Terayon Communication Systems, Inc. Form 424(b)(3)
 

Filing Pursuant to Rule 424(b)(3)
Registration Statement No. 333-48536

PROSPECTUS SUPPLEMENT NO. 23 DATED JULY 15, 2002
TO PROSPECTUS DATED JANUARY 22, 2001

TERAYON COMMUNICATION SYSTEMS, INC.

$500,000,000

of 5% Convertible Subordinated Notes Due 2007 and 5,951,673 Shares of
Common Stock Issuable upon Conversion of the Notes

Please read this prospectus supplement in conjunction with the prospectus dated January 22, 2001 (the “Prospectus”). The table on pages 21 through 24 of the Prospectus setting forth information concerning the selling holders, prospectus supplement no. 1 dated February 9, 2001, prospectus supplement no. 2 dated February 16, 2001, prospectus supplement no. 3 dated February 20, 2001, prospectus supplement no. 4 dated February 23, 2001, prospectus supplement no. 5 dated March 2, 2001, prospectus supplement no. 6 dated March 9, 2001, prospectus supplement no. 7 dated March 16, 2001, prospectus supplement no. 8 dated March 23, 2001, prospectus supplement no. 9 dated April 27, 2001, prospectus supplement no. 10 dated May 4, 2001, prospectus supplement no. 11 dated May 11, 2001, prospectus supplement no. 12 dated May 25, 2001, prospectus supplement no. 13 dated June 4, 2001, prospectus supplement no. 14 dated July 13, 2001, prospectus no. 15 dated July 27, 2001, prospectus no. 16 dated August 22, 2001, prospectus no. 17 dated November 16, 2001, prospectus no. 18 dated February 7, 2002, prospectus no. 19 dated February 20, 2002, prospectus no. 20 dated April 4, 2002, prospectus no. 21 dated May 6, 2002 and prospectus no. 22 dated July 2, 2002 are superseded by the following table:

SELLING HOLDERS

We originally issued the Notes and the Notes were sold by the initial purchasers in a transaction exempt from the registration requirements of the Securities Act to persons reasonably believed by the initial purchasers to be qualified institutional buyers or other institutional accredited investors. Selling holders, including their transferees, pledgees, donees or successors, may from time to time offer and sell pursuant to this prospectus any or all of the Notes and common stock into which the Notes are convertible. We agree to use reasonable efforts to keep the registration statement effective until July 26, 2002. Our registration of the Notes and the shares of common stock into which the Notes are convertible does not necessarily mean that the selling holders will sell any or all of the Notes or the shares of the common stock into which the Notes are convertible.

The following table sets forth information, as of July 15, 2002, with respect to the selling holders and the principal amounts of Notes beneficially owned by each selling holder that may be offered under this prospectus. The information is based on information provided by or on behalf of the selling holders. The selling holders may offer all, some or none of the Notes or common stock into which the Notes are convertible. Because the selling holders may offer all or some portion of the Notes or the common stock, no estimate can be given as to the amount of the Notes or the common stock that will be held by the selling holders upon termination of any sales. In addition, the selling holders identified below may have sold, transferred or otherwise disposed of all or a portion of their Notes since the date on which they provided the information regarding their Notes in transactions exempt from the registration requirements of the Securities Act.

                         
    Principal Amount of   Common Stock        
    Notes Beneficially   Issuable upon        
    Owned   Conversion   Common
Selling Holder   and Offered   of the Notes (1)   Stock Offered

 
 
 
Arbitex Master Fund, L.P.
    1,200,000       14,284       14,284  
Black Diamond Offshore, Ltd.
    665,000       7,915       7,915  
CALAMOS® High Yield Fund — CALAMOS® Investment Trust Investment Trust
    245,000       2,916       2,916  

 


 

                         
    Principal Amount of   Common Stock        
    Notes Beneficially   Issuable upon        
    Owned   Conversion   Common
Selling Holder   and Offered   of the Notes (1)   Stock Offered

 
 
