As filed with the Securities and Exchange Commission on June 6, 1996
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
CONCURRENT COMPUTER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2735766
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two Crescent Place
Oceanport, New Jersey 07757
(908) 870-4500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Kevin J. Dell, Esq.
Vice President, General Counsel and Secretary
Concurrent Computer Corporation
Two Crescent Place
Oceanport, New Jersey 07757
(908) 870-4500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Eric L. Cochran, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Tel: (212) 735-3000
Fax: (212) 735-2001
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of the Registration
Statement and from time to time thereafter.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend as interest reinvestment plans, check the
following box. [X]
If this Form is filed to register additional securities for an offer-
ing pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
______________________________
CALCULATION OF REGISTRATION FEE
____________________________________________________________________________
Title of each Proposed Proposed
class maximum maximum
of securities Amount offering aggregate Amount of
to be to be price offering registration
registered registered per unit(1) price(1) fee
____________________________________________________________________________
Common Stock,
par value 1,200,000 $2.547 $3,056,400 $1,054
$.01 per share
____________________________________________________________________________
Preferred 1,200,000 --- --- ---
Stock
Purchase
Rights(2)
____________________________________________________________________________
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933.
(2) The Preferred Stock Purchase Rights of Concurrent initially are attached
to and trade with all the shares of Common Stock outstanding as of, and
issued subsequent to, July 31, 1992, pursuant to the terms of the
Registrant's Rights Agreement, dated as of July 31, 1992. Until the
occurrence of certain prescribed events, the Preferred Stock Purchase
Rights are not exercisable, are evidenced by the certificates for the
Common Stock and will be transferred only with such stock. The value
attributable to such Preferred Stock Purchase Rights, if any, is re-
flected in the market price of Common Stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGIS-
TRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURI-
TIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
EXPLANATORY NOTE
This Registration Statement on Form S-3, as amended (the "Registration
Statement"), including the Prospectus forming a part hereof, assumes
consummation of the acquisition (the "Acquisition") of certain assets and
stock of CyberGuard Corporation (formerly known as Harris Computer Systems
Corporation) by the Registrant. No shares of Common Stock will be issued
or sold until after the Acquisition has been consummated. Accordingly,
this Prospectus has been prepared as if the Acquisition has been consummat-
ed. No shares of Common Stock will be sold if the Acquisition is not
consummated.
PROSPECTUS (Subject to Completion)
Issued June __, 1996
1,200,000 SHARES
CONCURRENT COMPUTER CORPORATION
COMMON STOCK
This Prospectus relates to the offering by Concurrent
Computer Corporation ("Concurrent") of up to 1,200,000 shares of
common stock, par value $.01 per share (the "Common Stock") of
Concurrent, including shares that may be sold by Concurrent at
the direction of Berenson Minella & Company ("Berenson Minella"),
shares that may be sold by Concurrent at the direction of John T.
Stihl, the Chairman of the Board of Directors of Concurrent and
shares that may be sold by Concurrent on behalf of certain former
executive officers of Concurrent, for their respective benefits.
See "Use of Proceeds," "Certain Arrangements with Berenson
Minella" and "Plan of Distribution." The Common Stock includes a
right to purchase fractional shares of preferred stock of Concur-
rent, as provided in Concurrent's Rights Agreement, dated as of
July 31, 1992.
The Common Stock is traded in the over-the-counter market
and price quotations therefor are reported on the National
Association of Securities Dealers Automated Quotation System
("NASDAQ") National Market System ("Nasdaq/NMS") under the
symbol "CCUR". The last reported sale price of the Common Stock
on June 5, 1996 was $2 9/16 per share.
THE SECURITIES OFFERED HEREBY REPRESENT A SIGNIFICANT DEGREE
OF RISK. INVESTORS SHOULD CAREFULLY CONSIDER CERTAIN RISKS AND
OTHER CONSIDERATIONS RELATING TO THE COMMON STOCK AND CONCURRENT.
SEE "RISK FACTORS" BEGINNING ON PAGE 8.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Concurrent, directly, or through agents designated from time
to time by it, Berenson Minella or Mr. Stihl or through dealers
or underwriters also to be so designated, may sell the Common
Stock from time to time on terms to be determined at the time of
sale. The distribution of the shares of Common Stock by Concur-
rent is not subject to any underwriting agreement. Concurrent
may sell the shares of Common Stock covered by the Prospectus
through the Nasdaq/NMS, at prices and terms then prevailing,
through customary brokerage channels, in privately negotiated
transactions or otherwise, either through broker-dealers acting
as agents or brokers for the seller, or through broker-dealers
acting as agents or principals. Such broker-dealers may receive
compensation in the form of underwriting discounts, concessions,
or commissions from Concurrent and/or the purchasers of the
shares of Common Stock for whom they may act as agent, which
compensation may be in excess of customary commissions. To the
extent required, the purchase price, the names of any such
agent, dealer or underwriter, and any applicable commission or
discount with respect to a particular offering will be set forth
in an accompanying Prospectus Supplement. The aggregate net
proceeds from the sale of any shares of the Common Stock will be
the price thereof less the aggregate agent's commission or
underwriter's discount, if any. See "Plan of Distribution" for
information regarding the designation of certain selling agents
and indemnification arrangements.
No person has been authorized in connection with any offer-
ing made hereby to give any information or to make any represen-
tations other than those contained in this Prospectus or any
Prospectus Supplement, and, if given or made, such information or
representations must not be relied upon as having been authorized
by Concurrent or any underwriter, dealer or agent. This Prospec-
tus or any Prospectus Supplement does not constitute an offer to
sell or the solicitation of an offer to buy any securities other
than the securities to which it relates or any offer to sell or
the solicitation of an offer to buy such securities in any
circumstances in which such offer or solicitation is unlawful.
Neither the delivery of this Prospectus or any Prospectus Supple-
ment nor any sale hereunder or thereunder shall, under any
circumstances, create any implication that the information
contained herein or therein is correct as of any time subsequent
to the date hereof and thereof.
AVAILABLE INFORMATION
Concurrent is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy state-
ments and other information with the Securities and Exchange
Commission (the "Commission"). Copies of such reports, proxy
statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the following Regional Offices of the Commis-
sion: Seven World Trade Center, 13th Floor, New York, NY 10048
and Citicorp Center, 500 West Madison Street (Suite 1400),
Chicago, Illinois 60661. Copies of such material can be obtained
at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Common Stock is traded on the Nasdaq/NMS (Symbol: CCUR). In
addition, material filed by Concurrent can be inspected at the
offices of Nasdaq/NMS, Reports Section, 1735 K Street N.W.,
Washington, D.C. 20006.
Concurrent has filed a registration statement (the "Regis-
tration Statement") on Form S-3 with respect to the Common Stock
offered hereby with the Commission under the Securities Act.
This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the
Registration Statement, certain items of which are contained in
schedules and exhibits to the Registration Statement as permitted
by the rules and regulations of the Commission. For further
information with respect to Concurrent and the Common Stock
offered hereby, reference is made to the Registration Statement
and to the exhibits and schedules thereto. Statements contained
in this Prospectus as to the contents of any agreement, instru-
ment or other document referred to are not necessarily complete.
With respect to each such agreement, instrument or other document
filed as an exhibit to the Registration Statement, reference is
made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in
its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed with the
Commission by Concurrent pursuant to the Exchange Act (Commission
File No. 0-13150), are incorporated by reference in this Prospec-
tus:
(1) Annual Report on Form 10-K for the fiscal year ended
June 30, 1995 (the "Annual Report");
(2) Quarterly Reports on Form 10-Q for the fiscal quarters
ended September 30, 1995, December 31, 1995 and March
31, 1996;
(3) Current Report on Form 8-K, dated April 19, 1996; and
(4) Joint Proxy Statement for the Special Meeting of Stock-
holders of Concurrent and Harris Computer Systems
Corporation (now known as CyberGuard Corporation
("CyberGuard")) held on June 26, 1996 (the "Joint Proxy
Statement").
The Annual Report contains a description of Concurrent's
business. For a description of the effect of the Acquisition (as
defined below) on the business of Concurrent, see "Concurrent
Computer Corporation -- The Acquisition."
All documents filed by Concurrent pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the
offering of the Common Stock made hereby shall be deemed to be
incorporated by reference in the Prospectus and to be a part
hereof from the date of filing of such documents. Any statement
contained in this Prospectus or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently
filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Prospectus.
This Prospectus incorporates by reference documents relating
to Concurrent which are not presented herein or delivered here-
with. A copy of any documents incorporated by reference (not
including exhibits to such documents other than exhibits specifi-
cally incorporated by reference into such documents) are avail-
able without charge to any person, including any beneficial
owner, to whom this Prospectus is delivered, upon written or oral
request. Requests for such documents should be directed to the
General Counsel and Secretary, Concurrent Computer Corporation,
Two Crescent Place, Oceanport, New Jersey 07757, telephone number
(908) 870-4500.
FORWARD-LOOKING STATEMENTS
This Prospectus and the Joint Proxy Statement incorporated
by reference herein, contain forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E
of the Exchange Act. Such statements include, but are not
limited to, integration of the CyberGuard and Concurrent real-
time businesses, achieving cost savings from the Acquisition,
projected sales, gross margin and net income figures, the avail-
ability of capital resources, customer reaction to the Acquisi-
tion, plans concerning products and market acceptance.
Forward-looking statements are inherently subject to risks
and uncertainties, many of which can not be predicted with
accuracy and some of which might not even be anticipated. Future
events and actual results, financial and otherwise, could differ
materially from those set forth in or contemplated by the for-
ward-looking statements herein. Important factors that could
contribute to such differences are set forth below under "Risk
Factors" including, but not limited to, "Changes in Market Prices
of Common Stock; Shares Eligible for Future Sale," "Uncertainties
in Successfully Integrating the CyberGuard Real-Time Business and
Achieving Cost Savings," "Impact of Transaction Costs on Finan-
cial Performance; Uncertainty of Acquisition-Related Costs,"
"Potential Shortfall in Liquidity," "Potentially Adverse Custom-
er Reaction," "Product Obsolescence; Significant Research and
Development Expenditures," "Reliance on Government Business," and
"Dependence on International Operations."
CONCURRENT COMPUTER CORPORATION
GENERAL
Concurrent is a supplier of high-performance real-time
computer systems. "Real-time" systems acquire, analyze, store,
display and control analog, digital and network data to provide
time critical information as real-world events occur. Concurrent
has over 25 years of experience in real-time systems, including
specific expertise in systems, applications software, productivi-
ty tools and networking. Concurrent's real-time systems offer
networked and distributed computing solutions and may be config-
ured to provide fault tolerance. Concurrent sells its systems
worldwide to end-users as well as to original equipment manufac-
turers, systems integrators, independent software vendors and
value-added resellers who combine Concurrent's products with
other equipment or with additional application software for
resale to end-users. End uses of Concurrent's systems include
product design and testing; flight simulation; air traffic
control and weather forecasting; intelligence data acquisition
and analysis; financial trading; and hospital information manage-
ment. Concurrent designs, manufactures, sells, and supports
real-time proprietary and standards-based open systems. It also
offers traditional maintenance and support services and profes-
sional services, such as performance and capacity analysis and
systems integration.
THE ACQUISITION
On June __, 1996, Concurrent acquired (the "Acquisition")
the assets of the real-time computer business of CyberGuard and
683,178 newly issued shares of common stock of CyberGuard (the
"CyberGuard Stock") pursuant to the Purchase and Sale Agreement
dated as of March 26, 1996, as amended and restated on May 23,
1996 (the "Purchase and Sale Agreement"). CyberGuard or its
predecessors has been engaged in the real-time computing business
since 1974. The CyberGuard Stock represents approximately 9% of
the common stock of CyberGuard outstanding immediately after the
issuance of the CyberGuard Stock to Concurrent and after giving
effect to the vesting and exercise of certain stock options. As
consideration for the Acquisition, Concurrent issued to
CyberGuard (i) 10,000,000 shares of Common Stock, which repre-
sented approximately 23% of the shares of Common Stock outstand-
ing immediately after such issuance, after giving effect to the
vesting and exercise of all outstanding options with respect to
the Common Stock, but without giving effect to the issuance of
any shares of Common Stock offered hereby and (ii) 1,000,000
shares of 9.00% Class B Convertible Preferred Stock (the "Con-
vertible Preferred Stock") with $10,000,000 aggregate liquidation
preference (subject to post-closing adjustments to reflect, among
other things, the amount of net current assets transferred to
Concurrent in the Acquisition) and convertible into a maximum of
4,000,000 shares of Common Stock, subject to anti-dilution
adjustments. In addition, Concurrent also assumed certain
liabilities of CyberGuard relating to its real-time computing
business.
In connection with the Acquisition, Concurrent and
CyberGuard entered into certain ancillary agreements including a
Share Holding Agreement (the "Share Holding Agreement") that
contains certain standstill, transfer and registration provisions
relating to the Common Stock and the CyberGuard Stock, and
provisions relating to the composition of the Board of Directors
of Concurrent and CyberGuard.
The Board of Directors of Concurrent believes the Acquisi-
tion offers the following significant strategic and financial
benefits to Concurrent and its stockholders, as well as to its
employees and customers:
* Enhanced Competitive Position. As a result of the
Acquisition, Concurrent expects to be in a better position
to meet the challenges of the increasingly competitive
environment in the real-time computing industry more effec-
tively than either Concurrent or CyberGuard standing alone.
In addition, Concurrent now has access to its own as well as
CyberGuard's technology, allowing it to combine the best of
both technologies in the next generation of products.
* Larger and More Diverse Market Coverage. As a result of the
Acquisition, Concurrent's service territory, installed base
and product offerings are larger and more diverse than prior
to the Acquisition. In addition, the combination of the
best of the technologies of the two companies is expected to
allow for a reduction in the time between the introduction
of next generation products within Concurrent's product
line, resulting in Concurrent being less dependent on the
success of any individual next generation product.
* Cost Savings. The Acquisition is expected to generate
significant cost savings during the first fiscal year. Such
savings will be primarily obtained through headcount reduc-
tions, as well as facilities cost reductions. These savings
will be obtained through a variety of actions including,
among others, integration of corporate management and admin-
istrative functions, consolidation of production and re-
search and development facilities and consolidation of
sales/service offices.
* Liquidity. The Acquisition has provided Concurrent with
additional borrowing capacity under its revolving credit
facility based on the higher borrowing base resulting from
the combination of the real-time businesses of the two
companies. Concurrent has entered into an amendment to the
loan agreement with its primary lender which, among other
things, extends the term of such agreement until August 1,
1999 and effectively increases the line of credit under the
revolving credit facility by $4.75 million to $12.75 mil-
lion. In addition, the Acquisition has provided Concurrent
with the opportunity to improve its liquidity by either
selling or pledging, subject to certain restrictions, the
shares of CyberGuard Stock owned by it.
For a discussion of certain risks associated with the
Acquisition, see "Risk Factors". CyberGuard is engaged in the
development and marketing of commercial network security products
designed to protect data on computer networks from access by
unauthorized users. For additional information concerning the
Acquisition and the real-time business of CyberGuard, see the
Joint Proxy Statement incorporated by reference herein.
The following former executive officers of CyberGuard became
executive officers of Concurrent upon consummation of the Acqui-
sition: Robert F. Chism (Vice President, Development), Daniel S.
Dunleavy (Vice President and Chief Financial Officer), Robert T.
Menzel (Vice President, North American Sales) and Michael N.
Smith (Vice President, Marketing). In addition, John T. Stihl
and George E. Chapman remain executive officers and serve as
Chairman of the Board and Vice President, International Sales,
respectively, of Concurrent although Mr. Stihl resigned as
President and Chief Executive Officer. The employment of six
individuals as executive officers of Concurrent terminated upon
consummation of the Acquisition. Pursuant to their severance
arrangements with Concurrent, which were amended, in part, in
contemplation of the Acquisition, these former executive officers
will receive severance compensation equal to their respective
annual base salaries at the time of the Acquisition (an aggregate
of $921,000) payable from the proceeds of the sale of a number of
shares registered hereunder. Pursuant to the terms of the sever-
ance arrangements, 40% of the severance obligation shall be paid
to the former executive officers, not later than 30 days follow-
ing consummation of the Acquisition with the remaining portion to
be paid not later than 60 days following consummation of the
Acquisition (i.e., August 26, 1996). See "Use of Proceeds." For
additional information with respect to the severance arrange-
ments, see the Joint Proxy Statement incorporated by reference
herein.
The employment agreement with Mr. Stihl was also amended in
contemplation of the Acquisition to provide him with the option
to receive (i) full severance compensation (i.e., annual base
salary) for the 24-month period commencing the day following the
Closing Date or (ii) the proceeds from the sale, at Mr. Stihl's
direction, of shares of Concurrent Common Stock with a fair
market value of $730,000. Mr. Stihl has elected to receive the
proceeds from the sale of Common Stock and, accordingly, shares
are registered hereunder for that purpose.
Berenson Minella was engaged as financial advisor to the
Board of Directors of Concurrent in connection with the Acquisi-
tion. For a description of the fee arrangement between Berenson
Minella and Concurrent, see "Certain Arrangements with Berenson
Minella".
ADDITIONAL INFORMATION
Concurrent's principal offices are located at Two Crescent
Place, Oceanport, New Jersey 07757. Its telephone number is
(908) 870-4500. Concurrent's principal offices are being relocat-
ed to 2101 West Cypress Creek Road, Fort Lauderdale, Florida
33309.
Concurrent has also filed with the Commission a registration
statement on Form S-3 for 14,000,000 shares of Common Stock
issued or issuable by Concurrent to CyberGuard (including a
maximum of 4,000,000 shares of Common Stock, subject to anti-
dilution adjustments, that are issuable upon conversion of the
Convertible Preferred Stock or the debentures into which such
Convertible Preferred Stock is exchangeable pursuant to its
terms) in connection with the Acquisition. Concurrent will not
receive any of the proceeds from the sale of Common Stock offered
by CyberGuard.
USE OF PROCEEDS
Of the 1,200,000 shares of Common Stock being offered
hereby, Concurrent will sell up to 412,000 shares as directed by
Berenson Minella and will pay the net proceeds thereof to
Berenson Minella without deducting the related estimated expenses
(other than agent's commissions or underwriter's discounts, if
any) in partial satisfaction of the advisory fee due from Concur-
rent to Berenson Minella for its services as financial advisor to
Concurrent in connection with the Acquisition. Assuming a sale
price of $__ per share (the last reported sale price of the
Common Stock on June __, 1996), the net proceeds to Berenson
Minella of the sale of all of such shares would be $_______. See
"Certain Arrangements with Berenson Minella" for a discussion of
the rights of Berenson Minella with respect to such 412,000
shares of Common Stock. With respect to the severance owed to
Mr. Stihl, based upon an assumed stock price of $______ per
share, Concurrent expects to sell approximately 238,000 shares as
directed by Mr. Stihl to satisfy such severance obligation. If
238,000 shares of Common Stock are insufficient to satisfy the
severance obligation to Mr. Stihl, Concurrent will allocate such
additional shares from the shares offered hereby as necessary to
satisfy such obligation. Of the remaining shares offered hereby,
Concurrent intends to sell that number of shares sufficient to
result in net proceeds of $921,000, after deducting the estimated
expenses related to the sale of such shares, to satisfy the
severance compensation obligations to certain former executive
officers. Any remaining shares after such sales will be
deregistered and the Registration Statement will be terminated.
