a series of related transactions) shall not be a sale of substantially all of the assets of the Company for purposes of this Agreement if (x) the Company’s and its other consolidated subsidiaries’ investments in such assets are less than 90% of the total assets of the Company and its subsidiaries consolidated as of the end of the most recently completed fiscal year or (y) the pro forma revenue of the business comprised by such assets as of the end of the most recently completed fiscal year end is less than 90% of the total revenue of the Company and its subsidiaries consolidated as of the end of the most recently completed fiscal year end.

(b)    A tender or exchange offer, other than one made by the Company, is made for Common Stock (or securities convertible into Common Stock) and such offer results in a portion of those securities being purchased and the offeror after the consummation of the offer is the beneficial owner (as determined pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), directly or indirectly, of securities representing more than 50 percent of the voting power of outstanding securities of the Company.

(c)    The Company receives a report on Schedule 13D of the Exchange Act reporting the beneficial ownership by any person, or more than one person acting as a group, of securities representing more than 50 percent of the voting power of outstanding securities of the Company, except that if such receipt shall occur during a tender offer or exchange offer described in (b) above, a Change of Control shall not take place until the conclusion of such offer.

Notwithstanding anything in the foregoing to the contrary, no Change of Control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in Executive, or a group of persons which includes Executive, acquiring, directly or indirectly, securities representing 20 percent or more of the voting power of outstanding securities of the Company.

6.4    Disability. "Disability" means Executive's absence from Executive's full-time duties with the Company for 180 consecutive calendar days as a result of Executive's incapacity due to physical or mental illness, as determined by Executive’s attending physician and in accordance with the Company’s Medical Leave of Absence Policy, unless within 30 days after notice of termination by the Company following such absence Executive shall have returned to the full-time performance of Executive's duties. This Agreement does not apply if the Executive is terminated due to Disability.

7.    Successors; Binding Agreement. This Agreement shall be binding on and inure to the benefit of the Company and its successors and assigns. This Agreement shall inure to the benefit of and be enforceable by Executive and Executive's legal representatives, executors, administrators and heirs.

8.    Entire Agreement. The Company and Executive agree that the foregoing terms and conditions constitute the entire agreement between the parties relating to the termination of Executive’s employment with the Company under the conditions described in Section 3.1, that this Agreement supersedes and replaces any prior agreements relating to the matters covered by this Agreement, and that there exist no other agreements between the parties, oral or written, express or implied, relating to any matters covered by this Agreement. Further, Executive waives any entitlement to any severance or other payment under any such agreement and that such waiver shall inure to the benefit of the Company, its successors and assigns, and any third parties.

9.    Resignation of Corporate Offices; Reasonable Assistance. Executive will resign Executive's office, if any, as a director, officer or trustee of the Company, its subsidiaries or affiliates and of any other

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corporation or trust of which Executive serves as such at the request of the Company, effective as of the date of termination of employment. Executive further agrees that, if requested by the Company or the surviving company following a Change of Control, Executive will continue his employment with the Company or the surviving company for a period of up to six months following the Change of Control in any capacity requested, consistent with Executive's area of expertise, provided that Executive receives the same salary and substantially the same benefits as in effect prior to the Change of Control. Executive agrees to provide the Company such written resignation(s) and assistance upon request and that no severance pay or other benefits will be paid until after such resignation(s) or services are provided.

10.    No Disparagement. Executive agrees that from and after the date of termination of employment Executive will not disparage or make false or adverse statements (whether written or oral) about the Company and its predecessors and successors, affiliates, and all of each such entity’s officers, directors, employees, insurers, agents, attorneys or assigns, in their individual and representative capacities (the "Parties"). The Company may take actions consistent with breach of this Agreement should it determine that Executive has disparaged or made false or adverse statements (whether written or oral) about the Company or the Parties. Should the Company determine that Executive has disparaged or made false or adverse statements (whether written or oral) about the Company or the Parties, the Executive shall not be entitled to the severance pay or other benefits provided under this Agreement.

11.    Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Oregon, without regard to its conflicts of laws provisions.

12.    Amendment. No provision of this Agreement may be modified unless such modification is agreed to in writing signed by Executive and the Company.

13.    Severability. If any of the provisions or terms of this Agreement shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other terms of this Agreement, and this Agreement shall be construed as if such unenforceable term had never been contained in this Agreement.

14.    Code Section 409A. This Agreement and the severance pay and other benefits provided hereunder are intended to qualify for an exemption from Code Section 409A, provided, however, that if this Agreement and the severance pay and other benefits provided hereunder are not so exempt, they are intended to comply with Code Section 409A to the extent applicable thereto. Notwithstanding any provision of this Agreement to the contrary, this Agreement shall be interpreted and construed consistent with this intent, provided that the Company shall not be required to assume any increased economic burden in connection therewith. Although the Company intends to administer this Agreement so that it will comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law. Neither the Company, its subsidiaries, nor their respective directors, officers, employees or advisers shall be liable to Executive (or any other individual claiming a benefit through Executive) for any tax, interest, or penalties Executive may owe as a result of compensation paid under this Agreement, and the Company and its subsidiaries shall have no obligation to indemnify or otherwise protect Executive from the obligation to pay any taxes pursuant to Code Section 409A. If any payment or reimbursement, or portion thereof, under this Agreement would be deemed to be a deferral of compensation not exempt from the provisions of Code Section 409A and would be considered a payment upon a separation from service for purposes of Code Section 409A, and Executive is determined to be a "specified employee" under Code Section 409A, then any such payment or reimbursement, or portion thereof, shall be delayed until the date that is the earlier to occur of (i) Executive's death or (ii) the date that is six months and one day following the date of the Termination of Executive's Employment (the "Delay Period"). Upon the expiration of the Delay Period, the payments delayed pursuant to this Section 14 shall be paid to Executive in a lump sum, and any remaining payments due under this Section 14 shall be payable in accordance with their original payment schedule.

15.    Costs and Attorneys' Fees. In the event of any administrative or civil action brought by Executive to enforce the provisions of this Agreement, the Company shall pay Executive's reasonable attorneys' fees through trial and/or on appeal. The payment or reimbursement of expenses described in this Section 15 shall be made promptly and in no event later than December 31 of the year following the year in which such expenses were

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incurred, and the amount of such expenses eligible for payment or reimbursement in any year shall not affect the amount of such expenses eligible for payment or reimbursement in any other year nor shall such right to payment or reimbursement be subject to liquidation or exchange for another benefit.

16.    Prohibition on Acceleration of Payments. The time or schedule of any payment or amount scheduled to be paid pursuant to the terms of this Agreement may not be accelerated except as otherwise permitted under Code Section 409A and the guidance and Treasury regulations issued thereunder.

RADISYS CORPORATION
By:	/s/ Brian Bronson	/s/ Stephen T. Collins
	Brian Bronson, CEO	Stephen T. Collins, VP of Global Sales

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EXHIBIT A
RELEASE OF CLAIMS

1.Parties.

The parties to Release of Claims (hereinafter "Release") are Stephen T. Collins and Radisys Corporation, an Oregon corporation, as hereinafter defined.

1.1    Executive and Releasing Parties.

For the purposes of this Release, "Executive" means Stephen T. Collins, and "Releasing Parties" means Executive and his attorneys, heirs, legatees, personal representatives, executors, administrators, assigns, and spouse.

1.2    The Company and the Released Parties.

For the purposes of this Release the "Company" means Radisys Corporation, an Oregon corporation, and "Released Parties" means the Company and its predecessors and successors, affiliates, and all of each such entity's officers, directors, employees, insurers, agents, attorneys or assigns, in their individual and representative capacities.

2.    Background And Purpose.

Executive was employed by the Company. Executive's employment is ending effective __________ under the conditions described in Section 3.1 of the Executive Change of Control Agreement ("Agreement") by and between Executive and the Company dated October 15, 2013.

The purpose of this Release is to settle, and the parties hereby settle, fully and finally, any and all claims the Releasing Parties may have against the Released Parties, whether asserted or not, known or unknown, including, but not limited to, claims arising out of or related to Executive's employment, any claim for reemployment, or any other claims whether asserted or not, known or unknown, past or future, that relate to Executive's employment, reemployment, or application for reemployment (in each case except as set forth below).

3.    Release.

In consideration for the payments and benefits set forth in Section 3.1 of the Agreement and other promises by the Company all of which constitute good and sufficient consideration, Executive, for and on behalf of the Releasing Parties, waives, acquits and forever discharges the Released Parties from any obligations the Released Parties have and all claims the Releasing Parties may have as of the Effective Date (as defined in Section 4 below) of this Release, including but not limited to, obligations and/or claims arising from the Agreement (other than any claim Executive may have against the Company after the date hereof with respect to nonperformance of the payment obligations of the Company set forth in Section 3.1 of the Agreement) or any other document or oral agreement relating to employment, compensation, benefits, severance or post-employment issues. Executive, for and on behalf of the Releasing Parties, hereby releases the Released Parties from any and all claims, demands, actions, or causes of action, whether known or unknown, arising from or related in any way to any employment of or past failure or refusal to employ Executive by the Company, or any other past claim that relates in any way to Executive's employment, compensation, benefits, reemployment, or application for employment, with the exception of any claim Executive may have against the Company for enforcement of the Agreement. The matters released include, but are not limited to, any claims under federal, state or local laws, including the Age Discrimination in Employment Act (“ADEA”) as amended by the Older Workers’ Benefit Protection Act (“OWBPA”), any common law tort, contract or statutory claims, and any claims for attorneys’ fees and costs. Further, Executive, for and on behalf of the Releasing Parties, waives and releases the Released Parties from any claims that this Release was procured by

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fraud or signed under duress or coercion so as to make the Release not binding. Executive is not relying upon any representations by the Company's legal counsel in deciding to enter into this Release. Executive understands and agrees that by signing this Release Executive, for and on behalf of the Releasing Parties, is giving up the right to pursue any legal claims that Executive or the Releasing Parties may have against the Released Parties with respect to the claims released hereby. Provided, nothing in this provision of this Release shall be construed to prohibit Executive from challenging the validity of the ADEA release in this Section of the Release or from filing a charge or complaint with the Equal Employment Opportunity Commission or any state agency or from participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission or state agency. However, the Released Parties will assert all such claims have been released in a final binding settlement.

Executive understands and agrees that this Release extinguishes all released claims, whether known or unknown, foreseen or unforeseen. Executive expressly waives any rights or benefits under Section 1542 of the California Civil Code, or any equivalent statute. California Civil Code Section 1542 provides as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

Executive fully understands that, if any fact with respect to any matter covered by this Release is found hereafter to be other than or different from the facts now believed by Executive to be true, Executive expressly accepts and assumes that this Release shall be and remain effective, notwithstanding such difference in the facts.

3.1    IMPORTANT INFORMATION REGARDING ADEA RELEASE.

Executive understands and agrees that:

(a) this Release is worded in an understandable way;

(b) claims under ADEA that may arise after the date of this Release are not waived;

(c) the rights and claims waived in this Release are in exchange for additional consideration over and above any consideration to which Executive was already undisputedly entitled;

(d) Executive has been advised to consult with an attorney prior to executing this Release and has had sufficient time and opportunity to do so;

(e) Executive has been given a period of time of 21 days (or, if required by applicable law, 45 days) (the “Statutory Period”), if desired, to consider this Release and understands that Executive may revoke his waiver and release of any ADEA claims covered by this Release within seven (7) days from the date Executive executes this Release. Notice of revocation must be in writing and received by Radisys Corporation, 5435 NE Dawson Creek Drive, Hillsboro, Oregon 97124 Attention: Vice President, Human Resources within seven (7) days after Executive signs this Release; and

(f) any changes made to this Release, whether material or immaterial, will not restart the running of the Statutory Period.

3.2    Reservations Of Rights.

This Release shall not affect any rights which Executive may have under any medical insurance, disability plan, workers' compensation, unemployment compensation, indemnifications, applicable company stock incentive plan(s), or the 401(k) plan maintained by the Company.

3.3    No Admission Of Liability.

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It is understood and agreed that the acts done and evidenced hereby and the release granted hereunder is not an admission of liability on the part of Executive or the Company or the Released Parties, by whom liability has been and is expressly denied.

4.    Effective Date.

The "Effective Date" of this Release shall be the eighth calendar day after it is signed by Executive.

5.    Confidentiality, Proprietary, Trade Secret And Related Information

Executive acknowledges the duty and agrees not to make unauthorized use or disclosure of any confidential, proprietary or trade secret information learned as an employee about the Company, its products, customers and suppliers, and covenants not to breach that duty. Moreover, Executive acknowledges that, subject to the enforcement limitations of applicable law, the Company reserves the right to enforce the terms of any offer letter, employment agreement, confidentially agreement, or any other agreement between Executive and the Company and any section(s) therein. Should Executive, Executive's attorney or agents be requested in any judicial, administrative, or other proceeding to disclose confidential, proprietary or trade secret information Executive learned as an employee of the Company, Executive shall promptly notify the Company of such request by the most expeditious means in order to enable the Company to take any reasonable and appropriate action to limit such disclosure.

6.    Scope Of Release.

The provisions of this Release shall be deemed to obligate, extend to, and inure to the benefit of the parties; the Company's parents, subsidiaries, affiliates, successors, predecessors, assigns, directors, officers, and employees; and each party’s insurers, transferees, grantees, legatees, agents, personal representatives and heirs, including those who may assume any and all of the above-described capacities subsequent to the execution and Effective Date of this Release.

7.    Entire Release.

This Release and the Agreement signed by Executive contain the entire agreement and understanding between the parties and, except as reserved in Sections 3 and 5 of this Release, supersede and replace all prior agreements, written or oral, prior negotiations and proposed agreements, written or oral. Executive and the Company acknowledge that no other party, nor agent nor attorney of any other party, has made any promise, representation, or warranty, express or implied, not contained in this Release concerning the subject matter of this Release to induce this Release, and Executive and the Company acknowledge that they have not executed this Release in reliance upon any such promise, representation, or warranty not contained in this Release.

8.    Severability.

Every provision of this Release is intended to be severable. In the event any term or provision of this Release is declared to be illegal or invalid for any reason whatsoever by a court of competent jurisdiction or by final and unappealed order of an administrative agency of competent jurisdiction, such illegality or invalidity should not affect the balance of the terms and provisions of this Release, which terms and provisions shall remain binding and enforceable.

9.    References.

The Company agrees to follow the applicable policy(ies) regarding release of employment reference information.

10.    Parties May Enforce Release.

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Nothing in this Release shall operate to release or discharge any parties to this Release or their successors, assigns, legatees, heirs, or personal representatives from any rights, claims, or causes of action arising out of, relating to, or connected with a breach of any obligation of any party contained in this Release.

11.    Governing Law.

This Release shall be construed in accordance with and governed by the laws of the State of Oregon, without regard to its conflicts of laws provisions.

	Dated:
Stephen T. Collins, VP of Global Sales

STATE OF OREGON    )    )ss.
County of __________    )

Personally appeared the above named Fred Barden and acknowledged the foregoing instrument to be his voluntary act and deed.

Before me:		NOTARY PUBLIC – OREGON My commission expires: _______________
RADISYS CORPORATION
By:		Dated:
Its:
	On Behalf of Radisys Corporation and "Company"

CHIDMS1/3055840.2

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EX-10.54

Exhibit 10.52

EXECUTIVE SEVERANCE AGREEMENT

October 23, 2013

Stephen T. Collins    Executive

RadiSys Corporation, an Oregon corporation
5435 NE Dawson Creek Parkway
Hillsboro, OR 97124    the Company

1.Employment Relationship. Executive is currently employed by the Company as Vice President of Global Sales. Executive and the Company acknowledge that either party may terminate this employment relationship at any time and for any or no reason, provided that each party complies with the terms of this Agreement.

2.    Release of Claims. In consideration for and as a condition precedent to receiving the severance benefits outlined in this Agreement, Executive agrees to execute a Release of Claims in the form attached as Exhibit A ("Release of Claims"). Executive promises to execute and deliver the Release of Claims to the Company within 21 days (or, if required by applicable law, 45 days) from the last day of Executive's active employment. Executive shall forfeit the severance benefits outlined in this Agreement in the event that Executive fails to execute and deliver the Release of Claims to the Company in accordance with the timing and other provisions of the preceding sentence or revokes such Release of Claims prior to the "Effective Date" (as such term is defined in the Release of Claims) of the Release of Claims.

3.Additional Compensation Upon Certain Termination Events.

3.1    In the event of a Termination of Executive's Employment (as defined in Section 5.1) and contingent upon the Executive's execution of the Release of Claims without revocation within the time period described in Section 2 above and compliance with Section 8 and Section 9, Executive shall be entitled to the following benefits:

(a)    As severance pay and in lieu of any other compensation for periods subsequent to the date of termination, the Company shall pay Executive, in a lump sum, an amount equal to six (6) months of Executive's annual base pay at the rate in effect immediately prior to the date of termination. Severance pay that is payable under this Agreement shall be paid to Executive within 5 days following the Effective Date of the Release of Claims, and no later than two and one-half months following the last day of the calendar year of the Termination of Executive's Employment.

(b)    As an additional severance benefit, the Company will provide Executive with up to six (6) months of continued coverage (100% paid by the Company) pursuant to COBRA under the Company's group health plan at the level of benefits (whether single or family coverage) previously elected by Executive immediately before the Termination of Executive's Employment and to the extent that Executive elects to continue coverage during such 6-month period. Each month for which the Company pays COBRA premiums directly reduces the total number of months of Executive’s COBRA continuation entitlement.

(c)    The Company shall pay Executive his stock-based incentive compensation plan payout under the Radisys Corporation Long Term Incentive Plan, if any, pursuant to the terms of and within the periods specified in the Long Term Incentive Plan and shall pay Executive his stock-based incentive compensation plan payout under each other stock-based incentive compensation plan maintained by the Company pursuant to the terms of and within the periods specified in each such other stock-based incentive compensation plan that may then be applicable. The Company shall also pay Executive his cash-based incentive compensation plan payout earned but

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not yet received under each cash-based incentive compensation plan maintained by the Company, if any, for any performance period completed prior to the Termination of Executive's Employment. In addition, the Company shall pay Executive his cash-based incentive compensation plan payout for any then current performance period under each such cash-based incentive compensation plan, provided that such payout, if any, shall be based on actual performance results for the performance period, shall not exceed the payout at target performance, and shall be pro-rated through the date of the Termination of Executive's Employment. The amounts described in this Section (c), if any, shall be paid on the date Executive would otherwise have received each such payment if his employment had not been terminated and, in any event, no later than two and one-half months following the last day of the calendar year for which the cash-based incentive compensation plan payout was earned.

4.Withholding; Subsequent Employment.

4.1    Withholding. All payments provided for in this Agreement are subject to applicable withholding obligations imposed by federal, state and local laws and regulations.

4.2    Offset. The amount of any payment provided for in this Agreement shall not be reduced, offset or subject to recovery by the Company by reason of any compensation earned by Executive as the result of employment by another employer after termination.

5.Definitions.

5.1Termination of Executive's Employment. Termination of Executive's Employment means that (i) the Company has terminated Executive's employment with the Company (including any subsidiary of the Company) other than for Cause (as defined in Section 5.2), death or Disability (as defined in Section 5.3), or (ii) Executive, by written notice to the Company, has terminated his employment with the Company (including any subsidiary of the Company) for Good Reason (as defined below). For purposes of this Agreement, "Good Reason" means:

(a)    a material reduction by the Company in Executive's annual base salary, other than a salary reduction that is part of a general salary reduction affecting employees generally; or

(b)    a material change in the geographic location where Executive is based, provided that such change is more than 25 miles from where Executive's office was previously located, except for required travel on Company business to the extent substantially consistent with Executive's business travel obligations on behalf of the Company.

An event described above will not constitute Good Reason unless Executive provides written notice to the Company of Executive's intention to resign for Good Reason and specifying in reasonable detail the breach or action giving rise thereto within 90 days of its initial existence and the Company does not cure such breach or action within 30 days after the date of Executive's notice. In no instance will a resignation by Executive be deemed to be for Good Reason if it is made more than 24 months following the initial occurrence of any of the events that otherwise would constitute Good Reason hereunder. A Termination of Executive’s Employment is intended to mean a termination of employment which constitutes a "separation from service" under Code Section 409A. If any payments are to be made within a specified period of time or during a calendar year, the date of such payment shall be in the sole discretion of the Company and Executive shall not be permitted, directly or indirectly, to designate the taxable year of payment.

5.2    Cause. Termination of Executive's Employment for "Cause" shall mean termination upon (a) the willful and continued failure by Executive to perform substantially Executive's reasonably assigned duties with the Company (other than any such failure resulting from Executive's incapacity due to physical or mental illness) after a demand for substantial performance is delivered to Executive by the Chief Executive Officer or the President of the Company, which specifically identifies the manner in which the Chief Executive Officer or the President of the Company believes that Executive has not substantially performed Executive's duties or (b) the willful engaging by Executive in illegal conduct which is materially and demonstrably injurious to the Company.

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No act, or failure to act, on Executive's part shall be considered "willful" unless done, or omitted to be done, by Executive without reasonable belief that Executive's action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors shall be conclusively presumed to be done, or omitted to be done, by Executive in the best interests of the Company.

5.3    Disability. "Disability" means Executive's absence from Executive's full-time duties with the Company for 180 consecutive calendar days as a result of Executive's incapacity due to physical or mental illness, as determined by Executive’s attending physician and in accordance with the Company’s Medical Leave of Absence Policy, unless within 30 days after notice of termination by the Company following such absence Executive shall have returned to the full-time performance of Executive's duties. This Agreement does not apply if the Executive is terminated due to Disability.

6.    Successors; Binding Agreement. This Agreement shall be binding on and inure to the benefit of the Company and its successors and assigns. This Agreement shall inure to the benefit of and be enforceable by Executive and Executive's legal representatives, executors, administrators and heirs.

7.    Entire Agreement. The Company and Executive agree that the foregoing terms and conditions constitute the entire agreement between the parties relating to the matters covered by this Agreement, that this Agreement supersedes and replaces any prior agreements relating to the matters covered by this Agreement, and that there exist no other agreements between the parties, oral or written, express or implied, relating to any matters covered by this Agreement; provided, however, this Agreement does not supersede or replace the Executive Change of Control Agreement by and between Executive and the Company dated, October 15, 2013.

8.    Resignation of Corporate Offices. Executive will resign Executive's office, if any, as a director, officer or trustee of the Company, its subsidiaries or affiliates and of any other corporation or trust of which Executive serves as such at the request of the Company, effective as of the date of termination of employment. Executive agrees to provide the Company such written resignation(s) upon request and that no severance pay or other benefits will be paid until after such resignation(s) are provided.

9.    No Disparagement.Executive agrees that from and after the date of termination of employment Executive will not disparage or make false or adverse statements (whether written or oral) about the Company and its predecessors and successors, affiliates, and all of each such entity’s officers, directors, employees, insurers, agents, attorneys or assigns, in their individual and representative capacities (the "Parties"). The Company may take actions consistent with breach of this Agreement should it determine that Executive has disparaged or made false or adverse statements (whether written or oral) about the Company or the Parties. Should the Company determine that Executive has disparaged or made false or adverse statements (whether written or oral) about the Company or the Parties, the Executive shall not be entitled to the severance pay or other benefits provided under this Agreement.

10.     Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Oregon, without regard to its conflicts of laws provisions.

11.    Amendment. No provision of this Agreement may be modified unless such modification is agreed to in writing signed by Executive and the Company.

12.    Severability. If any of the provisions or terms of this Agreement shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other terms of this Agreement, and this Agreement shall be construed as if such unenforceable term had never been contained in this Agreement.

13.    Code Section 409A. This Agreement and the severance pay and other benefits provided hereunder are intended to qualify for an exemption from Code Section 409A, provided, however, that if this Agreement and the severance pay and other benefits provided hereunder are not so exempt, they are intended to comply with Code Section 409A to the extent applicable thereto. Notwithstanding any provision of this Agreement to the contrary, this Agreement shall be interpreted and construed consistent with this intent, provided that the

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Company shall not be required to assume any increased economic burden in connection therewith. Although the Company intends to administer this Agreement so that it will comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law. Neither the Company, its subsidiaries, nor their respective directors, officers, employees or advisers shall be liable to Executive (or any other individual claiming a benefit through Executive) for any tax, interest, or penalties Executive may owe as a result of compensation paid under this Agreement, and the Company and its subsidiaries shall have no obligation to indemnify or otherwise protect Executive from the obligation to pay any taxes pursuant to Code Section 409A. If any payment or reimbursement, or portion thereof, under this Agreement would be deemed to be a deferral of compensation not exempt from the provisions of Code Section 409A and would be considered a payment upon a separation from service for purposes of Code Section 409A, and Executive is determined to be a "specified employee" under Code Section 409A, then any such payment or reimbursement, or portion thereof, shall be delayed until the date that is the earlier to occur of (i) Executive's death or (ii) the date that is six months and one day following the date of the Termination of Executive's Employment (the "Delay Period"). Upon the expiration of the Delay Period, the payments delayed pursuant to this Section 13 shall be paid to Executive in a lump sum, and any remaining payments due under this Section 13 shall be payable in accordance with their original payment schedule.

RADISYS CORPORATION
By:	/s/ Brian Bronson	/s/ Stephen T. Collins
	Brian Bronson, Chief Executive Officer	Stephen T. Collins, VP of Global Sales

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EXHIBIT ARELEASE OF CLAIMS

1. Parties.

The parties to Release of Claims (hereinafter "Release") are Stephen T. Collins and Radisys Corporation, an Oregon corporation, as hereinafter defined.

1.1Executive and Releasing Parties.

For the purposes of this Release, "Executive" means Stephen T. Collins, and "Releasing Parties" means Executive and his attorneys, heirs, legatees, personal representatives, executors, administrators, assigns, and spouse.

1.2    The Company and the Released Parties.

For the purposes of this Release, the "Company" means Radisys Corporation, an Oregon corporation, and "Released Parties" means the Company and its predecessors and successors, affiliates, and all of each such entity’s officers, directors, employees, insurers, agents, attorneys or assigns, in their individual and representative capacities.

2. Background And Purpose.

Executive was employed by the Company. Executive's employment is ending effective ____________ under the conditions described in Section 3.1 of the Severance Agreement ("Agreement") by and between Executive and the Company dated October 15, 2013.

The purpose of this Release is to settle, and the parties hereby settle, fully and finally, any and all claims the Releasing Parties may have against the Released Parties, whether asserted or not, known or unknown, including, but not limited to, claims arising out of or related to Executive's employment, any claim for reemployment, or any other claims whether asserted or not, known or unknown, past or future, that relate to Executive's employment, reemployment, or application for reemployment (in each case except as set forth below).

3. Release.

In consideration for the payments and benefits set forth in Section 3.1 of the Agreement and other promises by the Company all of which constitute good and sufficient consideration, Executive, for and on behalf of the Releasing Parties, waives, acquits and forever discharges the Released Parties from any obligations the Released Parties have and all claims the Releasing Parties may have as of the Effective Date (as defined in Section 4 below) of this Release, including but not limited to, obligations and/or claims arising from the Agreement (other than any claim Executive may have against the Company after the date hereof with respect to nonperformance of the payment obligations of the Company set forth in Section 3.1 of the Agreement) or any other document or oral agreement relating to employment, compensation, benefits, severance or post-employment issues. Executive, for and on behalf of the Releasing Parties, hereby releases the Released Parties from any and all claims, demands, actions, or causes of action, whether known or unknown, arising from or related in any way to any employment of or past failure or refusal to employ Executive by the Company, or any other past claim that relates in any way to Executive's employment, compensation, benefits, reemployment, or application for employment, with the exception of any claim Executive may have against the Company for enforcement of the Agreement. The matters released include, but are not limited to, any claims under federal, state or local laws,including the Age Discrimination in Employment Act (“ADEA”) as amended by the Older Workers’ Benefit Protection Act (“OWBPA”), any common law tort, contract or statutory claims, and any claims for attorneys’ fees and costs. Further, Executive, for and on behalf of the Releasing Parties, waives and releases the Released Parties from any claims that this Release was procured by

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fraud or signed under duress or coercion so as to make the Release not binding. Executive is not relying upon any representations by the Company's legal counsel in deciding to enter into this Release. Executive understands and agrees that by signing this Release Executive, for and on behalf of the Releasing Parties, is giving up the right to pursue any legal claims that Executive or the Releasing Parties may have against the Released Parties with respect to the claims released hereby. Provided, nothing in this provision of this Release shall be construed to prohibit Executive from challenging the validity of the ADEA release in this Section of the Release or from filing a charge or complaint with the Equal Employment Opportunity Commission or any state agency or from participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission or state agency. However, the Released Parties will assert all such claims have been released in a final binding settlement.

Executive understands and agrees that this Release extinguishes all released claims, whether known or unknown, foreseen or unforeseen. Executive expressly waives any rights or benefits under Section 1542 of the California Civil Code, or any equivalent statute. California Civil Code Section 1542 provides as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

Executive fully understands that, if any fact with respect to any matter covered by this Release is found hereafter to be other than or different from the facts now believed by Executive to be true, Executive expressly accepts and assumes that this Release shall be and remain effective, notwithstanding such difference in the facts.

3.1    IMPORTANT INFORMATION REGARDING ADEA RELEASE.

Executive understands and agrees that:

a. this Release is worded in an understandable way;

b. claims under ADEA that may arise after the date of this Release are not waived;

c. the rights and claims waived in this Release are in exchange for additional consideration over and above any consideration to which Executive was already undisputedly entitled;

d. Executive has been advised to consult with an attorney prior to executing this Release and has had sufficient time and opportunity to do so;

e. Executive has been given a period of time of 21 days (or, if required by applicable law, 45 days) (the "Statutory Period"), if desired, to consider this Release and understands that Executive may revoke his waiver and release of any ADEA claims covered by this Release within seven (7) days from the date Executive executes this Release. Notice of revocation must be in writing and received by Radisys Corporation, 5435 NE Dawson Creek Drive, Hillsboro, Oregon 97124 Attention: Vice President, Human Resources within seven (7) days after Executive signs this Release; and

f. any changes made to this Release, whether material or immaterial, will not restart the running of the Statutory Period.

3.2Reservations Of Rights.

This Release shall not affect any rights which Executive may have under any medical insurance, disability plan, workers' compensation, unemployment compensation, indemnifications, applicable company stock incentive plan(s), or the 401(k) plan maintained by the Company.

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3.3No Admission Of Liability.

It is understood and agreed that the acts done and evidenced hereby and the release granted hereunder is not an admission of liability on the part of Executive or the Company or the Released Parties, by whom liability has been and is expressly denied.

4. Effective Date.

The "Effective Date" of this Release shall be the eighth calendar day after it is signed by Executive.

5. Confidentiality, Proprietary, Trade Secret And Related Information

Executive acknowledges the duty and agrees not to make unauthorized use or disclosure of any confidential, proprietary or trade secret information learned as an employee about the Company, its products, customers and suppliers, and covenants not to breach that duty. Moreover, Executive acknowledges that, subject to the enforcement limitations of applicable law, the Company reserves the right to enforce the terms of any offer letter, employment agreement, confidentially agreement, or any other agreement between Executive and the Company and any section(s) therein. Should Executive, Executive's attorney or agents be requested in any judicial, administrative, or other proceeding to disclose confidential, proprietary or trade secret information Executive learned as an employee of the Company, Executive shall promptly notify the Company of such request by the most expeditious means in order to enable the Company to take any reasonable and appropriate action to limit such disclosure.

6. Scope Of Release.

The provisions of this Release shall be deemed to obligate, extend to, and inure to the benefit of the parties; the Company's parents, subsidiaries, affiliates, successors, predecessors, assigns, directors, officers, and employees; and each party’s insurers, transferees, grantees, legatees, agents, personal representatives and heirs, including those who may assume any and all of the above-described capacities subsequent to the execution and Effective Date of this Release.

7. Entire Release.

This Release and the Agreement signed by Executive contain the entire agreement and understanding between the parties and, except as reserved in Sections 3 and 6 of this Release, supersede and replace all prior agreements, written or oral, prior negotiations and proposed agreements, written or oral. Executive and the Company acknowledge that no other party, nor agent nor attorney of any other party, has made any promise, representation, or warranty, express or implied, not contained in this Release concerning the subject matter of this Release to induce this Release, and Executive and the Company acknowledge that they have not executed this Release in reliance upon any such promise, representation, or warranty not contained in this Release.

8. Severability.

Every provision of this Release is intended to be severable. In the event any term or provision of this Release is declared to be illegal or invalid for any reason whatsoever by a court of competent jurisdiction or by final and unappealed order of an administrative agency of competent jurisdiction, such illegality or invalidity should not affect the balance of the terms and provisions of this Release, which terms and provisions shall remain binding and enforceable.

9. References.

The Company agrees to follow the applicable policy(ies) regarding release of employment reference information.

10. Parties May Enforce Release.

7

Nothing in this Release shall operate to release or discharge any parties to this Release or their successors, assigns, legatees, heirs, or personal representatives from any rights, claims, or causes of action arising out of, relating to, or connected with a breach of any obligation of any party contained in this Release.

11. Governing Law.

This Release shall be construed in accordance with and governed by the laws of the State of Oregon, without regard to its conflicts of laws provisions.

Dated: ,

Stephen T. Collins

STATE OF OREGON    )    )
County of )

Personally appeared the above named Stephen T. Collins and acknowledged the foregoing instrument to be his voluntary act and deed.

Before me:    

NOTARY PUBLIC - OREGON

My commission expires:

RADISYS CORPORATION
By:		Dated:
Its:
	On Behalf of RadiSys Corporation and "Company"

CHIDMS1/3054859.4

8

EX-10.63

EXECUTION VERSION

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ((together with any schedule, annex, or exhibit attached hereto, as the same may be amended, restated, or otherwise modified, this “Agreement”) is entered into as of March 14, 2014 (the “Effective Date”) between SILICON VALLEY BANK, a California corporation (“Bank”), and RADISYS CORPORATION, an Oregon corporation (“Borrower”). This Agreement amends, restates, replaces, and supersedes in its entirety, but is not a novation of, that certain Second Amended and Restated Loan and Security Agreement between Bank and Borrower dated July 29, 2013, as amended to date, and provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties agree as follows:

1ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.

2LOAN AND TERMS OF PAYMENT

2.1Promise to Pay. Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement.

2.2Revolving Advances.

(a)Availability. Subject to the terms and conditions of this Agreement, Bank shall make Advances not exceeding the Net Borrowing Availability. Amounts borrowed under the Revolving Line may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable terms and conditions precedent herein.

(b)Termination; Repayment. The Revolving Line terminates on the Revolving Line Maturity Date, when the principal amount of all Advances, the unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and payable, except for Letters of Credit which are cash collateralized in form and substance reasonably satisfactory to Bank.

2.2.1Letters of Credit Sublimit.

(a)As part of the Revolving Line, Bank shall issue or have issued Letters of Credit for Borrower’s account. The face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) and any Letter of Credit Reserve may not exceed the lesser of One Million Dollars ($1,000,000) or the Net Borrowing Availability. The amount otherwise available for Advances under the Revolving Line shall at all times be reduced by the face amount of issued and outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) and any Letter of Credit Reserve. If, on the Revolving Line Maturity Date, there are any outstanding Letters of Credit, then on such date Borrower or the applicable Loan Party shall provide to Bank cash collateral in an amount equal to 105% of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment), to secure all of the Obligations relating to said Letters of Credit. All Letters of Credit shall be in form and substance acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of Bank’s standard Application and Letter of Credit Agreement (the

“Letter of Credit Application”). Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably request and pay to Bank customary fees and expenses for the issuance or renewal of Letters of Credit (including, without limitation, a Letter of Credit Fee of one and half percent (1.50%) per annum of the face amount of each Letter of Credit issued, upon the issuance, each anniversary of the issuance, and the renewal of such Letter of Credit).

(b)The obligation of Borrower to immediately reimburse Bank for drawings made under Letters of Credit shall be absolute, unconditional, and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, such Letters of Credit, and the Letter of Credit Application.

(c)Borrower may request that Bank issue a Letter of Credit payable in a Foreign Currency. If a demand for payment is made under any such Letter of Credit, Bank shall treat such demand as an Advance to Borrower of the equivalent of the amount thereof (plus standard fees and charges in connection therewith such as wire, cable, SWIFT or similar charges) in Dollars at the then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency.

