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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 2000
REGISTRATION NO. 333-[ ]
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CONCORD COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MASSACHUSETTS 04-2710876
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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600 NICKERSON ROAD
MARLBOROUGH, MASSACHUSETTS 01752
(508) 460-4646
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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JOHN A. BLAESER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CONCORD COMMUNICATIONS, INC.
600 NICKERSON ROAD
MARLBOROUGH, MASSACHUSETTS 01752
(508) 460-4646
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES OF ALL COMMUNICATIONS, INCLUDING ALL COMMUNICATIONS SENT TO THE AGENT FOR
SERVICE, SHOULD BE SENT TO:
KEVIN M. BARRY, ESQ.
TESTA, HURWITZ & THIBEAULT, LLP
125 HIGH STREET
BOSTON, MASSACHUSETTS 02110
(617) 248-7000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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 or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
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. [ ]
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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. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following. [ ]
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE(1) AGGREGATE OFFERING PRICE(1) REGISTRATION FEE(2)
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Common Stock, $.01 par value per
share.............................. 2,489,238 $28.69 $71,416,238 $18,853.89
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(1) The price of $28.69 share, which is the average of the high and low prices
of the Common Stock of the Registrant reported on the Nasdaq National Market
on May 1, 2000, is set forth solely for purposes of calculating the filing
fee pursuant to Rule 457 of the Securities Act of 1933, as amended.
(2) Calculated pursuant to Section 6(b) of the Securities Act of 1933.
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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 REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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SELLING STOCKHOLDERS' PROSPECTUS
CONCORD COMMUNICATIONS, INC.
2,489,238 SHARES
COMMON STOCK
This prospectus is offering 2,489,238 shares of our common stock for sale
by certain selling stockholders. These selling stockholders acquired their stock
in connection with our acquisition of Empire Technologies, Inc. completed on
October 29, 1999, and our acquisition of FirstSense Software, Inc. completed on
February 4, 2000. Empire and FirstSense are now wholly owned subsidiaries of
Concord.
We are receiving no proceeds from the sale of the shares offered for sale
hereunder.
Concord's common stock is traded on the Nasdaq National Market under the
symbol "CCRD." The last reported sale price of the common stock on the Nasdaq
National Market on May 1, 2000 was $29.75 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is May , 2000.
<PAGE> 3
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED HEREIN OR SPECIFICALLY
INCORPORATED BY REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS.
THE SELLING STOCKHOLDERS ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY, SHARES
OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS
PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE
OF THE COMMON STOCK.
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TABLE OF CONTENTS
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PAGE
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Summary of the Offering and the Company..................... 1
Risk Factors................................................ 3
Use of Proceeds............................................. 11
Selling Stockholders........................................ 11
Plan of Distribution........................................ 13
Legal Matters............................................... 15
Experts..................................................... 15
Indemnification of Officers and Directors................... 15
Where You Can Find More Information......................... 15
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Network Health(R) is a registered trademark and eHealth(TM) is a trademark
of Concord Communications, Inc.
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SUMMARY OF THE OFFERING
As used in this prospectus, "we," "us," "our" and "Concord" refer to
Concord Communications, Inc., a Massachusetts corporation, and its wholly owned
subsidiaries.
This prospectus is offering 2,489,238 shares of the common stock of Concord
Communications, Inc. for sale by certain selling stockholders. These selling
stockholders acquired their stock in connection with our acquisition of Empire
Technologies, Inc. completed on October 29, 1999, and our acquisition of
FirstSense Software, Inc. completed on February 4, 2000. Empire and FirstSense
are now wholly owned subsidiaries of Concord.
We are receiving no proceeds from the sale of the shares offered for sale
hereunder. We have agreed to pay the expenses associated with registering these
shares and certain accounting and legal expenses of the individual selling
stockholders but are not paying other expenses incurred by individual selling
stockholders such as brokerage commissions. We may suspend the use of this
prospectus during periods of time if there then exists material, non-public
information relating to Concord that, in our reasonable opinion, would not be
appropriate for disclosure.
THE COMPANY
Concord develops, markets and supports next-generation performance
management solutions. With our recent acquisitions of Empire and FirstSense, we
offer an integrated performance management solution spanning systems,
applications, services and networks. By successfully managing performance across
all of these key areas, our products ensure effective e-business. Our end-to-end
performance view provides the critical insights needed to power day-to-day
business and e-commerce operations for some of today's most successful
corporations and service providers worldwide.
By providing a global view of application, system and network performance,
our products enable traditional corporate enterprises and companies engaged in
e-commerce to manage effectively the service levels they are required to supply
to their community of users, including internal end users and external customers
and suppliers. In addition, service providers engaged in providing network and
bandwidth services (Carriers), internet access (ISP's), web Carrier hosting,
application services (ASP's) and outsourcing services use our products to manage
the provision of those services to their end user customers. Our eHealth(TM)
product family consists of a set of solutions that identify application and
business process response time and availability problems and provide information
about the underlying causes of those problems within particular applications,
servers, networks or services being provided by a Carrier, ISP or ASP. Our
software-only solutions provide instrumentation to gather critical application
and system information but also retrieve vital network statistics from a wide
range of network devices and operating systems. Extensive analysis is performed
on the data and statistics gathered and output in the form of intuitive,
informative, user friendly graphical reports that can be viewed on a historical
basis or in real time. This information is critically important to IT and
service provider executives, managers and technicians who in turn use it to
proactively affect the availability, response time, performance and capacity of
the services they are required to provide.
On October 19, 1999, we entered into an Agreement and Plan of
Reorganization providing for the merger of E Acquisition Corp., a wholly owned
subsidiary of Concord, with and into Empire. The merger was effected on October
29, 1999. At the effective time of the merger, the issued and outstanding shares
of Empire common stock were converted into 815,248 shares of our common stock.
Please see the Current Report on Form 8-K dated October 29, 1999 and filed with
the Securities and Exchange Commission (Commission) on November 12, 1999 and
which is incorporated by reference into this prospectus.
On January 20, 2000, we entered into an Agreement and Plan of
Reorganization providing for the merger of F Acquisition Corp., a wholly owned
subsidiary of Concord, with and into FirstSense. The merger was effected on
February 4, 2000. Concord has reserved for issuance in connection with the
merger 1,940,000 shares of Concord's common stock. Please see the Current Report
on Form 8-K dated February 4, 2000 and filed with the Commission on February 10,
2000, the Current Report on Form 8-K/A (Amendment No. 1) dated February 4, 2000
and filed with the Commission on April 19, 2000, and the Current Report on
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Form 8-K/A (Amendment No. 2) dated February 4, 2000 and filed with the
Commission on April 21, 2000, all of which are incorporated by reference into
this prospectus.
Our principal executive offices are located at 600 Nickerson Road,
Marlborough, Massachusetts, 01752 and our telephone number is (508) 460-4646.
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RISK FACTORS
Any investment in our common stock involves a high degree of risk. If any
of the following risks actually occur, our business, results of operations and
financial condition would likely suffer.
We do not provide forecasts of our future financial performance. From time
to time, however, the information we provide or statements made by our employees
may contain forward looking statements. This document contains forward looking
statements. Any statements contained in this document that do not describe
historical facts are forward looking statements. We make such forward looking
statements under the provisions of the "safe harbor" section of the Private
Securities Litigation Reform Act of 1995. The forward looking statements
contained in this document are based on current expectations, but are subject to
a number of risks and uncertainties. Our actual future results and actions may
differ significantly from those stated in any forward-looking statements.
Factors that may cause such differences include, but are not limited to, the
factors discussed below.
WE HAVE A LIMITED OPERATING HISTORY. OUR FUTURE OPERATING RESULTS ARE UNCERTAIN.
We changed our focus to network management software in 1991 and
commercially introduced our first Network Health(R) product in 1995.
Accordingly, we have only a limited operating history in the network performance
management market upon which you can evaluate our business and prospects. We
incurred significant net losses in each of the five fiscal years prior to
earning a small profit in 1997. As of December 31, 1999, we had accumulated net
losses of $11.0 million. Our limited operating history and our dependence on a
single product family in an emerging market make the prediction of future
results of operations difficult or impossible. Our prospects must be considered
in light of the risks, costs and difficulties frequently encountered by emerging
companies, particularly companies in the competitive software industry.
WE CANNOT ASSURE THAT OUR REVENUES WILL GROW OR THAT WE WILL REMAIN PROFITABLE.
Although we have achieved recent revenue growth and profitability for the
fiscal years ended 1999, 1998 and 1997, we cannot assure that we can generate
substantial additional revenue growth on a quarterly or annual basis, or that we
can sustain any revenue growth that we achieve. In addition, we have increased,
and plan to increase further, our operating expenses in order to:
- fund higher levels of research and development;
- increase our sales and marketing efforts;
- develop new distribution channels;
- broaden our customer support capabilities; and
- expand our administrative resources in anticipation of future growth.