See "Plan of Distribution" for a discussion of the retention of
specified agents to sell the shares of Common Stock offered hereby.
RISK FACTORS
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A
HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS AND INCORPORATED BY REFERENCE
HEREIN, PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE
FOLLOWING FACTORS IN EVALUATING CONCURRENT BEFORE PURCHASING ANY
SHARES OF COMMON STOCK.
CHANGES IN MARKET PRICES OF COMMON STOCK; SHARES ELIGIBLE FOR FUTURE SALE
General Market Risk
Pursuant to the Purchase and Sale Agreement, Concurrent
issued 10,000,000 shares of Common Stock to CyberGuard, and
CyberGuard issued 683,178 shares of CyberGuard Stock to Concur-
rent. The market prices of the Common Stock will vary from such
price at the date of this Prospectus. Such variation will be the
result of changes in the business, operations or prospects of
Concurrent, regulatory considerations, general market, economic
and industry conditions, the results of operations, liquidity and
the market's perception of the prospects of Concurrent as well as
other factors affecting Concurrent including the risk factors set
forth below. Furthermore, because Concurrent owns 9% of the
CyberGuard Stock, the price of the Common Stock will also reflect
changes in the price of the CyberGuard Stock and in the business
prospects for CyberGuard. Despite Concurrent's ownership of the
CyberGuard Stock and its right to designate one of CyberGuard's
seven members of its Board of Directors, Concurrent will not be
able to control CyberGuard's strategic direction or influence the
day-to-day management of CyberGuard's business or the future
results of CyberGuard's operations.
Shares Eligible for Future Sale
No assurance can be given as to the effect, if any, that
future sales of shares of Common Stock, or the availability of
shares of Common Stock for future sales, will have on the market
price of the Common Stock from time to time. Future sales of
shares of Common Stock (including shares issued upon exercise of
stock options), or the possibility that such sales could occur,
could adversely affect the prevailing market price of the Common
Stock. As of the date of this Prospectus, the shares of Common
Stock offered pursuant to this Prospectus, when aggregated with
the shares of Common Stock that are issuable upon the exercise of
the options, the shares of Common Stock being offered by
CyberGuard (see "Concurrent Computer Corporation -- Additional
Information") and the shares issuable upon the exercise of
certain outstanding warrants to purchase 361,544 shares of Common
Stock at $3 per share, equal approximately 40.9% of the shares of
Common Stock outstanding. As of the date of this Prospectus,
there are 2,556,740 shares of Common Stock issuable upon exercise
of options that are fully vested of which 2,366,822 options have
an exercise price equal to or less than $3.00 per share. An
additional 6,056,209 shares of Common Stock or options therefor
are reserved and available for future issuance under Concurrent's
stock option plan. The shares of Common Stock issued to
CyberGuard are subject to the terms of the Share Holding Agree-
ment between Concurrent and CyberGuard pursuant to which shares
of Common Stock may be sold by CyberGuard subject to certain
restrictions on transfer (including certain restrictions on the
sales of shares when Concurrent is engaged in or preparing to
engage in a public offering of Common Stock) and on the volume of
sales by CyberGuard of Common Stock.
UNCERTAINTIES IN SUCCESSFULLY INTEGRATING THE CYBERGUARD REAL-
TIME BUSINESS AND ACHIEVING COST SAVINGS
Concurrent has begun cost savings actions relating to the
Acquisition and expects full implementation thereof approximately
six months after the Acquisition. These savings will require
significant reductions in employees, as well as consolidation of
facilities worldwide and other miscellaneous cost savings ac-
tions. Obtaining these savings through the consolidation of
functions, the integration of departments, systems and procedures
and the relocation of staff present significant management
challenges. The consolidation of development and manufacturing
operations are especially challenging. The failure to effective-
ly consolidate development functions may result in delays in
introduction of the next generation of products. Similarly, the
failure to effectively consolidate manufacturing operations could
result in a delay in the shipment of certain customer orders and
could affect the quality of the goods delivered. Such failures
could have a material adverse effect on the future financial
performance, results of operations and financial condition of
Concurrent. There can be no assurance that such potential cost
savings, operating efficiencies and other synergies will be
successfully accomplished or accomplished within the time periods
initially contemplated, particularly since liquidity issues (see
" Potential Shortfall in Liquidity") may constrain Concurrent's
ability to integrate the real-time businesses of Concurrent and
CyberGuard. Moreover, although the primary purpose of such
actions is to realize direct cost savings and other operating
efficiencies, there can be no assurance of the extent to which
such cost savings and efficiencies can be achieved.
IMPACT OF TRANSACTION COSTS ON FINANCIAL PERFORMANCE; UNCERTAINTY
OF ACQUISITION-RELATED COSTS
Concurrent expects to take a pre-tax charge in the range
of $29 to $32 million and to adjust goodwill to cover the
transaction costs of the Acquisition and the costs of integrating
the real-time businesses of Concurrent and CyberGuard, including
the cost of facility closings and employee terminations to
eliminate duplicate facilities and excess capacity and other non-
recurring items. Concurrent expects that such charges and
related cash transaction costs will initially have a material
adverse effect on Concurrent's financial performance and finan-
cial condition within the period in which the charge and costs
are taken. Approximately $18 million of these costs are expected
to be paid out in cash over the next two years (primarily fiscal
year 1997), $9 to $11 million of the total charge are expected to
be non-cash fixed asset carrying cost adjustments and approxi-
mately $2 to $3 million are obligations which will be settled
using proceeds of the offering of Common Stock made hereby. Such
costs include Acquisition expenses (such as investment banker,
legal and accounting fees), employee, facility and equipment
relocation costs and employee out-placement costs. The $10
million of remaining cash payments will be a continuation of
current funding requirements and, after their full satisfaction,
are expected to positively impact Concurrent's liquidity. For
example, cash expenditures for employee severance costs are
expected to be paid out over time without increasing payroll
costs; payroll costs are expected to decline as severance pay-
ments cease. There can be no assurances as to the actual amount
of these charges or adjustments, and such charges or adjustments
could be higher than current estimates. In addition, there may
be further charges in future periods relating to the cost of
integrating the real-time business of Concurrent and CyberGuard.
However, the amount of such future charges cannot currently be
determined.
DECLINING TREND IN NET SALES
Over the past five years, annual net sales of Concurrent
generally have declined from a high of approximately $255 million
to an annualized rate in the current fiscal year of approximately
$100 million. With the exception of the quarter ended June 30,
1995, where net sales increased $162,000 over the prior quarter,
net sales of Concurrent declined quarter to quarter during the
fiscal year ended June 30, 1995 from $41.5 million in the first
quarter to $30.5 million in the fourth quarter for total net
sales during the period of $140.1 million. The trend continued
in the first two quarters of the fiscal year ended June 30, 1996.
Net sales for the three months ended September 30, 1995 were
$26.5 million, a decrease of $15.0 million from the prior year
period and a decrease of $4 million from the previous quarter.
Net sales for the three months ended December 31, 1995 were $24.5
million, a decrease of $13.3 million from the prior year quarter
and a decrease of $2 million from the previous quarter. Net sales
for the three months ended March 31, 1996 were $26.2 million, a
decrease of $4.2 million from the prior year period but an
increase of $1.7 million from the previous quarter. As a result
of the distractions and uncertainties associated with the Acqui-
sition, net sales for the quarter ended June 30, 1996 are expect-
ed to be the lowest quarterly revenues for the fiscal year ended
June 30, 1996. The decline in net sales was largely the result
of the anticipated decline in sales of proprietary systems,
including reduced shipments under the U.S. Department of
Commerce's Next Generation Weather Radar (NEXRAD) program without
a corresponding increase in the sales of open systems. Declining
sales of computer systems consequently results in fewer mainte-
nance contracts. This, together with a decline in renewal rates
on maturing maintenance contracts as installed systems are
decommissioned and competitive discounting from third party
maintenance providers, has led to a declining trend in service
revenues.
The future growth of Concurrent's business and its future
financial performance will depend on, among other things, its
ability to increase net sales by continuing to develop and market
competitive real-time open systems products and to expand its
revenue base through a combination of internal growth and strate-
gic alliances. There can be no assurance as to the future growth
of Concurrent's business and financial performance or as to the
success of its products and strategic alliances.
HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT
For the nine months ended March 31, 1996 and for the fiscal
years ended June 30, 1995 and 1994, Concurrent experienced losses
(before extraordinary items and the cumulative effect of changes
in accounting principles) of approximately $5.7 million, $2.0
million and $11.6 million, respectively. Concurrent recorded net
income of $3.9 million for the fiscal year ended June 30, 1993.
Pro forma to reflect the Acquisition, Concurrent would have
experienced losses of approximately $7.6 million and $7.4 million
for the nine months ended March 31, 1996 and the fiscal year
ended June 30, 1995, respectively, assuming the Acquisition were
consummated at the beginning of each such period. There can be
no assurance that Concurrent will be able to achieve profitabili-
ty, or if achieved, that such profitability can be maintained.
For the nine months ended March 31, 1996 and for the fiscal
years ended June 30, 1995, 1994 and 1993, Concurrent also experi-
enced a decline in assets. On a pro forma basis as of March 31,
1996, as a result of the Acquisition, Concurrent would have had
assets of approximately $109.5 million, including its CyberGuard
Stock (see "Pro Forma Condensed Consolidated Financial Statements
of Concurrent" in the Joint Proxy Statement incorporated by
reference herein). The pro forma consolidated balance sheet at
March 31, 1996 does not reflect certain restructuring adjustments
which may result from the integration of the Concurrent and
CyberGuard real-time businesses, such as the write-down of the
carrying value of property, plant and equipment which may become
excess to the needs of Concurrent. Such writedowns may exceed
$10 million. There can be no assurance that Concurrent's assets
will not continue to decline.