(d)To guard against fluctuations in currency exchange rates, upon the issuance of any Letter of Credit payable in a Foreign Currency, Bank shall create a reserve (the “Letter of Credit Reserve”) under the Revolving Line in an amount equal to ten percent (10%) of the face amount of such Letter of Credit. The amount of the Letter of Credit Reserve may be adjusted by Bank from time to time to account for fluctuations in the exchange rate. The availability of funds under the Revolving Line shall be reduced by the amount of such Letter of Credit Reserve for as long as such Letter of Credit remains outstanding.

2.3Overadvances. If at any time or for any reason the total of all outstanding Advances exceeds Net Borrowing Availability (an “Overadvance”), Borrower shall immediately pay the amount of such Overadvance to Bank, without notice or demand. Without limiting Borrower's obligation to repay to Bank the amount of any Overadvance, Borrower agrees to pay Bank interest on the oustanding amount of any Overadvance, on demand, at the Default Rate.

2.4Payment of Interest on the Credit Extensions.

(a)Advances. Subject to Section 2.4(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the sum of the Prime Rate plus the applicable Prime Rate Margin, which interest shall be payable monthly in accordance with Section 2.4(e) below.

(b)Default Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at a rate per annum which is two percentage points (2%) above the rate that is otherwise applicable thereto (the “Default Rate”). Fees and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including, without limitation, Bank Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations. Payment or acceptance of the increased interest rate provided in this Section 2.4(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank.

(c)Adjustment to Interest Rate. Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall be effective on the effective date of any change to the Prime Rate and to the extent of any such change.

(d)Minimum Interest. In the event the average of the aggregate of all outstanding Obligations in any month is less than Ten Million Dollars ($10,000,000), Borrower shall pay Bank an amount, payable on the last day of such month, equal to (i) the amount of interest that would have been charged as if Ten Million Dollars ($10,000,000) had been outstanding (the “Minimum Monthly Interest”) minus (ii) the

aggregate amount of all interest earned by Bank (exclusive of any collateral monitoring fees, unused line fees, or any other fees and charges hereunder) in such month.

(e)Payment; Interest Computation. Interest is payable monthly on the last calendar day of each month and shall be computed on the basis of a 360-day year for the actual number of days elapsed. In the event that any interest payment date shall fall on a day that is not a Business Day, such interest payment shall be due on the next succeeding Business Day. In computing interest, (i) all payments received after 12:00 p.m. Pacific time on any day shall be deemed received at the opening of business on the next Business Day, and (ii) the date of the making of any Credit Extension shall be included and the date of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on such Credit Extension.

2.5Fees. Borrower shall pay to Bank:

(a)Modification Fee. A fully earned, non refundable modification fee of Thirty-Five Thousand Dollars ($35,000) on the Effective Date;

(b)Commitment Fee. A fully earned, non‑refundable commitment fee of Thirty-Five Thousand Dollars ($35,000), on (i) July 29, 2014 and (ii) July 29, 2015;

(c)Termination Fee. Upon termination of this Agreement for any reason prior to the Revolving Line Maturity Date, in addition to the payment of any other amounts then-owing, a termination fee in an amount equal to (i) one and one-half percent (1.50%) of the Revolving Line; provided that no termination fee shall be charged if the credit facility hereunder is replaced with a new facility from Bank; and

(d)Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due (or, if no stated due date, upon demand by Bank).

(e)Fees Fully Earned. Unless otherwise provided in this Agreement or in a separate writing by Bank, Borrower shall not be entitled to any credit, rebate, or repayment of any fees earned by Bank pursuant to this Agreement notwithstanding any termination of this Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder. Bank may deduct amounts owing by Borrower under the clauses of this Section 2.5 pursuant to the terms of Section 2.6(c). Bank shall provide Borrower written notice of deductions made from the Designated Deposit Account pursuant to the terms of the clauses of this Section 2.5.

2.6Payments; Application of Payments; Debit of Accounts.

(a)All payments to be made by Borrower under any Loan Document shall be made in immediately available funds in Dollars, without setoff or counterclaim, before 12:00 p.m. Pacific time on the date when due. Payments of principal and/or interest received after 12:00 p.m. Pacific time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid.

(b)Bank has the exclusive right to determine the order and manner in which all payments with respect to the Obligations may be applied. Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply any payments required to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application is not specified elsewhere in this Agreement.

(c)Bank may debit any of Borrower’s deposit accounts, including the Designated Deposit Account, for principal and interest payments or any other amounts Borrower owes Bank when due. Bank

shall make commercially reasonable efforts to promptly notify Borrower after it debits Borrower’s accounts; provided, however, that any failure by Bank to provide Borrower with such notice shall not affet Bank's rights hereunder. These debits shall not constitute a set-off.

2.7Withholding. Payments received by Bank from Borrower under this Agreement will be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority (including any interest, additions to tax or penalties applicable thereto). Specifically, however, if at any time any Governmental Authority, applicable law, regulation or international agreement requires Borrower to make any withholding or deduction from any such payment or other sum payable hereunder to Bank, Borrower hereby covenants and agrees that the amount due from Borrower with respect to such payment or other sum payable hereunder will be increased to the extent necessary to ensure that, after the making of such required withholding or deduction, Bank receives a net sum equal to the sum which it would have received had no withholding or deduction been required, and Borrower shall pay the full amount withheld or deducted to the relevant Governmental Authority. Borrower will, upon request, furnish Bank with proof reasonably satisfactory to Bank indicating that Borrower has made such withholding payment; provided, however, that Borrower need not make any withholding payment if the amount or validity of such withholding payment is contested in good faith by appropriate and timely proceedings and as to which payment in full is bonded or reserved against by Borrower. The agreements and obligations of Borrower contained in this Section 2.7 shall survive the termination of this Agreement.

3CONDITIONS OF LOANS

3.1Conditions Precedent to Initial Credit Extension. Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate, including, without limitation:

a)    duly executed copies of signatures to the Loan Documents;

b)     duly executed copies of signatures to the Reaffirmation of Guaranty by Radisys International substantially in the form of Exhibit B;

c)    duly executed copies of signatures to the completed Borrowing Resolutions for Borrower and each Guarantor, respectively;

d)    subject to the provisions of Section 3.3 below, the Operating Documents and good standing certificates of Borrower and Guarantor certified by the Secretary of State (or equivalent agency) of Borrower’s and Guarantor's jurisdiction of organization or formation and each jurisdiction in which Borrower and Guarantor's failure to be qualified to conduct business would cause a Material Adverse Change, each as of a date no earlier than thirty (30) days prior to the Effective Date;

e)    the insurance policies and/or endorsements required pursuant to Section 6.7 hereof;

f)    (i) searches of UCC filings in the jurisdiction of incorporation or formation, as applicable, of each of Borrower and Guarantor Loan Party, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist other than Permitted Liens and (ii) tax lien, judgment and bankruptcy searches; and

g)    payment of the fees and Bank Expenses then due as specified in Section 2.5 hereof.

3.2Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following conditions precedent:

a)    except as otherwise provided in Section 2.2.1, timely receipt of an executed Transaction Report;

b)    the representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of the Transaction Report and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties in this Agreement remain true, accurate, and complete in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date;

c)    the security interest granted herein continuing to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens; and

d)    Bank determines to its reasonable satisfaction that there has not been a Material Adverse Change.

3.3Post-Closing Conditions. Unless otherwise waived by Bank, within three (3) Business Days after the Effective Date (or such later date set forth below), Bank shall have received, each in form and substance satisfactory to Bank:

(a)good standing certificates of Borrower certified by the Secretary of State (or equivalent agency) of Borrower’s jurisdiction of organization or formation and each jurisdiction in which Borrower’s failure to be qualified to conduct business would cause a Material Adverse Change, each as of a date no earlier than thirty (30) days prior to the Effective Date.

(b)duly executed original signatures to the Loan Documents, including, without limitation, the documents described in Sections 3.3(a), 3.3(b) and 3.3(c); and

3.4Covenant to Deliver. Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a condition precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any such item shall not constitute a waiver by Bank of Borrower’s obligation to deliver such item, and the making of any Credit Extension in the absence of a required item shall be in Bank’s sole discretion.

3.5Procedures for Borrowing. Subject to the prior satisfaction of all other applicable conditions to the making of an Advance (other than Advances under Section 2.2.1) set forth in this Agreement, to obtain an Advance, Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail by 12:00 p.m. Pacific time on the Funding Date of the Advance. In connection with such notification, Borrower must promptly deliver to Bank by electronic mail a completed Transaction Report executed by an Authorized Signer together with such other reports and information, including without limitation, sales journals, cash receipts journals, accounts receivable aging reports, as Bank may request in its sole discretion. Bank shall credit proceeds of an Advance to the Designated Deposit Account. Bank may make Advances under this Agreement based on instructions from an Authorized Signer or without instructions if the Advances are necessary to meet Obligations which have become due.

4CREATION OF SECURITY INTEREST

4.1Grant of Security Interest. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.

Borrower acknowledges that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank. Regardless of the terms of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by the first priority perfected security interest in the Collateral granted herein (subject only to Permitted Liens.

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at the sole cost and expense of Borrower, release its Liens in the Collateral and all rights therein shall revert to Borrower. Bank shall further, at the sole cost and expense of Borrower, execute and deliver to Borrower any and all documents as Borrower may reasonably request and file or authorize Borrower to file with any applicable Governmental Authority any and all documents and/or instruments, including any UCC-3 termination statements, as Borrower shall reasonably request in order to effect the release of Bank’s security interest pursuant to the terms hereof. In the event (x) all Obligations (other than inchoate indemnity obligations), except for Bank Services, are satisfied in full, and (y) this Agreement is terminated, Bank shall terminate the security interest granted herein upon Borrower providing cash collateral acceptable to Bank in its good faith business judgment for Bank Services, if any. In the event such Bank Services consist of outstanding Letters of Credit, Borrower shall provide to Bank cash collateral in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then at least one hundred five percent (105%); and (y) if such Letters of Credit are denominated in a Foreign Currency, then at least one hundred ten percent (110%), of the Dollar Equivalent of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its business judgment), to secure all of the Obligations relating to such Letters of Credit.

4.2Priority of Security Interest. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the general details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank.

4.3Confirmation of Existing Canadian Security. Borrower hereby confirms and agrees that the share pledge dated as of August 12, 2013 granted by the Borrower in favor of the Bank (the “Canadian Share Pledge”) is and shall remain in full force and effect in all respects, notwithstanding this Agreement and the amendments, supplements, and restatements contained herein, and shall continue to exist and apply to all of the Obligations. The foregoing is in addition to and shall not limit, derogate from or otherwise affect any provisions of the Canadian Share Pledge.

4.4Authorization to File Financing Statements. Borrower hereby authorizes Bank to file financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the Code. Such financing statements may indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in Bank’s discretion.

5REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

5.1Due Organization, Authorization; Power and Authority. Borrower and each of its Subsidiaries is duly existing and in good standing in its state or other jurisdiction of formation and qualified and licensed to do business in, and in good standing in, any state or other jurisdiction in which the conduct of their business or its ownership of property requires that they be qualified, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. In connection with this Agreement, Borrower has delivered, and has caused each Guarantor to deliver, to Bank completed certificates substantially in the form reasonably satisfactory to Bank each signed by Borrower or Guarantor, as applicable, entitled “Perfection Certificate”. Borrower represents and warrants to Bank, as of the date stated in the Perfection Certificate, that (a) Borrower’s and each Guarantor’s exact legal name is that indicated on the Perfection Certificates and on the signature pages thereof; (b) Borrower and each Guarantor are an organization of the type and are organized in the jurisdictions set forth in the Perfection Certificates; (c) the Perfection Certificates accurately set forth Borrower’s and each Guarantor’s organizational identification numbers or accurately state that neither Borrower nor such Guarantor has one; (d) the Perfection Certificates accurately set forth Borrower’s and such Guarantor’s places of business, or, if more than one, its respective chief executive office as well as Borrower’s and such Guarantor’s mailing addresses (if different than its respective chief executive office); (e) except as set forth on the Disclosure Schedule, Borrower and such Guarantor (and each of its respective predecessors) have not, in the past five (5) years, changed its respective state or other jurisdiction of formation, organizational structure or type, or any organizational number assigned by its respective jurisdiction; and (f) all other information set forth on the Perfection Certificates pertaining to Borrower and each of its Subsidiaries is accurate and complete. If neither Borrower nor any Guarantor is a Registered Organization but later becomes one, Borrower shall, and shall cause each Guarantor to promptly notify Bank of such occurrence and provide Bank with Borrower’s and such Guarantor’s organizational identification numbers.

The execution, delivery and performance, by each of Borrower and Guarantor, of the Loan Documents to which it is a party have been duly authorized, and do not (i) conflict with any of Borrower’s or Guarantor’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect or (v) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration of, any material agreement by which each of Borrower or Guarantor is bound. Neither Borrower nor Guarantor is in default under any agreement to which it is a party or by which it is bound in which the default could reasonably be expected to result in a Material Adverse Change.

5.2Collateral. Each of Borrower and Guarantor, as applicable, has good title to, rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Neither Borrower nor Guarantor has any Collateral Accounts at or with any bank or financial institution other than Bank or Bank’s Affiliates except for the Collateral Accounts described in the Perfection Certificates delivered to Bank in connection herewith and as to which Borrower or Guarantor, as applicable, has taken such actions as are necessary to give Bank a perfected security interest therein, pursuant to the terms of Section 6.8(c). The Accounts are bona fide, existing obligations of the Account Debtors.

The Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificates. None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificates.

All Inventory is in all material respects of good and marketable quality, free from material defects. Each of Borrower and Guarantor, as applicable, is the sole owner of the Intellectual Property which it owns or purports to own except for (a) non-exclusive licenses granted to its customers in the ordinary course of business, (b) over-the-counter software that is commercially available to the public, and (c) material Intellectual Property licensed to Borrower or Guarantor, as applicable, and noted on the Perfection Certificates. Each Patent which Borrower or Guarantor, as applicable, owns or purports to own and which is material to Borrower’s and/or Guarantor’s business is valid and enforceable, and no part of the Intellectual Property which either Borrower or Guarantor owns or purports to own and which is material to Borrower’s and/or Guarantor’s business has been judged invalid or unenforceable, in whole or in part. To the best of Borrower’s knowledge, no claim has been made that any part of the Intellectual Property violates the rights of any third party except to the extent such claim would not reasonably be expected to have a material adverse effect on Borrower’s business. Except as noted on the Perfection Certificates, neither Borrower nor Guarantor is a party to, nor bound by, any Restricted License.

5.3Accounts Receivable.

(a)For each Account with respect to which Advances are requested, on the date each Advance is requested and made, such Account shall be an Eligible Account.

(b)All statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the Eligible Accounts are and shall be true and correct and all such invoices, instruments and other documents, and all of Borrower’s Books are genuine and in all respects what they purport to be. All sales and other transactions underlying or giving rise to each Eligible Account shall comply in all material respects with all applicable laws and governmental rules and regulations. Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible Accounts in any Transaction Report. To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to all Eligible Accounts are genuine, and all such documents, instruments and agreements are legally enforceable in accordance with their terms.

5.4Litigation. There are no actions or proceedings pending or, to the knowledge of any Responsible Officer of the Borrower or any of its Subsidiaries, threatened in writing by or against Borrower or any of its Subsidiaries in which an adverse decision could reasonably be expected to cause a Material Adverse Change.

5.5Financial Statements; Financial Condition. All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations. There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to Bank.

5.6Solvency. The fair salable value of Borrower’s and each of its Subsidiaries' consolidated assets (including goodwill minus disposition costs) exceeds the fair value of Borrower’s liabilities; Neither Borrower nor any of its Subsidiaries is left with unreasonably small capital after the transactions in this Agreement; and Borrower and each of its Subsidiaries is able to pay its debts (including trade debts) as they mature.

5.7Regulatory Compliance. Neither Borrower nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act of 1940, as amended. Neither Borrower nor any of its Subsidiaries is engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of

Governors). Borrower and each of its Subsidiaries (a) has complied in all material respects with all Requirements of Law, and (b) has not violated any Requirements of Law the violation of which could reasonably be expected to cause a Material Adverse Change. None of Borrower’s nor any of its Subsidiaries’ properties nor assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Government Authorities that are necessary to continue their respective businesses as currently conducted, except where the failure to do so could not reasonably be expected to have a material adverse effect on the business of the Borrower or any of its Subsidiaries.

5.8Subsidiaries; Investments. Neither Borrower nor any of its Subsidiaries owns any stock, partnership, or other ownership interest or other equity securities except for Permitted Investments.

5.9Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor.

To the extent Borrower defers payment of any contested taxes, Borrower shall (i) notify Bank in writing of the commencement of, and any material development in, the proceedings, and (ii) post bonds or take any other steps required to prevent the governmental authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien.” Neither Borrower nor any of its Subsidiaries is aware of any claims or adjustments proposed for any of Borrower's prior tax years which could result in additional taxes becoming due and payable by Borrower or such Subsidiary. Borrower and each of its Subsidiaries has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and neither Borrower nor any of its Subsidiaries has withdrawn from participation in, nor permitted partial or complete termination of, nor permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower or any of its Subsidiaries, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

5.10Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely as working capital and to fund its general business requirements and not for personal, family, household or agricultural purposes.

5.11Full Disclosure. No written representation, warranty or other statement of Borrower or any Subsidiary in any certificate or written statement given to Bank, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Bank, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower or any of its Subsidiaries in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

5.12    Definition of “Knowledge.” For purposes of the Loan Documents, whenever a representation or warranty is made to Borrower’s or any Subsidiary’s knowledge or awareness, to the “best of” Borrower’s or such Subsidiary’s knowledge, or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation, of any Responsible Officer.

6AFFIRMATIVE COVENANTS

Borrower shall, and shall cause each of its Subsidiaries to, do all of the following:

6.1Government Compliance.

a)    Maintain its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on Borrower’s business or operations. Borrower shall comply, and have each Subsidiary comply, in all material respects, with all laws, ordinances and regulations to which it is subject.

6.2Financial Statements, Reports, Certificates. Provide Bank with the following:

a)    Deliver to Bank:

i.(A) as soon as available, but no later than fifteen (15) days after the end of each month at which there are outstanding Obligations on account of Advances or Letters of Credit, and (B) forty-five (45) days after the last day of each fiscal quarter whether or not there are outstanding Obligations, a company prepared consolidated and consolidating balance sheet and income statement prepared under GAAP (subject to the absence of footnotes and year-end adjustments) covering Borrower’s and each of its Subsidiary’s operations during the period certified by a Responsible Officer and in a form acceptable to Bank;

ii.as soon as available, but no later than fifteen (15) days after the end of each month consolidated and consolidating cash flow statements evidencing Borrower’s compliance with terms of Section 6.8(b);

iii.as soon as available, but no later than ninety (90) days after the last day of Borrower’s fiscal year, audited consolidated and consolidating financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm acceptable to Bank in its reasonable discretion;

iv.within five (5) days of delivery, copies of all statements, reports and notices made available to Borrower’s security holders or to any holders of Subordinated Debt or the holders of the 2015 Notes;

v.(A) within five (5) days of filing, but in any case no later than forty-five (45) days after the last day of each fiscal quarter, all reports on Form 10-Q (“10Q”) filed with the Securities and Exchange Commission (which delivery obligation may be satisfied by posting a link thereto on Borrower’s or another website on the Internet), (B) within five (5) days of filing, but in any case no later than ninety (90) days after the last day of each fiscal year, all reports on Form 10-K (“10K”) filed with the Securities and Exchange Commission (which delivery obligation may be satisfied by posting a link thereto on Borrower’s or another website on the Internet), and (c) within five (5) days of filing, all reports on Form 8 K (“8K”) filed with the Securities and Exchange Commission (which delivery obligation may be satisfied by posting a link thereto on Borrower’s or another website on the Internet);

vi.a prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of Two Hundred and Fifty Thousand Dollars ($250,000) or more to the extent not covered by insurance, or in which an adverse decision could reasonably be expected to cause a Material Adverse Change (collectively, “Material Litigation”);

vii.prompt notice of an event that materially and adversely affects the value of the Intellectual Property;

viii.as soon as available, but no later than sixty (60) days after the last day of Borrower’s fiscal year, annual board approved financial projections; and

ix.budgets, sales projections, operating plans and other financial information reasonably requested by Bank.

Borrower’s 10K, 10Q, and 8K reports required to be delivered pursuant to Section 6.2(a)(v) shall be deemed to have been delivered on the date on which Borrower posts such report or provides a link thereto on Borrower’s or another website on the Internet; provided, that Borrower shall provide paper copies to Bank of the Compliance Certificates required by Section 6.2(b). Delivery of Borrower’s 10Q and 10K reports, respectively, in accordance with the provisions of this Section 6.2, shall be deemed to satisfy the reporting requirements of Section 6.2(a)(i)(B) and Section 6.2(a)(ii) above.

b)    (i) Monthly, within fifteen (15) days after the last day of each month at which there are outstanding Obligations on account of Advances or Letters of Credit, deliver to Bank a duly completed Compliance Certificate signed by a Responsible Officer of Borrower setting forth calculations showing compliance with Section 6.9(a) of this Agreement; and (ii) together with the delivery of the quarterly and annual financial statements or reports required by Section 6.2(a)(i)(B) and Section 6.2(a)(ii) above, a duly completed Compliance Certificate signed by a Responsible Officer of Borrower setting forth calculations showing compliance with the financial covenants set forth in this Agreement, and including a reconciliation of actual restructuring charges against plan for such period.

c)     A Transaction Report (and any schedules related thereto) (i) with each request for an Advance, (ii) no later than 5:00 p.m. Pacific time Monday of each week immediately following a week when Liquidity is less than the Liquidity Threshold, and (iii) within twenty (20) days after the end of each month when Liquidity is greater than or equal to the Liquidity Threshold.

d)    Other financial information reasonably requested by Bank.

6.3Accounts Receivable.

a)    Schedules and Documents Relating to Accounts. Borrower shall deliver to Bank Transaction Reports and schedules of collections, as provided in Section 6.2, on Bank's standard forms; provided, however, that Borrower’s failure to execute and deliver the same shall not affect or limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall Bank’s failure to advance or lend against a specific Account affect or limit Bank’s Lien and other rights therein. If requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s request and if in the Borrower's known possession, originals) of all contracts, orders, invoices, and other similar documents, and all shipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or disposition of which gave rise to such Accounts. In addition, Borrower shall deliver to Bank, on its request and if in the Borrower's known possession, the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property evidencing or securing any Accounts, in the same form as received, with all necessary endorsements, and copies of all credit memos.

b)    Disputes. Borrower shall promptly notify Bank of all disputes or claims relating to Accounts. Borrower may forgive (completely or partially), compromise, or settle any Account for less than payment in full, or agree to do any of the foregoing so long as (i) Borrower does so in good faith, in a commercially reasonable manner, in the ordinary course of business, in arm’s-length transactions, and reports the same to Bank in the regular reports provided to Bank; (ii) no Event of Default has occurred and is continuing; and (iii) after taking into account all such discounts, settlements and forgiveness, the total outstanding Advances will not exceed the lesser of the Revolving Line or the Borrowing Base.

c)    Collection of Accounts. Borrower shall have the right to collect all Accounts, unless and until an Event of Default has occurred and is continuing. Borrower shall, direct Account Debtors to deliver or

transmit all proceeds of Accounts into a lockbox account, or via electronic deposit capture into a “blocked account” as specified by Bank (either such account, the “Cash Collateral Account”), pursuant to a blocked account agreement in form and substance satisfactory to as Bank. Whether or not an Event of Default has occurred and is continuing, Borrower shall immediately deliver all payments on and proceeds of Accounts to the Cash Collateral Account (i) to be applied to immediately reduce the Obligations when Liquidity is less then the Liquidity Threshold, or (ii) to be transferred on a daily basis to Borrower’s operating account with Bank when Liquidity is equal to or greater than the Liquidity Threshold. After the occurrence of an Event of Default, any amounts received by Borrower or any Guarantor shall be held in trust by Borrower or such Guarantor for Bank, and, if requested by Bank, Borrower shall, and shall cause each Guarantor to, immediately deliver such receipts to Bank in the form received from the Account Debtor, with proper endorsements for deposit.

d)    Returns. Provided no Event of Default has occurred and is continuing, if any Account Debtor returns any Inventory to Borrower, Borrower shall promptly (i) determine the reason for such return, (ii) issue a credit memorandum to the Account Debtor in the appropriate amount, and (iii) provide a copy of such credit memorandum to Bank, upon request from Bank. In the event any attempted return occurs after the occurrence and during the continuance of any Event of Default, Borrower shall hold the returned Inventory in trust for Bank, and immediately notify Bank of the return of the Inventory.

e)    Verification. Bank may, from time to time, verify directly with the respective Account Debtors the validity, amount and other matters relating to the Accounts, either in the name of Borrower or Bank or such other name as Bank may choose, and notify any Account Debtor of Bank’s security interest in such Account.

f)    No Liability. Bank shall not be responsible or liable for any shortage or discrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of which gives rise to an Account, or for any error, act, omission, or delay of any kind occurring in the settlement, failure to settle, collection or failure to collect any Account, or for settling any Account in good faith for less than the full amount thereof, nor shall Bank be deemed to be responsible for any of Borrower's obligations under any contract or agreement giving rise to an Account. Nothing herein shall, however, relieve Bank from liability for its own gross negligence or willful misconduct.

6.4Remittance of Proceeds. Except as otherwise provided in Section 6.3(c), deliver, in kind, all proceeds arising from the disposition of any Collateral to Bank in the original form in which received by Borrower not later than the following Business Day after receipt by Borrower, to be applied to the Obligations (a) prior to an Event of Default, pursuant to the terms of Section 2.6(c) hereof, and (b) after the occurrence and during the continuance of an Event of Default, pursuant to the terms of Section 9.4 hereof; provided that, if no Event of Default has occurred and is continuing, Borrower shall not be obligated to remit to Bank the proceeds of the sale of worn out or obsolete Equipment disposed of by Borrower in good faith in an arm’s length transaction for an aggregate purchase price of Twenty-Five Thousand Dollars ($25,000) or less (for all such transactions in any fiscal year). Borrower agrees that it will not commingle proceeds of Collateral with any of Borrower’s other funds or property, but will hold such proceeds separate and apart from such other funds and property and in an express trust for Bank. Nothing in this Section 6.4 limits the restrictions on disposition of Collateral set forth elsewhere in this Agreement.

6.5Taxes; Pensions. Timely file, and require each of its Subsidiaries to timely file, all required tax returns and reports and timely pay, and require each of its Subsidiaries to timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of Section 5.9 hereof, and shall deliver to Bank, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.

6.6Access to Collateral; Books and Records. At reasonable times, on five (5) Business Days' notice (provided no notice is required if Bank reasonably believes an Event of Default has occurred and is continuing), Bank, or its agents, shall have the right to inspect the Collateral and the right to audit and copy Borrower’s Books. The foregoing inspections and audits shall be conducted at Borrower’s expense and no more often than once every twelve (12) months unless (i) Liquidity is less than the Liquidity Threshold, in which case such inspections and audits shall occur once every six (6) months or (ii) an Event of Default has occurred and is continuing, in which case such inspections and audits shall occur as often as Bank shall determine is necessary. The charge therefor shall be Eight Hundred and Fifty Dollars ($850) per person per day (or such higher amount as shall represent Bank’s then-current standard charge for the same), plus reasonable out-of-pocket expenses. In the event Borrower and Bank schedule an audit more than ten (10) days in advance, and Borrower cancels or seeks to reschedules the audit with less than ten (10) days written notice to Bank, then (without limiting any of Bank’s rights or remedies) Borrower shall pay Bank a fee of One Thousand Dollars ($1,000) plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of the cancellation or rescheduling.

6.7Insurance.

a)    Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry and location and as Bank may reasonably request. Insurance policies shall be in a form, with financially sound and reputable insurance companies that are not Affiliates of Borrower, and in amounts that are satisfactory to Bank. All property policies shall have a lender’s loss payable endorsement showing Bank as lender loss payee. All liability policies shall show, or have endorsements showing, Bank as an additional insured. Bank shall be named as lender loss payee and/or additional insured with respect to any such insurance providing coverage in respect of any Collateral.

b)    Ensure that proceeds payable under any property policy are, at Bank’s option, payable to Bank on account of the Obligations.

c)     At Bank’s request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments. Each provider of any such insurance required under this Section 6.7 shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to Bank, that it will give Bank thirty (30) days prior written notice before any such policy or policies shall be materially altered or canceled. If Borrower fails to obtain insurance as required under this Section 6.7 or to pay any amount or furnish any required proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain such insurance policies required in this Section 6.7, and take any action under the policies Bank deems prudent.

6.8Operating Accounts.

a)    As of the Effective date through August 31, 2014, maintain its and its Subsidiaries’ primary Domestic operating and other deposit and investment accounts with Bank and Bank’s Affiliates; provided , however, that Borrower may hold up to Eight Million Dollars ($8,000,000) in accounts maintained at financial institutions outside of the United States that are not Bank or Bank's Affiliates (“Unaffiliated Foreign Financial Institutions”).

b)    As ofSeptember 1, 2014, and at all times thereafter, Borrower shall, and shall cause its Subsidiaries to, (i) maintain Borrower's and its Subsidiaries’ primary Domestic operating and other deposit and investment accounts with Bank and Bank’s Affiliates, (ii) ensure that the aggregate Dollar Equivalent maintained in all such accounts under clauses (i) shall at all times equal at least Four Million Dollars ($4,000,000) and (iii) ensure that the Dollar Equivalent of all Borrower’s and its Subsidiaries’ Accounts maintained at either Bank, Bank’s Affiliates or in an account maintained at all times with a financial institution as to which Bank shall have received a Control Agreement shall represent at least 50% of the Dollar Equivalent

of Borrower’s and its Subsidiaries’ Accounts at all financial institutions worldwide, as of the last Business Day of each month.

c)    Provide Bank five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates. For each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement may not be terminated without the prior written consent of Bank. The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes, and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as such.

6.9Financial Covenants.

Maintain as of the last day of each month, unless otherwise noted, on a consolidated basis with respect to Borrower and its Subsidiaries:

a)    Minimum Liquidity. Liquidity of not less than Ten Million Dollars ($10,000,000) as of the last Business Day of each month.

6.10Protection and Registration of Intellectual Property Rights.

a)    (i) Protect, defend and maintain the validity and enforceability of its Intellectual Property; (ii) promptly advise Bank in writing of material infringements or any other event that could reasonably be expected to materially and adversely affect the value of its Intellectual Property; and (iii) not allow any Intellectual Property material to Borrower’s or any Guarantor’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent.

6.11Litigation Cooperation. From the date hereof and continuing through the termination of this Agreement, make available to Bank, without expense to Bank, Borrower and each of its Subsidiaries and their respective officers, employees and agents and Borrower’s Books and records, to the extent that Bank may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Bank with respect to any Collateral or relating to Borrower or any such Subsidiary.

6.12Formation or Acquisition of Subsidiaries. Notwithstanding and without limiting the negative covenants contained in Sections 7.3 and 7.7 hereof, in the event that any Person becomes a Domestic Subsidiary of Borrower or any other existing Domestic Subsidiary and has total assets with a book value in excess of Two Million and Five Hundred Thousand Dollars ($2,500,000), Borrower shall, and shall cause the new Subsidiary and the existing Subsidiary to (a) concurrently with such Person becoming a Domestic Subsidiary, cause such Domestic Subsidiary to guarantee all of the Obligations and to grant to Bank a first priority Lien (subject to Permitted Liens) in the Collateral by delivering to Bank a guarantee in form and substance satisfactory to Bank, and (b) take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates necessary to effectuate such Domestic Subsidiary becoming a Guarantor and to grant such Lien in the Collateral referenced above. In the event that any Person becomes a Foreign Subsidiary of the Borrower or any existing Subsidiary and if the new Subsidiary is a Foreign Subsidiary in respect of which the pledge of all of the equity interest of such Subsidiary as Collateral would, in the good faith judgment of the Borrower, result in material adverse tax consequences to the Borrower or such existing Subsidiary, then Borrower or such existing Subsidiary shall pledge only sixty five percent (65%) of the ownership interests of such Foreign Subsidiary and such Foreign Subsidiary shall not be required to be Guarantor or grantor hereunder.

6.13Further Assurances. Execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral or to effect the purposes of this Agreement.

7NEGATIVE COVENANTS

Borrower shall not, and shall not permit any of its Subsidiaries to, do any of the following without Bank’s prior written consent, for so long as Bank has an obligation to lend or there are any outstanding Obligations:

7.1Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers

a)    of Inventory in the ordinary course of business for fair market value;

b)    to (i) Borrower or any Guarantor from Borrower or any of its Subsidiaries or (ii) any Subsidiary of Borrower (which is not a Guarantor) to any other Subsidiary of Borrower (which is not a Guarantor);

c)    of property to the extent such property is exchanged for credit against, or proceeds are promptly applied to, the purchase price of other property used or useful in the business of Borrower or its Subsidiaries;

d)    constituting non-exclusive licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business and other non-perpetual licenses that may be exclusive in some respects other than territory (and/or that may be exclusive as to territory only in discreet geographical areas outside of the United States), but that could not result in a legal transfer of Borrower’s title in the licensed property;

e)    otherwise permitted by the Loan Documents;

f)    involving sales or discounting of delinquent accounts in the ordinary course of business;

g)    associated with the making or disposition of a Permitted Investment;

h)    in connection with a permitted acquisition of a portion of the assets or rights acquired; and

i)    not otherwise permitted in this Section 7.1, provided, that the aggregate book value of all such Transfers by Borrower and its Subsidiaries, together, shall not exceed One Million Dollars ($1,000,000) in any fiscal year.

7.2Changes in Business; Change in Control; Jurisdiction of Formation. Engage in any material line of business other than those lines of business conducted by Borrower and its Subsidiaries on the date hereof and any businesses reasonably related, complementary or incidental thereto or reasonable extensions thereof; permit or suffer any Change in Control. Borrower will not, without prior written notice, change its jurisdiction of formation.

7.3Mergers or Acquisitions. Merge, amalgamate, or consolidate, or permit any of its Subsidiaries to merge, amalgamate, or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person; provided, however, that a Subsidiary may merge, amalgamate, or consolidate into a Guarantor or into Borrower or a Subsidiary which is not a Guarantor may merge, amalgamate, or consolidate with or into another Subsidiary which is not a Guarantor.

7.4Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.

7.5Encumbrance. Create, incur, or allow any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security interest granted herein, or enter into any agreement, document, instrument or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s Intellectual Property without Bank’s prior written consent, except as is otherwise permitted in Section 7.1 hereof and the definition of “Permitted Lien” herein.

7.6Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.8 hereof.

7.7Distributions; Investments. Directly or indirectly acquire or own any Person, or make any Investment in any Person, other than Permitted Investments, Permitted Distributions or as permitted pursuant to Section 7.3 hereof, or pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock; except Borrower may repurchase an amount not in excess of Twenty Million Dollars ($20,000,000) in the aggregate of Borrower’s capital stock during the period from November 1, 2011 through the Revolving Line Maturity Date.

7.8Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower or any Subsidiary than would be obtained in an arm’s length transaction with a non-affiliated Person.

7.9Subordinated Debt. Make or permit any payment on or amendments of any Subordinated Debt or the 2015 Notes, except (a) so long as no Event of Default has occurred and is continuing and no Default or Event of Default occurs or will occur on account thereof, regularly scheduled principal and interest payments pursuant to the terms of the 2015 Notes; (b) payments made with Borrower’s capital stock or other Subordinated Debt; or (c) amendments to Subordinated Debt so long as such Subordinated Debt remains subordinated in right of payment to this Agreement and any Liens securing such Subordinated Debt remain subordinate in priority to Bank’s Lien hereunder.

