SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 26, 1996
(Date of earliest event reported)
CONCURRENT COMPUTER CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 0-13150 04-2735766
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
Two Crescent Place
Oceanport, NJ 07757
(Address of principal executive offices, including zip code)
(908) 870-4354
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
On March 26, 1996, Concurrent Computer Corporation
("Concurrent"), executed a Purchase and Sale Agreement
(the "Purchase and Sale Agreement") between Concurrent
and Harris Computer Systems Corporation, a Florida corpo-
ration ("Harris"). The Purchase and Sale Agreement
provides for the assets of the real-time computer busi-
ness of Harris (the "Real-Time Business") to be sold to
Concurrent together with 683,178 shares of newly issued
common stock of Harris (the "Purchased Harris Shares") in
exchange for (i) 10,000,000 newly issued shares of common
stock of Concurrent, par value $.01 per share (the "Con-
current Common Stock Consideration"); (ii) convertible
exchangeable preferred stock of Concurrent (the "Concur-
rent Preferred Stock") paying a 9% cumulative annual
dividend quarterly in arrears with a liquidation prefer-
ence of $10,000,000, subject to adjustment; and (iii) the
assumption by Concurrent of certain liabilities (the
"Assumed Liabilities"). The sale of the Real-Time Busi-
ness and the Purchased Harris Shares in exchange for the
Concurrent Common Stock Consideration, the Concurrent
Preferred Stock and the assumption by Concurrent of the
Assumed Liabilities is referred to herein as the "Trans-
action."
The Purchase and Sale Agreement also contemplates
the execution at the closing of the Transaction of cer-
tain ancillary agreements, including a Share Holding
Agreement that will contain certain standstill, gover-
nance, transfer and registration provisions, and provi-
sions relating to the composition of the Board of Direc-
tors of Harris and Concurrent.
Consummation of the Transaction is conditioned upon
a number of events, including approval of the Purchase
and Sale Agreement and the Transaction by the sharehold-
ers of Concurrent and Harris, the approval by the share-
holders of Concurrent of an amendment to the Concurrent
1991 Restated Stock Option Plan, the approval by the
shareholders of Harris of an amendment to Harris's Stock
Incentive Plan, certain regulatory approvals, and other
conditions.
The description of the Transaction herein is quali-
fied entirely by reference to the Purchase and Sale
Agreement, and the exhibits thereto, filed as exhibits to
this Current Report on Form 8-K.
ITEM 7. EXHIBITS
The following exhibits are filed as part of this
Form 8-K:
(c) Exhibits
EXHIBIT NO. DESCRIPTION
10.1 Purchase and Sale Agreement
(and certain exhibits
thereto) dated March 26,
1996 between Concurrent and
Harris.
SIGNATURES
Pursuant to the requirements 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.
CONCURRENT COMPUTER CORPORATION
By:/s/ Kevin J. Dell
Kevin J. Dell
Vice President
General Counsel and Secretary
Dated: April __, 1996
---------------------------------------------------------
PURCHASE AND SALE AGREEMENT
BETWEEN
CONCURRENT COMPUTER CORPORATION,
AND
HARRIS COMPUTER SYSTEMS CORPORATION,
DATED AS OF MARCH 26, 1996
---------------------------------------------------------
TABLE OF CONTENTS
PAGE
ARTICLE I
SALE AND PURCHASE OF ASSETS.................. 2
Section 1.1 Transfer of Assets.................. 2
Section 1.2 Excluded Assets; Omitted
Property.......................... 5
Section 1.3 Assumed Liabilities;
Excluded Liabilities.............. 7
Section 1.4 Exact Effective Time................ 9
ARTICLE II
TRANSFER OF STOCK; ADDITIONAL AGREEMENTS............ 9
Section 2.1 Sale of Harris Common Stock......... 9
Section 2.2 Sale of Concurrent Stock............ 9
Section 2.3 Preparation of Audited
Financial Statements; Net
Current Assets Adjustment......... 10
Section 2.4 Ancillary Agreements;
Certificate of Designation........ 17
Section 2.5 Allocation of Purchase
Price............................. 18
ARTICLE III
CLOSING............................ 19
Section 3.1 Closing............................. 19
Section 3.2 Deliveries by Harris................ 20
Section 3.3 Deliveries by Concurrent............ 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HARRIS............ 23
Section 4.1 Organization Etc.................... 23
Section 4.2 Capitalization...................... 25
Section 4.3 Authority........................... 28
Section 4.4 Consents and Approvals;
No Violations..................... 29
Section 4.5 SEC Reports and Financial
Statements........................ 32
Section 4.6 Information in Disclosure
Documents......................... 33
Section 4.7 Litigation.......................... 34
Section 4.8 Absence of Certain Changes.......... 35
Section 4.9 Opinion of Financial
Advisor........................... 36
Section 4.10 Tax Matters......................... 36
Section 4.11 Vote Required....................... 41
Section 4.12 Employee Benefit Plans;
ERISA............................. 41
Section 4.13 Applicability of Certain
Laws.............................. 45
Section 4.14 Major Contracts..................... 45
Section 4.15 Interests of Officers and
Directors......................... 48
Section 4.16 Intellectual Property............... 48
Section 4.17 Questionable Payments............... 55
Section 4.18 Insurance........................... 56
Section 4.19 No Brokers.......................... 56
Section 4.20 Environmental....................... 57
Section 4.21 Assets.............................. 60
Section 4.22 Audited Balance Sheet............... 62
Section 4.23 Leased Properties................... 63
Section 4.24 Subsidiaries........................ 64
Section 4.25 Outstanding Liabilities to
Related Parties................... 65
Section 4.26 Product Returns; Warranties......... 65
Section 4.27 Transferred Subsidiaries............ 66
Section 4.28 Transferred Subsidiaries
Financial Statement............... 67
Section 4.29 Investment Purpose.................. 67
Section 4.30 Rights Agreement.................... 68
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CONCURRENT.......... 69
Section 5.1 Organization........................ 69
Section 5.2 Capitalization...................... 70
Section 5.3 Authority........................... 72
Section 5.4 Consents and Approvals;
No Violations..................... 74
Section 5.5 SEC Reports and Financial
Statements........................ 77
Section 5.6 Information in Disclosure
Documents......................... 78
Section 5.7 Litigation.......................... 79
Section 5.8 Absence of Certain Changes.......... 80
Section 5.9 Opinion of Financial
Advisor........................... 81
Section 5.10 Rights Agreement.................... 81
Section 5.11 Tax Matters......................... 81
Section 5.12 Vote Required....................... 85
Section 5.13 Employee Benefit Plans;
ERISA............................. 85
Section 5.14 Major Contracts..................... 88
Section 5.15 Interests of Officers and
Directors......................... 89
Section 5.16 Intellectual Property............... 90
Section 5.17 Questionable Payments............... 96
Section 5.18 Insurance........................... 97
Section 5.19 No Brokers.......................... 98
Section 5.20 Environmental....................... 98
Section 5.21 Investment Purpose..................100
Section 5.22 Applicability of Certain
Laws..............................101
Section 5.23 Product Returns; Warranties.........101
ARTICLE VI
COVENANTS...........................102
Section 6.1 Conduct of Business of
Harris............................102
Section 6.2 Conduct of Business of
Concurrent........................106
Section 6.3 Best Efforts........................111
Section 6.4 Registration Rights.................113
Section 6.5 Occurrence of Closing
Prior to or Following the Reference
Date..............................114
Section 6.6 Access to Information...............115
Section 6.7 Stockholders Meetings...............117
Section 6.8 No Solicitation.....................118
Section 6.9 Brokers or Finders..................121
Section 6.10 Rights Plan.........................121
Section 6.11 Publicity...........................121
Section 6.12 Notification of Certain
Matters...........................122
Section 6.13 Management and Corporate
Governance Matters................123
Section 6.14 Employment Agreements...............126
Section 6.15 Expenses............................126
Section 6.16 IRS Determination Letter............127
Section 6.17 Insurance...........................127
Section 6.18 Supplemental Disclosure.............127
Section 6.19 Further Assurances;
Subsequent Transfers..............129
Section 6.20 Risk of Loss........................132
Section 6.21 Compliance with Applicable
Bulk Sales Laws...................136
Section 6.22 Audited Financial Statements;
Statutory Financial Statements....136
Section 6.23 Tax Matters.........................136
Section 6.24 HSR Approval........................138
ARTICLE VII
EMPLOYMENT AND EMPLOYEE BENEFIT PLANS.............139
Section 7.1 Existing Employee Benefit
Plans of Harris...................139
Section 7.2 Employment of Employees
Employed in Business..............143
Section 7.3 Employee Benefit Plans of
Concurrent........................144
ARTICLE VIII
CONDITIONS...........................147
Section 8.1 Conditions to Each Party's
Obligation To Perform this
Agreement.........................147
Section 8.2 Conditions of Obligation of
Concurrent........................151
Section 8.3 Conditions of Obligation of
Harris............................153
ARTICLE IX
TERMINATION AND AMENDMENT...................156
Section 9.1 Termination by Mutual
Consent...........................156
Section 9.2 Termination by Either
Concurrent or Harris..............157
Section 9.3 Termination by Harris...............158
Section 9.4 Termination by Concurrent...........159
Section 9.5 Effect of Termination...............160
Section 9.6 Termination Fee.....................161
ARTICLE X
OBLIGATIONS OF PARTIES AFTER CLOSING DATE...........162
Section 10.1 Survival Periods....................162
Section 10.2 Indemnification.....................163
Section 10.3 Claims..............................165
ARTICLE XI
MISCELLANEOUS.........................168
Section 11.1 Amendment...........................168
Section 11.2 Extension; Waiver...................169
Section 11.3 Notices.............................169
Section 11.4 Interpretation......................170
Section 11.5 Counterparts........................171
Section 11.6 Entire Agreement; No Third
Party Beneficiaries...............172
Section 11.7 Governing Law.......................172
Section 11.8 Specific Performance................173
Section 11.9 Assignment..........................173
Section 11.10 Incorporation of Exhibits...........173
Section 11.11 Severability........................173
INDEX OF DEFINED TERMS
Term Section
Acquiring Person................................................4.3 and 5.10
Acquisition Transaction.........................................6.8(a)(i)
affiliate.......................................................4.15 and 5.15
Allocation......................................................2.5
Ancillary Agreements............................................2.4(a)
Appraisal Rights................................................5.22
Article.........................................................11.4
Assets..........................................................1.1(d)
associate.......................................................4.15 and 5.15
Assumed Concurrent Transfer Tax Liability.......................1.3(a)
Assumed Liabilities.............................................1.3(a)
at the closing; exact effective time............................1.4
Audited Balance Sheet...........................................2.3(a)(i)
Audited Balance Sheet Disagreement..............................2.3(a)(iii)
Audited Base Financial Statements...............................4.22
Best Efforts....................................................6.3
Business........................................................Introduction
Business Combinations with Interested Stockholders..............5.22
Business Employees..............................................7.1(a)(i)
Business Intellectual Property Rights...........................4.16(a)
Business Portion................................................1.3(a)
Closing.........................................................3.1
Closing Date....................................................3.1
Code............................................................2.5
Common Stock Consideration......................................2.2
Concurrent......................................................Introduction
Concurrent 401(k) Plan..........................................7.3(a)
Concurrent Additional Cost......................................6.20(a)(ii)
Concurrent Casualty Deficiency..................................6.20(a)(ii)
Concurrent Common Stock.........................................Introduction
Concurrent Designees............................................6.13(b)
Concurrent ERISA Affiliate......................................5.13(a)
Concurrent ERISA Plans..........................................5.13(a)
Concurrent Intellectual Property Rights.........................5.16(a)
Concurrent Matching Contribution................................7.3(a)(iii)
Concurrent Options..............................................5.2
Concurrent Plans................................................5.13(a)
Concurrent Preferred Stock......................................Introduction
Concurrent Rights Agreement.....................................5.2
Concurrent SEC Documents........................................5.5
Concurrent Stock Plan...........................................5.2
Concurrent Stock Plan Amendment.................................5.12
Concurrent Stockholder Meeting..................................4.6
Confidentiality Agreement.......................................6.6
Control-Share Acquisitions......................................4.13
Corporate Target Goals..........................................7.3(d)
Damages.........................................................10.2(a)
the date hereof.................................................11.4
the date of this Agreement......................................11.4
Debentures......................................................2.2
DGCL............................................................5.22
Disclosure Schedule.............................................4.16(d)
Distribution....................................................4.10(e)
Distribution Date...............................................5.10
employee benefit plan...........................................4.12(a)
and 5.13(a)employee pension plan................................4.12(g)
and 5.13(h) Employment Effective Time...........................7.1(a)(i)
Encumbrances....................................................4.21(d)
Environmental Claim.............................................4.20(d)
Environmental Laws..............................................4.20(d)
ERISA...........................................................4.12(a)
Exchange Act....................................................4.4(a)
Excluded Assets.................................................1.2(b)
Fair Market Value...............................................6.20(b)
Final Net Current Asset Reconciliation..........................2.3(b)(i)
First Appraiser.................................................6.20(b)
Flip-in Date....................................................4.30
Flip-over Transaction...........................................4.30
GAAP............................................................2.3(a)(i)
Governmental Entity.............................................4.4(a)
Harris..........................................................Introduction
Harris 401(k) Plan..............................................7.1(a)
Harris Common Stock.............................................Introduction
Harris Designees................................................6.13(a)
Harris ERISA Affiliate..........................................4.12(a)
Harris ERISA Plans..............................................4.12(a)
Harris Plans....................................................4.12(a)
Harris Rights...................................................4.2
Harris Rights Agreement.........................................4.2
Harris SEC Documents............................................4.5
Harris Stock Plan...............................................4.2
Harris Stock Plan Amendment.....................................4.11
Harris Stockholder Meeting......................................4.6
Harris Subsidiary Shares........................................1.1(c)
herein..........................................................11.4
hereof..........................................................11.4
hereunder.......................................................11.4
Hired Business Employee.........................................7.1(a)(iv)(B)
HSR Act.........................................................4.4(a)
Identified Real Time Assets.....................................1.1(a)
Identified Trusted Assets.......................................1.2(a)
include(s)......................................................11.4
including.......................................................11.4
Indemnified Parties.............................................10.2(b)
Indemnifying Party..............................................10.3(a)
Individual Target Goals.........................................7.3(d)
Intellectual Property Rights....................................4.16(a)
IRS.............................................................4.10(b)(ii)
ISRA............................................................8.3(g)
KPMG............................................................2.3(a)(i)
Leases..........................................................4.23(a)
Liabilities.....................................................1.3(c)
Material Adverse Effect.........................................4.1(a)
Materials of Environmental Concern..............................4.20(d)
multiemployer pension plan......................................4.12(d)
and 5.13(d) Net Assets..........................................2.3(c)(i)
Net Current Asset Reconciliations...............................2.3(b)(i)
Omitted Property................................................1.2(c)
Original Concurrent Designee....................................6.13(b)
Original Harris Designees.......................................6.13(a)
Other Real Time Assets..........................................1.1(a)
Person..........................................................6.8(a)(iii)
Preferred Stock Consideration...................................2.2
Projected Net Current Asset Reconciliation......................2.3(b)(i)
Property........................................................1.1(a)
and 6.20(a)(i)
Proxy Statement.................................................4.6
Purchased Harris Shares.........................................2.1
qualified.......................................................4.12(f) and
5.13(f)
qualified beneficiaries.........................................7.1(b)(iii)
qualifying event................................................7.1(b)(iii)
Reconciliation Disagreement.....................................2.3(b)(iii)
Reference Date..................................................2.3(b)(i)
Representatives.................................................10.2(a)
Right of Stockholders to Dissent................................4.13
S-3 Registration Statement(s)...................................6.4
Schedule........................................................11.4
SEC.............................................................4.5
Second Appraiser................................................6.20(b)
Section.........................................................11.4
Securities Act..................................................4.4(a)
Separation Time.................................................4.30
SERP............................................................7.3(e)
Shared Assets...................................................1.1(b)
Shared IP Right.................................................1.1(b)
Shared Liabilities..............................................1.3(a)
Shared Real Time Assets.........................................1.1(a)
Shared Trusted Assets...........................................1.2(a)
single employer.................................................4.12(a)
and 5.13(a)
Stock Acquisition Date..........................................4.30 and 5.10
Stockholder Meetings............................................4.6
Subsequently Acquired Real Time Assets..........................1.1(a)
Subsidiary......................................................4.1(a)
Supplemental Disclosure.........................................6.18(a)
Target Bonuses..................................................7.3(d)
Tax Return......................................................4.10(d)
Tax Sharing Agreement...........................................4.10(e)
Taxes...........................................................4.10(d)
Termination Fee.................................................9.6(c)
Third Appraiser.................................................6.20(b)
Transfer Taxes..................................................6.23(b)
Transferred Subsidiaries........................................1.1(c)
Transferred Subsidiaries Benefit Plans..........................4.12(j)
Transferred Subsidiaries Financial Statements...................4.28(a)
Triggering Event................................................5.10
Trusted Assets..................................................1.2
Trusted Systems Business........................................Introduction
Welfare and Fringe Benefit Plans................................7.1(b)
without limitation..............................................11.4
EXHIBITS
Exhibit A Form of Certificate of Designation
Exhibit B Debenture Term Sheet
Exhibit C Form of Share Holding Agreement
Exhibit D Employment Agreement
SCHEDULES
Schedule 1.1(a)(i) Identified Real Time Assets
Schedule 1.1(b) Shared Assets
Schedule 1.2(a)(ii) Identified Trusted Assets
Schedule 1.3(a) Assumed Liabilities
Schedule 1.3(b)(iv) Excluded Tax Liabilities
Schedule 2.3(a) Audited Balance Sheet Procedures
Schedule 2.3(b) Net Current Asset Reconciliation Procedures
Schedule 2.5 Allocation of Purchase Price
Schedule 4.2 Capitalization
Schedule 4.4(a) Consents and Approvals
Schedule 4.4(b) No Violation
Schedule 4.5 Material Undisclosed Liabilities
Schedule 4.7 Litigation
Schedule 4.8 Absence of Certain Changes
Schedule 4.10(b)(i) List of Localities in which Registered to do
Business and Tax Liens
Schedule 4.10(b)(ii) Tax Years Examined; Tax Deficiencies and As-
sessments
Schedule 4.10(c) Agreements or Waivers
Schedule 4.12(a) Employee Benefit Plans
Schedule 4.12(i) Unvested Harris Options
Schedule 4.12(k) Transferred Subsidiaries Benefit Plans
Schedule 4.14 Major Contracts
Schedule 4.15 Interests of Officers and Directors
Schedule 4.16(b) Business Intellectual Property Rights
Schedule 4.16(c) Products Sold by Harris
Schedule 4.16(e) Payments to Third Parties for Intellectual
Property Rights
Schedule 4.16(m) Agreements Granting Rights to any Third
Party in any of the Business Intellectual
Property Rights
Schedule 4.18 Insurance
Schedule 4.20(a) Compliance with Environmental Laws
Schedule 4.20(b) Pending Environmental Claims
Schedule 4.20(c) Harris Actions Leading to Possible Environ-
mental Claims
Schedule 4.23(b) Leased Properties
Schedule 4.24(a) Subsidiaries of Harris
Schedule 4.24(b) Ownership of the Stock of the Transferred
Subsidiaries
Schedule 4.24(c) Officers and Directors of the Transferred
Subsidiaries
Schedule 5.2 Capitalization
Schedule 5.4(a) Consents and Approvals
Schedule 5.4(b) No Violation
Schedule 5.5 Material Undisclosed Liabilities
Schedule 5.7 Litigation
Schedule 5.8 Absence of Certain Changes
Schedule 5.11(b)(i) List of Localities in which Registered to do
Business and Tax Liens
Schedule 5.11(b)(ii) Tax Years Examined; Tax Deficiencies and As-
sessments
Schedule 5.11(c) Agreements or Waivers
Schedule 5.13(a) Employee Benefit Plans
Schedule 5.14 Major Contracts
Schedule 5.15 Interests of Officers and Directors
Schedule 5.16(b) Business Intellectual Property Rights
Schedule 5.16(e) Payments to Third Parties for Intellectual
Property Rights
Schedule 5.16(m) Agreements Granting Rights to any Third
Party in any of the Concurrent Intellectual Prop-
erty Rights
Schedule 5.18 Insurance
Schedule 5.20(a) Compliance with Environmental Laws
Schedule 5.20(b) Pending Environmental Claims
Schedule 5.20(c) Concurrent Actions Leading to Possible Envi-
ronmental Claims
Schedule 6.1 Conduct of Business of Harris
Schedule 6.14 Terms of the Stihl Employment Agreement
Amendment
Schedule 7.1 Business Employees
Schedule 8.1(g) Consents
Schedule 8.2(d) Contracts and Agreements
THIS AGREEMENT is made as of the 26th day of March 1996,
between HARRIS COMPUTER SYSTEMS CORPORATION, a Florida corporation
("Harris") and CONCURRENT COMPUTER CORPORATION, a Delaware corporation
("Concurrent").
W I T N E S S E T H:
WHEREAS, Harris and its subsidiaries are engaged in the
businesses of providing and servicing high-performance real-time computer
systems on a worldwide basis (the "Business") and supplying "trusted
products," including operating systems and firewall application products
(the "Trusted Systems Business");
WHEREAS, Concurrent has agreed to purchase from Harris, and
Harris has agreed to sell to Concurrent, the Business and shares of common
stock, par value $0.01 per share, of Harris (the "Harris Common Stock") on
the terms and subject to the conditions set forth herein; and
WHEREAS, in exchange for the Business and such shares of Harris
Common Stock, Concurrent has agreed to sell to Harris, and Harris has
agreed to purchase from Concurrent, shares of common stock, par value $0.01
per share, of Concurrent (the "Concurrent Common Stock") and shares of a
new class of convertible exchangeable preferred stock of Concurrent (the
"Concurrent Preferred Stock") on the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
Section 1.1 Transfer of Assets.
(a) Except as provided in Section 1.2, at the
Closing, Harris shall sell, transfer and assign to Concurrent, and
Concurrent shall purchase, acquire and/or accept from Harris, all of
Harris' rights, title and interests in all the Property (as defined below),
of Harris which (i) is listed in Schedule 1.1(a)(i) (the "Identified Real
Time Assets") and including the Property identified on the Final Net
Current Asset Reconciliation in existence on the Closing Date; (ii)
constitutes the Shared Assets (as defined in Section 1.1(b)) to the extent
such Property is to be transferred and sold to, or utilized by, Concurrent
as provided in Schedule 1.1(b) (the "Shared Real Time Assets"); (iii)
constitutes all other Property of Harris which is not an Excluded Asset (as
defined in Section 1.2) (the "Other Real Time Assets"); (iv) is tangible
Property which is manufacturing Property, hardware customer support
Property and hardware development Property; and (v) constitutes all other
Property of the kind described in clauses (i) and (ii) above and acquired
by Harris between the date hereof and the Closing (the "Subsequently
Acquired Real Time Assets"). The term "Property" shall mean assets,
properties and rights, tangible and intangible, wherever located.
(b) The term "Shared Assets" shall mean the Property of Harris
having a significant use in both the Business and the Trusted Systems
Business. To the extent they have been identified as of the date hereof,
the Shared Assets are set forth in Schedule 1.1(b), which Schedule
indicates which of the therein identified Shared Assets shall be
transferred to Concurrent or retained by Harris.
To the extent that any Shared Assets are not identified in
Schedule 1.1(b), they shall be transferred to Concurrent at Closing or
retained by Harris as follows: (i) if the Shared Asset not identified in
Schedule 1.1(b) is a "Business Intellectual Property Right" (as defined in
Section 4.16(a)) (each Shared Asset that is also a Business Intellectual
Property Right, a "Shared IP Right"), then each such asset shall be
transferred as described in the second sentence of this paragraph; and (ii)
if the Shared Asset not identified in Schedule 1.1(b) is not a Shared IP
Right, then, unless Concurrent acknowledges that such asset is not needed
for the conduct of the Business after the Closing, it shall be transferred
to Concurrent. Shared IP Rights that have not been identified in Schedule
1.1(b) shall be made available by license or otherwise to Concurrent and
Harris as follows: (i) if the use of the Shared IP Rights does not require
royalties or other payments to be made to third parties, then the Shared IP
Right shall be made available, without cost, by license or otherwise so
that each of Concurrent and Harris may freely utilize such Shared IP Rights
after Closing, subject to the terms of the Non-Competition Agreement
required to be delivered in accordance with Section 2.4, and (ii) to the
extent the use of the Shared IP Rights requires royalties or payments to be
made to third parties, Schedule 1.1(b) sets forth the method by which such
royalties or other payments will be borne by Concurrent and Harris after
the Closing.
(c) At the Closing, Harris shall sell, transfer and assign,
directly or indirectly, to Concurrent and Concurrent shall purchase,
acquire and accept from Harris, good and valid legal title to and
beneficial ownership of all of the issued and outstanding shares of capital
stock (the "Harris Subsidiary Shares"), free and clear of all Encumbrances
(as defined in Section 4.21) or assets, as the case may be, of certain
subsidiaries to be mutually agreed upon by the parties prior to Closing.
The subsidiaries, if any, to be transferred as agreed to by the
parties hereto shall be collectively referred to as the "Transferred
Subsidiaries". The shares shall constitute all of the issued and
outstanding shares of each such Transferred Subsidiary.
(d) The term "Assets" shall mean the Identified Real Time
Assets, the Shared Real Time Assets, the Other Real Time Assets and the
Subsequently Acquired Real Time Assets, including the stock or assets, if
any, of each of the Transferred Subsidiaries, which will be being
transferred by Harris to Concurrent in accordance with Sections 1.1(a) and
(b).
Section 1.2 Excluded Assets; Omitted Property. (a) Concurrent
is not acquiring from Harris, and Harris shall retain ownership of all
right, title and interest in and to, and exclude from sale, transfer or
assignment hereunder (i) all Property of Harris used in the Trusted Systems
Business (other than Property which constitutes Shared Assets in accordance
with Section 1.1(b)) as conducted on the date hereof (the "Trusted
Assets"); (ii) the Trusted Assets listed in Schedule 1.2(a)(i) (the
"Identified Trusted Assets"), (iii) the Shared Assets, to the extent they
shall be retained or permitted to be utilized by Harris as provided in
Schedule 1.1(b) (the "Shared Trusted Assets").
(b) The term "Excluded Assets" shall mean the
Trusted Assets, the Identified Trusted Assets and the Shared Trusted Assets.
(c) The Parties hereto acknowledge that the Schedules of Assets
and Excluded Assets will not together contain a complete list of all
Property of Harris, but that at the Closing, the updated Schedules together
with the lists of Property attached to the bills of sale and other
documents of transfer delivered to Concurrent will list all the Assets as
of the Closing. To the extent that there is any Property of Harris as of
the Closing which failed to be identified on a Schedule of any Assets or
Excluded Assets or on a list of Property attached to the bill of sale or
other document of transfer delivered at Closing (the "Omitted Property"),
it will be transferred, assigned, or sold to Concurrent or retained or
utilized by Harris in accordance with the Assets or Excluded Assets to
which such Omitted Property is most similar. Any adjustments to the Final
Net Asset Reconciliation which may be appropriate in connection with such
Omitted Property shall be made so long as, pursuant to the terms hereof,
the time period during which the parties hereto may dispute the Final Net
Asset Reconciliation (as defined in Section 2.3(b)) has not elapsed.
Section 1.3 Assumed Liabilities; Excluded Liabilities.
(a) At the Closing, subject to Section 1.3(b) below, Concurrent
shall assume, and shall be solely and exclusively liable with respect to,
(i) Liabilities of Harris specifically reflected or reserved against on the
Final Net Current Asset Reconciliation (as defined below) and in existence
on the Closing Date; (ii) Liabilities arising from activities of the
Business after the Closing; (iii) Liabilities set forth on Schedule 1.3(a);
(iv) Liabilities specifically related to products sold in the Business,
including product warranty liabilities and liabilities for product returns;
(v) Liabilities exclusively associated with the Business; (vi) 50% of the
Transfer Taxes (as defined in Section 6.24) hereof resulting from the
transfer of the Assets (other than the Harris Subsidiary Shares, if any)
and 100% of the Transfer Taxes resulting from the transfer of the Harris
Subsidiary Shares, if any (the "Assumed Concurrent Transfer Tax Liability")
and (vii) the allocable portion (the "Business Portion") of all Liabilities
associated with both the Business and the Trusted Systems Business (the
"Shared Liabilities"), such portion to be based on the Business'
contribution to the total net revenues of Harris for the fiscal year ended
September 30, 1995 (items (i) through (vii), collectively, the "Assumed
Liabilities");
(b) Concurrent is not assuming, and shall not be deemed to have
assumed, any of the following Liabilities of Harris: (i) Liabilities
exclusively associated with the Trusted Systems Business; (ii) Liabilities
arising from activities of the Business prior to the Closing relating to
environmental matters, claims of shareholders of Harris, claims of
employees of Harris at the time of the applicable violation that Harris
violated employment practices laws, rules or regulations or
antidiscrimination laws, rules or regulations insofar as such claims are
based on acts or omissions that shall have occurred prior to Closing; (iii)
the portion of the Shared Liabilities after the assumption by Concurrent of
the Business Portion of such Liabilities; (iv) Liabilities in connection
with any Taxes imposed upon Harris's operations set forth in Schedule
1.3(b)(iv); and (v) all other Liabilities of Harris which are not Assumed
Liabilities.
(c) The term "Liabilities" shall mean any liabilities or
obligations, fixed or contingent, known or unknown as of the date hereof,
and including such liabilities or obligations under contracts and leases.
Section 1.4 Exact Effective Time. Unless otherwise expressly
provided, the exact effective time of the sale, transfer and assignment of
the Assets and the Harris Subsidiary Shares, and of the assumption of
Assumed Liabilities, which is stated herein to be "at the Closing," shall
be 12:01 a.m. of the morning of the Closing Date.
ARTICLE II
TRANSFER OF STOCK; ADDITIONAL AGREEMENTS
Section 2.1 Sale of Harris Common Stock. In addition to the
sale of the Assets described in Article I hereof, subject to the terms and
upon the conditions set forth in this Agreement and in reliance upon the
representations, warranties and agreements of Concurrent contained
herein, Harris shall issue, sell and deliver to Concurrent, and Concurrent
shall purchase and acquire, good and valid title to 227,726 shares of
Harris Common Stock, subject to adjustment for stock dividends, stock
splits and similar transactions prior to the Closing (such shares, the
"Purchased Harris Shares").
Section 2.2 Sale of Concurrent Stock. As consideration for the
sale of the Assets and the Purchased Harris Shares to Concurrent described
in Article I and Section 2.1 hereof, subject to the terms and upon the
conditions set forth in this Agreement and in reliance upon the
representations, warranties and agreements of Harris contained herein,
Concurrent shall issue, sell and deliver to Harris, and Harris shall
purchase and acquire, (i) good and valid title to ten million (10,000,000)
shares of Concurrent Common Stock, subject to adjustment for stock splits,
stock dividends and similar transactions prior to the Closing (the
"Common Stock Consideration") and (ii) ten million dollars ($10,000,000)
in total liquidation preference of Concurrent Preferred Stock, as adjusted
pursuant to the terms thereof and Section 2.3(c) hereof (the "Preferred
Stock Consideration"). The terms of the Preferred Stock Consideration are
set forth in the Certificate of Designation (as defined below) attached
hereto as Exhibit A. In accordance with the terms of the Certificate of
Designation such Preferred Stock Consideration may be converted into
debentures of Concurrent having the terms substantially set forth in the
term sheet attached hereto as Exhibit B (the "Debentures").
Section 2.3 Preparation of Audited Financial Statements; Net
Current Assets Adjustment. In connection with the transactions contemplated
hereby, Harris and Concurrent also agree to the following:
(a) Audited Financial Statements.
(i) Within 45 days after March 29, 1996,
Harris shall deliver to Concurrent an audited balance sheet of the
Business as of March 29, 1996, prepared in accordance with United
States generally accepted accounting principles ("GAAP") and such
additional procedures set forth in Schedule 2.3(a) hereto (such
financials, the "Audited Balance Sheet"). The audit for the Audited
Balance Sheet shall be performed by KPMG Peat Marwick LLP ("KPMG").
(ii) Following completion and delivery of the Audited
Balance Sheet, Harris shall promptly make available to Concurrent all
available work papers of KPMG created in connection with the
preparation of the Audited Balance Sheet. Harris shall cause the
representatives of KPMG to be available promptly to assist Concurrent
and its auditors in its review of such work papers. In addition, in
accordance with Section 6.6, Concurrent and its auditors shall be
entitled to review the books and records of Harris relating to the
Business.
(iii) Concurrent may dispute the Audited Balance Sheet by
giving written notice to Harris within 20 days after delivery of the
Audited Balance Sheet to Concurrent, setting forth in reasonable
detail the basis for such dispute (hereinafter called an "Audited
Balance Sheet Disagreement"). The parties shall promptly commence
good faith negotiations with a view to resolving such Audited Balance
Sheet Disagreement, which resolution shall be not later than 30 days
after the date the Audited Balance Sheet is received by Concurrent.
(iv) If Concurrent or Harris delivers a written notice to
the other party that an Audited Balance Sheet Disagreement is unable
to be resolved, such Audited Balance Sheet Disagreement shall be re-
ferred to a nationally recognized accounting firm other than KPMG,
Coopers & Lybrand or Ernst & Young for determination of the disputed
amounts in accordance with this Agreement. If Concurrent and Harris
do not promptly agree on the selection of a nationally recognized
accounting firm, their respective independent public accountants
shall select such accounting firm which shall be a firm other than
KPMG, Coopers & Lybrand or Ernst & Young. The determination of such
firm shall be final and binding upon the parties. Such firm shall
render its determination as soon as practicable after referral of the
Audited Balance Sheet Disagreement. The fees and expenses of such
firm with respect to the Audited Balance Sheet Disagreement shall be
paid by Concurrent and Harris as follows: 30% of such fees shall be
paid by the party whose position in the Audited Balance Sheet
Disagreement submitted to the arbiter is closest to the final
determination of the accounting firm selected, and the remaining 70%
of such fees shall be paid by the other party.
(b) Net Current Asset Reconciliations.
(i) Not later than 5 business days prior
to the Closing, Harris shall deliver to Concurrent a projected
reconciliation, certified by the chief financial officer of Harris,
which shall set forth the portion of the current assets of the
Business to be assigned, transferred and sold to Concurrent pursuant
to the terms hereof as of June 30, 1996 (the "Reference Date") and
the current liabilities of the Business which are not to be retained
by Harris as of the Reference Date (the "Projected Net Current Asset
Reconciliation"). The Projected Net Current Asset Reconciliation
shall, except as set forth in this subsection (i), be prepared in
accordance with GAAP consistent with the accounting principles used
in preparation of the Audited Balance Sheet and prepared in
accordance with the additional procedures set forth in Schedule
2.3(b) hereto. Harris shall cause KPMG to prepare promptly after the
Reference Date, but in no event more than 30 days following the
Reference Date, consistent with (i) the provisions of Schedule 2.3(b)
and (ii) the Projected Net Current Asset Reconciliation (to the
extent it does not conflict with Schedule 2.3(b)), a reconciliation
of the portion of the current assets of the Business assigned,
transferred and sold to Concurrent as of the Reference Date and the
current liabilities of the Business which were not retained by Harris
as of the Reference Date (the "Final Net Current Asset
Reconciliation" and with the Projected Net Current Asset
Reconciliation, the "Net Current Asset Reconciliations").
(ii) Following delivery of the Final Net Current Asset
Reconciliation, Harris shall promptly make available to Concurrent
all available work papers (including those relating to inventories
and accounts receivable) of KPMG created in connection with the
preparation of the Final Net Current Asset Reconciliation. Harris
shall cause the representatives of KPMG to be available to promptly
assist Concurrent and its auditors in its review of such work papers.
In addition, in accordance with Section 6.6, Concurrent and its
auditors shall be entitled to review the books and records of Harris
relating to the Business.