POTENTIAL SHORTFALL IN LIQUIDITY
Although the purchase of the CyberGuard real-time business
and the integration and consolidation of development and manufac-
turing operations is expected to improve Concurrent's liquidity
by permitting additional borrowing availability, there can be no
assurance that cash flow from the combined real-time operations
will be sufficient to fund transaction costs related to the
Acquisition including relocation of Concurrent's operations to
Florida, anticipated restructuring costs, and ongoing working
capital requirements. Concurrent's liquidity is dependent on many
factors, including sales volume, operating profit ratio, debt
service and the efficiency of asset use and turnover. The future
liquidity of Concurrent will depend to a significant extent on
(i) the actual versus anticipated decline in sales of proprietary
systems and service maintenance revenue; (ii) revenue growth from
open systems; (iii) both the related costs and the length of time
to realize the anticipated benefits from the integration of the
real-time businesses of Concurrent and CyberGuard; and (iv)
ongoing cost control actions. Liquidity will also be affected
by: (i) the timing of shipments, which predominantly occur
during the last month of the quarter; (ii) the increasing per-
centage of sales derived from outside the United States, where
there are generally longer accounts receivable collection cycles
and which receivables are not included in Concurrent's borrowing
base under its revolving credit facility; (iii) the sales level
in the United States, where related accounts receivable are
included in the borrowing base of Concurrent's revolving credit
facilities; and (iv) the number of countries in which Concurrent
will operate, which may require maintenance of minimum cash
levels in each country and, in certain cases, may restrict the
repatriation of cash, such as cash held on deposit to secure
office leases.
Concurrent may sell or pledge some or all of the CyberGuard
Stock to generate cash. To the extent CyberGuard consummates a
public offering of its stock, Concurrent intends to sell at least
one-half of the shares of CyberGuard Stock owned by it in connec-
tion with such public offering. On May 23, 1996, Cyberguard
filed a registration statement relating to a public offering of
2,500,000 million shares of its common stock of which 1,800,000
shares are being offered by Cyberguard, 341,589 are being offered
by Concurrent and the balance are being offered by other selling
stockholders. In addition, under the terms of the agreements
relating to the Acquisition, Concurrent may sell a portion of its
stock even if a public offering is not consummated. However,
Concurrent's ability to sell or pledge the CyberGuard Stock is
subject to a number of limitations and conditions pursuant to the
terms of the Acquisition. See "Terms Of The Transaction -- The
Share Holding Agreement" of the Joint Proxy Statement incorporat-
ed herein by reference. These limitations and conditions may
affect Concurrent's flexibility in generating cash through sales
of CyberGuard Stock.
Concurrent anticipates that the capital resources available
will be adequate to satisfy its capital requirements through June
1997, assuming quarterly net sales of the combined real-time
businesses in the range of $30 million. Concurrent's future
capital requirements, however, will depend on many factors,
including its ability to successfully market and sell its commer-
cial products, the cost and timing of the integration of the
real-time businesses of Concurrent and CyberGuard to realize
potential synergies and cost savings and the cost of developing,
marketing and selling competitive products. To the extent that
the funds generated by operations are insufficient to satisfy
Concurrent's capital requirements, Concurrent may seek additional
equity or debt financing or obtain additional credit facilities.
Any equity or debt financing, if available at all, may be on
terms which are not favorable to Concurrent and, in the case of
equity or convertible debt offerings, could result in dilution to
Concurrent's then existing stockholders. Concurrent is also
considering various additional financing alternatives, including
a possible sale or sale and partial leaseback of its Oceanport,
New Jersey facility to improve its financial flexibility. If
adequate funds are not available, Concurrent may be required to
curtail certain activities, including product development,
marketing and sales activities.
POTENTIALLY ADVERSE CUSTOMER REACTION
While Concurrent believes that its customers generally favor
the Acquisition due to the broader product line of Concurrent and
the other operational benefits of the Acquisition, there can be
no assurance as to such customer reaction. Adverse reactions by
Concurrent customers could have a material adverse effect on the
financial performance, results of operations and financial
condition of Concurrent.
LAG IN CUSTOMER ORDERS; LONG SALES CYCLE
Although Concurrent pursues significant programs with the
potential for high volume unit sales of its systems, it neither
has nor relies on fixed term or fixed quantity contracts for
future sales. Consequently, Concurrent relies on customer orders
in a given quarter for net sales for the quarter and on internal
forecasts of customer demand to plan operating expenditures. The
internal forecasts generally have proven to be optimistic. The
ability to match expenditures to anticipated sales is further
complicated by the trend of a majority of customers to delay
orders to the last month of a quarter. Further, the manufacture
of systems in anticipation of firm orders introduces the risk of
over-production and investing limited cash resources in potential
excess inventory. As a result, substantial efforts must be
undertaken on a continuous basis to maintain existing levels of
business and to manage expenditures consistent with anticipated
sales.
The sale of real-time products generally involves signifi-
cant education and commitment of capital by prospective custom-
ers, with the attendant delays frequently associated with large
capital expenditures and lengthy procurement procedures. For
these and other reasons, the expected sales cycle associated with
the sale of Concurrent's products is typically long and subject
to a number of significant risks over which Concurrent does not
have significant control. As a result, Concurrent may expend
significant resources pursuing potential sales that will not be
consummated, which in turn result in decreased revenues and cash
flow, potentially resulting in a material adverse effect on the
financial performance, results of operations and financial
condition of Concurrent.
SHIFT IN EMPHASIS AWAY FROM PROPRIETARY SYSTEMS
Many of Concurrent's target markets have undergone or are
undergoing a shift away from "proprietary" to "open" systems.
Sales related to Concurrent's proprietary systems, while declin-
ing, continue to represent more than 50% of its total systems
sales. Concurrent had approximately $25 million in open system
sales and $47 million in proprietary systems sales in its fiscal
year ended June 30, 1995 and $15 million in open systems sales
and $21 million in proprietary systems sales for the nine months
ended March 31, 1996. Although Concurrent's installed base of
proprietary systems is currently its largest market, Concurrent's
growth and its long-term financial performance will depend
largely on its ability to continue to develop and market industry
leading open systems that meet the real-time computing needs of
its targeted customers. Concurrent plans to capitalize on the
trend to open systems by focusing on its target markets as well
as entering into strategic alliances with third parties to bring
to market new solutions and software applications for new and
existing customers. Concurrent does not expect the shift in
emphasis to open systems to result in either significant incre-
mental costs over current cost levels or incremental capital
investment. A shift in emphasis to open systems may, however,
result in lower gross margins on systems sales. Currently, gross
margins on open systems are lower than gross margins on propri-
etary systems. Concurrent's operating income would be adversely
affected by such a shift unless total net sales increase, the
gross margins on its open systems improve and/or total operating
expenses are reduced.
Servicing Concurrent's large installed base, particularly
its proprietary systems, is an important element in Concurrent's
business strategy and generates significant revenue and cash flow
to Concurrent. The shift in emphasis to open systems may also
have an adverse impact on maintenance revenues. Generally, open
systems require less maintenance and can, in many cases, be
serviced by the customers themselves or by third party providers.
For Concurrent, the shift in emphasis, together with declining
systems sales, resulted in the decline of service revenue from
$87.6 million for the year ended June 30, 1993 to $68.1 million
for the year ended June 30, 1995, respectively. For the nine
months ended March 31, 1996, Concurrent's service revenue was
$41.4 million compared to $51.8 million in the prior year period.
There can be no assurance that the decline in service revenue
will not continue. Should such decline continue, Concurrent's
operating income would be adversely affected by such a decline
unless non-service revenues increase and/or total operating
expenses are reduced.
PRODUCT OBSOLESCENCE; SIGNIFICANT RESEARCH AND DEVELOPMENT EXPENDITURES
The information technology industry is characterized by
rapid advances in technology and demand for more cost effective
"solutions." The technologies incorporated by Concurrent into
its products and future products are in a continuous state of
development and tend to be surpassed by new developments within
18-24 months of initial commercial use. Continued rapid advances
in technology will further accelerate the technological obsoles-
cence of these products as well as those of Concurrent's competi-
tors, which may affect Concurrent's financial performance,
results of operations and financial condition. Concurrent's
success will depend, to a significant extent, upon the ability to
enhance existing products, to integrate the best technologies of
Concurrent and CyberGuard and to introduce new products and
features in a timely manner to meet changing customer require-
ments. It will also be dependent on the success of strategic
technological alliances. In order to accomplish these objec-
tives, Concurrent must maintain certain levels of investment in
research and development and effectively use this investment.
Concurrent must obtain and incorporate new hardware, software,
communications and peripheral technologies that are primarily
developed by others. There can be no assurance that the new
product development activities will be successful, that new
technologies will be available to Concurrent, that it will be
able to deliver commercial products in a timely manner or that
its products will achieve market acceptance. The business of
Concurrent will be adversely affected if it, its strategic
partners, or its suppliers incur delays in developing new prod-
ucts or enhancements, or if such products or enhancements do not
gain market acceptance because of competing technology. In
addition, some new product introductions are intended to replace
existing products. Although reasonable commercial efforts will
be made to monitor and manage new product introductions, there
can be no assurance that a new product introduction will not
result in a material amount of obsolete inventory. Consequently,
there may be a material adverse effect on liquidity of Concurrent
in the event there is significant inventory that Concurrent is
unable to dispose of in a reasonable time frame at an aggregate
value approximately equal to its aggregate book value. There can
be no assurance that new product introductions will be executed
without a material adverse effect on the financial performance,
results of operations or the financial condition of Concurrent.