To the extent that increases in our expenses precede or are not followed by
increased revenue, our profitability will suffer. Our revenue must grow
substantially in order for us to remain profitable on a quarterly or annual
basis. In addition, in view of recent revenue growth, the rapidly evolving
nature of our business and markets, our recent acquisitions and our limited
operating history in our current market, we believe that one should not rely on
period-to-period comparisons of our financial results as an indication of our
future performance. In light of our strong performance in 1998, we used all of
our remaining unrestricted tax net operating loss and credit carryforwards in
1998. Accordingly, we recorded a tax provision of $532,600 during 1998 and $5.6
million during 1999. The continuing restrictions on our future use of our net
operating loss carryforwards will severely limit the benefit, if any, we will
attribute to this asset.
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OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE.
We are likely to experience significant fluctuations in our quarterly
operating results caused by many factors, including, but not limited to:
- changes in the demand for our products;
- the timing, composition and size of orders from our customers, including
the tendency for significant bookings to occur in the last month of each
fiscal quarter;
- our customers' spending patterns and budgetary resources for performance
management software solutions;
- the success of our new customer generation activities;
- introductions or enhancements of products, or delays in the introductions
or enhancements of products, by us or our competitors;
- changes in our pricing policies or those of our competitors;
- changes in the distribution channels through which products are sold;
- our ability to anticipate and effectively adapt to developing markets and
rapidly changing technologies;
- changes in networking or communications technologies;
- our ability to attract, retain and motivate qualified personnel;
- changes in the mix of products sold by us and our competitors;
- the publication of opinions about us and our products, or our competitors
and their products, by industry analysts or others; and
- changes in general economic conditions.
Unlike other software companies with a longer history of operations, we do
not derive a significant portion of our revenues from maintenance contracts, and
therefore we do not have a significant ongoing revenue stream that may mitigate
quarterly fluctuations in operating results. Furthermore, we are trying to
expand our channels of distribution. Increases in our revenues will depend on
our successful implementation of our distribution strategy. Due to the buying
patterns of certain of our customers and also to our own sales incentive
programs focused on annual sales goals, revenues in our fourth quarter could be
higher than revenues in our first quarter of the following year. There also may
be other factors, such as seasonality and the timing of receipt and delivery of
orders within a fiscal quarter, that significantly affect our quarterly results,
which are difficult to predict given our limited operating history.
Our quarterly sales and operating results depend generally on:
- the volume and timing of orders within the quarter;
- the tendency of sales to occur late in fiscal quarters; and
- our fulfillment of orders received within the quarter.
In addition, our expense levels are based in part on our expectations of
future orders and sales, which are extremely difficult to predict. A substantial
portion of our operating expenses are related to personnel, facilities and sales
and marketing programs. Accordingly, we may not be able to adjust our fixed
expenses quickly enough to address any significant shortfall in demand for our
products in relation to our expectations.
Due to all of the foregoing factors, we believe that our quarterly
operating results are likely to vary significantly in the future. Therefore, in
some future quarter our results of operations may fall below the expectations of
securities analysts and investors. In such event, the trading price of our
common stock would likely suffer.
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THE MARKET FOR PERFORMANCE MANAGEMENT SOFTWARE IS EMERGING.
The market for our products is in an early stage of development. Although
the rapid expansion and increasing complexity of computer networks, systems and
applications in recent years has increased the demand for performance management
software products, the awareness of and the need for such products is a recent
development. Because the market for these products is only beginning to develop,
it is difficult to assess:
- the size of this market;
- the appropriate features and prices for products to address this market;
- the optimal distribution strategy; and
- the competitive environment that will develop.
The development of this market and our growth will depend significantly
upon the willingness of telecommunications carriers, ISPs, systems integrators
and outsourcers to integrate performance management software into their product
and service offerings. The market for performance management software may not
grow or we may fail to properly assess and address the needs of this market.
OUR SUCCESS IS DEPENDENT UPON SALES TO TELECOMMUNICATIONS CARRIERS.
We derive a significant portion of our revenues, and likely will continue
to, from the sales of our products to telecommunications carriers. Our future
performance depends upon telecommunications carriers' increased incorporation of
our products and services as part of their package of product and service
offerings to end users. Our products may fail to perform favorably in and become
an accepted component of the telecommunications carriers' product and service
offerings. The volume of sales of our products and services to
telecommunications carriers may increase slower than we expect or may decrease.
MARKET ACCEPTANCE OF OUR EHEALTH(TM) PRODUCT FAMILY IS CRITICAL TO OUR SUCCESS.
We currently derive substantially all of our revenues from our eHealth(TM)
product family, and we expect that revenues from these products will continue to
account for substantially all of our revenues for the foreseeable future. Broad
market acceptance of these products is critical to our future success. We cannot
assure that market acceptance of our eHealth(TM) product will increase or even
remain at current levels. Factors that may affect the market acceptance of our
products include:
- the availability and price of competing products and technologies; and
- the success of our sales efforts and those of our marketing partners.
Moreover, if demand for performance management software products increases,
we anticipate that our competitors will introduce additional competitive
products and new competitors could enter our market and offer alternative
products. Product introductions by our competitors may also reduce future market
acceptance of our products.
OUR INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE. OUR SUCCESS DEPENDS UPON
MAINTENANCE OF STANDARD PROTOCOLS.
The software industry is characterized by:
- rapid technological change;
- frequent introductions of new products;
- changes in customer demands; and
- evolving industry standards.
The introduction of products embodying new technologies and the emergence
of new industry standards can render existing products obsolete and
unmarketable. Our Network Health(R) product's analysis and
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reporting, as well as the quality of its reports, depends upon its utilization
of the industry-standard Simple Network Management Protocol (SNMP) and the data
resident in conventional Management Information Bases (MIBs). Any change in
these industry standards, the development of vendor-specific proprietary MIB
technology, or the emergence of new network technologies could affect the
compatibility of our Network Health(R) product with these devices which, in
turn, could affect its analysis and generation of comprehensive reports or the
quality of these reports. Furthermore, although our products currently run on
industry-standard UNIX operating systems and Windows NT, any significant change
in industry-standard operating systems could affect the demand for, or the
pricing of, our products.
WE MUST INTRODUCE PRODUCT ENHANCEMENTS AND NEW PRODUCTS ON A TIMELY BASIS.
Because of rapid technological change in the software industry and
potential changes in the performance management software market and industry
standards, the life cycle of versions of our eHealth(TM) product is difficult to
estimate. We cannot assure that:
- we will successfully develop and market enhancements to our eHealth(TM)
product or successfully develop new products that respond to
technological changes, evolving industry standards or customer
requirements;
- we will not experience difficulties that could delay or prevent the
successful development, introduction and sale of such enhancements or new
products; or
- that such enhancements or new products will adequately address the
requirements of the marketplace and achieve any significant degree of
market acceptance.
OUR ACQUISITIONS MAY NEGATIVELY IMPACT OUR RESULTS OF OPERATIONS.
In October 1999, we acquired Empire Technologies, Inc. Empire is a provider
of solutions for proactive self-management of UNIX and Windows NT systems, as
well as mission-critical applications. In February 2000, we acquired FirstSense
Software, Inc. FirstSense is a provider of application response management
solutions. Because these acquisitions will be recorded as
"poolings-of-interests" for accounting and financial reporting purposes, we
recorded the expenses of these acquisitions, which are substantial, in the
period in which each acquisition occurred. The reporting of expenses of each
acquisition as a current charge will have a significant adverse impact on our
post-acquisition results of operations.
INTEGRATING OUR ACQUIRED PRODUCTS AND SERVICES MAY BE DIFFICULT.
The anticipated benefits of our acquisitions may not be achieved unless,
among other things, our operations, products, services and personnel are
successfully combined with those of our acquired companies in a timely and
efficient manner. The diversion of our attention, and any difficulties
encountered in our transition processes, could harm the combined enterprise. We
cannot assure that we will successfully integrate our acquired companies,
because, among other things:
- the products and services offered by us and our acquired companies are
highly complex and have been developed independently; and
- integration of our product lines with those of our acquired companies
will require coordination of separate development and engineering teams
from each company.
If the anticipated benefits of our acquisitions are not achieved or are not
achieved in a timely fashion, then our acquisitions could harm our operating
results for a significant period of time that cannot now be determined.
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THE MARKET FOR OUR PRODUCTS IS INTENSELY COMPETITIVE.
The market for our products is new, intensely competitive, rapidly evolving
and subject to technological change. Our current and future competitors include:
- remote monitoring (RMON) probe vendors;
- element management software vendors;
- other performance analysis and reporting vendors;
- companies offering network performance reporting services;
- large network management platform vendors which may bundle their products
with other hardware and software in a manner that may discourage users
from purchasing our products; and
- developers of network element management solutions.
We expect competition to persist, increase and intensify in the future with
possible price competition developing in our markets. Many of our current and
potential competitors have longer operating histories and significantly greater
financial, technical and marketing resources and name recognition than us. We do
not believe our market will support a large number of competitors and their
products. In the past, a number of software markets have become dominated by one
or a small number of suppliers, and a small number of suppliers or even a single
supplier may dominate our market. If we do not provide products that achieve
success in our market in the short term, we could suffer an insurmountable loss
in market share and brand name acceptance. We cannot ensure that we will compete
effectively with current and future competitors.
OUR FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS MAY HARM OUR COMPETITIVE
POSITION IN THE NETWORK MANAGEMENT SOFTWARE MARKET.
