-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Acc1Bd6ax9Sd10FX/0Ths0sVX12H+gMvmDiQDR1m8nEaBFQSNN86Oac9p8lmYbkv D68fuCikymNlgqDVsElsVw== 0000950172-96-000342.txt : 19960705 0000950172-96-000342.hdr.sgml : 19960705 ACCESSION NUMBER: 0000950172-96-000342 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19960703 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCURRENT COMPUTER CORP/DE CENTRAL INDEX KEY: 0000749038 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 042735766 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-05383 FILM NUMBER: 96590957 BUSINESS ADDRESS: STREET 1: 2 CRECENT PLACE CITY: OCEANPORT STATE: NJ ZIP: 07757 BUSINESS PHONE: 9088704500 MAIL ADDRESS: STREET 1: 2 CRECENT PLACE CITY: OCEANPORT STATE: NJ ZIP: 07757 FORMER COMPANY: FORMER CONFORMED NAME: MASSACHUSETTS COMPUTER CORP DATE OF NAME CHANGE: 19881018 424B3 1 424B3 PROSPECTUS PROSPECTUS July 2, 1996 1,600,000 SHARES CONCURRENT COMPUTER CORPORATION COMMON STOCK This Prospectus relates to the offering by Concurrent Computer Corporation ("Concurrent") of up to 1,600,000 shares of common stock, par value $.01 per share (the "Common Stock") of Concurrent, including shares that may be sold by Concurrent at the direction of Berenson Minella & Company ("Berenson Minella"), shares that may be sold by Concurrent at the direction of John T. Stihl, the Chairman of the Board of Directors of Concurrent and shares that may be sold by Concurrent on behalf of certain former executive officers of Concurrent, for their respective benefits. See "Use of Proceeds," "Certain Arrangements with Berenson Minella" and "Plan of Distribution." The Common Stock includes a right to purchase fractional shares of preferred stock of Concur- rent, as provided in Concurrent's Rights Agreement, dated as of July 31, 1992. The Common Stock is traded in the over-the-counter market and price quotations therefor are reported on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") National Market System ("Nasdaq/NMS") under the symbol "CCUR". The last reported sale price of the Common Stock on July 1, 1996 was $2 1/16 per share. THE SECURITIES OFFERED HEREBY REPRESENT A SIGNIFICANT DEGREE OF RISK. INVESTORS SHOULD CAREFULLY CONSIDER CERTAIN RISKS AND OTHER CONSIDERATIONS RELATING TO THE COMMON STOCK AND CONCURRENT. SEE "RISK FACTORS" BEGINNING ON PAGE 8. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Concurrent, directly, or through agents designated from time to time by it, Berenson Minella or Mr. Stihl or through dealers or underwriters also to be so designated, may sell the Common Stock from time to time on terms to be determined at the time of sale. The distribution of the shares of Common Stock by Concur- rent is not subject to any underwriting agreement. Concurrent may sell the shares of Common Stock covered by the Prospectus through the Nasdaq/NMS, at prices and terms then prevailing, through customary brokerage channels, in privately negotiated transactions or otherwise, either through broker-dealers acting as agents or brokers for the seller, or through broker-dealers acting as agents or principals. Such broker-dealers may receive compensation in the form of underwriting discounts, concessions, or commissions from Concurrent and/or the purchasers of the shares of Common Stock for whom they may act as agent, which compensation may be in excess of customary commissions. To the extent required, the purchase price, the names of any such agent, dealer or underwriter, and any applicable commission or discount with respect to a particular offering will be set forth in an accompanying Prospectus Supplement. The aggregate net proceeds from the sale of any shares of the Common Stock will be the price thereof less the aggregate agent's commission or underwriter's discount, if any. See "Plan of Distribution" for information regarding the designation of certain selling agents and indemnification arrangements. No person has been authorized in connection with any offer- ing made hereby to give any information or to make any represen- tations other than those contained in this Prospectus or any Prospectus Supplement, and, if given or made, such information or representations must not be relied upon as having been authorized by Concurrent or any underwriter, dealer or agent. This Prospec- tus or any Prospectus Supplement does not constitute an offer to sell or the solicitation of an offer to buy any securities other than the securities to which it relates or any offer to sell or the solicitation of an offer to buy such securities in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this Prospectus or any Prospectus Supple- ment nor any sale hereunder or thereunder shall, under any circumstances, create any implication that the information contained herein or therein is correct as of any time subsequent to the date hereof and thereof. TABLE OF CONTENTS Available Information . . . . . . . . . . . . . . . . . . . . 3 Incorporation of Certain Documents by Reference . . . . . . . 3 Forward-Looking Statements . . . . . . . . . . . . . . . . . 4 Concurrent Computer Corporation . . . . . . . . . . . . . . . 5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 7 Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . 8 Certain Arrangements with Berenson Minella . . . . . . . . . 18 Plan of Distribution . . . . . . . . . . . . . . . . . . . . 18 Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . 19 Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 AVAILABLE INFORMATION Concurrent is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy state- ments and other information with the Securities and Exchange Commission (the "Commission"). Copies of such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the following Regional Offices of the Commis- sion: Seven World Trade Center, 13th Floor, New York, NY 10048 and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661. