[July 2, 2001]

RadiSys To Acquire Microware

RadiSys Corporation (NASDAQ:RSYS) and Microware Systems Corporation (NASDAQ:MWAR) announced that they have entered into a definitive agreement under which RadiSys, through a wholly owned subsidiary, will acquire Microware for $0.68 per share in an all-cash tender offer valued at approximately $13.1 million.

Microware, based in Des Moines, Iowa, has been reshaping itself into a communications middleware company from an earlier stage of being a general embedded software and real-time operating system company. Microware is a leader in providing communications software, microcode, and professional consulting services for Intel's highly successful IXP1200 network processor family. Microware's products also include the OS-9 real-time operating system; connectivity and networking software including the SoftStax integrated networking interface, SoftATM, Bluetooth, and router and managed switch protocols; Personal JAVA for embedded devices; and digital video software packages for applications such as extraction and decoding of video packets from an IP network.

Historically, Microware's leading product has been OS-9, a real-time operating system used in a wide variety of applications, such as cellular phones, pagers, set-top boxes, and vehicle navigation systems. OS-9 has been optimized for the IXP1200's StrongARM core and is in use by a significant number of current IXP1200 designs. Microware also provides its IXP1200 middleware and microcode on Linux and VxWorks operating systems. Microware's revenues for its most recent fiscal year ending March 31, 2001 were $14 million. The company has been particularly successful in Japan, where it has 22 employees and about a third of its revenues.

"This combination will be a tremendous benefit to our current customers," said Ken Kaplan, Microware CEO. "The size and financial strength of RadiSys will reassure our current customers of our ability to support them long-term, as well as deliver new capabilities to them. Being part of the RadiSys strategy in network processors allows us to focus on next steps for our IXP1200 support in such areas as MPLS, Packet over SONET, IPv6, ATM signaling, and advanced enterprise routing solutions."

The agreement provides for a cash tender offer to acquire all of the outstanding shares of Microware common stock at $0.68 per share, which will commence within 10 working days. RadiSys will also pay $2.2 million to retire Microware's convertible debt and related securities. The Board of Directors of Microware has approved the definitive agreement and has unanimously recommended that Microware shareholders tender their shares pursuant to the offer. RadiSys' obligations to accept shares tendered in the offer will be conditional upon the tender of 90% of outstanding Microware shares on a fully-diluted basis, other customary conditions, and compliance by Microware with certain financial and business criteria. The tender offer will expire 20 business days after it is commenced, but may be extended under certain circumstances. The chief executive officer of Microware has agreed to tender his shares in the offer, as have other significant shareholders of Microware. It is expected that all shares not purchased in the tender offer will be converted into the right to receive $0.68 per share in a second-step merger following the tender offer.

The acquisition is expected to be completed in the third quarter of 2001 and is expected to be accretive to earnings by year end. Upon completion, the organization will operate as a separate business division of RadiSys. This division will continue to support current Microware customers and continue to sell software and professional services to customers who don't choose to use RadiSys hardware solutions.

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