Our success depends significantly upon our proprietary technology. We rely
on a combination of patent, copyright, trademark and trade secret laws,
non-disclosure agreements and other contractual provisions to establish,
maintain and protect our proprietary rights. These means afford only limited
protection. We have six issued U.S. patents, seven pending U.S. patent
applications, and various foreign counterparts. We cannot assure that patents
will issue from our pending applications or from any future applications or
that, if issued, any claims allowed will be sufficiently broad to protect our
technology. In addition, we cannot assure that any patents that have been or may
be issued will not be challenged, invalidated or circumvented, or that any
rights granted thereunder would protect our proprietary rights. Failure of any
patents to protect our technology may make it easier for our competitors to
offer equivalent or superior technology. We have registered or applied for
registration for certain trademarks, and will continue to evaluate the
registration of additional trademarks as appropriate. Despite our efforts to
protect our proprietary rights, unauthorized parties may attempt to copy aspects
of our products or services or to obtain and use information that we regard as
proprietary. Third parties may also independently develop similar technology
without breach of our proprietary rights. In addition, the laws of some foreign
countries do not protect proprietary rights to as great an extent as do the laws
of the United States. In addition, our products are licensed under shrink wrap
license agreements that are not signed by licensees and therefore may not be
binding under the laws of certain jurisdictions.
WE LICENSE CERTAIN TECHNOLOGIES FROM THIRD PARTIES.
We license from third parties, generally on a non-exclusive basis, certain
technologies used in our products. The termination of any such licenses, or the
failure of the third-party licensors to maintain adequately or update their
products, could result in delay in our shipment of certain of our products while
we seek to implement technology offered by alternative sources, and any required
replacement licenses could prove costly. While it may be necessary or desirable
in the future to obtain other licenses relating to one or more of our products
or relating to current or future technologies, we cannot assure that we will be
successful in doing so on commercially reasonable terms or at all.
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INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS WOULD HARM OUR BUSINESS.
Although we do not believe that we are infringing the intellectual property
rights of others, claims of infringement are becoming increasingly common as the
software industry develops and legal protections, including patents, are applied
to software products. Litigation may be necessary to protect our proprietary
technology, and third parties may assert infringement claims against us with
respect to their proprietary rights. Any claims or litigation can be
time-consuming and expensive regardless of their merit. Infringement claims
against us can cause product release delays, require us to redesign our products
or require us to enter into royalty or license agreements, which agreements may
not be available on terms acceptable to us or at all.
PRODUCT DEFECTS COULD RESULT IN LOSS OR DELAY IN MARKET ACCEPTANCE OF OUR
PRODUCTS.
As a result of their complexity, software products may contain undetected
errors or failures when first introduced or as new versions are released. We
cannot assure that, despite testing by us and testing and use by current and
potential customers, errors will not be found in new products after we begin
commercial shipments or, if discovered, that we will successfully correct such
errors in a timely manner or at all. The occurrence of errors and failures in
our products could result in loss of or delay in market acceptance of our
products, and alleviating such errors and failures could require significant
expenditure of capital and other resources by us.
WE MAY NOT HAVE SUFFICIENT PROTECTION AGAINST PRODUCT LIABILITY CLAIMS.
Since our products are used by our customers to predict future network
problems and avoid failures of the network to support critical business
functions, design defects, software errors, misuse of our products, incorrect
data from network elements or other potential problems within or out of our
control that may arise from the use of our products could result in financial or
other damages to our customers. We do not maintain product liability insurance.
Although our license agreements with our customers typically contain provisions
designed to limit our exposure to potential claims as well as any liabilities
arising from such claims, such provisions may not effectively protect us against
such claims and the liability and costs associated therewith. We provide
warranties for our products for a period of time (currently three months) after
purchase. Our license agreements generally do not permit product returns by the
customer, and product returns for fiscal 1999, 1998 and 1997 represented less
than 1.0% of total revenues during each of such periods. We cannot assure that
product returns will not increase as a percentage of total revenues in future
periods.
WE RELY ON STRATEGIC PARTNERS AND OTHER EVOLVING DISTRIBUTION CHANNELS.
Our distribution strategy is to develop multiple distribution channels,
including sales through:
- strategic marketing partners, such as Cisco Systems;
- value added resellers, such as Empowered Networks;
- telecommunications carriers, such as MCI Communications Corporation;
- OEMs, such as Lucent Technologies, Inc.; and
- independent software vendors and international distributors.
We have developed a number of these relationships and intend to continue to
develop new "channel partner" relationships. Our success will depend in large
part on our development of these additional distribution relationships and on
the performance and success of these third parties, particularly
telecommunications carriers and other network service providers. We have
recently established many of our channel partner relationships. Accordingly, we
cannot predict the extent to which our channel partners will be successful in
marketing our products. We generally expect that our agreements with our channel
partners may
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be terminated by either party without cause. None of our channel partners are
required to purchase minimum quantities of our products and none of these
agreements contain exclusive distribution arrangements. We may:
- fail to attract important and effective channel partners;
- fail to penetrate the market segments of our channel partners; or
- lose any of our channel partners, as a result of competitive products
offered by other companies, products developed internally by these
channel partners or otherwise.
WE MAY FAIL TO MANAGE SUCCESSFULLY OUR GROWTH.
We have experienced significant growth in our sales and operations and in
the complexity of our products and product distribution channels. We have
increased and are continuing to increase the size of our sales force and
coverage territories. Furthermore, we have established and are continuing to
establish additional distribution channels through third party relationships.
Our growth, coupled with the rapid evolution of our markets, has placed, and is
likely to continue to place, significant strains on our administrative,
operational and financial resources and increase demands on our internal
systems, procedures and controls.
OUR SUCCESS DEPENDS ON OUR RETENTION OF KEY PERSONNEL.
Our performance depends substantially on the performance of our key
technical and senior management personnel, none of whom is bound by an
employment agreement. We may lose the services of any of such persons. We do not
maintain key person life insurance policies on any of our employees. Our success
depends on our continuing ability to identify, hire, train, motivate and retain
highly qualified management, technical, and sales and marketing personnel,
including recently hired officers and other employees. We experience intense
competition for such personnel. We cannot assure that we will successfully
attract, assimilate or retain highly qualified technical, managerial or sales
and marketing personnel in the future.
OUR FAILURE TO EXPAND INTO INTERNATIONAL MARKETS COULD HARM OUR BUSINESS.
We intend to continue to expand our operations outside of the United States
and enter additional international markets, primarily through the establishment
of additional reseller arrangements. We expect to commit additional time and
development resources to customizing our products and services for selected
international markets and to developing international sales and support
channels. We cannot assure that such efforts will be successful.
We face certain difficulties and risks inherent in doing business
internationally, including, but not limited to:
- costs of customizing products and services for international markets;
- dependence on independent resellers;
- multiple and conflicting regulations;
- exchange controls;
- longer payment cycles;
- unexpected changes in regulatory requirements;
- import and export restrictions and tariffs;
- difficulties in staffing and managing international operations;
- greater difficulty or delay in accounts receivable collection;
- potentially adverse tax consequences;
- the burden of complying with a variety of laws outside the United States;
- the impact of possible recessionary environments in economies outside the
United States; and
- political and economic instability.
Our successful expansion into certain countries will require additional
modification of our products, particularly national language support. Our
current export sales are denominated in United States dollars and we currently
expect to continue this practice as we expand internationally. To the extent
that international sales continue to be denominated in U.S. dollars, an increase
in the value of the United States dollar relative to other currencies could make
our products and services more expensive and, therefore, potentially less
9
<PAGE> 13
competitive in international markets. To the extent that future international
sales are denominated in foreign currency, our operating results will be subject
to risks associated with foreign currency fluctuation. We would consider
entering into forward exchange contracts or otherwise engaging in hedging
activities. To date, as all export sales are denominated in U.S. dollars, we
have not entered into any such contracts or engaged in any such activities. As
we increase our international sales, seasonal fluctuations resulting from lower
sales that typically occur during the summer months in Europe and other parts of
the world may affect our total revenues.
OUR SYSTEMS ARE SUBJECT TO YEAR 2000 COMPLIANCE FAILURES.
We were aware of the issues associated with the programming code in
existing computer systems and software products as the millennium (Year 2000)
approached. We set up a task force consisting of the Director of IT and
Operations, the Manager of System Applications and representative personnel from
each functional area. This task force addressed the Year 2000 issue in the
following categories:
- the Network Health(R) product;
- internal business computer systems and software applications;
- internal systems other than computer hardware and software; and
- systems of our external suppliers and service providers.
We also assessed our Year 2000 associated costs, risks and potential
contingency plans. Despite our efforts with respect to the Year 2000 issue, we
cannot assure that we would not suffer upon the failure of our products, our
internal systems and applications or the systems of our third party suppliers
and service providers to properly operate or manage data beyond 1999.
We believe that we have identified and resolved all our Year 2000 issues.
We realize, however, that it may not be possible to determine, at this time,
with complete certainty that all Year 2000 problems affecting us were corrected.
As a result, we could experience a significant number of operational
inconveniences and inefficiencies that may divert our time and attention from
our ordinary business activities.
OUR COMMON STOCK PRICE COULD EXPERIENCE SIGNIFICANT VOLATILITY.
We completed an initial public offering of our common stock during October
1997. The market price of our common stock may be highly volatile and could be
subject to wide fluctuations in response to:
- variations in results of operations;
- announcements of technological innovations or new products by us or our
competitors;
- changes in financial estimates by securities analysts; or
- other events or factors.
In addition, the financial markets have experienced significant price and
volume fluctuations that have particularly affected the market prices of equity
securities of many high technology companies and that often have been unrelated
to the operating performance of such companies or have resulted from the failure
of the operating results of such companies to meet market expectations in a
particular quarter. Broad market fluctuations or any failure of our operating
results in a particular quarter to meet market expectations may adversely affect
the market price of our common stock. In the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation has often been instituted against such a company. Such
litigation could result in substantial costs and a diversion of our attention
and resources.
WE MAY NEED FUTURE CAPITAL FUNDING.
We plan to continue to expend substantial funds on the continued
development, sales and marketing of the eHealth(TM) product family. We cannot
assure that our existing capital resources, the proceeds from our initial public
offering during October 1997 and any funds that may be generated from future
operations
10
<PAGE> 14
together will be sufficient to finance our future operations or that other
sources of funding will be available on terms acceptable to us, if at all. In
addition, future sales of substantial amounts of our securities in the public
market could adversely affect prevailing market prices and could impair our
future ability to raise capital through the sale of our securities.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of any of the shares
being offered and sold by the selling stockholders pursuant to this prospectus.
See "Selling Stockholders" and "Plan of Distribution". The principal purpose of
this offering is to effect an orderly disposition of the shares of our common
stock being offered and sold from time to time by the selling stockholders.
SELLING STOCKHOLDERS
The following table sets forth as of March 31, 2000, the following:
(i) the name of each selling stockholder;
(ii) the number of shares of our common stock and the percentage of
our outstanding common stock beneficially owned by each such selling
stockholder before this offering;
(iii) the number of shares that each selling stockholder may offer and
sell pursuant to this prospectus; and
(iv) the number of shares of our common stock and the percentage of
our outstanding common stock beneficially owned by each such selling
stockholder after this offering.
The shares registered pursuant to this prospectus may be offered from time
to time by any of the selling stockholders named below or by those individuals
and entities to which they may transfer or distribute the shares. See "Plan of
Distribution."
Except as described below, each of the selling stockholders has sole voting
and investment power with respect to the shares beneficially owned by them. In
addition, except as described below, none of the selling stockholders has had
any material relationship with Concord or any of our predecessors or affiliates
within the past three years.
Since each selling stockholder may sell all, some or none of its shares
registered under this prospectus, no estimate can be made of the aggregate
number or percentage of shares of common stock that each selling stockholder
will beneficially own upon completion of this offering. Thus, for purposes of
the table set forth below, we have assumed that the selling stockholders will
sell all of the shares of common stock registered for them under this
prospectus.
In calculating the percentage of shares beneficially owned by each selling
stockholder after completion of the offering, we have based our calculations on
the fact that as of March 31, 2000, a total of 16,175,439 shares of common stock
were outstanding.
11
<PAGE> 15
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY OWNED PRIOR BENEFICIALLY OWNED AFTER
TO OFFERING (A) THE OFFERING (A)
------------------------- NUMBER OF ------------------------
NAME NUMBER PERCENTAGE SHARES OFFERED NUMBER PERCENTAGE
- ---- ---------- ----------- -------------- -------- ------------
<S> <C> <C> <C> <C> <C>
Neeraj Agarwal(1).................. 300,564 1.86% 300,564 -- *
Albert Briner(2)................... 14,160(3) * 2,342 11,818 *
William Coakley.................... 2,113 * 2,113 -- *
Robert Cramer(4)................... 71,383(5) * 60,112 11,271 *
Michael & Jennifer Crismond(6)..... 22,760 * 22,760 -- *
Kathleen Doucette.................. 1,823(7) * 931 892 *
Jon G. Foletta..................... 704 * 704 -- *
Brian Goss......................... 626 * 626 -- *
Leonard J. Guida(8)................ 25,719(9) * 22,542 3,177 *
Meaghan Hennessy................... 372 * 372 -- *
Cary L. Johnson(10)................ 84,532 * 84,532 -- *
James P. Kelly(11)................. 1,708(12) * 1,144 564 *
Cheryl Krupczak(13)................ 411,700 2.59% 411,700 -- *
Robert Krupczak(14)................ 403,548 2.54% 403,548 -- *
Katrina Lyon-Smith................. 1,314 * 1,314 -- *
A. Suzanne Meszner-Eltrich......... 322 * 322 -- *
Veera S. Muddana(15)............... 9,014(16) * 3,464 5,550 *
Philip Reed........................ 234 * 234 -- *
Margaret J. Rimmler................ 1,928 * 1,928 -- *
Gregory E. Schmeichel.............. 64 * 64 -- *
Jo-Anne M. Trayers................. 234 * 234 -- *
James M. Wilson(17)................ 56,229(18) * 52,598 3,361 *
Atlas Venture Entrepreneurs' Fund
III L.P. ........................ 3,645 * 3,645 -- *
Atlas Venture Fund III L.P. ....... 167,676 1.04% 167,676 -- *
Comdisco Ventures ................. 18,033 * 18,033 -- *
Matrix IV Entrepreneurs Fund,
L.P. ............................ 17,132 * 17,132 -- *
Matrix Partners IV, L.P. .......... 325,511 2.01% 325,511 -- *
North Bridge Venture Partners II,
L.P. ............................ 342,643 2.12% 342,643 -- *
TL Ventures III L.P. .............. 193,604 1.22% 193,604 -- *
TL Ventures III Interfund L.P. .... 6,321 * 6,321 -- *
TL Venture III Offshore L.P. ...... 40,525 * 40,525 -- *
--------- ----- --------- ------ --
TOTAL.............................. 2,526,141 15.62% 2,489,238 36,903 *
========= ===== ========= ====== ==
</TABLE>
- ---------------
* Less than 1%
(A) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission"). Beneficial ownership
includes options to purchase common stock exercisable as of March 31, 2000
and options to purchase common stock that will become exercisable within 60
days of March 31, 2000 ("presently exercisable stock options"). Presently
exercisable stock options are deemed outstanding for purposes of computing
the percentage ownership of the person holding such options, but are not
deemed outstanding for computing the percentage of any other person.
(1) Former Vice President and Chief Technology Officer of FirstSense.
(2) Former software engineer for FirstSense. Currently, a software engineer for
Concord.
(3) Includes 11,818 shares of common stock issuable pursuant to presently
exercisable stock options.
12
<PAGE> 16
(4) Former Vice President of Marketing and Business Development (October 1997
through August 1999) and then President of Operations and Chief Executive
Officer of FirstSense. Currently, a Concord employee assigned to special
projects.
(5) Includes 11,271 shares of common stock issuable pursuant to presently
exercisable stock options.
(6) Michael Crismond served as Vice President of Sales for FirstSense until
August 1999.
(7) Includes 892 shares of common stock issuable pursuant to presently
exercisable stock options.
(8) Former Vice President of Finance and Chief Financial Officer (October 1997
through August 1999) and then Vice President of Operations and Chief
Financial Officer of FirstSense. Currently, a Concord employee.
(9) Includes 3,177 shares of common stock issuable pursuant to presently
exercisable stock options.
(10) Former President and Chief Executive Officer of FirstSense until August
1999.
(11) Former software engineer for FirstSense. Currently, a Concord software
engineer.
(12) Includes 564 shares of common stock issuable pursuant to presently
exercisable stock options.
(13) Former President, Treasurer and Assistant Secretary of Empire. Currently, a
Vice President of Systems Marketing for Concord.
(14) Former Vice President and Secretary of Empire. Currently, a Vice President
of Engineering for Concord.
(15) Former software engineer for FirstSense. Currently, a software engineer for
Concord.
(16) Includes 5,550 shares of common stock issuable pursuant to presently
exercisable stock options.
(17) Former Vice President of Engineering for FirstSense. Currently, a Vice
President of Engineering for Concord.
(18) Includes 3,361 shares of common stock issuable pursuant to presently
exercisable stock options.
PLAN OF DISTRIBUTION
The shares of our common stock offered under this prospectus may be sold
from time to time by or for the account of any of the selling stockholders or by
those individuals and entities to whom they pledge, donate, distribute or
transfer their shares or other successors in interest.
The selling stockholders received the shares of common stock offered under
this prospectus from Concord in connection with our acquisition of Empire
completed on October 29, 1999 or in connection with our acquisition of
FirstSense completed on February 4, 2000.
We will not receive any of the proceeds from the sale of these shares by
the selling stockholders. We are paying the expenses of registering these shares
for offer and sale by the selling stockholders. Our expenses include, but are
not limited to, legal fees, accounting fees, various filing fees and other
expenses incident to registering these shares. We are not paying any brokerage
commissions incurred by the selling stockholders. We have agreed to indemnify
the selling stockholders against certain liabilities, including liabilities
under the Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended (the Exchange Act), arising in connection with this prospectus.