(iii) Concurrent may dispute the Final Net Current Asset
Reconciliation by giving written notice to Harris within 30 days
after delivery of the Final Net Current Asset Reconciliation to
Concurrent, setting forth in reasonable detail the basis for such
dispute (hereinafter called a "Reconciliation Disagreement"). The
parties shall promptly commence good faith negotiations with a view
to resolving such Reconciliation Disagreement, which resolution shall
be not later than 70 days after the Closing Date.
(iv) If Concurrent or Harris delivers a written notice to
the other party that a Reconciliation Disagreement is unable to be
resolved, such Reconciliation Disagreement shall be referred to a
nationally recognized accounting firm other than KPMG, Coopers &
Lybrand or Ernst & Young for determination of the disputed amounts in
accordance with this Agreement. If Concurrent and Harris do not
promptly agree on the selection of a nationally recognized accounting
firm, their respective independent public accountants shall select
such accounting firm which shall be a firm other than KPMG, Coopers &
Lybrand or Ernst & Young. The determination of such firm shall be
final and binding upon the parties. Such firm shall render its
determination as soon as practicable after referral of the
Reconciliation Disagreement. The fees and expenses of such firm with
respect to a Reconciliation Disagreement shall be paid by Concurrent
and by Harris as follows: 30% of such fees shall be paid by the party
whose position in the Reconciliation Disagreement submitted to the
arbiter is closest to the final determination of the accounting firm
selected, and the remaining 70% of such fees shall be paid by the
other party.
(c) Adjustment to Preferred Stock Consideration. (i)
After delivery of the Projected Net Current Asset Reconciliation and
prior to the Closing, the Preferred Stock Consideration shall be
adjusted by reducing the total $10,000,000 liquidation preference and
stated value thereof, dollar for dollar, to the extent that total
current assets minus the total current liabilities (such difference,
the "Net Assets") shown on such Projected Net Current Asset
Reconciliation is less than $14,400,000. Such reduced amount of
Preferred Stock Consideration, if there shall be any reduction, shall
be the actual amount of such consideration delivered to Harris at the
Closing.
(ii) After the Closing, additional reductions, if any, in
the liquidation preference of the Preferred Stock Consideration shall
be in accordance with the terms of the Certificate of Designation. In
accordance with the terms of the Certificate of Designation, if the
Net Assets shown on the Final Net Asset Reconciliation (after
resolution of all Reconciliation Disagreements) is in excess of the
Net Assets shown on the Projected Net Asset Reconciliation, then the
liquidation preference and stated value of the Preferred Stock
Consideration delivered at Closing shall be increased, dollar for
dollar, to the extent of such excess up to $10,000,000 and any
remainder of such excess shall be paid, dollar for dollar, in cash as
soon as practicable after the determination of such excess.
Section 2.4 Ancillary Agreements; Certificate of Designation.
(a) On the Closing Date, the parties hereto shall enter into (1) leases to
be mutually agreed to by the parties hereto prior to Closing, (2) a Shared
Services Agreement to be mutually agreed to by the parties hereto prior to
Closing, (3) a Non-Competition/ Distribution Agreement, to be mutually
agreed to by the parties hereto prior to Closing, and (4) a Share Holding
Agreement, substantially in the form of Exhibit C hereto. The foregoing
agreements and any other agreements the parties hereto determine to be
necessary to effectuate this Agreement and the transactions contemplated
hereby and mutually agree shall be considered "Ancillary Agreements"
referred to herein as the "Ancillary Agreements".
(b) Prior to the Closing, the Board of Directors of Concurrent
shall have also adopted the Certificate of Designation.
Section 2.5 Allocation of Purchase Price. Concurrent shall
prepare and deliver, and Concurrent and Harris shall mutually agree to, the
allocation of the Purchase Price and the Assumed Liabilities among the
Assets to be purchased hereunder which allocation shall be reflected on
Schedule 2.5 and which shall be finalized as of the Closing Date but shall
be adjusted to take account of any post-closing purchase price adjustments
(the "Allocation"). The Allocation shall be made in accordance with Section
1060 of the Internal Revenue Code (the "Code") and applicable Treasury
regulations. Each of Harris and Concurrent shall (i) be bound by the
Allocation for purposes of determining any Taxes (as defined in Section
4.10), (ii) prepare and file, and cause its affiliates to prepare and file,
its Tax Returns (as defined in Section 4.10) on a basis consistent with the
Allocation and (iii) take no position, and cause its affiliates to take no
position, inconsistent with the Allocation of any applicable Tax Return, in
any proceeding before any taxing authority or otherwise. In the event that
the Allocation is disputed by any taxing authority, the party receiving
notice of the dispute shall promptly notify the other party hereto of the
receipt of such notice.
ARTICLE III
CLOSING
Section 3.1 Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place (a) at the offices of
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York
10022, on June 30, 1996 or as soon as practicable following the
satisfaction (or waiver) of the conditions set forth in Article VIII,
whether earlier or later than June 30, 1996 or (b) at such other date, time
or place as the parties shall mutually agree (the "Closing Date").
Section 3.2 Deliveries by Harris. At or prior to the Closing, Harris
shall deliver or shall cause to be delivered the following documents to
Concurrent:
(a) Cash by wire transfer in immediately available funds to an
account designated by Concurrent in the amount of the cash set forth on the
Projected Net Current Asset Reconciliation.
(b) Certificates representing the Purchased
Harris Shares.
(c) A duly executed bill of sale and assignment with respect to
the Assets in the form mutually agreed to by the parties hereto.
(d) (i) A duly executed instrument of assignment, in recordable
form, sufficient to transfer title in the Business Intellectual Property
Rights to Concurrent in the form mutually agreed to by the parties hereto
and (ii) such other duly executed individual instruments of assignments in
recordable form appropriate to transfer title in the Business Intellectual
Property Rights to Concurrent in the jurisdiction in which the Business
Intellectual Property Rights are registered or in which an application for
registration is pending in the form mutually agreed to by the parties
hereto.
(e) Such other duly executed instruments of conveyance and
transfer as may be reasonably requested by Concurrent prior to the Closing
Date.
(f) Opinions of counsel to Harris mutually
agreed to by the parties hereto.
(g) The certificates required by Sections 8.2(a) and 8.2(b)
hereof relating to truthfulness of representations and warranties and the
performance of all covenants of Harris hereunder.
(h) The records and files of the Business in the manner
requested by Concurrent, including the corporate documents of the
Transferred Subsidiaries, which records, files and documents shall remain
at the premises of such Transferred Subsidiaries and be deemed to be
delivered to Concurrent.
(i) Certificates representing the Harris Subsidiary Shares, if
any, accompanied by stock powers duly executed in blank or duly executed
stock transfer forms or instruments of transfer, with any requisite
documentary or stock transfer taxes affixed thereto.
(j) The consents set forth on Schedule 8.2(d).
(k) Duly executed counterparts of the Ancillary Agreements.
(l) The resignation of E. Courtney Siegel as a director and
an executive officer of Harris.
(m) The Audited Balance Sheet.
(n) Separate statutory financial statements
for each of the Transferred Subsidiaries as of and for the periods ended
September 30, 1994 and September 30, 1995, respectively.
(o) Such other documents reasonably requested
by Concurrent prior to the Closing Date.
Section 3.3 Deliveries by Concurrent. At
or prior to the Closing, Concurrent shall deliver or shall
cause to be delivered the following to Harris:
(a) Certificates representing the Common
Stock Consideration.
(b) Certificates representing the Preferred Stock
Consideration, as adjusted, if at all, prior to the Closing pursuant to the
terms hereof.
(c) Duly executed instruments of assumption,
in the form mutually agreed to by the parties hereto.
(d) Such other duly executed instruments of assumption as may
be reasonably requested by Harris prior to the Closing Date.
(e) Duly executed counterparts of the Ancil-
lary Agreements.
(f) Opinions of counsel to Concurrent
mutually agreed to by the parties hereto.
(g) The certificates required by Sections 8.3(a) and 8.3(b)
hereof relating to the truthfulness of representations and warranties, and
the performance of all covenants of Concurrent.
(h) The determinations and declarations re-
quired by Section 8.3(f) hereof.
(i) A certified copy of the Certificate of
Designation.
(j) Such other documents reasonably requested
by Harris prior to the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HARRIS
Harris represents and warrants to Concurrent as follows:
Section 4.1 Organization Etc.
(a) Harris and each of its Subsidiaries (as
defined below) is a corporation or other legal entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization and has all requisite corporate power and
authority to own, lease and operate the assets owned and leased by it and
to carry on its business as now being conducted, except where the failure
to be so organized, existing or in good standing or to have such power and
authority would not, individually or in the aggregate, have a Material
Adverse Effect (as defined herein) on either Harris and its Subsidiaries
taken as a whole or the Business. As used in this Agreement, the term
"Material Adverse Effect" with respect to an entity (or group of entities
taken as a whole) means such event, change or effect which is materially
adverse to the business, properties, assets, liabilities, results of
operations or financial condition of such entity (or group of entities
taken as a whole). Harris and each of its Subsidiaries is duly qualified or
licensed to do business and in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing
would not, individually or in the aggregate, have a Material Adverse Effect
on either Harris and its Subsidiaries taken as a whole or the Business. For
purposes of this Agreement, the term "Subsidiary" when used with respect to
any party, means any entity of which such party (either alone or through or
together with any other Subsidiary) owns, directly or indirectly, 50% or
more of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or
other governing body of such entity.
(b) Harris has heretofore made available to Concurrent a
complete and correct copy of the charter and by-laws or comparable
organizational documents, each as amended to date, of Harris and each of
its Subsidiaries.
Such charters, by-laws and comparable organizational documents are in full
force and effect. Neither Harris nor any of its Subsidiaries is in
violation of any provision of its charter, by-laws or comparable
organizational documents, except for such violations that would not,
individually or in the aggregate, have a Material Adverse Effect on Harris
or its Subsidiaries taken as a whole.
Section 4.2 Capitalization. As of the date of this Agreement,
the authorized capital stock of Harris consists of: (a) 20,000,000 shares
of Harris Common Stock of which, as of March 17, 1996, 1,995,389 shares
were issued and outstanding, no shares were held in treasury and (b)
5,000,000 shares of Preferred Stock, par value $0.01 per share, of which,
as of the date hereof, no shares were issued and outstanding and 20,000
shares were reserved for issuance in accordance with the Stockholder
Protection Rights Agreement dated as of September 15, 1994, by and between
Harris and Society National Bank, as Rights Agent (the "Harris Rights
Agreement"), pursuant to which Harris has issued rights (the "Harris
Rights") to purchase shares of Harris Preferred Stock. As of December 31,
1995, not more than 325,000 shares of Harris Common Stock and as of March
17, 1996 not more than 675,000 shares of Harris Common Stock were reserved
for issuance (i) upon exercise of outstanding options or for grants of
restricted stock pursuant to the Harris Stock Incentive Plan (the "Harris
Stock Plan") and (ii) upon exercise of outstanding options awarded to
directors and employees outside the Harris Stock Plan. Except as permitted
by Section 6.1 and Schedule 6.1, since the date hereof, Harris has not
issued any shares of Harris Common Stock, except upon the exercise of
options granted under the Harris Stock Plan which were outstanding on the
date hereof. All the outstanding shares of Harris's capital stock are, and
all shares which may be issued pursuant to the Harris Stock Plan will be,
when issued and paid for in accordance with the respective terms thereof,
duly authorized, validly issued, fully paid and nonassessable and not
subject to any preemptive rights of third parties in respect thereto. The
Purchased Harris Shares when issued and paid for in accordance with the
terms hereof will be duly authorized, validly issued, fully paid and
nonassessable and not subject to any preemptive rights of third parties in
respect thereto. Except as set forth above or on Schedule 4.2 hereto, as of
the date of this Agreement, there are no existing options, warrants, calls,
subscriptions or other rights or other agreements or commitments of any
character relating to the issued or unissued capital stock of Harris or any
of its Subsidiaries obligating Harris or any of its Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any
shares of capital stock of, or other equity interests in, Harris or any of
its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests or obligating Harris or any of its Subsidiaries
to grant, extend or enter into any such option, warrant, call, subscription
or other right, agreement or commitment. As of the date of this Agree-
ment, except as set forth on Schedule 4.2 hereto, there are no outstanding
contractual obligations of Harris or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of Harris or any
of its Subsidiaries. Each of the outstanding shares of capital stock of
each of Harris's Subsidiaries is duly authorized, validly issued, fully
paid and nonassessable, and such shares are owned by Harris free and clear
of any lien, claim, option, charge, security interest, limitation on voting
rights and encumbrance of any kind, except as would not have a Material
Adverse Effect on either Harris and its Subsidiaries taken as a whole or
the Business.
Section 4.3 Authority. Harris has the requisite corporate power
and authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby (other than the approval and adoption of
this Agreement and the transactions contemplated hereby by the affirmative
vote of the holders of a majority of the outstanding shares of Harris
Common Stock). The execution, delivery and performance of this Agreement
and the Ancillary Agreements by Harris and the consummation by Harris of
the transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of Harris and no other
corporate proceedings on the part of Harris are necessary to authorize this
Agreement or the Ancillary Agreements or to consummate the transactions
contemplated hereby or thereby (other than the approval and adoption of
this Agreement and the transactions contemplated hereby by the affirmative
vote of a majority of the outstanding shares of Harris Common Stock). This
Agreement has been, and when executed the Ancillary Agreements will be,
duly executed and delivered by Harris and, assuming this Agreement, and the
Ancillary Agreements when executed, constitute valid and binding
obligations of Concurrent, constitute, or will constitute, valid and
binding obligations of Harris, enforceable against Harris in accordance
with their terms.
Section 4.4 Consents and Approvals; No Violations.
(a) Except as set forth on Schedule 4.4(a) hereto and except
for filings, permits, authorizations, notices, consents and approvals as
may be required under, and other applicable requirements of, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Securities Act
of 1933, as amended (the "Securities Act"), the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the FBCA, certain
state takeover statutes or state securities or blue sky laws, neither the
execution, delivery or performance of this Agreement and the Ancillary
Agreements by Harris nor the consummation by Harris of the transactions
contemplated hereby and thereby and compliance by Harris with any of the
provisions hereof and thereof will (i) conflict with or result in any
breach of any provisions of the certificate of incorporation or by-laws or
comparable organizational documents of Harris or any of its Subsidiaries,
(ii) require any filing with, or permit, authorization, consent or approval
of, any court, arbitral tribunal, administrative agency or commission or
other governmental or other regulatory authority or agency (a "Governmental
Entity") (except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings would not prevent or delay
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements in any material respect and would not, individually or
in the aggregate, have a Material Adverse Effect on either Harris and its
Subsidiaries taken as a whole or the Business), (iii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, or result in the creation of any lien
or other encumbrance on any property or asset of Harris or any of its
Subsidiaries pursuant to, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Harris or any of its Subsidiaries
is a party or by which any of them or any of their properties or assets may
be bound or (iv) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Harris or any of its Subsidiaries or by which
any property or asset of Harris or any of its Subsidiaries is bound or
affected, except, in the case of clauses (iii) and (iv), for violations,
breaches, defaults or other occurrences which would not prevent or delay
consummation of this Agreement or the Ancillary Agreements or the
transactions contemplated hereby or thereby in any material respect and
would not, individually or in the aggregate, have a Material Adverse Effect
on either Harris and its Subsidiaries taken as a whole or the Business.
(b) Except as disclosed in the Harris SEC Documents (as defined
in Section 4.5) or on Schedule 4.4(b) hereto, neither Harris nor any of its
Subsidiaries is in conflict with, or in default or violation of, (i) any
order, writ, injunction, decree, statute, rule or regulation of any
Governmental Entity applicable to Harris or any of its Subsidiaries or by
which any of them or any of their properties or assets may be bound or (ii)
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Harris or any of its Subsidiaries
is a party or by which any of them or any of their properties or assets may
be bound or affected, except for any such conflicts, defaults or violations
which have not had and are not likely to have a Material Adverse Effect on
either Harris and its Subsidiaries taken as a whole or the Business.
Section 4.5 SEC Reports and Financial Statements. Harris has
filed with the Securities and Exchange Commission (the "SEC"), and has
heretofore made available to Concurrent true and complete copies of all
forms, reports and documents required to be filed by it since June 30,
1994, under the Exchange Act or the Securities Act (as such documents have
been amended since the time of their filing, collectively, the "Harris SEC
Documents"). The Harris SEC Documents, including without limitation any
financial statements or schedules included therein, at the time filed, (a)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act or the Securities Act, as the
case may be. The financial statements of Harris included in the Harris SEC
Documents complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements,
as permitted on Harris's Form 10-Q as filed with the SEC under the Exchange
Act) and fairly present (subject, in the case of the unaudited statements,
to normal, recurring audit adjustments which will not be material in amount
or effect) the consolidated financial position of Harris and its
consolidated Subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended.
Except as reflected, reserved against or otherwise disclosed in the
financial statements of Harris included in the Harris SEC Documents or as
disclosed on Schedule 4.5 hereto, neither Harris nor any of its
Subsidiaries has any liabilities or obligations (absolute, accrued, fixed,
contingent or otherwise) material to Harris and its Subsidiaries taken as a
whole that would be required to be reflected on, or reserved against in, a
balance sheet of Harris or the notes thereto, prepared in accordance with
generally accepted accounting principles consistently applied.
Section 4.6 Information in Disclosure Documents. None of the
information supplied or to be supplied by Harris in writing specifically
for inclusion or incorporation by reference in the joint proxy statement
relating to the meeting of the stockholders of Harris and Concurrent
(respectively, the "Harris Stockholder Meeting" and the "Concurrent
Stockholder Meeting" and collectively, the "Stockholder Meetings") to be
held in connection with the transactions contemplated by this Agreement
(the "Proxy Statement") will, at the time the Proxy Statement is filed with
the SEC, at the time such Proxy Statement is mailed to stockholders of
Harris and Concurrent, at the times of the Stockholder Meetings to be held
in connection with the transactions contemplated by this Agreement and at
the Closing Date, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not misleading. The Proxy Statement will, when filed
with the SEC, comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder,
except that no representation is made by Harris with respect to statements
made therein based on information supplied by Concurrent in writing
specifically for inclusion in the Proxy Statement.
Section 4.7 Litigation. Except as disclosed in the Harris SEC
Documents or on Schedule 4.7 hereto, there is no suit, claim, action,
proceeding or investigation pending or, to the best knowledge of Harris,
threatened, against Harris or any of its Subsidiaries before any
Governmental Entity which, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on either Harris or any of its
Subsidiaries taken as a whole or the Business or a Material Adverse Effect
on the ability of Harris to consummate the transactions contemplated by
this Agreement. Except as disclosed in the Harris SEC Documents or on
Schedule 4.7 hereto, neither Harris nor any of its Subsidiaries is subject
to any outstanding order, writ, injunction or decree which, insofar as can
be reasonably foreseen, individually or in the aggregate, would in the
future have a Material Adverse Effect on either Harris or any of its
Subsidiaries taken as a whole or the Business or a Material Adverse Effect
on the ability of Harris to consummate the transactions contemplated by
this Agreement. Harris has, in accordance with GAAP, made adequate
provision in its financial statements for the payment of losses arising out
of suits, claims, actions, proceedings or investigations disclosed in the
Harris SEC Document or on Schedule 4.7 and such provision has continued to
be adequate.
Section 4.8 Absence of Certain Changes. Except as disclosed in
the Harris SEC Documents or on Schedule 4.8 hereto, since September 30,
1995, Harris has conducted its business only in the ordinary course of such
business and there has not been (a) any material adverse change in either
Harris and its Subsidiaries taken as a whole or the Business, (b) any
declaration, setting aside or payment of any dividend or other distribution
with respect to its capital stock or (c) any material change in its
accounting principles, practices or methods.
Section 4.9 Opinion of Financial Advisor. Harris has received
the opinion of Bear, Stearns & Co. Inc., its financial advisor, to the
effect that, as of the date of this Agreement, the transactions
contemplated hereby are fair, from a financial point of view, to the
stockholders of Harris.
Section 4.10 Tax Matters.
(a) Harris and each of its Subsidiaries has
duly filed all, or as of the Closing Date will have filed, all Tax Returns
(as defined in Section 4.10(e)) required to be filed by it or its
Subsidiaries on or before the Closing Date, and such Tax Returns are or
will be true, correct and complete in all material respects.
Harris and its Subsidiaries have duly paid, caused to be paid, or made
adequate provision in the Harris SEC Documents in accordance with GAAP for
the payment of all Taxes (as defined in Section 4.10(d)) required to be
paid in respect of all periods covered by such Tax Returns. Harris has made
adequate provision in accordance with GAAP for the payment of all Taxes
anticipated to be payable in respect of all taxable periods or portions
thereof ending on or before the Closing Date since the periods covered by
such Tax Returns.
(b) (i) The reserves for Taxes (except for deferred Taxes)
reflected in the Harris SEC Documents are sufficient for the payment of all
unpaid Taxes (whether or not currently disputed) accrued through the date
thereof. Since September 30, 1995, neither Harris nor its Subsidiaries have
incurred any material liability for Taxes other than in the ordinary course
of business consistent with past practice. Harris and its Subsidiaries are
qualified or registered to do business in the states and localities set
forth on Schedule 4.10(b)(i) hereto. Except as set forth on Schedule
4.10(b)(i) hereto, there are no liens for Taxes upon the assets of Harris
or its Subsidiaries except for statutory liens for current Taxes not yet
due.
(ii) The Tax Returns filed by Harris have been examined
by the Internal Revenue Service (the "IRS") or other appropriate
taxing authority, for all taxable years as set forth on Schedule
4.10(b)(ii) hereto. Except as set forth on Schedule 4.10(b)(ii)
hereto, all deficiencies and assessments asserted as a result of such
examinations or other audits by federal, state, local or foreign
taxing authorities have been paid, fully settled or adequately
provided for in the Harris SEC Documents in accordance with GAAP, and
no issue or claim has been asserted for Taxes by any taxing authority
for any prior period, the adverse determination of which would result
in a deficiency which would have a Material Adverse Effect on either
Harris and its Subsidiaries taken as a whole or the Business, other
than those heretofore paid or provided for. Except as disclosed on
Schedule 4.10(b)(ii) hereto, no issue has been raised during the past
five years by any federal, state, local or foreign taxing authority
which, if raised with regard to any other period not so examined,
could reasonably be expected to result in a proposed deficiency for
any other period not so examined.
(c) (i) Except as set forth on Schedule 4.10(c) hereto,
there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Return of Harris
or its Subsidiaries. Except as set forth on Schedule 4.10(c) hereto,
neither Harris nor any of its Subsidiaries (x) has been a member of a
group filing consolidated returns for federal income tax purposes, or
(y) is a party to a tax sharing or tax indemnity agreement or any
other agreement of a similar nature that remains in effect. Except as
set forth on Schedule 4.10(c) hereto, no power of attorney has been
executed by, or on behalf of Harris or its Subsidiaries with respect
to any matter relating to Taxes which is currently in force.
(ii) Neither Harris nor any of its Subsidiaries has filed
a consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(2) of
the Code) owned by Harris or any of its Subsidiaries.
(iii) The respective net operating losses, net operating
loss carryforwards and tax credit carryforwards, if any, of each of
the Transferred Subsidiaries for all federal, state, local and
foreign tax purposes as of December 29, 1995, are as set forth on
Schedule 4.10(c)(iii) hereto.
(d) As used in this Agreement, "Taxes" shall
mean all taxes, charges, fees, levies or other assess-
ments, including, without limitation, income, gross receipts, excise,
property, sales, transfer, use (or any similar taxes), license, payroll,
withholding, social security, capital stock and franchise taxes, imposed by
any federal, state, local or foreign taxing authority, including any
interest, penalties or additions thereto. As used in this Agreement, the
term "Tax Return" shall mean any report, return or other information or
document required to be supplied to a taxing authority in connection with
Taxes.
(e) Neither Harris nor any of its
Subsidiaries has committed any breach of any representation or covenant
contained in the Tax Sharing Agreement (as defined herein) or made in
connection with the opinion rendered by Sullivan & Cromwell (as described
in Section 1.12(a) of the Tax Sharing Agreement), in each case relating to
the qualification of the Distribution (as defined herein) as a distribution
pursuant to Section 355 of the Code, and none of the actions contemplated
by this Agreement shall result in or otherwise give rise to a breach of any
such representation or covenant. As used in this Agreement, the term
"Distribution" shall refer to the distribution of Harris Common Stock
pursuant to the Distribution Agreement by and between Harris and Harris
Corporation dated September 16, 1994 and "Tax Sharing Agreement" shall
refer to the Tax Disaffiliation Agreement by and between Harris and Harris
Corporation dated September 13, 1994.
Section 4.11 Vote Required. The only votes of the holders of
any class or series of Harris's capital stock necessary to approve the
transactions contemplated hereby are the affirmative vote of a majority of
(a) all votes entitled to be cast by the holders of Harris Common Stock
with respect to this Agreement and the transactions contemplated hereby and
(b) the voting shares of Harris Common Stock, in a separate vote, with
respect to an amendment to the Harris Stock Plan (the "Harris Stock Plan
Amendment") to increase the number of shares of Harris Common Stock
reserved and available for issuance under the Harris Stock Plan to 675,000
shares of Harris Common Stock.
Section 4.12 Employee Benefit Plans; ERISA.
(a) Schedule 4.12(a) contains a true and com-
plete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay, hospitalization
or other medi-cal, life or other insurance, supplemental unemployment
benefits, profit-sharing, pension, or retirement plan, program, agreement
or arrangement, and each other employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required to be
contributed to by Harris or by any trade or business, whether or not
incorporated (a "Harris ERISA Affiliate"), that together with Harris would
be deemed a "single employer" within the meaning of section 4001 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), for
the benefit of any employee or terminated employee of Harris or any Harris
ERISA Affiliate (the "Harris Plans"). Schedule 4.12(a) identifies each of
the Harris Plans that is an "employee benefit plan," as that term is
defined in section 3(3) of ERISA (the "Harris ERISA Plans").
(b) With respect to each Harris Plan, Harris has heretofore
delivered to Concurrent true and complete copies of each of the following
documents:
(i) a copy thereof;
(ii) a copy of the most recent annual re-
port and actuarial report, if required under ERISA
and the most recent report prepared with respect
thereto in accordance with Statement of Financial
Accounting Standards No. 87, Employer's Accounting
for Pensions;
(iii) a copy of the most recent Summary
Plan Description required under ERISA with respect
thereto;
(iv) if the Harris Plan is funded through a trust or any
third party funding vehicle, a copy of the trust or other funding
agreement and the latest financial statements thereof; and
(v) the most recent determination letter received from
the IRS with respect to each Harris Plan intended to qualify under
section 401 of the Code.
(c) Neither Harris nor any Harris ERISA Affiliate maintains or
has ever maintained an ERISA Plan subject to Title IV of ERISA.
(d) No Harris ERISA Plan is a "multiemployer pension plan," as
defined in section 3(37) of ERISA, nor is any Harris ERISA Plan a plan
described in section 4063(a) of ERISA.
(e) Each Harris Plan has been operated and administered in all
material respects in accordance with its terms and applicable law,
including but not limited to ERISA and the Code.
(f) To the best knowledge of Harris, each Harris ERISA Plan
intended to be "qualified" within the meaning of section 401(a) of the Code
is so qualified and the trusts maintained thereunder are exempt from
taxation under section 501(a) of the Code.
(g) No Harris Plan provides benefits, including death or
medical benefits (whether or not insured), with respect to current or
former employees of Harris or any Harris ERISA Affiliate beyond their
retirement or other termination of service (other than (i) coverage
mandated by applicable law or (ii) death benefits or retirement benefits
under any "employee pension plan," as that term is defined in section 3(2)
of ERISA).
(h) There are no pending, threatened or anticipated claims by
or on behalf of any Harris Plan, by any employee or beneficiary covered
under any such Harris Plan, or otherwise involving any such Harris Plan
(other than routine claims for benefits).
(i) Except with respect to the Harris Options which are set
forth on Schedule 4.12(i) hereto and shall continue to have the vesting
schedule in effect on the date hereof, at the Closing Date, all Harris
Options then outstanding under the Harris Stock Plan shall become
exercisable and vested to the extent provided for pursuant to the stock
option agreements under which such Harris Options were granted.
(j) As of the Closing Date, full payment will have been made or
accrued in accordance with GAAP, and to the extent applicable, section 412
of the Code of all amounts required to be paid under the terms of each of
the Harris Plans and any other similar fringe or employee benefit plans,
programs or arrangements applicable to employees of the Transferred
Subsidiaries (the "Transferred Subsidiaries Benefit Plans") as
contributions to such plans.
(k) Listed on Schedule 4.12(k) is a description of each of the
Transferred Subsidiaries Benefit Plans that provides post-retirement
medical, health or other post-retirement benefits to employees.
(l) Where applicable, the Transferred Subsidiaries Benefit
Plans required to be registered with applicable regulatory authorities have
been registered and have been maintained in good standing with such
applicable regulatory authorities.
Section 4.13 Applicability of Certain Laws. The provisions of
Section 607.0901-.0903 ("Control-Share Acquisitions") and Section
607.1302(1)-(3) ("Right of Stockholders to Dissent"), respectively, of the
FBCA will not apply to this Agreement or any of the transactions
contemplated hereby.
Section 4.14 Major Contracts. Except as disclosed in the Harris
SEC Documents or as set forth on Schedule 4.14 hereto, neither Harris nor
any of its Subsidiaries is a party to or subject to:
(a) Any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of profits
with other persons;
(b) Any existing OEM agreement, distribution agreement, volume
purchase agreement, or other similar agreement in which the annual amount
involved in 1995 exceeded or is expected to exceed in fiscal 1996 $500,000
in aggregate amount or pursuant to which Harris has granted or received
exclusive marketing rights related to any product, group of products or
territory;
(c) Any material license agreement, either as licensor or
licensee (excluding nonexclusive software licenses granted to customers or
end-users in the ordinary course of business) involving the payment of at
least $250,000;
(d) Any contract containing covenants purporting to limit
Harris's freedom or that of any of its Subsidiaries to compete in any line
of business in any geographic area;
(e) Any mortgage, loan agreement, note, or
guarantee of obligations of others for borrowing of
money in excess of $50,000;
(f) Any agreement or arrangement for the purchase or sale of
any Assets, or for the grant of any preferential right to purchase any of
the Assets, other than in the ordinary course of business or would exceed
$50,000;
(g) Any lease for Equipment or other personal
property involving an aggregate commitment of $50,000 ;
(h) Any agreement, contract or commitment for maintenance,
consulting, engineering or other services involving an aggregate commitment
of $50,000 or more on an annual basis;
(i) Any agreement, contract or commitment for purchase of
materials or supplies (other than capital equipment), or any group of such
agreements, contracts or commitments with a single vendor, involving an
aggregate commitment of $100,000 or more on an annual basis;
(j) Any agreement, contract or commitment for
purchase of capital equipment under which the remaining
commitment is $50,000 or more;
(k) Any distribution, dealer, manufacturer's representative,
sales agency or franchise contract not terminable without penalty within 90
days and in excess of $50,000; and
(l) Any shareholders' agreements relating to
any of Harris's Subsidiaries.
Each of the contracts set forth in Schedule 4.14 is in full
force and effect. Harris is not in default, and there are no existing acts,
events or conditions (other than the transactions contemplated hereby)
which, with notice or lapse of time, or both, will result in a material
default by Harris under any of the contracts.
Section 4.15 Interests of Officers and Directors. Except as
disclosed on Schedule 4.15 hereto or in the Harris SEC Documents, no
officer or director of Harris or any of its Subsidiaries or any "affiliate"
or "associate" (as those terms are defined in Rule 405 promulgated under
the Securities Act) of any such person has had, either directly or
indirectly, a material interest in: (a) any person or entity which
purchases from or sells, licenses or furnishes to Harris or any Subsidiary
any goods, property, technology or intellectual or other property rights or
services; (b) any contract or agreement to which Harris or any of its
Subsidiaries is a party or by which it may be bound or affected; or (c) any
property, real or personal, tangible or intangible, used in or pertaining
to the Business, including any interest in the Harris Intellectual Property
Rights (as defined herein), except for rights as a stockholder, and except
for rights under any Harris Plan.
Section 4.16 Intellectual Property.
(a) Harris and any of the Transferred Subsid-
iaries own, or are licensed or otherwise entitled to exercise all rights in
and to, all domestic and foreign patents, trademarks, trade names, service
marks, copyrights, mask works, trade secrets and other intellectual
property rights, and any applications, registrations, certificates and/or
Letters Patent therefor, and all net lists, schematics, sketches, drawings,
notebooks, reports, memoranda, prints, drafts, worksheets, and any other
writings, methods and practices, business information, procedures,
technology, source code, know-how, computer software programs and all other
tangible and intangible information or material, and all goodwill
associated with any of the foregoing, including goodwill in respect of
trademarks, that are used in the operation of the Assets as currently
operated (collectively, the "Business Intellectual Property Rights").
Harris or any of its Subsidiaries own or are licensed or otherwise are
entitled to exercise all rights in and to all of the foregoing types of
intellectual property used in the operation of the Trusted Systems Business
(such other intellectual property, together with the Business Intellectual
Property Rights, the "Intellectual Property Rights"). There are no
restrictions applicable to the Business Intellectual Property Rights that
interfere in any material respect with the current use of such Business
Intellectual Property Rights.
(b) Schedule 4.16(b) hereto is a complete and accurate list of
the Business Intellectual Property Rights. For each item listed thereon,
Schedule 4.16(b) hereto identifies the owner thereof and, if the owner is
not Harris or any of the Transferred Subsidiaries, the means by which
Harris or any of the Transferred Subsidiaries obtains rights thereto, and
which party obtains such rights. Schedule 4.16(b) hereto identifies all
oral or written licenses, agreements and other arrangements for any
Business Intellectual Property Rights between any two or more of Harris and
its Subsidiaries, the parties thereto and the subject matter thereof.
(c) Schedule 4.16(c) hereto lists all of the currently marketed
products of the Business and an indication as to which, if any, of such
products are the subject of certificates of copyright issued by the United
States Copyright Office, and any similar office or agency of any foreign
country or jurisdiction, and/or are the subject of applications for patent
or original Letters Patent in the United States or any foreign country or
jurisdiction.
(d) Neither Harris nor any of its Subsidiaries is, or as a
result of the execution and delivery of this Agreement or the other
transactions contemplated hereby or the performance of Harris's obligations
hereunder will be, in violation of, or lose any rights pursuant to any
license, sublicense or agreement that is materially related to a Business
Intellectual Property Right and is described in the disclosure schedule
attached to this Agreement (the "Disclosure Schedule") with respect to
Harris.
(e) Harris and one of the Transferred Subsidiaries is the owner
or licensee of the Business Intellectual Property Rights, and Harris and
one of the Subsidiaries is the owner of all other Intellectual Property
Rights, with all necessary right, title and interest in and to the same
free and clear of any liens, encumbrances or security interests. Except as
set forth on Schedule 4.16(e) hereto, neither Harris nor any of its
Subsidiaries is contractually obligated to pay any compensation to any
third party in an amount in excess of $250,000 in respect to the use of any
of the Intellectual Property Rights or the material covered thereby in
connection with the services or products being manufactured and/or used
and/or sold by Harris or any of its Subsidiaries.
(f) No claims with respect to the Intellectual Property Rights
have been asserted or, to the best knowledge of Harris, after reasonable
investigation, are threatened by any person. Harris knows of no claims: (i)
to the effect that the manufacture, offer for sale, sale or use of any
product as now used or offered by Harris or any of its Subsidiaries, or the
use thereof by any customer or licensee of Harris or any of its
Subsidiaries infringes any copyright, patent, trademark or service mark, or
violates any trade secret rights, or other intellectual property rights of
any third party, (ii) challenging the ownership or validity of any of the
Intellectual Property Rights.
(g) To the best knowledge of Harris, all patents and registered
trademarks, service marks, copyrights and patents held by Harris or any of
its Subsidiaries are valid and subsisting.