7.10Compliance. Become an “investment company” or a company controlled by an “investment company”, under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s or any Subsidiary’s business, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower or any Subsidiary, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

8EVENTS OF DEFAULT

Any one of the following shall constitute an event of default (an “Event of Default”) under this Agreement:

8.1Payment Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension when due, or (b) pay any other Obligations within three (3) Business Days after such

Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the Revolving Line Maturity Date). During the cure period, the failure to make or pay any payment specified under clause (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure period);

8.2Covenant Default.

a)    Borrower fails or neglects to perform any obligation in Sections 6.2, 6.5, 6.7, 6.8, 6.9, 6.12 or violates any covenant in Section 7; or

b)    Borrower or any Guarantor fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement, any Loan Documents, and as to any default (other than those specified in this Section 8) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such cure period). Cure periods provided under this section shall not apply, among other things, to financial covenants or any other covenants set forth in clause (a)) above;

8.3Material Adverse Change. A Material Adverse Change occurs;

8.4Attachment; Levy; Restraint on Business. (a) Any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy is not removed in ten (10) days; (b) the service of process upon Borrower seeking to attach, by trustee or similar process, any funds of Borrower on deposit with Bank, or any entity under control of Bank (including a subsidiary); (c) Borrower is enjoined, restrained, or prevented by court order from conducting a material part of its business; (d) a judgment or other claim in excess of One Million Dollars ($1,000,000) becomes a Lien on any of Borrower’s assets; or (e) a notice of lien, levy, or assessment is filed against any of Borrower’s assets by any government agency and not paid within ten (10) days after Borrower receives notice. These are not Events of Default, if cured, if stayed or if a bond is posted in each case within thirty (30) days after such event pending contest or resolution by Borrower (but no Credit Extensions shall be made during the cure period);

8.5Insolvency. (a) Borrower is unable to pay its debts (including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower or any of its Subsidiaries begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower or any of its Subsidiaries and is not dismissed or stayed within thirty (30) days (but no Credit Extensions shall be made while any of the conditions described in clause (a) exist and/or until any Insolvency Proceeding is dismissed);

8.6Other Agreements. If Borrower fails to (a) make any payment that is due and payable with respect to any Material Indebtedness and such failure continues after the applicable grace or notice period, if any, specified in the agreement or instrument relating thereto, or (b) perform or observe any other condition or covenant, or any other event shall occur or condition exist under any agreement or instrument relating to any Material Indebtedness, and such failure continues after the applicable grace or notice period, if any, specified in the agreement or instrument relating thereto and the effect of such failure, event or condition is to cause the holder or holders of such Material Indebtedness to accelerate the maturity of such Material Indebtedness or cause the mandatory repurchase of any Material Indebtedness;

8.7Judgments; Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment of money in an amount, individually or in the aggregate, of at least One Million Dollars ($1,000,000) (not covered by independent third-party insurance as to which liability has been accepted by

such insurance carrier) shall be rendered against Borrower by any Governmental Authority, and the same are not, within ten (10) days after the entry, assessment or issuance thereof, discharged, satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay (provided that no Credit Extensions will be made prior to the satisfaction, payment, discharge, stay, or bonding of such fine, penalty, judgment, order or decree);

8.8Misrepresentations. Borrower or any Person acting for Borrower makes any representation, warranty, or other statement now or later in this Agreement, any Loan Document or in any writing delivered to Bank or to induce Bank to enter this Agreement or any other Loan Document, and such representation, warranty, or other statement is incorrect in any material respect when made;

8.9Subordinated Debt. A default or breach occurs under (a) any agreement between Borrower and any creditor of Borrower that signed a subordination, intercreditor, or other similar agreement with Bank, or any creditor that has signed such an agreement with Bank breaches any terms of such agreement, (b) the 2015 Notes, or (c) any FX Contract between any of Borrower’s Subsidiaries and the Bank; or

8.10Guaranty. (a) Any guaranty of any Obligations terminates or ceases for any reason to be in full force and effect; (b) any Guarantor does not perform any obligation or covenant under any guaranty of the Obligations; (c) any circumstance described in Sections 8.3, 8.4, 8.5, 8.7, or 8.8 occurs with respect to any Guarantor, or (d) the liquidation, winding up, or termination of existence of any Guarantor; or (e) (i) a material impairment in the perfection or priority of Bank’s Lien in the collateral provided by Guarantor or in the value of such collateral or (ii) a material adverse change in the general affairs, management, results of operation, condition (financial or otherwise) or the prospect of repayment of the Obligations occurs with respect to any Guarantor.

9BANK’S RIGHTS AND REMEDIES

9.1Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, without notice or demand, do any or all of the following:

a)    declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);

b)    stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Bank;

c)    demand that Borrower (i) deposit cash with Bank in an amount equal to at least 105% or 110%, as applicable, of the Dollar Equivalent of the aggregate face amount of all Letters of Credit remaining undrawn (plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)), to secure all of the Obligations relating to such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all Letter of Credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit;

d)    terminate any FX Contracts;

e)    verify the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles, settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Bank considers advisable, and notify any Person owing Borrower money of Bank’s security interest in such funds;

f)    make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral. Borrower shall, and shall cause each Guarantor to, assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises

where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants, and shall cause each Guarantor to grant to, Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies;

g)    apply to the Obligations any (i) balances and deposits of Borrower or any Guarantor it holds, or (ii) any amount held by Bank owing to or for the credit or the account of Borrower or any Guarantor;

h)    ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s and any Guarantor’s labels, Patents, Copyrights, mask works, rights of use of any name, trade secrets, trade names, service marks, Trademarks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section 9, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit;

i)    place a “hold” on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral;

j)    demand and receive possession of Borrower’s Books; and

k)    exercise all rights and remedies available to Bank under the Loan Documents or at law or equity, including all remedies provided under the Code (including disposal of the Collateral pursuant to the terms thereof).

9.2Power of Attorney. Borrower hereby irrevocably appoints, and shall cause each Guarantor to appoint, Bank as its lawful attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower’s or such Guarantor’s name on any checks or other forms of payment or security; (b) sign Borrower’s or such Guarantor’s name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust all claims under Borrower’s or such Guarantor’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints, and shall cause each Guarantor to appoint, Bank as its lawful attorney-in-fact to sign Borrower’s or such Guarantor’s name on any documents necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and Bank is under no further obligation to make Credit Extensions hereunder. Bank’s foregoing appointment as Borrower’s and each Guarantor’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions terminates.

9.3Protective Payments. If Borrower or any Guarantor fails to obtain the insurance called for by Section 6.7 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document or which may be required to preserve the Collateral, Bank may obtain such insurance or make such payment, and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then highest rate applicable to the Obligations, and secured by the Collateral. Bank will make reasonable efforts to provide Borrower or such Guarantor with notice of Bank obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default.

9.4Application of Payments and Proceeds. If an Event of Default has occurred and is continuing, Bank shall have the right to apply in any order any funds in its possession, whether from Borrower or any Guarantor account balances, payments, proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations. Bank shall pay any surplus to Borrower by credit to the Designated Deposit Account or to other Persons legally entitled thereto; Borrower and each Guarantor shall remain liable to Bank for any deficiency. If Bank, directly or indirectly, enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Bank of cash therefor.

9.5Bank’s Liability for Collateral. So long as Bank complies with reasonable banking practices regarding the safekeeping of the Collateral in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower and each Guarantor bear all risk of loss, damage or destruction of the Collateral.

9.6No Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to require strict performance by Borrower of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by the party granting the waiver and then is only effective for the specific instance and purpose for which it is given. Bank’s rights and remedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election and shall not preclude Bank from exercising any other remedy under this Agreement or other remedy available at law or in equity, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay in exercising any remedy is not a waiver, election, or acquiescence.

9.7Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable.

10NOTICES

All notices, consents, requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below. Bank or Borrower may change its mailing or electronic mail address or facsimile number by giving the other party written notice thereof in accordance with the terms of this Section 10.

If to Borrower:Radisys Corporation

5435 NE Dawson Creek Drive

Hillsboro, OR 97124

Attn: Barb Doolin

Fax: (503) 615-1121

Email: barb.doolin@radisys.com

If to Bank:Silicon Valley Bank

555 Mission Street, Suite 900

San Francisco, CA 94105

Attn: Richard DaCosta

Fax: (415) 615-0076

Email: RDacosta@svb.com

11Choice of Law, Venue, Jury Trial Waiver and Judicial Reference

California law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently provided by Borrower in accordance with, Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,] BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them arising at any time shall be decided by a reference to a private judge, mutually selected by the parties (or, if they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California Code of Civil Procedure § 638 (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby submit to the jurisdiction of such court. The reference proceedings shall be conducted pursuant to and in accordance with the provisions of California Code of Civil Procedure Sections 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisional relief, including without limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential and all records relating thereto shall be permanently sealed. If during the course of

any dispute, a party desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such party may apply to the Santa Clara County, California Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a court under the rules of evidence applicable to judicial proceedings. The parties shall be entitled to discovery which shall be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discovery rules and orders applicable to judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private judge shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall report a statement of decision thereon pursuant to California Code of Civil Procedure Section 644(a). Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies, foreclose against collateral, or obtain provisional remedies. The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph.]

This Section 11 shall survive the termination of this Agreement.

12GENERAL PROVISIONS

12.1Termination Prior to Revolving Line Maturity Date; Survival. All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations have been satisfied. So long as Borrower has satisfied the Obligations (other than inchoate indemnity obligations, any other obligations which, by their terms, are to survive the termination of this Agreement, and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement), this Agreement may be terminated prior to the Revolving Line Maturity Date by Borrower, effective three (3) Business Days after written notice of termination is given to Bank. Those obligations that are expressly specified in this Agreement as surviving this Agreement’s termination shall continue to survive notwithstanding this Agreement’s termination.

12.2Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights or obligations under it without Bank’s prior written consent (which may be granted or withheld in Bank’s discretion). Bank has the right, without the consent of or notice to Borrower or any Guarantor, to sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights, and benefits under this Agreement and the other Loan Documents.

12.3Indemnification.

a)    Borrower agrees, and shall cause each Guarantor, to indemnify, defend and hold Bank and its directors, officers, employees, agents, attorneys, or any other Person affiliated with or representing Bank (each, an “Indemnified Person”) harmless against: (i) all obligations, demands, claims, and liabilities (collectively, “Claims”) claimed or asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (ii) all losses or expenses (including Bank Expenses) in any way suffered, incurred, or paid by such Indemnified Person as a result of, following from, consequential to, or arising from transactions between Bank and Borrower and/or any Guarantor (including reasonable attorneys’ fees and expenses), except for Claims and/or losses directly caused by such Indemnified Person’s gross negligence or willful misconduct.

b)    If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures Bank could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of Borrower with respect to any such sum due from it to Bank hereunder or under any other Loan Document

shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by Bank of any sum adjudged to be so due in the Judgment Currency, Bank may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to Bank from Borrower in the Agreement Currency, Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify Bank against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to Bank in such currency, Bank agrees to return the amount of any excess to Borrower (or to any other Person who may be entitled thereto under applicable law).

This Section 12.3 shall survive until all statutes of limitation with respect to the Claims, losses, and expenses for which indemnity is given shall have run.

12.4Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement.

12.5Severability of Provisions. Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.

12.6Correction of Loan Documents. Bank may correct patent errors and fill in any blanks in the Loan Documents consistent with the agreement of the parties.

12.7Amendments in Writing; Waiver; Integration. No purported amendment or modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by the party against which enforcement or admission is sought. Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan Document. Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. The Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Documents merge into the Loan Documents.

12.8Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement.

12.9Confidentiality. In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (a) to Bank’s Subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with Bank, collectively, “Bank Entities”); (b) to prospective transferees or purchasers of any interest in the Credit Extensions (provided, however, Bank shall use commercially reasonable efforts to obtain any prospective transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise required in connection with Bank’s examination or audit; (e) as Bank considers appropriate in exercising remedies under the Loan Documents; and (f) to third-party service providers of Bank so long as such service providers have executed a confidentiality agreement with Bank with terms no less restrictive than those contained herein. Confidential information does not include information that is either: (i) in the public domain or in Bank’s possession when disclosed to Bank, or becomes part of the public domain after disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information.

Bank Entities may use confidential information for the development of databases, reporting purposes, and market analysis so long as such confidential information is aggregated and anonymized prior to distribution unless otherwise expressly permitted by Borrower.  The provisions of the immediately preceding sentence shall survive the termination of this Agreement.

12.10Attorneys’ Fees, Costs and Expenses. In any action or proceeding between Borrower and any Guarantor, on the one hand, and Bank, on the other, arising out of or relating to the Loan Documents, the prevailing party shall be entitled to recover its reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other relief to which it may be entitled.

12.11Electronic Execution of Documents. The words “execution,” “signed,” “signature” and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.

12.12Captions. The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

12.13Construction of Agreement. The parties mutually acknowledge that they and their attorneys have participated in the preparation and negotiation of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist.

12.14Relationship. The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement. The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arm’s-length contract.

12.15Third Parties. Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or remedies under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any person not an express party to this Agreement; or (c) give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.

13DEFINITIONS

13.1Definitions. As used in the Loan Documents, the word “shall” is mandatory, the word “may” is permissive, the word “or” is not exclusive, the words “includes” and “including” are not limiting, the singular includes the plural, and numbers denoting amounts that are set off in brackets are negative. As used in this Agreement, the following capitalized terms have the following meanings:

“2015 Notes” means 4.50% Convertible Senior Notes due 2015 issued pursuant to the Indenture dated as of February 12, 2008 as supplemented by the Second Supplemental Indenture dated as of June 29, 2012, in each case by Borrower and The Bank of New York Trust Company, N.A., as trustee.

“Account” is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to Borrower or Radisys International.

“Account Debtor” is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made.

“Advance” or “Advances” means a revolving credit loan (or revolving credit loans) under the Revolving Line.

“Affiliate” is, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members.

“Agreement” is defined in the preamble hereof.

“Agreement Currency” is defined in Section 12.3.

“Authorized Signer” is any individual listed in Borrower’s Borrowing Resolution who is authorized to execute the Loan Documents, including any Advance request, on behalf of Borrower.

“Bank” is defined in the preamble hereof.

“Bank Entities” is defined in Section 12.9.

“Bank Expenses” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for preparing, amending, negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower or any Guarantor.

“Bank Services”  are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash management services (including, without limitation, merchant services, direct deposit of payroll, business credit cards, and check cashing services), interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Bank’s various agreements related thereto (each, a “Bank Services Agreement”).

“Bank Services Agreement” is defined in the definition of Bank Services.

“Borrower” is defined in the preamble hereof.

“Borrower’s Books” are all Borrower’s and any Guarantors’ books and records including ledgers, federal and state tax returns, records regarding Borrower’s and such Guarantor’s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.

“Borrowing Base” is (i) the sum of (a) 80% of Eligible Accounts, plus, without duplication, (b) 80% of Eligible Foreign Accounts where Nokia Siemens or Philips Medical (or one of their respective Subsidiaries) is the Account Debtor, plus, without duplication, (c) 65% of Eligible Foreign Accounts where neither Nokia Siemens nor Philips Medical (or one of their respective Subsidiaries) is the Account Debtor, minus (ii) any account payables that are aged over sixty (60) days from the invoice date (or, if there is no invoice, within sixty (60) days of the document date); provided, however, that Bank may decrease the foregoing percentages in its good faith business judgment based on events, conditions, contingencies, or risks which, as determined by Bank, may adversely affect Collateral.

“Borrowing Resolutions” are, with respect to any Person, those resolutions adopted by such Person’s Board of Directors (and, if required under the terms of such Person’s Operating Documents, such Persons stockholders) and delivered by such Person to Bank approving the Loan Documents to which such Person is a party and the transactions contemplated thereby, together with a certificate executed by its secretary on behalf of such Person certifying (a) such Person has the authority to execute, deliver, and perform its obligations under each of the Loan Documents to which it is a party, (b) that set forth as a part of or attached as an exhibit to such certificate is a true, correct, and complete copy of the resolutions then in full force and

effect authorizing and ratifying the execution, delivery, and performance by such Person of the Loan Documents to which it is a party, (c) the name(s) of the Person(s) authorized to execute the Loan Documents, including any Advance request, on behalf of such Person, together with a sample of the true signature(s) of such Person(s), and (d) that Bank may conclusively rely on such certificate unless and until such Person shall have delivered to Bank a further certificate canceling or amending such prior certificate.

“Business Day” is any day that is not a Saturday, Sunday or a day on which Bank is closed and if any determination of a “Business Day” shall relate to an FX Contract, the term “Business Day” shall mean a day on which dealings are carried on in the country of settlement of the Foreign Currency.

“Canadian Share Pledge” is defined in Section 4.3.

“Capital Expenditures” means with respect to any Person, the aggregate of all expenditures (whether paid in cash or other consideration or accrued as a liability and including that portion of Capital Lease Obligations which is capitalized on the consolidated balance sheet of such Person) by such Person and its Subsidiaries during such period for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) that, in conformity with GAAP, are included in “additions to property, plant or equipment” or comparable items reflected in the consolidated statement of cash flows of such Person and its Subsidiaries.

“Capital Lease” means with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person.

“Capital Lease Obligation” means with respect to any Capital Lease of any Person, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease.

“Cash Collateral Account” is defined in Section 6.3(c).

“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.; (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue; and (d) money market funds at least ninety-five percent (95%) of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (c) of this definition.

“Change in Control” means any event, transaction, or occurrence as a result of which (a) any “person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of Borrower, is or becomes a beneficial owner (within the meaning Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of Borrower, representing twenty-five percent (25%) or more of the combined voting power of Borrower’s then outstanding securities; or (b) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the Board of Directors of Borrower (together with any new directors whose election by the Board of Directors of Borrower was approved by a vote of not less than two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors then in office.

“Claims” is defined in Section 12.3.

“Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of California; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code,

the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of California, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.

“Collateral” is any and all properties, rights and assets of Borrower described on Exhibit A.

“Collateral Account” is any Deposit Account, Securities Account, or Commodity Account.

“Commodity Account” is any “commodity account” as defined in the Code with such additions to such term as may hereafter be made.

“Compliance Certificate” is that certain certificate in the form attached hereto as Exhibit D.

“Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation, in each case, directly or indirectly guaranteed, endorsed, co‑made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement.

“Control Agreement” is any control agreement entered into among the depository institution at which Borrower or any Guarantor maintains a Deposit Account or the securities intermediary or commodity intermediary at which Borrower or any Guarantor maintains a Securities Account or a Commodity Account, Borrower, such Guarantor and Bank pursuant to which Bank obtains control (within the meaning of the Code) over such Deposit Account, Securities Account, or Commodity Account.

“Copyrights” are any and all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.

“Credit Extension” is any Advance, any Overadvance, Letter of Credit, FX Contract, amount utilized for cash management services, or any other extension of credit by Bank for Borrower’s benefit.

“Currency” is coined money and such other banknotes or other paper money as are authorized by law and circulate as a medium of exchange.

“Default Rate” is defined in Section 2.4(b).

“Deferred Revenue” is all amounts received or invoiced in advance of performance under contracts and not yet recognized as revenue.

“Deposit Account” is any “deposit account” as defined in the Code with such additions to such term as may hereafter be made.

“Designated Deposit Account” means the deposit account maintained with Bank in the name of Borrower or any Guarantor.

“Disclosure Schedule” means the disclosure schedule attached hereto as Schedule A.

“Dollars,”“dollars” or use of the sign “$” means only lawful money of the United States and not any other currency, regardless of whether that currency uses the “$” sign to denote its currency or may be readily converted into lawful money of the United States.

“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time on the basis of the then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency.

“Domestic” means within the United States or any state or territory thereof or the District of Columbia.

“Domestic Subsidiary” means a Subsidiary organized under the laws of the United States or any state or territory thereof or the District of Columbia.

“Effective Date” is defined in the preamble hereof.

“Eligible Accounts” means Accounts which arise in the ordinary course of Borrower’s or Radisys International’s business that meet all Borrower’s representations and warranties in Section 5. Bank reserves the right at any time and from time to time after the Effective Date, to adjust any of the criteria set forth below and to establish new criteria in its good faith business judgment. Unless Bank otherwise agrees in writing, Eligible Accounts shall not include:

a)    (i) Accounts that the Account Debtor has not paid within sixty (60) days of the due date, and (ii) Accounts that the Account Debtor has not paid within one hundred and twenty (120) days of invoice date (or, if there is no invoice, within one hundred and twenty (120) days of the document date);

b)    Accounts owing from an Account Debtor, twenty-five percent (25%) or more of whose Accounts have not been paid within sixty (60) days of the due date or within one hundred and twenty (120) days of invoice date;

c)    credit balances over ninety (90) days from invoice date;

d)    Accounts owing from an Account Debtor, including Affiliates, whose total obligations to Borrower and/or Radisys International exceed twenty-five (25%) of all Accounts, except for Nokia Siemens for which such percentage is 40%, for the amounts that exceed that percentage, unless Bank approves in writing;

e)    Accounts owing from an Account Debtor which does not have its principal place of business in the United States except for Eligible Foreign Accounts;

f)    Accounts owing from an Account Debtor which is a federal, state or local government entity or any department, agency, or instrumentality thereof except for Accounts of the United States if Borrower and Radisys International have assigned their payment rights to Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940, as amended;

g)    Accounts owing from an Account Debtor to the extent that Borrower and/or Radisys International is indebted or obligated in any manner to the Account Debtor (as creditor, lessor, supplier or otherwise - sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts), with the exception of customary credits, adjustments and/or discounts given to an Account Debtor by Borrower or Radisys International in the ordinary course of its business;

h)    Accounts for demonstration or promotional equipment, or in which goods are consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on approval”, “bill and hold”, or other terms if Account Debtor’s payment may be conditional;

i)    Accounts for which the Account Debtor is Borrower’s or Radisys International’s Affiliate, officer, employee, or agent;

j)    Accounts in which the Account Debtor disputes liability or makes any claim (but only up to the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business; and

k)    Accounts for which Bank in its reasonable good faith business judgment determines collection to be doubtful.

“Eligible Foreign Accounts” are Accounts for which the Account Debtor does not have its principal place of business in the United States but are otherwise Eligible Accounts.

“Equipment” is all “equipment” as defined in the Code with such additions to such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.

“ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations.

“Event of Default” is defined in Section 8.

“Exchange Act” is the Securities Exchange Act of 1934, as amended.

“Foreign Currency” means lawful money of a country other than the United States.

“Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.

“Funding Date” is any date on which a Credit Extension is made to or for the account of Borrower which shall be a Business Day.

“FX Contract” is any foreign exchange contract by and between Borrower and Bank under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency on a specified date.

“GAAP” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.

“General Intangibles” is all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security and other deposits, payment intangibles, contract rights, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.

“Governmental Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.

“Governmental Authority” is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization.

“Guarantor” is any Person providing a Guaranty in favor of Bank, including, without limitation, Radisys International.

“Guaranty” is any guarantee of all or any part of the Obligations, as the same may from time to time be amended, restated, modified or otherwise supplemented.

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) Capital Lease Obligations, and (d) Contingent Obligations.

“Indemnified Person” is defined in Section 12.3.

“Insolvency Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

“Intellectual Property” means, with respect to any Person, means all of such Person’s right, title, and interest in and to the following:

(a)its Copyrights, Trademarks and Patents;

(b)any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how, operating manuals;

(c)any and all source code;

(d)any and all design rights which may be available to such Person;

(e)any and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above; and

(f)all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.

“Interest Expense” means for any fiscal period, interest expense (whether cash or non-cash) determined in accordance with GAAP for the relevant period ending on such date, including, in any event, interest expense with respect to any Credit Extension and other Indebtedness of Borrower and its Subsidiaries, including, without limitation or duplication, all commissions, discounts, or related amortization and other fees and charges with respect to letters of credit and bankers’ acceptance financing and the net costs associated with interest rate swap, cap, and similar arrangements, and the interest portion of any deferred payment obligation (including leases of all types).

“Inventory” is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s or any Guarantor’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above.

“Investment” is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance or capital contribution to any Person.

“Judgment Currency” is defined in Section 12.3.

“Letter of Credit” means a standby letter of credit issued by Bank or another institution based upon an application, guarantee, indemnity or similar agreement on the part of Bank as set forth in Section 2.2.1.

“Letter of Credit Application” is defined in Section 2.2.1.

“Letter of Credit Reserve” has the meaning set forth in Section 2.2.1.

“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise against any property.

“Liquidity” is, at any time, the sum of (a) the aggregate amount of unrestricted cash and Cash Equivalents plus (b) the unused portion of the Revolving Line; provided, however, that in the event that the maturity date of the 2015 Notes (the “2015 Notes Maturity Date”) is not extended in a manner satisfactory to Bank, in its sole discretion, at least one hundred and twenty (120) days prior to the 2015 Notes Maturity Date, Liquidity shall be reduced by the outstanding principal amount of the 2015 Notes.

“Liquidity Threshold” means, as of the last Business Day of each month, Liquidity equal to Fifteen Million Dollars ($15,000,000); provided, however, that the Liquidity Threshold shall mean Liquidity equal to Twenty Million Dollars ($20,000,000) as of the last Business Day of the last month of any fiscal quarter.

“Loan Documents” are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any other documents related to this Agreement, the Reaffirmation of Guaranty, the Perfection Certificates, any Bank Services Agreement, any Control Agreement, any subordination agreement, any note or notes or guaranties executed by Borrower or any Guarantor, and any other present or future agreement by Borrower and/or any Guarantor with or for the benefit of Bank in connection with this Agreement or Bank Services, all as amended, restated, or otherwise modified.

“Material Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of either Borrower or any of its Subsidiaries; or (c) a material impairment of the prospect of repayment of any portion of the Obligations; or (d) Bank determines, based upon information available to it and in its reasonable judgment, that there is a reasonable likelihood that Borrower shall fail to comply with one or more of the financial covenants in Section 6 during the next succeeding financial reporting period.

“Material Indebtedness” is any Indebtedness the principal amount of which is equal to or greater than Five Hundred Thousand Dollars ($500,000), and in any event, includes the Indebtedness evidenced by the 2015 Notes.

“Material Litigation” has the meaning ascribed to it in Section 6.2(a) hereof.

“Minimum Monthly Interest” is defined in Section 2.4(d).

“Net Borrowing Availability” is (a) the lesser of (i) the Revolving Line or (ii) the Borrowing Base minus (b) the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit Reserves.

“Obligations” are Borrower’s and/or any Guarantor’s (or any of Borrower’s Subsidiaries’ with respect to any FX Contract with Bank) obligation to pay when due any debts, principal, interest, fees, Bank Expenses, and other amounts Borrower and/or any Guarantor (or any of Borrower’s Subsidiaries with respect to any foreign exchange contracts with Bank) owe Bank now or later, whether under this Agreement, the other Loan Documents, or otherwise, including, without limitation, all obligations relating to letters of credit (including reimbursement obligations for drawn and undrawn letters of credit), cash management services, and foreign exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower and/or any Guarantor (or any of Borrower’s Subsidiaries with respect to any foreign exchange contracts with Bank) assigned to Bank, and to perform Borrower’s and/or any Guarantor’s (or any of Borrower’s Subsidiaries’ with respect to any FX Contract with Bank) duties under the Loan Documents.

“Operating Documents” are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or equivalent agency) of such Person’s jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.

“Overadvance” is defined in Section 2.3.

“Patents” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

“Perfection Certificate” is defined in Section 5.1.

“Permitted Distributions” means:

a) purchases of capital stock from former employees, consultants and directors pursuant to repurchase agreements or other similar agreements in an aggregate amount not to exceed Five Hundred Thousand Dollars ($500,000) in any fiscal year provided that at the time of such purchase no Default or Event of Default has occurred and is continuing;

b) distributions or dividends consisting solely of Borrower’s or any Subsidiary’s capital stock;

c) purchases for value of any rights distributed in connection with any stockholder rights plan;

d) purchases of capital stock pledged as collateral for loans to employees;

e) purchases of capital stock in connection with the exercise of stock options or stock appreciation rights by way of cashless exercise or in connection with the satisfaction of withholding tax obligations;

f) purchases of fractional shares of capital stock arising out of stock dividends, splits or combinations or business combinations; and

g) the settlement or performance of such Person’s obligations under any equity derivative transaction, option contract or similar transaction or combination of transactions.

“Permitted Indebtedness” is:

a) Borrower’s Indebtedness to Bank under this Agreement or any other Loan Document;

b) any Indebtedness existing on the Effective Date and shown on the Perfection Certificate;

c) Subordinated Debt;

d) unsecured Indebtedness to trade creditors and with respect to surety bonds and similar obligations incurred in the ordinary course of business;

e) guaranties of Permitted Indebtedness;

f) Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;

g) Indebtedness consisting of interest rate, currency, or commodity swap agreements, interest rate cap or collar agreements or arrangements designated to protect a Person against fluctuations in interest rates, currency exchange rates, or commodity prices;

h) Indebtedness between Borrower and any Guarantor or between any of Borrower’s Subsidiaries (which are not Guarantors);

i) capitalized leases and purchase money Indebtedness not to exceed Five Hundred Thousand Dollars ($500,000) in the aggregate in any fiscal year secured by Permitted Liens;

j) refinanced Permitted Indebtedness, provided that the amount of such Indebtedness is not increased except by an amount equal to a reasonable premium or other reasonable amount paid in connection with such refinancing and by an amount equal to any existing, but unutilized, commitment thereunder;

k) the 2015 Notes; and

l) other Indebtedness, if, on the date of incurring any Indebtedness pursuant to this clause (l), the outstanding aggregate amount of all Indebtedness incurred pursuant to this clause (l) does not exceed Five Hundred Thousand Dollars ($500,000) at anytime.

“Permitted Investments” are:

a) Investments existing on the Effective Date;

b) (i)(A) marketable direct obligations issued or unconditionally guaranteed by the United States or its agencies or any state maturing within one (1) year from its acquisition, (B) commercial paper maturing no more than 2 years after its creation and having the highest rating from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc., and (C) Bank’s certificates of deposit maturing no more than 2 years after issue and (ii) Investments approved by the Borrower’s Board of Directors or otherwise pursuant to a Board-approved investment policy;

c) Investments (i) between Borrower or any Guarantor or (ii) between any Subsidiary (which are not Guarantors);

d) Investments consisting of Collateral Accounts in the name of Borrower or any Guarantor so long as Bank has a first priority, perfected security interest in such Collateral Accounts;

e) Investments consisting of extensions of credit to Borrower’s or its Subsidiaries’ customers in the nature of accounts receivable, prepaid royalties or notes receivable arising from the sale or lease of goods, provision of services or licensing activities of Borrower;

f) Investments received in satisfaction or partial satisfaction of obligations owed by financially troubled obligors;

g) Investments acquired in exchange for any other Investments in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization;

h) Investments consisting of interest rate, currency, or commodity swap agreements, interest rate cap or collar agreements or arrangements designated to protect a Person against fluctuations in interest rates, currency exchange rates, or commodity prices;

i) Investments consisting of loans and advances to employees in an aggregate amount not to exceed One Hundred Thousand Dollars ($100,000); and

j) other Investments, if, on the date of incurring any Investments pursuant to this clause (j), the outstanding aggregate amount of all Investments incurred pursuant to this clause (j) does not exceed Seven Hundred and Fifty Thousand Dollars ($750,000).

“Permitted Liens” are:

a) Liens arising under this Agreement or other Loan Documents;

b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains adequate reserves on Borrower’s Books, if they have no priority over any of Bank’s Liens;

c) Liens (including with respect to capital leases) (i) on property (including accessions, additions, parts, replacements, fixtures, improvements and attachments thereto, and the proceeds thereof) acquired or held by Borrower or its Subsidiaries incurred for financing such property (including accessions, additions,

parts, replacements, fixtures, improvements and attachments thereto, and the proceeds thereof), or (ii) existing on property (and accessions, additions, parts, replacements, fixtures, improvements and attachments thereto, and the proceeds thereof) when acquired, if the Lien is confined to such property (including accessions, additions, parts, replacements, fixtures, improvements and attachments thereto, and the proceeds thereof);

d) Liens incurred in the extension, renewal or refinancing of the Indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness it secures may not increase;

e) leases or subleases of real property granted in the ordinary course of business, and leases, subleases, non-exclusive licenses or sublicenses of property (other than real property or intellectual property) granted in the ordinary course of Borrower’s business, if the leases, subleases, licenses and sublicenses do not prohibit granting Bank a security interest;

f) non-exclusive license of intellectual property granted to third parties in the ordinary course of business;

g) leases or subleases granted in the ordinary course of Borrower’s business, including in connection with Borrower’s leased premises or leased property;

h) Liens in favor of custom and revenue authorities arising as a matter of law to secure the payment of custom duties in connection with the importation of goods;

i) Liens on insurance proceeds securing the payment of financed insurance premiums;

j) customary Liens granted in favor of a trustee to secure fees and other amounts owing to such trustee under an indenture or other similar agreement;

k) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Sections 8.4 or 8.7;

l) Liens in favor of other financial institutions arising in connection with Borrower’s deposit or securities accounts held at such institutions;

m) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days or which are being contested in good faith and by appropriate proceeding if adequate reserves with respect thereto are maintained on the books of the applicable Person;

n) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and compliance with other social security requirements applicable to Borrower; and

o) deposits to secure the performance of bids, trade contracts (other than for borrowed money), contracts for the purchase of property, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case, incurred in the ordinary course of business and not representing an obligation for borrowed money.

“Person” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.

“Prime Rate” is the rate of interest per annum from time to time published in the money rates section of The Wall Street Journal or any successor publication thereto as the “prime rate” then in effect; provided that if such rate of interest, as set forth from time to time in the money rates section of The Wall Street Journal, becomes unavailable for any reason as determined by Bank, the “Prime Rate” shall mean the rate of interest per annum announced by Bank as its prime rate in effect at its principal office in the State of California (such

Bank announced Prime Rate not being intended to be the lowest rate of interest charged by Bank in connection with extensions of credit to debtors).

“Prime Rate Margin” is the basis points set forth below as determined by Borrower’s Liquidity:

Liquidity	Prime Rate Margin
Greater than or Equal to Liquidity Threshold	75 basis points
Less than Liquidity Threshold	225 basis points

“Radisys International” means Radisys International LLC, a Delaware limited liability company.

“Reaffirmation of Guaranty” is that certain reaffirmation of guaranty in the form attached hereto as Exhibit B.

“Registered Organization” is any “registered organization” as defined in the Code with such additions to such term as may hereafter be made.

“Requirement of Law” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Responsible Officer” is any of the Chief Executive Officer, President, Chief Financial Officer, Controller, Vice President of Finance, and Treasury Manager of Borrower or any Subsidiary of Borrower, as applicable.

“Restricted License” is any material license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under or termination of could interfere with the Bank’s right to sell any Collateral.

“Revolving Line” is an aggregate principal amount equal to Twenty-Five Million Dollars ($25,000,000).

“Revolving Line Maturity Date” is July 28, 2016.

“Securities Account” is any “securities account” as defined in the Code with such additions to such term as may hereafter be made.

“Subordinated Debt” is Indebtedness incurred by Borrower subordinated to all of Borrower’s now or hereafter arising Indebtedness to Bank (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered into between Bank and the other creditor), on terms acceptable to Bank.

“Subsidiary” is, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless the context otherwise requires, each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower or Guarantor.

“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.

“Transaction Report” is that certain report of transactions in the form attached hereto as Exhibit C.

“Transfer” is defined in Section 7.1.

“Unaffiliated Foreign Financial Institutions” is defined in Section 6.8(a).

[Signature page follows.]

IN WITNESS WHEREOF, the parties hereto have caused this Third Amended and Restated Loan and Security Agreement to be executed as of the Effective Date.

BORROWER:

RADISYS CORPORATION

By_/s/ Allen Muhich________________________

Name:_Allen Muhich________________________

Title:_Chief Financial Officer_________________

IN WITNESS WHEREOF, the parties hereto have caused this Third Amended and Restated Loan and Security Agreement to be executed as of the Effective Date.

BANK:

SILICON VALLEY BANK

By_/s/ Alina Zinchik________________________

Name:_Alina Zinchik_______________________

Title:__Vice President______________________

SCHEDULE A

DISCLOSURE SCHEDULE

Continuous Computing Corporation, a Delaware corporation, was converted into Radisys International.

EXHIBIT A

The Collateral consists of all of Borrower’s right, title and interest in and to the following personal property:

All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles (except as provided below), commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and

all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

Notwithstanding the foregoing, the Collateral does not include any of the following, whether now owned or hereafter acquired (a) more than 65% of the presently existing and hereafter arising issued and outstanding shares of capital stock owned by Borrower of any Foreign Subsidiary which shares entitle the holder thereof to vote for directors or any other matter, or (b) all Intellectual Property (as such term is defined in this Agreement), including any copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished, any patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, and the goodwill of the business of Borrower connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future infringement of any of the foregoing; provided, however, the Collateral shall include all Accounts, license and royalty fees and other revenues, proceeds, or income arising out of or relating to any of the foregoing.