The distribution of the shares of our common stock offered under this
prospectus by the selling stockholders is not subject to any underwriting
agreement. The shares may be sold under this prospectus
- directly to purchasers by the selling stockholders in negotiated
transactions;
- by or through brokers or dealers in ordinary brokerage transactions or
transactions in which the broker solicits purchasers;
- by or through block trades in which the broker or dealer will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal;
13
<PAGE> 17
- by or through transactions in which a broker or dealer purchases as
principal for resale for its own account; or
- through underwriters or agents.
The shares of our common stock offered under this prospectus may be sold at
a fixed offering price, which may be changed, at the prevailing market price at
the time of sale, at prices related to such prevailing market price or at
negotiated prices. Any brokers, dealers, underwriters or agents may arrange for
others to participate in any such transaction and may receive compensation in
the form of discounts, commissions or concessions from the selling stockholders
and/or the purchasers of the shares. Each selling stockholder will be
responsible for payment of any and all commissions to brokers.
The selling stockholder may also loan or pledge the shares registered under
this prospectus to a broker-dealer and the broker-dealer may sell the shares so
loaned or upon a default the broker-dealer may effect sales of the pledged
shares using this prospectus.
If and when any of the shares covered by this prospectus qualifies for sale
under Rule 144 under the Securities Act, they may be sold under Rule 144 rather
than under this prospectus.
Any selling stockholder and any broker-dealer, agent or underwriter that
participates with the selling stockholder in the distribution of the shares of
common stock of Concord offered under this prospectus may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
commissions received by such broker-dealers, agents or underwriters and any
profit on the resale of the shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
The selling stockholders are not restricted as to the price or prices at
which they may sell the shares of common stock offered under this prospectus.
Sales of such shares at less than the market price may depress the market price
of our common stock. Moreover, the selling stockholders are not restricted as to
the number of shares that may be sold at any one time, and it is possible that a
significant number of shares could be sold at the same time which may also
depress the market price of our common stock.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares of our common stock offered under this
prospectus may not simultaneously engage in market making activities with
respect to the shares for a period of time prior to the commencement of such
distribution. In addition, each selling stockholder will be subject to
applicable provisions of the Exchange Act and the rules and regulations under
the Exchange Act, including, but not limited to, Rule 10b-5 and Regulation M,
which provisions may limit the timing of purchases and sales of the shares by
the selling stockholder.
There is no assurance that any selling stockholder will sell any or all of
the shares described in this prospectus and may transfer, devise or gift such
securities by other means not described in this prospectus and, upon the
transfer, the donee would have the same rights of sale as the selling
stockholder under this prospectus. Certain of the selling stockholders may
distribute their shares from time to time to their limited and/or general
partners, who may sell shares pursuant to this prospectus. In addition, certain
of these limited and/or general partners may in turn make further distributions
of their shares from time to time, who may sell shares pursuant to this
prospectus.
Expenses of preparing and filing the registration statement and all
post-effective amendments will be borne by us.
We are permitted to suspend the use of this prospectus in connection with
sales of the shares of our common stock offered under this prospectus by holders
during periods of time if there then exists material, non-public information
relating to Concord which, in our reasonable opinion, would not be appropriate
for disclosure at that time.
We will use all commercially reasonable efforts to cause this prospectus to
remain effective until June 30, 2001. Concord common stock is listed on the
Nasdaq National Market under the symbol "CCRD".
14
<PAGE> 18
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts.
EXPERTS
Our consolidated financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports. The
financial statements of FirstSense Software, Inc. as of December 31, 1999 and
1998, and the related statements of operations, stockholders' (deficit) equity,
and cash flows for each of the years in the three-year period ended December 31,
1999 have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our Restated Articles of Organization and our Restated By-Laws provide for
indemnification of our directors and officers unless such indemnification is
prohibited by the Massachusetts Business Corporation Law. The Massachusetts
Business Corporation Law generally permits indemnification of directors and
officers for liabilities and expenses that they may incur in such capacities,
except with respect to any matter that the indemnified person shall have been
adjudicated in any proceeding not to have acted in good faith in the reasonable
belief that his or her action was in the best interest of Concord. Reference is
made to our corporate charter filed as Exhibit 3.02 to our Registration
Statement on Form S-1 filed with the Commission on August 8, 1997, as amended
(the "S-1") and Restated By-Laws filed as Exhibit 3.03 to our S-1 and hereby
incorporated by reference.
Pursuant to an agreement between Charles River Partnership VII Limited
Partnership and Mr. Richard M. Burnes, Jr., Charles River Partnership VII has
agreed to indemnify Mr. Burnes against any liability incurred in his capacity as
our director.
We have entered into indemnification agreements with our directors and
officers and have obtained directors and officers liability insurance for the
benefit of our directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on
operation of the Public Reference Room. Our SEC filings are also available to
the public from the SEC's website at "http://www.sec.gov." Our website is
located at "http://www.concord.com." Information contained on our website is not
part of this prospectus.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to other documents previously filed with the SEC, including our
annual, current and quarterly reports. The information incorporated herein by
reference is considered to be part of this document, except to the extent such
information is modified or superseded by information provided herein. Any
information that we file later with the SEC, specifically those documents
15
<PAGE> 19
filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act will
automatically update and supersede the information in this Prospectus:
We have filed the following documents with the SEC (File No. 0-23067) and
hereby incorporate them by reference:
1. Our Current Report on Form 8-K, dated April 25, 2000 and filed May
1, 2000, providing consolidated financial statements of FirstSense and
Concord as if the two entities had operated as one since inception as
amended by Amendment No. 1 filed on May 3, 2000;
2. Our Annual Report on Form 10-K for the year ended December 31,
1999;
3. Our proxy statement, filed on March 22, 2000, for the annual
meeting of shareholders for the fiscal year ended December 31, 1999;
4. Our Current Report on Form 8-K dated February 4, 2000 and filed
February 10, 2000, announcing the completion of the FirstSense acquisition,
as amended by Amendment No. 1 filed on April 19, 2000 providing certain
financial information; and as further amended by Amendment No. 2 filed on
April 21, 2000;
5. Our Current Report on Form 8-K dated January 20, 2000 and filed on
January 26, 2000 announcing the signing of the FirstSense acquisition;
6. Our Current Report on Form 8-K, dated October 29, 1999 and filed
November 12, 1999 announcing the signing of the Empire acquisition; and
7. The "Description of Registrant's Securities to be Registered"
contained in our registration statement filed on Form 8-A, filed on
September 12, 1997.
You may request a copy of all of the information incorporated by reference
herein, at no cost, by writing or telephoning our Chief Financial Officer at the
following address:
Concord Communications, Inc.
600 Nickerson Road
Marlborough, MA 01752
(508) 460-4646
This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide you with different information.
We are not making an offer of these securities in any state where the offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of the document.
16
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth an estimate (other than with respect to the
Registration Fee and the Nasdaq National Market additional listing fee expense)
of the expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered, other than underwriting
discounts and commissions:
<TABLE>
<S> <C>
Registration Fee -- Securities and Exchange Commission...... $ 15,975.53
Nasdaq National Market Additional Listing Fee............... $ 18,000.00
Accounting Fees and Expenses................................ $514,000.00
Legal Fees and Expenses..................................... $358,000.00
Miscellaneous............................................... $ 40,000.00
-----------
Total..................................................... $945,975.53
</TABLE>
Concord will bear all expenses shown above.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Restated Articles of Organization and the Restated By-Laws provide for
indemnification of our directors and officers unless such indemnification is
prohibited by the Massachusetts Business Corporation Law. The Massachusetts
Business Corporation Law generally permits indemnification of directors and
officers for liabilities and expenses that they may incur in such capacities,
except with respect to any matter that the indemnified person shall have been
adjudicated in any proceeding not to have acted in good faith in the reasonable
belief that his or her action was in the best interest of Concord. Reference is
made to our corporate charter filed as Exhibit 3.02 to our Registration
Statement on Form S-1 filed with the Commission on August 8, 1997, as amended
(the "S-1") and Restated By-Laws filed as Exhibit 3.03 to our S-1 and hereby
incorporated by reference.
Pursuant to an agreement between Charles River Partnership VII Limited
Partnership and Mr. Richard M. Burnes, Jr., Charles River Partnership VII has
agreed to indemnify Mr. Burnes against any liability incurred in his capacity as
our director.
We have entered into indemnification agreements with our directors and
officers and have obtained directors and officers liability insurance for the
benefit of our directors and officers.
ITEM 16. EXHIBITS.
The following exhibits, required by Item 601 of Regulation S-K, are filed
as a part of this Registration Statement. Exhibit numbers, where applicable, in
the left column correspond to those of Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
EXHIBIT NO. ITEM AND REFERENCE
- ----------- ------------------
<C> <S>
2.1 Agreement and Plan of Reorganization dated as of October 19,
1999, by and among Concord Communications, Inc., E
Acquisition Corp., Empire Technologies, Inc., and the
stockholders of Empire Technologies, Inc. (filed as Exhibit
2.1 to the current report on Form 8-K, dated October 29,
1999 and filed with the Commission on November 12, 1999 and
hereby incorporated by reference).