(h) To the best knowledge of Harris, there has not been and
there is not now any material unauthorized use, infringement or
misappropriation of any of the Intellectual Property Rights by any third
party, including, without limitation, any employee or former employee of
Harris or any of its Subsidiaries; neither Harris nor any of its
Subsidiaries has been sued or charged in writing as a defendant in any
claim, suit, action or proceeding which involves a claim of infringement of
any patents, trademarks, service marks, copyrights or other intellectual
property rights and which has not been finally terminated prior to the date
hereof; there are no such charges or claims outstanding; and to the best
knowledge of Harris neither Harris nor any of its Subsidiaries has any
infringement liability with respect to any patent, trademark, service mark,
copyright or other intellectual property right of another.
(i) No Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting
in any manner the licensing or other disposition thereof by Harris or any
of its Subsidiaries. Except with respect to products and software described
in the Night Hawk Product Catalog a true and complete copy of which has
been delivered to Concurrent, neither Harris nor any of its Subsidiaries
has entered into any agreement to indemnify any other person against any
charge of infringement of any Intellectual Property Right. Neither Harris
nor any of its Subsidiaries has entered into any agreement granting any
third party the right to bring infringement actions with respect to, or
otherwise to enforce rights with respect to, any Intellectual Property
Right.
(j) Harris and its Subsidiaries have the exclusive right to
file, prosecute and maintain all applications, certificates, registrations
and Letters Patent with respect to the Intellectual Property Rights owned
by Harris or its Subsidiaries. Harris or any of its Subsidiaries is listed
in the records of the appropriate agency as the sole owner of record for
each registration, grant, Letters Patent and application listed on Schedule
4.16(b) hereto as owned by Harris or any of the Subsidiaries. All
registration and maintenance fees that have become due and payable with
respect of such Intellectual Property Rights have been paid.
(k) To the best knowledge of Harris, no act has been done, or
omitted to be done, by Harris or any of its Subsidiaries to impair or
dedicate to the public or to entitle any governmental authority to cancel,
forfeit, modify or hold abandoned any of the Intellectual Property Rights.
(l) Harris and its Subsidiaries, with respect to all
Intellectual Property Rights owned and/or developed thereby, have taken or
caused to be taken all reasonable steps to obtain and retain valid and
enforceable intellectual property rights therein, including, without
limitation, the use of non-disclosure agreements adequate to protect the
proprietary nature of any confidential information disclosed by Harris or
any of its Subsidiaries to third parties.
(m) Schedule 4.16(m) hereto sets forth a complete and accurate
list of all licenses, assignments and other agreements pursuant to which
Harris, or any of its Subsidiaries, grants rights to any third party in and
to any of the Business Intellectual Property Rights.
(n) To the best knowledge of Harris, the components of all
software, hardware and firmware that are material to the Assets and are
used or currently proposed to be used in the operation of the Assets and
the Excluded Assets as currently operated are (i) owned by Harris and any
of the Subsidiaries, or (ii) currently in the public domain or otherwise
available to Harris and any of its Subsidiaries without the approval or
consent of any third party, or (iii) used by Harris or any of its
Subsidiaries, or included in any of their products, pursuant to rights
granted to Harris or any of its Subsidiaries pursuant to a written license
or lease from a third party.
Section 4.17 Questionable Payments. Neither Harris nor any of
its Subsidiaries nor to its best knowledge any director, officer or other
employee of Harris or any of its Subsidiaries has: (a) corruptly made any
payments or provided services in the United States or in any foreign
country in order to obtain preferential treatment or consideration by any
Governmental Entity in order to obtain or retain business for Harris or any
of its Subsidiaries in violation of Section 30A of the Exchange Act; or
(b) made any political contributions unlawful under the laws of the United
States and the foreign country in which such payments were made. Neither
Harris nor any of its Subsidiaries nor to its best knowledge any director,
officer or other employee of Harris or any of its Subsidiaries has been the
subject of any inquiry or investigation by any Governmental Entity relating
to the conduct described above in this Section 4.17.
Section 4.18 Insurance. Except as set forth on Schedule 4.18
hereto, Harris and each of its Subsidiaries is, and has been continuously
since at least October 7, 1994, insured with financially responsible
insurers in such amounts and against such risks and losses as are customary
in all material respects for companies conducting the Business as conducted
by Harris and its Subsidiaries during such time period. Except as set forth
on Schedule 4.18 hereto, neither Harris nor any of its Subsidiaries has
received any notice of cancellation or termination with respect to any
material insurance policy of Harris or any of its Subsidiaries. The
insurance policies of Harris and its Subsidiaries are valid and enforceable
policies in all material respects.
Section 4.19 No Brokers. Harris has not entered into any
contract, arrangement or understanding with any person or firm which may
result in the obligation of Harris or Concurrent to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby, except that Harris has retained Bear,
Stearns & Co. Inc. as its financial advisor, the arrangements with which
have been disclosed in writing to Concurrent prior to the date hereof.
Other than the foregoing arrangement or as disclosed in Section 5.19,
Harris is not aware of any claim for payment of any finder's fees,
brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
Section 4.20 Environmental.
(a) Except as set forth on Schedule 4.20(a)
hereto, Harris and its Subsidiaries are in compliance in all material
respects with all applicable Environmental Laws (as defined herein). Except
as set forth on Schedule 4.20(a) hereto, Harris has not received any
communication (written or oral), whether from a governmental authority,
citizen group, employee or otherwise, that alleges that Harris is not in
such compliance, and, to Harris's best knowledge after due inquiry, there
are no circumstances that may prevent or interfere with such
compliance in the future. Except as set forth on Schedule 4.20(a) hereto,
Harris has not received in the past five years any written request for
information from a governmental authority concerning or relating to the
treatment, transportation or disposal of any Materials of Environmental
Concern (as defined herein). Except as set forth on Schedule 4.20(a)
hereto: Harris has acquired all necessary permits, licenses, approvals and
other governmental authorizations necessary to operate in compliance with
all applicable Environmental Laws; such permits, licenses, approvals and
authorizations are currently valid; and Harris is in compliance in all
material respects with such permits, licenses, approvals and
authorizations. To Harris's best knowledge, after due inquiry, there are no
circumstances that may prevent or interfere with the renewal of the
permits, licenses, approvals and other governmental authorizations held by
Harris pursuant to Environmental Laws.
(b) Except as set forth on Schedule 4.20(b) hereto, there has
been in the last five years and there is no Environmental Claim (as defined
herein) pending or threatened against Harris or, to Harris's best knowledge
after due inquiry, against any person or entity whose liability for any
Environmental Claim Harris's has or may have retained or assumed either
contractually or by operation of law.
(c) Except as set forth on Schedule 4.20(c) hereto, there are
no past or present actions, activities, circumstances, conditions, events
or incidents, including, the release, emission, discharge or disposal of
any Material of Environmental Concern (as defined herein), that could form
the basis of any Environmental Claim against Harris or, to Harris' best
knowledge after due inquiry, against any person or entity whose liability
for any Environmental Claim Harris has or may have retained or assumed
either contractually or by operation of law.
(d) As used in this Agreement, the term "Environmental Laws"
means all federal, state, local and foreign laws and regulations relating
to pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, ground water, land surface
or subsurface strata), including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern. As used in
this Agreement, the term "Environmental Claim" means any notice (written or
oral) by any person or entity alleging potential liability (including,
without limitation, potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or
resulting from (i) the presence, or release into the environment, of any
Material of Environmental Concern at any location, whether or not owned
by Harris, Concurrent or any of their Subsidiaries or (ii) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law. As used in this Agreement, the term "Materials of
Environmental Concern" means chemicals, pollutants, hazardous substances,
contaminants, toxic substances, hazardous waste, petroleum and petroleum
products as those terms are defined by Environmental Laws.
Section 4.21 Assets.
(a) The lists of assets to be attached to the Bill of Sale to
be delivered by Harris to Concurrent at the Closing will be a true and
complete listing of Assets as of the Closing.
(b) Schedule 1.1(b) is a true and complete listing of the
Property used in both the Business and the Trusted Systems Business as the
date of this Agreement.
(c) Schedule 1.2(a)(i) is a true and complete listing of all of
the Property used in the Trusted Systems Business.
(d) The Assets and the assets of the Transferred Subsidiaries,
together with the other arrangements contemplated by this Agreement
(including the Ancillary Agreements), constitute all the Property used in
the operation of the Business as they are presently being operated by
Harris and the Transferred Subsidiaries, and, except as otherwise
contemplated by the terms hereof and the terms of the Ancillary Agreements,
will enable Concurrent and the Transferred Subsidiaries to operate the
Business immediately after the Closing as Harris and the Transferred
Subsidiaries operated the Business immediately prior to the Closing. As of
the Closing Date, all of the machines, equipment and other assets that
constitute tangible personal property that are being operated in connection
with the Business are in usable condition for the purpose for which they
are intended subject to ordinary wear and tear and routine maintenance.
Harris has, and, except as otherwise contemplated by the terms hereof
(including Schedule 1.1(b) which describes the extent to which Shared
Assets are transferred to Concurrent) or the terms of the Ancillary
Agreements, at Closing Harris will deliver to Concurrent, good and valid
title to all of the tangible personal property included in the Assets
subject to (i) any security interests, mortgages, liens, pledges,
conditional sale or other title retention agreements, rights of first
refusal, options, leases, adverse claims, or any other encumbrances (the
"Encumbrances") relating to purchase money security interests entered into
in the ordinary course of business consistent with past practice and
reflected in the Audited Balance Sheet or the Final Net Current Asset
Reconciliation; and (ii) Encumbrances relating to lessors' interests in
leased tangible personal property.
Harris has valid and subsisting leasehold interests in the Leased
Properties. To the best knowledge of Harris after reasonable inquiry, the
Transferred Subsidiaries have valid and subsisting leasehold interests in
the leased property of the Transferred Subsidiaries. Upon the Closing,
Concurrent shall acquire, directly or indirectly, the same right, title and
interest in and to all of the assets, real or personal, of the Transferred
Subsidiaries as held by Harris immediately prior to Closing.
Section 4.22 Audited Balance Sheet. The Audited Balance Sheet
and all financial statements or financial data with respect to the Business
included in the Proxy Statement (the "Audited Base Financial Statements")
will be prepared in accordance with GAAP and will present fairly, in all
material respects, the financial position of the Business or portion
thereof, as the case may be, as of the date or for the periods indicated
therein.
Section 4.23 Leased Properties.
(a) Schedules 1.1(a)(ii) and 1.1(b) contain
an accurate and complete list of all Leases, including the name and address
of the lessor of each such Leased Property, and the date of each of the
Leases. Harris has delivered to Concurrent true and complete copies of all
Leases. For purposes of Section 4.23, the term "Leases" shall include all
leases, amendments thereto, assignments thereof, subleases, subordination
and/or nondisturbance agreements and all other agreements creating,
amending or modifying the leasehold estates in the Leased Properties.
(b) With respect to the Leased Properties: (i) to the best
knowledge of Harris, there are no material defects in the buildings,
improvements and structures located thereon which would be reasonably
expected to substantially impair the operation of the Business immediately
preceding the Closing as compared with the operation of the Business by
Harris on the date hereof; (ii) to the best knowledge of Harris, all Leases
are in full force and effect, and constitute legal, valid and binding
obligations of Harris, in accordance with their respective terms; (iii) no
written waiver, indulgence or postponement of landlord's obligations
thereunder has been granted by Harris and Harris has not received any such
written waiver, indulgence or postponement of its obligations thereunder
except as set forth on Schedule 4.23(b); and (iv) to the best knowledge of
Harris, there exists no event of default, event, occurrence, condition or
act (other than the transaction contemplated hereunder) which, with the
giving of notice, the lapse of time or the happening of any further event
or condition, would become a material default thereunder.
Section 4.24 Subsidiaries.
(a) Schedule 4.24(a) contains a true and com-
plete list of all Subsidiaries beneficially owned, directly or indirectly,
by Harris and a description of those Subsidiaries that are involved in the
conduct of the Business.
(b) Schedule 4.24(b) contains a true and complete list of the
authorized and issued capital stock of each of the Transferred
Subsidiaries, and the record owners thereof.
(c) Schedule 4.24(c) contains a complete list of the officers
and directors of each of the Transferred Subsidiaries.
(d) Upon delivery of certificates representing the Harris
Subsidiary Shares to Concurrent or appropriate entries in the stock
register, as the case may be, Concurrent shall acquire legal and
beneficial ownership of, and shall have good and valid title to, the Harris
Subsidiary Shares, free and clear of any Encumbrance, as analogous
concepts are understood under applicable local laws. Upon delivery, all of
the issued and outstanding shares of each Transferred Subsidiary will be
duly authorized, validly issued, fully paid and non-assessable and not
subject to any preemptive rights of third parties in respect thereto.
Section 4.25 Outstanding Liabilities to Related Parties. There
are no outstanding liabilities, contingent or otherwise, relating to the
Business or that will arise out of the transactions contemplated by this
Agreement (except as set forth in this Agreement) for amounts due to
shareholders, directors, officers, employees or other parties affiliated
with or related to Harris or, to the best knowledge of Harris after
reasonable inquiry, the Transferred Subsidiaries other than amounts due to
directors, officers and employees in the ordinary course of business
consistent with past practice.
Section 4.26 Product Returns; Warranties.
(a) There are no liabilities for product
returns, warranty obligations and product services other than those arising
in the ordinary course of business, consistent with Harris's historical
practice relating to the Business and in accordance with normal industry
standards. Harris has no knowledge of any threatened claims for any
extraordinary (i) product returns, (ii) warranty obligations or (iii)
product services, relating to the Business, reserved or otherwise. Harris
has made adequate provision for product returns and warranty obligations in
the Audited Balance Sheet in accordance with GAAP.
(b) Any liabilities for product returns and warranty
obligations are fully accrued and fully reserved against on each of the
Audited Base Financial Statements provided by Harris to Concurrent. Such
reserves are adequate to pay any amounts which may be owed by Harris of
any of its Subsidiaries to any party as a result of the incurrence of such
liabilities.
(c) True and correct copies of the standard warranty provided
by Harris on sales orders and other related documents which are delivered
in connection with the Business have been made available to Concurrent.
Such warranty delivered is the only warranty applicable to the products of
the Business except for warranties provided by applicable law.
Section 4.27 Transferred Subsidiaries. There exists no debt,
liability or other obligation of the Transferred Subsidiaries, contingent
or otherwise, except those that will be reflected on the Final Net Current
Asset Reconciliation.
Section 4.28 Transferred Subsidiaries Financial Statement. (a)
Harris has previously delivered to Concurrent true and complete copies of
the statutory balance sheets as of September 30, 1995 and 1994 and the
statements of operations for the fiscal periods ended September 30, 1995
and 1994 of each Transferred Subsidiary, together with the notes to such
financial statements (where available) (the "Transferred Subsidiaries
Financial Statements").
(b) Each Transferred Subsidiary Financial Statement presents
fairly in all material respects, the financial condition of such
Transferred Subsidiary as at its respective date or during the respective
period; and each of such Transferred Subsidiary Financial Statements has
been prepared in accordance with GAAP consistently applied during the
periods involved, except as otherwise stated therein.
Section 4.29 Investment Purpose. Harris will acquire the shares
of Concurrent Common Stock to be issued pursuant to this Agreement and the
transactions contemplated hereby for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, except pursuant to an effective registration
statement under the Securities Act and all applicable state securities laws
or pursuant to an exemption from the Securities Act and all applicable
state securities laws confirmed by an opinion of counsel satisfactory to
Concurrent, the expense for which shall be borne by Harris.
Section 4.30 Rights Agreement. Harris shall take all necessary
and appropriate actions such that (i) Concurrent will not become an
"Acquiring Person", (ii) no "Stock Acquisition Date", "Separation Time",
"Flip-over Transaction" or "Flip-in Date" (as such terms are defined in the
Harris Rights Agreement) will occur and (iii) the stockholders of Harris
will not be entitled to receive any right or benefit under the Harris
Rights Agreement as a result of the approval, execution or delivery of this
Agreement by Harris or the consummation of the transactions contemplated
hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CONCURRENT
Concurrent represents and warrants to Harris
as follows:
Section 5.1 Organization.
(a) Concurrent and each of its Subsidiaries
is a corporation or other legal entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power and authority would not, individually or in
the aggregate, have a Material Adverse Effect on Concurrent and its
Subsidiaries taken as a whole. Concurrent and each of its Subsidiaries is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not, individually or in the aggre-
gate, have a Material Adverse Effect on Concurrent and its Subsidiaries
taken as a whole.
(b) Concurrent has heretofore made available to Harris a
complete and correct copy of the charter and by-laws or comparable
organizational documents, each as amended to date, of Concurrent and each
of its Subsidiaries. Such charters, by-laws and comparable organizational
documents are in full force and effect. Neither Concurrent nor any of its
Subsidiaries is in violation of any provision of its charter, by-laws or
comparable organizational documents, except for such violations that
would not, individually or in the aggregate, have a Material Adverse Effect
on Concurrent and its Subsidiaries taken as a whole.
Section 5.2 Capitalization. As of the date of this Agreement,
the authorized capital stock of Concurrent consists of: (a) 100,000,000
shares of Concurrent Common Stock of which, as of March 20, 1996 30,569,159
shares were issued and outstanding and 840 shares were held in treasury;
and (b) 25,000,000 shares of Series Preferred Stock, par value $.01 per
share, of which, as of the date of this Agreement, no shares are issued and
outstanding and 300,000 shares are designated as Series A Participating
Cumulative Preferred Stock, and are reserved for issuance in accordance
with the Rights Agreement as of July 31, 1992, between Concurrent and First
National Bank of Boston, as Rights Agent (the "Concurrent Rights
Agreement"). As of December 31, 1995, 3,042,495 shares of Concurrent Common
Stock and as of the date hereof not more than 3,042,495 shares of
Concurrent Common Stock were reserved for issuance upon exercise of
outstanding options (the "Concurrent Options") pursuant to Concurrent's
Stock Option Plan (the "Concurrent Stock Plan"). Since the date hereof,
Concurrent has not issued any shares of Concurrent Common Stock, except
upon the exercise of options granted under Concurrent Stock Plan which were
outstanding on the date hereof. All the outstanding shares of Concurrent's
capital stock are, and all shares of Concurrent Common Stock and Concurrent
Preferred Stock which are to be issued to Harris pursuant to the
transactions contemplated by this Agreement will be, when issued and paid
for in accordance with the respective terms thereof, duly authorized,
validly issued, fully paid and nonassessable and not subject to any
preemptive rights of third parties in respect thereto. The Debentures
issuable in exchange for the Preferred Stock Consideration have been duly
authorized. Except as set forth above or on Schedule 5.2 hereto, as of the
date of this Agreement, there are no existing options, warrants, calls,
subscriptions or other rights or other agreements or commitments of any
character relating to the issued or unissued capital stock of Concurrent or
any of its Subsidiaries obligating Concurrent or any of its Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any
shares of capital stock of, or other equity interests in, Concurrent or of
any of its Subsidiaries or securities convertible into or exchangeable for
such shares or equity interests or obligating Concurrent or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement or commitment. As of the date of
this Agreement, except as set forth on Schedule 5.2 hereto, there are no
outstanding contractual obligations of Concurrent or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Concurrent or any of its Subsidiaries. Each of the
outstanding shares of capital stock of each of Concurrent's Subsidiaries is
duly authorized, validly issued, fully paid and nonassessable, and such
shares are owned by Concurrent or by a Subsidiary of Concurrent free and
clear of any lien, claim, option, charge, security interest, limitation on
voting rights and encumbrance of any kind, except as would not have a
Material Adverse Effect on Concurrent and its Subsidiaries taken as whole.
Section 5.3 Authority. Concurrent has the requisite corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements and to consummate the transactions contemplated hereby and
thereby (other than (a) with respect to the issuance of shares of
Concurrent Common Stock pursuant to the transactions contemplated by this
Agreement and the Ancillary Agreements, the approval of the holders of
Concurrent Common Stock required for such issuance by the affirmative vote
of a majority of the total votes cast and (b) with respect to the
Concurrent Stock Plan Amendment (as defined in Section 5.12) the
affirmative vote of a majority of the voting shares of Concurrent Common
Stock in a separate vote). The execution, delivery and performance of this
Agreement and the Ancillary Agreements by Concurrent and the consummation
by Concurrent of the other transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of
Concurrent and no other corporate proceedings on the part of Concurrent are
necessary to authorize this Agreement and the Ancillary Agreements or to
consummate the transactions contemplated hereby and thereby (other than,
with respect to the issuance of shares of Concurrent Common Stock and
Preferred Consideration pursuant to the transactions contemplated by this
Agreement (including Common Stock issuable upon the conversion of the
Preferred Stock Consideration or any debentures for which such
consideration is exchangeable pursuant to its terms) and the Ancillary
Agreements, the approval of the holders of Concurrent Common Stock required
for such issuance by the affirmative vote of a majority of the total votes
cast). This Agreement and the Ancillary Agreements have been duly executed
and delivered by Concurrent and, assuming this Agreement and the Ancillary
Agreements constitute valid and binding obligations of Harris, consti-
tute valid and binding obligations of Concurrent, enforceable against
Concurrent in accordance with their respective terms.
Section 5.4 Consents and Approvals; No Violations.
(a) Except as set forth on Schedule 5.4(a) hereto, and except
for filings, permits, authorizations, notices, consents and approvals as
may be required under, and other applicable requirements of, the Exchange
Act, the Securities Act, the HSR Act, the FBCA, certain state takeover
statutes or state securities or blue sky laws, neither the execution,
delivery or performance of this Agreement and the Ancillary Agreements by
Concurrent nor the consummation by Concurrent of the transactions
contemplated hereby and thereby and compliance by Concurrent with any of
the provisions hereof and thereof will (i) conflict with or result in any
breach of any provision of the respective certificates of incorporation or
by-laws or comparable organizational documents of Concurrent or any
Subsidiary of Concurrent, (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity (except
where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings would not prevent or delay consummation
of the transactions contemplated by this Agreement and the Ancillary
Agreements in any material respect and would not, individually or in the
aggregate, have a Material Adverse Effect on Concurrent and its
Subsidiaries taken as a whole), (iii) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation
or acceleration) under, or result in the creation of any lien or other
encumbrance on any property or asset of Concurrent or any of its
Subsidiaries pursuant to, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, lease, contract, agreement or
other instrument or obligation to which Concurrent or any of its
Subsidiaries is a party or by which any of them or any of their properties
or assets may be bound or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Concurrent or any of its
Subsidiaries or by which any property or asset of Concurrent or any of its
Subsidiaries is bound or affected, except, in the case of clauses (iii) and
(iv), for violations, breaches, defaults or other occurrences which would
not prevent or delay consummation of this Agreement and the Ancillary
Agreements or the transactions contemplated hereby or thereby in any
material respect and would not, individually or in the aggregate, have a
Material Adverse Effect on Concurrent and its Subsidiaries taken as a
whole.
(b) Except as disclosed in the Concurrent SEC Documents (as
defined in Section 5.5) or on Schedule 5.4(b) hereto, neither Concurrent
nor any of its Subsidiaries is in conflict with, or in default or violation
of, (i) any order, writ, injunction, decree, statute, rule or regulation of
any Governmental Entity applicable to Concurrent or any of its Subsidiaries
or by which any of them or any of their properties or assets may be bound
or (ii) any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Concurrent or any of
its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or affected, except for any such
conflicts, defaults or violations which have not had and are not likely to
have a Material Adverse Effect on Concurrent and its Subsidiaries taken as
a whole.
Section 5.5 SEC Reports and Financial Statements. Concurrent
has filed with the SEC, and has heretofore made available to Harris true
and complete copies of all forms, reports and other documents required to
be filed by it since June 30, 1995 under the Exchange Act or the Securities
Act (as such documents have been amended since the time of their filing,
collectively, the "Concurrent SEC Documents"). The Concurrent SEC
Documents, including without limitation any financial statements or
schedules included therein, at the time filed, (a) did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (b) complied in all material respects with the applicable
requirements of the Exchange Act or the Securities Act, as the case may be.
The financial statements of Concurrent included in the Concurrent SEC
Documents complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements,
as permitted on Concurrent's Form 10-Q as filed with the SEC under the
Exchange Act) and fairly present (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments which will not be
material in amount or effect) the consolidated financial position of
Concurrent and its consolidated Subsidiaries as at the dates thereof and
the consolidated results of their operations and cash flows for the periods
then ended. Except as reflected, reserved against or otherwise disclosed in
the financial statements of Concurrent included in the Concurrent SEC
Documents or as disclosed on Schedule 5.5 hereto, neither Concurrent nor
any of its Subsidiaries has any liabilities or obligations (absolute,
accrued, fixed, contingent or otherwise) material to Concurrent and its
Subsidiaries taken as a whole that would be required to be reflected on, or
reserved against in, a balance sheet of Concurrent or the notes thereto,
prepared in accordance with generally accepted accounting principles
consistently applied.
Section 5.6 Information in Disclosure Documents. None of the
information supplied or to be supplied by Concurrent in writing
specifically for inclusion or incorporation by reference the Proxy
Statement will, at the time the Proxy Statement is filed with the SEC, at
the time such Proxy Statement is mailed to stockholders of Concurrent and
Harris, at the times of the meetings of stockholders of Concurrent and
Harris to be held in connection with the transactions contemplated by this
Agreement and at the Closing Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy
Statement will, when filed with the SEC, comply as to form in all material
respects with the provisions of the Exchange Act and the rules and
regulations thereunder, except that no representation is made by Concurrent
with respect to statements made therein based on information supplied by
Harris in writing specifically for inclusion in the Proxy Statement.
Section 5.7 Litigation. Except as disclosed in the Concurrent
SEC Documents or on Schedule 5.7 hereto, there is no suit, claim, action,
proceeding or investigation pending or, to the best knowledge of
Concurrent, threatened, against Concurrent or any of its Subsidiaries
before any Governmental Entity which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on Concurrent and its
Subsidiaries taken as a whole or a Material Adverse Effect on the ability
of Concurrent to consummate the transactions contemplated by this
Agreement. Except as disclosed in the Concurrent SEC Documents or on
Schedule 5.7 hereto, neither Concurrent nor any of its Subsidiaries is
subject to any outstanding order, writ, injunction or decree which,
insofar as can be reasonably foreseen, individually or in the aggregate,
would in the future have a Material Adverse Effect on Concurrent and its
Subsidiaries taken as a whole or a Material Adverse Effect on the ability
of Concurrent to consummate the transactions contemplated by this
Agreement. Concurrent has, in accordance with GAAP, made adequate provision
in its financial statements for the payment of losses arising out of suits,
claims, actions, proceedings or investigations disclosed in the Concurrent
SEC Documents or on Schedule 5.7 and such provision has continued to be
adequate.
Section 5.8 Absence of Certain Changes. Except as disclosed in
the Concurrent SEC Documents or on Schedule 5.8 hereto, since June 30,
1995, Concurrent has conducted its business in the ordinary course of such
business and there has not been any (a) material adverse change in
Concurrent and its Subsidiaries taken as a whole (b) any declaration,
setting aside or payment of any dividend or other distribution with respect
to its capital stock or (c) any material change in its accounting
principles, practices or methods.
Section 5.9 Opinion of Financial Advisor. Concurrent has
received the opinion of Berenson Minella & Company, its financial advisor,
to the effect that, as of the date of this Agreement, the purchase of the
Assets and the Purchased Harris Shares for the Common Stock Consideration
and the Preferred Stock Consideration and the Assumed Liabilities, taken as
a whole, are fair to the stockholders of Concurrent from a financial point
of view.
Section 5.10 Rights Agreement. Concurrent shall take all
necessary and appropriate actions such that (a) Harris will not become an
"Acquiring Person", (b) no "Stock Acquisition Date", "Distribution Date" or
"Triggering Event" (as such terms are defined in Concurrent Rights
Agreement) will occur and (c) Concurrent Stockholders will not become
entitled to receive any right or benefit under the Concurrent Rights
Agreement as a result of the approval, execution or delivery of this
Agreement by Concurrent, or the consummation of the transactions
contemplated hereby.
Section 5.11 Tax Matters.
(a) Concurrent and each of its Subsidiaries
has duly filed all, or as of the Closing Date will have filed, all Tax
Returns required to be filed by it or its Subsidiaries on or before the
Closing Date, and such Tax Returns are or will be true, correct and
complete in all material respects. Concurrent and its Subsidiaries have
duly paid, caused to be paid or made adequate provision in the Concurrent
SEC Documents in accordance with GAAP for the payment of all Taxes required
to be paid in respect of all periods covered by such Tax Returns.
Concurrent has made adequate provision in accordance with GAAP for payment
of all Taxes anticipated to be payable in respect of all taxable periods or
portions thereof ending on or before the Closing Date since the periods
covered by such Tax Returns.
(b) (i) The reserves for Taxes (except for deferred
Taxes) reflected in the Concurrent SEC Documents are sufficient for
the payment of all unpaid Taxes (whether or not currently disputed)
accrued through the date thereof. Since June 30, 1995, neither
Concurrent nor its Subsidiaries incurred any material liability for
Taxes other than in the ordinary course of business consistent with
past practice. Concurrent and its Subsidiaries are registered to do
business in the states and localities set forth on Schedule
5.11(b)(i) hereto, and Concurrent or its Subsidiaries file all
required Tax Returns in such states and localities. Except as set
forth on Schedule 5.11(b)(i) hereto, there are no liens for Taxes
upon the assets of Concurrent or its Subsidiaries except for
statutory liens for current Taxes not yet due.
(ii) The Tax Returns required to be filed by Concurrent
have been examined by the IRS or other appropriate taxing authority
for all taxable years as set forth on Schedule 5.11(b)(ii) hereto.
Except as set forth on Schedule 5.11(b)(ii) hereto, all deficiencies
and assessments asserted as a result of such examinations or other
audits by federal, state, local or foreign taxing authorities have
been paid, fully settled or adequately provided for in the Concurrent
SEC Documents in accordance with GAAP, and no issue or claim has been
asserted for Taxes by any taxing authority for any prior period, the
adverse determination of which would result in a deficiency which
would have a Material Adverse Effect on Concurrent and its
Subsidiaries taken as a whole, other than those heretofore paid or
provided for. Except as disclosed on Schedule 5.11(b)(ii) hereto, no
issue has been raised during the past five years by any federal,
state, local or foreign taxing authority which, if raised with regard
to any other period not so examined, could reasonably be expected to
result in a proposed deficiency for any other period not so examined.
(c) (i) Except as set forth on Schedule 5.11(c) hereto,
there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Return of
Concurrent or its Subsidiaries. Except as set forth on Schedule
5.11(c) hereto, neither Concurrent nor any of its Subsidiaries (x)
has been a member of a group filing consolidated returns for federal
income tax purposes, or (y) is a party to a tax sharing or tax
indemnity agreement or any other agreement of a similar nature that
remains in effect. Except as set forth on Schedule 5.11(c) hereto, no
power of attorney has been executed by, or on behalf of Concurrent or
its Subsidiaries with respect to any matter relating to Taxes which
is currently in force.
(ii) Neither Concurrent nor any of its Subsidiaries have
filed a consent pursuant to Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(2) of
the Code) owned by Concurrent or any of its Subsidiaries.
Section 5.12 Vote Required. The only votes of the holders of
any class or series of Concurrent's capital stock necessary to approve the
transactions contemplated hereby are the affirmative vote of a majority of
(i) the total votes cast by the holders of Concurrent Common Stock with
respect to the issuance of Concurrent Common Stock pursuant to the
transactions contemplated by this Agreement and (ii) the voting shares of
Concurrent Common Stock, in a separate vote, with respect to an amendment
to the Concurrent Stock Plan (the "Concurrent Stock Plan Amendment") to
increase the number of shares of Concurrent Common Stock available for
issuance under the Concurrent Stock Plan to 8,000,000 shares of Concurrent
Common Stock.
Section 5.13 Employee Benefit Plans; ERISA.
(a) Schedule 5.13(a) contains a true and com-
plete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay, hospitalization
or other medi-cal, life or other insurance, supplemental unemployment
benefits, profit-sharing, pension, or retirement plan, program, agreement
or arrangement, and each other employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required to be
contributed to by Concurrent or by any trade or business, whether or not
incorporated (a "Concurrent ERISA Affiliate"), that together with
Concurrent would be deemed a "single employer" within the meaning of
section 4001 of ERISA, for the benefit of any employee or terminated
employee of Concurrent or any Concurrent ERISA Affiliate (the "Concurrent
Plans"). Schedule 5.13(a) identifies each of Concurrent Plans that is an
"employee benefit plan," as that term is defined in section 3(3) of ERISA
(the "Concurrent ERISA Plans").
(b) With respect to each Concurrent Plan, Concurrent has
heretofore delivered to Harris true and complete copies of each of the
following documents:
(i) a copy thereof;
(ii) a copy of the most recent annual re-
port and actuarial report, if required under ERISA
and the most recent report prepared with respect
thereto in accordance with Statement of Financial
Accounting Standards No. 87, Employer's Accounting
for Pensions;
(iii) a copy of the most recent Summary Concurrent Plan
Description required under ERISA with respect thereto; and
(iv) if Concurrent Plan is funded through a trust or any
third party funding vehicle, a copy of the trust or other funding
agreement and the latest financial statements thereof.
(c) Neither Concurrent nor any Concurrent ERISA Affiliate
maintains or has ever maintained an ERISA Plan subject to Title IV of
ERISA.
(d) No Concurrent ERISA Plan is a "multiemployer pension plan,"
as defined in section 3(37) of ERISA, nor is any Concurrent ERISA Plan a
plan described in section 4063(a) of ERISA.
(e) Each Concurrent Plan has been operated and administered in
all material respects in accordance with its terms and applicable law,
including but not limited to ERISA and the Code.
(f) To the best knowledge of Concurrent, each Concurrent ERISA
Plan intended to be "qualified" within the meaning of section 401(a) of the
Code is so qualified and the trusts maintained thereunder are exempt from
taxation under section 501(a) of the Code.
(g) No amounts payable under the Concurrent Plans will fail to
be deductible for federal income tax purposes by virtue of section 280G of
the Code.
(h) No Concurrent Plan provides benefits, including death or
medical benefits (whether or not insured), with respect to current or
former employees of Concurrent or any Concurrent ERISA Affiliate beyond
their retirement or other termination of service (other than (i) coverage
mandated by applicable law or (ii) death benefits or retirement benefits
under any "employee pension plan," as that term is defined in section 3(2)
of ERISA).
(i) There are no pending, threatened or anticipated claims by
or on behalf of any Concurrent Plan, by any employee or beneficiary covered
under any such Concurrent Plan, or otherwise involving any such Concurrent
Plan (other than routine claims for benefits).
(j) At the Closing Date, Concurrent shall take all actions to
cause all Concurrent Options then outstanding under the Concurrent Stock
Plan to become fully vested and exercisable.
(k) As of the Closing Date, full payment will have been made or
accrued in accordance with GAAP, and to the extent applicable, section 412
of the Code of all amounts required to be paid under the terms of each of
the Concurrent Plans.
Section 5.14 Major Contracts. Except as disclosed in Concurrent
SEC Documents or as set forth on Schedule 5.14 hereto, neither Concurrent
nor any of its Subsidiaries is a party to or subject to:
(a) Any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of profits
with other persons;
(b) Any existing OEM agreement, distribution agreement, volume
purchase agreement, or other similar agreement in which the annual amount
involved in 1995 exceeded or is expected to exceed in fiscal 1996 $500,000
in aggregate amount or pursuant to which Concurrent has granted or received
exclusive marketing rights related to any product, group of products or
territory;
(c) Any material license agreement, either as licensor or
licensee (excluding nonexclusive software licenses granted to customers or
end-users in the ordinary course of business) involving the payment of at
least $250,000; or
(d) Any contract containing covenants purporting to limit
Concurrent's freedom or that of any of its Subsidiaries in any line of
business in any geographic area.