EXHIBIT B

FORM OF

REAFFIRMATION OF UNCONDITIONAL SECURED GUARANTY

This Reaffirmation of Unconditional Secured Guaranty is entered into as of March 14, 2014, by the undersigned (the “Guarantor”) in favor of SILICON VALLEY BANK (“SVB”).

WHEREAS, Guarantor executed and delivered to SVB that certain Unconditional Secured Guaranty dated as of August 8, 2011 (the “Guaranty”) with respect to the obligations of Radisys Corporation, an Oregon corporation (“Borrower”), under that certain Loan and Security Agreement dated August 7, 2008, by and between Borrower and SVB (the “Loan Agreement”);

WHEREAS, Guarantor executed and delivered to SVB that certain Reaffirmation of Unconditional Secured Guaranty dated as of November 1, 2011 (the “Initial Reaffirmation of Guaranty”) with respect to the obligations of Borrower, under that certain Amended and Restated Loan and Security Agreement dated November 1, 2011, by and between Borrower and SVB (the “A&R Loan Agreement”); and

WHEREAS, Guarantor executed and delivered to SVB that certain Reaffirmation of Unconditional Secured Guaranty dated as of July 29, 2013 (the “Second Reaffirmation of Guaranty”) with respect to the obligations of Borrower, under that certain Second Amended and Restated Loan and Security Agreement dated as of July 29, 2013 (the “Second A&R Loan Agreement”).

WHEREAS, Borrower and SVB are amending and restating the Second A&R Loan Agreement pursuant to that certain Third Amended and Restated Loan and Security Agreement dated as of the date hereof (the “Third A&R Loan Agreement”).

Now therefore, for valuable consideration, receipt of which is acknowledged, each Guarantor hereby agrees as follows:

1. Capitalized Terms. Unless otherwise defined in this Reaffirmation of Unconditional Secured Guaranty, all capitalized terms shall have the meaning given to them in the Guaranty.

2. Reaffirmation of Guaranty. Guarantor has reviewed the Third A&R Loan Agreement. Guarantor hereby ratifies and reaffirms its obligations under the Guaranty and agrees that none of the amendments or modifications to the Second A&R Loan Agreement as set forth in the Third A&R Loan Agreement shall impair such Guarantor’s obligations under the Guaranty or SVB’s rights under the Guaranty.

3. Continuing Effect and Absence of Defenses. Guarantor acknowledges that the Guaranty is still in full force and effect and that Guarantor has no defenses, other than actual payment of the guaranteed obligations, to enforcement of the Guaranty. Guarantor waives any and all defenses to enforcement of the Guaranty that might otherwise be available as a result of the amendment and restatement of the Second A&R Loan Agreement.

RADISYS INTERNATIONAL LLC, a Delaware limited liability company

By:

Name:

Title:

EXHIBIT C

Transaction Report

[EXCEL spreadsheet to be provided separately from lending officer.]

EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE

TO:SILICON VALLEY BANKDate:

FROM:

The undersigned authorized officer of Radisys Corporation (“Borrower”) certifies that under the terms and conditions of the Third Amended and Restated Loan and Security Agreement dated March 14, 2014, between Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with generally GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.
Reporting Covenant	Required	Complies
Monthly consolidating financial statements	Monthly within 15 days if Advances or Letters of Credit are outstanding at month-end	Yes No
Monthly cash flow statements evidencing Borrower’s compliance with terms of Section 6.8(b)	Monthly within 15 days	Yes No
Quarterly consolidating financial statements + Compliance Certificate Quarterly and annual financial statement requirement may be met by delivery of 10Q and 10K reports in accordance with the provisions of Section 6.2. Compliance Certificate required with every delivery of a 10Q and 10K.	Quarterly within 45 days	Yes No
Annual financial statement + Compliance Certificate1	FYE audited within 90 days	Yes No
10Q, 10K and 8K + Compliance Certificate1	Within 5 days after filing with SEC, but, (i) in case of 10Qs, no later than within 45 days of the last day of the first three fiscal quarter ends of each fiscal year, and (2) in case of 10Ks, no later than 90 days of the last day of each fiscal year	Yes No
Monthly Compliance Certificate showing compliance with Liquidity ratio	Monthly within 15 days if Advances or Letters of Credit are outstanding at month-end	Yes No

Transaction Report (and schedules attached thereto)		(i) with each request for an Advance, (ii) no later than 5:00 p.m. Pacific time Monday of each week immediately following a week when Liquidity is less than the Liquidity Threshold, and (iii) within twenty (20) days after the end of each month when Liquidity is greater than or equal to the Liquidity Threshold.		Yes No
Material Litigation report		Promptly		Yes* No
Annual board approved financial projections		Annually within 60 days of fiscal year end		Yes No
*If yes, attached is a summary of the Material Litigation not previously disclosed by Borrower or any of its Subsidiaries.
Financial Covenant	Required		Actual		Complies
Liquidity (tested monthly as of the last Business Day of each month)	Not less than $10,000,000 as of the last Business Day of each month		$______		Yes No
Pricing - Liquidity Threshold			Actual		Applies
Liquidity Threshold Pricing: If Borrower’s Liquidity is greater than $15,000,000 as of the last Business Day of each month (excluding the last Business Day of the Last month of any fiscal quarter) - Prime Rate plus 75 basis points If Borrower’s Liquidity is greater than $20,000,000 as of the last Business Day of the last month of any fiscal quarter - Prime Rate plus 75 basis points If Borrower’s Liquidity is equal to or less than $15,000,000 as of the last Business Day of each month (excluding the last Business Day of the Last month of any fiscal quarter) - Prime Rate plus 225 basis points If Borrower’s Liquidity is equal to or less than $20,000,000 as of the last Business Day of the last month of any fiscal quarter - Prime Rate plus 225 basis points			$______		Yes No Yes No Yes No Yes No

The financial covenant analys[is][es] and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate. The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

RADISYS CORPORATION By: Name: Title: BANK USE ONLY Received by: _____________________ authorized signer Date: _________________________ Verified: ________________________ authorized signer Date: _________________________ Compliance Status:Yes No

Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

Dated:____________________

I.Liquidity (Section 6.9(a))³

Required: Liquidity of not less than Ten Million Dollars ($10,000,000) as of the last Business Day of each month. In the event that the 2015 Notes Maturity Date is not extended in a manner satisfactory to Bank, in its sole discretion, at least one hundred and twenty 120 days prior to the 2015 Notes Maturity Date, Liquidity shall be reduced by the outstanding principal amount of the 2015 Notes.

Actual:

A.	Borrower’s unrestricted cash and Cash Equivalents	$_______
B.	the unused portion of the Revolving Line	$_______
C.	Sum of lines A through B	$_______

Is line C greater than or equal to $10,000,000?

_________ No, not in compliance  Yes, in compliance

EX-12.0

Exhibit 12

Computation of Ratio of Earnings to Fixed Charges

	For the years ended December 31,
	2013			2012			2011			2010			2009
Income (loss) before taxes and discontinued operations	$	(41,928	)	$	(37,123	)	$	(12,661	)	$	(854	)	$	(3,232	)
Fixed charges:
Interest expense (A)	1,220			1,722			1,870			2,035			2,373
Rentals:
Buildings, net of sublease income – 6.0% (B)	245			324			288			494			311
Total fixed charges	1,465			2,046			2,158			2,529			2,684
Income (loss) before taxes and discontinued operations, plus fixed charges	(40,463		)	(35,077		)	(10,503		)	1,675			(548		)
Ratio of earnings to fixed charges (C)	—			—			—			—			—
Deficit	$	(41,928	)	$	(37,123	)	$	(12,661	)	$	(854	)	$	(3,232	)

A	Amortization of the discount on the Company’s outstanding convertible subordinated notes is included in Interest expense.
B	Management believes that 6% is a reasonable approximation of the interest factor on rentals. Building and office rental fees that were included in restructuring charges were excluded from fixed charges.
C	The earnings to fixed charges ratio was less than 1:1 due to the losses reported for the years ended December 31, 2013, 2012, 2011, 2010, and 2009.

EX-21.1

Exhibit 21.1

List of Subsidiaries

Subsidiary	Jurisdiction of Incorporation
Nihon Radisys K.K.	Japan
Radisys Systems Equipment Trading (Shanghai) Co. Ltd.	China
Radisys (Malaysia) Sdn. Bhd.	Malaysia
Radisys Canada ULC	Canada
Radisys UK Limited	United Kingdom
Radisys Convedia (Ireland) Limited	Ireland
Radisys Ireland Limited	Ireland
Radisys GmbH	Germany
Radisys B.V.	Netherlands
Radisys Korea Ltd.	South Korea
Radisys Poland sp. z o.o	Poland
Radisys India Private Limited	India
Radisys Technologies (Shenzhen) Co., Ltd.	China
Radisys Spain S.L.U.	Spain
Radisys Cayman Limited	Cayman Islands
Radisys International LLC	United States

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Radisys Corporation:

We consent to the incorporation by reference in the registration statement Nos. 333-183807 and 333-191229 on Form S-3 and registration statement Nos. 333-80577, 333-00514, 333-46473, 333-80087, 333-80089, 333-85093, 333-38966, 333-38988, 333-50582, 333-50584, 333-68362, 333-106670, 333-111520, 333-116570, 333-126189, 333-137060, 333-142968, 333-142969, 333-158959, 333-162230, 333-162231, 333-169044, 333-173885, 333-175510, 333-175511, 333-191033, 333-191034, 333-190171, and 333-190176 on Form S-8 of Radisys Corporation of our report dated March 14, 2014, with respect to the consolidated balance sheets of Radisys Corporation as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive loss, changes in shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2013, and the effectiveness of internal control over financial reporting as of December 31, 2013, which report appears in the December 31, 2013 annual report on Form 10-K of Radisys Corporation.

/s/ KPMG

Portland, Oregon

March 14, 2014

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Brian Bronson, certify that:

1.    I have reviewed this Annual Report on Form 10-K of Radisys Corporation for the fiscal year ended December 31, 2013;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 14, 2014

/s/ Brian Bronson

Brian Bronson

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Allen Muhich, certify that:

1.    I have reviewed this Annual Report on Form 10-K of Radisys Corporation for the fiscal year ended December 31, 2013;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 14, 2014

/s/ Allen Muhich

Allen Muhich

Chief Financial Officer and Vice President of Finance (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Radisys Corporation (the “Company”) on Form 10-K for the fiscal year ended December 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian Bronson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §. 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)    The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Brian Bronson

Brian Bronson

Chief Executive Officer

March 14, 2014

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Radisys Corporation (the “Company”) on Form 10-K for the fiscal year ended December 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Allen Muhich, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)    The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Allen Muhich

Allen Muhich

Chief Financial Officer and Vice President of Finance (Principal Financial and Accounting Officer)

March 14, 2014

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

The income tax provision consists of the following (in thousands):

	For the Years Ended December 31,
	2013			2012			2011
Current provision:
Federal	$	—		$	—		$	—
State	(70		)	122			38
Foreign	2,299			1,252			271
Total current provision	2,229			1,374			309
Deferred provision (benefit):
Federal	—			(65		)	(9,451		)
State	—			(3		)	(74		)
Foreign	12,726			1,284			(1,916		)
Total deferred provision (benefit)	12,726			1,216			(11,441		)
Total income tax provision (benefit)	$	14,955		$	2,590		$	(11,132	)

Schedule of Effective Income Tax Rate Reconciliation

The income tax provision (benefit) differs from the amount computed by applying the statutory federal income tax rate to pretax income as a result of the following differences (dollar amounts in thousands):

	For the Years Ended December 31,
	2013					2012					2011
	$			%		$			%		$			%
Statutory federal tax (benefit) rate	$	(12,057	)	35.0	%	$	(14,309	)	35.0	%	$	(4,431	)	35.0	%
Increase (decrease) in rates resulting from:
State taxes	(347		)	1.0		(266		)	0.7		(131		)	1.0
Foreign dividend	1,938			(5.6	)	6,754			(16.5	)	—			—
Goodwill impairment expense and (benefit) from acquisitions	—			—		9,377			(22.9	)	(81		)	0.6
Valuation allowance	32,784			(95.2	)	3,725			(9.1	)	(5,524		)	43.6
Taxes on foreign income that differ from U.S. tax rate	(8,507		)	24.7		(2,796		)	6.8		(2,888		)	22.8
Tax credits	(252		)	0.7		(304		)	0.7		(737		)	5.8
Non-deductible stock-based compensation expense	1,596			(4.6	)	1,812			(4.4	)	1,275			(10.1	)
Earnout liability fair value adjustment	(596		)	1.7		(1,768		)	4.3		—			—
Transaction costs	—			—		—			—		1,183			(9.3	)
Other	396			(1.2	)	365			(0.9	)	202			(1.5	)
Effective tax rate	$	14,955		(43.5	)%	$	2,590		(6.3	)%	$	(11,132	)	87.9	%

Schedule of Deferred Tax Assets and Liabilities

The components of deferred taxes consist of the following (in thousands):

	December 31, 2013			December 31, 2012
Deferred tax assets:
Accrued warranty	$	1,166		$	1,136
Inventory	2,952			1,734
Restructuring accrual	317			119
Net operating loss carryforwards	52,248			40,547
Tax credit carryforwards	24,692			25,256
Stock-based compensation	2,490			2,696
Capitalized research and development	144			556
Fixed assets	2,437			2,179
Goodwill	3,358			4,464
Other	5,005			5,723
Total deferred tax assets	94,809			84,410
Less: valuation allowance	(82,995		)	(50,200		)
Net deferred tax assets	11,814			34,210
Deferred tax liabilities:
Intangible assets	(7,514		)	(17,286		)
Other	(493		)	(387		)
Total deferred tax liabilities	(8,007		)	(17,673		)
Total net deferred tax assets	$	3,807		$	16,537

Schedule of Unrecognized Tax Benefits Roll Forward

The Company’s total amounts of unrecognized tax benefits at the beginning and end of the period are as follows (in thousands):

	Total
Balance as of December 31, 2011	$	2,878
Additions based on tax positions related to the current year	42
Additions for tax positions of prior years	260
Reductions for tax positions of prior years	(169		)
Reductions as a result of a lapse of applicable statute of limitations	—
Other	—
Balance as of December 31, 2012	$	3,011
Additions based on tax positions related to the current year	532
Additions for tax positions of prior years	281
Reductions for tax positions of prior years	(102		)
Reductions as a result of a lapse of applicable statute of limitations	(70		)
Other	(206		)
Balance as of December 31, 2013	$	3,446

XML

Accrued Restructuring Restructuring Reserve Rollforward (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Restructuring Reserve [Roll Forward]
Balance accrued as of December 31, 2012	$ 1,188
Additions	6,542
Reversals	(477)
Expenditures	(4,506)
Balance accrued as of December 31, 2013	2,747
Other Noncurrent Liabilities [Member]
Restructuring Reserve [Roll Forward]
Balance accrued as of December 31, 2013	600
Severance, Payroll Taxes and Other Employee Benefits [Member]
Restructuring Reserve [Roll Forward]
Balance accrued as of December 31, 2012	198
Additions	5,599
Reversals	(136)
Expenditures	(3,875)
Balance accrued as of December 31, 2013	1,786
Lease Abandonment Charges [Member]
Restructuring Reserve [Roll Forward]
Balance accrued as of December 31, 2012	990
Additions	943
Reversals	(341)
Expenditures	(631)
Balance accrued as of December 31, 2013	$ 961

XML

Accounts Receivable and Other Receivables (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts Receivable, Gross	$ 41,707	$ 52,660
Less: allowance for doubtful accounts	(348)	(779)
Accounts Receivable, Net	41,359	51,881
Allowance for Doubtful Accounts Receivable [Roll Forward]
Allowance for Doubtful Accounts Receivable	779	828	933
Allowance for Doubtful Accounts Receivable, Charge-offs	(310)	0	51
Allowance for Doubtful Accounts Receivable, Recoveries	(121)	(49)	(156)
Allowance for Doubtful Accounts Receivable	348	779	828
Other receivables	$ 2,634	$ 2,394

XML

Employee Benefit Plans Stock Options Rollforward (Details) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	2,555		3,465
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	1,746
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	(43)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period	(119)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period	(674)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	1,301
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	3,339
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 7.84		$ 5.15
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 3.46
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price	$ 0.67
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price	$ 4.06
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price	$ 11.59
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 7.75
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price	$ 5.21
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term	4 years 7 months 24 days	3 years 9 months 3 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term	2 years 10 months 13 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term	4 years 7 months 9 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value	$ 211,000	$ 482,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value	203
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value	$ 211,000

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Other Accrued and Other Long-Term Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Accrued restructuring	$ 2,105	$ 567
Contingent consideration liability	390	836
Deferred compensation plan liability	1,276	1,395
Adverse purchase commitments	632	375
Income tax payable, net	508	318
Other	2,468	2,962
Other accrued liabilities	9,978	9,601
Accrued restructuring	642	621
Contingent consideration liability	0	1,705
Other	1,905	1,719
Other long-term liabilities	3,276	4,851
Warranty Reserves [Member]
Accrued warranty reserve	2,599	3,148
Warranty Reserves [Member]
Accrued warranty reserve	$ 729	$ 806

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Fair Value of Financial Instruments Fair Value Measurements (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment Assessment, Amount that Undiscounted Future Cash Flows Exceed Book Value	$ 63,300,000
Impairment Assessment, Percentage that Undiscounted Future Cash Flows Exceed Book Value	84.00%
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash surrender value of life insurance contracts	1,866,000	3,398,000
Foreign currency forward contracts	(169,000)	(297,000)
Contingent Consideration Liability	(390,000)	(2,541,000)
Total	31,000	(835,000)
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash surrender value of life insurance contracts	0	0
Deferred Compensation Liability, Classified, Noncurrent
Foreign currency forward contracts	0	0
Contingent Consideration Liability	0	0
Total	0	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash surrender value of life insurance contracts	1,866,000	3,398,000
Deferred Compensation Liability, Classified, Noncurrent	(1,276,000)	(1,395,000)
Foreign currency forward contracts	(169,000)	(297,000)
Contingent Consideration Liability	0	0
Total	421,000	1,706,000
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash surrender value of life insurance contracts	0	0
Deferred Compensation Liability, Classified, Noncurrent
Foreign currency forward contracts	0	0
Contingent Consideration Liability	(390,000)	(2,541,000)	(7,594,000)
Total	(390,000)	(2,541,000)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings	187,000	857,000
Re-Measurement of Liability [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings	$ (1,891,000)	$ (5,910,000)

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Accrued Restructuring (Tables)

12 Months Ended

Dec. 31, 2013

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Reserve by Type of Cost

Accrued restructuring, which is included in other accrued liabilities and other long-term liabilities in the accompanying Consolidated Balance Sheets as of December 31, 2013 and 2012, consisted of the following (in thousands):

	Severance, payroll taxes and other employee benefits			Facility reductions			Total
Balance accrued as of December 31, 2012	$	198		$	990		$	1,188
Additions	5,599			943			6,542
Reversals	(136		)	(341		)	(477		)
Expenditures	(3,875		)	(631		)	(4,506		)
Balance accrued as of December 31, 2013	$	1,786		$	961		$	2,747

Schedule of Restructuring and Related Costs

The following table summarizes the Company's restructuring and other gains and charges as presented in the Consolidated Statement of Operations (in thousands):

	December 31, 2013			December 31, 2012
Employee-related restructuring expenses	$	5,463		$	2,769
Fair value adjustments to contingent consideration liability	(1,740		)	(5,052		)
Facility reductions	602			1,590
Write off of purchased computer software	2,868			—
Net gain from sale of OS-9 software assets	(1,532		)	—
Integration-related expenses	1,039			576
Non-recurring legal expenses	779			—
Restructuring and other charges, net	$	7,479		$	(117	)

Restructuring and Other Charges

The following table summarizes the Company's restructuring and other gains and charges as presented in the Consolidated Statement of Operations (in thousands):

	December 31, 2013			December 31, 2012
Employee-related restructuring expenses	$	5,463		$	2,769
Fair value adjustments to contingent consideration liability	(1,740		)	(5,052		)
Facility reductions	602			1,590
Write off of purchased computer software	2,868			—
Net gain from sale of OS-9 software assets	(1,532		)	—
Integration-related expenses	1,039			576
Non-recurring legal expenses	779			—
Restructuring and other charges, net	$	7,479		$	(117	)

Restructuring and other charges may include costs from non-recurring events such as costs incurred for employee severance, acquisition or divestiture activities, excess facility costs, certain legal costs, asset related charges and other expenses associated with business restructuring activities.

During the year ended December 31, 2013, the Company recorded the following restructuring and other charges:

• $5.5 million net expense for the severance of 203 employees, primarily related to Shanghai and Penang site reductions and severance for named executives, net of reductions resulting from changes in previously estimated amounts for employee severance and associated payroll costs;

• $2.9 million expense relating to the write off of the Company's Security Gateway ("SEG") purchased computer software resulting from management's decision to abandon this technology;

• $1.7 million gain resulting from the decrease in fair value of the Continuous Computing contingent consideration liability;

• $1.5 million net gain from the sale of the Company's OS-9 software assets;

• $1.0 million net expense principally associated with asset write-offs, legal fees, and personnel overlap resulting from resource consolidation primarily associated with our Shanghai and Penang site reductions;

• $0.6 million net lease abandonment expense primarily resulting from a lease abandonment charge resulting from the shuttering of our San Diego facility; and

• $0.8 million legal expenses associated with a non-operating strategic project.

During the year ended December 31, 2012, the Company recorded the following restructuring and other charges:

• $2.8 million net expense for the severance of employees, including a $0.9 million contractual severance benefit provided to our former Chief Executive Officer, and severance paid to other executive officers, net of reductions resulting from changes in previously estimated amounts for employee severance and associated payroll costs;

• $5.1 million gain due to the decrease in fair value of the Continuous Computing contingent consideration liability;

• $1.6 million net expense resulting from facilities rationalization in certain North American sites; and

• $0.6 million expense related to expenses incurred related to the integration and acquisition of Continuous Computing.

Accrued restructuring, which is included in other accrued liabilities and other long-term liabilities in the accompanying Consolidated Balance Sheets as of December 31, 2013 and 2012, consisted of the following (in thousands):

	Severance, payroll taxes and other employee benefits			Facility reductions			Total
Balance accrued as of December 31, 2012	$	198		$	990		$	1,188
Additions	5,599			943			6,542
Reversals	(136		)	(341		)	(477		)
Expenditures	(3,875		)	(631		)	(4,506		)
Balance accrued as of December 31, 2013	$	1,786		$	961		$	2,747

Of the$2.7 million and $1.2 million accrued restructuring balance atDecember 31, 2013and2012,$0.6 millionis included in other long-term liabilities on the Consolidated Balance Sheets as of December 31, 2013. These amounts represent the long-term portion of accrued lease abandonment charges. The remaining balances are presented in other accrued liabilities on the Consolidated Balance Sheets.

The Company evaluates the adequacy of the accrued restructuring charges on a quarterly basis. Reversals are recorded in the period in which the Company determines that expected restructuring obligations are less than the amounts accrued.

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Segment Information Product and Service and Product Group (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Revenue from External Customer [Line Items]
Revenues	$ 50,138	$ 54,109	$ 65,438	$ 68,178	$ 69,300	$ 63,725	$ 77,584	$ 75,487	$ 237,863	$ 286,096	$ 330,865	[1]
ATCA Platforms [Member]
Revenue from External Customer [Line Items]
Revenues									116,537	136,572	132,530
Software and Solutions [Member]
Revenue from External Customer [Line Items]
Revenues									44,934	52,666	36,938
Com Express and Rackmount Server [Member]
Revenue from External Customer [Line Items]
Revenues									56,019	49,538	56,848
Other Products [Member]
Revenue from External Customer [Line Items]
Revenues									$ 20,373	$ 47,320	$ 104,549

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Convertible Debt (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Feb. 15, 2013
Debt Instrument [Line Items]
Convertible senior notes	$ 18,000,000	$ 18,000,000
Convertible Senior Notes, Total	18,000,000	34,900,000
Convertible senior notes, current	0	16,919,000
Convertible Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Fair Value Disclosure	17,800,000	17,700,000
Convertible Senior Notes [Member] | 2013 Convertible Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage				2.75%
Debt Instrument, Interest Rate, Effective Percentage		3.73%	3.64%
Contractually stated interest costs	810,000	1,289,000	1,372,000
Amortization of interest costs	43,000	398,000	501,000
Convertible Senior Notes [Member] | 2015 Convertible Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Coupon Rate, Stated Percentage	4.50%
Debt Instrument, Convertible, Conversion Ratio	117.2333
Debt Instrument, Convertible, Conversion Ratio, Principal Amount	$ 1,000
Debt Instrument, Convertible, Conversion Price	$ 8.53
Debt Instrument, Call Feature, Call Price, Percent of Principal	100.00%
Debt Instrument, Interest Rate, Effective Percentage	4.50%	4.50%

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Segment Information Accounts Receivable (Details) (Nokia Siemens Networks [Member], Accounts Receivable [Member])	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Nokia Siemens Networks [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	20.70%	24.70%

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Quarterly Financial Data (Details) (USD $)	3 Months Ended																12 Months Ended
	Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Revenues	$ 50,138,000		$ 54,109,000		$ 65,438,000		$ 68,178,000		$ 69,300,000		$ 63,725,000		$ 77,584,000		$ 75,487,000		$ 237,863,000	$ 286,096,000	$ 330,865,000	[1]
Gross Profit	10,853,000		14,166,000		19,464,000		19,655,000		20,700,000		17,648,000		26,651,000		23,040,000		64,138,000	88,039,000	96,765,000	[1]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest	(13,947,000)	[2]	(11,996,000)	[2]	(3,273,000)	[2]	(5,550,000)	[2]	(3,590,000)	[2]	(34,324,000)	[2]	2,422,000	[2]	(4,254,000)	[2]	(34,449,000)	(40,884,000)	(12,661,000)	[1]
Net income (loss)	(26,015,000)	[2]	(12,720,000)	[2]	(4,112,000)	[2]	(6,557,000)	[2]	(4,855,000)	[2]	(35,111,000)	[2]	1,307,000	[2]	(4,815,000)	[2]	(49,404,000)	(43,474,000)	(1,529,000)	[1]
Earnings Per Share, Basic	$ (0.89)		$ (0.44)		$ (0.14)		$ (0.23)		$ (0.18)		$ (1.28)		$ 0.05		$ (0.18)		$ (1.72)	$ (1.60)	$ (0.06)	[1]
Earnings Per Share, Diluted	$ (0.89)		$ (0.44)		$ (0.14)		$ (0.23)		$ (0.18)		$ (1.28)		$ 0.05		$ (0.18)		$ (1.72)	$ (1.60)	$ (0.06)	[1]
Valuation Allowance, Deferred Tax Asset, Change in Amount	12,500,000																(12,476,000)	0	10,350,000
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal																	1,532,000	0
Impairment of goodwill											29,700,000						0	29,748,000	0	[1]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings																	187,000	857,000
Fair Value, Inputs, Level 3 [Member] | Re-Measurement of Liability [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings																	(1,891,000)	(5,910,000)
Software [Member]
Impairment of Long-Lived Assets Held-for-use							2,900,000
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal							$ 1,500,000

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[2] The comparability of our income (loss) from operations and net income (loss) per share was affected by the following unusual income or expense items:•During the fourth quarter of 2013, the Company incurred a $12.5 million loss associated with the establishment of a valuation allowance against certain of the Company's foreign deferred tax assets.•During the first quarter of 2013, the Company recorded a $2.9 million loss associated to the write off of the Company's Security Gateway ("SEG") purchased computer software due to management's decision to abandon future development of this technology.•During the first quarter of 2013, the Company recorded a $1.5 million gain associated with the the sale of the Company's OS-9 software assets.•The balance of goodwill was determined to be impaired during the third quarter of 2012, resulting in an impairment charge of $29.7 million. In addition, the Company recorded a $5.9 million gain associated with a decrease in fair value of the contingent consideration related to our acquisition of Continuous Computing.

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Employee Benefit Plans Valuation Disclosures (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Stock Options [Member]
Estimated fair value	$ 3.45	$ 2.10	$ 4.23
Expected life (in years)	4 years 6 months	4 years 6 months	4 years 4 months 24 days
Interest rate	1.33%	0.65%	0.91%
Volatility	57.00%	71.00%	70.00%
Dividend yield	0.00%	0.00%	0.00%
Assumed Options [Member]
Estimated fair value			$ 7.77
Expected life (in years)			2 years 8 months 15 days
Interest rate			0.66%
Volatility			64.00%
Dividend yield			0.00%
Employee Stock [Member]
Estimated fair value	$ 1.79	$ 2.05	$ 2.09
Expected life (in years)	1 year 6 months	1 year 6 months	1 year 6 months
Interest rate	0.15%	0.18%	0.12%
Volatility	52.00%	53.00%	42.00%
Dividend yield	0.00%	0.00%	0.00%

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Segment Information

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company's Chief Operating Decision Maker (CODM), Radisys' Chief Executive Officer, reviews the Company's results of operations on a consolidated level and executive staff is structured by function rather than by product category. Therefore, the Company is one operating segment. Key resources, decisions, and assessment of performance are also analyzed on a company-wide level.

Generally, the Company's customers are not the end-user of its products. The Company ultimately derives its revenues from following product groups as follows for the years ended December 31 (in thousands):

	2013		2012		2011
ATCA	$	116,537	$	136,572	$	132,530
Software-Solutions	44,934		52,666		36,938
COM Express and Rackmount Server	56,019		49,538		56,848
Other Products	20,373		47,320		104,549
Total revenues	237,863		286,096		330,865

Geographic Revenues

	For the Years Ended December 31,
	2013		2012		2011
United States	$	100,780	$	105,858	$	105,671
Other North America	3,042		3,310		1,371
China	29,818		45,419		69,503
Japan	30,724		39,435		29,337
Other APAC	20,988		31,695		45,125
Total APAC	81,530		116,549		143,965
Germany	11,770		18,580		39,266
Other EMEA	40,741		41,799		40,592
Total EMEA	52,511		60,379		79,858
Foreign Countries	137,083		180,238		225,194
Total revenues	$	237,863	$	286,096	$	330,865

Long-lived assets by Geographic Area

	For the Years Ended December 31,
	2013		2012
Property and equipment, net
United States	$	7,421	$	8,572
Other North America	942		953
China	3,396		4,685
Other APAC	185		358
Total APAC	3,581		5,043
India	2,893		3,110
Other EMEA	17		35
Total EMEA	2,910		3,145
Foreign Countries	7,433		9,141
Total property and equipment, net	$	14,854	$	17,713
Intangible assets, net
United States	$	56,474	$	68,903
Other North America	36		211
EMEA	—		1,170
Foreign Countries	36		1,381
Total intangible assets, net	$	56,510	$	70,284

The following customers accounted for more than 10% of total revenues for the years ended December 31:

	2013	2012	2011
Nokia Solutions and Networks	18.7%	22.5%	35.1	%
NEC	NA	11.1%	NA

The following customer accounted for more than 10% of accounts receivable for the years ended December 31:

	2013	2012
Nokia Solutions and Networks	20.7%	24.7%

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Property and Equipment (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 63,497,000	$ 66,620,000
Less: accumulated depreciation and amortization	(48,643,000)	(48,907,000)
Property and equipment, net	14,854,000	17,713,000
Depreciation	8,000,000	7,300,000	5,400,000
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	26,779,000	26,560,000
Office Equipment And Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	30,745,000	32,905,000
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 5,973,000	$ 7,155,000

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Significant Accounting Policies Distributor Revenue (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accounting Policies [Abstract]
Distributor Revenue	14.30%	16.00%	24.30%

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Segment Information Revenue by Major Customer (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Nokia Siemens Networks [Member]
Revenue, Major Customer [Line Items]
Concentration Risk, Customer	.187	0.225	0.351
NEC [Member]
Revenue, Major Customer [Line Items]
Concentration Risk, Customer		.111

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases

For the Years Ending December 31,	Future Minimum Lease Payments
2014	$	2,802
2015	2,764
2016	1,694
2017	782
2018	497
2019 and thereafter (through 2020)	769
Total future minimum lease commitments	$	9,308

Schedule of Product Warranty Liability

	For the Years Ended December 31,
	2013			2012
Warranty liability balance, beginning of the year	$	3,954		$	3,438
Product warranty accruals	3,131			5,332
Adjustments for payments made	(3,757		)	(4,816		)
Warranty liability balance, end of the year	$	3,328		$	3,954

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Intangible Assets Future Amortization of Finite Lived Intangibles (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
2014	$ 13,281,000
2015	12,901,000
2016	12,747,000
2017	10,714,000
2018	4,870,000
Thereafter	1,997,000
Total estimated future amortization expense	$ 56,510,000	$ 70,284,000

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Income Taxes (Details) (USD $)	3 Months Ended																12 Months Ended
	Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating Loss Carryforwards [Line Items]
Unrecognized Tax Benefits	$ 3,446,000								$ 3,011,000								$ 3,446,000	$ 3,011,000	$ 2,878,000
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	3,000,000																3,000,000
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense																	22,000
Uncertain Tax Benefits, Potential Change, Current																	400,000
Deferred Tax Assets, Valuation Allowance	82,995,000								50,200,000								82,995,000	50,200,000
Deferred Tax Assets, Tax Credit Carryforwards, Research	17,600,000																17,600,000
Investment Tax Credit																	5,500,000
Repatriation of Cash from Foreign Subsidiaries																	800,000
Deferred Tax Liabilities, Undistributed Foreign Earnings	800,000																800,000
Undistributed Earnings of Foreign Subsidiaries	2,200,000																2,200,000
Indefinite Reinvestment of Undistributed Earnings from Foreign Subsidiaries																	13,200,000
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest	(13,947,000)	[1]	(11,996,000)	[1]	(3,273,000)	[1]	(5,550,000)	[1]	(3,590,000)	[1]	(34,324,000)	[1]	2,422,000	[1]	(4,254,000)	[1]	(34,449,000)	(40,884,000)	(12,661,000)	[2]
Internal Revenue Service (IRS) [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards	144,800,000								84,000,000								144,800,000	84,000,000
Foreign Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards	3,600,000																3,600,000
Maximum [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards, Expiration Year																	2033
CANADA
Operating Loss Carryforwards [Line Items]
Deferred Tax Assets, Valuation Allowance	12,500,000																12,500,000
Deferred Tax Assets, Tax Credit Carryforwards, Research	15,300,000																15,300,000
Domestic [Member]
Operating Loss Carryforwards [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest																	46,500,000	55,800,000	23,200,000
Foreign Countries [Member]
Operating Loss Carryforwards [Line Items]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest																	12,000,000	14,900,000	10,500,000
Interest Expense [Member]
Operating Loss Carryforwards [Line Items]
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	400,000																400,000
Penalty [Domain]
Operating Loss Carryforwards [Line Items]
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	$ 300,000																$ 300,000

[1] The comparability of our income (loss) from operations and net income (loss) per share was affected by the following unusual income or expense items:•During the fourth quarter of 2013, the Company incurred a $12.5 million loss associated with the establishment of a valuation allowance against certain of the Company's foreign deferred tax assets.•During the first quarter of 2013, the Company recorded a $2.9 million loss associated to the write off of the Company's Security Gateway ("SEG") purchased computer software due to management's decision to abandon future development of this technology.•During the first quarter of 2013, the Company recorded a $1.5 million gain associated with the the sale of the Company's OS-9 software assets.•The balance of goodwill was determined to be impaired during the third quarter of 2012, resulting in an impairment charge of $29.7 million. In addition, the Company recorded a $5.9 million gain associated with a decrease in fair value of the contingent consideration related to our acquisition of Continuous Computing.