2.2 Agreement and Plan of Reorganization dated as of January 20,
2000, by and among Concord Communications, Inc., F
Acquisition Corp., and FirstSense Software, Inc. (filed as
Exhibit 2.1 to the current report on Form 8-K dated February
4, 2000 and filed with the Commission on February 10, 2000
and hereby incorporated by reference).
</TABLE>
II-1
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT NO. ITEM AND REFERENCE
- ----------- ------------------
<C> <S>
3.1 Restated Articles of Organization of Concord Communications,
Inc. (filed as Exhibit 3.02 to the Registration Statement on
Form S-1 of Concord Communications, Inc., filed with the
Commission on August 8, 1997, as amended and hereby
incorporated by reference).
3.2 Restated By-laws of Concord Communications, Inc. (filed as
Exhibit 3.03 to the Registration Statement on Form S-1 of
Concord Communications, Inc., filed with the Commission on
August 8, 1997, as amended and hereby incorporated by
reference).
4.1 Registration Rights Agreement, dated as of October 29, 1999
by and among Concord Communications, Inc., Cheryl Krupczak
and Robert Krupczak (filed herewith).
4.2 Registration Rights Agreement, dated as of February 4, 2000
by and among Concord Communications, Inc. and Timothy
Barrows as Securityholder Agent (filed as Exhibit 99.1 to
the current report on Form 8-K dated February 4, 2000 and
filed with the Commission on February 10, 2000 and hereby
incorporated by reference).
5.1 Legal Opinion of Testa, Hurwitz & Thibeault, LLP (filed
herewith)
23.1 Consent of Arthur Andersen LLP (filed herewith)
23.2 Consent of Testa, Hurwitz & Thibeault, LLP (included in
Exhibit 5.1)
23.3 Consent of KPMG LLP (filed herewith)
24 Power of Attorney (contained on Signature Pages)
</TABLE>
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 amendment 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-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered ) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective 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 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
II-2
<PAGE> 22
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement 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 registrant pursuant to provisions described in Item 14 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification 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 registrant 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 indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 23
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 on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Marlborough, Commonwealth of Massachusetts on May
2, 2000.
Concord Communications, Inc.
By: /s/ JOHN A. BLAESER
------------------------------------
John A. Blaeser
Chief Executive Officer
and President
POWER OF ATTORNEY
We, the undersigned officers and directors of Concord Communications, Inc.,
hereby severally constitute and appoint John A. Blaeser and Melissa H. Cruz and
each of them singly, our true and lawful attorneys, with full power to them and
each of them singly, to sign for us in our names in the capacities indicated
below, any amendments to this Registration Statement on Form S-3 (including
post-effective amendments), and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, and generally to do all things in our names and on our behalf in our
capacities as officers and directors of Concord Communications, Inc., to enable
Concord Communications, Inc. to comply with the provisions of the Securities Act
of 1933, as amended, hereby ratifying and confirming our signatures as they may
be signed by our said attorneys, or any of them, to said Registration Statement
and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- ----
<C> <S> <C>
/s/ JOHN A. BLAESER Chief Executive Officer, President May 2, 2000
- --------------------------------------------------- and Director (Principal Executive
John A. Blaeser Officer)
/s/ MELISSA H. CRUZ Chief Financial Officer, Executive May 2, 2000
- --------------------------------------------------- Vice President of Finance
Melissa H. Cruz (Principal Financial and
Accounting Officer)
/s/ FREDERICK W. W. BOLANDER Director May 2, 2000
- ---------------------------------------------------
Frederick W. W. Bolander
/s/ RICHARD M. BURNES, JR. Director May 2, 2000
- ---------------------------------------------------
Richard M. Burnes, Jr.
/s/ ROBERT C. HAWK Director May 2, 2000
- ---------------------------------------------------
Robert C. Hawk
/s/ JOHN ROBERT HELD Director May 2, 2000
- ---------------------------------------------------
John Robert Held
/s/ DEEPAK KAMRA Director May 2, 2000
- ---------------------------------------------------
Deepak Kamra
/s/ ROBERT M. WADSWORTH Director May 2, 2000
- ---------------------------------------------------
Robert M. Wadsworth
</TABLE>
II-4
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. ITEM AND REFERENCE
- ----------- ------------------
<C> <S>
2.1 Agreement and Plan of Reorganization dated as of October 19,
1999, by and among Concord Communications, Inc., E
Acquisition Corp., Empire Technologies, Inc., and the
stockholders of Empire Technologies, Inc. (filed as Exhibit
2.1 to the current report on Form 8-K, dated October 29,
1999 and filed with the Commission on November 12, 1999 and
hereby incorporated by reference).
2.2 Agreement and Plan of Reorganization dated as of January 20,
2000, by and among Concord Communications, Inc., F
Acquisition Corp., and FirstSense Software, Inc. (filed as
Exhibit 2.1 to the current report on Form 8-K dated February
4, 2000 and filed with the Commission on February 10, 2000
and hereby incorporated by reference).
3.1 Restated Articles of Organization of Concord Communications,
Inc. (filed as Exhibit 3.02 to the Registration Statement on
Form S-1 of Concord Communications, Inc., filed with the
Commission on August 8, 1997, as amended and hereby
incorporated by reference).
3.2 Restated By-laws of Concord Communications, Inc. (filed as
Exhibit 3.03 to the Registration Statement on Form S-1 of
Concord Communications, Inc., filed with the Commission on
August 8, 1997, as amended and hereby incorporated by
reference).
4.1 Registration Rights Agreement, dated as of October 29, 1999
by and among Concord Communications, Inc., Cheryl Krupczak
and Robert Krupczak (filed herewith).
4.2 Registration Rights Agreement, dated as of February 4, 2000
by and among Concord Communications, Inc. and Timothy
Barrows as Securityholder Agent (filed as Exhibit 99.1 to
the current report on Form 8-K dated February 4, 2000 and
filed with the Commission on February 10, 2000 and hereby
incorporated by reference).
5.1 Legal Opinion of Testa, Hurwitz & Thibeault, LLP (filed
herewith)
23.1 Consent of Arthur Andersen LLP (filed herewith)
23.2 Consent of Testa, Hurwitz & Thibeault, LLP (included in
Exhibit 5.1)
23.3 Consent of KPMG LLP (filed herewith)
24 Power of Attorney (contained on Signature Pages)
</TABLE>
<PAGE> 1
EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
This Agreement dated as of October 29, 1999 is entered into by and
among Concord Communications, Inc., a Massachusetts corporation (the "Company"),
Cheryl Krupczak and Robert Krupczak (the "Purchasers").
Recitals
WHEREAS, the Company, E Acquisition Corp., Empire Technologies, Inc.
and the Purchasers have entered into an Agreement and Plan of Reorganization of
even date herewith (the "Merger Agreement"); and
WHEREAS, the Company and the Purchasers desire to provide for certain
arrangements with respect to the registration of shares of capital stock of the
Company under the Securities Act of 1933;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Commission" means the Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, $.01 par value per
share, of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Initiating Holders" means the Stockholders initiating a
request for registration pursuant to Section 2.1.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by an amendment or prospectus supplement,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
"Registration Expenses" means the expenses described in
Section 2.4.
<PAGE> 2
"Registration Statement" means a registration statement filed
by the Company with the Commission for a public offering and sale of securities
of the Company, including, without limitation, any public offering on behalf of
any other person granted registration rights by the Company and any registration
statement covering securities proposed to be issued in exchange for securities
or assets of another corporation (other than a registration statement on Form
S-8 or Form S-4, or their successors, or any other form for a similar limited
purpose, ).
"Registrable Shares" means the shares of Common Stock issued
to either Purchaser in connection with the Merger; provided, however, that
shares of Common Stock which are Registrable Shares shall cease to be
Registrable Shares upon any sale pursuant to a Registration Statement.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Selling Stockholder" means any Stockholder owning Registrable
Shares included in a Registration Statement.
"Stockholders" means the Purchasers and any permitted assigns
pursuant to Section 3 hereof.
Capitalized terms not otherwise defined herein shall have the meanings
provided in the Merger Agreement.
2. Registration Rights
2.1 Incidental Registration.
(a) If the Company proposes to file a Registration
Statement it will, prior to such filing, give written notice to all Stockholders
of its intention to do so; provided that no such notice need be given if no
Registrable Shares are to be included therein as a result of a determination of
the managing underwriter; provided that the Company will exercise its best
efforts to cause the managing underwriter to include at least 200,000
Registrable Shares in such Registration Statement. Upon the written request of a
Stockholder or Stockholders given within 7 days after the Company provides such
notice (which request shall state the intended method of disposition of such
Registrable Shares), the Company shall use its commercially reasonable efforts
to cause all Registrable Shares which the Company has been requested by such
Stockholder or Stockholders to register to be registered under the Securities
Act to the extent necessary to permit their sale or other disposition in
accordance with the intended methods of distribution specified in the request of
such Stockholder or Stockholders; provided that the Company shall have the right
to postpone or withdraw any registration effected pursuant to this Section 2.1
without obligation to any Stockholder.