Section 5.15 Interests of Officers and Directors. Except as
disclosed on Schedule 5.15 hereto, no officer or director of Concurrent or
any "affiliate" or "associate" (as those terms are defined in Rule 405
promulgated under the Securities Act) of any such person has had, either
directly or indirectly, a material interest in: (a) any person or entity
which purchases from or sells, licenses or furnishes to Concurrent or any
of its Subsidiaries any goods, property, technology or intellectual or
other property rights or services; (b) any contract or agreement to which
Concurrent or any of its Subsidiaries is a party or by which it may be
bound or affected; or (c) any property, real or personal, tangible or
intangible, used in its business or that of its Subsidiaries, including any
interest in the Concurrent Intellectual Property Rights (as defined in
Section 5.16(a) except for rights as a stockholder, and except for rights
under any Concurrent Plan.
Section 5.16 Intellectual Property.
(a) Concurrent owns, or is licensed or other-
wise entitled to exercise, without restriction, all rights in and to, all
domestic and foreign patents, trademarks, trade names, service marks,
copyrights, mask works, trade secrets and other intellectual property
rights, and any applications, registrations, certificates and/or Letters
Patent therefor, and all net lists, schematics, sketches, drawings,
notebooks, reports, memoranda, prints, drafts, worksheets, and any other
writings, methods and practices, business information, procedures,
technology, source code, know-how, computer software programs and all other
tangible and intangible information or material and all goodwill associated
with any of the foregoing including goodwill in respect of trademarks, that
are used in or necessary for the conduct of the business of Concurrent and
its Subsidiaries as currently conducted or as currently proposed to be
conducted (collectively, the "Concurrent Intellectual Property Rights").
(b) Schedule 5.16(b) hereto is a complete and accurate list of
all domestic and foreign patents, registered copyrights, unregistered
copyrightable subject matter; trade names, registered and unregistered
trademarks and service marks, and other company, product or service
identifiers; mask work rights; and any applications, registrations or
grants thereof or therefor, included in the Concurrent Intellectual
Property Rights.
For each item listed thereon, Schedule 5.16(b) hereto identifies the owner
thereof and, if the owner is not Concurrent or any of its Subsidiaries, the
means by which Concurrent or any of its Subsidiaries obtains rights
thereto.
(c) Concurrent has provided to Harris a copy of Concurrent's
proprietary Product Information Book, dated November 1994, which identifies
all of Concurrent's currently marketed products. No such products are the
subject of certificates of copyright issued by the United States Copyright
Office, and any similar office or agency of any foreign country or
jurisdiction, and/or are the subject of applications for patent or original
Letters Patent in the United States or any foreign country or jurisdiction.
(d) Neither Concurrent nor any of its Subsidiaries is, or as a
result of the execution and delivery of this Agreement or the performance
of Concurrent's obligations hereunder will be, in violation of, or lose any
rights pursuant to any license, sublicense or agreement described in the
Concurrent Disclosure Schedule.
(e) Concurrent or one of its Subsidiaries is the owner or
licensee of the Concurrent Intellectual Property Rights, with all necessary
right, title and interest in and to the same free and clear of any liens,
encumbrances or security interests. Except as set forth on Schedule 5.16(e)
hereto, Concurrent is not contractually obligated to pay any compensation
to any third party, in an amount in excess of $250,000 in respect to the
use of any of the Concurrent Intellectual Property Rights or the material
covered thereby in connection with the services or products being
manufactured and/or used and/or sold by Concurrent.
(f) No claims with respect to Concurrent Intellectual Property
Rights have been asserted or, to the best knowledge of Concurrent, after
reasonable investigation, are threatened by any person. Concurrent knows of
no claims (i) to the effect that the manufacture, offer for sale, sale or
use of any product as now used or offered by Concurrent or any Subsidiary
of Concurrent, or the use thereof by any customer or licensee of Concurrent
infringes any copyright, patent, trademark or service mark, or violates any
trade secret rights, or other intellectual property rights of any third
party, or (ii) challenging the ownership or validity of any of the
Concurrent Intellectual Property Rights.
(g) To the best knowledge of Concurrent, all patents and
registered trademarks, service marks, copyrights and patents held by
Concurrent are valid and subsisting.
(h) To the best knowledge of Concurrent, there has not been and
there is not now any material unauthorized use, infringement or
misappropriation of any of the Concurrent Intellectual Property Rights by
any third party, including, without limitation, any employee or former
employee of Concurrent or any of its Subsidiaries; neither Concurrent nor
any of its Subsidiaries has been sued or charged in writing as a defendant
in any claim, suit, action or proceeding which involves a claim of
infringement of any patents, trademarks, service marks, copyrights or other
intellectual property rights and which has not been finally terminated
prior to the date hereof; there are no such charges or claims outstanding;
and to the best knowledge of Concurrent neither Concurrent nor any of its
Subsidiaries has any infringement liability with respect to any patent,
trademark, service mark, copyright or other intellectual property right of
another.
(i) No Concurrent Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting
in any manner the licensing or other disposition thereof by Concurrent or
any of its Subsidiaries. Neither Concurrent nor any of its Subsidiaries has
entered into any agreement to indemnify any other person against any charge
of infringement of any Concurrent Intellectual Property Right. Neither
Concurrent nor any of its Subsidiaries has entered into any agreement
granting any third party the right to bring infringement actions with
respect to, or otherwise to enforce rights with respect to, any Concurrent
Intellectual Property Right.
(j) Concurrent and its Subsidiaries have the exclusive right to
file, prosecute and maintain all applications, certificates, registrations
and Letters Patent with respect to the Concurrent Intellectual Property
Rights owned by Concurrent or its Subsidiaries. Concurrent or any of its
Subsidiaries is listed in the records of the appropriate agency as the sole
owner of record for each registration, grant Letters Patent and application
listed on Schedule 5.16(b) hereto as owned by Concurrent or any of its
Subsidiaries. All registration and maintenance fees that have become due
and payable with respect of such Concurrent Intellectual Property Rights
have been paid.
(k) To the best knowledge of Concurrent, no act has been done,
or omitted to be done, by Concurrent or any of its Subsidiaries to impair
or dedicate to the public or to entitle any governmental authority to
cancel, forfeit, modify or hold abandoned any of the Concurrent
Intellectual Property Rights.
(l) Concurrent and its Subsidiaries, with respect to all
Concurrent Intellectual Property Rights owned and/or developed thereby,
have taken or caused to be taken all reasonable steps to obtain and retain
valid and enforceable intellectual property rights therein, including,
without limitation, the use of non-disclosure agreements adequate to
protect the proprietary nature of any confidential information disclosed by
Concurrent or any of its Subsidiaries to third parties.
(m) Schedule 5.16(m) hereto sets forth a complete and accurate
list of all licenses, assignments and other agreements pursuant to which
Concurrent, or any of its Subsidiaries, grants rights to any third party in
and to any of the Concurrent Intellectual Property Rights.
(n) To the best knowledge of Concurrent, the components of all
software, hardware and firmware that are material to the business of
Concurrent and are used or currently proposed to be used in or necessary
for the conduct of the business of Concurrent and its Subsidiaries as
currently conducted or as currently proposed to be conducted are (i) owned
by Concurrent or any of its Subsidiaries, or (ii) currently in the public
domain or otherwise available to Concurrent or any of its Subsidiaries
without the approval or consent of any third party, or (iii) used by
Concurrent or any of its Subsidiaries, or included in any of their
products, pursuant to rights granted to Concurrent or any of its
Subsidiaries pursuant to a written license or lease from a third party.
Section 5.17 Questionable Payments. Neither Concurrent nor any
of its Subsidiaries nor to its best knowledge any director, officer or
other employee of Concurrent or any of its Subsidiaries has: (a) corruptly
made any payments or provided services in the United States or in any
foreign country in order to obtain preferential treatment or consideration
by any Governmental Entity in order to obtain or retain business for
Concurrent or any of its Subsidiaries in violation of Section 30A of the
Exchange Act; or (b) made any political contributions unlawful under the
laws of the United States and the foreign country in which such payments
were made. Neither Concurrent nor any of its Subsidiaries nor to its best
knowledge any director, officer or other employee of Concurrent or any of
its Subsidiaries has been the subject of any inquiry or investigation by
any Governmental Entity relating to the conduct described above in this
Section 5.17.
Section 5.18 Insurance. Except as set forth on Schedule 5.18
hereto, Concurrent and each of its Subsidiaries is, and has been
continuously since at least July 1, 1995, insured with financially
responsible insurers in such amounts and against such risks and losses as
are customary in all material respects for companies conducting the
business as conducted by Concurrent and its Subsidiaries during such time
period. Except as set forth on Schedule 5.18 hereto, neither Concurrent nor
any of its Subsidiaries has received any notice of cancellation or
termination with respect to any material insurance policy of Concurrent or
any of its Subsidiaries. The insurance policies of Concurrent and each of
its Subsidiaries are valid and enforceable policies in all material
respects.
Section 5.19 No Brokers. Concurrent has not entered into any
contract, arrangement or understanding with any person or firm which may
result in the obligation of Concurrent or Harris to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby, except that Concurrent has retained
Berenson Minella & Company as its financial advisor, the arrangements with
which have been disclosed in writing to Harris prior to the date hereof.
Other than the foregoing arrangements other than as disclosed in Section
4.19, Concurrent is not aware of any claim for payment of any finder's
fees, brokerage or agent's commissions or other like payments in connection
with the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
Section 5.20 Environmental.
(a) Except as set forth on Schedule 5.20(a)
hereto, Concurrent and its Subsidiaries are in compliance in all material
respects with all applicable Environmental Laws. Except as set forth on
Schedule 5.20(a) hereto, Concurrent has not received any communication
(written or oral), whether from a governmental authority, citizen group,
employee or otherwise, that alleges that Concurrent is not in such
compliance, and, to Concurrent's best knowledge after due inquiry, there
are no circumstances that may prevent or interfere with such compliance in
the future. Except as set forth on Schedule 5.20(a) hereto, Concurrent has
not received in the past five years any written request for information
from a governmental authority concerning or relating to the treatment,
transportation or disposal of any Materials of Environmental Concern.
Except as set forth on Schedule 5.20(a) hereto: Concurrent has acquired all
necessary permits, licenses, approvals and other governmental
authorizations necessary to operate in compliance with all applicable
Environmental Laws; such permits, licenses, approvals and authorizations
are currently valid; and Concurrent is in compliance in all material
respects with such permits, licenses, approvals and authorizations. To
Concurrent's best knowledge, after due inquiry, there are no circumstances
that may prevent or interfere with the renewal of the permits, licenses,
approvals and other governmental authorizations held by Concurrent pursuant
to Environmental Laws.
(b) Except as set forth on Schedule 5.20(b) hereto, there has
been in the last five years and there is no Environmental Claim pending or
threatened against Concurrent or, to Concurrent's best knowledge after due
inquiry, against any person or entity whose liability for any Environmental
Claim Concurrent has or may have retained or assumed either contractually
or by operation of law.
(c) Except as set forth on Schedule 5.20(c) hereto, there are
no past or present actions, activities, circumstances, conditions, events
or incidents, including the release, emission, discharge or disposal of any
Material of Environmental Concern, that could form the basis of any
Environmental Claim against Concurrent or, to Concurrent's best knowledge
after due inquiry, against any person or entity whose liability for any
Environmental Claim Concurrent has or may have retained or assumed either
contractually or by operation of law.
Section 5.21 Investment Purpose. Concurrent will acquire the
shares of Harris Common Stock to be issued pursuant to this Agreement and
the transactions contemplated hereby for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, except pursuant to an effective registration
statement under the Securities Act and all applicable state securities laws
or pursuant to an exemption from the Securities Act and all applicable
state securities laws confirmed by an opinion of counsel satisfactory to
Harris the expense for which shall be borne by Concurrent.
Section 5.22 Applicability of Certain Laws. The provisions of
Section 203 ("Business Combinations with Interested Stockholders") and
Section 262 ("Appraisal Rights"), respectively, of the Delaware General
Corporation Law (the "DGCL") will not apply to this Agreement or any of the
transactions contemplated hereby.
Section 5.23 Product Returns; Warranties. There are no
liabilities for product returns, warranty obligations and product services
other than those arising in the ordinary course of business, consistent
with Concurrent's historical practice and in accordance with normal
industry standards. Concurrent has no knowledge of any threatened claims
for any extraordinary (i) product returns, (ii) warranty obligations or
(iii) product services, reserved or otherwise. Concurrent has made adequate
provision in the latest Concurrent SEC Document for product returns and
warranty obligations in accordance with GAAP.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business of Harris. Except as
contemplated by this Agreement (including Schedule 6.1 hereto) and the
Ancillary Agreements or with the prior written consent of Concurrent,
during the period from the date of this Agreement to the Closing Date,
Harris will, and will cause each of its Subsidiaries to, use all reasonable
efforts, to conduct the Business only in the ordinary course and consistent
with prior practice, to use Best Efforts to maintain, keep and preserve the
Assets and the assets of the Transferred Subsidiaries in operating
condition and repair and maintain or, if necessary, replace insurance
thereon in accordance with present practices, to preserve intact the
present organization of the Business, keep available the services of its
present officers and employees and preserve its relationships with
licensors, licensees, customers, suppliers, employees and any others having
business dealings with it. Without limiting the generality of the
foregoing, and except as otherwise provided in or contemplated by this
Agreement (including Schedule 6.1 hereto) or the Ancillary Agreements,
Harris will not, and will not permit any of its Subsidiaries to, prior to
the Closing Date, without the prior written consent of Concurrent:
(a) adopt any amendment to its charter or by-
laws or comparable organizational documents or to the
Harris Rights Agreement;
(b) except for issuances of capital stock of any of the
Transferred Subsidiaries to Harris or to another Transferred Subsidiary of
Harris, issue, reissue, sell, deliver or pledge or authorize or propose the
issuance, reissuance, sale, delivery or pledge of additional shares of
capital stock of any class or any securities convertible into capital stock
of any class, or any rights, warrants or options to acquire any convertible
securities or capital stock, other than the issuance of shares of Harris
Common Stock upon the exercise of stock options or stock grants pursuant to
the Harris Stock Plan outstanding on or prior to the Closing Date in
accordance with the terms of the agreements under which they are issued;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock, except
that any Transferred Subsidiary may pay dividends to Harris or any of the
other Transferred Subsidiaries;
(d) adjust, split, combine, subdivide, reclassify or redeem,
purchase or otherwise acquire, or propose to redeem or purchase or
otherwise acquire, any shares of its capital stock, or any of its other
securities;
(e) (i) incur, assume or pre-pay any long-term debt or incur or
assume any short-term debt, except that Harris and its Subsidiaries may
incur or pre-pay debt in the ordinary course of business consistent with
past practice under existing lines of credit, (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except
in the ordinary course of business consistent with past practice, or (iii)
make any loans, advances or capital contributions to, or investments in,
any other person, except Transferred Subsidiaries of Harris and except in
the ordinary course of business consistent with past practice;
(f) except for increases in salary, wages and benefits of
employees of Harris or its Subsidiaries (other than executive or corporate
officers of Harris) in accordance with past practice and except for
increases in salary, wages and benefits granted to employees of Harris or
its Subsidiaries (other than executive or corporate officers of Harris) in
conjunction with promotions or other changes in job status consistent with
past practice or required under existing agreements increase the com-
pensation or fringe benefits payable or to become payable to its directors,
officers or employees (whether from Harris or any of its Subsidiaries), or
pay any benefit not required by any existing plan or arrangement or grant
any severance or termination pay to (except pursuant to existing agreements
or policies as set forth on Schedule 4.12(a) hereto), or enter into any
employment or severance agreement with, any director, officer or other
key employee of Harris or any of the Transferred Subsidiaries or establish,
adopt, enter into, terminate or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, welfare, deferred compensation, employment,
termination, severance or other employee benefit plan, agreement, trust,
fund, policy or arrangement for the benefit or welfare of any directors,
officers or current or former employees, except to the extent such termina-
tion or amendment is required by applicable law; provided, however, that
nothing herein shall be deemed to prohibit the payment of benefits as they
become payable; provided, further, however that Harris shall be permitted
to take action so that at the Closing Date, each stock option issued and
outstanding at the date hereof under the Harris Stock Plan will be fully
vested and exercisable;
(g) other than as may be required by law to consummate the
transactions contemplated hereby, acquire, sell, lease, transfer or dispose
of any assets or securities which are material to Harris and its
Subsidiaries taken as a whole, or enter into any commitment to do any of
the foregoing;
(h) settle any material tax liability or make
any material tax election; or
(i) agree in writing or otherwise to take any of the foregoing
actions or any action which would make any representation or warranty in
this Agreement untrue or incorrect in any material respect or which would
result in any of the conditions set forth in Article VIII not being
satisfied.
Section 6.2 Conduct of Business of Concurrent. Except as
contemplated by this Agreement and the Ancillary Agreements or with the
prior written consent of Harris, during the period from the date of this
Agreement to the Closing Date, Concurrent will, and will cause each of its
Subsidiaries to, conduct its operations only in the ordinary and usual
course of business consistent with past practice and will use all
reasonable efforts, and will cause each of its Subsidiaries to use all
reasonable efforts, to preserve intact its present business organization,
keep available the services of its present officers and employees and
preserve its relationships with licensors, licensees, customers, suppliers,
employees and any others having business dealings with it. Without limiting
the generality of the foregoing, and except as otherwise provided in or
contemplated by this Agreement or the Ancillary Agreements, Concurrent will
not, and will not permit any of the Subsidiaries to, prior to the Closing
Date, without the prior written consent of Harris:
(a) adopt any amendment to its charter or by-
laws or comparable organizational documents or to the
Concurrent Rights Agreement;
(b) except for (i) issuances of capital stock of Concurrent's
Subsidiaries to Concurrent or a wholly owned Subsidiary of Concurrent, or
(ii) issuances of capital stock of Concurrent to employees of Concurrent
who become, at or after the Closing Date, entitled to severance under
Concurrent's existing severance contracts and policies in lieu of an
equivalent cash payment under such contracts and policies, issue, reissue,
sell, deliver or pledge or authorize or propose the issuance, reissuance,
sale, delivery or pledge of additional shares of capital stock of any class
or any securities convertible into capital stock of any class, or any
rights, warrants or options to acquire any convertible securities or
capital stock, other than the issuance of shares of Concurrent Common Stock
upon the exercise of stock options or stock grants pursuant to the
Concurrent Stock Plan outstanding on or prior to the Closing Date in
accordance with the terms of the Agreements under which they are issued;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock, except
that any wholly owned Subsidiary of Concurrent may pay dividends to
Concurrent or any of Concurrent's wholly owned Subsidiaries;
(d) adjust, split, combine, subdivide, reclassify or redeem,
purchase or otherwise acquire, or propose to redeem or purchase or
otherwise acquire, any shares of its capital stock, or any of its other
securities;
(e) (i) incur, assume or pre-pay any long-term debt or incur or
assume any short-term debt, except that Concurrent and its Subsidiaries may
incur or pre-pay debt in the ordinary course of business consistent with
past practice under existing lines of credit, (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except
in the ordinary course of business consistent with past practice, or
(iii) make any loans, advances or capital contributions to, or investments
in, any other person, except Subsidiaries of Concurrent and except in the
ordinary course of business consistent with past practice;
(f) except for increases in salary, wages and benefits of
employees of Concurrent or its Subsidiaries (other than executive or
corporate officers of Concurrent) in accordance with past practice and
except for increases in salary, wages and benefits granted to employees of
Concurrent or its Subsidiaries (other than executive or corporate officers
of Concurrent) in conjunction with promotions or other changes in job
status consistent with past practice or required under existing agreements,
increase the compensation or fringe benefits payable or to become payable
to its directors, officers or employees (whether from Concurrent or any of
its Subsidiaries), or pay any benefit not required by any existing plan or
arrangement or grant any severance or termination pay to (except pursuant
to existing agreements or policies as set forth on Schedule 5.13(a)
hereto), or enter into any employment or severance agreement with, any
director, officer or other key employee of Concurrent or any of its
Subsidiaries or establish, adopt, enter into, terminate or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, welfare, deferred compensa-
tion, employment, termination, severance or other employee benefit plan,
agreement, trust, fund, policy or arrangement for the benefit or welfare
of any directors, officers or current or former employees, except to the
extent such termination or amendment is required by applicable law;
provided, however, that nothing herein shall be deemed to prohibit the
payment of benefits as they become payable; provided, further, however,
that Concurrent shall be permitted to take action so that at the Closing
Date, each stock option issued and outstanding at such time under the
Concurrent Stock Plan will become fully vested and exercisable (it being
understood and agreed that the transactions contemplated hereby will be
deemed to be a change in control for purposes of such plan and the option
agreements entered into thereunder); provided, further, that nothing herein
shall prevent Concurrent or any of its Subsidiaries from instituting
retention and/or severance arrangements with employees of Concurrent or any
of its Subsidiaries, for the purpose of encouraging employees to remain
with Concurrent until the Closing Date subject to (i) Concurrent consulting
with Harris prior to implementing any such retention and/or severance
arrangement and (ii) a ceiling of $2,000,000 on the aggregate dollar amount
which may be paid or pursuant to which the obligation may be incurred
between November 5, 1995 and the Closing Date pursuant to all such reten-
tion and/or severance arrangements.
(g) other than as may be required by law to consummate the
transactions contemplated hereby, acquire, sell, lease, transfer or dispose
of any assets or securities which are material to Concurrent and its
Subsidiaries taken as a whole, or enter into any commitment to do any of
the foregoing;
(h) settle any material tax liability or make
any material tax election; or
(i) agree in writing or otherwise to take any of the foregoing
actions or any action which would make any representation or warranty in
this Agreement untrue or incorrect in any material respect or which would
result in any of the conditions set forth in Article VIII not being
satisfied.
Section 6.3 Best Efforts. Subject to the
terms and conditions of this Agreement, each of the par-
ties hereto agrees to use its Best Efforts (as defined
herein) to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions
contemplated by this Agreement including (a) the prompt preparation and
filing with the SEC of the Proxy Statement, (b) such actions as may be
required to have the Proxy Statement cleared by the SEC, in each case as
promptly as practicable, including by consulting with each other as to, and
responding promptly to, any SEC comments with respect thereto, and (c) such
actions as may be required to be taken under applicable state securities or
blue sky laws in connection with the issuance of the Purchased Harris
Shares and shares of Concurrent Common Stock and Concurrent Preferred Stock
contemplated hereby or the Ancillary Agreements. As used in this Agreement,
the term "Best Efforts" means all such efforts as may be taken in a
commercially reasonable manner. It shall be a condition to the mailing of
the Proxy Statement to the stockholders of Concurrent and Harris that (a)
Concurrent shall have received an opinion from Berenson Minella & Company,
dated the date of the Proxy Statement, to the effect that, as of the date
thereof, the purchase of the Assets and the Purchased Harris Shares for the
Common Stock Consideration and the Preferred Stock Consideration and the
Assumed Liabilities, taken as a whole, are fair to the stockholders of
Concurrent from a financial point of view and (b) Harris shall have
received an opinion from Bear, Stearns & Co. Inc., dated the date of the
Proxy Statement, to the effect that, as of the date thereof, and the
transactions contemplated hereby are fair, from a financial point of view,
to the stockholders of Harris. Each party shall promptly consult with the
other with respect to, provide any necessary information with respect to
and provide the other (or its counsel) copies of, all filings made by such
party with any Governmental Entity in connection with this Agreement and
the transactions contemplated hereby. In addition, if at any time prior to
the Closing Date any event or circumstance relating to either Harris or any
of the Transferred Subsidiaries of Concurrent or any of its Subsidiaries,
or any of their respective officers or directors, should be discovered by
Harris or Concurrent, as the case may be, and which should be set forth in
an amendment or supplement to the Proxy Statement, the discovering party
shall promptly inform the other party of such event or circumstance.
Section 6.4 Registration Rights. Each of Harris and Concurrent
shall prepare and file as promptly as practicable after the date hereof,
and shall cause to become effective on the Closing Date, a registration
statement on Form S-3 (or if either Concurrent or Harris is not eligible to
use Form S-3 on such other form as Concurrent or Harris may use) (each, an
"S-3 Registration Statement" and collectively, the "S-3 Registration State-
ments"), in compliance with the Securities Act relating to the sale by the
other party hereto and its permitted pledgees of the registrant's shares of
common stock (and, in the case of Concurrent, the common stock issuable
upon conversion of the Preferred Stock Consideration or the Debentures)
issued in accordance with the terms of this Agreement and the Share Holding
Agreement. Each of Harris and Concurrent shall indemnify the other in
connection with the S-3 Registration Statements in accordance with the
provisions set forth in the Share Holding Agreement. Each of Harris and
Concurrent shall also cause the shares of common stock issued by it to the
other party to be approved for inclusion on the NASDAQ/NMS on the effective
date of the applicable Registration Statement, subject to official notice
of issuance.
Section 6.5 Occurrence of Closing Prior to or Following the
Reference Date. In the event the Closing occurs prior to the Reference
Date, Concurrent shall operate the Business only in the ordinary course
consistent with past practice between the Closing and the Reference Date.
In the event the Closing occurs after the Reference Date, without limiting
the provisions of Section 6.6 below, Harris shall provide to Concurrent on
a weekly basis information with respect to the status of the net current
assets, except inventory and current liabilities which will be provided on
a monthly basis.
Section 6.6 Access to Information. Upon reasonable notice,
Harris and Concurrent shall each (and shall cause each of their respective
Subsidiaries to) afford to the officers, employees, accountants, counsel
and other representatives of the other, access, during normal business
hours during the period prior to the Closing Date, to all its properties,
facilities, books, contracts, commitments and records and other information
and, during such period, each of Harris and Concurrent shall (and shall
cause each of their respective Subsidiaries to) (a) furnish promptly to the
other a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the
requirements of federal securities laws, (b) furnish promptly to the other
all other information concerning the Business, properties and personnel as
such other party may reasonably request, (c) make available to the other
all its environmental sampling, assessment, remediation reports, studies
and any other document and all its permits, licenses, approvals and other
governmental authorizations referenced in Schedules to Section 4.20 or
Section 5.20 of this Agreement, and (d) afford access to the other to all
its employees and outside environmental consultants who have conducted or
assisted in preparing environmental sampling, assessment or remediation
studies. Neither party nor any of their respective Subsidiaries shall be
required to provide access to or to disclose information where such access
or disclosure would violate or prejudice the rights of customers,
jeopardize the attorney-client privilege of the institution in possession
or control of such information or contravene any law, rule, regulation,
order, judgment, decree, fiduciary duty or binding agreement entered into
prior to the date of this Agreement. Unless otherwise required by law, the
parties will hold any such information which is nonpublic in confidence in
accordance with the terms of Section 1 of that certain letter agreement,
dated September 28, 1995, between Concurrent and Harris (the
"Confidentiality Agreement"), and in the event of termination of this
Agreement for any reason each party shall promptly return all nonpublic
documents obtained from any other party, and any copies made of such
documents, to such other party in the manner contemplated by the
Confidentiality Agreement.
Section 6.7 Stockholders Meetings. Harris and Concurrent each
shall call a meeting of its stockholders for the purpose of voting, in the
case of Harris, upon (a) the sale of the Business (including the Assets and
the Transferred Subsidiaries) and (b) an amendment to the Harris Stock Plan
to increase the number of shares of Harris Common Stock reserved and
available for distribution under the Harris Stock Plan in accordance with
Section 4.11, and, in the case of Concurrent, upon (x) the issuance of
shares of Concurrent Common Stock pursuant to this Agreement and (y) an
amendment to the Concurrent Stock Plan to increase the number of shares
of Concurrent Common Stock reserved and available for distribution under
the Concurrent Stock Plan in accordance with Section 5.12. Harris and
Concurrent will, through their respective Boards of Directors, recommend to
their respective stockholders approval of such matters and will coordinate
and cooperate with respect to the timing of such Stockholders Meetings and
shall use their Best Efforts to hold such Stockholders Meetings on the same
day and as soon as practicable after the date hereof; provided, however,
that nothing contained in this Section 6.7 shall require the Board of
Directors of Harris or Concurrent to take any action or refrain from taking
any action in violation of its fiduciary duties. In addition, Concurrent
may seek approval from its shareholders at the Concurrent Stockholders
Meeting, if required by applicable law or the rules and regulations of
NASDAQ; for a reverse stock split at or following the Closing Date;
provided, however, that the transactions contemplated by this Agreement
shall not be conditioned on approval of any such reverse stock split
proposal.
Section 6.8 No Solicitation.
(a) Except as provided in Section 6.8(b),
Schedule 6.1 or otherwise agreed to by the parties hereto, until the
termination of this Agreement pursuant to Article IX, Harris and Concurrent
will not, nor will either of them permit its officers, directors,
affiliates, representatives or agents, directly or indirectly, to do any of
the following:
(i) discuss, negotiate, undertake, authorize, recommend,
propose or enter into, either as the proposed surviving, merged,
acquiring or acquired corporation, any transaction (other than the
transactions contemplated by this Agreement and the Ancillary
Agreements) involving any disposition or other change of ownership of
a substantial portion of (x) Harris's or Concurrent's or their
respective Subsidiaries' capital stock or assets or (y) the Business
(an "Acquisition Transaction");
(ii) facilitate, encourage, solicit or initiate or in any
way engage in any discussion, negotiation or submission of a proposal
or offer in respect of an Acquisition Transaction;
(iii) furnish or cause to be furnished to any
corporation, partnership, individual or other entity or group (other
than the other party and its representatives) (a "Person") any
information concerning the business, operations, properties or assets
of Harris or Concurrent in connection with an Acquisition
Transaction; or
(iv) otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any
other Person to do or seek any of the foregoing.
Harris and Concurrent will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
Person conducted heretofore with regard to an Acquisition Transaction and
will take the necessary steps to inform such Persons of the obligations
undertaken in this Section 6.8. Each party will inform the other party by
telephone within 24 hours of its receipt of any proposal or bid (including
the terms thereof and the Person making such proposal or bid) in respect of
any Acquisition Transaction.
(b) Notwithstanding anything else contained in this Section
6.8, either party may engage in discussions or negotiations with, and may
furnish information to, a third party who, or representatives of a third
party who, makes a written, bona fide proposal with respect to an
Acquisition Transaction that is reasonably capable of being consummated
and, as determined in good faith by its Board of Directors after
consultation with its financial advisors, is more favorable to such party's
stockholders than the transactions contemplated hereby, provided that the
Board of Directors of such party shall have determined in good faith on the
basis of the advice of outside counsel that failure to take such action
creates a substantial risk that the Board of Directors would fail to comply
with its fiduciary duties under applicable law. Nothing in this Section 6.8
shall (i) permit any party to terminate this Agreement (except as
specifically provided in Article IX hereof), (ii) permit any party to enter
into any agreement with respect to an Acquisition Transaction during the
term of this Agreement (it being agreed that during the term of this
Agreement, no party shall enter into any agreement with any person that
provides for, or in any way facilitates, an Acquisition Transaction (other
than a confidentiality agreement in customary form)), or (iii) affect any
other obligation of any party under this Agreement.
Section 6.9 Brokers or Finders. Each of Concurrent and Harris
agree to indemnify and hold the other harmless from and against any claims
with respect to any fees, commissions or expenses asserted by any person on
the basis of any act or statement alleged to have been made by such party
or its Subsidiary or affiliate.
Section 6.10 Rights Plan. Harris shall not redeem the Harris
Rights, or amend or terminate the Harris Rights Agreement prior to the
Closing Date unless required to do so by order of a court of competent
jurisdiction. Concurrent shall not redeem Concurrent Rights or amend (other
than in accordance with Section 5.10) or terminate Concurrent Rights
Agreements unless required to do so by order of a court of competent
jurisdiction.
Section 6.11 Publicity. The initial press release relating to
this Agreement shall be a joint press release and thereafter Harris and
Concurrent shall, subject to their respective legal obligations (including
requirements of stock exchanges and other similar regulatory bodies),
consult with each other, and use reasonable efforts to agree upon the text
of any press release, before issuing any such press release or otherwise
making public statements with respect to the transactions contemplated
hereby and in making any filings with any federal or state governmental or
regulatory agency or with any national securities exchange with respect
thereto. With respect to all other press releases during the term of this
Agreement, the parties hereto shall use reasonable efforts to consult with
each other prior to issuing such press releases.
Section 6.12 Notification of Certain Matters. Harris shall give
prompt notice to Concurrent, and Concurrent shall give prompt notice to
Harris, of (a) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which would be likely to cause (i) any
representation or warranty contained in this Agreement to be untrue or
inaccurate or (ii) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied and (b) any failure of
Harris or Concurrent, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.12 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 6.13 Management and Corporate Gover-
nance Matters.
(a) Composition of Concurrent's Board of Directors. The Board
of Directors of Concurrent shall take action to cause the number of
directors comprising the full board of directors of Concurrent to be nine
persons, three of whom shall be designated by Harris prior to the Closing
Date ("Original Harris Designees") and six of whom shall be designees of
Concurrent. If any Original Harris Designee shall decline or be unable to
serve, Harris shall designate a person to serve in such person's stead (the
Original Harris Designees together with any alternate or alternates
selected in accordance with this sentence are herein referred to as the
"Harris Designees"). From and after the Closing Date until at least
September 30, 1997, unless a majority of Harris Designees then serving as
Concurrent directors shall consent to a waiver of this Section 6.13(a),
Concurrent shall maintain a Board of Directors consisting of no more than
nine directors, three of whom shall be Harris Designees.
(b) Composition of Harris' Board of Directors. The Board of
Directors of Harris shall take action to cause the number of directors
comprising the full board of directors of Harris to be not more than seven
persons, one of whom shall be designated by Concurrent prior to the Closing
Date ("Original Concurrent Designee") and six of whom shall be designees of
Harris. If the Original Concurrent Designee shall decline or be unable to
serve, Concurrent shall designate a person to serve in such person's stead
(the Original Concurrent Designee together with any alternate selected in
accordance with this sentence are herein referred to as the "Concurrent
Designees"). From and after the Closing Date until at least September 30,
1997, Harris shall maintain a Board of Directors consisting of no more than
seven directors, one of whom shall be a Concurrent Designee.
(c) Chief Executive Officers of Harris. Harris shall use its
Best Efforts to cause E. Courtney Siegel to resign as a director, President
and Chief Executive Officer of Harris effective as of the Closing. Harris
will keep Concurrent reasonably informed of the status of the search for a
new chief executive officer of Harris and will use Best Efforts to find and
disclose, if found prior to the mailing of the Proxy Statement or if
required by applicable law, the identity of such chief executive officer in
the Proxy Statement.
(d) Designation of Concurrent Officers. Con-
current shall cause the election or appointment, effec-
tive as of the Closing Date, of E. Courtney Siegel as
the President and Chief Executive Officer of Concurrent and
John T. Stihl as the Chairman of the Board of Directors
of Concurrent. Mr. Siegel shall be an Original Harris
Designee.
(e) Increase in Shares Available under Concurrent Stock Plan.
Concurrent shall use its Best Efforts to cause the number of shares of
Concurrent Common Stock authorized for issuance under the Concurrent Stock
Plan to be increased to 8,000,000 such shares (of which approximately
5,000,000 will be available for grant thereunder), including the inclusion
of such increase in the matters submitted for a vote of shareholders in the
Proxy Statement.
(f) Increase in Shares Available under Harris Stock Plan.
Harris shall use its Best Efforts to cause the number of shares of Harris
Common Stock authorized for issuance under the Harris Stock Plan to be
675,000 such shares (of which approximately 350,000 will be available for
grant thereunder), including the inclusion of such increase in the matters
submitted for a vote of shareholders in the Proxy Statement.
(g) Amendment of Concurrent By-laws. At or prior to the Closing
Date Concurrent shall amend its Bylaws to provide that the President of
Concurrent shall be the exclusive chief executive officer of Concurrent,
reporting directly to Concurrent's Board of Directors.
Section 6.14 Employment Agreements. Concurrent shall cause the
amendment to the employment agreement with John T. Stihl, the material
terms of which are set forth on Schedule 6.14 hereto, to become effective
upon Closing. Prior to or simultaneously with the execution hereof,
Concurrent entered into an employment agreement with E. Courtney Siegel, a
copy of which is attached hereto as Exhibit D.