The costs of developing future products in the real-time comput-
ing and multimedia markets is expected to be significant. While
Concurrent's real-time computing sectors are well developed and
have an extensive operational history, its multimedia sector is
in the relatively early stages of market development and is
likely to require extensive development, sales and marketing
expense before it may be in a position to contribute significant
revenue or cash flow. There can be no assurance as to the cost
of funding future products in either product sector or on the
ability of these product sectors to contribute to the revenues or
cash flows of Concurrent.
NEED TO ESTABLISH ADDITIONAL MARKETING RELATIONSHIPS
A significant business strategy of Concurrent is to enter
into strategic marketing alliances or other similar collaborative
relationships. There can be no assurance that existing or
contemplated collaborative relationships will be commercially
successful, that Concurrent will be able to negotiate additional
collaborative relationships, that such additional collaborations
will be available to Concurrent on acceptable terms or that any
such relationships, if established, will be commercially success-
ful. The potential increased revenues from such relationships
may be reduced by requirements to provide volume price discounts
and other allowances, and potential significant costs incurred in
customizing products. In addition, there can be no assurance
that parties with whom collaborative relationships are estab-
lished will not pursue alternative technologies or develop
alternative products in addition to or in lieu of Concurrent's
products, either on their own or in collaboration with others,
including Concurrent's competitors. Such alternative technolo-
gies or products, if developed, may be in direct competition with
Concurrent's technologies or products and may significantly erode
the benefits of such strategic marketing alliances or collabora-
tive relationships.
LIMITED PROTECTION OF INTELLECTUAL PROPERTY AND PROPRIETARY
RIGHTS; RISK OF LITIGATION; RELIANCE ON LICENSED TECHNOLOGY
Concurrent relies on patent, trademark, copyright and trade
secret laws, employee and third-party non-disclosure agreements
and other methods to protect its rights. Concurrent holds
patents and may apply for patents which cover certain aspects of
its technology. There can be no assurance that any pending or
future patent applications will be granted or that any current or
future patents will not be challenged, invalidated or circumvent-
ed or that the rights granted thereunder will provide competitive
advantages to Concurrent. There can be no assurance that Concur-
rent s trade secrets or non-disclosure agreements will provide
meaningful protection of its proprietary information. Further-
more, there can be no assurance that others will not independent-
ly develop similar technologies or duplicate any technology
developed by Concurrent or that the technology will not infringe
upon patents or other rights owned by others. Further, Concur-
rent may be subject to risk as it enters into transactions in
countries where intellectual property laws are not well developed
or are poorly enforced. Legal protections of Concurrent's rights
may be ineffective in such countries, and technology developed in
such countries may not be protectable in jurisdictions where
protection is ordinarily available. Concurrent s inability to
maintain a competitive advantage based on proprietary rights
would have a material adverse effect on its financial perfor-
mance, results of operations and financial condition.
As the number of real-time computing products in the indus-
try increases and the functionality of these products further
overlaps, software developers and publishers may increasingly
become subject to infringement claims. There can be no assurance
that third parties will not assert infringement claims against
Concurrent in the future with respect to current or future
products. There has been substantial litigation regarding
patent, copyright, trademark and other intellectual property
rights involving computer companies generally. Concurrent has
been separately notified by IBM and BTG (British Technology
Group), that each believes that certain of Concurrent s technology
may infringe on certain patents held by their respective
companies. These and any claims or litigation, with or without
merit, could be costly and could result in a diversion of manage-
ment s attention, which could have a material adverse effect on
Concurrent's financial performance, results of operations and
financial condition. Adverse determinations in such claims or
litigation could also have a material adverse effect on
Concurrent's financial performance, results of operations and
financial condition.
From time to time, other companies and individuals assert
exclusive patent, copyright, trademark and other intellectual
property rights to technologies or marks that are important to
the computer industry or Concurrent's business. Concurrent
evaluates each claim relating to its products and, if appropri-
ate, seeks a license to use the protected technology. The
licensing agreements generally do not protect Concurrent from
trade secret, copyright or other violations by Concurrent or its
suppliers in developing or selling these products. There can be
no assurance, however, that Concurrent will be able to obtain
licenses to intellectual property of third parties on commercial-
ly reasonable terms, if at all. In addition, Concurrent could be
at a disadvantage if its competitors obtain licenses for protect-
ed technologies with more favorable terms than does Concurrent.
If Concurrent or its suppliers are unable to license protected
technology used in its products, Concurrent could be prohibited
from marketing those products or may have to market products
without desirable features. Concurrent could also incur substan-
tial costs to redesign its products or to defend any legal action
taken against it. If Concurrent's products should be found to
infringe protected technology, it could be enjoined from further
infringement and required to pay damages to the infringed party.
RELIANCE ON GOVERNMENT BUSINESS
Concurrent derives a significant portion of its revenues
from the supply of systems under government contracts. For its
fiscal year ended June 30, 1995, approximately $39.2 million of
Concurrent's revenues were directly or indirectly related to
agencies of the U.S. Government. This amount represented approx-
imately 28% of Concurrent's worldwide revenues for fiscal year
1995, compared to 31% and 29% for its 1994 and 1993 fiscal years,
respectively. For the nine months ended March 31, 1996, approxi-
mately $14 million (18%) of Concurrent s revenues were directly
or indirectly related to agencies of the U.S. Government.
Concurrent's revenues related to sales to the U.S. Government are
derived from various federal agencies, no one of which accounted
for more than 5% of total revenues (e.g., several agencies
participate under the NEXRAD program). Sales to Unisys Corp., as
prime contractor, under the NEXRAD program contributed approxi-
mately $17.5 million, $23 million and $35 million in revenues for
fiscal years 1995, 1994 and 1993, respectively. The program is
largely completed and no significant revenue is expected for
future periods. Government business is, in general, subject to
special risks, such as delays in funding, termination of con-
tracts or subcontracts for convenience of the government or for
default by the contractor, reduction or modification of contracts
or subcontracts, failure to exercise options, changes in govern-
mental policies and the imposition of budgetary constraints. A
loss of government contract revenues could have a material
adverse effect on the financial performance, results of opera-
tions and financial condition of Concurrent.
DEPENDENCE ON INTERNATIONAL OPERATIONS
The financial results of Concurrent are increasingly depen-
dent on its international operations. Approximately 46% of
total revenues for its fiscal year 1995 were derived from inter-
national operations. For the nine months ended March 31, 1996,
approximately 51% of total revenues were derived from interna-
tional operations. Concurrent expects international operations
to continue to account for a significant percentage of total
revenues. Certain risks are inherent in international opera-
tions, including exposure to currency fluctuations, the imposi-
tion of government controls, export license requirements, re-
strictions on the export of critical technology, political and
economic instability, trade restrictions, changes in tariffs,
taxes and freight rates, generally longer payment cycles, diffi-
culties in staffing and managing international operations and
general economic conditions. From time to time in the past,
financial results of Concurrent have been affected both favorably
and unfavorably by fluctuations in currency exchange rates.
Future unfavorable fluctuations in currency exchange rates may
have an adverse impact on the financial performance, results of
operations and financial condition of Concurrent. Although
international revenues continue to represent an increasing
percentage of total revenues, accounts receivable from such
international revenues are not included in the borrowing base
under Concurrent's revolving credit facility.
COMPETITION
Concurrent operates in highly competitive environments
driven by rapid technological innovation. Many of its competi-
tors have greater financial and operating resources. In addi-
tion, companies with greater resources that currently do not
compete may enter into various of the company's target business-
es. The success of Concurrent will depend in part upon the
ability of its management to demonstrate to potential customers
the performance and reliability of its products and services.
There can be no assurance that management will be successful in
these efforts.
An increase in competition could result in, among other
things, price reductions and loss of sales volume. Such competi-
tion and any resulting reduction in aggregate revenues and/or
gross margins could have a material adverse effect on the future
financial performance, results of operations and financial
condition of Concurrent. There can be no assurance that
Concurrent's competitors will not develop real-time products that
may be more effective than Concurrent's current or future prod-
ucts or that Concurrent's technologies and products will not be
rendered obsolete by such developments.
LIMITED SOURCES OF SUPPLY
In limited cases, Concurrent purchases components from a
single supplier to obtain the required technology and the most
favorable price and delivery terms. Concurrent estimates that a
lead time of up to 16-24 weeks may be necessary to switch to an
alternative supplier of certain custom application specific
integrated circuits ("ASICS") and printed circuit assemblies. A
change in the supplier of these components without the appropri-
ate lead time could result in a material delay in shipments by
Concurrent of certain products and possibly, a material adverse
effect on the financial performance, results of operations and
financial condition of Concurrent.
Concurrent purchases components, including customized
components such as certain computer peripheral equipment incorpo-
rated into NightHawk computers, from a single supplier to obtain
the required technology and the most favorable price and delivery
terms. This single supplier will continue to be relied upon by
Concurrent. In the manufacture of the current generation 6000
series of NightHawk computers, Concurrent depends on the avail-
ability of Power PC chips provided by both IBM and Motorola. In
addition, the manufacturing process requires a high volume of
quality components that are procured from third-party suppliers.
Reliance on suppliers, as well as industry supply condi-
tions, generally involve several risks, including the possibility
of defective parts, a shortage of components, increase in compo-
nent costs, and reduced control over delivery schedules, any or
all of which could adversely affect Concurrent's respective
financial results. Where alternative sources are available,
qualification of the alternative suppliers and establishment of
reliable supplies of components from such sources may result in
delays. Problems with supplier performance or delays in delivery
of components may cause a delay in shipments of various products.
Since revenue is recognized typically upon shipment, any delay in
shipment may also result in a delay in revenue recognition,
possibly outside the fiscal period originally planned, and, as a
result, may adversely affect financial results for that particu-
lar period.