-2-
<PAGE> 3
(b) If the registration for which the Company gives
notice pursuant to Section 2.1(a) is a registered public offering involving an
underwriting, the Company shall so advise the Stockholders as a part of the
written notice given pursuant to Section 2.1(a). In such event, the right of any
Stockholder to include its Registrable Shares in such registration pursuant to
Section 2.1 shall be conditioned upon such Stockholder's participation in such
underwriting on the terms set forth herein. All Stockholders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for the underwriting by the Company. Notwithstanding any other
provision of this Section 2.1, if the managing underwriter determines that the
inclusion of all shares requested to be registered would adversely affect the
offering, the Company may limit the number of Registrable Shares to be included
in the registration and underwriting. The Company shall so advise all holders of
Registrable Shares requesting registration. The securities of the Company held
by the Stockholders shall be excluded from such registration and underwriting to
the extent deemed advisable by the managing underwriter, and underwriting shall
be allocated among all Stockholders requesting registration in proportion, as
nearly as practicable, to the respective number of shares of Common Stock which
they held at the time the Company gives the notice specified in Section 2.1(a).
If any Stockholder would thus be entitled to include more securities than such
holder requested to be registered, the excess shall be allocated among other
requesting Stockholders pro rata in the manner described in the preceding
sentence. If any holder of Registrable Shares or any officer or director
disapproves of the terms of any such underwriting, such person may elect to
withdraw therefrom by written notice to the Company, and any Registrable Shares
or other securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
2.2. Registrations on Form S-3.
If at any time after October 29, 2000, (i) a Stockholder requests that
the Company file a registration statement on Form S-3 or any successor thereto
for a public offering of all or any portion of the Registrable Shares held by
such Stockholder, the reasonably anticipated aggregate price to the public of
which would exceed $5,000,000, and (ii) the Company is a registrant entitled to
use Form S-3 or any successor thereto to register such shares, then the Company
shall use its best efforts to register under the Securities Act on Form S-3 or
any successor thereto for public sale the number of Registrable Shares;
provided, however, that (A) the number of registrations on Form S-3 which may be
requested and obtained under this Section 2.2 shall be limited to three, and (B)
the Company shall not be obligated to file a registration statement on Form S-3
if at the time of any such request the Registrable Shares are eligible for sale
pursuant to Rule 144 and the volume limitations, if any, imposed on the
Stockholders at the time of such request would prevent the Stockholders from
selling up to an aggregate of 200,000 of such shares during any ninety (90) day
period. The registration rights in this section 2.2 are in addition to the
registration rights afforded under section 2.1. Notwithstanding anything to the
contrary contained herein, the Holders agree not to sell under any registration
statement or otherwise more than 25% of their Registrable Shares in any one
quarter unless the Company otherwise agrees in writing.
-3-
<PAGE> 4
2.3 Registration Procedures.
(a) If and whenever the Company is required by the
provisions of this Agreement to effect the registration of any Registrable
Shares under the Securities Act, the Company shall:
(i) file with the Commission a Registration
Statement on Form S-3 with respect to such Registrable Shares and use its
commercially reasonable efforts to cause that Registration Statement to become
effective as soon as possible;
(ii) as expeditiously as possible prepare
and file with the Commission any amendments and supplements to the Registration
Statement on Form S-3 and the prospectus included in the Registration Statement
on Form S-3 as may be necessary to comply with the provisions of the Securities
Act (including the anti-fraud provisions thereof) and to keep the Registration
Statement on Form S-3 effective until all such Registrable Shares are sold;
(iii) as expeditiously as possible furnish
to each Selling Stockholder such reasonable numbers of copies of the Prospectus,
including any preliminary Prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such Selling Stockholder may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Shares owned by such Selling Stockholder;
(iv) as expeditiously as possible use its
commercially reasonable efforts to register or qualify the Registrable Shares
covered by the Registration Statement under the securities or Blue Sky laws of
such states as the Selling Stockholders shall reasonably request, and do any and
all other acts and things that may be necessary or desirable to enable the
Selling Stockholders to consummate the public sale or other disposition in such
states of the Registrable Shares owned by the Selling Stockholder; provided,
however, that the Company shall not be required in connection with this
paragraph (iv) to qualify as a foreign corporation or execute a general consent
to service of process in any jurisdiction;
(v) as expeditiously as possible, cause all
such Registrable Shares to be listed on each securities exchange or automated
quotation system on which similar securities issued by the Company are then
listed;
(vi) promptly provide a transfer agent and
registrar for all such Registrable Shares not later than the effective date of
such registration statement;
(vii) promptly make available for inspection
by the Selling Stockholders, any managing underwriter participating in any
disposition pursuant to such Registration Statement, and any attorney or
accountant or other agent retained by any such underwriter or selected by the
Selling Stockholders, all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any
-4-
<PAGE> 5
such seller, underwriter, attorney, accountant or agent in connection with such
Registration Statement;
(viii) as expeditiously as possible, notify
each Selling Stockholder, promptly after
it shall receive notice thereof, of the time when such Registration Statement
has become effective or a supplement to any Prospectus forming a part of such
Registration Statement has been filed; and
(ix) as expeditiously as possible following
the effectiveness of such Registration
Statement, notify each seller of such Registrable Shares of any request by the
Commission for the amending or supplementing of such Registration Statement or
Prospectus.
(b) If the Company has delivered a Prospectus to the
Selling Stockholders and after having done so the Prospectus is amended to
comply with the requirements of the Securities Act, the Company shall promptly
notify the Selling Stockholders and, if requested, the Selling Stockholders
shall immediately cease making offers of Registrable Shares and return all
Prospectuses to the Company. The Company shall promptly provide the Selling
Stockholders with revised Prospectuses and, following receipt of the revised
Prospectuses, the Selling Stockholders shall be free to resume making offers of
the Registrable Shares.
(c) In the event that, in the judgment of the
Company, it is advisable to suspend use of a Prospectus included in a
Registration Statement due to pending material developments or other events that
have not yet been publicly disclosed and as to which the Company believes public
disclosure would be detrimental to the Company, the Company shall notify all
Selling Stockholders to such effect, and, upon receipt of such notice, each such
Selling Stockholder shall immediately discontinue any sales of Registrable
Shares pursuant to such Registration Statement until such Selling Stockholder
has received copies of a supplemented or amended Prospectus or until such
Selling Stockholder is advised in writing by the Company that the then current
Prospectus may be used and has received copies of any additional or supplemental
filings that are incorporated or deemed incorporated by reference in such
Prospectus. Notwithstanding anything to the contrary herein, the Company shall
not exercise its rights under this Section 2.3(c) to suspend sales of
Registrable Shares for a period in excess of 180 days in any 365-day period.
2.4 Allocation of Expenses. The Company will pay all
Registration Expenses for all registrations under this Agreement; provided,
however, that if a registration under Section 2.1 is withdrawn at the request of
the Initiating Holders (other than as a result of information concerning the
business or financial condition of the Company which is made known to the
Stockholders after the date on which such registration was requested) and if the
Initiating Holders elect not to have such registration counted as a registration
requested under Section 2.1, the requesting Stockholders shall pay the
Registration Expenses of such registration pro rata in accordance with the
number of their Registrable Shares included in such registration. For purposes
of this Section, the term "Registration Expenses" shall mean all expenses
incurred by the Company in complying with this Agreement, including, without
limitation, all registration
-5-
<PAGE> 6
and filing fees, exchange listing fees, printing expenses, fees and expenses of
counsel for the Company and the reasonable fees and expenses of one counsel
selected by the Selling Stockholders to represent the Selling Stockholders,
state Blue Sky fees and expenses, and the expense of any special audits incident
to or required by any such registration, but excluding underwriting discounts,
selling commissions and the fees and expenses of Selling Stockholders' own
counsel (other than the counsel selected to represent all Selling Stockholders).
2.5 Indemnification and Contribution.
(a) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company will indemnify and hold harmless each Selling Stockholder, each
underwriter of such Registrable Shares, and each other person, if any, who
controls such Selling Stockholder or underwriter within the meaning of the
Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such Selling Stockholder, underwriter or
controlling person may become subject under the Securities Act, the Exchange
Act, state securities or Blue Sky laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable Shares
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Company will reimburse such Selling Stockholder, underwriter and each such
controlling person for any legal or any other expenses reasonably incurred by
such Selling Stockholder, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission made in such Registration Statement,
preliminary prospectus or prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company, in
writing, by or on behalf of such Selling Stockholder, underwriter or controlling
person specifically for use in the preparation thereof.
(b) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, each
Selling Stockholder, severally and not jointly, will indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may become subject
under the Securities Act, Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the
-6-
<PAGE> 7
Registration Statement, or arise out of or are based upon any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, if the statement or
omission was made in reliance upon and in conformity with information relating
to such Selling Stockholder furnished in writing to the Company by or on behalf
of such Selling Stockholder specifically for use in connection with the
preparation of such Registration Statement, prospectus, amendment or supplement;
provided, however, that the obligations of a Selling Stockholder hereunder shall
be limited to an amount equal to the net proceeds to such Selling Stockholder of
Registrable Shares sold in connection with such registration.