Section 6.15 Expenses. Whether or not the transactions
contemplated by this Agreement are consummated but subject to the
provisions of Article IX hereto, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby,
shall be paid by the party incurring such costs and expenses except as
expressly provided herein. Notwithstanding the above, (i) the filing fee in
connection with the HSR Act filing, the filing fee in connection with the
filing of the Proxy Statement with the SEC, the fees and expenses incurred
in connection with the preparation of the Audited Balance Sheet and the Net
Current Asset Reconciliation, Transfer Taxes (as defined in Section
6.24(b)) with respect to Assets other than the stock of Transferred
Subsidiaries, and the expenses incurred in connection with printing and
mailing the Proxy Statement, shall be shared equally by Harris and
Concurrent and (ii) Transfer Taxes with respect to the transfer of the
stock of Trans ferred Subsidiaries shall be borne entirely by Concurrent.
Section 6.16 IRS Determination Letter. Prior to the Closing
Date, Concurrent shall deliver to Harris a copy of the most recent
determination letter received from the Internal Revenue Service with
respect to each Concurrent Plan intended to qualify under Section 401 of
the Code.
Section 6.17 Insurance. Harris shall and shall cause its
Subsidiaries to use their Best Efforts to maintain the insurance policies
referred to in Section 4.18 in full force and effect through the Closing
Date. Concurrent shall use its Best Efforts to maintain the insurance
policies referred to in Section 5.18 in full force and effect through the
Closing Date.
Section 6.18 Supplemental Disclosure.
(a) Prior to the Closing, Harris shall have a
continuing obligation to notify Concurrent, and Concurrent shall have a
continuing obligation to notify Harris, of events, circumstances or
discoveries which would be likely to result in any of the representations
and warranties in Article IV or Article V hereof, respectively, being
inaccurate or incomplete in any respect and supplement or amend the
Schedules with respect to any matter hereafter arising or discovered which,
if existing or known at the date of this Agreement, would have been
required to be set forth or described in the Disclosure Schedules. Any
amendments or supplements to the Disclosure Schedules after the date hereof
and prior to the Closing Date shall be referred to herein as "Supplemental
Disclosure."
(b) In the event of a Supplemental Disclosure occurring within
five (5) business days prior to a date on which a scheduled Closing would
otherwise occur, the party to which such Supplemental Disclosure is
delivered shall have the right to delay the Closing for up to five (5)
business days from the date such party receives such Supplemental
Disclosure.
(c) The Supplemental Disclosure will not be deemed to have
cured any breach of any representation or warranty made in this Agreement
as of the date hereof for purposes of determining whether or not the
conditions set forth in Article VIII have been satisfied or for purposes of
the indemnification obligations set forth in Article X hereof.
Section 6.19 Further Assurances; Subsequent
Transfers.
(a) The parties hereto shall execute and deliver such further
instruments of conveyance, transfer, assignment and other similar documents
and shall take such other actions as each of them may reasonably request of
the other in order to effectuate the purposes of this Agreement and to
carry out the terms hereof. Without limiting the generality of the
foregoing, at any time and from time to time after the Closing Date, (i) at
the request of Concurrent, Harris shall execute and deliver to Concurrent
such other instruments of transfer, conveyance, assignment and confirmation
and take such action as Concurrent may reasonably deem necessary or
desirable in order to more effectively transfer, convey and assign to
Concurrent and to confirm Concurrent's title to all of the Assets, to put
Concurrent in actual possession and operating control thereof and to permit
Concurrent to exercise all rights with respect thereto (including, without
limitation, rights under contracts and other arrangements as to which the
consent of any third party to the transfer thereof shall not have
previously been obtained), (ii) at the request of Harris, Concurrent shall
execute and deliver to Harris all instruments, undertakings or other
documents and take such other action as Harris may reasonably deem
necessary or desirable in order to have Concurrent fully assume and be
liable for the Assumed Liabilities and shall deliver to Harris any of the
Excluded Assets inadvertently left in the control or possession of
Concurrent, and (iii) at the request of Concurrent, Harris shall execute
and deliver to the appropriate Transferred Subsidiaries all instruments,
undertakings or other documents and take such other action as Concurrent
may reasonably deem necessary or desirable in order to have Harris fully
assume the Excluded Liabilities as they relate to the Transferred
Subsidiaries. Notwithstanding the foregoing, the parties shall not be
obligated, in connection with the foregoing, to expend monies other than
reasonable out-of-pocket expenses and attorneys' fees.
(b) Harris shall use its Best Efforts to obtain any consent,
approval or amendment required to novate and/or assign all agreements,
Leases, licenses and other rights of any nature whatsoever relating to the
transfer of the Assets to Concurrent. In the event and to the extent that
Harris is unable to obtain any such required consent, approval, amendment
or modification (except with respect to any Lease, agreement or license set
forth in Schedule 8.2(d) hereof) (i) Harris shall continue to be bound by
such agreements, leases, licenses or other matters, (ii) unless not
permitted by law, Concurrent shall pay, perform and discharge fully all the
obligations of Harris thereunder and indemnify Harris for all liabilities
arising out of such performance by Concurrent (but only to the extent that
(x) such liabilities are Assumed Liabilities and (y) in the case of a
Lease, upon such payment or performance, Concurrent shall be entitled to
use and occupancy of the premises covered by such lease) and (z) so long as
Concurrent has paid, performed and discharged the obligations of Harris,
Harris shall, without further consideration therefor, pay and remit to
Concurrent promptly all monies, rights and other considerations received in
respect of such performance.
Harris shall exercise or exploit its rights and options under all such
agreements, leases, licenses and other rights and commitments (other than
in connection with the Leases referred to in Schedule 8.2(d) hereof)
referred to in this Section 6.19(b) only as reasonably directed by
Concurrent. If and when any such consent shall be obtained or such
agreement, lease, license or other right (other than in connection with the
Leases referred to in Schedule 8.2(d) hereof) shall otherwise become
assignable or able to be novated, Harris shall promptly assign and novate
all its rights and obligations thereunder to Concurrent without payment of
further consideration and Concurrent shall, without the payment of any
further consideration therefor, assume such rights and obligations.
Section 6.20 Risk of Loss.
(a) Leasehold Properties:
(i) In the event that during the period between the date
hereof and the Closing, all or any portion of the Leased Property
included in the Assets (a "Property") is damaged by fire or other
casualty, Harris shall promptly give notice thereof to Concurrent. If
such damage materially affects the ability of Concurrent at Closing
to conduct the Business as contemplated herein, Concurrent shall have
the right to terminate this Agreement. In the event of such
termination, all parties shall be released from all liability
hereunder.
(ii) If as a result of such casualty, the Property is
partially damaged or rendered partially unusable for the purposes for
which such Property is used by Harris on the date hereof, but such
damage does not materially affect Concurrent's ability to conduct the
Business at Closing as conducted on the date hereof, then Harris
shall convey such Property to Concurrent at Closing in its damaged
condition upon and subject to all of the other terms and conditions
of this Agreement, and Harris shall assign to Concurrent all of
Harris's right, title and interest in and to any claims Harris may
have under its insurance policies, and/or any causes of action with
respect to such damage or destruction, and shall assign to Concurrent
all insurance proceeds awarded to Harris under such policies with
respect to the damage to the Property. Notwithstanding the
foregoing, in the event that the damaged Property was not covered
by insurance or the insurance proceeds received by Concurrent
pursuant to the preceding sentence are insufficient to restore the
Property to its condition prior to such casualty ("Concurrent
Casualty Deficiency"), then (x) if a Concurrent Casualty Deficiency
is discovered prior to the determination of the Preferred Stock
Consideration pursuant to Section 2.3, the liquidation value and
stated value of the Preferred Stock Consideration shall be reduced by
an amount equal to the additional cost (the "Concurrent Additional
Cost"), as estimated by an engineer or architect, selected by
Harris and reasonably acceptable to Concurrent, required to repair
such damage and restore the Property to its condition immediately
prior to the casualty or (y) if a Concurrent Casualty Deficiency is
discovered subsequent to the determination of the Preferred Stock
Consideration pursuant to Section 2.3, Harris shall, within five days
of the determination of the Concurrent Additional Cost, pay such cost
to Concurrent in cash or other immediately available funds.
(iii) In the event such Property is totally destroyed or
rendered wholly unusable for the purposes for which it was used by
Harris prior to the casualty but such damage does not materially
affect Concurrent's ability to conduct the Business at Closing as
conducted on the date hereof, then such Property shall be excluded
from Assets, and the parties shall proceed to the Closing with
respect to the remaining Assets upon and subject to all of the other
terms and conditions of this Agreement, except that the liquidation
preference Preferred Stock Consideration hereunder shall be reduced
in an amount equal to the Fair Market Value (as defined in Section
6.20(b)) of such Property prior to such casualty.
(b) Fair Market Value:
Fair Market Value of the Leased Properties
shall mean the fair market value of the interest on such Property
contemplated to be transferred by this Agreement, as if such Property were
available in the then leasing market, for comparable property, as
determined by an independent real estate appraiser selected by Harris (in
the case of the Leased Properties) (the "First Appraiser"), which appraisal
shall be made within thirty (30) days after the occurrence of the casualty.
If Concurrent (in the event of a total destruction of the Leased
properties), disputes the determination of the First Appraiser, which
dispute must be raised within twenty (20) days after receipt by Concurrent
of the First Appraiser's determination, Concurrent shall appoint its own
independent real estate appraiser (the "Second Appraiser"). If within
thirty (30) days after Concurrent disputes the determination of the First
Appraiser, the First Appraiser and Second Appraiser shall mutually agree
upon the determination of the Fair Market Value of the property in
question, their determination shall be final and binding upon the parties.
If the First Appraiser and Second Appraiser are unable to reach a mutual
determination within said thirty (30) day period, both such Appraisers
shall jointly select a third real estate appraiser (the "Third Appraiser"),
whose fee shall be borne equally by Harris and Concurrent, and who shall,
within thirty (30) days of his selection, choose either the First or Second
Appraiser's determination; such choice by the Third Appraiser shall be
conclusive and binding upon the parties hereto.
Section 6.21 Compliance with Applicable Bulk Sales Laws.
Without admitting the applicability of the bulk transfer laws of any
jurisdiction, Harris and Concurrent have agreed to waive the compliance
with the requirements of any applicable laws relating to bulk sales. Harris
shall defend, indemnify and hold Concurrent harmless from and against any
Losses incurred as a result of Harris's noncompliance with any applicable
bulk transfer laws.
Section 6.22 Audited Financial Statements; Statutory Financial
Statements. Prior to the Closing, Harris shall have delivered to Concurrent
the Audited Balance Sheet and the statutory financial statements of the
Transferred Subsidiaries for the periods ended September 30, 1995 and
September 30, 1994.
Section 6.23 Tax Matters. For purposes of Section 1.3, Taxes of
Harris accruing prior to Closing shall mean any Taxes of the Business
attributable to any Tax period (or portion thereof) of Harris, or any of
its Subsidiaries ending on or before the close of business on the Closing
Date, and, in the case of any Taxes that are imposed on a periodic
basis or are payable for a taxable period that includes (but does not end
on) the Closing Date, the portion of such Taxes related to the portion of
such taxable period ending on the Closing Date shall (i) in the case of any
Taxes other than Taxes based upon or related to income, be deemed to be
determined on a per diem basis, and (ii) in the case of any Taxes based
upon or related to income, be deemed equal to the amount which would be
payable if the relevant taxable period ended on the Closing Date. Any
credits relating to a taxable period that begins before and ends after the
Closing Date shall be taken into account as though the relevant taxable
period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent
with the prior practice of Harris, the Transferred Subsidiaries and their
subsidiaries.
(a) Without the prior written consent of Concurrent, if a
Material Adverse Effect on the liability for Taxes of the Transferred
Subsidiaries will result therefrom, none of the Transferred Subsidiaries
nor their subsidiaries shall make or change any election, change an annual
accounting period, adopt or change any accounting method, file any amended
Tax return or report, enter into any closing agreement, settle any Tax
claim or assessment relating to any of the Transferred Subsidiaries or
their subsidiaries, surrender any right to claim a refund of Taxes, or
consent to any extension or waiver of the limitations period applicable to
any Tax claim or assessment relating to any of the Transferred
Subsidiaries or their subsidiaries.
(b) "Transfer Taxes" shall be borne by Harris and Concurrent as
provided in Section 6.15. Transfer Taxes include all sales, use, transfer,
recording, ad valorem, bulk sales and other similar taxes and fees, arising
out of or in connection with the transactions contemplated by this
Agreement. The party which has primary responsibility for the payment of
any particular Transfer Tax shall prepare and file the relevant Tax Return,
pay the Transfer Taxes shown on such Return, and notify the other party in
writing of the Transfer Taxes shown on such Tax return and how such
Transfer Taxes were calculated; the other party shall, within 5 days of the
receipt of such notice, pay to the first party its share of such Transfer
Taxes.
Section 6.24 HSR Approval. If the lowest closing bid price of
Concurrent Common Stock is greater than $1.50 per share on the date that
the Proxy Statement is mailed to shareholders of Concurrent and Harris,
each of the parties hereto agrees to use its Best Efforts to take, or cause
to be taken, and to do, or cause to be done, all things necessary to
promptly prepare and file the pre-merger notification report form and to
seek early termination or expiration of the waiting period under the HSR
Act.
ARTICLE VII
EMPLOYMENT AND EMPLOYEE BENEFIT PLANS
Section 7.1 Existing Employee Benefit Plans of Harris.
Notwithstanding any other provisions contained herein, none of Harris's
obligations under any of its employee benefit plans, including the Harris
Stock Plan, shall be assumed by Concurrent. Contributions shall be made to
and benefits shall be provided under the Harris Plans as follows:
(a) With respect to the Harris Computer Sys-
tems Corporation Savings Plan (the "Harris 401(k)
Plan"),
(i) Harris shall, in accordance with Section 3.9(a) of
the Harris 401(k) Plan, remit to the Trustee of the Harris
401(k) Plan all pre-tax contributions and after-tax
contributions authorized by the employees listed in Schedule
7.1 (Harris employees who will be employed by Concurrent
following Closing) ("Business Employees") and collected by
Harris prior to 12:01 a.m. of the morning of the Closing Date
(hereinafter in this Article VII, the "Employment Effective
Time");
(ii) Harris shall, in accordance with Section 3.9(a) of
the Harris 401(k) Plan, remit to the Trustee of the Harris
401(k) Plan the Matching Employer Contribution to which the
Business Employees are entitled for the 1995
Plan Year;
(iii) In applying Section 12.4 of the Harris 401(k) Plan,
Harris shall deem a partial termination to have occurred with
respect to the Business Employees as of the Employment
Effective Time. As a result of said partial termination, each
Business Employee shall be fully vested and have a
nonforfeitable interest in that portion of such Business
Employee's account attributable to Matching Employer
Contributions as of the Employment Effective Time without
regard to the number of years of service such Business Employee
has completed for Harris.
(iv) Harris shall distribute the Harris 401(k) Plan
account balances of the Business Employees according to either
(A) or (B) below, whichever is applicable:
(A) If the sale of the Assets described in Article
I constitutes a sale of substantially all the assets of a
trade or business, within the meaning of Section
401(k)(10)(A)(ii) of the Code, Harris shall notify each
Business Employee of his rights with respect to the
distribution of his Harris 401(k) Plan account balance
and shall make distribution of such account balances in
accordance with the terms of the Harris 401(k) Plan,
ERISA and the Code.
(B) If the sale of the Assets described in Article
I does not constitute a sale of substantially all the
assets of a trade or business, within the meaning of
Section 401(k)(10)(A)(ii) of the Code, Harris shall not
distribute the Harris 401(k) Plan account balance of any
Business Employee who becomes an employee of Concurrent
("Hired Business Employee") to such Hired Business
Employee until the termination of his employment with
Concurrent. Concurrent shall notify Harris of the
termination of the employment of any Hired Business
Employee no later than five days following the date on
which such Hired Business Employee's employment with
Concurrent terminates.
(b) With respect to the Harris Computer Systems Corporation
Medical/Dental Plan, the Harris Computer Systems Corporation Long
Term Disability Plan, the Harris Computer Systems Corporation Life,
AD&D, and Business Travel Accident Plan, the Harris Computer Systems
Corporation Short Term Disability Plan, the Harris Computer Systems
Corporation Cafeteria Plan, the Harris Computer Systems Corporation
Medical Reimbursement Plan, and the Harris Computer Systems
Corporation Dependent Care Plan (collectively, the "Welfare and
Fringe Benefit Plans"),
(i) Harris shall make, as soon as administratively
practicable following the Closing, all contributions and shall
pay all insurance premiums necessary to provide the benefits to
which the Business Employees are entitled, under the terms of
the Welfare and Fringe Benefit Plans;
(ii) Harris shall be responsible for the payment of all
expenses and claims incurred prior to 12:01 a.m. of the morning
of the Closing Date under the Welfare and Fringe Benefits
Plans, and shall use Best Efforts to make arrangements with
Welfare and Fringe Benefits providers for a runoff period in
which claims incurred prior to but submitted after 12:01 a.m.
of the morning of the Closing Date will be honored for payment
by Harris; and
(iii) Harris shall be responsible for compliance with the
requirements of Section 4980B of the Code and Part 6 of Title I
of ERISA for its employees employed in the Business and their
"qualified beneficiaries" whose "qualifying event" (as such
terms are defined in Section 4980B of the Code) occurs prior to
the Employment Effective Time. Section 7.2 Employment of
Employees
Employed in Business. (a) Effective the Employment Effective Time,
Concurrent shall offer employment to each Business Employee at the same
annual salary or hourly compensation and on other terms not materially less
favorable to the Business Employees than those in effect as of the date of
this Agreement.
(b) Harris shall transfer to Concurrent any records (including,
but not limited to, Forms W-4 and Employee Withholding Allowance
Certificates) relating to withholding and payment of income and employment
taxes (federal, state and local) and FICA taxes with respect to wages paid
by Harris during the 1996 calendar year to any employees retained by
Concurrent. Concurrent shall, to the extent permitted by applicable law,
provide such employees with Forms W-2, Wage and Tax Statements for the 1996
calendar year setting forth the wages and taxes withheld with respect to
such employees for the 1996 calendar year by Harris and Concurrent as
predecessor and successor employers, respectively. Harris and Concurrent
shall also comply with the filing requirements set forth in Revenue
Procedure 84-77, 1984-2 C.B. 753, to implement this Section 7.2(b).
Section 7.3 Employee Benefit Plans of Concurrent. Concurrent
agrees to use Best Efforts to amend the existing Concurrent Plans and to
establish new employee benefit plans, programs, policies or arrangements to
accomplish the following effective at Closing:
(a) Amend its Code section 401(k) retirement
plan ("Concurrent 401(k) Plan") to provide
(i) coverage for each Hired Business Em-
ployee on the same basis as provided for each
current participant in the Concurrent 401(k)
Plan as of the date of this Agreement;
(ii) credit for each Hired Business Employee's prior
years of service with Harris for purposes of eligibility and
vesting;
(iii) a contribution by Concurrent for each plan year
equal to 100% of each Hired Business Employee's elective
deferral contributions up to 6% of such Hired Business
Employee's compensation for the plan year ("Concurrent Matching
Contribution"), with 2% of the Concurrent Matching Contribution
made in the form of cash and 4% of the Concurrent Matching
Contribution made in the form of Concurrent stock;
(iv) acceptance of direct rollovers and elective
transfers of the cash and non-cash assets of the Harris 401(k)
Plan accounts of Hired Business Employees, including promissory
notes related to outstanding participant loans received by
Hired Business Employees from the Harris 401(k) Plan; and
(v) the repayment of outstanding participant loans
received from the Harris 401(k) Plan by the Hired Business
Employees who elect a direct rollover to the Concurrent 401(k)
Plan promissory notes related to such outstanding participant
loans. (b) in accordance with Section 6.13(e)
hereof, Concurrent shall use its Best Efforts to cause the number of
shares of Concurrent Common Stock authorized for issuance under the
Concurrent Stock Plan to be increased to 8,000,000 (of which
approximately 5,000,000 shall be available for grant).
(c) implement a long term incentive program for executive
officers comprised of the vesting of stock option grants contingent
upon identified Company performance objectives for the three (3)
fiscal years following the purchase of the Assets and the Purchased
Harris Shares pursuant to the terms hereof.
(d) implement a management bonus program for executive officers
of the Company pursuant to which they will have the opportunity to
receive cash bonuses ("Target Bonuses") upon achievement of both
individual goals established for such persons ("Individual Target
Goals") and corporate financial goals established based upon the
business plan ("Corporate Target Goals"), and up to 150% of such
Target bonuses upon achievement of goals in excess of such persons
Target Individuals Goals and Target Corporate Goals. The Individual
Target Goals, Corporate Target Goals, the levels of performance
required to result in payments thereunder and all other matters
relating to the bonus program shall be determined by the Board of
Directors of Concurrent (or a committee thereof).
(e) review the appropriateness of providing a nonqualified
deferred compensation arrangement or Supplemental Employer Retirement
Plan ("SERP") for the benefit of allowing the employee directed
deferral and Company match on contributions under the Concurrent
401(k) Plan otherwise limited by the Code, including sections
401(a)(4), 401(a)(17), 401(k) and 402(g).
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation To Perform
this Agreement. The respective obligations of the parties to perform this
Agreement and the transactions contemplated hereby shall be subject to the
satisfaction or waiver, on or prior to the Closing Date, of the following
conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the affirmative
vote of a majority of all the votes entitled to be cast with respect to the
holders of Harris Common Stock and the issuance of shares of Concurrent
Common Stock pursuant to this Agreement shall have been approved by the
affirmative vote of a majority of the total votes cast with respect to the
stockholders of Concurrent. The Concurrent Stock Plan Amendment shall have
been approved by the affirmative vote of a majority of the voting shares of
Concurrent Common Stock in a separate vote. The Harris Stock Plan Amendment
shall have been approved by the affirmative vote of a majority of the
voting shares of Harris Common Stock in a separate vote.
(b) Other Approvals. All authorizations, notices, consents,
orders or approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity, the failure to obtain
or make which would have a Material Adverse Effect on (i) Concurrent and
its Subsidiaries, (ii) Harris and its Subsidiaries, in each case taken as a
whole, or (iii) the Business shall have been filed, occurred or been
obtained. Concurrent and Harris each shall have received all state
securities or blue sky permits and other authorizations necessary to issue
Concurrent Common Stock pursuant to this Agreement.
(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the this Agreement and the transactions
contemplated hereby shall be in effect (each party agreeing to use all
reasonable efforts to have any such order reversed or injunction lifted).
(d) No Action. No action, suit or proceeding by any
Governmental Entity before any court or governmental or regulatory
authority shall be pending against Harris, Concurrent or any of their
Subsidiaries challenging the validity or legality of the transactions
contemplated by this Agreement, other than actions, suits or proceedings
which, in the reasonable opinion of counsel to the parties hereto, are
unlikely to result in an adverse judgment having a Material Adverse Effect
on either Concurrent, Harris or any of their respective Subsidiaries taken
as a whole or the Business.
(e) Tax Opinion. Harris and Concurrent shall have received an
opinion of Holland & Knight, counsel to Harris, in form and substance
reasonably satisfactory to Harris and Concurrent, dated a date within two
days prior to the expected date of the Proxy Statement, substantially to
the effect that none of the actions expressly contemplated by this
Agreement shall result in or otherwise give rise to a breach of any
covenant contained in the Tax Sharing Agreement or made in connection with
the opinion rendered by Sullivan & Cromwell (as described in Section
1.12(a) of the Tax Sharing Agreement), in each case relating to the
qualification of the Distribution as a distribution pursuant to Section 355
of the Code. In rendering such opinion, Holland & Knight may rely
exclusively without an independent investigation upon representations
contained in certificates of officers of Harris and others unless Holland &
Knight has actual knowledge or reason to believe that such representations
are false or inaccurate.
(f) HSR Approval. Any applicable waiting period under the HSR
Act shall have expired or been terminated.
(g) Consents. The consents set forth in
Schedule 8.1(g) shall have been obtained.
(h) The Ancillary Agreements (each of which shall provide that
it shall become effective simultaneously with the effectiveness of this
Agreement) shall have been executed and delivered by the parties thereto.
(i) Concurrent and Harris shall have reached mutual agreement
with respect to the transfer of stock and assets of the Transferred
Subsidiaries.
Section 8.2 Conditions of Obligation of Concurrent. The
obligation of Concurrent to perform this Agreement and the transactions
contemplated hereby are subject to the satisfaction, on or prior to the
Closing Date, of the following conditions unless waived by Concurrent:
(a) Representations and Warranties. The representations and
warranties of Harris set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date.
Concurrent shall have received a certificate signed on behalf of Harris by
the Chief Executive Officer and the Chief Financial Officer of Harris to
the foregoing effect.
(b) Performance of Obligations of Harris. Harris shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Concurrent
shall have received a certificate signed on behalf of Harris by the Chief
Executive Officer and the Chief Financial Officer of Harris to such effect.
(c) Filings and Consents with Governmental Entities. Harris
shall have made all filings or registrations with, and obtained all
permits, authorizations, notices, consents and approvals from, Governmental
Entities as may be required in connection with the transactions
contemplated by this Agreement under the Exchange Act, the Securities Act,
the HSR Act, the FBCA, any state securities or blue sky laws or other
applicable laws, except for filings, registrations, permits,
authorizations, notices, consents and approvals, the failure to obtain of
which would not have a Material Adverse Effect on Harris, Concurrent and
their Subsidiaries taken as a whole or the Business (after giving effect to
the transactions contemplated hereby).
(d) Consents Under Agreements. The parties
to the contracts and agreements identified on Schedule
8.2(d) hereto shall consented to the assignment of such
contracts and agreement to Concurrent.
(e) Material Adverse Effect. From the date
of this Agreement through the Closing Date, there shall not have occurred
any change in the financial condition, business, operations or prospects of
Harris and the Transferred Subsidiaries, taken as a whole, that would have
or would be reasonably likely to have a Material Adverse Effect on either
Harris and its Subsidiaries, taken as a whole, or the Business other than
any such change that affects both Concurrent and Harris in a substantially
similar manner.
(f) Fairness Opinion. The fairness opinion letter from Berenson
Minella & Company referred to in Section 5.9 shall not, in good faith, have
been withdrawn by Berenson Minella & Company.
(g) Approval of Schedules. Concurrent shall have approved all
Schedules delivered by Harris pursuant to Article I hereof, the
non-approval of which shall not be based on matters regarding amortization
or reclassification for purposes of changes in depreciation or for other
financial statement purposes and which approval may not be unreasonably
withheld.
(h) Effectiveness of Registration Statement/Inclusion of
NASDAQ/NMS. A Registration Statement of Harris shall be effective under the
Securities Act covering the Purchased Harris Shares to be received by
Concurrent at the Closing and such Purchased Harris Shares shall have been
approved for inclusion on the NASDAQ/NMS, subject to official notice of
issuance.
Section 8.3 Conditions of Obligation of Harris. The obligation
of Harris to perform this Agreement and the transactions contemplated
hereby is subject to the satisfaction of the following conditions, on or
prior to the Closing Date, unless waived by Harris:
(a) Representations and Warranties. The representations and
warranties of Concurrent set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the
Closing Date. Harris shall have received a certificate signed on behalf of
Concurrent by the Chief Executive Officer and the Chief Financial Officer
of Concurrent to the foregoing effect.
(b) Performance of Obligations of Concurrent.
Concurrent shall have performed in all material
respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and Harris shall have received a
certificate signed on behalf of Concurrent by the Chief Executive Officer
and the Chief Financial Officer of Concurrent to such effect.
(c) Filings and Consents with Governmental Entities. Concurrent
shall have made all filings or registrations and obtained all permits,
authorizations, notices, consents and approvals from, Governmental Entities
as may be required in connection with the transactions contemplated by this
Agreement under the Exchange Act, the Securities Act, the HSR Act, the
FBCA, any state securities or blue sky laws or other applicable laws,
except for filings, registrations, permits, authorizations, notices,
consents and approvals, the failure to obtain of which would not have a
Material Adverse Effect on Harris, Concurrent and their Subsidiaries taken
as a whole (after giving effect to the transactions contemplated hereby).
(d) Material Adverse Effect. From the date of this Agreement
through the Closing Date, there shall not have occurred any change in the
financial condition, business, operations or prospects of Concurrent and
its Subsidiaries, taken as a whole, that would have or would be reasonably
likely to have a Material Adverse Effect on Concurrent and its
Subsidiaries, taken as a whole, other than any such change that affects
both Concurrent and Harris in a substantially similar manner.
(e) Effectiveness of Registration Statement/ Inclusion on
NASDAQ/NMS. A Registration Statement of Concurrent shall be effective under
the Securities Act covering the Concurrent Common Stock to be received by
Harris at the Closing and the Concurrent Common Stock issuable upon
conversion of the Concurrent Preferred Stock to be received by Harris at
the Closing or the Debentures, and such Concurrent Common Stock shall have
been approved for inclusion on the NASDAQ/NMS, subject to official notice
of issuance.
(f) Fairness Opinion. The fairness opinion
letter from Bear, Stearns & Co. Inc. to Harris referred
to in Section 4.9 shall not, in good faith, have been
withdrawn by Bear, Stearns & Co. Inc.
(g) New Jersey Advice. Harris shall have received from
Concurrent (i) a written determination by the New Jersey Department of
Environmental Protection of the nonapplicability of the New Jersey
Industrial Site Recovery Act, as amended ("ISRA") to the transactions
contemplated by this Agreement, or (ii) a written Negative Declaration (as
defined in ISRA) from the New Jersey Department of Environmental Protection
to the effect that no soil or groundwater assessment or remediation is
required or (iii) written assurances to Harris that Concurrent has
otherwise complied with ISRA in a manner which does not require a material
financial commitment on behalf of Concurrent.
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.1 Termination by Mutual Consent. This Agreement may
be terminated and the transactions contemplated hereby may be abandoned at
any time prior to the Closing Date, before or after the approval of this
Agreement by the stockholders of Harris or Concurrent, by the mutual
consent of Concurrent and Harris.
Section 9.2 Termination by Either Concurrent or Harris. This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned by action of the Board of Directors of either Harris or
Concurrent if (a) the Closing contemplated by this Agreement shall not have
been consummated by August 30, 1996 provided, in the case of a termination
pursuant to this clause (a), that the terminating party shall not have
breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the occurrence of the
failure referred to in said clause, or (b) the approval of Harris's
stockholders referred to in Section 4.11 shall not have been obtained at a
Harris Stockholder Meeting duly convened therefor or at any adjournment
thereof, or (c) the approval of Concurrent's stockholders referred to in
Section 5.12 shall not have been obtained at a Concurrent Stockholder
Meeting duly convened therefor or at any adjournment thereof, or (d) a
United States federal or state court of competent jurisdiction or United
States federal or state governmental, regulatory or administrative agency
or commission shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and non-appealable;
provided, that the party seeking to terminate this Agreement pursuant to
this clause (d) shall have used all reasonable efforts to remove such
injunction, order or decree.
Section 9.3 Termination by Harris. This Agreement may be
terminated at any time prior to the Closing Date, before or after the
adoption and approval by the stockholders of Harris referred to in Section
4.11, by action of the Board of Directors of Harris, if (a) in the exercise
of its good faith judgment as to its fiduciary duties to its stockholders
imposed by law the Board of Directors of Harris determines that such
termination is required by reason of an Acquisition Transaction proposal
being made, (b) there has been a breach by Concurrent of any representation
or warranty contained in this Agreement which would have or would be
reasonably likely to have a Material Adverse Effect on Concurrent and its
Subsidiaries taken as a whole, (c) there has been a material breach of any
of the covenants or agreements set forth in this Agreement on the part of
Concurrent, which breach is not curable or, if curable, is not cured within
30 days after written notice of such breach is given by Harris to
Concurrent or (d) Concurrent withdraws, amends, or modifies its favorable
recommendation of this Agreement and the transactions contemplated hereby
or promulgates any recommendation with respect to an Acquisition
Transaction other than a recommendation to reject such Acquisition
Transaction.
Section 9.4 Termination by Concurrent. This Agreement may be
terminated at any time prior to the Closing Date, before or after the
approval by the stockholders of Concurrent referred to in Section 5.12, by
action of the Board of Directors of Concurrent, if (a) in the exercise of
its good faith judgment as to its fiduciary duties to its stockholders
imposed by law the Board of Directors of Concurrent determines that such
termination is required by reason of an Acquisition Transaction proposal
being made, (b) there has been a breach by Harris of any representation or
warranty contained in this Agreement which would have or would be
reasonably likely to have a Material Adverse Effect on either Harris and
the Transferred Subsidiaries, taken as a whole or the Business, (c) there
has been a material breach of any of the covenants or agreements set forth
in this Agreement on the part of Harris, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by Concurrent to Harris or (d) Harris withdraws, amends, or modifies
its favorable recommendation of the transactions contemplated by this
Agreement and the transactions contemplated hereby or promulgates any
recommendation with respect to an Acquisition Transaction other than a
recommendation to reject such Acquisition Transaction.
Section 9.5 Effect of Termination. In the event of termination
of this Agreement pursuant to this Article IX, all obligations of the
parties hereto shall terminate, except the obligations of the parties
pursuant to this Section 9.5 and Sections 6.6 and 6.9. Moreover, in the
event of termination of this Agreement pursuant to Section 9.3 or 9.4,
nothing herein shall prejudice the ability of the non-terminating party
from seeking damages from any other party for any breach of this Agreement,
attorneys' fees and the right to pursue any remedy at law or in equity;
provided, however, that in the event non-terminating party has received
the Termination Fee (as defined in Section 9.6(c)) from the terminating
party, the non-terminating party shall not (a) assert or pursue in any
manner, directly or indirectly, any claim or cause of action based in whole
or in part upon alleged tortious or other interference with rights under
this Agreement against any entity or person submitting a proposal for an
Acquisition Transaction (b) assert or pursue in any manner, directly or
indirectly, any claim or cause of action against the terminating party or
any of its officers or directors based in whole or in part upon its or
their receipt, consideration, recommendation, or approval of an Acquisition
Transaction or the terminating party's exercise of its right of termination
under Section 9.3(a) or 9.4(a), as appropriate, or assert any claim for any
of the expenses referred to in Section 6.15 herein. Notwithstanding the
foregoing, in the event the non-terminating party is required to file
suit to seek such Termination Fee, and it ultimately succeeds on the
merits, it shall be entitled to all expenses, including reasonable
attorneys' fees, which it has incurred in enforcing its rights hereunder.
Section 9.6 Termination Fee. (a) If (i) (x) this Agreement is
terminated by either Concurrent or Harris in accordance with Section
9.2(b), (y) prior to the Harris Stockholder Meeting a proposal for a
competing Acquisition Transaction involving Harris is publicly announced,
and (z) any Acquisition Transaction involving Harris is consummated within
1 year of the date of termination of this Agreement or (ii) this Agreement
is terminated by Harris in accordance with Section 9.3(a), Harris shall pay
to Concurrent the Termination Fee.
(b) If (i) (x) this Agreement is terminated by either
Concurrent or Harris in accordance with Section 9.2(c), (y) prior to the
Concurrent Stockholder Meeting a proposal for a competing Acquisition
Transaction involving Concurrent is publicly announced, and (z) any
Acquisition Transaction involving Concurrent is consummated within 1 year
of the date of termination of this Agreement or (ii) this Agreement is
terminated by Concurrent in accordance with Section 9.4(a), Concurrent
shall pay to Harris the Termination Fee.
(c) The Termination Fee shall be $1.75 million payable by wire
transfer of immediately available funds within five business days of the
date of the first to occur of clauses (i) or (ii) of either Section 9.6 (a)
or (b), as appropriate, to such account as the receiving party shall
specify to the paying party.
ARTICLE X
OBLIGATIONS OF PARTIES AFTER CLOSING DATE
Section 10.1 Survival Periods. Except as otherwise provided
herein, the representations and warranties of the parties contained in this
Agreement or any certificate delivered in connection herewith shall not
survive the Closing. The covenants and agreements of the parties hereto
shall survive the Closing if and to the extent so provided in such covenant
or agreement.