[2] {F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOjM5NWUyOWE4MDI1ZTQ0MzRiNDkzYTg1NTliYmFkYzZmfFRleHRTZWxlY3Rpb246NDNEQkU1MjQ2ODVEQUY3OTM0RDgyMjQwRUI5OUMyRDUM}

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Basic and Diluted Net IncomePer Share Earnings (Loss) Per Share Calculation (Details) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	3 Months Ended																12 Months Ended
	Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net income (loss)	$ (26,015,000)	[1]	$ (12,720,000)	[1]	$ (4,112,000)	[1]	$ (6,557,000)	[1]	$ (4,855,000)	[1]	$ (35,111,000)	[1]	$ 1,307,000	[1]	$ (4,815,000)	[1]	$ (49,404,000)	$ (43,474,000)	$ (1,529,000)	[2]
Interest on convertible notes, net of tax benefit																	0	0	0
Net loss, diluted																	$ (49,404,000)	$ (43,474,000)	$ (1,529,000)
Weighted average shares used to calculate net loss per share, basic																	28,805	27,174	25,413	[2]
Effect of escrow shares (in shares)																	0	0	0
Effect of convertible notes (in shares)																	0	0	0
Weighted average shares used to calculate net income (loss) per share, diluted																	28,805	27,174	25,413	[2]
Basic (in dollars per share)	$ (0.89)		$ (0.44)		$ (0.14)		$ (0.23)		$ (0.18)		$ (1.28)		$ 0.05		$ (0.18)		$ (1.72)	$ (1.60)	$ (0.06)	[2]
Diluted (in dollars per share)	$ (0.89)		$ (0.44)		$ (0.14)		$ (0.23)		$ (0.18)		$ (1.28)		$ 0.05		$ (0.18)		$ (1.72)	$ (1.60)	$ (0.06)	[2]
Total equity award shares excluded																	3,993	3,082	3,410
Restricted Stock Units (RSUs) [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Effect of dilutive equity awards (in shares)																	0	0	0
Stock Options [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Effect of dilutive equity awards (in shares)																	0	0	0
Contingent Consideration Classified as Equity [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Total equity award shares excluded																	0	700	1,300

[1] The comparability of our income (loss) from operations and net income (loss) per share was affected by the following unusual income or expense items:•During the fourth quarter of 2013, the Company incurred a $12.5 million loss associated with the establishment of a valuation allowance against certain of the Company's foreign deferred tax assets.•During the first quarter of 2013, the Company recorded a $2.9 million loss associated to the write off of the Company's Security Gateway ("SEG") purchased computer software due to management's decision to abandon future development of this technology.•During the first quarter of 2013, the Company recorded a $1.5 million gain associated with the the sale of the Company's OS-9 software assets.•The balance of goodwill was determined to be impaired during the third quarter of 2012, resulting in an impairment charge of $29.7 million. In addition, the Company recorded a $5.9 million gain associated with a decrease in fair value of the contingent consideration related to our acquisition of Continuous Computing.

[2] {F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOjM5NWUyOWE4MDI1ZTQ0MzRiNDkzYTg1NTliYmFkYzZmfFRleHRTZWxlY3Rpb246NDNEQkU1MjQ2ODVEQUY3OTM0RDgyMjQwRUI5OUMyRDUM}

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Fair Value of Financial Instruments Level 3 (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Payments	$ (447)
Fair Value, Inputs, Level 3 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	2,541	7,594
Fair value level 3 activity	187	857
Ending Balance	390	2,541
Fair Value, Inputs, Level 3 [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Additions	0	0
Fair Value, Inputs, Level 3 [Member] | Change in estimate
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value level 3 activity	(1,891)	(5,910)
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Ending Balance		$ 2,541

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Principles of Consolidation

The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All inter-company accounts and transactions have been properly eliminated in consolidation.

Management Estimates

The Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these Consolidated Financial Statements requires management to make estimates and judgments that may affect the amounts reported in its Consolidated Financial Statements and accompanying notes. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

Multiple Element Arrangements

A significant portion of the Company's revenue relates to product sales for which revenue is recognized upon shipment, with limited judgment required related to product returns. Title transfer for substantially all product sales occurs upon delivery of products to our customer's freight forwarders. The software elements included in certain components of ATCA systems and MRF products are considered to be functioning together with the non-software elements to provide the tangible product's essential functionality and these arrangements generally include multiple elements such as hardware, technical support services as well as software upgrades or enhancements on a when and if available basis. Arrangements that include multiple elements require significant management judgment to evaluate the effective terms of agreements, the Company's performance commitments and determination of fair value of the various deliverables under the arrangement.

For hardware sales which may include software, ASU 2009-13 provides a fair value hierarchy in order to determine the appropriate relative fair value for each element of an arrangement. When available, the Company uses vendor specific objective evidence (“VSOE”) to determine the estimated fair value of each element of the arrangement. In the absence of VSOE or third−party evidence ("TPE") for a delivered element, the Company then uses an estimated selling price in order to determine fair value. Estimated selling prices represent the Company's best estimate of the price at which it would transact if the deliverables were sold on a standalone basis. For technical support services, the Company generally determines its selling price based on VSOE as supported by substantive renewal rates in the related service agreements. In certain instances where VSOE cannot be established, the Company then relies upon its estimated selling price for such deliverables as TPE is generally not available due to the unique company-specific terms surrounding such service agreements. In establishing an appropriate estimated selling price for these technical support agreements, the Company considered entity specific factors such as its historical and projected costs, historical and projected revenues, and profit objectives. The Company also considered market specific factors when establishing reasonable profit objectives.

Hardware

Revenue from hardware products is recognized in accordance with ASC 605 Revenue Recognition. Under the Company’s standard terms and conditions of sale, the Company transfers title and risk of loss to the customer at the time product is shipped to the customer and revenue is recognized accordingly, unless customer acceptance is uncertain or significant obligations remain. We reduce revenue for estimated customer returns for rotation rights according to agreements with our distributors. The amount of revenues derived from distributors as a percentage of revenues was 14.3%, 16.0% and 24.3% for the years ended December 31, 2013, 2012 and 2011. Revenues associated with distributors are generally recognized upon shipment as the Company has established a sell-to model with distributors. The Company accrues the estimated cost of product warranties, based on historical experience at the time the Company recognizes revenue.

The software elements included in certain components of ATCA systems and MRF products are considered to be functioning together with the non-software elements to provide the tangible product's essential functionality and the Company’s MRF arrangements generally include multiple elements such as hardware and technical support services.

Software licenses and royalties

Revenue from software licenses and royalties is recognized in accordance with ASC 985 Software. The Company recognizes software license revenue at the time of shipment or upon delivery of the software master provided that the revenue recognition criteria have been met and VSOE exists to allocate the total fee to all undelivered elements of the arrangement. The Company defers revenue on arrangements, including specified software upgrades, until the specified upgrade has been delivered. Revenue from customers for prepaid, non-refundable software royalties is recorded when the revenue recognition criteria have been met. Revenue for non-prepaid royalties is recognized at the time we receive reporting from customers as the Company has not established an ability to reliably estimate customer royalties prior to time contractually obligated reporting is received.

Technical support services

Technical support services revenue is recognized as earned on the straight-line basis over the term of the contract. The fair value of the Company’s post-contract support has been determined by renewal rates within the Company’s support agreements, the actual amounts charged to customers for renewal of their support services or based on an estimated selling price.

Professional and other services

Professional services revenue is recognized upon completion of certain contractual milestones and customer acceptance of the services rendered. Other services revenues include hardware repair services and custom software implementation projects. Hardware repair services revenues are recognized when the services are complete. Software implementation revenues are recognized upon completion of certain contractual milestones and customer acceptance of the services rendered or as services are performed under the percentage-of-completion method when the Company is reasonably able to estimate the total effort required to complete the contract.

Deferred income

Deferred income represents amounts received or billed for the following types of transactions:

• Undelivered elements of an arrangement—Certain software sales include specified upgrades and enhancements to an existing product. Revenue for such products is deferred until the future obligation is fulfilled.

• Technical support services—The Company has a number of technical support agreements with customers for hardware and software maintenance. Generally, these services are billed in advance and recognized over the term of the agreement.

Capitalized Software Development Costs

The Company does not capitalize internal software development costs incurred in the production of computer software as the Company does not incur any material costs between the point of technological feasibility and general release of the product to customers in the future. As such software development costs are expensed as research and development (“R&D”) costs.

Shipping Costs

The Company’s shipping and handling costs for product sales are included under cost of sales for all periods presented. For the years ended December 31, 2013, 2012 and 2011, shipping and handling costs represented approximately 1% of cost of sales.

Advertising Costs

The Company expenses advertising costs as incurred. Advertising costs consist primarily of media, display, web, and print advertising, along with trade show costs and product demos and brochures. For the years ended December 31, 2013, 2012 and 2011 advertising costs were $2.0 million, $2.1 million and $2.2 million.

Cash Equivalents

The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents.

Accounts Receivable

Trade accounts receivable are stated net of an allowance for doubtful accounts. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of customers to make required payments. Management reviews the allowance for doubtful accounts quarterly for reasonableness and adequacy. If the financial condition of the Company’s customers were to deteriorate resulting in an impairment of their ability to make payments, additional provisions for uncollectible accounts receivable may be required. In the event the Company determined that a smaller or larger reserve was appropriate, it would record a credit or a charge in the period in which such determination is made. In addition to specific customer reserves, the Company maintains a non-specific bad debt reserve for all customers. This non-specific bad debt reserve is calculated based on the Company's historical pattern of bad debt write-offs as a percentage of annual revenues, which percentage is then applied to the current rolling four-quarters revenue. The Company’s customers are concentrated in the technology industry and the collection of its accounts receivable are directly associated with the operational results of the industry.

Inventories

Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) basis, or market, net of an inventory valuation allowance. The Company uses a standard cost methodology to determine the cost basis for its inventories. The Company evaluates inventory on a quarterly basis for obsolete or slow-moving items to ascertain if the recorded allowance is reasonable and adequate. Inventory is written down for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. The Company's inventory valuation allowances establish a new cost basis for inventory.

Long-Lived Assets

Long-lived assets, such as property and equipment and definite-life intangible assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The Company assesses the impairment of the assets based on the undiscounted future cash flow the assets are expected to generate compared to the carrying value of the assets. If the carrying amount of the assets is determined not to be recoverable, a write-down to fair value is recorded. Management estimates future cash flows using assumptions about expected future operating performance. Management’s estimates of future cash flows may differ from actual cash flow due to, among other things, technological changes, economic conditions or changes to the Company’s business operations.

Intangible assets with estimable useful lives are amortized on a straight-line basis over their respective estimated life and reviewed for impairment when certain triggering events suggest impairment has occurred. The Company determined a triggering event occurred during the third quarter of 2013 and required an analysis of the recoverability of its long-lived assets. After finalizing its analysis, the Company concluded its long-lived assets were not impaired.

Property and Equipment

Property and equipment is recorded at historical cost and generally depreciated or amortized on a straight-line basis according to the table below. In certain circumstances where the Company is aware that an asset’s life differs from the general guidelines set forth in its policy, management adjusts its depreciable life accordingly, to ensure expense is being recognized over the appropriate future periods. Ordinary maintenance and repair expenses are expensed when incurred.

Machinery, equipment, furniture and fixtures	5 years
Software, computer hardware and manufacturing test fixtures	3 years
Engineering demonstration products and samples	1 year
Leasehold improvements	Lesser of the lease term or estimated useful lives

Leases

The Company leases all of its facilities, certain office equipment and vehicles under non-cancelable operating leases that expire at various dates through 2020, along with options that permit renewals for additional periods. Rent escalations are considered in the determination of straight-line rent expense for operating leases. Leasehold improvements made at the inception of or during the lease are amortized over the shorter of the asset life or the lease term.

Accrued Restructuring

Expenses associated with exit or disposal activities are recognized when probable and estimable because the Company has a history of paying severance benefits. The Company has engaged, and may continue to engage, in restructuring actions, which require the Company to make significant estimates in several areas including: realizable values of assets made redundant or obsolete; expenses for severance and other employee separation costs; the ability and timing to generate sublease income, as well as the Company's ability to terminate lease obligations at the amounts estimated; and other exit costs. Should the actual amounts differ from the estimates, the amount of the restructuring charges could be materially impacted.

Warranty

The Company provides for the estimated cost of product warranties at the time it recognizes revenue. Products are generally sold with warranty coverage for a period of 12 or 24 months after shipment. On a quarterly basis the Company assesses the reasonableness and adequacy of the warranty liability and adjusts such amounts as necessary. Warranty reserves are included in other accrued liabilities and other long-term liabilities in the accompanying Consolidated Balance Sheets as of December 31, 2013 and 2012.

Research and Development

Research, development and engineering costs are expensed as incurred. R&D expenses consist primarily of salary, bonuses and benefits for product development staff, and cost of design and development supplies and equipment, net of reimbursements for non-recurring engineering services.

Income Taxes

Income tax accounting requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities. Valuation allowances are established to reduce deferred tax assets if it is “more likely than not” that all or portion of the asset will not be realized due to inability to generate sufficient taxable income in the relevant period to utilize the deferred tax asset. Tax law and rate changes are reflected in the period such changes are enacted. The Company recognizes uncertain tax positions after evaluating whether certain tax positions are more likely than not to be sustained by taxing authorities. In addition, the Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.

Fair Value of Financial Assets and Liabilities

The Company measures at fair value certain financial assets and liabilities, including cash equivalents, short-term investments, contingent consideration, and the cash surrender value of life insurance contracts. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:

Level 1—Quoted prices for identical instruments in active markets;

Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Comprehensive Income (Loss)

The Company reports accumulated other comprehensive income (loss) in its Consolidated Balance Sheets. Comprehensive income (loss) includes net income (loss), translation adjustments and unrealized gains (losses) on hedging instruments net of their tax effect. The cumulative translation adjustments consist of unrealized gains (losses) for foreign currency translation.

Stock-Based Compensation

The Company measures stock-based compensation at the grant date, based on the fair value of the award, and recognizes expense on a straight-line basis over the employee's requisite service period. For LTIP and Overlay awards the requisite service period is equal to the period of time over which performance objectives underlying the award are expected to be achieved and vested. The number of LTIP and Overlay shares that ultimately vest depends on the achievement of certain performance criteria over the measurement period. Quarterly, the Company reevaluates the probability that the performance objectives will be met and the number of LTIP and Overlay shares expected to vest. The amount of expense recorded each period for LTIP and Overlay awards is based on the Company's estimate of the number of awards that will ultimately vest.

Net income (loss) per share

Basic earnings (loss) per share amounts are computed based on the weighted average number of common shares outstanding. Diluted earnings per share incorporates the incremental shares issuable upon the assumed exercise of stock options, incremental shares associated with the assumed vesting of restricted stock and the assumed conversion of the Company’s convertible notes, as if the conversion to common shares had occurred at the beginning of the fiscal year and when such conversion would have a dilutive effect. When the conversion of the Company’s convertible notes are dilutive, earnings have been adjusted for interest expense incurred on the convertible notes.

Derivatives

The Company hedges exposure to changes in exchange rates from the US Dollar to the Indian Rupee. These derivatives are recognized on the balance sheet at their fair value. Unrealized gain positions are recorded as other current assets and unrealized loss positions are recorded as other accrued liabilities. Changes in the fair values of the outstanding derivatives that are highly effective are recorded in other comprehensive income until net income (loss) is affected by the variability of the cash flows of the hedged transaction. Hedge ineffectiveness could result when the amount of the Company’s hedge contracts exceed the Company’s forecasted or actual transactions for which the hedge contracts were designed to hedge. Once a hedge contract matures the associated gain (loss) on the contract will remain in other comprehensive income until the underlying hedged transaction affects net income (loss), at which time the gain (loss) will be recorded to the expense line item being hedged, which is primarily cost of sales and R&D. The Company only enters into derivative contracts in order to hedge foreign currency exposure. If the Company entered into a contract for speculative reasons or if the Company’s current hedge position becomes ineffective, changes in the fair values of the derivatives would be recognized in earnings in the current period.

Foreign currency translation

Assets and liabilities of international operations using a functional currency other than the U.S. dollar are translated into U.S. dollars at exchange rates as of December 31, 2013 and 2012. Income and expense accounts are translated into U.S. dollars at the average daily rates of exchange prevailing during the period. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are recorded as a separate component in shareholders’ equity. Foreign exchange transaction gains and losses are included in other income (expense), net, in the Consolidated Statements of Operations.

Contingent Consideration

Contingent consideration is recorded at the acquisition date based upon the estimated fair value of the contingent payment for all acquisitions. The fair value of the contingent consideration is remeasured each reporting period with any adjustments in fair value included in the Company’s Consolidated Statements of Operations.

Liquidity Outlook

The Company believes that current working capital, plus availability under the line of credit, provides sufficient liquidity to operate the business at normal levels; however, if available liquidity is not sufficient to meet the Company's operating and debt service obligations as they come due, the Company plans to, among others things, pursue alternative financing arrangements or reduce expenditures as necessary to meet cash requirements throughout 2014. Additionally, the Company believes that cash generation in 2014, combined with the borrowing availability under the 2014 Agreement, will enable the Company to repay the outstanding balance of the 2015 convertible senior notes when they mature in February 2015.  If available liquidity is not sufficient to repay outstanding 2015 convertible senior notes, the Company may pursue alternative financing arrangements which may include, extending the maturity date of the 2015 convertible senior on existing notes or repaying the outstanding balance with proceeds from sales of securities under the Company's shelf registration statement. The Company may also divest of certain product lines as it seeks to maximize shareholder value or improve the Company's cash position.

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board's ("FASB") Emerging Issues Task Force ("EITF") reached final consensus with regard to the "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The update is intended to eliminate diversity in practice in the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Current GAAP does not include explicit guidance on this topic. The main provisions of the update provide that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. An exception exists if such deferred tax asset is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from a disallowance of a tax position or if the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose. In such cases the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this update will be applied prospectively. The update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company has historically used this method of accounting; consequently, the change will have no effect on the Company's financial position, results of operations or cash flows.

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Basic and Diluted Net IncomePer Share Anti-Dilutive Securities (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options	3,465,000	2,555,000	2,900,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	3,465,000	2,555,000
Total equity award shares excluded	3,993,000	3,082,000	3,410,000
Convertible Debt Securities [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total equity award shares excluded	2,110,000	3,517,000	3,454,000
Convertible Debt Securities [Member] | 2013 Convertible Senior Notes [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total equity award shares excluded	0	2,450,000	3,454,000
Convertible Debt Securities [Member] | 2015 Convertible Senior Notes [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total equity award shares excluded	2,110,000	1,067,000	0
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	335,000	527,000	510,000
Performance Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	193,000	0	0
Long-term Incentive Plan [Member] | Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities Excluded from Computation of Earnings Per Share, Performance Target Not Met, Amount	1,500,000	2,300,000	800,000

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Significant Accounting Policies Advertising Costs (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accounting Policies [Abstract]
Advertising Expense	$ 2.0	$ 2.1	$ 2.2

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Accounts Receivable and Other Receivables (Tables)

12 Months Ended

Dec. 31, 2013

Receivables [Abstract]

Accounts Receivable, Net

Accounts receivable balances consisted of the following (in thousands):

	December 31, 2013			December 31, 2012
Accounts receivable, gross	$	41,707		$	52,660
Less: allowance for doubtful accounts	(348		)	(779		)
Accounts receivable, net	$	41,359		$	51,881

Allowance for Doubtful Accounts

Accounts receivable at December 31, 2013 and 2012 consisted of sales to the Company’s customers which are generally based on standard terms and conditions. The Company recorded the following activity in allowance for doubtful accounts (in thousands):

	For the Years Ended December 31,
	2013			2012			2011
Allowance for doubtful accounts, beginning of the year	$	779		$	828		$	933
Charged to costs and expenses	(310		)	—			51
Less: write-offs, net of recoveries	(121		)	(49		)	(156		)
Remaining allowance, end of the year	$	348		$	779		$	828

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Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2013

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring Basis

The following table summarizes the fair value measurements as of December 31, 2013 for the Company's financial instruments (in thousands):

	Fair Value Measurements as of December 31, 2013
	Total			Level 1		Level 2			Level 3
Cash surrender value of life insurance contracts (A)	$	1,866		$	—	$	1,866		$	—
Deferred compensation liability (A)	(1,276		)			(1,276		)
Foreign currency forward contracts	(169		)	—		(169		)	—
Contingent consideration liability	(390		)	—		—			(390		)
Total	$	31		$	—	$	421		$	(390	)

The following table summarizes the fair value measurements as of December 31, 2012, for the Company’s financial instruments (in thousands):

	Fair Value Measurements as of December 31, 2012
	Total			Level 1		Level 2			Level 3
Cash surrender value of life insurance contracts	$	3,398		—		$	3,398		$	—
Deferred compensation liability	(1,395		)			(1,395		)
Foreign currency forward contracts	(297		)	—		(297		)	—
Contingent consideration liability	(2,541		)	—		—			(2,541		)
Total	$	(835	)	$	—	$	1,706		$	(2,541	)

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following table summarizes level 3 activity for the Company's contingent consideration liability (in thousands):

	Fair Value
	Contingent Consideration
Balance at December 31, 2011	$	7,594
Additions	—
Decrease in liability due to re-measurement	(5,910		)
Accretion	857
Balance at December 31, 2012	$	2,541
Additions	—
Decrease in liability due to re-measurement	(1,891		)
Payments	(447		)
Accretion	187
Balance at December 31, 2013	$	390

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Short-Term Borrowings (Details) (USD $)	3 Months Ended			5 Months Ended	9 Months Ended	18 Months Ended	19 Months Ended						9 Months Ended	12 Months Ended				12 Months Ended					0 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Feb. 15, 2015	Dec. 31, 2014	Dec. 31, 2014	Jul. 26, 2016	Nov. 01, 2013	Dec. 31, 2012	Dec. 31, 2013 United States Accounts Receivable Balance [Member] Line of Credit [Member] 2014 Debt Agreement [Member]	Dec. 31, 2013 Foreign Accounts Receivable Balance [Member] Line of Credit [Member] 2014 Debt Agreement [Member]	Dec. 31, 2013 Certain Cases [Member]	Sep. 30, 2013 Maximum [Member]	Dec. 31, 2013 Maximum [Member]	Dec. 31, 2013 Maximum [Member] Line of Credit [Member] 2014 Debt Agreement [Member]	Dec. 31, 2013 Minimum [Member]	Dec. 31, 2013 Line of Credit [Member]	Dec. 31, 2013 EBITDA Ratio Less than 2.0 [Member]	Dec. 31, 2013 EBITDA Ratio Less than 3.0 and Greater Than or Equal to 2.0 [Member]	Dec. 31, 2013 EBITDA Ratio Greater than 3.0 [Member]	Dec. 31, 2013 Non-Quarter End Months [Member]	Dec. 31, 2013 Quarter End Months [Member]	Mar. 14, 2014 Subsequent Event [Member] Line of Credit [Member] 2014 Debt Agreement [Member]	Mar. 14, 2014 Subsequent Event [Member] Maximum [Member] Line of Credit [Member] 2014 Debt Agreement [Member] Prime Rate [Member]	Mar. 14, 2014 Subsequent Event [Member] Minimum [Member] Line of Credit [Member] 2014 Debt Agreement [Member] Prime Rate [Member]	Mar. 14, 2014 Subsequent Event [Member] Letter of Credit [Member] Line of Credit [Member] 2014 Debt Agreement [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 35,000,000
Line of Credit Facility, Current Borrowing Capacity		35,000,000						40,000,000									0						25,000,000			1,000,000
Line of Credit Facility, Borrowing Formula, Eligible Accounts Receivable										80.00%	65.00%	70.00%
Line of Credit Facility, Borrowing Formula, Eligible Accounts Receivable past due															60 days
Line of Credit Facility, Borrowing Formula, Eligible Accounts Receivable, Days from Invoice Date														120 days
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage														15,000,000		10,000,000
Line Credit Facility, Available Capacity Measurement, Two Rolling Quarter EBITDA														9,000,000		6,000,000
Line of Credit Facility, Borrowing Capacity Calculation, EBITDA Ratio														3.0		2.0
Line of Credit Facility, Variable Interest Rate, Base Percent		0.18%
Debt Instrument, Basis Spread on Variable Rate																		2.00%	2.25%	2.50%				2.25%	0.75%
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage														0.50%		0.375%
Line of Credit Facility, Covenant Terms, Liquidity Ratio																					1.25	1.5
Line of Credit Facility, Covenant Terms, Liquidity Ratio, Allowable Subsidiary Cash Balance														10,000,000
Line of Credit Facility, Minimum Cash Balance				18,000,000
Line of Credit Facility, Covenant Terms, Restructuring Charges						12,000,000
Line of Credit Facility, Minimum Two Quarter Rolling EBITDA	2,000,000	(4,000,000)	2,000,000		6,000,000		9,000,000
Line of Credit Facility, Covenant Terms, 2012 Capital Expenditures													11,000,000
Line of Credit Facility, Covenant Terms, 2013 and Beyond Capital Ependitures													8,000,000
Line of credit		15,000,000							0
Line of Credit Facility, Remaining Borrowing Capacity		7,900,000
Line of Credit, Liquidity Threshold																							15,000,000
Line of Credit, Liquidity Threshold, Last Month of Quarter																							20,000,000
Line of Credit, Modification Fee																							35,000
Debt Instrument, Average Monthly Interest Expense																							10,000,000
Line of Credit Facility, Cancellation Fee Percentage																							1.50%
Line of Credit Facility, Debt Covenant, Liquidity																							$ 10,000,000

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Significant Accounting Policies Property, Plant and Equipment (Details)	12 Months Ended
	Dec. 31, 2013
Machinery, Equipment, Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Software, Computer Hardware and Manufacturing Test [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	3 years
Engineering Demonstration Products and Samples [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	1 year

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Inventories (Tables)

12 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Schedule of Inventory, Current

Inventories consisted of the following (in thousands):

	December 31, 2013			December 31, 2012
Raw materials	$	21,127		$	10,420
Work-in-process	1,194			605
Finished goods	9,644			11,245
	31,965			22,270
Less: inventory valuation allowance	(7,037		)	(2,199		)
Inventories, net	$	24,928		$	20,071

Schedule of Inventory Deposit

	December 31, 2013			December 31, 2012
Inventory deposit (A)	$	1,289		$	11,637
Less: inventory deposit valuation allowance	(808		)	(2,801		)
Inventory deposit, net	$	481		$	8,836

(A) Beginning in the third quarter of 2013 the Company modified the inventory deposit arrangement with its contract manufacturing partner. Prior to the modification, the Company was obligated to place a deposit with its contract manufacturer for the cost of excess inventory that had been purchased as a result of the Company's forecasted demand when there was no alternative use. Under the new arrangement, rather than place a deposit with the contract manufacturer, the Company is now obligated to purchase the inventory on consignment. The calculation of excess inventory and its impact on the Company’s cash and reported aggregate inventory levels is the same under the consignment arrangement as it was under the prior deposit arrangement. As of December 31, 2013, the balance of consigned inventory at the Company’s contract manufacturing partner was $10.3 million with the remaining inventory deposit associated with inventory held at the Company’s outsourced hardware repair service provider. The remaining deposit is recorded net of adverse purchase commitment liabilities, and therefore the net balance of the deposit represents inventory the Company believes will be utilized. The deposit will be applied against future adverse purchase commitments owed to the Company's contract manufacturer or reduced based on the usage of inventory. See Note 14 - Commitments and Contingencies for additional information regarding the Company's adverse purchase commitment liability.

Charges Associated with Inventory

The Company recorded the following charges associated with the valuation of inventory, inventory deposit and the adverse purchase commitment liability for the years ended December 31 (in thousands):

	2013		2012		2011
Inventory, net	$	3,302	$	1,080	$	2,668
Inventory deposit, net	945		926		1,096
Adverse purchase commitments	327		31		733

Change in Inventory Valuation Allowance

The following is a summary of the change in the Company’s inventory valuation allowance for the years ended December 31 (in thousands):

	2013			2012
Inventory valuation allowance, beginning of the year	$	2,199		$	4,640
Usage:
Inventory scrapped	(956		)	(3,397		)
Inventory utilized	(363		)	(696		)
Subtotal—usage	(1,319		)	(4,093		)
Write-downs of inventory valuation	3,665			1,928
Transfer from other liabilities (A)	35			29
Transfer from (to) inventory deposit valuation allowance	2,457			(305		)
Inventory valuation allowance, end of the year	$	7,037		$	2,199

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Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property and equipment consisted of the following (in thousands):

	December 31, 2013			December 31, 2012
Manufacturing equipment	$	26,779		$	26,560
Office equipment and software	30,745			32,905
Leasehold improvements	5,973			7,155
Property and equipment, gross	63,497			66,620
Less: accumulated depreciation and amortization	(48,643		)	(48,907		)
Property and equipment, net	$	14,854		$	17,713

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Nature of Operations

12 Months Ended

Dec. 31, 2013

Nature of Operations [Abstract]

Nature of Operations

Nature of Operations

Radisys Corporation (NASDAQ: RSYS) is a provider of wireless infrastructure solutions to the telecom market.  The Company's Media Resource Function ("MRF"), T-Series platform products, and Trillium software coupled with an expert professional services organization enable the Company's customers to bring high-value products and services to the telecom market faster and with lower investment and risk.  By leveraging this telecom expertise, the Company is also able to deliver its products and capabilities into adjacent markets such as aerospace and defense. These products are targeted throughout the telecommunication network from Radio Access Network ("RAN") to the Evolved Packet Core ("EPC") to the IP Multimedia Subsystem ("IMS") and include the following:

• MRF products, which can be purchased either as a complete product on our own T-Series ATCA platforms (MPX-12000) or as software-only MPX Operating Software ("MPX-OS") when the Company's customers want to leverage other processing platforms, are designed into the IMS core of the network and provide the necessary media processing capabilities required as carriers deploy applications such as audio conferencing, Voice over Long-Term Evolution ("VoLTE"), Rich Communications Services (“RCS”) and video conferencing;

• T-Series ATCA and Network Appliance products provide the platforms necessary to control and move data in the core of the telecom network enabling networks elements within the EPCs as well as providing a platform for applications such as Deep Packet Inspection ("DPI") and policy management. When these products are combined with the Company's professional service organization of network experts, we believe this technology enables customers to bring to market solutions such as intelligent gateways (security, femto, and LTE gateways) and load balancers, at a cost and time to market advantage when compared to internally developed solutions; and

• Trillium software is the protocol foundation for a complete turn-key application that enables the linkage between end user wireless devices and small cells as carriers seek to optimize radio access spectrum utilization in both the 3G and LTE networks. Additionally, the Company leverages the same Trillium technology to enable small cell applications in adjacent markets such as aerospace and defense as well as manufacturing and test.

Certain prior year balances have been reclassified to conform to the current year’s presentation. Such reclassifications did not affect total cash flows, total net revenues, operating loss, net loss, total assets, total liabilities or shareholders’ equity.

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Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2013

Intangible Assets [Abstract]

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The estimated future amortization expense of purchased intangible assets as of December 31, 2013 is as follows (in thousands):

For the Years Ending December 31,	Estimated Intangible Amortization Amount
2014	$	13,281
2015	12,901
2016	12,747
2017	10,714
2018	4,870
Thereafter	1,997
Total estimated future amortization expense	$	56,510

Schedule of Intangible Assets and Goodwill

The following tables summarize the Company’s total purchased intangible assets (in thousands):

	Gross		Accumulated Amortization			Net
December 31, 2013
Purchased technology	$	114,754	$	(79,189	)	$	35,565
Patents	6,472		(6,472		)	—
Customer lists	37,000		(21,997		)	15,003
Trade names	11,536		(5,594		)	5,942
Backlog	2,127		(2,127		)	—
Total intangible assets	$	171,889	$	(115,379	)	$	56,510
December 31, 2012
Purchased technology	$	114,754	$	(70,815	)	$	43,939
Patents	6,472		(6,450		)	22
Customer lists	37,000		(17,543		)	19,457
Trade names	11,536		(4,670		)	6,866
Backlog	2,127		(2,127		)	—
Total intangible assets	$	171,889	$	(101,605	)	$	70,284

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Employee Benefit Plans Stock Compensation (Tables)

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity

The following table summarizes stock option activity for 2013 (in thousands, except average prices and weighted average remaining contractual lives):

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Balance, December 31, 2012	2,555		$	7.84	3.76	$	482
Granted	1,746		3.46
Exercised	(43	)	0.67
Forfeited	(119	)	4.06
Expired	(674	)	11.59
Balance, December 31, 2013	3,465		$	5.15	4.65	$	211
Options exercisable at December 31, 2013	1,301		$	7.75	2.87	$	203
Options vested as of December 31, 2013 and expected to vest after December 31, 2013	3,339		$	5.21	4.61	$	211

Schedule of Nonvested Share Activity

The following table summarizes nonvested stock activity for 2013:

	Restricted Stock Units				LTIP and Overlay Awards
	Restricted Shares		Weighted Average Fair Value		Restricted Shares		Weighted Average Fair Value
Balance, December 31, 2012	527		$	5.65	1,003		$	2.19
Granted	102		3.71		130		4.37
Vested	(231	)	6.15		(186	)	2.27
Forfeited	(63	)	5.28		(151	)	4.19
Balance, December 31, 2013	335		$	4.73	796		$	5.00

Schedule of Share-based Compensation, Employee Stock Purchase Plan, Activity

The following table summarizes shares issued under the ESPP (in thousands, except per share amounts):

	Year Ended December 31,
	2013		2012		2011
Shares issued pursuant to the ESPP	381		352		251
Cash received for the purchase of shares pursuant to the ESPP	$	767	$	1,225	$	1,572
Weighted average purchase price per share	$	2.01	$	3.48	$	6.27

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair value calculations for stock options and ESPP shares used the following assumptions for the years ended December 31:

	Stock Options									Assumed Options			Employee Stock Purchase Plan
	2013			2012			2011			2011			2013			2012			2011
Estimated fair value	$	3.45		$	2.10		$	4.23		$	7.77		$	1.79		$	2.05		$	2.09
Expected life (in years)	4.5			4.5			4.4			2.7			1.5			1.5			1.5
Interest rate	1.33		%	0.65		%	0.91		%	0.66		%	0.15		%	0.18		%	0.12		%
Volatility	57		%	71		%	70		%	64		%	52		%	53		%	42		%
Dividend yield	—			—			—			—			—			—			—

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

For the years ended December 31, 2013, 2012 and 2011, stock-based compensation was recognized and allocated in the Consolidated Statements of Operations as follows (in thousands):

	2013		2012		2011
Cost of sales	$	550	$	25	$	838
Research and development	1,170		601		1,434
Selling, general and administrative	3,578		765		3,445
Total stock-based compensation expense	$	5,298	$	1,391	$	5,717

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Accrued Restructuring (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Restructuring and Related Activities [Abstract]
Employee-related restructuring expenses	$ 5,463	$ 2,769
Fair value adjustments to contingent consideration liability	(1,740)	(5,052)
Facility reductions	602	1,590
Write off of purchased computer software	2,868	0	0
Net gain from sale of OS-9 software assets	(1,532)	0
Integration-related expenses	1,039	576
Non-recurring legal expenses	779	0
Restructuring and other charges, net	$ 7,479	$ (117)	$ 9,980	[1]

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Employee Benefit Plans Stock Based Compensation (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Stock-based compensation expense	$ 5,298	$ 1,391	$ 5,717
Cost of Sales [Member]
Stock-based compensation expense	550	25	838
Research and Development Expense [Member]
Stock-based compensation expense	1,170	601	1,434
Selling, General and Administrative Expenses [Member]
Stock-based compensation expense	$ 3,578	$ 765	$ 3,445

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Statement [Abstract]
Revenues	$ 237,863	$ 286,096	$ 330,865	[1]
Cost of sales:
Cost of sales	165,166	188,513	225,752	[1]
Amortization of purchased technology	8,559	9,544	8,348	[1]
Total cost of sales	173,725	198,057	234,100	[1]
Gross margin	64,138	88,039	96,765	[1]
Research and development	45,000	47,739	44,625	[1]
Selling, general and administrative	41,210	45,200	52,722	[1]
Intangible assets amortization	5,215	5,215	2,922	[1]
Impairment of goodwill	0	29,748	0	[1]
Restructuring and other charges, net	7,479	(117)	9,980	[1]
Gain on the liquidation of a foreign subsidiary	0	0	(2,081)	[1]
Loss from operations	(34,766)	(39,746)	(11,403)	[1]
Interest expense	(1,220)	(1,722)	(1,870)	[1]
Interest income	26	39	99	[1]
Other income	1,511	545	513	[1]
Loss before income tax expense	(34,449)	(40,884)	(12,661)	[1]
Income tax expense (benefit)	14,955	2,590	(11,132)	[1]
Net loss	$ (49,404)	$ (43,474)	$ (1,529)	[1]
Net loss per share:
Basic	$ (1.72)	$ (1.60)	$ (0.06)	[1]
Diluted	$ (1.72)	$ (1.60)	$ (0.06)	[1]
Weighted average shares outstanding:
Basic	28,805	27,174	25,413	[1]
Diluted	28,805	27,174	25,413	[1]

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Goodwill (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Goodwill [Abstract]
Impairment of goodwill	$ 29,700	$ 0	$ 29,748	$ 0	[1]

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Consolidated Statement of Changes in Shareholders' Equity (USD $) In Thousands, except Share data, unless otherwise specified	Total		Common Stock [Member]	Retained Deficit [Member]	Accumulated Other Comprehensive Income [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest at Dec. 31, 2010	$ 137,394		$ 266,945	$ (134,683)	$ 5,132
Common Stock, Shares, Issued at Dec. 31, 2010			24,351,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued pursuant to benefit plans, shares			335,000
Shares issued pursuant to benefit plans	1,960		1,960	0	0
Stock based compensation associated with employee benefit plans	5,717		5,717	0	0
Vesting of restricted stock units, shares			161,000
Vesting of restricted stock units	0		0	0	0
Restricted share forfeitures for tax settlements, shares			(45,000)
Restricted share forfeitures for tax settlements	(295)		(295)	0	0
Repurchases of common stock, shares			(518,000)
Repurchases of common stock	(3,920)		(3,920)	0	0
Shares issued for acquisition, shares			3,665,000
Shares issued for acquisition	30,818		30,818	0	0
Net adjustment for fair value of hedge derivatives, net of taxes	(1,167)		0	0	(1,167)
Gain on liquidation of foreign subsidiary	(2,081)		0	0	(2,081)
Translation adjustments	(164)		0	0	(164)
Net income (loss)	(1,529)	[1]	0	(1,529)	0
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest at Dec. 31, 2011	166,733		301,225	(136,212)	1,720
Common Stock, Shares, Issued at Dec. 31, 2011			27,949,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued pursuant to benefit plans, shares			384,000
Shares issued pursuant to benefit plans	1,272		1,272	0	0
Stock based compensation associated with employee benefit plans	1,391		1,391	0	0
Vesting of restricted stock units, shares			176,000
Vesting of restricted stock units	0		0	0	0
Restricted share forfeitures for tax settlements, shares			(38,000)
Restricted share forfeitures for tax settlements	(164)		(164)	0	0
Shares issued for acquisition	0
Net adjustment for fair value of hedge derivatives, net of taxes	9		0	0	9
Gain on liquidation of foreign subsidiary	0
Translation adjustments	(325)		0	0	(325)
Net income (loss)	(43,474)		0		0
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest at Dec. 31, 2012	125,442		303,724	(179,686)	1,404
Common Stock, Shares, Issued at Dec. 31, 2012	28,471,000		28,471,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued pursuant to benefit plans, shares	319,000		424,000
Shares issued pursuant to benefit plans	806		806	0	0
Stock based compensation associated with employee benefit plans	5,298		5,298	0	0
Vesting of restricted stock units, shares			417,000
Vesting of restricted stock units	0		0	0	0
Restricted share forfeitures for tax settlements, shares			(114,000)
Restricted share forfeitures for tax settlements	(458)		(458)	0	0
Shares issued for acquisition	0
Net adjustment for fair value of hedge derivatives, net of taxes	(110)		0	0	(110)
Gain on liquidation of foreign subsidiary	0
Translation adjustments	(438)		0	0	(438)
Net income (loss)	(49,404)		0		0
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest at Dec. 31, 2013	$ 81,136		$ 309,370	$ (229,090)	$ 856
Common Stock, Shares, Issued at Dec. 31, 2013	29,198,000		29,198,000

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Commitments and Contingencies Operating Leases (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating Leases [Abstract]
2014	$ 2,802,000
2015	2,764,000
2016	1,694,000
2017	782,000
2018	497,000
2019 and thereafter (through 2020)	769,000
Total future minimum lease commitments	9,308,000
Operating Leases, Rent Expense, Net	$ 4,200,000	$ 5,400,000	$ 4,800,000

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Convertible Debt (Tables)

12 Months Ended

Dec. 31, 2013

Short-term Debt [Line Items]

Schedule of Debt

As of December 31, 2013 and 2012, the Company had outstanding 2013 and 2015 convertible senior notes with a combined face value of $18.0 million and $34.9 million. Of these balances $0.0 million and $16.9 million were classified as current liabilities in the Consol

Convertible Senior Notes [Member]

Short-term Debt [Line Items]

Schedule of Debt

2013 Convertible Senior Notes

On February 15, 2013, the Company repaid at maturity the entire outstanding balance of the 2.75% convertible senior notes due 2013 (the "2013 convertible senior notes") in accordance with the terms thereof.