(c) Each party entitled to indemnification under this
Section (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section except to the extent
that the Indemnifying Party is adversely affected by such failure. The
Indemnified Party may participate in such defense at such party's expense;
provided, however, that the Indemnifying Party shall pay such expense if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding; provided further that in no event shall the
Indemnifying Party be required to pay the expenses of more than one law firm per
jurisdiction as counsel for the Indemnified Party. The Indemnifying Party also
shall be responsible for the expenses of such defense if the Indemnifying Party
does not elect to assume such defense. No Indemnifying Party, in the defense of
any such claim or litigation shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
of such claim or litigation, and no Indemnified Party shall consent to entry of
any judgment or settle such claim or litigation without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in this
Section 2.5 is due in accordance with its terms but for any reason is held to be
unavailable to an Indemnified Party in respect to any losses, claims, damages
and liabilities referred to herein, then the Indemnifying Party shall, in lieu
of indemnifying such Indemnified Party, contribute to the amount paid or payable
by such Indemnified Party as a result of such losses, claims, damages or
liabilities to which such party may be subject in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and the
Selling Stockholders on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of the Company and
the Selling
-7-
<PAGE> 8
Stockholders shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of material fact related to information
supplied by the Company or the Selling Stockholders and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Selling Stockholders agree that
it would not be just and equitable if contribution pursuant to this Section 2.5
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph of Section 2.5, (a) in no case
shall any one Selling Stockholder be liable or responsible for any amount in
excess of the net proceeds received by such Selling Stockholder from the
offering of Registrable Shares and (b) the Company shall be liable and
responsible for any amount in excess of such proceeds; provided, however, that
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve such party from any other obligation it or they may have
thereunder or otherwise under this Section. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its prior written consent, which consent shall not be unreasonably
withheld.
2.6 Information by Holder. Each holder of Registrable Shares
included in any registration shall furnish to the Company such information
regarding such holder and the distribution proposed by such holder as the
Company may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this
Agreement.
2.7 "Stand-Off" Agreement; Confidentiality of Notices. Each
Stockholder, if requested by the Company and the managing underwriter of an
underwritten public offering by the Company of Common Stock, shall not sell or
otherwise transfer or dispose of any Registrable Shares or other securities of
the Company held by such Stockholder for a period of 180 days following the
effective date of a Registration Statement. The Company may impose stop-transfer
instructions with respect to the Registrable Shares or other securities subject
to the foregoing restriction until the end of such 180-day period. Any
Stockholder receiving any written notice from the Company regarding the
Company's plans to file a Registration Statement shall treat such notice
confidentially and shall not disclose such information to any person other than
as necessary to exercise its rights under this Agreement.
2.8 Rule 144 Requirements. The Company agrees to:
(a) make and keep current public information about
the Company available, as those terms are understood and defined in Rule 144;
-8-
<PAGE> 9
(b) use its best efforts to file with the Commission
in a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act (at any time after it has become subject
to such reporting requirements);
(c) furnish to any holder of Registrable Shares upon
request (i) a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements),
(ii) a copy of the most recent annual or quarterly report of the Company, and
(iii) such other reports and documents of the Company as such holder may
reasonably request to avail itself of any similar rule or regulation of the
Commission allowing it to sell any such securities without registration; and
(d) instruct its transfer agent to remove the
restrictive legend on any Registrable Shares which are eligible for resale under
Rule 144(k) provided that the Stockholders execute the customary representation
letter required by the transfer agent.
2.9 Termination. All of the Company's obligations to register
Registrable Shares under Section 2.1 and Section 2.2 of this Agreement shall
terminate upon the four year anniversary date of this Agreement.
3. Transfers of Rights. This Agreement, and the rights and obligations
of each Purchaser hereunder, may be assigned by such Purchaser to (a) the
spouse, children or descendants of any Purchaser; or (b) any trust for the
exclusive benefit of any Purchaser or one or more of the individuals listed in
clause (a); provided that the transferee provides written notice of such
assignment to the Company and agrees in writing to be bound hereby. All
covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto
4. Representations, Warranties and Covenants of the Company. The
Company represents and warrants to Stockholders as follows:
(a) The execution, delivery and performance of this
Agreement by the Company have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Charter or By-laws of the Company or any
provision of any indenture, agreement or other instrument to which it or any or
its properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(b) This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable in accordance with its terms.
-9-
<PAGE> 10
5. General.
(a) Severability. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(b) Specific Performance. In addition to any and all
other remedies that may be available at law in the event of any breach of this
Agreement, each Purchaser shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other injunctive
or other equitable relief as may be granted by a court of competent
jurisdiction.
(c) Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the Commonwealth of
Massachusetts (without reference to the conflicts of law provisions thereof).
(d) Notices. All notices, requests, consents, and
other communications under this Agreement shall be in writing and shall be
deemed delivered (i) two business days after being sent by registered or
certified mail, return receipt requested, postage prepaid or (ii) one business
day after being sent via a reputable nationwide overnight courier service
guaranteeing next business day delivery, in each case to the intended recipient
as set forth at the address indicated in the Merger Agreement.
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
(e) Complete Agreement. This Agreement constitutes
the entire agreement and understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
(f) Amendments and Waivers. Any term of this
Agreement may be amended or terminated and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), with the written consent of the Company and the
holders of at least 66 2/3 % of the Registrable Shares held by all of the
Stockholders; provided, that this Agreement may be amended with the consent of
the holders of less than all Registrable Shares only in a manner which applies
to all such holders in the same fashion. Any such amendment, termination or
waiver effected in accordance with this Section 6(f) shall be binding on all
parties hereto, even if they do not execute such consent. No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
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<PAGE> 11
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
(g) Pronouns. Whenever the context may require, any
pronouns used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural, and vice versa.
(h) Counterparts; Facsimile Signatures. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, and all of which together shall constitute one and the
same document. This Agreement may be executed by facsimile signatures.
(i) Section Headings. The section headings are for
the convenience of the parties and in no way alter, modify, amend, limit or
restrict the contractual obligations of the parties.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK.]
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<PAGE> 12
Executed as of the date first written above.
COMPANY:
CONCORD COMMUNICATIONS, INC.
By: /s/ Gary E. Haroian
--------------------------------------------
Gary E. Haroian
Sr. Vice President and CFO
PURCHASERS:
/s/ Cheryl Krupczak
-----------------------------------------------
Cheryl Krupczak
/s/ Robert Krupczak
-----------------------------------------------
Robert Krupczak
-12-
<PAGE> 1
EXHIBIT 5.1
May 2, 2000
Concord Communications, Inc.
600 Nickerson Road
Marlborough, Massachusetts 01752
Re: Registration Statement on Form S-3 relating to
the registration of 2,489,238 shares of Common Stock
Dear Sir or Madam:
Reference is made to the above-captioned Registration Statement on Form
S-3 (the "Registration Statement") filed by Concord Communications, Inc. (the
"Company") on the date hereof with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, relating to an aggregate of 2,489,238
shares of Common Stock, par value $.01 per share, of the Company (the "Shares").
We have reviewed the corporate proceedings taken by the Board of
Directors of the Company with respect to the authorization and issuance of the
Shares. We have also examined and relied upon originals or copies, certified or
otherwise authenticated to our satisfaction, of all corporate records,
documents, agreements or other instruments of the Company and have made all
investigations of law and have discussed with the Company's officers all
questions of fact that we have deemed necessary or appropriate.
We are only members of the bar of the Commonwealth of Massachusetts and
are not expert in, and express no opinion regarding, the laws of any
jurisdiction other than the Commonwealth of Massachusetts, the General
Corporation Law of the State of Delaware and the United States of America.
Based on the foregoing, we are of the opinion that the Shares are
validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and further consent to the use of our name wherever
appearing in the Registration Statement and any amendments thereto.
Very truly yours,
/s/ Testa, Hurwitz & Thibeault, LLP
------------------------------------------------
TESTA, HURWITZ & THIBEAULT, LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated January 17, 2000 (except with respect to the matter discussed in
Note 3(b), as to which the date is February 4, 2000) and to all references to
our Firm incorporated by reference in this registration statement. Our report
dated January 17, 2000 included in Concord's Form 10-K for the year ended
December 31, 1999 is no longer appropriate since restated financial statements
have been presented giving effect to a business combination accounted for as a
pooling-of-interests.
/s/ Arthur Andersen LLP
-----------------------------
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 1, 2000
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors
FirstSense Software, Inc.:
We consent to incorporation by reference in the Registration Statement on Form
S-3 of Concord Communications, Inc. of our report dated April 5, 2000, with
respect to the balance sheets of FirstSense Software, Inc. as of December 31,
1999 and 1998, and the related statements of operations, stockholders' (deficit)
equity, and cash flows for each of the years in the three-year period ended
December 31, 1999, which report appears in the Form 8-K/A of Concord
Communications, Inc. dated February 4, 2000 and filed on April 19, 2000 and in
the Form 8-K/A of Concord Communications, Inc. dated April 25, 2000 and filed
on May 2, 2000, and to the reference to our firm under the heading "Experts" in
the prospectus.
/s/ KPMG LLP
- ---------------------
Boston, Massachusetts
April 27, 2000