Section 10.2 Indemnification.
Subject to the other provisions of this
Article X, from and after the Closing:
(a) Harris shall indemnify and hold harmless
Concurrent and its affiliates, and each of their affiliates' and their
respective affiliates' directors, officers, employees, representatives and
agents, and each of the heirs, executors, successors and assigns of any of
the foregoing (collectively, the "Representatives") from and against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages and amounts paid in settlement (collectively,
"Damages") to the extent they are the result of (i) any breach of any
representation or warranty made by or on behalf of Harris under this
Agreement that is a result of fraud or intentional or wilful
misrepresentation by Harris or (ii) the Excluded Liabilities. As to claims
for Damages by Concurrent and its Representatives in respect of
misrepresentations pursuant to clause (i) of this Section 10.2(a), such
claims, to the extent practicable, shall be satisfied by reductions in
the Liquidation Preference for the Outstanding Preferred Stock
Consideration pursuant to the terms of the Certificate of Designation.
(b) Concurrent shall indemnify and hold harmless Harris and its
Representatives from and against any Damages to the extent they arise out
of and are the result of (i) any breach of any representation or warranty
made by or on behalf of Concurrent under this Agreement that is a result of
fraud or intentional or wilful misconduct by Concurrent or (ii) the Assumed
Liabilities. Concurrent and its Representatives, on the one hand, and
Harris and its Representatives, on the other hand, as the case may be, are
referred to herein as the "Indemnified Parties."
(c) Neither Harris nor Concurrent, as the case may be, shall be
obligated to indemnify a party pursuant to this Article X for any Damages
pursuant to Sections 10.2(a)(i) and 10.2(b)(i) unless Harris or Concurrent,
as the case may be, shall have received written notice of such Damages (i)
in the case of a breach of a representation and warranty (other than the
representations and warranties set forth in Sections 4.10 and 5.11, as the
case may be), within 2 years from the Closing Date and (ii) in the case of
the representations and warranties set forth in Sections 4.10 and 5.11, as
the case may be, prior to the expiration of the applicable statute of
limitations; provided, however, in the event that an Indemnified Party (x)
receives notice of any matter which provides a reasonable basis for a claim
to indemnification hereunder and within the applicable period provided in
this Section 10.2(c) and (y) provides notice to the Indemnifying Party (as
defined hereinafter) of the receipt of such notice, then such Indemnified
Party shall be entitled to indemnification with respect to such claim until
its final resolution, and provided, further, that there shall be no period
of time within which notice of or a claim for indemnity must be provided by
an Indemnified Party to an Indemnifying Party (as defined in Section
10.3(a)) with respect to those items set forth in Section 10.2(a)(ii) and
10.2(b)(ii) hereof.
Section 10.3 Claims.
(a) If an Indemnified Party intends to seek
indemnification pursuant to this Article X, such Indemnified Party shall
promptly notify Harris or Concurrent, as the case may be (the "Indemnifying
Party"), in writing of such claim describing such claim in reasonable
detail; provided, however, that the failure to provide such notice shall
not affect the obligations of the Indemnifying Party unless it is actually
prejudiced thereby, subject, however, to the time periods specified in
Section 10.1 hereof. In the event that such claim involves a claim by a
third party against the Indemnified Party, the Indemnifying Party shall
have 30 days after receipt of such notice to decide whether it will
undertake, conduct and control, through counsel of its own choosing and at
its own expense, the settlement or defense thereof, and if it so decides,
the Indemnified Party shall cooperate with it in connection therewith;
provided, however, that the Indemnified Party may participate in such
settlement or defense through counsel chosen by it; and provided, further,
however, that the fees and expenses of such counsel shall be borne by the
Indemnified Party. The decision by an Indemnifying Party to undertake the
defense or settlement of such claim shall be conclusive evidence of its
concurrence that any Indemnified Party involved in such claim is entitled
to indemnification hereunder with respect to such claim. Notwithstanding
anything in this Section 10.3(a) to the contrary, the Indemnifying Party
may, without the consent of the Indemnified Party, settle or compromise any
action or consent to the entry of any judgment which includes as an
unconditional term thereof the delivery by the claimant or plaintiff to the
Indemnified Party of a duly executed written release of the Indemnified
Party from all liability in respect of such action, which release shall be
reasonably satisfactory in form and substance to counsel for the
Indemnified Party; provided, however, that the Indemnifying Party shall
not, without the written consent of the Indemnified Party, settle or
compromise any action in any manner that, in the reasonable judgment of the
Indemnified Party or its counsel, would materially and adversely affect the
Indemnified Party, other than as a result of money damages or other money
payments. If the Indemnifying Party does not notify the Indemnified Party
within 30 days after the receipt of the Indemnified Party's notice of a
claim of indemnity hereunder that it elects to undertake the defense
thereof, the Indemnified Party shall have the right to contest, settle or
compromise the claim but shall not thereby waive any right to indemnity
therefor pursuant to this Agreement. So long as the Indemnifying Party is
contesting any such claim in good faith, the Indemnified Party shall not
pay or settle any such claim. Notwithstanding the foregoing, the
Indemnified Party shall have the right to pay or settle any such claim;
provided, however, that so long as the Indemnifying Party is contesting
such claim in good faith, any such settlement shall include as an uncondi-
tional term thereof the delivery by the claimant or plaintiff to the
Indemnifying Party of a duly executed written release of the Indemnifying
Party from all liability in respect of such action; and provided,
further, however, that in such event it shall waive any right to indemnity
therefor by the Indemnifying Party; and provided, further, ][however,
that the Indemnified Party shall provide the Indemnifying Party reasonable
advance notice of any proposed settlement or payment and shall not pay or
settle any claim if the Indemnifying Party shall reasonably object.
(b) The Indemnified Party shall cooperate fully in all aspects
of any investigation, defense, pretrial activities, trial, compromise,
settlement or discharge of any claim in respect of which indemnity is
sought pursuant to Article X, including, but not limited to, by providing
the other party with reasonable access to employees and officers (including
as witnesses) and other information.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Amendment. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of this Agreement and the
transactions contemplated hereby by the stockholders of Harris or of
Concurrent, but, after any such approval, no amendment shall be made which
by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 11.2 Extension; Waiver. At any time during the term of
this Agreement or during the time any provision survives termination hereof
or Closing as provided herein, the parties hereto, by action taken or
authorized by the respective Boards of Directors, may to the extent legally
allowed, (a) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained here. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set
forth in a written instrument signed on behalf of such party.
Section 11.3 Notices. All consents, notices and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (which is confirmed) or mailed by
registered or certified mail (return receipt requested) to the parties at
the following addresses or telephone numbers
(or at such other address for a party as shall be speci-
fied by like notice):
(a) if to Concurrent, to
Concurrent Computer Corporation
2 Crescent Place
Oceanport, NJ 07757
Attention: Kevin Dell
Telecopy: (908) 870-4779
with a copy, which copy shall not
constitute notice, to
Skadden, Arps, Slate, Meagher
& Flom
919 Third Avenue
New York, N.Y. 10022
Telecopy: (212) 735-3764
Attention: Eric L. Cochran
and
(b) if to Harris, to
Harris Computer Systems Corporation
2101 W. Cypress Creek Road
Ft. Lauderdale, FL 33309
Attention: Daniel Dunleavy
Telecopy: (305) 973-5253
with a copy, which copy shall not
constitute notice, to
Holland & Knight
One East Broward Blvd.
P.O. Box 14070
Fort Lauderdale, FL 33302
Telecopy: (305) 463-2030
Attention: Brian Foremny
Section 11.4 Interpretation. Any reference in this Agreement to
an "Article", a "Section" or a "Schedule" without reference to a document
is a reference to an Article or a Section hereof or a Schedule hereto.
Notwithstanding any specific reference to a Schedule in this Agreement,
all of the representations, warranties and covenants of the parties
contained in this Agreement are qualified by the entire Disclosure
Schedule. With respect to any discrepancy between this Agreement and the
Ancillary Agreements, and other agreements and instruments delivered
herewith, the provisions set forth in this Agreement shall control. The
headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "hereof", "herein", and "hereunder" are used
in this Agreement they shall refer to this Agreement as a whole unless the
context otherwise requires. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed
by the words "without limitation." The phrases "the date of this
Agreement," "the date hereof" and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to the date first
written above. The use of any gender herein shall be deemed to include the
other gender.
Section 11.5 Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.
Section 11.6 Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement, including all Schedules hereto, together with the
Ancillary Agreements referred to in Section 2.4 and the Confidentiality
Agreement (a) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof, and (b) except as
expressly provided herein are not intended to confer upon any person other
than the parties hereto and thereto any rights or remedies hereunder or
thereunder.
(b) Effective as of the date hereof, the Agreement and Plan of
Merger and Reorganization, dated November 5, 1995, among Harris, Concurrent
and Concurrent Acquisition Corporation, is hereby terminated by the mutual
consent of Harris and Concurrent.
Section 11.7 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Delaware
applicable to contracts made, executed, delivered and performed wholly
within the State of Delaware, without regard to any applicable conflicts of
law.
Section 11.8 Specific Performance. The parties hereto agree
that if any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached,
irreparable damage would occur, no adequate remedy at law would exist and
damages would be difficult to determine, and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
Section 11.9 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. This Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Section 11.10 Incorporation of Exhibits. The
Disclosure Schedule, Concurrent Disclosure Schedule and
all Exhibits attached hereto and referred to herein are
hereby incorporated herein and made a part hereof for
all purposes as if fully set forth herein.
Section 11.11 Severability. Any term or pro-
vision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions
of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
IN WITNESS WHEREOF, Concurrent and Harris have caused this
Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
CONCURRENT COMPUTER CORPORATION
By: /s/ John T. Stihl
John T. Stihl
Chairman, President and
Chief Executive Officer
HARRIS COMPUTER SYSTEMS
CORPORATION
By: /s/ E. Courtney Siegel
E. Courtney Siegel
Chairman, President and
Chief Executive Officer
DESIGNATION, PREFERENCES AND RIGHTS OF CLASS B
CONVERTIBLE PREFERRED STOCK
1. DESIGNATION AND NUMBER OF SHARES. The designation of such
series shall be 9.00% Class B Convertible Preferred Stock (the "Convertible
Preferred Stock"), and the number of shares constituting such series
initially shall be [1,000,000].
2. PAR VALUE; PREEMPTIVE RIGHTS. As provided in Article Fourth
of the Corporation's Restated Certificate of Incorporation, the Convertible
Preferred Stock shall have a par value of $.01 per share. Holders of
Convertible Preferred Stock shall not be entitled to any preemptive rights
to acquire shares of any class or series of capital stock of the
Corporation.
3. RANK. The Convertible Preferred Stock shall rank, with
respect to rights to receive dividends and rights to receive distributions
upon the liquidation, winding up or dissolution of the Corporation (whether
voluntary or involuntary): (a) senior to the Corporation's Common Stock,
par value $.01 per share (the "Common Stock"), and senior to any class or
series of capital stock, including any preferred stock, issued by the
Corporation, other than the Class A Preferred Stock (the "Junior Stock"),
and (b) on a parity with the Class A Preferred Stock (the "Parity Stock").
4. DIVIDENDS AND DISTRIBUTIONS; METHOD OF PAYMENT. (a) The
holders of shares of Convertible Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for such purpose, dividends at the rate per annum of
9.00% of the Liquidation Preference (as defined in Section 8 hereof) of
such shares. Such dividends shall be fully cumulative, shall accumulate
from the date of original issuance of the Convertible Preferred Stock, and
shall be payable quarterly in arrears in cash on each [ ], [ ], [ ] and [ ]
, commencing ______, 1996 1 (provided, that if any such date is not a
Business Day, then such dividend shall be payable without interest on the
next succeeding Business Day), to holders of record as they appear on the
stock books of the Corporation on such record dates as shall be fixed by
the Board of Directors. Such record dates shall be not more than 60 nor
less than 10 days preceding the respective dividend payment dates. The
amount of dividends payable per share of Convertible Preferred Stock for
each full quarterly dividend period shall be computed by dividing the
annual dividend amount by four. The amount of dividends payable for the
initial dividend period and for any other period shorter than a full
quarterly dividend period shall be computed on the basis of a 360-day year
of twelve 30-day months.
Dividends on account of arrears for any past dividend periods
may be declared and paid at any time, without reference to any regular
dividend payment date, to holders of record of Convertible Preferred Stock
on such date, not exceeding 45 days preceding the payment date thereof, as
may be fixed in advance by the Board of Directors.
Dividends shall not be paid or declared and set apart for
payment on any Parity Stock for any period unless full cumulative dividends
have been, or contemporaneously are, paid or declared and set apart for
payment on the Convertible Preferred Stock for all dividend periods
terminating on or prior to the date of payment of such full cumulative
dividends. Dividends shall not be paid or declared and set apart for
payment on the Convertible Preferred Stock for any period unless full
cumulative dividends have been, or contemporaneously are, paid or declared
and set apart for payment on any Parity Stock for all dividend periods
terminating on or prior to the date of payment of such full cumulative
dividends. When dividends are not paid in full upon the Convertible
Preferred Stock and any Parity Stock, the Corporation may make dividend
payments on account of arrears on the Convertible Preferred Stock or any
such Parity Stock, provided that the Corporation shall make such payments
ratably upon all outstanding shares of Convertible Preferred Stock and
such Parity Stock in proportion to the respective amounts of dividends in
arrears upon all such outstanding shares of Convertible Preferred Stock
and Parity Stock to the date of such dividend payment.
So long as any Convertible Preferred Stock shall be
outstanding, the Corporation shall not declare or pay any dividends on the
Common Stock or any other Junior Stock, or make any payment on account of,
or set apart money for, a sinking fund or other similar fund or agreement
for the purchase, redemption or other retirement of any shares of Junior
Stock, or make any distribution in respect thereof, whether in cash or
property or in obligations or stock of the Corporation, other than (A) the
Rights (as defined in Section 13 hereof) and (B) a distribution consisting
solely of Junior Stock (such dividends, payments, setting apart and
distributions being herein called "Junior Stock Payments"), unless the
following conditions shall be satisfied at the date of such declaration in
the case of any such dividend, or the date of such setting apart in the
case of any such fund, or the date of such payment or distribution in the
case of any other Junior Stock Payment:
(i) full cumulative dividends shall have been paid or declared
and set apart for payment on all outstanding shares of
Convertible Preferred Stock through the last quarterly dividend
payment date established pursuant to this Section 4(a) that
immediately precedes such dividend, setting apart, payment or
distribution; and
(ii) the Corporation shall not be in default or in arrears with
respect to any redemption (whether optional or mandatory) of
any shares of Convertible Preferred Stock.
Holders of shares of Convertible Preferred Stock shall not be
entitled to any dividend in excess of full cumulative dividends on such
shares. No interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend payment that is in arrears.
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1 Insert as the first payment date the first day of the first
fiscal quarter following the Closing.
(a) The Corporation may pay dividends pursuant to this Section 4 and
any redemption payments pursuant to Sections 5 and 6 hereof to holders of
record of Convertible Preferred Stock by checks payable to such holders
in money of the United States.
5. REDEMPTION AT OPTION OF THE CORPORATION. Whenever the
Current Market Price (as defined in Section 13) exceeds $3.75 (the
"Triggering Price"), as such price may be adjusted pursuant to Section 9(e)
hereof, prior to the date of any notice of redemption, the Corporation may,
at its option, redeem all or a portion of the shares of Convertible
Preferred Stock, at any time or from time to time, at a price per share
equal to the Liquidation Preference. The Corporation's right to redeem
pursuant to this provision is subject to the payment of all accrued and
accumulated but unpaid dividends, whether or not declared, without
interest, to the Redemption Date (as defined below) on the shares to be
redeemed; and dividends on the shares to be redeemed will cease to accrue
on the Redemption Date.
Notice of any redemption pursuant to this Section 5 shall be
given by the Corporation by first class mail, postage prepaid, not more
than 30 days after the end of the period during which the applicable
Current Market Price is determined and not less than 30 or more than 90
days prior to the date fixed for redemption (the "Redemption Date"), to
each holder of record of the shares to be redeemed, at such holder's
address as shown on the stock register of the Corporation. Each such notice
shall state: (a) the Redemption Date; (b) the number of shares of
Convertible Preferred Stock to be redeemed and, if less than all such
shares held by such holder are to be redeemed, the number of such shares to
be redeemed from such holder; (c) the Redemption Price; (d) the place or
places where certificates for such shares are to be surrendered for payment
of the Redemption Price; (e) the then effective Conversion Price (as
defined in Section 9(a) hereof); (f) that the right of holders of
Convertible Preferred Stock called for redemption to exercise their
conversion rights pursuant to Section 9 hereof shall cease and terminate as
to such shares at the close of business on the Redemption Date (provided
that there is no default in payment of the Redemption Price); (g) that
payment of the Redemption Price will be made upon presentation and
surrender of certificates representing the shares of Convertible Preferred
Stock called for redemption; (h) that, in accordance with the second
sentence of the first paragraph of this Section 5, accumulated but unpaid
dividends to the Redemption Date on the shares to be redeemed will be paid
on the Redemption Date; and (i) that dividends on the shares to be redeemed
will cease to accrue on the Redemption Date. If a notice is mailed to a
holder in the manner provided above within the time prescribed, it is duly
given with respect to such holder. Notice having been mailed as aforesaid,
from and after the Redemption Date (unless default shall be made by the
Corporation in providing money for the payment of the Redemption Price)
dividends on the shares of Convertible Preferred Stock so called for
redemption shall cease to accrue, and such shares shall no longer be deemed
to be outstanding, and all rights of the holders thereof as shareholders of
the Corporation by virtue of the ownership of such shares (except the right
to receive from the Corporation the Redemption Price without interest)
shall cease. Upon surrender in accordance with such notice of the certifi-
cates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors shall so require and the notice shall
so state), the Corporation shall redeem such shares at the Redemption
Price.
If less than all the then outstanding shares of Convertible
Preferred Stock are to be redeemed, the Corporation shall effect such
redemption pro rata (as nearly as practicable) among all holders of
Convertible Preferred Stock. If fewer than all the shares represented by
a surrendered certificate or certificates are redeemed, the Corporation
shall issue a new certificate representing the unredeemed shares.
Notwithstanding the foregoing, the Corporation shall not redeem less than
all the outstanding shares of Convertible Preferred Stock pursuant to this
Section 5, or purchase or acquire any shares of Convertible Preferred Stock
otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of shares of Convertible Preferred Stock, unless full
cumulative dividends shall have been paid upon all outstanding shares of
Convertible Preferred Stock for all past dividend periods.
6. MANDATORY REDEMPTION. On _____2, 2006 (the "Mandatory
Redemption Date"), the Corporation shall redeem all of the Convertible
Preferred Stock then outstanding at the Liquidation Preference. Accrued
and accumulated but unpaid dividends, whether or not declared, without
interest, to the Mandatory Redemption Date will be paid on the Mandatory
Redemption Date and on and after the Mandatory Redemption Date, dividends
will cease to accumulate on the Convertible Preferred Stock.
Notice of such redemption shall be given by the Corporation by
first class mail, postage prepaid, not less than 30 or more than 90 days
prior to the Mandatory Redemption Date, to each holder of record of the
shares to be redeemed, at such holder's address as shown on the stock
register of the Corporation. Each such notice shall state: (a) the
Mandatory Redemption Date; (b) the Redemption Price; (c) the place or
places where certificates for such shares are to be surrendered for
payment of the Redemption Price; (d) the then effective Conversion Price;
(e) that the right of holders of Convertible Preferred Stock to exercise
their conversion rights pursuant to Section 9 hereof shall cease and
terminate at the close of business on the Mandatory Redemption Date
(provided that there is no default in payment of the Redemption Price); (f)
that payment of the Redemption Price will be made upon presentation and
surrender of certificates representing the shares of Convertible Preferred
Stock; (g) that, in accordance with the second sentence of the first
paragraph of this Section 6, accumulated but unpaid dividends to the
Mandatory Redemption Date will be paid on the Mandatory Redemption Date;
and (h) that on and after the Mandatory Redemption Date, dividends will
cease to accumulate on the Convertible Preferred Stock. If a notice is
mailed to a holder in the manner provided above within the time prescribed,
it is duly given with respect to such holder.
On or after the Mandatory Redemption Date, each holder of the
shares of outstanding Convertible Preferred Stock (other than shares which
have been duly surrendered for conversion at or before the close of
business on the Mandatory Redemption Date) shall surrender the certifi-
cate or certificates evidencing such shares to the Corporation at the
place designated in the redemption notice and shall thereupon be entitled
to receive payment of the Redemption Price. If, on the Mandatory Redemption
Date, funds necessary for the redemption shall be available therefor and
shall have been irrevocably deposited or set aside, then, notwithstanding
that the certificates evidencing any shares to be redeemed shall not have
been surrendered, the dividends with respect to such shares shall cease to
accumulate on and after the Mandatory Redemption Date, such shares shall no
longer be deemed to be outstanding, the holders thereof shall cease to be
shareholders of the Corporation by virtue of the ownership of such
shares, and all rights whatsoever with respect to such shares (except the
right of the holders thereof to receive the Redemption Price without
interest upon surrender of their certificates) shall terminate.
7. VOTING.
(a) No General Voting Rights. Except as otherwise provided from
time to time by the laws of Delaware or this Corporation's Restated
Certificate of Incorporation, the entire voting power for the election of
directors of the Corporation and for all other purposes shall be vested
in the holders of Common Stock which shall vote as a single class, with the
holder of each share of Common Stock being entitled to one vote in respect
of such shares.
(b) Other Voting Rights. Without the consent or affirmative
vote of the holders of a majority of the outstanding shares of Convertible
Preferred Stock, voting separately as a class to the exclusion of holders
of any other shares of capital stock of the Corporation (either in writing
without a meeting, if permitted by the Certificate of Incorporation and
applicable law, or by vote at any meeting called for that purpose), the
Corporation may not amend, alter or repeal (by any means whatsoever,
including, without limitation, by merger or consolidation any provision of
the Certificate of Incorporation, any amendment or supplement thereto or
this Certificate of Designations (or any similar document relating to any
series or class of preferred stock of the Corporation), if such action
would (a) increase or decrease the aggregate number of authorized shares
of Convertible Preferred Stock, (b) increase or decrease the par value of
such shares or (c) amend, alter, repeal or change the powers, rights,
privileges or preferences of the holders of shares of Convertible Preferred
Stock so as to affect them adversely, provided, however, that the creation,
issuance or increase in the amount of authorized shares of any series of
Junior Stock will not be deemed to adversely affect such powers, rights,
privileges or preferences of the Convertible Preferred Stock.
For purposes of the foregoing provisions of this Section 7,
each share of Convertible Preferred Stock shall have one vote per share.
The foregoing provisions of this Section 7 shall not apply if, at or prior
to the time when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding shares of Convertible Preferred
Stock shall have been redeemed or called for redemption and sufficient
funds shall have been irrevocably deposited in trust to effect such
redemption and all other steps necessary or desirable to effect such
redemption shall have been taken.
8. LIQUIDATION PREFERENCE. (i) In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of Convertible Preferred Stock shall be entitled
to receive out of the assets of the Corporation available for distribution
to shareholders, before any distribution of assets shall be made to the
holders of the Common Stock or of any other shares of Junior Stock, a
liquidating distribution in the total amount of [$10,000,000]3 (the
"Total Liquidation Preference") or an amount equal to $[10] per share (the
"Liquidation Preference") plus an amount equal to any accrued and
accumulated but unpaid dividends thereon to the date of final distribution
to such holders, whether or not declared, without interest; provided,
however, if in accordance with the provisions of the Purchase and Sale
Agreement, dated as of March 26, 1996, between the Corporation and Harris
Computer Systems Corporation (the "Purchase and Sale Agreement") the amount
of the net current assets (the "Net Assets")shown on the Final Net
Current Asset Reconciliation (as defined in the Purchase and Sale
Agreement)(such amount shown, the "Actual Net Asset Amount") is less than
the lesser of (i) the amount of the Net Assets shown on the Projected Net
Current Asset Reconciliation (as defined in the Purchase and Sale
Agreement) and (ii) $14,400,000 (such lesser amount, the "Applicable
Amount"), then the Total Liquidation Preference shall be adjusted by
reducing it, dollar for dollar, to the extent of the difference (the
"Difference") between the Actual Net Asset Amount and the Applicable
Amount. The Liquidation Preference shall then be reduced by the amount
[(rounded to the nearest $[ ]] determined by dividing the Difference by the
number of issued and outstanding shares of Convertible Preferred Stock as
of the date of the Final Net Current Asset Reconciliation or, if later, the
date any Reconciliation Disagreement (as defined in the Purchase and Sale
Agreement) is resolved. Alternatively, if the amount of the Net Assets
shown on the Final Net Current Asset Reconciliation after resolution of all
reconciliation Disagreements (as defined in the Purchase and Sale
Agreement) is in excess of the Net Assets shown on the Projected Net
Current Asset Reconciliation (as defined in the Purchase and Sale
Agreement), then the Total Liquidation Preference shall be increased,
dollar for dollar, to the extent of such excess up to $10,000,000 (such
excess up to $10,000,000, the "Excess"). The Liquidation Preference shall
then be increased by the amount [(rounded to the nearest $[ ]] determined
by dividing the Excess by the number of issued and outstanding shares of
Convertible Preferred Stock as of the date of the Final Net Current Asset
Reconciliation or, if later, the date any Reconciliation Disagreement is
resolved.
(ii) The Total Liquidation Preference shall also be
further reduced to the extent that the parties to the Purchase and Sale
Agreement or a court of competent jurisdiction determines (which
determination by such court shall be final and nonappealable) that any
Asset (as defined in the Purchase and Sale Agreement) required to be
transferred by the Purchase and Sale Agreement was not in fact transferred,
such reduction (the "Net Asset Reduction") to be equal to the book value of
such Asset on the Final Net Current Asset Reconciliation or with respect
to non-current assets the Audited Balance Sheet (as defined in the Purchase
and Sale Agreement) less any cash paid to the Corporation in respect
thereof. The Liquidation Preference shall then be reduced by the amount
[(rounded to the nearest $[])] determined by dividing the Net Asset
Reduction by the number of issued and outstanding shares of Convertible
Preferred Stock as of the date the amount of the Net Asset Reduction is
determined. In addition, in accordance with the terms of the Purchase and
Sale Agreement, the Total Liquidation Preference shall be further reduced
by the amount of any Damages (as defined in the Purchase and Sale
Agreement), less any cash paid to the Corporation in respect thereof (the
"Net Damages"), incurred by the Corporation and its Representatives (as
defined in the Purchase and Sale Agreement) as a result of a wilful breach
by Harris of a representation or warranty contained in the Purchase and
Sale Agreement. The Liquidation Preference shall then be reduced by the
amount [(rounded to the nearest $[ ])] determined by dividing the Net
Damages by the number of issued and outstanding shares of Convertible
Preferred Stock as of the date the total amount of the Net Damages is
determined.
If, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the assets available for
distribution are insufficient to pay in full the amounts payable with
respect to the Convertible Preferred Stock and any other outstanding
shares of Parity Stock, the holders of the Convertible Preferred Stock and
of such other Parity Stock shall share ratably in any distribution of
assets of the Corporation in proportion to the full respective preferential
amounts to which they are entitled.
After payment to the holders of the Convertible Preferred Stock
of the full preferential amounts provided for in this Section 8, the
holders of the Convertible Preferred Stock shall not be entitled to any
further participation in any distribution of assets by the Corporation.
For purposes of this Section 8, neither a consolidation or
merger of the Corporation with or into another person nor a sale or
transfer of all or substantially all of the assets of the Corporation
will be deemed a liquidation, dissolution or winding up of the Corporation.
9. CONVERSION AND EXCHANGE RIGHTS.
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2 Insert the first day of the month of the date of original
issuance of the Convertible Preferred Stock.
3 May be adjusted pursuant to the terms of the Purchase and Sale
Agreement.
(a) General Rights to Convert. Each holder of a share of
Convertible Preferred Stock shall have the right, at the option of such
holder, at any time to convert, upon the terms and provisions of this
Section 9, one or more shares of Convertible Preferred Stock into fully
paid and nonassessable shares of Common Stock of the Corporation (and such
other securities and property as such holder may be entitled to as
hereinafter provided). Such conversion of shares of Convertible Preferred
Stock to shares of Common Stock shall be made at a conversion rate of one
share of Convertible Preferred Stock for a number of shares of Common Stock
equal to (x) the Liquidation Preference divided by (y) the conversion price
applicable per share of Common Stock at the time of conversion (the
"Conversion Price"). The Conversion Price shall initially be $2.50. The
Conversion Price shall be adjusted in certain instances as provided below.
An amount in cash equal to the full cumulative dividends
accrued and accumulated but unpaid, whether or not declared and without
interest, on such shares of Convertible Preferred Stock shall be paid on
the effective date of the conversion through the last quarterly payment
date that immediately precedes the effective date of the conversion.
(b) Mechanics of Conversion. In order to convert shares of
Convertible Preferred Stock into Common Stock, the holder or holders
thereof shall surrender the certificate or certificates evidencing such
shares of Convertible Preferred Stock at the office of the transfer agent
for the Convertible Preferred Stock (or if there is no such transfer agent,
to the secretary of the Corporation), which certificate or certificates
shall be duly endorsed to the Corporation or in blank, or accompanied by
proper instruments of transfer, accompanied by (i) a written notice to the
Corporation that the holder elects so to convert all or a specified number
of such shares of Convertible Preferred Stock and specifying the name or
names (with address or addresses) in which a certificate or certificates
evidencing shares of Common Stock are to be issued and (ii) if required
pursuant to Section 9(j) hereof, an amount sufficient to pay any transfer
or similar tax (or evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid). If more than one share of
Convertible Preferred Stock shall be surrendered for conversion at one time
by the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number
of shares of Convertible Preferred Stock so surrendered.
Shares of Convertible Preferred Stock shall be deemed to have
been converted immediately prior to the close of business on the day of the
surrender of such shares for conversion in accordance with the foregoing
provisions, and the person or persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Common Stock at such time. As promptly as
practicable on or after the surrender of a certificate or certificates
for conversion and the receipt of the notice relating thereto (and in any
event within five Business Days thereafter), the Corporation shall deliver
or cause to be delivered to the person or persons entitled to receive the
same: (i) a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion; (ii) any cash owed in lieu of
any fraction of a share, determined in accordance with Section 9(i)
hereof; (iii) if less than the full number of shares of Convertible
Preferred Stock evidenced by the surrendered certificate or certificates
is being converted, a new certificate or certificates, of like tenor, for
the number of shares evidenced by such surrendered certificate or
certificates less the number of shares being converted; and (iv) subject to
the provisions of the second paragraph of Section 9(a), an amount in cash
equal to the full cumulative dividends accrued but unpaid on such shares of
Convertible Preferred Stock through the last quarterly dividend payment
date established pursuant to Section 4 hereof that immediately precedes the
effective date of conversion. If for any reason the Corporation is
unable to pay any accrued dividends on the Convertible Preferred Stock
being converted, the Corporation will pay such dividends to the converting
holder as soon thereafter as funds of the Corporation are legally avail-
able for such payment and may be paid under applicable credit agreements
with interest thereon, accruing at a rate of 9.00% per annum. At the
request of any such converting holder, the Corporation shall deliver to
such holder a due bill or other appropriate instrument evidencing the
Corporation's obligation to such holder. A payment or adjustment shall not
be made by the Corporation upon any conversion on account of any
dividends on the Common Stock issued upon conversion.
(c) Rights to Exchange. (i) Corporation may, at its option,
cause shares of Convertible Preferred Stock, as a whole or in part, at any
time and from time to time, to be exchanged for debentures of the Corpo-
ration having the terms set forth in Exhibit [ ] to the Purchase and Sale
Agreement (the "Debentures"). Such exchange of shares of Convertible
Preferred Stock for the Debentures pursuant to this Section 9(c)(i) shall
be made at an exchange rate of Debentures in the principal amount equal to
the Liquidation Preference.
On the effective date of the exchange pursuant to this Section
9(c)(i), the Corporation shall pay holders of Convertible Preferred Stock
to be exchanged an amount in cash equal to the full cumulative dividends
accrued and accumulated but unpaid, whether or not declared and without
interest, on such shares of Convertible Preferred Stock through the last
quarterly dividend payment date that immediately precedes the effective
date of the exchange.
(ii) Each holder of shares of Convertible Preferred Stock
shall have the right at any time after September 1, 1998 upon the terms and
conditions set forth in this Section 9(c)(ii), at the option of such
holder, whenever dividends due for four quarterly periods have not been
paid, to exchange such shares of Convertible Preferred Stock, as a whole or
in part, for Debentures. Such exchange of shares of Convertible Stock for
the Debentures shall be of an Exchange Rate of Debentures in the principal
amount equal to the Liquidation Preference plus all dividends which are
accrued and accumulated but unpaid, whether or not declared and without
interest up to the calendar quarter immediately preceding the calendar
quarter in which the date of conversion occurs.
(d) Mechanics of the Exchange. In connection with the exchange
shares of Convertible Preferred Stock for the Debentures, the holder or
holders thereof shall surrender the certificate or certificates evidencing
such shares of Convertible Preferred Stock at the office of the transfer
agent (or the secretary of the Corporation if there is no such transfer
agent) for the Convertible Preferred Stock, which certificate or
certificates shall be duly endorsed to the Corporation or in blank, or
accompanied by proper instruments of transfer, accompanied by (i) a
written notice to the Corporation that the holder shall thereby exchange
all or the number specified by the Corporation and specifying the name or
names (with address or addresses) in which a certificate or certificates
evidencing the Debentures are to be issued and (ii) if required pursuant to
Section 9(i) hereof, an amount sufficient to pay any transfer or similar
tax (or evidence reasonably satisfactory to the Corporation demon-
strating that such taxes have been paid). When more than one share of
Convertible Preferred Stock is to be surrendered for exchange at one time
by the same holder, the principal amount of the Debentures issuable upon
exchange thereof shall be computed on the basis of the aggregate number of
shares of Convertible Preferred Stock so surrendered.
Shares of Convertible Preferred Stock shall be deemed to have
been exchanged immediately prior to the close of business on the day of the
surrender of such shares for exchange in accordance with the foregoing
provisions, and the person or persons entitled to receive the Debentures
issuable upon such exchange shall be treated for all purposes as the record
holder or holders of such Debentures at such time. As promptly as prac-
ticable on or after the surrender of a certificate or certificates for
exchange and the receipt of the notice relating thereto (and in any event
within five Business Days thereafter), the Corporation shall deliver or
cause to be delivered to the person or persons entitled to receive the
same: (i) a certificate or certificates for the principal amount of the
Debentures issuable upon such conversion; (ii) any cash owed in lieu of any
fraction of a Debenture in accordance with Section 9(j) hereof; (iii) if
less than the full number of shares of Convertible Preferred Stock
evidenced by the surrendered certificate or certificates is being
exchanged, a new certificate or certificates, of like tenor, for the number
of shares evidenced by such surrendered certificate or certificates less
the number of shares being exchanged; and (iv) if exchanged pursuant to
Section 9(c)(i), subject to the provisions of the second paragraph of
Section 9(c)(i), an amount in cash equal to the full cumulative dividends
accrued but unpaid on such shares of Convertible Preferred Stock through
the last quarterly dividend payment date established pursuant to Section 4
hereof that immediately precedes the effective date of exchange. If for any
reason the Corporation is unable to pay any accrued dividends on the
Convertible Preferred Stock being exchanged pursuant to Section 9(c)(i),
the Corporation will pay such dividends to the converting holder as soon
thereafter as funds of the Corporation are legally available for such
payment and may be paid under applicable credit agreements with interest
thereon, accruing at a rate of 9.00% per annum. At the request of any such
holder converting pursuant to Section 9(c)(i), the Corporation shall
deliver to such holder a due bill or other appropriate instrument
evidencing the Corporation's obligation to such holder.