POTENTIAL NEED TO EXPAND INFRASTRUCTURE
If Concurrent experiences rapid growth, of which there can
be no assurance, it will need to continue to improve and expand
its infrastructure. There can be no assurance that Concurrent
will be able to manage expansion of its infrastructure to support
future growth effectively, if required. Concurrent expects to
transition its management information systems to more fully
integrate them on an enterprise wide basis, to reduce redundancy
and to incorporate enhanced functionality. There can be no
assurance that this management information system transition can
be accomplished on a timely basis or without disruptions of
Concurrent's operations, or management information functions,
which could have a material adverse effect on Concurrent's
financial performance, results of operations and financial
condition.
DEPENDENCE ON KEY EMPLOYEES
As a high technology company in a highly competitive indus-
try, the success of Concurrent depends in part on its ability to
attract and retain highly skilled technical, managerial, sales
and marketing employees. Competition for these key employees is
intense. The uncertainty as to which employees will remain as
part of Concurrent and the locations of various functions in
connection with the integration of the CyberGuard real-time
business as well as other factors beyond Concurrent's control may
lead certain employees to choose alternative employment. Al-
though Concurrent is not dependent on any one employee, the loss
of a number of key employees in significant positions and the
inability to attract and retain qualified replacement employees
in a timely manner could adversely affect the financial perfor-
mance, results of operations and financial condition of Concurrent.
DIVIDEND POLICY
It is currently contemplated that Concurrent will not pay
cash dividends on the Common Stock in the immediately foreseeable
future. Concurrent's dividend policy will be reviewed by its
Board of Directors at such future time as may be appropriate in
light of relevant factors existing at such times.
CERTAIN BARRIERS TO CHANGES OF CONTROL; EFFECTS OF CHANGES OF CONTROL
Rights associated with Common Stock may have the effect of
discouraging a third party from making an acquisition proposal to
Concurrent, and may thereby inhibit a change in control of the
company in circumstances that could give the holders of Common
Stock the opportunity to realize a premium over the then prevail-
ing market price. Such provisions may also adversely affect the
market price of Common Stock. In addition, loans under certain
credit agreements may be accelerated at the option of the lenders
in the event of a "change in control" of Concurrent (as that term
is defined in the credit agreements governing such loans). The
charter and by-laws of Concurrent and the Delaware General
Corporation Law (the "DGCL") contain certain provisions that may
have the effect of inhibiting a non-negotiated merger or other
business combination.
The Board of Directors of Concurrent has the authority to
issue shares of preferred stock and to determine the designa-
tions, preferences, and rights and the qualifications or restric-
tions of those shares without any further vote or action by the
stockholders. The rights of the holders of Common Stock will be
subject to, and may be materially adversely affected by, the
rights of the holders of any preferred stock that may be issued
in the future. The issuance of preferred stock, while providing
desirable flexibility in connection with possible acquisitions
and other corporate actions, could have the effect of making it
more difficult for a third party to acquire, or of discouraging a
third party from acquiring, as the case may be. With the excep-
tion of the Convertible Preferred Stock issued to CyberGuard,
Concurrent has no present plan to issue shares of preferred
stock.
LIMITATIONS ON THE USE OF CERTAIN TAX LOSS CARRYFORWARDS
Concurrent has substantial tax loss carryforwards available
to offset future taxable income. Under Section 382 of the
Internal Revenue Code of 1986, as amended (the "Code"), the use
of Concurrent's tax loss carryforwards could be limited in the
event of an "ownership change" involving more than 50% of
Concurrent's stock, including ownership changes arising by reason
of stock issuances by Concurrent. Although Concurrent has issued
a significant amount of stock in connection with the Acquisition,
the "ownership shift" resulting from such issuance, when coupled
with other ownership shifts involving certain 5% stockholders of
Concurrent since July 21, 1993, is not sufficient to constitute a
50% ownership change within the meaning of Section 382 of the
Code. Accordingly, the Acquisition has not impaired the avail-
ability of these tax loss carryforwards to Concurrent. It is
possible, however, that future ownership shifts involving the
stock of Concurrent could limit its ability to use these tax loss
carryforwards, including changes which occur by reason of addi-
tional stock issuances by Concurrent or acquisitions or disposi-
tions of Common Stock by persons who are or become owners of 5%
or more of Common Stock.
ANTI-TAKEOVER PROVISIONS
Concurrent has adopted and implemented a Rights Agreement
that will expire by its terms on August 14, 2002 pursuant to
which each share of Common Stock has attached to it a right to
purchase a share of preferred stock under certain circumstances.
This agreement is intended to encourage a person interested in
acquiring Concurrent to negotiate with, and to obtain the approv-
al of, the Board of Directors in connection with such a transac-
tion. However, this agreement may discourage a future acquisi-
tion of Concurrent, including an acquisition in which stockhold-
ers might otherwise receive a premium for their shares. As a
result, stockholders who might desire to participate in such a
transaction may not have the opportunity to do so.
CERTAIN ARRANGEMENTS WITH BERENSON MINELLA
In June 1995, Concurrent engaged Berenson Minella as its
financial advisor to assist senior management in restructuring
and/or refinancing Concurrent's bank debt and to explore various
options with respect to raising capital and combination transac-
tions with other parties As part of such engagement, Berenson
Minella acted as Concurrent's financial advisor in connection
with the Acquisition.
Since June 1995, Berenson Minella has received fees total-
ling $280,000 for its financial advisory services to Concurrent.
In connection with the Acquisition, Concurrent agreed to pay
Berenson Minella a transaction fee of $_______, equal to 1.5% of
the average aggregate value of the outstanding Common Stock (as
of the close of business) for the five business days prior to the
date of consummation of the Acquisition (the "Closing Price"),
against which fee $_______ of the amount previously paid was
credited. Of such fee, $300,000 was paid at the closing of the
Acquisition (offset by previously paid retainer fees as described
in the preceding sentence), and the remainder of $_______ (the
"Remainder Amount") is payable by delivery to Berenson Minella of
the proceeds from the sale by Concurrent at the direction of
Berenson Minella of the 412,000 shares of Common Stock offered
hereby; provided, however, that if the aggregate net proceeds
from the sale of the shares are less than the Remainder Amount,
Concurrent has agreed to pay Berenson Minella the amount of the
difference in cash on or before the twenty-fifth business day
following the closing of the Acquisition or, if Berenson Minella
so elects, to deliver such unsold shares to Berenson Minella,
which shares would be unregistered and without registration
rights. Concurrent will sell up to 412,000 of the shares of
Common Stock offered hereby only as directed by Berenson Minella
and will not be entitled to any of the proceeds therefrom. See
"Plan of Distribution." Pursuant to the terms of the engagement,
the number of shares was determined by using a price per share
equal to the product of (i) the Closing Price and (ii) .875.
Concurrent has also agreed to reimburse Berenson Minella for its
reasonable out of pocket expenses (including the fees and expens-
es of its counsel) and to indemnify Berenson Minella and certain
related persons against certain liabilities and expenses in
connection with its services as financial advisor and the sale of
the 412,000 shares of Common Stock in connection with the compen-
sation therefor, including liabilities under federal securities laws.
PLAN OF DISTRIBUTION
The distribution of the shares of Common Stock is not
subject to any underwriting agreement. Any or all of the shares
of Common Stock offered hereby may be offered and sold to
purchasers directly by or on behalf of Concurrent from time to
time in the over-the-counter market, in privately negotiated
transactions, or otherwise at prices prevailing in such market or
as may be negotiated at the time of the sale. With respect to
412,000 of the shares of Common Stock offered hereby, Concurrent
has, at the direction of Berenson Minella, designated Bear,
Stearns & Co., Inc. ("Bear Stearns") as the selling agent. An
account has been established at Bear Stearns for the benefit of
Berenson Minella. Concurrent, upon notification by Berenson
Minella, will direct the sale of the 412,000 shares by Bear
Stearns. To the extent that the aggregate net proceeds generated
from the sale of the shares of Common Stock exceed the Remainder
Amount, Berenson Minella will retain such excess proceeds in
accordance with the terms of its fee arrangement with Concurrent.
Bear Stearns will earn an agency fee of $[.02] per share of Common
Stock sold. Alternatively, Bear Stearns, which is a market-maker
in the Common Stock, may act as principal in the purchase of such
shares.
With respect to the severance obligation of $730,000 to Mr.
Stihl, Concurrent has appointed A.G. Edwards Inc. ("A.G. Ed-
wards") as its selling agent to sell up to 238,000 shares of
Common Stock as directed by Mr. Stihl. Aggregate net proceeds in
excess of $730,000 from the sale of such shares will be retained
by Concurrent in accordance with the terms of the employment
agreement between Concurrent and Mr. Stihl. If the proceeds from
the sale of such shares are insufficient to satisfy the $730,000
severance obligation, Concurrent will allocate additional shares
of Common Stock to be sold by A.G. Edwards as selling agent as
directed by Mr. Stihl. A.G. Edwards will earn an agency fee of
$.02 per share of Common Stock sold.
With respect to the remaining shares of Common Stock,
Concurrent has appointed Smith Barney Inc. ("Smith Barney") as
selling agent. An account has been established at Smith Barney
by Concurrent on behalf of the former executive officers of
Concurrent (other than Mr. Stihl) entitled to severance pursuant
to the terms of the Acquisition. Concurrent will direct the sale
of such shares of Common Stock as are necessary to fund the
severance obligations owed to the former executive officers. The
aggregate net proceeds from such sales of shares of Common Stock
will be allocated proportionately to each individual executive
officer by means of sub-accounts that have been established by
Concurrent at Smith Barney for the benefit of each such former
executive officer. Smith Barney will earn an agency fee of $.02
per share of Common Stock sold. Alternatively, Smith Barney,
which is a market-maker in the Common Stock, may act as principal
in the purchase of such shares.