 
Credit Suisse First Boston
    1,000,000       11,903       11,903  
Deutsche Bank Securities, Inc.
    200,000       2,380       2,380  
Double Black Diamond Offshore, LDC
    2,708,000       32,234       32,234  
ECT Investments, Inc.
    1,000,000       11,903       11,903  
Faria Fund, Ltd.
    100,000       1,190       1,190  
Greenlight Capital, L.P.
    1,055,000       12,558       12,558  
Greenlight Capital Offshore, Ltd.
    2,413,000       28,722       28,722  
Greenlight Capital Qualified, L.P.
    2,532,000       30,139       30,139  
Ilanot Batucha Investment House, Ltd.
    300,000       3,571       3,571  
Israel Brokerage & Investments IBI, Ltd.
    100,000       1,190       1,190  
Jefferies & Co.
    875,000       10,415       10,415  
JMG Capital Partners, L.P.
    500,000       5,951       5,951  
JMG Triton Offshore Fund, Ltd.
    500,000       5,951       5,951  
JRS, Ltd.
    1,000,000       11,903       11,903  
Julius Baer Securities, Inc.
    250,000       2,975       2,975  
KBC Financial Products USA, Inc.
    900,000       10,713       10,713  
Lehman Brothers, Inc.
    1,200,000       14,284       14,284  
LibertyView Funds, LLC
    100,000       1,190       1,190  
LibertyView Funds, L.P.
    400,000       4,761       4,761  
Lonestar Partners, L.P.
    2,500,000       29,758       29,758  
Lumber Industries, Inc.
    750,000       8,927       8,927  
Lydian Overseas Partners Master Fund
    15,000,000       178,550       178,550  
McMahan Securities Co., L.P.
    1,000,000       11,903       11,903  
Merrill, Lynch, Pierce, Fenner and Smith, Inc.
    16,000       190       190  

 


 

                         
    Principal Amount of   Common Stock        
    Notes Beneficially   Issuable upon        
    Owned   Conversion   Common
Selling Holder   and Offered   of the Notes (1)   Stock Offered

 
 
 
Miller Tabak Roberts Securities
    50,000       595       595  
Morgan Stanley & Co.
    2,500,000       29,758       29,758  
Pacific Life Insurance Company
    1,000,000       11,903       11,903  
Ramus Capital Group Holdings, Ltd.
    200,000       2,380       2,380  
Research Capital Corporation
    750,000       8,927       8,927  
Spear, Leads & Kellogg Capital Markets
    2,400,000       28,568       28,568  
Standard Mortgage Holding Corp.
    500,000       5,951       5,951  
The Class IC Company, Ltd.
    1,500,000       17,855       17,855  
United Mizrahi Bank, Ltd.
    50,000       595       595  
Valentis Investors, LLC
    2,000,000       23,806       23,806  
Ventana Partners, L.P.
    1,000,000       11,903       11,903  
DLG Securities Corp.
    100,000       1,190       1,190  
Investec Clali (Israel) Ltd.
    300,000       3,571       3,571  
Investec Ernst & Co.
    1,000,000       11,903       11,903  
Investec Bank Israel (Ltd.)
    1,000,000       11,903       11,903  
CRT Capital Group, LLC
    1,787,000       21,271       21,271  
Ilanot Batucha Asset Management Ltd.
    118,000       1,404       1,404  
Merced Partners Limited Partnership
    5,000,000       59,516       59,516  
Any other holders of Notes or future holders (2)
    40,377,000       480,622       480,622  
Total
    500,000,000       5,951,673       5,951,673  


(1)   Assumes a conversion rate of 11.9033 shares of common stock per $1,000 principal amount of Notes and a cash payment in lieu of any fractional interest.
(2)   Assumes that any other holders of Notes or any future transferees from any holder do not or will not beneficially own any common stock other than common stock into which the Notes are convertible at the conversion rate of 11.9033 shares of common stock per $1,000 principal amount of Notes. Additionally, $399,859,000 principal amount of Notes have been repurchased by the Company as of July 15, 2002, which is convertible into 4,759,659 shares of common stock.

None of the selling holders nor any of their affiliates, officers, directors or principal equity holders has held any position or office or has had any material relationship with us within the past three years with the exception of

 


 

Deutsche Bank Securities, Inc. and Lehman Brothers, Inc. In the past three years, Deutsche Bank, Inc. and Lehman Brothers, Inc. have acted as underwriters of the Company’s initial public offering and follow-on public offering and as initial purchasers in the offering of the Notes. The selling holders purchased all of the Notes in a private transaction. All of the Notes and the shares of common stock into which the Notes are convertible are “restricted securities” under the Securities Act.

Information concerning the selling holders may change from time to time and any changed information will be set forth in supplements to this prospectus if and when necessary. In addition, the conversion price, and therefore, the number of shares of common stock issuable upon conversion of the Notes, is subject to adjustment under certain circumstances. Accordingly, the aggregate principal amount of Notes and the number of shares of common stock into which the Notes are convertible may increase or decrease.

The date of this Prospectus Supplement is July 15, 2002.