2015 Convertible Senior Notes

On June 20, 2012, the Company entered into subscription agreements with certain holders of the Company's 2013 convertible senior notes. Pursuant to the subscription agreements, on June 29, 2012 the Company exchanged $18.0 million aggregate principal amount of the 2013 convertible senior notes for $18.0 million aggregate principal amount of the Company's 2015 convertible senior notes. The 2015 convertible senior notes mature on February 15, 2015 and have a coupon rate of 4.5%. Holders of the 2015 convertible senior notes may convert their notes into a number of shares of the Company's common stock determined as set forth in the indenture governing the notes at their option on any day to and including the business day prior to the maturity date. The 2015 convertible senior notes are initially convertible into 117.2333 shares of the Company's common stock per $1,000 principal amount of the notes (which is equivalent to a conversion price of approximately $8.53 per share), subject to adjustment upon the occurrence of certain events. Upon the occurrence of a fundamental change, holders of the 2015 convertible senior notes may require the Company to repurchase some or all of their notes for cash at a price equal to 100% of the principal amount of the notes being repurchased, plus accrued and unpaid interest, if any. In addition, if certain fundamental changes occur, the Company may be required in certain circumstances to increase the conversion rate for any 2015 convertible senior notes converted in connection with such fundamental changes by a specified number of shares of the Company's common stock. The 2015 convertible senior notes are the Company's general unsecured obligations and rank equal in right of payment to all of its existing and future senior indebtedness, and senior in right of payment to the Company's future subordinated debt. The Company's obligations under the 2015 convertible senior notes are not guaranteed by, and are effectively subordinated in right of payment to all existing and future obligations of its subsidiaries and are effectively subordinated in right of payment to its future secured indebtedness to the extent of the assets securing such debt.

As of December 31, 2013 and 2012, the Company had outstanding 2013 and 2015 convertible senior notes with a combined face value of $18.0 million and $34.9 million. Of these balances $0.0 million and $16.9 million were classified as current liabilities in the Consolidated Balance Sheets at December 31, 2013 and 2012. As of December 31, 2013 and 2012, the estimated fair value of the Company's 2015 convertible senior notes was $17.8 million and $17.7 million

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Income Taxes Deferred Tax Reconciliation (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Deferred Tax Reconciliation [Abstract]
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Warranty Reserves	$ 1,166	$ 1,136
Deferred Tax Assets, Inventory	2,952	1,734
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Restructuring Charges	317	119
Deferred Tax Assets, Operating Loss Carryforwards	52,248	40,547
Deferred Tax Assets, Tax Credit Carryforwards	24,692	25,256
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-based Compensation Cost	2,490	2,696
Deferred Tax Assets, in Process Research and Development	144	556
Deferred Tax Assets, Property, Plant and Equipment	2,437	2,179
Deferred Tax Assets, Goodwill and Intangible Assets	3,358	4,464
Deferred Tax Assets, Other	5,005	5,723
Deferred Tax Assets, Gross	94,809	84,410
Deferred Tax Assets, Valuation Allowance	(82,995)	(50,200)
Deferred Tax Assets, Net of Valuation Allowance	11,814	34,210
Deferred Tax Liabilities, Intangible Assets	(7,514)	(17,286)
Deferred Tax Liabilities, Other	(493)	(387)
Deferred Tax Liabilities, Net	(8,007)	(17,673)
Deferred Tax Assets, Net	$ 3,807	$ 16,537

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Basic and Diluted Net IncomePer Share

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Basic and Diluted Loss per Share

Basic and Diluted Loss per Share

A reconciliation of the numerator and the denominator used to calculate basic and diluted loss per share is as follows (in thousands, except per share amounts):

	For the Years Ended December 31,
	2013			2012			2011
Numerator—Basic
Net loss, basic	$	(49,404	)	$	(43,474	)	$	(1,529	)
Numerator—Diluted
Net loss, basic	$	(49,404	)	$	(43,474	)	$	(1,529	)
Interest on convertible senior notes, net of tax benefit (B)	—			—			—
Net loss, diluted	$	(49,404	)	$	(43,474	)	$	(1,529	)
Denominator—Basic
Weighted average shares used to calculate net loss per share, basic	28,805			27,174			25,413
Denominator—Diluted
Weighted average shares used to calculate net loss per share, basic	28,805			27,174			25,413
Effect of escrow shares (A)	—			—			—
Effect of convertible notes (B)	—			—			—
Effect of dilutive restricted stock (C)(D)	—			—			—
Effect of dilutive stock options (C)	—			—			—
Weighted average shares used to calculate net loss per share, diluted	28,805			27,174			25,413
Net loss per share:
Basic	$	(1.72	)	$	(1.60	)	$	(0.06	)
Diluted	$	(1.72	)	$	(1.60	)	$	(0.06	)

(A) For the year ended December 31, 2013 there were no contingently issuable escrow shares outstanding. For the years ended December 31, 2012 and 2011, 0.7 million and 1.3 million contingently issuable escrow shares were excluded from the calculation as their effect would have been anti-dilutive.

(B) The following as-if converted shares associated with the Company’s 2013 and 2015 convertible senior notes were excluded from the calculation as their effect would be anti-dilutive (in thousands):

	For the Years Ended December 31,
	2013	2012	2011
2013 convertible senior notes	—	2,450	3,454
2015 convertible senior notes	2,110	1,067	—
Total as-if converted shares excluded	2,110	3,517	3,454

(C) The following shares, by equity award type, were excluded from the calculation, as their effect would have been anti-dilutive (in thousands):

	For the Years Ended December 31,
	2013	2012	2011
Stock options	3,465	2,555	2,900
Restricted stock units	335	527	510
Performance based restricted stock units (D)	193	—	—
Total equity award shares excluded	3,993	3,082	3,410

(D) For the years ended December 31, 2013, 2012 and 2011 the Company excluded restricted shares of 1.5 million, 2.3 million, and 0.8 million granted under the LTIP as the performance criteria required for issuance of the awards was not satisfied as of these dates.

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Hedging (Tables)

12 Months Ended

Dec. 31, 2013

Dec. 31, 2012

Dec. 31, 2011

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Foreign Exchange Contracts, Statement of Financial Position

A summary of the aggregate contractual or notional amounts, balance sheet location and estimated fair values of derivative financial instruments designated as cash flow hedges at December 31, 2013 is as follows (in thousands):

	Contractual / Notional Amount		Consolidated Balance Sheet Classification	Estimated Fair Value
				Asset		(Liability)
Foreign currency forward exchange contracts	$	15,328	Other accrued liabilities	$	—	$	(169	)

A summary of the aggregate contractual or notional amounts, balance sheet location and estimated fair values of derivative financial instruments designated as cash flow hedges at December 31, 2012 is as follows (in thousands):

	Contractual / Notional Amount		Consolidated Balance Sheet Classification	Estimated Fair Value
				Asset		(Liability)
Foreign currency forward exchange contracts	$	13,986	Other current assets	$	—	$	(297	)

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The effect of derivative instruments on the Consolidated Financial Statements for the year ended December 31, 2013 was as follows (in thousands):

			Ineffective Portion
Consolidated Statements of Operations Classification of Gain Reclassified from Accumulated Other Comprehensive Income	Hedge Gain  Reclassified from Accumulated Other Comprehensive Income		Consolidated Statement of Operations Classification of Gain (Loss) Recognized	Hedge Gain (Loss) Recognized
Cost of sales	$	498	None	$	—
Research and development	544		None	—
Selling, general and administrative	158		None	—

The effect of derivative instruments on the Consolidated Financial Statements for the year ended December 31, 2012 was as follows (in thousands):

Effective Portion			Ineffective Portion
Consolidated Statements of Operations Classification of Gain Reclassified from Accumulated Other Comprehensive Income	Hedge Gain  Reclassified from Accumulated Other Comprehensive Income		Consolidated Statement of Operations Classification of Gain (Loss) Recognized	Hedge Gain (Loss) Recognized
Cost of sales	$	286	None	$	—
Research and development	183		None	—
Selling, general and administrative	87		None	—

The effect of derivative instruments on the Consolidated Financial Statements for the year ended December 31, 2011 was as follows (in thousands):

Effective Portion			Ineffective Portion
Consolidated Statements of Operations Classification of Gain Reclassified from Accumulated Other Comprehensive Income	Hedge Gain  Reclassified from Accumulated Other Comprehensive Income		Consolidated Statement of Operations Classification of Gain (Loss) Recognized	Hedge Gain (Loss) Recognized
Cost of sales	$	41	None	$	—
Research and development	322		None	—
Selling, general and administrative	123		None	—

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Stock-Based Employee Benefit Plans

Equity instruments are granted to employees, directors and consultants in certain instances, as defined in the respective plan agreements.

Stock Options and Restricted Stock Awards

On May 15, 2007, the Company's shareholders approved the 2007 Stock Plan (as amended, the "2007 Stock Plan") which provides for issuance of stock options, restricted shares, restricted stock units and performance-based awards. Under the 2007 Stock Plan, 6,200,000 shares have been reserved and authorized for issuance to any non-employee directors and employees. The 2007 Stock Plan provides the Board of Directors discretion in creating employee equity incentives. Unless otherwise stipulated in the plan document, the Board of Directors determines stock option exercise prices, which may not be less than the fair value of Radisys common stock at the date of grant, vesting periods and the expiration periods which are a maximum of 10 years from the date of grant for certain awards.

On August 17, 2010, the shareholders approved the LTIP. The LTIP provides for the grants of awards payable in shares of common stock upon the achievement of performance goals set by the Company’s Compensation and Development Committee (“the Committee”). The number of shares of the Company’s common stock initially reserved for issuance under the LTIP is 2,000,000 shares with a maximum of 500,000 shares in any calendar year to one participant.

On May 3, 2011 the Company registered 600,000 shares of its common stock under the Radisys Corporation Inducement Stock Plan for CCPU Employees (the "CCPU Plan"). The CCPU Plan was adopted without shareholder approval in reliance upon the exception provided under NASDAQ Listing Rule 5635(c)(4) relating to awards granted in connection with the hiring of new employees, including grants to transferred employees in connection with a merger or acquisition. Awards under the CCPU Plan are made only to employees of Continuous Computing or its subsidiaries and became effective upon the completion of the Continuous Computing acquisition. The CCPU Plan provides for the issuance of stock options, restricted shares and restricted stock units. In 2011, the Company issued 368,000 shares under the CCPU Plan and no future awards will be granted.

The Company assumed the stock plans of Continuous Computing on July 8, 2011. Under the terms of the Company's merger agreement with Continuous Computing, options outstanding under these plans were converted to options to purchase shares of the Company's common stock. Options issued under these plans vest over four years from the original grant date and have an expiration date of 10 years from the original grant date. The exercise price of each converted option is equal to the product of the original exercise price and the original number of options granted divided by the number of converted options received. These stock plans have been suspended and no future awards will be granted under these plans. A total of 319,000 shares of common stock were issued under the Continuous Computing stock plans.

In accordance with the Continuous Computing merger agreement, unvested options pursuant to the Continuous Computing plans were required to be converted into multiple awards on the acquisition date, with the resulting awards becoming non-contingent and contingent options of the Company. Both the non-contingent and contingent awards continue to vest under the original service conditions of the awards. However, the contingent awards contain post-vesting restrictions tied to payment of certain merger contingencies such as the earn-out and indemnification agreements. The assumed options were valued using a Black-Scholes option-pricing model. In addition, the Company utilized the Finnerty Asian Put Option Approach to estimate the discount associated with the post-vesting restrictions for the contingent options. The resulting discount applied was 10%.

On September 4, 2012, the Committee approved 291,375 performance based restricted stock awards under the Overlay Plan based on attainment of the performance goals at maximum levels. The Overlay provides for the grants of awards payable in shares of common stock upon the achievement of performance goals set by the Committee. The awards had four separate quarterly performance achievement dates in 2013 and vest one year after they are earned.

Effective September 10, 2012, the Committee canceled all outstanding awards under the LTIP, resulting in the shares underlying such awards becoming eligible for grants of additional awards under the LTIP.

Following such cancellation of awards, on September 10, 2012, the Committee approved 799,975 performance based restricted stock awards under the LTIP based on attainment of 100% of the performance goals being met. The LTIP provides for the grants of awards payable in shares of common stock upon the achievement of performance goals set by the Committee. The awards have four separate semi-annual performance achievement dates in 2013 and 2014 and vest upon attainment of the performance conditions. In addition to the performance conditions, the awards contain market-based multipliers based on the average price of the Company's common stock thirty days prior to each semi-annual performance period. The maximum multiplier for a given semi-annual performance period is 2.75x the original grant and limited to a maximum of 2.5x (or 1,999,938 shares) over the entire performance period.

As of December 31, 2013, the Company had 482,613 common shares available for future grant under its equity plans.

The following table summarizes stock option activity for 2013 (in thousands, except average prices and weighted average remaining contractual lives):

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Balance, December 31, 2012	2,555		$	7.84	3.76	$	482
Granted	1,746		3.46
Exercised	(43	)	0.67
Forfeited	(119	)	4.06
Expired	(674	)	11.59
Balance, December 31, 2013	3,465		$	5.15	4.65	$	211
Options exercisable at December 31, 2013	1,301		$	7.75	2.87	$	203
Options vested as of December 31, 2013 and expected to vest after December 31, 2013	3,339		$	5.21	4.61	$	211

The aggregate intrinsic value in the table above represents the total pretax value, based on the Company's closing common stock price of $2.29 at December 31, 2013 that would have been received by the option holders had all option holders exercised their in-the-money options on December 31, 2013.

Total intrinsic value of options exercised for the years ended December 31, 2013, 2012 and 2011 was $0.2 million, $0.1 million, and $0.1 million. The total amount of cash received from the exercise of options in 2013, 2012 and 2011 was $0.1 million, $0.1 million and $0.5 million

As of December 31, 2013, the Company had $3.2 million in unrecognized compensation expense related to stock options which is expected to be recognized over a weighted average period of 2.3 years.

The following table summarizes nonvested stock activity for 2013:

	Restricted Stock Units				LTIP and Overlay Awards
	Restricted Shares		Weighted Average Fair Value		Restricted Shares		Weighted Average Fair Value
Balance, December 31, 2012	527		$	5.65	1,003		$	2.19
Granted	102		3.71		130		4.37
Vested	(231	)	6.15		(186	)	2.27
Forfeited	(63	)	5.28		(151	)	4.19
Balance, December 31, 2013	335		$	4.73	796		$	5.00

The total fair value of restricted stock units that vested in 2013, 2012 and 2011 was $1.4 million, $1.0 million and $1.5 million. As of December 31, 2013, the Company had $1.0 million in unrecognized compensation expense related to restricted stock units which is expected to be recognized over a weighted average period of 1.4 years. The LTIP and Overlay awards are separated into four performance periods which range from September 10, 2012 to December 31, 2014. Expense associated with each service period is measured on the date the respective service period begins. At December 31, 2013, the Company had $0.3 million in unrecognized compensation expense associated with all of the performance periods of the Overlay awards which is expected to be recognized over a weighted average period of 0.6 years. There was no unrecognized compensation expense associated with the first two performance periods of LTIP as both performance periods ended and the shares vested at or prior to December 31, 2013. The final two performance periods are both in 2014 and expense measurement and recognition will occur during 2014.

Employee Stock Purchase Plan

In December 1995, the Company established an Employee Stock Purchase Plan (“ESPP”). All employees of Radisys and its subsidiaries who customarily work 20 or more hours per week, including all officers, are eligible to participate in the ESPP. Separate offerings of common stock to eligible employees under the ESPP (an “Offering”) commence on February 15, May 15, August 15 and November 15 of each calendar year (“Enrollment Dates”) and continue for a period of 18 months. Multiple separate Offerings are in operation under the ESPP at any given time. An employee may participate in only one Offering at a time and may purchase shares only through payroll deductions permitted under the provisions stipulated by the ESPP. The purchase price is the lesser of 85% of the fair market value of the common stock on date of grant or that of the purchase date (“look-back feature”). Pursuant to the provisions of the ESPP, as amended, the Company is authorized to issue up to 6.7 million shares of common stock under the ESPP. At December 31, 2013, 833,857 shares were available for issuance under the ESPP.

During the second quarter of 2009, the Board of Directors approved an amendment to the Company’s ESPP to provide for a one-year holding period with respect to common stock shares purchased by participants under the ESPP. The one-year holding period took effect during the fourth quarter of 2009. Due to the holding period, the Company applies a discount to the ESPP stock compensation to reflect the decreased liquidity. The Company utilizes the Finnerty Asian Put Option Approach to estimate the discount. Inputs for the model include the length of the holding period, volatility and risk-free rate. The discount applied in the fourth quarter of 2013 was 13.0%.

The following table summarizes shares issued under the ESPP (in thousands, except per share amounts):

	Year Ended December 31,
	2013		2012		2011
Shares issued pursuant to the ESPP	381		352		251
Cash received for the purchase of shares pursuant to the ESPP	$	767	$	1,225	$	1,572
Weighted average purchase price per share	$	2.01	$	3.48	$	6.27

Stock-Based Compensation Expense

The Company uses the Black-Scholes model to measure the grant-date fair value of stock options and ESPP shares. The grant-date fair value of stock options that are expected to vest is recognized on a straight-line basis over the requisite service period, generally, three years. The grant date fair value of ESPP shares that are expected to vest is recognized on a straight-line basis over the requisite service period, generally, 18 months, subject to modification at the date of purchase due to the ESPP look-back feature. The estimate of the number of options, ESPP shares and restricted stock units granted under the 2007 Stock Plan expected to vest is determined based on historical experience.

The Company estimates the fair value of stock options and purchase rights under the ESPP using a Black-Scholes option-pricing model. The calculation includes several assumptions that require management’s judgment. The expected term of the option or share is determined based on assumptions about patterns of employee exercises, and represents a probability-weighted average time period from grant until exercise of stock options, subject to information available at time of grant. Determining expected volatility generally begins with calculating historical volatility for a similar long-term period and then considering the ways in which the future is reasonably expected to differ from the past.

The Company uses one employee population. The expected term computation is based on historical vested option exercise and post-vest forfeiture patterns and is also factored by an estimate of the expected term for fully vested and outstanding options. The estimate of the expected term for options that were fully vested and outstanding was determined as the midpoint between the evaluation date and the contractual term date of the option.

The risk free interest rate is based on the U.S. Treasury constant maturities in effect at the time of grant for the expected term of the option or share.

The fair value of nonvested stock is the market value as of the grant date. The grant-date fair value of the restricted stock units that are expected to vest is recognized on a straight-line basis over the requisite service period, which is three years. The grant-date fair value of the LTIP and Overlay awards is recognized ratably over the service period which equals the measurement period of the award. The measurement period is the period of time over which performance objectives are expected to be achieved. Since the number of shares that may be issued under the LTIP and Overlay and the service period are both variable, the Company evaluates the LTIP and Overlay awards on a quarterly basis and adjusts the number of shares expected to be awarded based upon financial results of the Company as compared to the performance goals set for the award. Adjustments to the number of shares awarded, and to the corresponding compensation expense, are made on a cumulative basis at the date of adjustment based upon the estimated probable number of shares to be awarded. Adjustments made to compensation expense resulting from a change in the estimated probable vesting date of the awards are made on a prospective basis. Additionally, under the 2012 LTIP the Company is required to measure the fair value of the market-based condition contained in the awards. This fair value of this feature is measured at the outset of each semi-annual performance period and recognized over the service period of the respective performance period.

The fair value calculations for stock options and ESPP shares used the following assumptions for the years ended December 31:

	Stock Options									Assumed Options			Employee Stock Purchase Plan
	2013			2012			2011			2011			2013			2012			2011
Estimated fair value	$	3.45		$	2.10		$	4.23		$	7.77		$	1.79		$	2.05		$	2.09
Expected life (in years)	4.5			4.5			4.4			2.7			1.5			1.5			1.5
Interest rate	1.33		%	0.65		%	0.91		%	0.66		%	0.15		%	0.18		%	0.12		%
Volatility	57		%	71		%	70		%	64		%	52		%	53		%	42		%
Dividend yield	—			—			—			—			—			—			—

For the years ended December 31, 2013, 2012 and 2011, stock-based compensation was recognized and allocated in the Consolidated Statements of Operations as follows (in thousands):

	2013		2012		2011
Cost of sales	$	550	$	25	$	838
Research and development	1,170		601		1,434
Selling, general and administrative	3,578		765		3,445
Total stock-based compensation expense	$	5,298	$	1,391	$	5,717

401(k) Savings Plan

The Company established a 401(k) Savings Plan (“401(k) Plan”), a defined contribution plan, as of January 1, 1989 and amended through January 1, 2007, in compliance with Section 401(k) and other related sections of the Internal Revenue Code and corresponding regulations issued by the Department of Treasury and Section 404(c) of Employee Retirement Income Security Act of 1974 (“ERISA”), to provide retirement benefits for its U.S employees. Under the provisions of the plan, eligible employees are allowed pre-tax contributions of up to 30% of their annual compensation or the maximum amount permitted by the applicable statutes. Additionally, eligible employees can elect to make catch-up contributions, within the limits set forth by pre-tax contributions, or to the maximum amount permitted by the applicable statutes. Pursuant to the provisions of the 401(k) Plan, the Company may contribute 50% of pre-tax contributions made by eligible employees, adjusted for loans and withdrawals, up to 6% of annual compensation for each eligible employee. The Company may elect to make supplemental contributions as periodically determined by the Board of Directors at their discretion. The contributions made by the Company on behalf of eligible employees become 100% vested after three years of service, or 33% per year after one year of service. The Company’s total contributions to the 401(k) Plan amounted to $0.7 million, $0.7 million, and $0.7 million in 2013, 2012 and 2011. In addition, some of the Company’s employees outside the U.S are covered by various defined contribution plans, in compliance with the statutes of respective countries. The participants pay for the 401(k) Plan administrative expenses.

Deferred Compensation Plan

The Company terminated its Deferred Compensation Plan during 2013. The distribution of plan assets and participant balances began during 2013 and will continue through January 2015 based on participant elections. The Deferred Compensation Plan provided its directors and certain eligible employees with opportunities to defer a portion of their compensation as defined by the provisions of the plan. The Company credited additional amounts to the Deferred Compensation Plan to make up for reductions of Company contributions under the 401(k) Plan. The deferred amounts were credited with earnings and losses under investment options chosen by the participants. The Company set aside deferred amounts, which were then invested in long-term insurance contracts. All deferred amounts and earnings are 100% vested at all times, but are subject to the claims of creditors of the Company under a bankruptcy proceeding. Benefits were payable to a participant upon retirement, death, and termination of employment and paid as elected by the participant in accordance with the terms of the plan.

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Employee Benefit Plans (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended	12 Months Ended									0 Months Ended	12 Months Ended		0 Months Ended
	Dec. 31, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Maximum [Member]	Dec. 31, 2013 Stock Options [Member]	Dec. 31, 2013 Restricted Stock [Member]	Dec. 31, 2013 LTIP and Overlay Awards [Member]	Dec. 31, 2013 Restricted Stock [Member]	Dec. 31, 2013 2007 Stock Plan [Member]	Sep. 04, 2012 2007 Stock Plan [Member] Restricted Stock [Member]	Dec. 31, 2013 LTIP [Member]	Dec. 31, 2013 LTIP [Member] Maximum [Member]	Sep. 04, 2012 LTIP [Member] Restricted Stock [Member]	Dec. 31, 2013 CCPU Inducement Plan [Member]	Dec. 31, 2013 Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized										6,200,000						6,700,000
Common Stock, Shares Authorized	100,000,000	100,000,000	100,000,000									2,000,000	500,000		600,000
Common Stock, Shares, Issued	29,198,000	29,198,000	28,471,000												368,000
Shares issued pursuant to benefit plans, shares		319,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures		1,746,000									291,375			799,975
Share-based Compensation Arrangement by Share-based Payment Award, Equity Plan Maximum Shares												1,999,938
Share-based Compensation Arrangement by Share-based Payment Award, Equity Plan Remaining Shares Available for Future Grants		482,613
Share Price	$ 2.29	$ 2.29
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Total Intrinsic Value		$ 0.2	$ 0.1	$ 0.1
Proceeds from Stock Options Exercised		0.1	0.1	0.5
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	3.2	3.2						0.3	1.0
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition						2 years 3 months 24 days	1 year 4 months 24 days	7 months 6 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number		2,555,000	2,900,000					1,003,000	527,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period								130,000	102,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period								(186,000)	(231,000)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period								(151,000)	(63,000)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	3,465,000	3,465,000	2,555,000	2,900,000				796,000	335,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value								$ 2.19	$ 5.65
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value								$ 4.37	$ 3.71
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value								$ 2.27	$ 6.15
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price								$ 4.19	$ 5.28
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value								$ 5.00	$ 4.73
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures		1.4	1.0	1.5
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant																833,857
Employee Stock Purchase Plan, Discount Rate	13.00%
Defined Contribution Plan, Maximum Annual Contribution Per Employee, Percent		30.00%
Defined Contribution Plan, Employer Matching Contribution, Percent		6.00%			50.00%
Defined Contribution Plan, Employers Matching Contribution, Annual Vesting Percentage		33.00%			100.00%
Defined Contribution Plan, Cost Recognized		$ 0.7	$ 1.0	$ 0.7
Deferred Compensation Plan, Vesting Percentage	0.00%	0.00%

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Cash flows from operating activities:
Net income (loss)	$ (49,404)	$ (43,474)	$ (1,529)	[1]
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	21,748	22,079	16,864
Impairment of goodwill	0	29,748	0	[1]
Inventory valuation allowance	3,302	1,232	2,668
Deferred income taxes	703	1,531	(842)
Deferred tax valuation allowance provision (reversal)	12,476	0	(10,350)
Write off of purchased computer software	2,868	0	0
Gain on the sale of purchased computer software	(1,532)	0	0
Gain on the liquidation of a foreign subsidiary	0	0	(2,081)	[1]
Gain on sale of property held for sale	(771)	0	0
Stock-based compensation expense	5,298	1,391	5,717
Other	330	1,210	2,250
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	11,119	(2,082)	7,146
Other receivables	(303)	1,005	(1,202)
Inventories	(10,192)	4,864	(9,221)
Inventory deposit	10,349	352	(2,249)
Other current assets	(1,197)	744	451
Accounts payable	(6,013)	3,718	2,629
Accrued wages and bonuses	(1,640)	(3,608)	1,317
Accrued restructuring	1,551	(3,014)	2,148
Deferred income	(1,145)	(2,733)	4,269
Other accrued liabilities	362	(7,352)	(3,177)
Net cash provided by (used in) operating activities	(2,091)	5,611	14,808
Cash flows from investing activities:
Acquisitions, net of cash acquired	0	0	(79,298)
Capital expenditures	(6,047)	(11,092)	(8,171)
Proceeds from sale of software assets	1,137	0	0
Proceeds from sale of land	1,415	0	0
Other	0	(68)	(500)
Net cash used in investing activities	(3,495)	(11,160)	(87,969)
Cash flows from financing activities:
Borrowings on line of credit	15,000	0	0
Payments on contingent consideration liability	(447)	0	0
Repayment of convertible notes	(16,919)	(10,081)	(4,875)
Repurchases of common stock	0	0	(3,920)
Proceeds from issuance of common stock	806	1,272	1,646
Other financing activities	(474)	(213)	(923)
Net cash used in financing activities	(2,034)	(9,022)	(8,072)
Effect of exchange rate changes on cash	(80)	(17)	(75)
Net decrease in cash and cash equivalents	(7,700)	(14,588)	(81,308)
Cash and cash equivalents, beginning of period	33,182	47,770	129,078
Cash and cash equivalents, end of period	25,482	33,182	47,770
Supplemental disclosure of cash flow information:
Interest	1,090	1,347	1,424
Income taxes	1,415	1,202	806
Supplemental disclosure of non-cash investing and financing activities:
Issuance of common stock for acquisitions	$ 0	$ 0	$ 30,818

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 25,482	$ 33,182
Accounts receivable, net	41,359	51,881
Other receivables	2,634	2,394
Inventories, net	24,928	20,071
Inventory deposit, net	481	8,836
Other current assets	4,688	4,248
Deferred tax assets, net	1,121	5,376
Total current assets	100,693	125,988
Property and equipment, net	14,854	17,713
Intangible assets, net	56,510	70,284
Long-term deferred tax assets, net	2,686	11,161
Other assets	1,442	7,248
Total assets	176,185	232,394
Current liabilities:
Accounts payable	35,081	41,191
Accrued wages and bonuses	5,547	7,168
Deferred income	8,167	9,222
Convertible senior notes	0	16,919
Line of credit	15,000	0
Other accrued liabilities	9,978	9,601
Total current liabilities	73,773	84,101
Long-term liabilities:
Convertible senior notes	18,000	18,000
Other long-term liabilities	3,276	4,851
Total long-term liabilities	21,276	22,851
Total liabilities	95,049	106,952
Commitments and contingencies (Note 14)
Preferred stock — $0.01 par value, 5,664 shares authorized; none issued or outstanding at December 31, 2013 and December 31, 2012	0	0
Common stock — no par value, 100,000 shares authorized; 29,198 and 28,471 shares issued and outstanding at December 31, 2013 and December 31, 2012	309,370	303,724
Accumulated deficit	(229,090)	(179,686)
Accumulated other comprehensive income:
Cumulative translation adjustments	1,731	2,169
Unrealized loss on hedge instruments	(875)	(765)
Total accumulated other comprehensive income	856	1,404
Total shareholders’ equity	81,136	125,442
Total liabilities and shareholders’ equity	$ 176,185	$ 232,394

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Other Accrued and Other Long-Term Liabilities

12 Months Ended

Dec. 31, 2013

Other Accrued and Other Long-Term Liabilities [Abstract]

Other Accrued and Other Long-Term Liabilities

Other Accrued and Other Long-Term Liabilities

Other accrued liabilities consisted of the following (in thousands):

	December 31, 2013		December 31, 2012
Accrued restructuring	$	2,105	$	567
Accrued warranty reserve	2,599		3,148
Contingent consideration liability	390		836
Deferred compensation plan liability	1,276		1,395
Adverse purchase commitments	632		375
Income tax payable, net	508		318
Other	2,468		2,962
Other accrued liabilities	$	9,978	$	9,601

Other long-term liabilities consisted of the following (in thousands):

	December 31, 2013		December 31, 2012
Accrued restructuring	$	642	$	621
Accrued warranty reserve	729		806
Contingent consideration liability	—		1,705
Other	1,905		1,719
Other long-term liabilities	$	3,276	$	4,851

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DEI Document (USD $)	12 Months Ended
	Dec. 31, 2013	Mar. 11, 2014	Jun. 30, 2013
DEI [Abstract]
Entity Registrant Name	Radisys Corporation
Entity Central Index Key	0000873044
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		29,457,838
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Public Float			$ 115,588,196
Entity Current Reporting Status	Yes

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Short-Term Borrowings

12 Months Ended

Dec. 31, 2013

Short-term Debt [Abstract]

Short-Term Borrowings

Short-Term Borrowings

Silicon Valley Bank

The Company has a $35.0 million secured revolving line of credit agreement (as amended, the "Agreement") with Silicon Valley Bank ("SVB") with a stated maturity date of July 28, 2016. On November 1, 2013 the Agreement was amended to reduce the total size of the secured revolving credit facility from $40.0 million to $35.0 million, revise the minimum two quarter rolling EBITDA financial covenant for the quarters ended September 30, 2013, December 31, 2013, and March 31, 2014 and modify certain terms within the liquidity ratio, all of which revisions are reflected herein. On February 11, 2014 the Agreement was amended to revise the minimum two quarter rolling EBITDA financial covenant for the quarter ended December 31, 2013 which revisions are reflected herein.