(e) Adjustments to Conversion Price and the Triggering
Price. The Conversion Price and Triggering Price shall be adjusted
from time to time as follows:
(i) In case the Corporation shall pay or make a dividend or
other distribution on any class of capital stock of the Corporation
in Common Stock, the Conversion Price and Triggering Price in
effect at the close of business on the date fixed for the
determination of shareholders entitled to receive such dividend or
other distribution shall be reduced to a price determined by
multiplying such Conversion Price and Triggering Price each by a
fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed
for such determination and of which the denominator shall be the
sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to
become effective at the opening of business on the day following the
date fixed for such determination. In the event that such dividend
or distribution is not so paid or made, the Conversion Price and
Triggering Price shall be readjusted to be the Conversion Price and
Triggering Price which would then be in effect if such date fixed for
the determination of shareholders entitled to receive such dividend or
other distribution had not been fixed.
(ii) In case the Corporation shall issue rights or warrants to
all holders of its outstanding shares of Common Stock entitling
them to subscribe for or purchase shares of Common Stock (or
securities convertible into (which for purposes of this paragraph
(ii) shall also mean exchangeable for) Common Stock) at a price per
share less than the Current Market Price (as defined in Section 13
hereof) of Common Stock on the date fixed for the determination of
shareholders entitled to receive such rights or warrants, the
Conversion Price and Triggering Price in effect at the close of
business on the date fixed for such determination shall be reduced to
a price determined by multiplying such Conversion Price and
Triggering Price each by a fraction of which the numerator shall be
the total number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the number
of shares of Common Stock which the aggregate of the offering price
of the total number of shares of Common Stock so offered for
subscription or purchase (or the aggregate conversion price of the
convertible securities so offered) would purchase at such Current
Market Price and of which the denominator shall be the number of
shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the total number of
additional shares of Common Stock so offered for subscription or
purchase (or into which the convertible securities so offered are
convertible), such reduction to become effective at the opening of
business on the day following the date fixed for such determination.
To the extent that shares of Common Stock are not delivered after the
expiration of such rights or warrants, the Conversion Price and
Triggering Price shall be readjusted to the Conversion Price and
Triggering Price which would then be in effect had the adjustments
made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock
actually delivered. In the event that such rights or warrants are not
so issued, the Conversion Price and Triggering Price shall be
readjusted to be the Conversion Price and Triggering Price which
would then be in effect if the date fixed for the determination of
shareholders entitled to receive such rights or warrants had not
been fixed.
(iii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
Conversion Price and Triggering Price in effect at the close of
business on the date upon which such subdivision becomes effective
shall be proportionately reduced, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a
smaller number of shares of Common Stock, the Conversion Price and
Triggering Price in effect at the close of business on the date upon
which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become
effective at the opening of business on the day following the date
upon which such subdivision or combination becomes effective.
(iv) Notwithstanding any other provision of this Section 9, no
adjustment in the Conversion Price or Triggering Price shall be re-
quired unless such adjustment would require an increase or decrease
of at least 1% in the Conversion Price or Triggering Price, as the
case may be ; provided, however, that any adjustments which by reason
of this paragraph (iv) are not required to be made shall be carried
forward and taken into account in determining whether any subsequent
adjustment shall be required. Once the cumulative effect of any
such adjustments that are carried forward would result in an increase
or decrease of at least 1% in the Conversion Price or Triggering
Price, then the Conversion Price or Triggering Price shall be changed
to reflect all adjustments called for by this Section 9 and not
previously made.
(v) Notwithstanding any other provision of this Section 9, no
adjustment to the Conversion Price or Triggering Price shall reduce
the Conversion Price or Triggering Price below the then par value per
share of the Common Stock, and any such purported adjustment shall
instead reduce the Conversion Price or Triggering Price to such par
value.
(vi) Whenever the Conversion Price or Triggering Price is
adjusted as provided herein, the Corporation shall compute the
adjusted Conversion Price or Triggering Price in accordance with
this Section 9 and shall prepare a certificate signed by the
Treasurer of the Corporation setting forth the adjusted Conversion
Price or Triggering Price and showing in reasonable detail the facts
upon which such adjustment is based, and the corporation shall mail
a copy of such certificate as soon as practicable to the holders of
record of the shares of Convertible Preferred Stock.
(vii) In any case in which this Section 9 shall require that an
adjustment shall become effective on the day following a record date
for an event, the Corporation may defer until the occurrence of such
event (i) issuing to the holder of any share of Convertible Preferred
Stock, if such share is converted after such record date and before
the occurrence of such event, the additional Common Stock issuable
upon such conversion by reason of the adjustment required by such
event over and above Common Stock issuable upon such conversion
before giving effect to such adjustment and (ii) paying to such
holders any amount in cash in lieu of a fractional share of Common
Stock pursuant to paragraph (i) of this Section 9; provided, that,
upon request of any such holder, the Corporation shall deliver to
such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional Common Stock and such
cash, upon the occurrence of the event requiring such adjustment;
and provided, further, that the failure of such event to occur shall
relieve the Corporation of the obligation to make an additional
distribution upon conversion by reason of the adjustment required by
the occurrence of such event.
(viii) The Corporation may make such reductions in the
Conversion Price, in addition to those required by this Section 9, as
the Board of Directors considers to be advisable in order that any
event treated for Federal income tax purposes as a dividend or
distribution of stock (or rights to acquire stock) shall not be
taxable to the recipients. The Corporation at any time or from time
to time, as permitted by applicable law and to the extent the Board
of Directors determines that such reduction would be in the best
interests of the Corporation, may reduce the Conversion Price by any
amount for any period of time, if the period is at least twenty (20)
days and if the reduction is irrevocable during the period.
(ix) Whenever the Conversion Price is reduced by the
Corporation pursuant to paragraph (viii) of this Section 9(e), the
Corporation shall mail to holders of the Convertible Preferred Stock
a notice of the reduction. The Corporation shall mail such notice by
first class mail, postage prepaid, at least fifteen (15) days before
the date the reduced Conversion Price takes effect, to each holder of
record of shares of Convertible Preferred Stock at such holder's
address as shown on the stock register of the Corporation. The notice
shall state the reduced Conversion Price and the period it will be in
effect. If a notice is mailed to a holder in the manner provided
above within the time prescribed, it is duly given with respect to
such holder.
(f) Reclassification, Consolidation, Merger or Sale of Assets.
In the event that the Corporation shall be a party to any transaction
(including without limitation any (i) recapitalization or
reclassification of the Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination of the Common Stock), (ii) any
consolidation or merger of the Corporation with or into any other person or
any merger of another person into the Corporation (other than a merger
which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Corporation),
(iii) any sale or transfer of all or substantially all of the assets of the
Corporation, or (iv) any compulsory share exchange) pursuant to which the
Common Stock shall be exchanged for, converted into, acquired for or
constitute solely the right to receive other securities, cash or other
property, then appropriate provision shall be made as part of the terms of
such transaction whereby the holder of each share of Convertible Preferred
Stock then outstanding shall thereafter have the right to convert such
share only into the kind and amount of securities, cash and other property
receivable upon such recapitalization, reclassification, consolidation,
merger, sale, transfer or share exchange by a holder of the number of
shares of Common Stock into which such share of Convertible Preferred
Stock might have been converted immediately prior to such transaction. The
Corporation or the person formed by such consolidation or resulting from
such merger or which acquired such assets or which acquired the
Corporation's shares, as the case may be, shall make provisions in its
certificate or articles of incorporation or other constituent document to
establish such right. Such certificate or articles of incorporation or
other constituent document shall provide for adjustments which, for events
subsequent to the effective date of such certificate or articles of
incorporation or other constituent document, shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Section 9.
The above provisions shall similarly apply to successive transactions of
the type described in this paragraph.
(g) Prior Notice of Certain Events. In case at any time:
(i) the Corporation shall (1) declare any dividend or any other
distribution on its Common Stock, other than (A) a dividend payable
solely in shares of Common Stock or (B) the Rights or (2) declare or
authorize a redemption or repurchase of any of the then outstanding
shares of Common Stock or any other Junior Stock; or
(ii) the Corporation shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or of any other rights or
warrants; or
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock), or of
any consolidation or merger to which the Corporation is a party and
for which approval of any shareholders of the Corporation shall be
required, or of the sale or transfer of all or substantially all of
the assets of the Corporation or of any compulsory share exchange
whereby the Common Stock is converted into other securities, cash
or other property; or
(iv) of the voluntary or involuntary liq-
uidation, dissolution or winding up of the Corporation;
then, in any such case, the Corporation shall cause to be mailed to the
holders of record of the Convertible Preferred Stock, at their last
addresses as they shall appear upon the stock transfer books of the
Corporation, at least twenty (20) days prior to the applicable record date
or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend,
distribution, redemption, repurchase or granting of rights or warrants or,
if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distribution,
redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer, share
exchange, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock
for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
liquidation, dissolution or winding up. No failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of
the corporate action required to be specified in such notice.
(h) Reservation of Shares, etc. The Corporation shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, solely for the purpose of effecting
the conversion of shares of Convertible Preferred Stock, the full number of
shares of Common Stock then deliverable upon the conversion of all shares
of Convertible Preferred Stock then outstanding. If the Corporation shall
issue any securities or make any change in its capital structure which
would change the number of shares of Common Stock into which each share of
the Convertible Preferred Stock shall be convertible as herein provided,
the Corporation shall at the same time also make proper provision so that
thereafter there shall be a sufficient number of shares of Common Stock
authorized and reserved, free from preemptive rights, for conversion of the
outstanding Convertible Preferred Stock on the new basis.
If any Debentures or shares of Common Stock required to be
reserved for purposes of exchange or conversion of the Convertible
Preferred Stock hereunder require registration with or approval of any
governmental authority under any Federal or State law before such
debentures or shares may be issued upon exchange or conversion, the
Corporation will in good faith and as expeditiously as possible endeavor to
cause such debentures or shares to be duly registered or approved, as the
case may be. The Corporation will, in good faith and as expeditiously as
possible, endeavor, if permitted by the rules of the applicable exchange or
quotation system, list and keep listed or quote and keep quoted on the
principal exchange or quotation system of its Common Stock, as the case may
be, upon official notice of issuance or quotation, all Debentures or shares
of Common Stock issuable upon exchange or conversion of the Convertible
Preferred Stock.
(i) No Fractional Shares or Debentures. No fractional shares or
scrip representing fractional shares of Common Stock shall be issued upon
conversion of Convertible Preferred Stock. Instead of any fraction of a
share which would otherwise be issuable upon conversion of any shares of
Convertible Preferred Stock, the Corporation shall pay a cash adjustment
in respect of such fraction in an amount equal to the same fraction of the
Closing Price (as defined in Section 13 hereof) of a share of Common Stock
(or, if there is no such Closing Price, the fair market value of a share of
Common Stock, as determined in good faith by the Board of Directors or in
any manner prescribed by the Board of Directors) at the close of business
on the Trading Day immediately preceding the date of conversion.
The Debentures will be issued in denominations of $[ ] and
integral multiples thereof. No fractional interests in the Debentures shall
be issued upon exchange of conversion of Convertible Preferred Stock.
Instead of any fraction of a Debenture which would otherwise be issuable
upon exchange of any shares of Convertible Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fraction in an
amount equal to the same fraction of the Closing Price (as defined in
Section 13 hereof) of a Debenture in the principal amount of $[ ] (or, if
there is no such Closing Price, the fair market value of a Debenture in
such principal amount, as determined in good faith by the Board of
Directors or in any manner prescribed by the Board of Directors) at the
close of business on the Trading Day immediately preceding the date of
exchange.
(j) Transfer Taxes, etc. The Corporation will pay any and all
taxes that may be payable in respect of the issue or delivery of shares of
Common Stock or Debentures on conversion or exchange of shares of
Convertible Preferred Stock pursuant hereto. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock or
Debentures in a name other than that in which the shares of Convertible
Preferred Stock so exchanged or converted were registered, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Corporation the amount of any such tax, or has estab-
lished to the satisfaction of the Corporation that such tax has been paid.
10. EXCHANGES. Certificates representing shares of
Convertible Preferred Stock shall be exchangeable, at the option
of the holder, for a new certificate or certificates of the same or
different denominations representing in the aggregate the same
number of shares of Convertible Preferred Stock.
11. OUTSTANDING SHARES. For purposes of this Certificate of
Designations, all shares of Convertible Preferred Stock shall be deemed
outstanding except for (a) shares of Convertible Preferred Stock held of
record or beneficially by the Corporation or any subsidiary of the
Corporation; (b) from the date of surrender of certificates representing
Convertible Preferred Stock for conversion pursuant to Section 9 hereof,
all shares of Convertible Preferred Stock which have been converted into
Common Stock or other securities or property pursuant to Section 9
hereof; and (c) from the date fixed for redemption pursuant to Section 5 or
6 hereof, all shares of Convertible Preferred Stock which have been called
for redemption, provided that funds necessary for such redemption are
available therefor and have been irrevocably deposited or set aside for
such purpose and all other steps necessary to effect such redemption shall
have been taken.
12. STATUS OF CONVERTIBLE PREFERRED STOCK UPON RETIREMENT.
Shares of Convertible Preferred Stock which are acquired or redeemed by the
Corporation or converted pursuant to Section 9 shall return to the status
of authorized and unissued shares of Preferred Stock of the Corporation,
without designation as to series. Upon the acquisition or redemption by the
Corporation or conversion pursuant to Section 9 of all outstanding shares
of Convertible Preferred Stock, all provisions of this Certificate of
Designations shall cease to be of further effect.
13. DEFINITIONS. For purposes of this Certificate of
Designation, the following terms shall have the meanings indicated:
(a) "Board of Directors" shall mean the board of directors of
the Corporation or any committee authorized by such board of directors to
perform any of its responsibilities with respect to the Convertible Pre-
ferred Stock.
(b) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which commercial banks in the State of New York are
authorized or required by law or executive order to close or a day which is
or is declared a national or New York state holiday;
(c) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case no
such sale takes place on such day, the average of the reported closing bid
and asked prices, regular way, in each case on the principal national
securities exchange or quotation system on which such security is quoted or
listed or admitted to trading, or, if not quoted or listed or admitted to
trading on any national securities exchange or quotation system, the
average of the closing bid and asked prices of such security on the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similarly generally accepted reporting
service, or if not so available, in such manner as furnished by any New
York Stock Exchange member firm selected from time to time by the Board of
Directors of the Corporation for that purpose or a price determined in good
faith by the Board.
(d) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the thirty consecutive Trading
Days immediately prior to the date in question.
(e) "fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction.
(f) "full cumulative dividends" shall mean, with respect to the
Convertible Preferred Stock, or any other capital stock of the Corporation,
as of any date the amount of accumulated, accrued and unpaid dividends
payable on such shares of Convertible Preferred Stock, or other capital
stock, as the case may be, whether or not earned or declared and whether or
not there shall be funds legally available for the payment thereof.
(g) "record date" shall mean, with respect to any
dividend, distribution or other transaction or event in which the holders
of Common Stock have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security) is
exchanged or converted into any combination of cash, securities or other
property, the date fixed for determination of shareholders entitled to
receive such cash, securities or other property (whether such date is fixed
by the Board of Directors or by statute, contract or otherwise), and with
respect to any subdivision or combination of the Common Stock, the
effective date of such subdivision or combination.
(h) "Rights" shall mean the rights of the Corporation that are
issuable under the Corporation's Rights Agreement, dated July 31, 1992 and
as amended from time to time, or rights to purchase any capital stock of
the Corporation under any successor stockholder rights plan or plans
adopted in replacement of the Corporations Rights Agreement.
(i) "Trading Day" shall mean (x) if the applicable security
is quoted on the Nasdaq National Market of The Nasdaq Stock Market, a day
on which trades may be made on such Nasdaq National Market or (y) if the
applicable security is listed or admitted for trading on the New York
Stock Exchange or another national securities exchange, a day on which the
New York Stock Exchange or another national securities exchange is open for
business or (z) if the applicable security is not so listed, admitted for
trading or quoted, any day other than a Saturday or Sunday or a day on
which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
EXHIBIT B
CONCURRENT COMPUTER CORPORATION
DESCRIPTION OF NEW DEBENTURES
The principal terms of the New Debentures are set
forth below.
ISSUER: Concurrent Computer Corporation.
ISSUE: Series A Debentures (the "New
Debentures").
PRINCIPAL AMOUNT: If converted pursuant to
Concurrent's right to convert,
the initial principal amount
shall equal the Total Liquidation
Preference of the 9.00% Class B
Convertible Preferred Stock (the
"Class B Preferred Stock") out-
standing on the date that the
Class B Preferred Stock is con-
verted (the "Conversion Date")
into the New Debentures in accor-
dance with Section 9(c)(i) of the
Certificate of Designation (the
"Certificate of Designation") of
the Class B Preferred Stock.
If converted pursuant to a
holder's right to convert pursu-
ant to Section 9(c)(ii) of the
Certificate of Designation, the
initial principal amount shall
equal the Total Liquidation Pref-
erence of the Class B Preferred
Stock outstanding on the Conver-
sion Date plus all dividends
which are accrued and accumulated
but unpaid, whether or not de-
clared and without interest, up
to the calendar quarter immedi-
ately preceding the quarter in
which the Conversion Date occurs.
CHANGES IN
PRINCIPAL AMOUNT: If in accordance with the provi-
sions of the Purchase and Sale
Agreement, dated as of March 26,
1996, between the Concurrent and
Harris Computer Systems Corpora-
tion (the "Purchase and Sale
Agreement") the amount of the
net current assets (the "Net As-
sets") shown on the Final Net
Current Asset Reconciliation (as
defined in the Purchase and Sale
Agreement)(such amount shown, the
"Actual Net Asset Amount") is
less the lesser of (i) the amount
of the Net Assets shown on the
Projected Net Current Asset Rec-
onciliation (as defined the Pur-
chase Agreement) and (ii)
$14,400,000 (such lesser amount,
the "Applicable Amount"), then
the Principal Amount shall be
adjusted by reducing it, dollar
for dollar, to the extent of the
difference (the "Difference")
between the Actual Net Asset
Amount and the Applicable Amount.
Alternatively, if the amount of
the Net Assets shown on the Final
Net Current Asset Reconciliation,
after resolution of all Reconcil-
iation Disagreements (as defined
in the Purchase and Sale Agree-
ment) is in excess of the Net
Current Assets shown on the Pro-
jected Net Current Asset Recon-
ciliation (as defined in the Pur-
chase and Sale Agreement), the
Principal Amount shall be in-
creased, dollar for dollar, to
the extent of such excess up to
$10,000,000. The Principal
Amount shall also be further re-
duced to the extent that the par-
ties to the Purchase and Sale
Agreement or a court of competent
jurisdiction determines (which
determination by such court shall
be final and nonappealable) that
any Asset (as defined in the Pur-
chase and Sale Agreement) re-
quired to be transferred by the
Purchase and Sale Agreement was
not in fact transferred, such
reduction (the "Net Asset Reduc-
tion") to be equal to the book
value on the Final Net Current
Asset Reconciliation or with re-
spect to noncurrent assets, the
"Audited Balance Sheet" (as de-
fined in the Purchase and Sale
Agreement) less any cash paid to
Concurrent in respect thereof.
In addition, in accordance with
the terms of the Purchase and
Sale Agreement, the Principal
Amount shall be further reduced
by the amount of any Damages (as
defined in the Purchase and Sale
Agreement), less any cash paid to
Concurrent in respect thereof
(the "Net Damages"), incurred by
Concurrent and its Representa-
tives (as defined in the Purchase
and Sale Agreement) as a result
of a wilful breach by Harris of a
representation or warranty con-
tained in the Purchase and Sale
Agreement.
These provisions will be drafted
so that there will be no double
counting of reductions or in-
creases in the Liquidation Pref-
erence of the Preferred Stock
which occurred prior to the ex-
change of such stock for the New
Debentures.
PAYMENT IN KIND: Interest payments on the New De-
bentures may be paid in cash or
in kind.
INTEREST RATE: The New Debentures will bear in-
terest at the rate of 9% per an-
num, accruing from the first day
of the calendar quarter (the "Ac-
crual Date") during which the
Conversion Date occurred, and
payable quarterly on ______,
______, _____ and _____ commenc-
ing on the Accrual Date.(1)
MATURITY DATE: June __, 2006.
OPTIONAL REDEMPTION: Subject to certain adjustments
for stock splits, stock dividends
and similar transactions, whenev-
er the Current Market Price (as
defined in the Certificate of
Designation) of the Common Stock
exceeds $3.75, Concurrent may, at
its option, redeem all or a por-
tion of the Debentures, at any
time or from time to time, at par
plus any accrued interest there-
on.
MANDATORY REDEMP On June __, 2006, Concurrent
TION: shall redeem all of the Deben-
tures then outstanding at par
plus any accrued interest thereon
or at any time the outstanding
principal amount of the Deben-
tures is less than $[ ].
CONVERSION OF
DEBENTURES: Each holder of a New Debenture
shall have the right, at the op-
tion of such holder, at any time
or from time to time, in whole or
in part, to convert such New De-
benture into fully paid and non-
assessable shares of Common Stock
of Concurrent. Such conversion
of New Debentures to shares of
Common Stock shall be made at a
conversion rate equal to (x) the
principal amount of such New De-
benture (plus any accrued and
_________________
1 Calendar quarters will be used.
unpaid interest thereon) divided
by (y) the applicable conversion
price per share of Common Stock
at the time of conversion (the
"Conversion Price"). The Conver-
sion Price shall initially be
$2.50, subject to certain adjust-
ments as provided in the Certifi-
cate of Designation. Notwith-
standing any other provision to
the contrary, the maximum number
of shares in which the New Deben-
tures shall be convertible shall
be 4,000,000 (subject to adjust-
ment on a basis similar to the
antidilution adjustments con-
tained in the Certificate of Des-
ignation).
RANKING: The New Debentures will be gener-
al unsecured indebtedness of Con-
current and will rank pari passu
in right of payment to existing
indebtedness.
MODIFICATION OF By majority of outstanding prin
DEBENTURE INDENTURE: cipal amount, with certain excep-
tions involving certain fundamen-
tal changes which shall require
unanimous approval.
RESTRICTED PAYMENTS: The New Debenture Indenture will
provide that Concurrent will not,
and will not permit any of its
Subsidiaries to directly or indi-
rectly: (i) declare or pay any
dividend or make any distribution
on account of the Equity Inter-
ests of Concurrent or any of its
Subsidiaries (other than divi-
dends or distributions payable in
Equity Interests of Concurrent or
dividends or distributions pay-
able to Concurrent or any Subsid-
iary); (ii) purchase, redeem or
otherwise acquire or retire for
value any Equity Interests of
Concurrent, any Subsidiary or
other Affiliate of Concurrent
(other than any such Equity In-
terests owned by Concurrent or
its Subsidiaries or in connection
with capitalizing a Subsidiary);
(iii) purchase, redeem or other-
wise acquire or retire for value,
or make any cash interest payment
on, any Indebtedness of Concur-
rent that is subordinated to the
New Debentures (all such payments
and other actions set forth in
clauses (i) through (iii) above
being collectively referred to as
"Restricted Payments"), unless,
at the time of such Restricted
Payment no Default or Event of
Default will have occurred and be
continuing or would occur as a
consequence thereof and interest
due on the New Debentures for the
four calendar quarters immediate-
ly preceding the quarter in which
such Restricted Payment occurs
has been paid in cash.
LIMITATION ON MERGER,
CONSOLIDATION OR SALE
OF ASSETS: Concurrent will not consolidate
or merge (whether or not Concur-
rent shall be the surviving cor-
poration), or sell, assign,
transfer or lease all or substan-
tially all of its properties and
assets as an entirety to any
person, unless: (i) the entity or
person formed by or surviving any
such consolidation or merger (if
other than Concurrent) or to
which such sale, assignment,
transfer or lease shall have been
made shall be an entity organized
under the laws of the United
States or any State thereof or
the District of Columbia and
shall expressly assume, by a sup-
plemental indenture, all the ob-
ligations of Concurrent under the
New Debenture Indenture; (ii)
immediately before and immediate-
ly after giving effect to such
transaction, no Event of Default
and no Default will have occurred
and be continuing.
EVENTS OF DEFAULT: The New Debenture Indenture will
provide that each of the follow-
ing constitutes an Event of De-
fault: (i) default for __ days in
the payment when due of Interest
on the New Debentures; (ii) de-
fault in payment when due of the
principal of, or premium, if any,
on the New Debentures; (iii)
failure by Concurrent for __ days
after notice to comply with any
of its other agreements in the
New Debenture Indenture or the
New Debentures; (iv) certain
events of bankruptcy or insolven-
cy with respect to Concurrent or
any of its Subsidiaries.
OTHER: Such additional provisions as
appropriate, which provisions,
however, shall be no less favor-
able to the Holder of the Deben-
tures than the provisions set
forth herein.
EXHIBIT C
SHARE HOLDING AGREEMENT
dated as of
[ ], 1996
between
CONCURRENT COMPUTER CORPORATION
and
HARRIS COMPUTER SYSTEMS CORPORATION
SHARE HOLDING AGREEMENT dated as of
[ ], 1996, between CONCURRENT COMPUTER
CORPORATION, a Delaware corporation ("Concurrent"), and
HARRIS COMPUTER SYSTEMS CORPORATION, a Florida corpora-
tion ("Harris").
WHEREAS Harris and Concurrent are parties to a
Purchase and Sale Agreement dated as of March 26, 1996
(the "Purchase and Sale Agreement") and upon consummation
of the transactions contemplated therein (the "Transac-
tions"), Harris will Beneficially Own 10,000,000 shares
of Concurrent Common Stock and Concurrent will Benefi-
cially Own 227,726 shares of Harris Common Stock (as such
terms are defined below); and
WHEREAS the parties hereto wish to set forth
their agreement concerning certain governance matters of
Concurrent and Harris following consummation of the
Transactions as well as certain matters relating to
Concurrent's and Harris's ownership of Voting Securities
(as such term is defined below).
NOW, THEREFORE, in consideration of the mutual
covenants and undertakings contained herein and for good
and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section A. Definitions. As used in this
Agreement, the following terms shall have the following
meanings:
An "affiliate" of any Person means any other
Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first Person. For purposes of
the definition of affiliate, "control" has the meaning
specified in Rule 12b-2 under the Exchange Act as in
effect on the date of this Agreement.
An "associate" has the meaning set forth in
Rule 12b-2 under the Exchange Act as in effect on the
date of this Agreement.
A Person shall be deemed to "Beneficially Own",
to have "Beneficial Ownership" of, or to be "Beneficially
Owning" any securities (which securities shall also be
deemed "Beneficially Owned" by such Person) that such
Person is deemed to "beneficially own" within the meaning
of Rule 13d-3 under the Exchange Act as in effect on the
date of this Agreement.
"Best Efforts" with respect to any action
subject to such a Best Efforts obligation shall mean all
efforts to take such action as may be taken in a commer-
cially reasonable manner.
"Change of Control" with respect to Concurrent
or Harris, as the case may be, shall be deemed to have
occurred at such time as a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Ex-
change Act) (i) becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Securities of
Concurrent or Harris, as the case may be or (ii) other-
wise obtains control of Concurrent or Harris, as the case
may be.
"Closing Date" means the date of the closing of
the Purchase and Sale Agreement.
"Concurrent", together with any subsidiary of
Concurrent that holds shares of Harris Common Stock, has
the meaning set forth in the recitals to this Agreement.
"Concurrent Board" means the board of directors
of Concurrent.
"Concurrent Common Stock" means the common
stock of Concurrent, par value $0.01 per share.
"Concurrent Designee" means such person as is
so designated by Concurrent in accordance with Section
2.2(b) to serve as a member of the Harris Board pursuant
to Section 2.3 hereof.
"Concurrent Liquidity Restrictions" means
restrictions, which shall become effective only in accor-
dance with the provisions of Article VI hereof and only
so long as Concurrent Beneficially Owns at least the
Triggering Number of Harris Shares, pursuant to which
Concurrent may not sell more than 15,000 shares of Harris
Common Stock (subject to adjustment for stock splits,
stock dividends and similar transactions) in any consecu-
tive thirty day period (which 15,000 share limit shall be
reduced by sales of Harris Common Stock by Lenders during
such 30 day period, if any) and will not permit more than
35% of the Current Market Value (up to $40 per share) of
Harris Common Stock plus (ii) 25% of the Current Market
Value (in excess of $40 per share) of Harris Common Stock
(in each case measured as of the date such stock is
pledged) to serve as collateral for a margin loan from
any Lender.
"Concurrent President" means the President and
Chief Executive Officer of Concurrent.
"Current Market Value" means the average of the
daily closing prices for the ten consecutive trading days
immediately prior to the relevant measuring date.
"Exchange Act" means the Securities Exchange
Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
"Governmental Entity" means any court of compe-
tent jurisdiction, administrative agency, regulatory
body, commission or other governmental authority, board,
bureau or instrumentality, domestic or foreign and any
subdivision thereof.
A "group" has the meaning set forth in Section
13(d) of the Exchange Act as in effect on the date of
this Agreement.
"Harris", together with any subsidiary of
Harris that holds shares of Concurrent Common Stock, has
the meaning set forth in the recitals to this Agreement.
"Harris Board" means the board of directors of
Harris.
"Harris Common Stock" means the common stock of
Harris, par value $0.01 per share.
"Harris Designees" means such Persons as are so
designated by Harris in accordance with Section 2.1(b),
as such designations may change from time to time in
accordance with this Agreement, to serve as members of
the Concurrent Board pursuant to Section 2.3 hereof.
"Harris Liquidity Restrictions" means restric-
tions, which shall become effective only in accordance
with the provisions of Article VI hereto and only so long
as Harris Beneficially Owns at least the Triggering
Number of Concurrent Shares, pursuant to which Harris may
not sell more than 260,000 shares of Concurrent Common
Stock (subject to adjustment for stock splits, stock
dividends and similar transactions) in any consecutive
thirty day period (which 260,000 share limit shall be
reduced by sales of Concurrent Common Stock by Lenders
during such 30 day period, if any) and will not permit
more than (A) 35% of the Current Market Value (up to
$1.25 per share) of Concurrent Common Stock plus (B) 25%
of the Current Market Value (in excess of $1.25 per
share) of Concurrent Common Stock (in each case measured
as of the date such stock is pledged) to serve as collat-
eral for a margin loan from any Lender; provided, howev-
er, the above restrictions shall not prevent Harris from
obtaining a margin or other loan secured by Concurrent
Common Stock with a principal amount equal to the product
of $.50 and the number of shares of Concurrent Common
Stock issued to Harris on the Closing Date (subject to
adjustment for stock splits, stock dividends and similar
transactions) and still Beneficially Owned by Harris at
the time of the execution of the applicable loan agree-
ment.
"Lender" shall mean any bank, broker-dealer or
other lender who grants either party hereto a margin loan
or other similar loans secured by the securities of
either party hereto.
"Minimum Number of Owned Concurrent Shares"
means 2,000,000 shares of Concurrent Common Stock Benefi-
cially Owned by Harris (subject to adjustment for stock
splits, stock dividends and similar transactions) less
the total of all shares of Concurrent Common Stock sold
by Harris or a Lender of Harris between the date hereof
and the applicable date.
"Minimum Number of Owned Harris Shares" means
113,863 shares of Harris Common Stock Beneficially Owned
by Concurrent (subject to adjustment for stock splits,
stock dividends and similar transactions) less the total
of all shares of Harris Common Stock sold by Concurrent
or a Lender of Concurrent between the date hereof and the
applicable date.
"in registration" means, with respect to any
party hereto, any period during which such party (i) has
a good faith intention to complete a Public Offering (as
defined below) within three calendar months of the date
such intention is communicated in writing to the other
party hereto and (ii) is actively taking steps to com-
plete such an offering (including steps which may pre-
date the filing of a registration statement for a Public
Offering).
"Other Concurrent Holders" means the holders of
the Other Concurrent Shares.
"Other Concurrent Shares" means Voting Securi-
ties of Concurrent not Beneficially Owned by Harris or
any of its affiliates.
"Person" means any individual, group, corpora-
tion, firm, partnership, joint venture, trust, business
association, organization, Governmental Entity or other
entity.
"Public Offering" means any underwritten offer-
ing of stock registered under the Securities Act.
"Purchase and Sale Agreement" has the meaning
set forth in the recitals to this Agreement.
"SEC" means the Securities and Exchange Commis-
sion or any successor Governmental Entity.
"Securities Act" means the Securities Act of
1933, as amended, and the rules and regulations promul-
gated thereunder.
"Standstill Period" means the period commencing
on the date hereof and expiring [the date which is 42
months following the Closing Date].
"Subsidiary" means, with respect to any Person,
as of any date of determination, any other Person as to
which such Person owns, directly or indirectly, or other-
wise controls, more than 50% of the voting shares or
other similar interests.
"Third Party Offer" means a bona fide offer to
enter into a transaction by a Person other than Harris or
any of its respective affiliates or any other Person
acting on behalf of Harris or any of its respective
affiliates which would result in a Change of Control of
Concurrent or a transfer of all or substantially all of
the assets of Concurrent.
"Transactions" has the meaning set forth in the
recitals to this Agreement.
"Triggering Number of Concurrent Shares" means
2,000,000 shares of Concurrent Common Stock, subject to
adjustment for stock splits, stock dividends and similar
transactions.
"Triggering Number of Harris Shares" means
113,863 shares of Harris Common Stock, subject to adjust-
ment for stock splits, stock dividends and similar trans-
actions.
"Voting Securities" means Concurrent Common
Stock or Harris Common Stock, as the case may be, and any
other securities of Concurrent or Harris, as the case may
be, entitled to vote generally in the election of direc-
tors of Concurrent or Harris, as the case may be.
ARTICLE II.
CORPORATE GOVERNANCE
SECTION A. The Concurrent Board of Direc-
tors.
1. At Closing, the Concurrent Board shall
consist of no more than nine directors, including the
individuals identified in Section 2.3(a) hereto as the
initial Harris Designees.
2. After September 30, 1997, so long as
Harris Beneficially Owns at least the number of shares of
Concurrent Common Stock (including the Concurrent Pre-
ferred Stock assuming full conversion of all such shares)
set forth below, as such numbers may be appropriately
adjusted for stock dividends, stock splits or similar
transactions, Concurrent shall exercise all authority
under applicable law to maintain a board of directors of
no more than nine directors and to cause any slate of
directors presented to stockholders for election to the
Concurrent Board to include such nominees that, if elect-
ed, would result in the Concurrent Board including that
number of directors which appears directly opposite the
minimum share ownership set forth below:
Minimum Number of Shares
of Concurrent Common
Stock Beneficially Owned Number of Harris Designees
by Harris on Concurrent Slate
10,700,000 3
4,700,000 2
2,400,000 1
less than 2,400,000 0
Prior to September 30, 1997, Harris shall be entitled to
three Harris Designees unless Harris Beneficially Owns
less than 2,400,000 shares of Concurrent Common Stock, as
such number of shares may be appropriately adjusted for
stock dividends, stock splits or similar transactions, on
the date of the mailing of the proxy statement for the
next annual meeting of Concurrent shareholders following
the date hereof, in which case the provisions of this
Section 2.1(b) will not apply and Harris shall not be
entitled to any representation on the Concurrent Board in
accordance with this Section 2.1(b) and Section 2.3(a)
hereof.
3. The initial Chairman of the Concurrent
Board shall be John T. Stihl.
SECTION B. The Harris Board of Directors.
1. The Harris Board shall consist of no more
than seven directors, including the individual identified
in Section 2.4(b) hereto as the initial Concurrent
Designee.
2. So long as Concurrent Beneficially Owns at
least 125,000 (subject to adjustment for stock splits,
stock dividends and similar transactions) shares of
Harris Common Stock, as such number of shares may be
appropriately adjusted for stock dividends, stock splits
or similar transactions, the parties hereto shall exer-
cise all authority under applicable law to maintain a
board of directors of no more than seven directors and to
cause any slate of directors presented to stockholders
for election to the Harris Board to include such nominees
that, if elected, would result in the Harris Board in-
cluding one Concurrent Designee; provided, however, that
if Concurrent Beneficially Owns less than 125,000 (sub-
ject to adjustment for stock splits, stock dividends and
similar transactions) shares of Harris Common Stock, as
such number of shares may be appropriately adjusted for
stock dividends, stock splits or similar transactions, on
the date of the mailing of the proxy statement for the
next annual meeting of Harris shareholders following the
date hereof, then this Section 2.2(b) will not apply and
Concurrent shall not be entitled to any representation on
the Harris Board in accordance with this Section 2.2(b)
and Section 2.3(b) hereof.