To the extent that the aggregate net proceeds from the sale
of shares of Common Stock are insufficient to fund the obliga-
tions to Mr. Stihl or the executive officers, Concurrent may use
cash or register additional shares of Common Stock for sale
pursuant to a new registration statement.
Agents that participate in the distribution of shares of the
Common Stock may be deemed to be underwriters, and any profit on
the sale of the shares of the Common Stock by them and any
commissions received by them may be deemed to be underwriting
discounts and commissions under the Securities Act. The agents
may also engage in other transactions with, and perform services
for, Concurrent. At the time a particular offer of the shares of
Common Stock is made, to the extent required, a supplement to
this Prospectus will be distributed which will set forth the
aggregate number of shares of Common Stock being offered, and the
terms of the offering, the name or names of any agents, any
underwriting discounts or commissions and other items constitut-
ing compensation from, and the resulting net proceeds to, Concur-
rent, any discounts, commissions or concessions allowed or
reallowed or paid to dealers and, if applicable, the purchase
price to be paid by any underwriter for shares of Common Stock
purchased from Concurrent.
In order to comply with the securities laws of certain
states, sales of shares of the Common Stock to the public in such
states may be made only through broker-dealers who are registered
or licensed in such states. Sales of shares of the Common Stock
must also be made by the Concurrent in compliance with other
applicable state securities laws and regulations.
In connection with Berenson Minella's engagement as finan-
cial advisor to Concurrent, Concurrent has agreed to indemnify
Berenson Minella and each other person, if any, who controls
Berenson Minella within the meaning of the Securities Act, and
its respective directors, officers, partners, agents and affili-
ates, against certain liabilities which may be incurred in
connection with the sale of shares of Common Stock under this
Prospectus. The terms of the indemnification agreement also
provide for rights of contribution if such indemnification is not
available.
LEGAL OPINIONS
The validity of the Common Stock offered hereby will be
passed on for Concurrent by Skadden, Arps, Slate, Meagher & Flom,
919 Third Avenue, New York, New York 10022.
EXPERTS
Concurrent Computer Corporation's consolidated balance
sheets as of June 30, 1995 and 1994 and the consolidated state-
ment of operations, shareholders' equity (deficiency ) and cash
flow for each of the three years in the period ended June 30,
1995 incorporated by reference in this Prospectus have been
incorporated herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority
of that firm as experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the issuance of the securities
being registered hereby are estimated as follows:
SEC Registration Fee . . . . . . . . . $1,054
Accounting fees and expenses . . . . . *
Legal fees and expenses . . . . . . . . *
Blue Sky and Legal Investment fees
and expenses . . . . . . . . . . . . $ *
Transfer Agent's fees and expenses . . *
Printing expenses . . . . . . . . . . . *
Miscellaneous . . . . . . . . . . . . . *
Total . . . . . . . . . . . . . . . . $ *
* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides
that a corporation may indemnify directors and officers as well
as other employees and individuals against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
in connection with specified actions, suits or proceedings,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation - a "deriva-
tive action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was
unlawful. A similar standard is applicable in the case of
derivative actions, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with
the defense or settlement of such action, and the statute re-
quires court approval before there can be any indemnification
where the person seeking indemnification has been found liable to
the corporation. The statute provides that it is not exclusive
of other indemnification that may be granted by a corporation's
charter, by-laws, disinterested director vote, stockholder vote,
agreement or otherwise. Article 23 of the Registrant's By-laws
provides for indemnification of directors, officers, employees
and agents of the Registrant for expenses (including attorneys'
fees), judgments or fines of any threatened, pending or completed
action, suit or proceeding.
Article 11 of the Registrant's Certificate of Incorporation
provides that directors shall not be liable for monetary damages
resulting from a breach of their fiduciary duties, except for
liability for any of the following: (i) any breach of the duty
of loyalty to the Registrant and its stockholders, (ii) acts or
omissions not in good faith or which involve intentional miscon-
duct or a knowing violation of law, (iii) as provided under
Section 174 of the General Corporation Law of the State of
Delaware (which provides that directors are personally liable for
unlawful dividends or unlawful stock repurchase or redemptions),
or (iv) any transaction from which a director personally derived
any improper personal benefit. If the Delaware General Corpora-
tion Law is amended after approval by the stockholders of Article
11 to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a
director of Concurrent shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law,
as so amended from time to time. Any repeal or modification of
Article 11 shall not increase the personal liability of any
director of Concurrent for any act or occurrence taking place
prior to such repeal or modification, or otherwise adversely
affect any right or protection of a director of Concurrent
existing hereunder prior to the time of such repeal or modification.
The Registrant maintains director and officer liability
insurance policies providing for the insurance on behalf of any
person who is or was a director or officer of the Registrant and
subsidiary companies against any liability incurred by him in any
such capacity or arising out of his status as such. The
insurers' limit of liability under the policies is $10,000,000 in
the aggregate for all insured losses per year. The policies
contain various reporting requirements and exclusions.
Effective January 31, 1996 Concurrent entered into indemnity
agreements with its directors and executive officers (each, an
"Indemnitee" and collectively, the "Indemnitees"). The indemnity
agreements provide a contractual right to indemnification to the
Indemnitees for certain expenses incurred due to actions, suits
or other proceedings brought against them in their capacity as
directors, officers, employees or agents of Concurrent or any of
its subsidiaries.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
2.1 Purchase and Sale Agreement dated March 26, 1996 as
amended and restated on May 23, 1996, between Concur-
rent Computer Corporation ("Concurrent") and Harris
Computer Systems Corporation ("Harris").
4.1 Certificate of Designation, Preferences and Rights of
Class B Convertible Preferred Stock. (a)
4.2 Form of Share Holding Agreement dated , 1996
between Concurrent and Harris. (a)
4.3 Form of Common Stock Certificate. (b)
4.4 Rights Agreement, dated July 31, 1992. (c)
4.5 Form of Severance Agreement between Concurrent and its
executive officers. All agreements contain substan-
tially the same terms other than annual base salary and
annual target bonus percentage. (d).
4.6 Form of Amendment to Severance Agreement. (e).
4.7 Warrant and Registration Rights Agreement, dated July
21, 1993. (f).
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom. (e)
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom (in-
cluded in Exhibit 5.1).
_______________________________
(a) Incorporated by reference to the Exhibits to Concurrent's
Current Report on Form 8-K, dated April 19, 1996.
(b) Incorporated by reference to Exhibit Number 4.4 of Item 14
of Concurrent's Annual Report on Form 10-K for the fiscal
year ended June 30, 1992.
(c) Incorporated by reference to Concurrent's Current Report on
Form 8-K dated August 20, 1992.
(d) Incorporated by reference to Exhibit Number 10 of Item 14 of
Concurrent's Annual Report on Form 10-K for the fiscal year
ended June 30, 1991.
(e) To be filed by amendment.
(f) Incorporated by reference to the Exhibits to Concurrent's
Amendment No. 3 to Registration Statement on Form S-2 dated
July 14, 1993 (No. 33-62440).
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which
offers or sales are being made, a post-effective amend-
ment to this registration statement;
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the
registration statement (or the most recent post-effec-
tive amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the infor-
mation set forth in the registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any material
change to such information in the registration state-
ment.
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to
be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with
or furnished to the Commission by the Registrant pursu-
ant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of
a post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes
that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration state-
ment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the regis-
trant pursuant to the foregoing provisions, or otherwise,
the registrant has ben advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, there-
fore, unenforceable. In the event that a claim for indemni-
fication against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the regis-
trant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indem-
nification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in
the City of Oceanport, State of New Jersey, on June 6, 1996.
CONCURRENT COMPUTER CORPORATION
By: /s/ Kevin J. Dell
Kevin J. Dell
Vice President, General Counsel
and Secretary
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities indicated on June 6, 1996.
NAME TITLE
/s/ John T. Stihl Chairman of the Board,
_______________________ President and Chief
John T. Stihl Executive Officer
(Principal Execu-
tive Officer)
/s/ Roger J. Mason Vice President, Finance,
_______________________ Treasurer and Chief
Roger J. Mason Financial Officer
(Principal Finan-
cial and Accounting
Officer)