The secured revolving credit facility is available for cash borrowings and is subject to a borrowing formula based upon eligible accounts receivable and EBITDA (as defined in the Agreement) non-formula thresholds. Eligible accounts receivable include 80% of domestic and 65% of foreign accounts receivable (70% in certain cases) for our U.S. companies, limited to concentration by certain customers, not greater than 60 days past due and no greater than 120 days from original invoice date. EBITDA non-formula availability is $15.0 million when two rolling quarters EBITDA is $9.0 million or greater and $10.0 million when two rolling quarters EBITDA is $6.0 million or greater but less than $9.0 million. Borrowings under the Agreement bear interest based on a debt to EBITDA ratio where EBITDA is calculated on a rolling four quarter basis. The calculation of interest under the Agreement is as follows:

• Debt to EBITDA ratio less than 2.0:1.0 - LIBOR, which was 0.18% as of December 31, 2013, plus 2.00%;

• Debt to EBITDA ratio less than 3.0:1.0, but more than or equal to 2.0:1.0 - LIBOR plus 2.25%;

• Debt to EBITDA more than or equal to 3.0:1.0 - LIBOR plus 2.50%.

The Company is required to make interest payments monthly. The Company was further required to pay a commitment fee equal to $35,000 on the original closing date of the Agreement and annually thereafter and to pay quarterly in arrears an unused facility fee based on the debt to EBITDA ratio as follows: debt to EBITDA ratio less than 2.0:1.0 - 0.375% per year of the unused amount of the facility; and debt to EBITDA ratio of 2.0:1.0 or greater - 0.50% per year of the unused amount of the facility.

The Agreement requires the Company to make and maintain certain financial covenants, representations, warranties and other agreements that are customary in credit agreements of this type. The Agreement also requires the Company to maintain the following specific financial covenants:

• minimum monthly liquidity ratio of 1.25 at the end of intra-quarter months and 1.50 at the end of quarter end months. The liquidity ratio is defined as cash, cash equivalents and short term investments (with cash and cash equivalents held by the Company's foreign subsidiaries not to exceed $10.0 million and excluding any investments held by the Company's foreign subsidiaries) plus eligible accounts receivable, divided by the sum of obligations owing to SVB under the Agreement;

• beginning September 30, 2014 until the 2015 convertible senior notes are repaid, (i) minimum cash balance of $18.0 million held at either SVB or in an account held with a financial institution where SVB shall have received a Qualifying Control Agreement (as defined in the Agreement) and (ii) immediately after giving pro forma effect to the payment of the 2015 convertible senior notes as if such payment occurred on September 30, 2014, compliance with the liquidity covenant noted above;

• minimum two quarter rolling EBITDA (earnings before interest, taxes, depreciation, amortization, stock based compensation, non-cash restructuring charges (as defined in the Agreement) and cash restructuring charges not to exceed $12.0 million cumulatively during 2013 and 2014 combined) of $2.0 million for the quarter ending September 30, 2013, $(4.0) million for the quarter ending December 31, 2013, $2.0 million for the quarter ending March 31, 2014, $6.0 million for the quarters ending June 30, 2014, September 30, 2014 and December 31, 2014 and $9.0 million in subsequent quarters; and

• capital expenditures may not exceed $11.0 million during the period January 1, 2013 to December 31, 2013 and $8.0 million in subsequent years.

As of December 31, 2013 and 2012, the Company had outstanding balances of $15.0 million and $0.0 million issued on its behalf under the Agreement. At December 31, 2013, the Company had $7.9 million of total borrowing availability remaining under the Agreement. After giving effect to the amendment to the Agreement, the Company was in compliance with all covenants under the Agreement.

On March 14, 2014, the Company entered into an amended and restated $25.0 revolving line of credit agreement with SVB (the "2014 Agreement") that replaces the Agreement and has a stated maturity date of July 28, 2016. The secured revolving credit facility under the 2014 Agreement is available for cash borrowings and is subject to a borrowing formula based upon eligible accounts receivable. Eligible accounts receivable include 80% of domestic and 65% of foreign accounts receivable(80% in certain cases), in each case, not greater than 60 days past original invoice date. The secured revolving credit facility also includes a letter of credit sublimit (subject to the borrowing formula) of $1,000,000. The interest rate is dependent upon a liquidity threshold (the "Liquidity Threshold"), which is defined in the 2014 Agreement as $15.0 million, with the exception of the last month end of each quarter, where it is defined as $20.0 million. Liquidity is calculated under the 2014 Agreement as unrestricted cash plus unused availability on the revolving line of credit; however if the 2015 convertible senior notes are not renewed or refinanced 120 days prior to their maturity date, which is February 15, 2015, Liquidity (for purposes of testing against the Liquidity Threshold) will be reduced by the outstanding principal amount of the 2015 convertible senior notes. The calculation of interest under the 2014 Agreement is as follows:

• When Liquidity is above the Liquidity Threshold, the interest rate is the prime rate (as published in Wall Street Journal) plus 0.75%;

• When Liquidity is below the Liquidity Threshold, the interest rate is the prime rate (as published in Wall Street Journal) plus 2.25%;

The Company is required to make interest payments monthly. The Company was further required to pay a loan modification fee of $35,000 and will be required to pay a commitment fee equal to $35,000 on July 29, 2014 and annually thereafter. Under the 2014 Agreement the Company is required to pay the higher of actual monthly interest incurred or the interest equivalent of $10.0 million in average monthly borrowings. If the Company terminates the commitment under the 2014 Agreement prior to the maturity date, the Company is required to pay a cancellation fee equal to 1.5% of the commitment under the 2014 Agreement.

The 2014 Agreement requires the Company to make certain representations, warranties and other agreements that are customary in credit agreements of this type. The 2014 Agreement also includes a financial covenant that requires the Company to maintain minimum Liquidity of $10.0 million tested monthly.

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Consolidated Statements of Comprehensive Loss (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Statement of Comprehensive Income [Abstract]
Net loss	$ (49,404)	$ (43,474)	$ (1,529)	[1]
Translation adjustments	(438)	(325)	(164)
Gain on liquidation of foreign subsidiary	0	0	(2,081)
Adjustment for fair value of hedge derivatives, net of tax	(110)	9	(1,167)
Other comprehensive loss	(548)	(316)	(3,412)
Comprehensive loss	$ (49,952)	$ (43,790)	$ (4,941)

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Accounts Receivable and Other Receivables

12 Months Ended

Dec. 31, 2013

Receivables [Abstract]

Accounts Receivable and Other Receivables

Accounts Receivable and Other Receivables

Accounts receivable balances consisted of the following (in thousands):

	December 31, 2013			December 31, 2012
Accounts receivable, gross	$	41,707		$	52,660
Less: allowance for doubtful accounts	(348		)	(779		)
Accounts receivable, net	$	41,359		$	51,881

Accounts receivable at December 31, 2013 and 2012 consisted of sales to the Company’s customers which are generally based on standard terms and conditions. The Company recorded the following activity in allowance for doubtful accounts (in thousands):

	For the Years Ended December 31,
	2013			2012			2011
Allowance for doubtful accounts, beginning of the year	$	779		$	828		$	933
Charged to costs and expenses	(310		)	—			51
Less: write-offs, net of recoveries	(121		)	(49		)	(156		)
Remaining allowance, end of the year	$	348		$	779		$	828

As of December 31, 2013 and 2012, other receivables were 2.6 million and $2.4 million. Other receivables consisted primarily of non-trade receivables including receivables for inventory transferred to the Company’s contract manufacturing partners on which the Company does not recognize revenue.

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Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures

Fair Value of Financial Instruments

The Company measures at fair value certain financial assets and liabilities. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs have created the following fair-value hierarchy:

Level 1— Quoted prices for identical instruments in active markets;

Level 2— Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3— Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Foreign currency forward contracts are measured at fair value using models based on observable market inputs such as foreign currency exchange rates; therefore, they are classified within Level 2 of the valuation hierarchy. The cash surrender value of life insurance contracts and deferred compensation liability are measured at fair value using quoted market prices for similar instruments; therefore, they are classified within Level 2 of the valuation hierarchy.

The Company has obligations ("contingent consideration"), to be paid in cash, related to the acquisition of Continuous Computing Corporation ("Continuous Computing") based on the amount of product royalty revenues to be generated by a specified set of contracts associated with certain of Continuous Computing's products over a period of 36 months after closing, which occurred on July 8, 2011. The contingent consideration liability was established at the time of acquisition and is evaluated at the end of each reporting period. As the significant inputs used in determining the fair value are unobservable, this liability is classified within Level 3 of the fair value hierarchy.

The fair value of this contingent consideration is determined by calculating the net present value of the expected payments using significant inputs that are not observable in the market, including revenue projections and discount rates consistent with the level of risk of achievement. The Company developed its own assumptions for the expected product royalty revenues generated under the arrangement. The fair value of the contingent consideration is affected most significantly by changes in the amount and timing of the revenue projections. If the revenue projections increase or decrease the fair value of the contingent consideration will increase or decrease accordingly in amounts that will vary based on the timing of the projected revenues and the timing of the expected payments.

The following table summarizes the fair value measurements as of December 31, 2013 for the Company's financial instruments (in thousands):

	Fair Value Measurements as of December 31, 2013
	Total			Level 1		Level 2			Level 3
Cash surrender value of life insurance contracts (A)	$	1,866		$	—	$	1,866		$	—
Deferred compensation liability (A)	(1,276		)			(1,276		)
Foreign currency forward contracts	(169		)	—		(169		)	—
Contingent consideration liability	(390		)	—		—			(390		)
Total	$	31		$	—	$	421		$	(390	)

(A) During the year ended December 31, 2013, the company terminated its Deferred Compensation Plan. The distribution of plan assets and participant balances and will occur through January 2015 based on participant elections.

The following table summarizes the fair value measurements as of December 31, 2012, for the Company’s financial instruments (in thousands):

	Fair Value Measurements as of December 31, 2012
	Total			Level 1		Level 2			Level 3
Cash surrender value of life insurance contracts	$	3,398		—		$	3,398		$	—
Deferred compensation liability	(1,395		)			(1,395		)
Foreign currency forward contracts	(297		)	—		(297		)	—
Contingent consideration liability	(2,541		)	—		—			(2,541		)
Total	$	(835	)	$	—	$	1,706		$	(2,541	)

The following table summarizes level 3 activity for the Company's contingent consideration liability (in thousands):

	Fair Value
	Contingent Consideration
Balance at December 31, 2011	$	7,594
Additions	—
Decrease in liability due to re-measurement	(5,910		)
Accretion	857
Balance at December 31, 2012	$	2,541
Additions	—
Decrease in liability due to re-measurement	(1,891		)
Payments	(447		)
Accretion	187
Balance at December 31, 2013	$	390

The Company records all changes in estimates and accretion on the contingent consideration liability to restructuring and other charges, net in the Consolidated Statements of Operations. At December 31, 2013, the entire contingent consideration liability of $0.4 million was recorded in other accrued liabilities on the Consolidated Balance Sheet.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company assessed long-lived assets for impairment during the third quarter of 2013, comparing the undiscounted future cash flow the assets are expected to generate to the carrying value of the assets. The probability-weighted analysis of expected undiscounted future cash flows exceeded the book value of the long lived assets by $63.3 million, or 84%. Key assumptions used in this analysis included revenue growth for the Company's technologies as well as general economic and business conditions.

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Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The income tax provision consists of the following (in thousands):

	For the Years Ended December 31,
	2013			2012			2011
Current provision:
Federal	$	—		$	—		$	—
State	(70		)	122			38
Foreign	2,299			1,252			271
Total current provision	2,229			1,374			309
Deferred provision (benefit):
Federal	—			(65		)	(9,451		)
State	—			(3		)	(74		)
Foreign	12,726			1,284			(1,916		)
Total deferred provision (benefit)	12,726			1,216			(11,441		)
Total income tax provision (benefit)	$	14,955		$	2,590		$	(11,132	)

The income tax provision (benefit) differs from the amount computed by applying the statutory federal income tax rate to pretax income as a result of the following differences (dollar amounts in thousands):

	For the Years Ended December 31,
	2013					2012					2011
	$			%		$			%		$			%
Statutory federal tax (benefit) rate	$	(12,057	)	35.0	%	$	(14,309	)	35.0	%	$	(4,431	)	35.0	%
Increase (decrease) in rates resulting from:
State taxes	(347		)	1.0		(266		)	0.7		(131		)	1.0
Foreign dividend	1,938			(5.6	)	6,754			(16.5	)	—			—
Goodwill impairment expense and (benefit) from acquisitions	—			—		9,377			(22.9	)	(81		)	0.6
Valuation allowance	32,784			(95.2	)	3,725			(9.1	)	(5,524		)	43.6
Taxes on foreign income that differ from U.S. tax rate	(8,507		)	24.7		(2,796		)	6.8		(2,888		)	22.8
Tax credits	(252		)	0.7		(304		)	0.7		(737		)	5.8
Non-deductible stock-based compensation expense	1,596			(4.6	)	1,812			(4.4	)	1,275			(10.1	)
Earnout liability fair value adjustment	(596		)	1.7		(1,768		)	4.3		—			—
Transaction costs	—			—		—			—		1,183			(9.3	)
Other	396			(1.2	)	365			(0.9	)	202			(1.5	)
Effective tax rate	$	14,955		(43.5	)%	$	2,590		(6.3	)%	$	(11,132	)	87.9	%

The components of deferred taxes consist of the following (in thousands):

	December 31, 2013			December 31, 2012
Deferred tax assets:
Accrued warranty	$	1,166		$	1,136
Inventory	2,952			1,734
Restructuring accrual	317			119
Net operating loss carryforwards	52,248			40,547
Tax credit carryforwards	24,692			25,256
Stock-based compensation	2,490			2,696
Capitalized research and development	144			556
Fixed assets	2,437			2,179
Goodwill	3,358			4,464
Other	5,005			5,723
Total deferred tax assets	94,809			84,410
Less: valuation allowance	(82,995		)	(50,200		)
Net deferred tax assets	11,814			34,210
Deferred tax liabilities:
Intangible assets	(7,514		)	(17,286		)
Other	(493		)	(387		)
Total deferred tax liabilities	(8,007		)	(17,673		)
Total net deferred tax assets	$	3,807		$	16,537

At December 31, 2013, the Company's unrecognized tax benefits associated with uncertain tax positions were $3.4 million, of which $3.0 million, if recognized, would favorably affect the effective tax rate.

The Company's ongoing practice is to recognize potential accrued interest and penalties related to unrecognized tax benefits within its global operations in income tax expense. During 2013, the Company recognized a net increase of approximately $22,000 in potential interest and penalties associated with uncertain tax positions in the Consolidated Statements of Operations. The Company had approximately $0.4 million and $0.3 million of interest and penalties associated with uncertain tax positions at December 31, 2013, which are excluded from the unrecognized tax benefits table below.

The Company’s total amounts of unrecognized tax benefits at the beginning and end of the period are as follows (in thousands):

	Total
Balance as of December 31, 2011	$	2,878
Additions based on tax positions related to the current year	42
Additions for tax positions of prior years	260
Reductions for tax positions of prior years	(169		)
Reductions as a result of a lapse of applicable statute of limitations	—
Other	—
Balance as of December 31, 2012	$	3,011
Additions based on tax positions related to the current year	532
Additions for tax positions of prior years	281
Reductions for tax positions of prior years	(102		)
Reductions as a result of a lapse of applicable statute of limitations	(70		)
Other	(206		)
Balance as of December 31, 2013	$	3,446

The Company and its subsidiaries are subject to federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company's statutes of limitations are closed for all federal and state income tax years before 2010 and 2009. The statutes of limitations for the Company's other foreign subsidiaries are closed for all income tax years before 2006. However, to the extent allowed by law, the taxing authorities may have the right to examine prior periods where net operating losses and credits were generated and carried forward, and make adjustments up to the net operating loss and credit carryforward amounts. It is reasonably possible that the Company's uncertain tax positions, including interest and penalties, could decrease by approximately $0.4 million in the next twelve months.

During 2011 a Canada Revenue Agency (“CRA”) examination was effectively settled when the Company agreed to the proposed adjustments issued by that CRA. The effective settlement did not have a significant impact on the Company's financial statements.

The Company is currently under examination in India. The periods covered by the examination are the Company's assessment years 2006 through 2008 and 2010. The examination is in various stages of appellate proceedings and all material uncertain tax positions associated with the examination have been taken into account in the ending balance of the unrecognized tax benefits at December 31, 2013.

The Company has recorded valuation allowances of $83.0 million and $50.2 million as of December 31, 2013 and 2012. This represents a full valuation allowance against the Company's U.S. net deferred tax assets as well as a partial valuation allowance against the Company's Canadian net deferred tax assets. During 2013 the Company recognized the partial valuation allowance against Company's Canadian net deferred tax assets in the amount of $12.5 million due to expected changes in the nature of the Company's operations in Canada. In evaluating its valuation allowance, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance.

At December 31, 2013 the Company had total available federal and state net operating loss carryforwards of approximately $144.8 million and $84.0 million. The federal and state net operating loss carryforwards expire between 2017 and 2033. The net operating losses from acquisitions are stated net of limitations pursuant to Section 382 of the Internal Revenue Code. The Company also had net operating loss carryforwards of approximately $3.6 million from the United Kingdom (“U.K.”) and China. The U.K. tax losses may be carried forward indefinitely provided certain requirements are met. The Chinese tax losses may be carried forward 5 years.

The Company had federal and state research and development tax credit and other federal credit carryforwards of approximately $17.6 million at December 31, 2013, to reduce future income tax liabilities.  The federal and Oregon credits expire between 2014 and 2013.  The California research and development credits do not expire.  The credits from acquisitions are stated net of limitations pursuant to Section 383 of the Internal Revenue Code.  The Company's Canadian subsidiary also had approximately $5.5 million in investment tax credit, $15.3 million of unclaimed scientific research and experimental expenditures to be carried forward and applied against future income in Canada.

Realization of the Company's foreign deferred tax assets is dependent on generating sufficient taxable income prior to the expiration of the net operating loss and tax credit carryforwards. Although realization is not assured, management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the balance of the deferred tax assets, net of the valuation allowance, as of December 31, 2013. The amount of the net deferred tax assets that is considered realizable, however, could be reduced if estimates of future taxable income during the carryforward periods are reduced. Should management determine that the Company would not be able to realize all or part of the net deferred tax assets in the future, adjustments to the valuation allowance for deferred tax assets may be required.

During 2013, the Company repatriated $0.8 million in cash from certain foreign subsidiaries. The company has provided a deferred tax liability of $0.8 million related to $2.2 million of unremitted earnings of certain foreign subsidiaries. The Company plans to indefinitely reinvest the earnings of certain foreign subsidiaries. Should the Company repatriate any foreign earnings from the remaining subsidiaries in the future, it may be required to establish an income tax liability and recognize additional income tax expense related to such earnings. The Company has indefinitely reinvested approximately $13.2 million of undistributed earnings from the foreign subsidiaries at December 31, 2013. Such earnings would be subject to U.S. taxation if repatriated to the U.S.

Pretax book loss from domestic operations for the fiscal years 2013, 2012, and 2011 was $46.5 million, $55.8 million, and $23.2 million. Pretax book income from foreign operations for the fiscal years 2013, 2012, and 2011 was $12.0 million, $14.9 million, and $10.5 million.

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Convertible Debt

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Convertible Debt

Convertible Debt

2013 Convertible Senior Notes

On February 15, 2013, the Company repaid at maturity the entire outstanding balance of the 2.75% convertible senior notes due 2013 (the "2013 convertible senior notes") in accordance with the terms thereof.

2015 Convertible Senior Notes

On June 20, 2012, the Company entered into subscription agreements with certain holders of the Company's 2013 convertible senior notes. Pursuant to the subscription agreements, on June 29, 2012 the Company exchanged $18.0 million aggregate principal amount of the 2013 convertible senior notes for $18.0 million aggregate principal amount of the Company's 2015 convertible senior notes. The 2015 convertible senior notes mature on February 15, 2015 and have a coupon rate of 4.5%. Holders of the 2015 convertible senior notes may convert their notes into a number of shares of the Company's common stock determined as set forth in the indenture governing the notes at their option on any day to and including the business day prior to the maturity date. The 2015 convertible senior notes are initially convertible into 117.2333 shares of the Company's common stock per $1,000 principal amount of the notes (which is equivalent to a conversion price of approximately $8.53 per share), subject to adjustment upon the occurrence of certain events. Upon the occurrence of a fundamental change, holders of the 2015 convertible senior notes may require the Company to repurchase some or all of their notes for cash at a price equal to 100% of the principal amount of the notes being repurchased, plus accrued and unpaid interest, if any. In addition, if certain fundamental changes occur, the Company may be required in certain circumstances to increase the conversion rate for any 2015 convertible senior notes converted in connection with such fundamental changes by a specified number of shares of the Company's common stock. The 2015 convertible senior notes are the Company's general unsecured obligations and rank equal in right of payment to all of its existing and future senior indebtedness, and senior in right of payment to the Company's future subordinated debt. The Company's obligations under the 2015 convertible senior notes are not guaranteed by, and are effectively subordinated in right of payment to all existing and future obligations of its subsidiaries and are effectively subordinated in right of payment to its future secured indebtedness to the extent of the assets securing such debt.

As of December 31, 2013 and 2012, the Company had outstanding 2013 and 2015 convertible senior notes with a combined face value of $18.0 million and $34.9 million. Of these balances $0.0 million and $16.9 million were classified as current liabilities in the Consolidated Balance Sheets at December 31, 2013 and 2012. As of December 31, 2013 and 2012, the estimated fair value of the Company's 2015 convertible senior notes was $17.8 million and $17.7 million.

The following table outlines the effective interest rate, contractually stated interest costs, and costs related to the amortization of issuance costs for the Company's 2013 and 2015 convertible senior notes:

	Years Ended
	December 31,
	2013			2012			2011
Effective interest rate of 2013 convertible senior notes	NA			3.73		%	3.64		%
Effective interest rate of 2015 convertible senior notes	4.50		%	4.50		%	NA
Contractually stated interest costs	$	810		$	1,289		$	1,372
Amortization of interest costs	$	43		$	398		$	501

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Intangible Assets

12 Months Ended

Dec. 31, 2013

Intangible Assets [Abstract]

Intangible Assets

Intangible Assets

The following tables summarize the Company’s total purchased intangible assets (in thousands):

	Gross		Accumulated Amortization			Net
December 31, 2013
Purchased technology	$	114,754	$	(79,189	)	$	35,565
Patents	6,472		(6,472		)	—
Customer lists	37,000		(21,997		)	15,003
Trade names	11,536		(5,594		)	5,942
Backlog	2,127		(2,127		)	—
Total intangible assets	$	171,889	$	(115,379	)	$	56,510
December 31, 2012
Purchased technology	$	114,754	$	(70,815	)	$	43,939
Patents	6,472		(6,450		)	22
Customer lists	37,000		(17,543		)	19,457
Trade names	11,536		(4,670		)	6,866
Backlog	2,127		(2,127		)	—
Total intangible assets	$	171,889	$	(101,605	)	$	70,284

Intangible assets amortization expense was $13.8 million, $14.8 million and $11.3 million for the years ended December 31, 2013, 2012 and 2011. The Company’s purchased intangible assets have remaining useful lives of one to eight years as of December 31, 2013. The Company reviews for impairment all of its purchased intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The estimated future amortization expense of purchased intangible assets as of December 31, 2013 is as follows (in thousands):

For the Years Ending December 31,	Estimated Intangible Amortization Amount
2014	$	13,281
2015	12,901
2016	12,747
2017	10,714
2018	4,870
Thereafter	1,997
Total estimated future amortization expense	$	56,510

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Commitments and Contingencies (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Class of Warrant or Right [Line Items]
Unrecorded Unconditional Purchase Obligation, Maximum	$ 5,100,000
Movement in Standard Product Warranty Accrual [Roll Forward]
Warranty liability balance, beginning of the year	3,954,000	3,438,000
Product warranty accruals	3,131,000	5,332,000
Adjustments for payments made	(3,757,000)	(4,816,000)
Warranty liability balance, end of the year	3,328,000	3,954,000
Warranty Reserves [Member]
Class of Warrant or Right [Line Items]
Accrued warranty reserve	2,599,000	3,148,000
Warranty Reserves [Member]
Class of Warrant or Right [Line Items]
Accrued warranty reserve	$ 729,000	$ 806,000

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Inventories

12 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consisted of the following (in thousands):

	December 31, 2013			December 31, 2012
Raw materials	$	21,127		$	10,420
Work-in-process	1,194			605
Finished goods	9,644			11,245
	31,965			22,270
Less: inventory valuation allowance	(7,037		)	(2,199		)
Inventories, net	$	24,928		$	20,071

	December 31, 2013			December 31, 2012
Inventory deposit (A)	$	1,289		$	11,637
Less: inventory deposit valuation allowance	(808		)	(2,801		)
Inventory deposit, net	$	481		$	8,836

(A) Beginning in the third quarter of 2013 the Company modified the inventory deposit arrangement with its contract manufacturing partner. Prior to the modification, the Company was obligated to place a deposit with its contract manufacturer for the cost of excess inventory that had been purchased as a result of the Company's forecasted demand when there was no alternative use. Under the new arrangement, rather than place a deposit with the contract manufacturer, the Company is now obligated to purchase the inventory on consignment. The calculation of excess inventory and its impact on the Company’s cash and reported aggregate inventory levels is the same under the consignment arrangement as it was under the prior deposit arrangement. As of December 31, 2013, the balance of consigned inventory at the Company’s contract manufacturing partner was $10.3 million with the remaining inventory deposit associated with inventory held at the Company’s outsourced hardware repair service provider. The remaining deposit is recorded net of adverse purchase commitment liabilities, and therefore the net balance of the deposit represents inventory the Company believes will be utilized. The deposit will be applied against future adverse purchase commitments owed to the Company's contract manufacturer or reduced based on the usage of inventory. See Note 14 - Commitments and Contingencies for additional information regarding the Company's adverse purchase commitment liability.

Consigned inventory is held at third-party locations, including the Company's contract manufacturing partner and customers. The Company retains title to the inventory until purchased by the third-party. Consigned inventory, consisting of raw materials and finished goods, was $12.0 million and $0.7 million at December 31, 2013 and 2012.

The Company recorded the following charges associated with the valuation of inventory, inventory deposit and the adverse purchase commitment liability for the years ended December 31 (in thousands):

	2013		2012		2011
Inventory, net	$	3,302	$	1,080	$	2,668
Inventory deposit, net	945		926		1,096
Adverse purchase commitments	327		31		733

The following is a summary of the change in the Company’s inventory valuation allowance for the years ended December 31 (in thousands):

	2013			2012
Inventory valuation allowance, beginning of the year	$	2,199		$	4,640
Usage:
Inventory scrapped	(956		)	(3,397		)
Inventory utilized	(363		)	(696		)
Subtotal—usage	(1,319		)	(4,093		)
Write-downs of inventory valuation	3,665			1,928
Transfer from other liabilities (A)	35			29
Transfer from (to) inventory deposit valuation allowance	2,457			(305		)
Inventory valuation allowance, end of the year	$	7,037		$	2,199

(A) Transfer from other liabilities is related to obsolete inventory purchased from contract manufacturers during the year which was previously reserved for as an adverse purchase commitment. (Note 10—Other Accrued and Other Long-Term Liabilities and Note 14—Commitments and Contingencies.)

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Property and Equipment

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

Property and equipment consisted of the following (in thousands):

	December 31, 2013			December 31, 2012
Manufacturing equipment	$	26,779		$	26,560
Office equipment and software	30,745			32,905
Leasehold improvements	5,973			7,155
Property and equipment, gross	63,497			66,620
Less: accumulated depreciation and amortization	(48,643		)	(48,907		)
Property and equipment, net	$	14,854		$	17,713

Depreciation expense associated with property and equipment for the years ended December 31, 2013, 2012 and 2011 was $8.0 million, $7.3 million and $5.4 million.

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Accrued Restructuring

12 Months Ended

Dec. 31, 2013

Restructuring and Related Activities [Abstract]

Restructuring and Other Charges

Restructuring and Other Charges

The following table summarizes the Company's restructuring and other gains and charges as presented in the Consolidated Statement of Operations (in thousands):

	December 31, 2013			December 31, 2012
Employee-related restructuring expenses	$	5,463		$	2,769
Fair value adjustments to contingent consideration liability	(1,740		)	(5,052		)
Facility reductions	602			1,590
Write off of purchased computer software	2,868			—
Net gain from sale of OS-9 software assets	(1,532		)	—
Integration-related expenses	1,039			576
Non-recurring legal expenses	779			—
Restructuring and other charges, net	$	7,479		$	(117	)

Restructuring and other charges may include costs from non-recurring events such as costs incurred for employee severance, acquisition or divestiture activities, excess facility costs, certain legal costs, asset related charges and other expenses associated with business restructuring activities.

During the year ended December 31, 2013, the Company recorded the following restructuring and other charges:

• $5.5 million net expense for the severance of 203 employees, primarily related to Shanghai and Penang site reductions and severance for named executives, net of reductions resulting from changes in previously estimated amounts for employee severance and associated payroll costs;

• $2.9 million expense relating to the write off of the Company's Security Gateway ("SEG") purchased computer software resulting from management's decision to abandon this technology;

• $1.7 million gain resulting from the decrease in fair value of the Continuous Computing contingent consideration liability;

• $1.5 million net gain from the sale of the Company's OS-9 software assets;

• $1.0 million net expense principally associated with asset write-offs, legal fees, and personnel overlap resulting from resource consolidation primarily associated with our Shanghai and Penang site reductions;

• $0.6 million net lease abandonment expense primarily resulting from a lease abandonment charge resulting from the shuttering of our San Diego facility; and

• $0.8 million legal expenses associated with a non-operating strategic project.

During the year ended December 31, 2012, the Company recorded the following restructuring and other charges:

• $2.8 million net expense for the severance of employees, including a $0.9 million contractual severance benefit provided to our former Chief Executive Officer, and severance paid to other executive officers, net of reductions resulting from changes in previously estimated amounts for employee severance and associated payroll costs;

• $5.1 million gain due to the decrease in fair value of the Continuous Computing contingent consideration liability;

• $1.6 million net expense resulting from facilities rationalization in certain North American sites; and

• $0.6 million expense related to expenses incurred related to the integration and acquisition of Continuous Computing.

Accrued restructuring, which is included in other accrued liabilities and other long-term liabilities in the accompanying Consolidated Balance Sheets as of December 31, 2013 and 2012, consisted of the following (in thousands):

	Severance, payroll taxes and other employee benefits			Facility reductions			Total
Balance accrued as of December 31, 2012	$	198		$	990		$	1,188
Additions	5,599			943			6,542
Reversals	(136		)	(341		)	(477		)
Expenditures	(3,875		)	(631		)	(4,506		)
Balance accrued as of December 31, 2013	$	1,786		$	961		$	2,747

Of the$2.7 million and $1.2 million accrued restructuring balance atDecember 31, 2013and2012,$0.6 millionis included in other long-term liabilities on the Consolidated Balance Sheets as of December 31, 2013. These amounts represent the long-term portion of accrued lease abandonment charges. The remaining balances are presented in other accrued liabilities on the Consolidated Balance Sheets.

The Company evaluates the adequacy of the accrued restructuring charges on a quarterly basis. Reversals are recorded in the period in which the Company determines that expected restructuring obligations are less than the amounts accrued.

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Income Taxes Reconciliation of Statutory Federal Tax Rates and Effective Tax Rates (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Statutory federal tax (benefit) rate	$ (12,057)	$ (14,309)	$ (4,431)
Statutory federal tax (benefit) rate	35.00%	35.00%	35.00%
State taxes	(347)	(266)	(131)
State taxes	1.00%	0.70%	1.00%
Foreign dividend	1,938	6,754	0
Foreign dividend	(5.60%)	(16.50%)	0.00%
Goodwill impairment expense and (benefit) from acquisitions	0	9,377	(81)
Goodwill impairment expense and (benefit) from acquisitions	0.00%	(22.90%)	0.60%
Valuation allowance	32,784	3,725	(5,524)
Valuation allowance	(95.20%)	(9.10%)	43.60%
Taxes on foreign income that differ from U.S. tax rate	(8,507)	(2,796)	(2,888)
Taxes on foreign income that differ from U.S. tax rate	24.70%	6.80%	22.80%
Tax credits	(252)	(304)	(737)
Tax credits	0.70%	0.70%	5.80%
Non-deductible stock-based compensation expense	1,596	1,812	1,275
Non-deductible stock-based compensation expense	(4.60%)	(4.40%)	(10.10%)
Effective Income Tax Rate Reconciliation, Other Adjustments	(1.20%)	(0.90%)	(1.50%)
Other	396	365	202
Effective tax rate	14,955	2,590	(11,132)	[1]
Effective tax rate	(43.50%)	(6.30%)	87.90%
Earnout Liability Fair Value Adjustment [Member]
Earnout liability fair value adjustment	(596)	(1,768)	0
Effective Income Tax Rate Reconciliation, Other Adjustments	1.70%	4.30%	0.00%
Acquisition-related Costs [Member]
Effective Income Tax Rate Reconciliation, Other Adjustments	0.00%	0.00%	(9.30%)
Transaction costs	$ 0	$ 0	$ 1,183

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Income Taxes Unrecognized Tax Benefits (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Unrecognized Tax Benefits	$ 3,011	$ 2,878
Additions based on tax positions related to the current year	532	42
Additions for tax positions of prior years	281	260
Reductions for tax positions of prior years	(102)	(169)
Reductions as a result of a lapse of applicable statute of limitations	(70)	0
Other	(206)	0
Unrecognized Tax Benefits	$ 3,446	$ 3,011

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Income Taxes Current Provision (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Abstract]
Current Federal Tax Expense (Benefit)	$ 0	$ 0	$ 0
Current State and Local Tax Expense (Benefit)	(70)	122	38
Current Foreign Tax Expense (Benefit)	2,299	1,252	271
Current Income Tax Expense (Benefit)	2,229	1,374	309
Deferred Federal Income Tax Expense (Benefit)	0	(65)	(9,451)
Deferred State and Local Income Tax Expense (Benefit)	0	(3)	(74)
Deferred Foreign Income Tax Expense (Benefit)	12,726	1,284	(1,916)
Deferred Income Tax Expense (Benefit)	12,726	1,216	(11,441)
Income Tax Expense (Benefit)	$ 14,955	$ 2,590	$ (11,132)	[1]

[1] {F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOjM5NWUyOWE4MDI1ZTQ0MzRiNDkzYTg1NTliYmFkYzZmfFRleHRTZWxlY3Rpb246NDNEQkU1MjQ2ODVEQUY3OTM0RDgyMjQwRUI5OUMyRDUM}

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Other Accrued and Other Long-Term Liabilities (Tables)

12 Months Ended

Dec. 31, 2013

Other Accrued and Other Long-Term Liabilities [Abstract]

Accounts Payable and Accrued Liabilities Disclosure

Other accrued liabilities consisted of the following (in thousands):

	December 31, 2013		December 31, 2012
Accrued restructuring	$	2,105	$	567
Accrued warranty reserve	2,599		3,148
Contingent consideration liability	390		836
Deferred compensation plan liability	1,276		1,395
Adverse purchase commitments	632		375
Income tax payable, net	508		318
Other	2,468		2,962
Other accrued liabilities	$	9,978	$	9,601

Schedule of Other Long-term Liabilities

Other long-term liabilities consisted of the following (in thousands):

	December 31, 2013		December 31, 2012
Accrued restructuring	$	642	$	621
Accrued warranty reserve	729		806
Contingent consideration liability	—		1,705
Other	1,905		1,719
Other long-term liabilities	$	3,276	$	4,851

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Intangible Assets Finite-Lived Intangible Assets by Major Class (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	$ 171,889,000	$ 171,889,000
Finite-Lived Intangible Assets, Accumulated Amortization	(115,379,000)	(101,605,000)
Total estimated future amortization expense	56,510,000	70,284,000
Amortization of Intangible Assets	13,800,000	14,800,000	11,300,000
Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	1 year
Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	8 years
Purchased Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	114,754,000	114,754,000
Finite-Lived Intangible Assets, Accumulated Amortization	(79,189,000)	(70,815,000)
Total estimated future amortization expense	35,565,000	43,939,000
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	6,472,000	6,472,000
Finite-Lived Intangible Assets, Accumulated Amortization	(6,472,000)	(6,450,000)
Total estimated future amortization expense	0	22,000
Customer Lists [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	37,000,000	37,000,000
Finite-Lived Intangible Assets, Accumulated Amortization	(21,997,000)	(17,543,000)
Total estimated future amortization expense	15,003,000	19,457,000
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	11,536,000	11,536,000
Finite-Lived Intangible Assets, Accumulated Amortization	(5,594,000)	(4,670,000)
Total estimated future amortization expense	5,942,000	6,866,000
Order or Production Backlog [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	2,127,000	2,127,000
Finite-Lived Intangible Assets, Accumulated Amortization	(2,127,000)	(2,127,000)
Total estimated future amortization expense	$ 0	$ 0

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Operating Leases

Radisys is obligated under non-cancelable operating leases for certain facilities, office equipment, and vehicles. Future minimum lease payments with initial or remaining non-cancelable lease terms in excess of one year, at December 31, 2013, were as follows (in thousands):

For the Years Ending December 31,	Future Minimum Lease Payments
2014	$	2,802
2015	2,764
2016	1,694
2017	782
2018	497
2019 and thereafter (through 2020)	769
Total future minimum lease commitments	$	9,308

Rent expense totaled $4.2 million, $5.4 million and $4.8 million for the years ended December 31, 2013, 2012 and 2011.