SECTION C. Initial Designees.
1. The initial Harris Designees shall be E.
Courtney Siegel (who shall also be the initial Concurrent
President in accordance with Section 6.13 of the Purchase
and Sale Agreement), C. Shelton James and Michael F.
Maguire.
2. The initial Concurrent Designee shall be
Richard P. Rifenburgh.
SECTION D. Resignations and Replacements.
1. If at any time a member of the Concurrent
Board resigns or is removed, a new member shall be desig-
nated to replace such member until the next election of
directors. If such director who resigned or was removed
was a Harris Designee, Harris shall designate the re-
placement of such director. If such director who re-
signed or was removed was not a Harris Designee, Concur-
rent shall designate the replacement director in accor-
dance with the terms of its by-laws.
2. If at any time a member of the Harris
Board resigns or is removed, a new member shall be desig-
nated to replace such member until the next election of
directors. If such director who resigned or was removed
was a Concurrent Designee, Concurrent shall designate the
replacement of such director. If such director who
resigned or was removed was not a Concurrent Designee,
Harris shall designate the replacement director in accor-
dance with the provisions of its by-laws.
SECTION E. Solicitation and Voting of
Shares.
1. Concurrent or Harris, as the case may be,
shall use reasonable efforts to solicit from its stock-
holders eligible to vote for the election of directors
proxies in favor of the board designees selected in
accordance with Sections 2.1, 2.2 and 2.3.
2. Until Concurrent Beneficially Owns less
than the Triggering Number of Harris Shares, Concurrent
shall and shall cause any of its Subsidiaries to be
present for all stockholders meetings for purposes of
establishing a quorum and shall vote and shall cause any
of its Subsidiaries to vote all securities of Harris
owned by it and entitled to vote, in favor of matters
recommended by the Harris Board for approval by stock-
holders.
3. So long as either (i) Harris Beneficially
Owns 4,700,000 (subject to adjustment for stock splits,
stock dividends) or more shares of Concurrent Common
Stock or (ii) Harris Beneficially Owns 2,400,000 (subject
to adjustment for stock splits, stock dividends) or more
shares of Concurrent Common Stock and at least one member
of the existing Concurrent Board (other than the Chief
Executive Officer) was a Harris Designee, Harris shall
and shall cause any of its Subsidiaries to be present for
all stockholder meetings for purposes of establishing a
quorum and shall vote and cause any Subsidiary of Harris
to vote all securities of Concurrent owned by it and
entitled to vote, in favor of matters recommended by the
Concurrent Board for approval by stockholders.
ARTICLE III.
STANDSTILL
SECTION A. Standstill.
1. During the Standstill Period, except as
otherwise expressly provided in this Agreement (including
this Section 3.1 and Section 3.2), without the express
written consent of the other party, neither Harris,
Concurrent nor any of their controlled affiliates, as the
case may be, shall, directly or indirectly, (i) take any
action, to acquire or affect control of the other party
or to encourage or assist any other Person or group to do
so, (ii) enter, propose to enter into, solicit or support
any merger, business combination, Change of Control,
restructuring or similar transaction involving Concurrent
or Harris, as the case may be, or any of their Subsidiar-
ies, or purchase, acquire, propose to purchase or acquire
or solicit or support the purchase or acquisition of any
portion of the business, assets or securities of Concur-
rent or Harris or any of their Subsidiaries, (iii) seek
additional representation on the Concurrent or Harris
Board, as the case may be, the removal of any directors
from the Concurrent or Harris Board, as the case may be,
or a change in the size or composition of such board,
(iv) initiate or propose any securityholder proposal
without the approval of the Concurrent or Harris Board,
as the case may be, granted in accordance with this
Agreement or make, engage in, or in any way participate
in, any "solicitation" of "proxies" (as such terms are
used in the proxy rules promulgated by the SEC under the
Exchange Act) to vote, or seek to advise or influence any
Person with respect to the voting of, any securities or
request or take any action to obtain any list of
securityholders for such purposes with respect to any
matter (or, as to such matters, solicit any Person in a
manner that would require the filing of a proxy statement
under Regulation 14A of the Exchange Act), (v) deposit
any securities in a voting trust or enter into any voting
agreement or arrangement with respect thereto (other than
this Agreement), (vi) disclose any intent, purpose, plan,
arrangement or proposal inconsistent with the foregoing
(including any such intent, purpose, plan, arrangement or
proposal that is conditioned on or would require the
waiver, amendment, nullification or invalidation of any
of the foregoing) or take any action that would require
public disclosure of any such intent, purpose, plan,
arrangement or proposal, (vii) make any request to amend
or waive any provision of this Section 3.1, which request
would require public disclosure under applicable law,
rule or regulation, (viii) take any action challenging
the validity or enforceability of the foregoing or (ix)
assist, advise, encourage or negotiate with any Person
with respect to, or seek to do, any of the foregoing.
2. Nothing in this Section 3.1 shall (i)
prohibit or restrict Concurrent or Harris, as the case
may be, from responding to any inquiries from any stock-
holders of Harris or Concurrent, as the case may be, as
to its intention with respect to the voting of any secu-
rities of the other party Beneficially Owned by it so
long as such response is consistent with the terms of
this Agreement; (ii) restrict the right of each Harris
Director on the Concurrent Board or any committee there-
of, and each Concurrent Director on the Harris Board or
any committee thereof, to vote on any matter as such
individual believes appropriate in light of his or her
duties to the stockholders of Concurrent or Harris, as
the case may be; or (iii) prohibit Harris or Concurrent,
as the case may be, from Beneficially Owning securities
of the other party issued as dividends or distributions
in respect of, or issued upon conversion, exchange or
exercise of, securities which Harris or Concurrent, as
the case may be, is permitted to Beneficially Own under
this Agreement.
SECTION B. Third Party Offers. If Concur-
rent becomes the subject of a Third Party Offer that is
approved by a majority of the Board of Directors of
Concurrent at a time when Harris and its controlled
affiliates own more than 10% of the outstanding Voting
Securities of Concurrent, promptly after such approval by
the Board of Directors of Concurrent, Concurrent shall
deliver a written notice to Harris, briefly describing
the material terms of such Third Party Offer, and Harris
shall, within ten business days after receipt of such
notice, either (i) offer to acquire all or substantially
all of the assets of Concurrent or the Other Concurrent
Shares, as the case may be, on terms at least as favor-
able to the Other Concurrent Holders as those contemplat-
ed by such Third Party Offer or (ii) confirm in writing
that it will support, and at the appropriate time will
support, such Third Party Offer, including by voting and
causing each of its controlled affiliates to vote all its
Concurrent Common Stock eligible to vote thereon in favor
of such Third Party Offer or, if applicable, tendering or
selling and causing each of its controlled affiliates to
tender or sell all its securities of Concurrent owned by
it to the Person making such Third Party Offer.
ARTICLE IV.
TRANSFER RESTRICTIONS
SECTION A. Restrictions. Except in connec-
tion with a Third Party Offer as provided in Section 3.2,
neither Harris, Concurrent, nor any of their Subsidiar-
ies, as the case may be, shall, directly or indirectly,
sell, transfer or otherwise dispose of any securities of
the other party except in accordance with one of the
following: (i) (a) pursuant to a sale to any other Person
of any such securities in an amount of less than 5% of
the outstanding securities of any class of Concurrent or
Harris, as the case may be, (and for these purposes,
sales in open market transactions which are not inten-
tionally planned by the Seller to assist any other person
in acquiring over 5% of the outstanding securities of any
class of Concurrent or Harris shall be permitted) or if
such acquiring Person is an institutional investor eligi-
ble to file a Statement on Schedule 13G (a "13G Filer")
(or any successor form) with respect to its investment,
greater than 5% but less than 10% of the outstanding
securities of any class of Concurrent or Harris, as the
case may be, provided, however, that such 13G Filer
provides a certification to Concurrent or Harris, as the
case may be, that the securities acquired by it were
acquired in the ordinary course of business and were not
acquired for the purpose of changing or influencing the
control of the issuer of such securities and were not
acquired in connection with or as a participant in any
transaction having such purpose or effect, (ii) pursuant
to a merger, consolidation or other business combination
of Harris or Concurrent or any Harris or Concurrent
Entity, as the case may be, where such party is not the
surviving entity or a sale of all or substantially all of
such party's assets; provided, however, that the surviv-
ing or purchasing entity agrees to be bound by the terms
of this Agreement, (iii) pursuant to a transfer of shares
of Concurrent or Harris to affiliates of Harris or Con-
current, as the case may be, provided that such affili-
ates agree to be bound by the terms of this Agreement,
(iv) pursuant to Section 4.2 hereof or (v) in order to,
and only to the extent necessary to, comply with applica-
ble law. For purposes of Section 4.1(i), the convertible
exchangeable preferred stock of Concurrent to be deliv-
ered in connection with the Purchase and Sale Agreement
shall be deemed to be the same class of securities as the
Concurrent Common Stock.
SECTION B. Pledge of Stock.
1. Harris or Concurrent, as the case may be,
(each, a "Pledgor") may pledge the securities of the
other party received by it pursuant to the Purchase and
Sale Agreement to a Lender to secure borrowings or other
indebtedness as extended from time to time, provided,
however, that as a condition to such pledge, (i) the
Lender shall agree in writing not to sell, transfer or
otherwise dispose of the securities pledged to it other
than pursuant to an effective registration statement on
Form S-3 (the "S-3 Registration Statement") with respect
to the disposition of such securities or an applicable
exemption from registration under the Securities Act,
(ii) the Lender shall agree in writing that such Lender
will be bound by the terms of this Agreement relating to
any restrictions on such securities, including with
respect to the transfer, pledge or other disposition of
securities, applicable to the Pledgor under Article IV
hereof and (iii) all certificates representing securities
pledged to such Lender shall (x) if pledged after the
date on which the S-3 Registration Statement is declared
effective, bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS OF A SHARE HOLDING AGREE-
MENT (THE "SHARE HOLDING AGREEMENT"), DATED
____ __, 1996 BY AND BETWEEN CONCURRENT COMPUT-
ER CORPORATION ("CONCURRENT") AND HARRIS COM-
PUTER SYSTEMS CORPORATION ("HARRIS") PURSUANT
TO WHICH, AMONG OTHER THINGS, [CONCURRENT]
[HARRIS] (THE "ISSUER") HAS FILED, AND THE SEC
HAS DECLARED EFFECTIVE, A REGISTRATION STATE-
MENT UNDER THE SECURITIES ACT (THE "REGISTRA-
TION STATEMENT"). THE ISSUER HAS A BEST EFFORTS
OBLIGATION TO MAINTAIN THE EFFECTIVENESS OF THE
REGISTRATION STATEMENT UNTIL ___. THE PLEDGEE
HEREOF SHALL NOT TRANSFER, SELL OR OTHERWISE
DISPOSE OF THE SHARES REPRESENTED BY THIS CER-
TIFICATE UNLESS SUCH TRANSFER, SALE OR OTHER
DISPOSITION IS UNDERTAKEN PURSUANT TO THE REG-
ISTRATION STATEMENT (IF THEN EFFECTIVE) OR AN
APPLICABLE EXEMPTION FROM REGISTRATION (CON-
FIRMED BY AN OPINION OF COUNSEL SATISFACTORY TO
[CONCURRENT] [HARRIS], THE EXPENSE FOR WHICH
SHALL BE BORNE BY [CONCURRENT] [HARRIS]), AND
IN ACCORDANCE WITH THE TRANSFER RESTRICTIONS
SET FORTH IN THE SHARE HOLDING AGREEMENT WHICH
INCLUDE, AMONG OTHER THINGS, LIMITS ON THE
PERCENTAGE OF SECURITIES WHICH MAY BE SOLD TO
ANY PERSON OR ENTITY. ANY TRANSFERS IN VIOLA-
TION OF THE SHARE HOLDING AGREEMENT ARE NULL
AND VOID.
or (y) if pledged prior to the date on which the S-3
Registration Statement is declared effective by the SEC,
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS OF A SHARE HOLDING AGREE-
MENT (THE "SHARE HOLDING AGREEMENT"), DATED
____ __, 1996 BY AND BETWEEN CONCURRENT COMPUT-
ER CORPORATION ("CONCURRENT") AND HARRIS COM-
PUTER SYSTEMS CORPORATION ("HARRIS") PURSUANT
TO WHICH, AMONG OTHER THINGS, [CONCURRENT]
[HARRIS] (THE "ISSUER") HAS A BEST EFFORTS
OBLIGATION TO FILE, AND HAVE THE SEC DECLARE
EFFECTIVE, A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT (THE "REGISTRATION STATEMENT").
THE ISSUER ALSO HAS A BEST EFFORTS OBLIGATION
TO MAINTAIN THE EFFECTIVENESS OF THE REGISTRA-
TION STATEMENT UNTIL ___. THE PLEDGEE HEREOF
SHALL NOT TRANSFER, SELL OR OTHERWISE DISPOSE
OF THE SHARES REPRESENTED BY THIS CERTIFICATE
UNLESS SUCH TRANSFER, SALE OR OTHER DISPOSITION
IS UNDERTAKEN PURSUANT TO THE REGISTRATION
STATEMENT (IF THEN EFFECTIVE) OR AN APPLICABLE
EXEMPTION FROM REGISTRATION (CONFIRMED BY AN
OPINION OF COUNSEL SATISFACTORY TO [CONCURRENT]
[HARRIS], THE EXPENSE FOR WHICH SHALL BE BORNE
BY [CONCURRENT] [HARRIS], AND IN ACCORDANCE
WITH THE TRANSFER RESTRICTIONS SET FORTH IN THE
SHARE HOLDING AGREEMENT WHICH INCLUDE, AMONG
OTHER THINGS, LIMITS ON THE PERCENTAGE OF SECU-
RITIES WHICH MAY BE SOLD TO ANY PERSON OR ENTI-
TY. ANY TRANSFERS IN VIOLATION OF THE SHARE
HOLDING AGREEMENT ARE NULL AND VOID.
2. If requested by Harris, Concurrent shall,
to the extent it has not done so prior to the Closing,
use its Best Efforts to facilitate the receipt by Harris,
at or shortly following the Closing Date net proceeds of
$5,000,000 from the pledge of Concurrent Common Stock;
provided, however, neither Concurrent nor its counsel
shall be required to issue an opinion to any Pledgee
regarding the legal status of such securities or the
Pledgee
SECTION C. Effect. Any purported transfer
of securities that is inconsistent with the provisions of
this Article IV shall be null and void and of no force or
effect.
ARTICLE V.
TERMINATION
SECTION A. Termination.
1. This Agreement shall automatically termi-
nate upon the last to occur of all of the following: (i)
the Standstill Period has expired, (ii) the percentage of
the Concurrent Common Stock Beneficially Owned by Harris
and any affiliate of Harris, as a group, is less than 5%
of the outstanding Concurrent Common Stock and (iii) the
percentage of Harris Common Stock Beneficially Owned by
Concurrent and any affiliate of Concurrent, as a group,
is less than 5% of the outstanding Harris Common Stock.
2. If either party to this Agreement is in
breach of or violates any material obligation under this
Agreement and fails to cure such breach or violation
within 60 days after delivery of written notice from the
other party specifying such breach and requesting its
cure, such other party may terminate its obligations
under this Agreement.
ARTICLE VI.
REGISTRATION
SECTION A. Registration.
1. To the extent that an S-3 Registration
Statement with respect to the sale of shares of Harris
Common Stock held by Concurrent has not been filed with
the SEC or declared effective by the SEC on or prior to
the Closing Date, Harris shall use its Best Efforts to
prepare and file as promptly as practicable after the
Closing Date and shall use its Best Efforts to cause to
become effective as soon as possible after the Closing
Date, such S-3 Registration Statement, including a final
prospectus (the "Harris S-3"), in compliance with the
Securities Act, relating to the sale by Concurrent and
its permitted pledgees of shares of Harris Common Stock
issued to Concurrent pursuant to the terms of the Pur-
chase and Sale Agreement. To the extent that an S-3
Registration Statement with respect to the sale of shares
of Concurrent Common Stock held by Harris has not been
filed with the SEC or declared effective by the SEC on or
prior to the Closing Date, Concurrent shall use its Best
Efforts to prepare and file as promptly as practicable
after the Closing Date and shall use its Best Efforts to
cause to become effective as soon as possible after the
Closing Date, such S-3 Registration Statement, including
a final prospectus (the "Concurrent S-3" and together
with a Harris S-3, the "S-3 Registration Statements"), in
compliance with the Securities Act, relating to the sale
by Harris and its permitted pledgees of the shares of
Concurrent Common Stock issued to Harris pursuant to the
terms of the Purchase and Sale Agreement and shares
issuable upon conversion of the preferred stock or deben-
tures issued to Harris in connection with the Transac-
tions (references in this Article VI to "shares of Con-
current Common Stock held by Harris" shall include the
Harris Common Stock issuable upon conversion of such
preferred stock or debentures). To the extent the shares
of Concurrent Common Stock held by Harris at the Closing
have not been so approved on the Closing Date, Concurrent
shall also use its Best Efforts to cause the shares of
Concurrent Common Stock issued by it to Harris to be
approved for inclusion on the NASDAQ/NMS on the effective
date of the Concurrent S-3, subject to official notice of
issuance. To the extent the shares of Harris Common
Stock held by Concurrent at the Closing have not been so
approved on the Closing Date, Harris shall also use its
Best Efforts to cause the shares of Harris Common Stock
issued by it to Concurrent to be approved for inclusion
on the NASDAQ/NMS on the effective date of the Harris S-3,
subject to official notice of issuance.
2. Subject to Article IV and the other provi-
sions of this Article VI, upon the effectiveness of the
applicable S-3 Registration Statement for the sale of
securities, each of Harris and Concurrent shall be per-
mitted to sell shares of such securities of the other
party held by it at any time in accordance with applica-
ble law; provided, however, no such sales may occur
unless and until both of the S-3 Registration Statements
have been declared effective.
3. So long as Harris is in registration,
Concurrent shall be subject to the Concurrent Liquidity
Restrictions. So long as Concurrent is in registration,
Harris shall be subject to the Harris Liquidity Restric-
tions.
4. Concurrent shall have the right to sell in
any Public Offering by Harris of shares of Harris Common
Stock up to the Minimum Number of Harris Owned Shares.
Harris shall have the right to sell in any Public Offer-
ing by Concurrent of shares of Concurrent Common Stock up
to the Minimum Number of Concurrent Owned Shares.
5. Subject to Section 6.1(f) below, (i)
Harris shall use its Best Efforts to include for the
benefit of Concurrent in any Public Offering of its stock
(including in connection with the exercise by any under-
writer of any over-allotment option) any shares of Harris
Common Stock Beneficially Owned by Concurrent in excess
of the Minimum Number of Owned Harris Shares as requested
by Concurrent and (ii) Concurrent shall use its Best
Efforts to include for the benefit of Harris in any
Public Offering of its stock (including in connection
with the exercise by any underwriter of any over-allot-
ment option) any shares of Concurrent Common Stock Bene-
ficially Owned by Harris in excess of the Minimum Number
of Owned Concurrent Shares as requested by Harris.
6. The Minimum Number of Owned Harris Shares
and the Minimum Number of Owned Concurrent Shares sold
for the benefit of Concurrent or Harris, as the case may
be, in a Public Offering may be reduced if (i) the appli-
cable managing underwriter of such Public Offering advis-
es Concurrent or Harris, as the case may be, that the
distribution of all or a portion of such shares will
materially and adversely affect the distribution of the
stock being offering in the applicable Public Offering
and (ii) the Public Offering in which such number of
shares is reduced does not provide for the sale of any
shares of stock for the benefit of any party other than
the issuer; provided, however, any such reduction in the
number of shares shall be the smallest reduction possible
in order for the applicable managing underwriter to
conclude that the distribution of such reduced number of
shares will not materially and adversely affect the
distribution of the stock in the applicable Public Offering.
7. If a Public Offering is consummated by
Harris in which at least the Minimum Number of Owned
Harris Shares is sold for the benefit of Concurrent (or
at least such lesser number as requested by Concurrent to
be included in such Public Offering), Concurrent shall be
subject to a "lock-up" (so long as it Beneficially Owns
at least the Triggering Number of Harris Shares at the
time of such lock-up) for a period of up to 6 months (or
up to such lesser lock-up period which is applicable to
any selling shareholder in such Public Offering who is a
director, officer, employee or affiliate of Harris at the
time the Public Offering is consummated). If a Public
Offering is consummated by Concurrent in which at least
the Minimum Number of Owned Concurrent Shares is sold for
the benefit of Harris (or at least such lesser number as
requested by Harris to be included in such Public Offer-
ing), Concurrent shall be subject to a lock-up (so long
as it Beneficially Owns at least the Triggering Number of
Concurrent Shares at the time of such lock-up) for a
period of up to 6 months (or up to such lesser lock-up
period which is applicable to any selling shareholder in
such Public Offering who is a director, officer, or other
affiliate of Concurrent at the time the Public Offering
is consummated).
8. If a Public Offering is consummated by
Harris in which less than the Minimum Number of Owned
Harris Shares is sold for the benefit of Concurrent (or
less than such lesser number as requested by Concurrent
to be included in such Public Offering), the Concurrent
Liquidity Restrictions shall remain in effect for a
period of up to 6 months (or up to such lesser lock-up
period which is applicable to any selling shareholder in
such Public Offering who is a director, officer, employee
or affiliate of Harris at the time the Public Offering is
consummated) but Concurrent shall not be obligated to
enter into any other lock-up provisions in connection
with such Public Offering. If a Public Offering is con-
summated by Concurrent in which less than the Minimum
Number of Owned Concurrent Shares is sold for the benefit
of Harris (or less than such lesser number as requested
by Harris to be included in such Public Offering), the
Harris Liquidity Restrictions shall remain in effect for
a period of up to 6 months (or up to such lesser lock-up
period which is applicable to any selling shareholder in
such Public Offering who is a director, officer, employee
or affiliate of Concurrent at the time the Public Offer-
ing is consummated) but Harris shall not be obligated to
enter into any other lock-up provisions in connection
with such Public Offering.
9. After such registration statement is
declared effective by the SEC, Harris shall use its Best
Efforts to maintain the effectiveness of the Harris S-3
until the third anniversary of the effective date plus an
additional period beyond the third anniversary equal to
the total period of all lock-ups applied to Concurrent
pursuant to Section 6.1(g) above. So long as the Harris
S-3 remains effective, Harris shall file any material
press releases and report any material event as soon as
practicable in a Current Report of Form 8-K.
10. After such registration statement is
declared effective by the SEC, Concurrent shall use its
Best Efforts to maintain the effectiveness of the Concur-
rent S-3 until the third anniversary of the effective
date plus an additional period beyond the third anniver-
sary equal to the total period of all lock-ups applied to
Harris pursuant to Section 6.1(g) above. So long as the
Concurrent S-3 remains effective, Concurrent shall file
any material press releases and report any material event
as soon as practicable in a Current Report of Form 8-K.
SECTION B. Indemnification; Contribution.
1. In the case of each registration effected
by Concurrent or Harris, as the case may be, (each, a
"Registrant") pursuant to this Agreement under the feder-
al securities laws, the Registrant agrees to indemnify
and hold harmless, to the full extent permitted by law,
Harris or Concurrent, as the case may be (each, a "Hold-
er"), and such Holder's officers, directors, agents and
employees against all losses, claims, damages, liabili-
ties and expenses arising out of or based upon any untrue
or alleged untrue statement of a material fact contained
in the registration statement under which securities of
the Registrant owned by such Holder were registered under
the Securities Act, any prospectus or preliminary pro-
spectus or in any amendment or supplement thereto or any
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
the statements therein (in the case of a prospectus, in
the light of the circumstances under which they were
made) not misleading, except insofar as the same arise
out of, are based upon or are contained in any informa-
tion furnished in writing to the Registrant by such
Holder expressly for use therein or by the Holder's
failure to deliver a copy of the applicable registration
statement or final prospectus after the Registrant has
furnished such Holder with a sufficient number of copies
of the same.
2. In connection with any registration state-
ment in which a Holder is participating, such Holder
shall furnish to the Registrant in writing such informa-
tion and affidavits as the Registrant reasonably requests
for use in connection with any registration statement or
prospectus and agrees to indemnify and hold harmless, to
the full extent permitted by law, the Registrant, its
directors, officers, agents, employees against any loss-
es, claims, damages, liabilities and expenses arising out
of or based upon any untrue or alleged untrue statement
of a material fact contained in the registration state-
ment under which securities of the Registrant owned by
such Holder were registered under the Securities Act, any
prospectus or preliminary prospectus or in any amendment
or supplement thereto or any omission or alleged omission
to state therein a material fact required to be stated
therein or necessary to make the statements therein (in
the case of a prospectus, in the light of the circum-
stances under which they were made) not misleading, to
the extent, but only to the extent, that such untrue or
alleged untrue statement or omission or alleged omission
is contained in or should have been contained in any
information or affidavit so furnished in writing by such
Holder to the Registrant specifically for inclusion in
such registration statement or prospectus. In no event
shall the liability of any Holder, hereunder be greater
in amount than the dollar amount of the proceeds received
by such Holder upon the sale of the securities of the
Registrant giving rise to such indemnification obliga-
tion. The Registrant and, to the extent customary in
underwriting agreements at the time, its directors,
officers, agents, employees, shall be entitled to receive
indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals
participating in the distribution to the same extent as
provided above with respect to information so furnished
in writing by such Persons specifically for inclusion in
any prospectus or registration statement.
3. Any Person entitled to indemnification
hereunder shall (i) give prompt written notice to the
indemnifying party of any claim with respect to which it
shall seek indemnification and (ii) unless in the reason-
able judgment of counsel to such indemnified party a
conflict of interest is likely to exist between such
indemnified party and the indemnifying party with respect
to such claim, permit the indemnifying party to assume
the defense of such claim with counsel reasonably satis-
factory to the indemnified party. If the indemnifying
party assumes the defense of such claim, it shall not be
obligated to pay the fees and expenses of more than one
counsel with respect to such claim, unless, in the rea-
sonable judgment of counsel to such indemnified party, a
conflict of interest is likely to exist between such
indemnified party and any other indemnified party with
respect to such claim, in which event the indemnifying
party shall be obligated to pay the fees and expenses of
one additional counsel with respect to such claim.
Subject to the foregoing, the indemnifying party shall in
no event be liable to an indemnified party for legal and
other expenses incurred by such indemnified party in
connection with the defense of a claim subsequent to the
assumption of such defense by such indemnifying party.
The indemnifying party shall not be subject to any lia-
bility for any settlement made without its consent.
4. If for any reason the indemnification
provided for in the preceding paragraphs of this Section
6.2 is unavailable to an indemnified party or is insuffi-
cient to hold it harmless as contemplated by the preced-
ing paragraphs (a) and (b), then the indemnifying party,
in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemni-
fied party as a result of such loss, claim, damage,
liability or expense in such proportion as is appropriate
to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the
indemnifying party in connection with the actions which
resulted in such loss, claim, damage, liability or ex-
pense, as well as any other relevant equitable consider-
ations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference
to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a
material fact, has been made by, or relates to informa-
tion supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or
prevent such action. The amount paid or payable by a
party as a result of the losses, claims, damages, liabil-
ities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section
6.2(c) hereof, any legal or other fees or expenses rea-
sonably incurred by such party in connection with any
investigation or proceeding. The parties hereto agree
that it would not be just and equitable if contribution
pursuant to this Section 6.2(d) were determined by pro
rata allocation or by any other method of allocation
which does not take into account the equitable consider-
ations referred to in the immediately preceding para-
graph. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
No Holder shall be required to contribute in an amount
greater than the dollar amount of proceeds received by
such Holder with respect to the sale of securities of the
Registrant held by such Holder.
ARTICLE VII.
MISCELLANEOUS
SECTION A. Effectiveness. This Agreement
shall be executed contemporaneously with the Purchase and
Sale Agreement and shall be effective at the Closing
Date.
SECTION B. Notices. All notices, requests
and other communications hereunder shall be in writing
(including fax) and shall be sent, delivered or mailed,
addressed, or faxed:
1. if to Concurrent, to:
Concurrent Corporation
2 Crescent Place
Oceanport, NJ 07757
(908) 870-4500
(F) (908) 870-4779
Attention of Kevin J. Dell
Vice President, Secretary
and General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
(T) (212) 735-3000
(F) (212) 735-2000
Attention: Eric L. Cochran, Esq.
2. if to Harris, to:
Harris Computer Systems Corporation
2101 West Cypress Creek Road
Fort Lauderdale, FL 33309
(T) (305) 974-1700
(F) (305) 973-5253
Attention of President
with a copy to:
Holland & Knight
One East Broward Boulevard
P.O. Box 14070
Fort Lauderdale, FL 33302
(T) (305) 525-1000
(F) (305) 463-2030
Attention: Brian Foremny, Esq.
Each such notice, request or other communication shall be
given (i) by hand delivery, (ii) by nationally recognized
courier service or (iii) by fax, receipt confirmed. Each
such notice, request or communication shall be effective
(A) if delivered by band or by nationally recognized
courier service, when delivered at the address specified
in this Section 5.1 (or in accordance with the latest
unrevoked written direction from such party) and (B) if
given by fax, when such fax is transmitted to the fax
number specified in this Section 5.1 (or in accordance
with the latest unrevoked written direction from such
party), and the appropriate confirmation is received.
SECTION C. Interpretation. The headings
contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words
"included," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the
words "without limitation."
SECTION D. Severability.
1. To the extent that any provision of this
Agreement, with respect to either party hereto, is deter-
mined to be invalid, unenforceable or excessive in scope
by any court or other body of competent jurisdiction,
unless the analogous provision with respect to the other
party hereto is also determined to be invalid, unenforce-
able or excessive in scope by such court or other body of
competent jurisdiction, or unless the other party waives
the effect of such provision in writing then this Agree-
ment shall be terminated in its entirety and of no fur-
ther force or effect.
2. If such analogous provision is determined
to be invalid, unenforceable or excessive in scope by
such court or other body of competent jurisdiction, each
such provision shall be ineffective only to the most
limited extent so as not to render the Agreement unen-
forceable, and the remaining provisions shall remain in
full force and effect as if this Agreement had been
executed with the invalid, unenforceable or excessive
provision so limited.
SECTION E. Counterparts. This Agreement may
be executed in one or more counterparts, each of which
shall be deemed an original and all of which shall, taken
together, be considered one and the same agreement, it
being understood that both parties need not sign the same
counterpart.
SECTION F. Entire Agreement; No Third Party
Beneficiaries. This Agreement together with the Purchase
and Sale Agreement (a) constitutes the entire agreement
and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to
the subject matter hereof and (b) is not intended to
confer upon any Person, other than the parties hereto,
any rights or remedies hereunder.
SECTION G. Further Assurances. Each party
shall execute, deliver, acknowledge and file such other
documents and take such further actions as may be reason-
ably requested from time to time by the other party
hereto to give effect to and carry out the transactions
contemplated herein.
SECTION H. Governing Law; Equitable Reme-
dies. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under
applicable principles of conflicts of law. The parties
hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that
the parties hereto shall be entitled to equitable relief,
including in the form of injunctions, in order to enforce
specifically the provisions of this Agreement, in addi-
tion to any other remedy to which they are entitled at
law or in equity.
SECTION I. Consent to Jurisdiction. Each
party hereto irrevocably submits to the exclusive juris-
diction of the United States District Court for the
Southern District of Florida or if such court does not
have jurisdiction, the Circuit Court for the Seventeenth
Judicial Circuit in and for Broward County, Florida, for
the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contem-
plated hereby. Each party hereto further agrees that
service of any process, summons, notice or document by
U.S. registered mail to such party's respective address
set forth in Section 5.1 shall be effective service of
process for any action, suit or proceeding in Florida
with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately pre-
ceding sentence. Each party hereto irrevocably and
unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of
this Agreement or the transactions contemplated hereby in
(a) the United States District Court for the Southern
District of Florida or (b) the Circuit Court for the
Seventeenth Judicial Circuit in and for Broward County,
Florida, and hereby further irrevocably and uncondition-
ally waives and agrees not to plead or claim in any such
court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum.
SECTION J. Amendments; Waivers.
1. No provision of this Agreement may be
amended or waived unless such amendment or waiver is in
writing and signed, in the case of an amendment, by the
parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective; provided that
no such amendment or waiver by Concurrent shall be effec-
tive without the approval of a majority of the directors
of Concurrent. Notwithstanding any provision herein to
the contrary, if a majority of the directors of Concur-
rent determine in good faith to do so, such directors may
seek to enforce, in the name and on behalf of Concurrent,
the terms of this Agreement against Harris.
2. No failure or delay by any party in exer-
cising any right, power or privilege hereunder shall
operate as waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION K. Assignment. Neither this Agree-
ment nor any of the rights or obligations hereunder shall
be assigned by either of the parties hereto without the
prior written consent of the other party, except that
either party may assign all its rights and obligations to
the assignee of all or substantially all of the assets of
such party, provided that such party shall in no event be
released from its obligations hereunder without the prior
written consent of the other party. Subject to the
preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have caused
this Agreement to be duly executed and delivered, all as
of the date first set forth above.
CONCURRENT COMPUTER CORPORATION
By__________________________
Name:
Title:
HARRIS COMPUTER SYSTEMS CORPORATION
By__________________________
Name:
Title:
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS . . . . . . . . . . . . 2
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . 2
ARTICLE II
CORPORATE GOVERNANCE . . . . . . . . . . 10
SECTION 2.1. The Concurrent Board of Directors. . . . . . . 10
SECTION 2.2. The Harris Board of Directors . . . . . . . . . 12
SECTION 2.3. Initial Designees . . . . . . . . . . . . . . . 13
SECTION 2.4. Resignations and Replacements . . . . . . . . . 13
SECTION 2.5. Solicitation and Voting of Shares . . . . . . . 14
ARTICLE III
STANDSTILL . . . . . . . . . . . . 15
SECTION 3.1. Standstill . . . . . . . . . . . . . . . . . . 15
SECTION 3.2. Third Party Offers . . . . . . . . . . . . . . 18
ARTICLE IV
TRANSFER RESTRICTIONS . . . . . . . . . . 19
SECTION 4.1. Restrictions . . . . . . . . . . . . . . . . . 19
SECTION 4.2. Pledge of Stock. . . . . . . . . . . . . . . . 21
SECTION 4.3. Effect. . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V
TERMINATION . . . . . . . . . . . . 24
SECTION 5.1. Termination . . . . . . . . . . . . . . . . . . 24
ARTICLE VI
REGISTRATION . . . . . . . . . . . . 25
SECTION 6.1. Registration . . . . . . . . . . . . . . . . . 25
SECTION 6.2. Indemnification; Contribution. . . . . . . . . 32
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . 38
SECTION 7.1. Effectiveness. . . . . . . . . . . . . . . . . 38
SECTION 7.2. Notices . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.3. Interpretation . . . . . . . . . . . . . . . . 39
SECTION 7.4. Severability . . . . . . . . . . . . . . . . . 40
SECTION 7.5. Counterparts . . . . . . . . . . . . . . . . . 41
SECTION 7.6. Entire Agreement; No Third Party
Beneficiaries . . . . . . . . . . . . . . . . . 41
SECTION 7.7. Further Assurances . . . . . . . . . . . . . . 41
SECTION 7.8. Governing Law; Equitable Remedies . . . . . . . 41
SECTION 7.9. Consent to Jurisdiction . . . . . . . . . . . . 42
SECTION 7.10. Amendments; Waivers . . . . . . . . . . . . . . 43
SECTION 7.11. Assignment . . . . . . . . . . . . . . . . . . 44