/s/ Michael A. Brunner Director
________________________
Michael A. Brunner
/s/ Kevin N. Clowe Director
________________________
Kevin N. Clowe
/s/ C. Forbes Dewey, Jr. Director
________________________
C. Forbes Dewey, Jr.
/s/ Morton E. Handel Director
________________________
Morton E. Handel
/s/ Richard P. Rifenburgh Director
_________________________
Richard P. Rifenburgh
/s/ Robert R. Sparacino Director
_________________________
Robert R. Sparacino
ANNEX A
- ------------------------------------------------------------------------------
PURCHASE AND SALE AGREEMENT
between
CONCURRENT COMPUTER CORPORATION,
and
HARRIS COMPUTER SYSTEMS CORPORATION,
Dated as of March 26, 1996
and amended and restated
as of May 23, 1996
- ------------------------------------------------------------------------------
Table of Contents
Page
------
ARTICLE I
SALE AND PURCHASE OF ASSETS...................................... A-1
Section 1.1 Transfer of Assets............................... A-1
Section 1.2 Excluded Assets; Omitted Property................ A-2
Section 1.3 Assumed Liabilities; Excluded Liabilities........ A-3
Section 1.4 Exact Effective Time............................. A-3
ARTICLE II
TRANSFER OF STOCK; ADDITIONAL AGREEMENTS......................... A-3
Section 2.1 Sale of Harris Common Stock..................... A-3
Section 2.2 Sale of Concurrent Stock........................ A-3
Section 2.3 Preparation of Audited Financial Statements;
Net Current Assets Adjustment................. A-4
Section 2.4 Ancillary Agreements; Certificate of Designation.... A-5
Section 2.5 Allocation of Purchase Price....................... A-6
ARTICLE III
CLOSING............................................................. A-6
Section 3.1 Closing........................................... A-6
Section 3.2 Deliveries by Harris............................. A-6
Section 3.3 Deliveries by Concurrent........................ A-7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HARRIS......................... A-7
Section 4.1 Organization Etc................................ A-7
Section 4.2 Capitalization.................................. A-8
Section 4.3 Authority....................................... A-8
Section 4.4 Consents and Approvals; No Violations........... A-9
Section 4.5 SEC Reports and Financial Statements............ A-9
Section 4.6 Information in Disclosure Documents............. A-10
Section 4.7 Litigation...................................... A-10
Section 4.8 Absence of Certain Changes....................... A-10
Section 4.9 Opinion of Financial Advisor..................... A-10
Section 4.10 Tax Matters..................................... A-11
Section 4.11 Vote Required.................................... A-12
Section 4.12 Employee Benefit Plans; ERISA.................... A-12
Section 4.13 Applicability of Certain Laws.................... A-13
Section 4.14 Major Contracts.................................. A-13
Section 4.15 Interests of Officers and Directors.............. A-14
Section 4.16 Intellectual Property............................ A-14
Section 4.17 Questionable Payments............................ A-16
Section 4.18 Insurance........................................ A-16
Section 4.19 No Brokers....................................... A-16
Section 4.20 Environmental.................................... A-16
Section 4.21 Assets........................................... A-17
Section 4.22 Audited Balance Sheet............................ A-18
Section 4.23 Leased Properties................................ A-18
Section 4.24 Subsidiaries..................................... A-18
Section 4.25 Outstanding Liabilities to Related Parties....... A-19
Section 4.26 Product Returns; Warranties...................... A-19
Section 4.27 Transferred Subsidiaries......................... A-19
Section 4.28 Transferred Subsidiaries Financial Statement..... A-19
Section 4.29 Investment Purpose............................... A-19
Section 4.30 Rights Agreement................................. A-19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CONCURRENT...................... A-20
Section 5.1 Organization..................................... A-20
Section 5.2 Capitalization................................... A-20
Section 5.3 Authority........................................ A-21
Section 5.4 Consents and Approvals; No Violations............ A-21
Section 5.5 SEC Reports and Financial Statements............. A-22
Section 5.6 Information in Disclosure Documents.............. A-22
Section 5.7 Litigation....................................... A-22
Section 5.8 Absence of Certain Changes....................... A-23
Section 5.9 Opinion of Financial Advisor..................... A-23
Section 5.10 Rights Agreement................................. A-23
Section 5.11 Tax Matters...................................... A-23
Section 5.12 Vote Required.................................... A-24
Section 5.13 Employee Benefit Plans; ERISA.................... A-24
Section 5.14 Major Contracts.................................. A-25
Section 5.15 Interests of Officers and Directors.............. A-25
Section 5.16 Intellectual Property............................ A-25
Section 5.17 Questionable Payments............................ A-27
Section 5.18 Insurance........................................ A-27
Section 5.19 No Brokers....................................... A-27
Section 5.20 Environmental.................................... A-28
Section 5.21 Investment Purpose............................... A-28
Section 5.22 Applicability of Certain Laws.................... A-28
Section 5.23 Product Returns; Warranties...................... A-28
ARTICLE VI
COVENANTS......................................................... A-29
Section 6.1 Conduct of Business of Harris.................... A-29
Section 6.2 Conduct of Business of Concurrent................ A-30
Section 6.3 Best Efforts..................................... A-31
Section 6.4 Registration Rights.............................. A-32
Section 6.5 Occurrence of Closing Prior to or
Following the Reference Date................... A-32
Section 6.6 Access to Information............................ A-32
Section 6.7 Stockholders Meetings............................ A-32
Section 6.8 No Solicitation.................................. A-33
Section 6.9 Brokers or Finders............................... A-34
Section 6.10 Rights Plan...................................... A-34
Section 6.11 Publicity........................................ A-34
Section 6.12 Notification of Certain Matters.................. A-34
Section 6.13 Management and Corporate Governance Matters...... A-34
Section 6.14 Employment Agreements............................ A-35
Section 6.15 Expenses......................................... A-35
Section 6.16 IRS Determination Letter......................... A-35
Section 6.17 Insurance........................................ A-35
Section 6.18 Supplemental Disclosure.......................... A-35
Section 6.19 Further Assurances; Subsequent Transfers......... A-36
Section 6.20 Risk of Loss..................................... A-37
Section 6.21 Compliance with Applicable Bulk Sales Laws....... A-38
Section 6.22 Audited Financial Statements; Statutory
Financial Statements.......................... A-38
Section 6.23 Tax Matters...................................... A-38
Section 6.24 HSR Approval..................................... A-38
ARTICLE VII
EMPLOYMENT AND EMPLOYEE BENEFIT PLANS............................. A-38
Section 7.1 Existing Employee Benefit Plans of Harris........ A-38
Section 7.2 Employment of Employees Employed in Business..... A-40
Section 7.3 Employee Benefit Plans of Concurrent............. A-40
ARTICLE VIII
CONDITIONS........................................................ A-41
Section 8.1 Conditions to Each Party's Obligation To
Perform this Agreement......................... A-41
Section 8.2 Conditions of Obligation of Concurrent........... A-42
Section 8.3 Conditions of Obligation of Harris............... A-43
ARTICLE IX
TERMINATION AND AMENDMENT......................................... A-43
Section 9.1 Termination by Mutual Consent.................... A-43
Section 9.2 Termination by Either Concurrent or Harris....... A-43
Section 9.3 Termination by Harris............................ A-44
Section 9.4 Termination by Concurrent........................ A-44
Section 9.5 Effect of Termination............................ A-44
Section 9.6 Termination Fee.................................. A-45
ARTICLE X
OBLIGATIONS OF PARTIES AFTER CLOSING DATE......................... A-45
Section 10.1 Survival Periods................................. A-45
Section 10.2 Indemnification.................................. A-45
Section 10.3 Claims........................................... A-46
ARTICLE XI
MISCELLANEOUS..................................................... A-47
Section 11.1 Amendment........................................ A-47
Section 11.2 Extension; Waiver................................ A-47
Section 11.3 Notices.......................................... A-47
Section 11.4 Interpretation................................... A-48
Section 11.5 Counterparts..................................... A-48
Section 11.6 Entire Agreement; No Third Party Beneficiaries... A-48
Section 11.7 Governing Law.................................... A-48
Section 11.8 Specific Performance............................. A-48
Section 11.9 Assignment....................................... A-49
Section 11.10 Incorporation of Exhibits........................ A-49
Section 11.11 Severability..................................... A-49
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 Assessments
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 Environmental 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 Assessments
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 Property 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 Environmental
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, and amended and
restated as of the 23th day of May 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.
To the extent Concurrent purchases the stock of the Transferred
Subsidiaries, Concurrent shall not assume, and shall not be deemed to have
assumed, Liabilities of the Transferred Subsidiaries arising from activities
of the businesses of the Transferred Subsidiaries prior to Closing relating to
(i) environmental matters or (ii) claims of employees of the Transferred
Subsidiaries at the time of the applicable violation that the Transferred
Subsidiary 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 (the
"Transferred Subsidiaries Excluded Liabilities"). At Closing, Harris shall
assume, and shall be solely and exclusively liable with respect to the
Transferred Subsidiaries Excluded Liabilities.
(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 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 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 Ancillary 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 required 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 Agreement, 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 assessments, 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 total votes
cast by the holders 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 2,025,000 shares of Harris Common
Stock.
Section 4.12 Employee Benefit Plans; ERISA.
(a) Schedule 4.12(a) contains a true and complete list of each bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
severance or termination pay, hospitalization or other medical, 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 report 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 Subsidiaries 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 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, clean-up 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 of 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)(i) 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 complete 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 aggregate, 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, constitute 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 in 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, 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 total votes cast by the holders of Concurrent
Common Stock, in a separate vote, with respect to an amendment to the
Concurrent Stock Plan (the "Concurrent Stock Plan Amendment") in the form set
forth on Exhibit E hereto.
Section 5.13 Employee Benefit Plans; ERISA.
(a) Schedule 5.13(a) contains a true and complete list of each bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
severance or termination pay, hospitalization or other medical, 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 the 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 report 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 otherwise 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 trade-
marks, 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 or
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 con-
summation 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 compensation 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 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 Harris shall be permitted to take action so that at the
Closing Date, each stock option issued and outstanding prior to December 31,
1995 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 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 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 retention 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 parties 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, 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 Statements"), 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 Stock-
holders 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 Governance 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. Concurrent shall cause the
election or appointment, effective 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 9,000,000 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 2,025,000 such
shares, 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 Transferred 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 Systems 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 pretax
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 Employee 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
9,000,000 (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. An increase in the number of shares of Concurrent Common Stock
authorized for issuance under the Concurrent Stock Plan to 9,000,000 such
shares shall have been approved by the affirmative vote of a majority of the
total votes cast by the holders 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 total votes cast by the holders of the 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 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 consent to the
assignment of such contracts and agreements 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
nonterminating 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 unconditional 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 specified 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 provision 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 originally
executed as of the 26th day of March, 1996 and as amended and restated as of
the 13th day of May, 1996.
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
CONSENT OF INDEPENDENT ACCOUNTANTS
___________
We consent to the incorporation by reference in this registration
statement on Form S-3 of our report dated August 15, 1995, except
for Note 19, as to which the date is September 26, 1995, on our
audits of the consolidated financial statements and financial
statement schedules of Concurrent Computer Corporation. We also
consent to the reference to our Firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Parsippany, New Jersey
June 4, 1996