Adverse Purchase Commitments

The Company is contractually obligated to place a deposit with its contract manufacturer for the cost of excess inventory used in the manufacture of the Company’s products, if there is no alternative use. This liability, referred to as adverse purchase commitments, is provided for in other accrued liabilities in the accompanying Consolidated Balance Sheets. Estimates for adverse purchase commitments are derived from reports received on a quarterly basis from the Company’s contract manufacturer. Increases to this liability are charged to cost of goods sold. When and if the Company takes possession of inventory reserved for in this liability, the liability is transferred from other accrued liabilities (Note 10 — Other Accrued and Other Long-Term Liabilities) to the excess and obsolete inventory valuation allowance (Note 6 — Inventories).

In November 2013, the Company notified its existing contract manufacturer of the Company's intent to transition manufacturing to another contract manufacturer co-located with the Company's Shenzhen site. Upon notification of intent to terminate the relationship, the manufacturing agreement contractually obligates the Company to purchase all inventories in excess of ninety days demand. As of December 31, 2013 the existing contract manufacturer has yet to invoke this clause and therefore an inventory deposit and offsetting liability have not been reflected on the Consolidated Balance Sheets to account for the additional potential inventory deposit. The value of the potential liability in excess of the current adverse purchase commitment was $5.1 million at December 31, 2013.

Guarantees and Indemnification Obligations

As permitted under Oregon law, the Company has agreements whereby it indemnifies its officers, directors and certain finance employees for certain events or occurrences while the officer, director or employee is or was serving in such capacity at the request of the Company. The term of the indemnification period is for the officer’s, director’s or employee’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a Director and Officer insurance policy that limits its exposure and enables the Company to recover a portion of any future amounts paid. To date, the Company has not incurred any costs associated with these indemnification agreements and, as a result, management believes the estimated fair value of these indemnification agreements is minimal. Accordingly, the Company has not recorded any liabilities for these agreements as of December 31, 2013.

The Company enters into standard indemnification agreements in its ordinary course of business. Pursuant to these agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners or customers, in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to the Company’s current products, as well as claims relating to property damage or personal injury resulting from the performance of services by us or the Company’s subcontractors. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is generally limited. Historically, the Company’s costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and accordingly management believes the estimated fair value of these agreements is immaterial.

Accrued Warranty

The Company provides for the estimated cost of product warranties at the time it recognizes revenue. Products are generally sold with warranty coverage for a period of 12 or 24 months after shipment. Parts and labor are covered under the terms of the warranty agreement. The workmanship of the Company’s products produced by the contract manufacturer is covered under warranties provided by the contract manufacturer for 12 months. The warranty provision is based on historical experience by product family. The Company engages in product quality programs and processes, including actively monitoring and evaluating the quality of its components suppliers; however ongoing failure rates, material usage and service delivery costs incurred in correcting product failure, as well as specific product class failures out of the Company’s baseline experience, affect the estimated warranty obligation. If actual product failure rates, material usage or service delivery costs differ from estimates, revisions to the estimated warranty liability would be required.

The following is a summary of the change in the Company’s warranty accrual reserve (in thousands):

	For the Years Ended December 31,
	2013			2012
Warranty liability balance, beginning of the year	$	3,954		$	3,438
Product warranty accruals	3,131			5,332
Adjustments for payments made	(3,757		)	(4,816		)
Warranty liability balance, end of the year	$	3,328		$	3,954

At December 31, 2013 and 2012, $2.6 million and $3.1 million of the warranty liability balance are included in other accrued liabilities and $0.7 million and $0.8 million are included in other long-term liabilities in the accompanying Consolidated Balance Sheets.

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Legal Proceedings

12 Months Ended

Dec. 31, 2013

Legal Proceedings Disclosure [Abstract]

Legal Proceedings

Legal Proceedings

In the normal course of business, the Company becomes involved in litigation. As of December 31, 2013, in the opinion of management, Radisys had no pending litigation that would have a material effect on the Company’s financial position, results of operations or cash flows.

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Inventories (Details) (USD $)	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Inventory, Net [Abstract]
Raw materials	$ 21,127,000		$ 10,420,000
Work-in-process	1,194,000		605,000
Finished goods	9,644,000		11,245,000
Inventory, Gross	31,965,000		22,270,000
Less: inventory valuation allowance	(7,037,000)		(2,199,000)		(4,640,000)
Inventories, net	24,928,000		20,071,000
Other Inventory, Net [Abstract]
Inventory deposit (A)	1,289,000	[1]	11,637,000	[1]
Less: inventory deposit valuation allowance	(808,000)		(2,801,000)
Inventory deposit, net	481,000		8,836,000
Inventory Deposit under Consignment	10,300,000
Other Inventory, Materials, Supplies and Merchandise under Consignment, Gross	12,000,000		700,000
Inventory, net	3,302,000		1,080,000		2,668,000
Inventory deposit, net	945,000		926,000		1,096,000
Adverse purchase commitments	327,000		31,000		733,000
Inventory Valuation Allowance [Roll Forward]
Inventory valuation allowance, beginning of the year	2,199,000		4,640,000
Inventory scrapped	(956,000)		(3,397,000)
Inventory utilized	(363,000)		(696,000)
Subtotal—usage	(1,319,000)		(4,093,000)
Inventory, net	3,302,000		1,232,000		2,668,000
Transfer from (to) inventory deposit valuation allowance	2,457,000		(305,000)
Inventory valuation allowance, end of the year	7,037,000		2,199,000		4,640,000
Write-Downs of Inventory Valuation [Member]
Inventory Valuation Allowance [Roll Forward]
Inventory, net	3,665,000		1,928,000
Transfers to Adverse Purchase Commitments [Member]
Inventory Valuation Allowance [Roll Forward]
Inventory, net	$ 35,000	[2]	$ 29,000	[2]

[1] (A)Beginning in the third quarter of 2013 the Company modified the inventory deposit arrangement with its contract manufacturing partner. Prior to the modification, the Company was obligated to place a deposit with its contract manufacturer for the cost of excess inventory that had been purchased as a result of the Company's forecasted demand when there was no alternative use. Under the new arrangement, rather than place a deposit with the contract manufacturer, the Company is now obligated to purchase the inventory on consignment. The calculation of excess inventory and its impact on the Company’s cash and reported aggregate inventory levels is the same under the consignment arrangement as it was under the prior deposit arrangement. As of December 31, 2013, the balance of consigned inventory at the Company’s contract manufacturing partner was $10.3 million with the remaining inventory deposit associated with inventory held at the Company’s outsourced hardware repair service provider. The remaining deposit is recorded net of adverse purchase commitment liabilities, and therefore the net balance of the deposit represents inventory the Company believes will be utilized. The deposit will be applied against future adverse purchase commitments owed to the Company's contract manufacturer or reduced based on the usage of inventory. See Note 14 - Commitments and Contingencies for additional information regarding the Company's adverse purchase commitment liability.

[2] Transfer from other liabilities is related to obsolete inventory purchased from contract manufacturers during the year which was previously reserved for as an adverse purchase commitment. (Note 10—Other Accrued and Other Long-Term Liabilities and Note 14—Commitments and Contingencies.)

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Revenue from External Customers by Products and Services

	2013		2012		2011
ATCA	$	116,537	$	136,572	$	132,530
Software-Solutions	44,934		52,666		36,938
COM Express and Rackmount Server	56,019		49,538		56,848
Other Products	20,373		47,320		104,549
Total revenues	237,863		286,096		330,865

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas

	For the Years Ended December 31,
	2013		2012		2011
United States	$	100,780	$	105,858	$	105,671
Other North America	3,042		3,310		1,371
China	29,818		45,419		69,503
Japan	30,724		39,435		29,337
Other APAC	20,988		31,695		45,125
Total APAC	81,530		116,549		143,965
Germany	11,770		18,580		39,266
Other EMEA	40,741		41,799		40,592
Total EMEA	52,511		60,379		79,858
Foreign Countries	137,083		180,238		225,194
Total revenues	$	237,863	$	286,096	$	330,865

	For the Years Ended December 31,
	2013		2012
Property and equipment, net
United States	$	7,421	$	8,572
Other North America	942		953
China	3,396		4,685
Other APAC	185		358
Total APAC	3,581		5,043
India	2,893		3,110
Other EMEA	17		35
Total EMEA	2,910		3,145
Foreign Countries	7,433		9,141
Total property and equipment, net	$	14,854	$	17,713
Intangible assets, net
United States	$	56,474	$	68,903
Other North America	36		211
EMEA	—		1,170
Foreign Countries	36		1,381
Total intangible assets, net	$	56,510	$	70,284

Schedule of Revenue by Major Customers by Reporting Segments

	2013	2012	2011
Nokia Solutions and Networks	18.7%	22.5%	35.1	%
NEC	NA	11.1%	NA

Schedules of Concentration of Risk, by Risk Factor

	2013	2012
Nokia Solutions and Networks	20.7%	24.7%

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Balance Sheet Parenthetical [Abstract]
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	5,664	5,664
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par or Stated Value Per Share	$ 0	$ 0
Common Stock, Shares Authorized	100,000	100,000
Common Stock, Shares, Issued	29,198	28,471
Common Stock, Shares, Outstanding	29,198	28,471

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Goodwill

12 Months Ended

Dec. 31, 2013

Goodwill [Abstract]

Goodwill

Goodwill

The Company had no Goodwill recorded at December 31, 2013 or 2012. During the third quarter of 2012, the Company determined that indicators of potential impairment existed to require an interim goodwill impairment assessment. These indicators included the recent trading value of the Company's common stock, coupled with overall telecommunications market conditions. As a result, the Company compared its book value to its market capitalization, adjusted for factors such as a control premium and concluded step two of the impairment test should be performed.

The Company estimated the fair value of its single reporting unit using a market approach. The market approach estimates fair value in part on market capitalization plus an estimated control premium paid in acquisitions of publicly traded companies with similar characteristics to the Company. Based on the Company's analysis, the implied fair value of goodwill was lower than its carrying value. As a result, the Company recorded a full impairment charge of $29.7 million against the carrying amount of goodwill and as of December 31, 2012 the Company had no goodwill. The impairment charge is included in "Impairment of goodwill" in the Consolidated Statements of Operations.

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Hedging (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Derivatives, Fair Value [Line Items]
Cash Flow Hedge Gain (Loss) Reclassified to Cost of Sales, Net	$ 498,000	$ 286,000	$ 41,000
Cash Flow Hedge Gain (Loss) Reclassified To Research and Development	544,000	183,000	322,000
Cash Flow Hedge Gain (Loss) Reclassified To Selling, General and Administrative	158,000	87,000	123,000
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net	0	0	0
Beginning balance of unrealized loss on forward exchange contracts	(765,000)	(774,000)	393,000
Other comprehensive loss before reclassifications	(1,310,000)	(547,000)	(1,653,000)
Amounts reclassified from other comprehensive income	1,200,000	556,000	486,000
Other comprehensive income (loss)	(110,000)	9,000	(1,167,000)
Ending balance of unrealized loss on forward exchange contracts	(875,000)	(765,000)	(774,000)
Foreign Exchange Forward [Member]
Derivatives, Fair Value [Line Items]
Notional Amount of Foreign Currency Cash Flow Hedge Derivatives	15,328,000	13,986,000
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months	(800,000)
Foreign Exchange Forward [Member] | Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Cash Flow Hedge Derivative Instrument Assets at Fair Value	0	0
Foreign Exchange Forward [Member] | Other Accrued Liabilities [Member]
Derivatives, Fair Value [Line Items]
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value		(297,000)
Cash Flow Hedging [Member] | Foreign Exchange Forward [Member]
Derivatives, Fair Value [Line Items]
Derivative, Number of New Instruments During Period	0	0
Derivative, New Instruments During Period, Notional Amount	12,800,000	13,300,000
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Foreign Exchange Forward [Member] | Other Accrued Liabilities [Member]
Derivatives, Fair Value [Line Items]
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value	$ (169,000)

XML

Employee Benefit Plans ESPP (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
ESPP [Abstract]
Shares issued pursuant to the ESPP	381	352	251
Cash received for the purchase of shares pursuant to the ESPP	$ 767	$ 1,225	$ 1,572
Weighted average purchase price per share	$ 2.01	$ 3.48	$ 6.27

XML

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All inter-company accounts and transactions have been properly eliminated in consolidation.

Management Estimates

Management Estimates

The Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these Consolidated Financial Statements requires management to make estimates and judgments that may affect the amounts reported in its Consolidated Financial Statements and accompanying notes. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

Revenue Recognition

Multiple Element Arrangements

A significant portion of the Company's revenue relates to product sales for which revenue is recognized upon shipment, with limited judgment required related to product returns. Title transfer for substantially all product sales occurs upon delivery of products to our customer's freight forwarders. The software elements included in certain components of ATCA systems and MRF products are considered to be functioning together with the non-software elements to provide the tangible product's essential functionality and these arrangements generally include multiple elements such as hardware, technical support services as well as software upgrades or enhancements on a when and if available basis. Arrangements that include multiple elements require significant management judgment to evaluate the effective terms of agreements, the Company's performance commitments and determination of fair value of the various deliverables under the arrangement.

For hardware sales which may include software, ASU 2009-13 provides a fair value hierarchy in order to determine the appropriate relative fair value for each element of an arrangement. When available, the Company uses vendor specific objective evidence (“VSOE”) to determine the estimated fair value of each element of the arrangement. In the absence of VSOE or third−party evidence ("TPE") for a delivered element, the Company then uses an estimated selling price in order to determine fair value. Estimated selling prices represent the Company's best estimate of the price at which it would transact if the deliverables were sold on a standalone basis. For technical support services, the Company generally determines its selling price based on VSOE as supported by substantive renewal rates in the related service agreements. In certain instances where VSOE cannot be established, the Company then relies upon its estimated selling price for such deliverables as TPE is generally not available due to the unique company-specific terms surrounding such service agreements. In establishing an appropriate estimated selling price for these technical support agreements, the Company considered entity specific factors such as its historical and projected costs, historical and projected revenues, and profit objectives. The Company also considered market specific factors when establishing reasonable profit objectives.

Hardware

Revenue from hardware products is recognized in accordance with ASC 605 Revenue Recognition. Under the Company’s standard terms and conditions of sale, the Company transfers title and risk of loss to the customer at the time product is shipped to the customer and revenue is recognized accordingly, unless customer acceptance is uncertain or significant obligations remain. We reduce revenue for estimated customer returns for rotation rights according to agreements with our distributors. The amount of revenues derived from distributors as a percentage of revenues was 14.3%, 16.0% and 24.3% for the years ended December 31, 2013, 2012 and 2011. Revenues associated with distributors are generally recognized upon shipment as the Company has established a sell-to model with distributors. The Company accrues the estimated cost of product warranties, based on historical experience at the time the Company recognizes revenue.

The software elements included in certain components of ATCA systems and MRF products are considered to be functioning together with the non-software elements to provide the tangible product's essential functionality and the Company’s MRF arrangements generally include multiple elements such as hardware and technical support services.

Software licenses and royalties

Revenue from software licenses and royalties is recognized in accordance with ASC 985 Software. The Company recognizes software license revenue at the time of shipment or upon delivery of the software master provided that the revenue recognition criteria have been met and VSOE exists to allocate the total fee to all undelivered elements of the arrangement. The Company defers revenue on arrangements, including specified software upgrades, until the specified upgrade has been delivered. Revenue from customers for prepaid, non-refundable software royalties is recorded when the revenue recognition criteria have been met. Revenue for non-prepaid royalties is recognized at the time we receive reporting from customers as the Company has not established an ability to reliably estimate customer royalties prior to time contractually obligated reporting is received.

Technical support services

Technical support services revenue is recognized as earned on the straight-line basis over the term of the contract. The fair value of the Company’s post-contract support has been determined by renewal rates within the Company’s support agreements, the actual amounts charged to customers for renewal of their support services or based on an estimated selling price.

Professional and other services

Professional services revenue is recognized upon completion of certain contractual milestones and customer acceptance of the services rendered. Other services revenues include hardware repair services and custom software implementation projects. Hardware repair services revenues are recognized when the services are complete. Software implementation revenues are recognized upon completion of certain contractual milestones and customer acceptance of the services rendered or as services are performed under the percentage-of-completion method when the Company is reasonably able to estimate the total effort required to complete the contract.

Deferred income

Deferred income represents amounts received or billed for the following types of transactions:

• Undelivered elements of an arrangement—Certain software sales include specified upgrades and enhancements to an existing product. Revenue for such products is deferred until the future obligation is fulfilled.

• Technical support services—The Company has a number of technical support agreements with customers for hardware and software maintenance. Generally, these services are billed in advance and recognized over the term of the agreement.

Capitalized Software Development Costs

Capitalized Software Development Costs

The Company does not capitalize internal software development costs incurred in the production of computer software as the Company does not incur any material costs between the point of technological feasibility and general release of the product to customers in the future. As such software development costs are expensed as research and development (“R&D”) costs.

Shipping Costs

Shipping Costs

The Company’s shipping and handling costs for product sales are included under cost of sales for all periods presented. For the years ended December 31, 2013, 2012 and 2011, shipping and handling costs represented approximately 1% of cost of sales.

Advertising Costs

Advertising Costs

The Company expenses advertising costs as incurred. Advertising costs consist primarily of media, display, web, and print advertising, along with trade show costs and product demos and brochures. For the years ended December 31, 2013, 2012 and 2011 advertising costs were $2.0 million, $2.1 million and $2.2 million.

Cash Equivalents

Cash Equivalents

The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents.

Accounts Receivable

Accounts Receivable

Trade accounts receivable are stated net of an allowance for doubtful accounts. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of customers to make required payments. Management reviews the allowance for doubtful accounts quarterly for reasonableness and adequacy. If the financial condition of the Company’s customers were to deteriorate resulting in an impairment of their ability to make payments, additional provisions for uncollectible accounts receivable may be required. In the event the Company determined that a smaller or larger reserve was appropriate, it would record a credit or a charge in the period in which such determination is made. In addition to specific customer reserves, the Company maintains a non-specific bad debt reserve for all customers. This non-specific bad debt reserve is calculated based on the Company's historical pattern of bad debt write-offs as a percentage of annual revenues, which percentage is then applied to the current rolling four-quarters revenue. The Company’s customers are concentrated in the technology industry and the collection of its accounts receivable are directly associated with the operational results of the industry.

Inventories

Inventories

Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) basis, or market, net of an inventory valuation allowance. The Company uses a standard cost methodology to determine the cost basis for its inventories. The Company evaluates inventory on a quarterly basis for obsolete or slow-moving items to ascertain if the recorded allowance is reasonable and adequate. Inventory is written down for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. The Company's inventory valuation allowances establish a new cost basis for inventory.

Long-Lived Assets

Long-Lived Assets

Long-lived assets, such as property and equipment and definite-life intangible assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The Company assesses the impairment of the assets based on the undiscounted future cash flow the assets are expected to generate compared to the carrying value of the assets. If the carrying amount of the assets is determined not to be recoverable, a write-down to fair value is recorded. Management estimates future cash flows using assumptions about expected future operating performance. Management’s estimates of future cash flows may differ from actual cash flow due to, among other things, technological changes, economic conditions or changes to the Company’s business operations.

Intangible assets with estimable useful lives are amortized on a straight-line basis over their respective estimated life and reviewed for impairment when certain triggering events suggest impairment has occurred. The Company determined a triggering event occurred during the third quarter of 2013 and required an analysis of the recoverability of its long-lived assets. After finalizing its analysis, the Company concluded its long-lived assets were not impaired.

Property and Equipment

Property and Equipment

Property and equipment is recorded at historical cost and generally depreciated or amortized on a straight-line basis according to the table below. In certain circumstances where the Company is aware that an asset’s life differs from the general guidelines set forth in its policy, management adjusts its depreciable life accordingly, to ensure expense is being recognized over the appropriate future periods. Ordinary maintenance and repair expenses are expensed when incurred.

Machinery, equipment, furniture and fixtures	5 years
Software, computer hardware and manufacturing test fixtures	3 years
Engineering demonstration products and samples	1 year
Leasehold improvements	Lesser of the lease term or estimated useful lives

Leases

Leases

The Company leases all of its facilities, certain office equipment and vehicles under non-cancelable operating leases that expire at various dates through 2020, along with options that permit renewals for additional periods. Rent escalations are considered in the determination of straight-line rent expense for operating leases. Leasehold improvements made at the inception of or during the lease are amortized over the shorter of the asset life or the lease term.

Accrued Restructuring

Accrued Restructuring

Expenses associated with exit or disposal activities are recognized when probable and estimable because the Company has a history of paying severance benefits. The Company has engaged, and may continue to engage, in restructuring actions, which require the Company to make significant estimates in several areas including: realizable values of assets made redundant or obsolete; expenses for severance and other employee separation costs; the ability and timing to generate sublease income, as well as the Company's ability to terminate lease obligations at the amounts estimated; and other exit costs. Should the actual amounts differ from the estimates, the amount of the restructuring charges could be materially impacted.

Warranty

Warranty

The Company provides for the estimated cost of product warranties at the time it recognizes revenue. Products are generally sold with warranty coverage for a period of 12 or 24 months after shipment. On a quarterly basis the Company assesses the reasonableness and adequacy of the warranty liability and adjusts such amounts as necessary. Warranty reserves are included in other accrued liabilities and other long-term liabilities in the accompanying Consolidated Balance Sheets as of December 31, 2013 and 2012.

Research and Development

Research and Development

Research, development and engineering costs are expensed as incurred. R&D expenses consist primarily of salary, bonuses and benefits for product development staff, and cost of design and development supplies and equipment, net of reimbursements for non-recurring engineering services.

Income Taxes

Income Taxes

Income tax accounting requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities. Valuation allowances are established to reduce deferred tax assets if it is “more likely than not” that all or portion of the asset will not be realized due to inability to generate sufficient taxable income in the relevant period to utilize the deferred tax asset. Tax law and rate changes are reflected in the period such changes are enacted. The Company recognizes uncertain tax positions after evaluating whether certain tax positions are more likely than not to be sustained by taxing authorities. In addition, the Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.

Fair Value of Financial Assets and Liabilities

Fair Value of Financial Assets and Liabilities

The Company measures at fair value certain financial assets and liabilities, including cash equivalents, short-term investments, contingent consideration, and the cash surrender value of life insurance contracts. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:

Level 1—Quoted prices for identical instruments in active markets;

Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

The Company reports accumulated other comprehensive income (loss) in its Consolidated Balance Sheets. Comprehensive income (loss) includes net income (loss), translation adjustments and unrealized gains (losses) on hedging instruments net of their tax effect. The cumulative translation adjustments consist of unrealized gains (losses) for foreign currency translation.

Stock-Based Compensation

Stock-Based Compensation

The Company measures stock-based compensation at the grant date, based on the fair value of the award, and recognizes expense on a straight-line basis over the employee's requisite service period. For LTIP and Overlay awards the requisite service period is equal to the period of time over which performance objectives underlying the award are expected to be achieved and vested. The number of LTIP and Overlay shares that ultimately vest depends on the achievement of certain performance criteria over the measurement period. Quarterly, the Company reevaluates the probability that the performance objectives will be met and the number of LTIP and Overlay shares expected to vest. The amount of expense recorded each period for LTIP and Overlay awards is based on the Company's estimate of the number of awards that will ultimately vest.

Net Income (Loss) Per Share

Net income (loss) per share

Basic earnings (loss) per share amounts are computed based on the weighted average number of common shares outstanding. Diluted earnings per share incorporates the incremental shares issuable upon the assumed exercise of stock options, incremental shares associated with the assumed vesting of restricted stock and the assumed conversion of the Company’s convertible notes, as if the conversion to common shares had occurred at the beginning of the fiscal year and when such conversion would have a dilutive effect. When the conversion of the Company’s convertible notes are dilutive, earnings have been adjusted for interest expense incurred on the convertible notes.

Derivatives

Derivatives

The Company hedges exposure to changes in exchange rates from the US Dollar to the Indian Rupee. These derivatives are recognized on the balance sheet at their fair value. Unrealized gain positions are recorded as other current assets and unrealized loss positions are recorded as other accrued liabilities. Changes in the fair values of the outstanding derivatives that are highly effective are recorded in other comprehensive income until net income (loss) is affected by the variability of the cash flows of the hedged transaction. Hedge ineffectiveness could result when the amount of the Company’s hedge contracts exceed the Company’s forecasted or actual transactions for which the hedge contracts were designed to hedge. Once a hedge contract matures the associated gain (loss) on the contract will remain in other comprehensive income until the underlying hedged transaction affects net income (loss), at which time the gain (loss) will be recorded to the expense line item being hedged, which is primarily cost of sales and R&D. The Company only enters into derivative contracts in order to hedge foreign currency exposure. If the Company entered into a contract for speculative reasons or if the Company’s current hedge position becomes ineffective, changes in the fair values of the derivatives would be recognized in earnings in the current period.

Foreign Currency Translation

Foreign currency translation

Assets and liabilities of international operations using a functional currency other than the U.S. dollar are translated into U.S. dollars at exchange rates as of December 31, 2013 and 2012. Income and expense accounts are translated into U.S. dollars at the average daily rates of exchange prevailing during the period. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are recorded as a separate component in shareholders’ equity. Foreign exchange transaction gains and losses are included in other income (expense), net, in the Consolidated Statements of Operations.

Contingent Consideration

Contingent Consideration

Contingent consideration is recorded at the acquisition date based upon the estimated fair value of the contingent payment for all acquisitions. The fair value of the contingent consideration is remeasured each reporting period with any adjustments in fair value included in the Company’s Consolidated Statements of Operations.

Liquidity Outlook

Liquidity Outlook

The Company believes that current working capital, plus availability under the line of credit, provides sufficient liquidity to operate the business at normal levels; however, if available liquidity is not sufficient to meet the Company's operating and debt service obligations as they come due, the Company plans to, among others things, pursue alternative financing arrangements or reduce expenditures as necessary to meet cash requirements throughout 2014. Additionally, the Company believes that cash generation in 2014, combined with the borrowing availability under the 2014 Agreement, will enable the Company to repay the outstanding balance of the 2015 convertible senior notes when they mature in February 2015.  If available liquidity is not sufficient to repay outstanding 2015 convertible senior notes, the Company may pursue alternative financing arrangements which may include, extending the maturity date of the 2015 convertible senior on existing notes or repaying the outstanding balance with proceeds from sales of securities under the Company's shelf registration statement. The Company may also divest of certain product lines as it seeks to maximize shareholder value or improve the Company's cash position.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board's ("FASB") Emerging Issues Task Force ("EITF") reached final consensus with regard to the "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The update is intended to eliminate diversity in practice in the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Current GAAP does not include explicit guidance on this topic. The main provisions of the update provide that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. An exception exists if such deferred tax asset is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from a disallowance of a tax position or if the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose. In such cases the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this update will be applied prospectively. The update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company has historically used this method of accounting; consequently, the change will have no effect on the Company's financial position, results of operations or cash flows.

XML

Segment Information Geographical Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 50,138	$ 54,109	$ 65,438	$ 68,178	$ 69,300	$ 63,725	$ 77,584	$ 75,487	$ 237,863	$ 286,096	$ 330,865	[1]
Property and equipment, net	14,854				17,713				14,854	17,713
Intangible Assets, Net (Excluding Goodwill)	56,510				70,284				56,510	70,284
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues									100,780	105,858	105,671
Property and equipment, net	7,421				8,572				7,421	8,572
Intangible Assets, Net (Excluding Goodwill)	56,474				68,903				56,474	68,903
Other North America
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues									3,042	3,310	1,371
Property and equipment, net	942				953				942	953
Intangible Assets, Net (Excluding Goodwill)	36				211				36	211
China [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues									29,818	45,419	69,503
Property and equipment, net	3,396				4,685				3,396	4,685
Japan [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues									30,724	39,435	29,337
Other APAC [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues									20,988	31,695	45,125
Property and equipment, net	185				358				185	358
Foreign Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues									137,083	180,238	225,194
Property and equipment, net	7,433				9,141				7,433	9,141
Intangible Assets, Net (Excluding Goodwill)	36				1,381				36	1,381
Asia Pacific [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues									81,530	116,549	143,965
Property and equipment, net	3,581				5,043				3,581	5,043
India [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	2,893				3,110				2,893	3,110
Germany [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues									11,770	18,580	39,266
Other EMEA [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues									40,741	41,799	40,592
Property and equipment, net	17				35				17	35
Europe, the Middle East and Africa [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues									52,511	60,379	79,858
Property and equipment, net	2,910				3,145				2,910	3,145
Intangible Assets, Net (Excluding Goodwill)	$ 0				$ 1,170				$ 0	$ 1,170

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Basic and Diluted Net IncomePer Share (Tables)

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

	For the Years Ended December 31,
	2013			2012			2011
Numerator—Basic
Net loss, basic	$	(49,404	)	$	(43,474	)	$	(1,529	)
Numerator—Diluted
Net loss, basic	$	(49,404	)	$	(43,474	)	$	(1,529	)
Interest on convertible senior notes, net of tax benefit (B)	—			—			—
Net loss, diluted	$	(49,404	)	$	(43,474	)	$	(1,529	)
Denominator—Basic
Weighted average shares used to calculate net loss per share, basic	28,805			27,174			25,413
Denominator—Diluted
Weighted average shares used to calculate net loss per share, basic	28,805			27,174			25,413
Effect of escrow shares (A)	—			—			—
Effect of convertible notes (B)	—			—			—
Effect of dilutive restricted stock (C)(D)	—			—			—
Effect of dilutive stock options (C)	—			—			—
Weighted average shares used to calculate net loss per share, diluted	28,805			27,174			25,413
Net loss per share:
Basic	$	(1.72	)	$	(1.60	)	$	(0.06	)
Diluted	$	(1.72	)	$	(1.60	)	$	(0.06	)

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Hedging

12 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Hedging

Hedging

The Company’s business activities expose it to a variety of market risks, including the effects of changes in foreign currency exchange rates. The Company manages these risks through the use of forward exchange contracts, designated as foreign-currency cash flow hedges, in an attempt to reduce the potentially adverse effects of foreign currency exchange rate fluctuations that occur in the normal course of business. As such, the Company’s hedging activities are employed solely for risk management purposes. All hedging transactions are conducted with, in the opinion of management, financially stable and reputable financial institutions. As of and for the years ended December 31, 2013 and 2012, the only hedge instruments executed by the Company were associated with its exposure to fluctuations in the Indian Rupee which result from obligations such as payroll and rent paid in Rupees.

These derivatives are recognized on the balance sheet at their fair value. Unrealized gain positions are recorded as other current assets and unrealized loss positions are recorded as other current liabilities. Changes in the fair values of the outstanding derivatives that are highly effective are recorded in other comprehensive income until net income is affected by the variability of the cash flows of the hedged transaction. Hedge ineffectiveness could result when the amount of the Company’s hedge contracts exceed the Company’s forecasted or actual transactions for which the hedge contracts were designed to hedge. Once a hedge contract matures, the associated gain (loss) on the contract will remain in other comprehensive income until the underlying hedged transaction affects net income (loss), at which time the gain (loss) will be recorded to the expense line item being hedged, which is primarily within Cost of Sales and R&D. The Company only enters into derivative contracts in order to hedge foreign currency exposure, which contracts do not exceed two years from inception. If the Company entered into a contract for speculative reasons or if the Company’s current hedge position becomes ineffective, changes in the fair values of the derivatives would be recognized in earnings in the current period.

The Company assesses, both at the inception of the hedge and on an ongoing basis, whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the cash flows of hedged items and whether those derivatives are expected to remain highly effective in future periods. For the years ended December 31, 2013 and 2012 the Company had no hedge ineffectiveness.

During the year ended December 31, 2013, the Company entered into 33 new foreign currency forward contracts, with total contractual values of $12.8 million. During the year ended December 31, 2012, the Company entered into 83 new foreign currency forward contracts, with total contractual values of $13.3 million.

A summary of the aggregate contractual or notional amounts, balance sheet location and estimated fair values of derivative financial instruments designated as cash flow hedges at December 31, 2013 is as follows (in thousands):

	Contractual / Notional Amount		Consolidated Balance Sheet Classification	Estimated Fair Value
				Asset		(Liability)
Foreign currency forward exchange contracts	$	15,328	Other accrued liabilities	$	—	$	(169	)

A summary of the aggregate contractual or notional amounts, balance sheet location and estimated fair values of derivative financial instruments designated as cash flow hedges at December 31, 2012 is as follows (in thousands):

	Contractual / Notional Amount		Consolidated Balance Sheet Classification	Estimated Fair Value
				Asset		(Liability)
Foreign currency forward exchange contracts	$	13,986	Other current assets	$	—	$	(297	)

The effect of derivative instruments on the Consolidated Financial Statements for the year ended December 31, 2013 was as follows (in thousands):

			Ineffective Portion
Consolidated Statements of Operations Classification of Gain Reclassified from Accumulated Other Comprehensive Income	Hedge Gain  Reclassified from Accumulated Other Comprehensive Income		Consolidated Statement of Operations Classification of Gain (Loss) Recognized	Hedge Gain (Loss) Recognized
Cost of sales	$	498	None	$	—
Research and development	544		None	—
Selling, general and administrative	158		None	—

The effect of derivative instruments on the Consolidated Financial Statements for the year ended December 31, 2012 was as follows (in thousands):

Effective Portion			Ineffective Portion
Consolidated Statements of Operations Classification of Gain Reclassified from Accumulated Other Comprehensive Income	Hedge Gain  Reclassified from Accumulated Other Comprehensive Income		Consolidated Statement of Operations Classification of Gain (Loss) Recognized	Hedge Gain (Loss) Recognized
Cost of sales	$	286	None	$	—
Research and development	183		None	—
Selling, general and administrative	87		None	—

The effect of derivative instruments on the Consolidated Financial Statements for the year ended December 31, 2011 was as follows (in thousands):

Effective Portion			Ineffective Portion
Consolidated Statements of Operations Classification of Gain Reclassified from Accumulated Other Comprehensive Income	Hedge Gain  Reclassified from Accumulated Other Comprehensive Income		Consolidated Statement of Operations Classification of Gain (Loss) Recognized	Hedge Gain (Loss) Recognized
Cost of sales	$	41	None	$	—
Research and development	322		None	—
Selling, general and administrative	123		None	—

The following is a summary of changes to comprehensive income (loss) associated with the Company's hedging activities (in thousands):

	December 31, 2013			December 31, 2012			December 31, 2011
Beginning balance of unrealized loss on forward exchange contracts	$	(765	)	$	(774	)	$	393
Other comprehensive loss before reclassifications	(1,310		)	(547		)	(1,653		)
Amounts reclassified from other comprehensive income	1,200			556			486
Other comprehensive income (loss)	(110		)	9			(1,167		)
Ending balance of unrealized loss on forward exchange contracts	$	(875	)	$	(765	)	$	(774	)

Over the next twelve months, the Company expects to reclassify into earnings a loss of approximately $0.8 million currently recorded as other comprehensive income, as a result of the maturity of currently held forward exchange contracts.

The bank counterparties in these contracts expose the Company to credit-related losses in the event of their nonperformance. However, to mitigate that risk, the Company only contracts with counterparties who meet its minimum requirements regarding counterparty credit worthiness. In addition, the Company monitors credit ratings, credit spreads and potential downgrades prior to entering into any new hedging contracts.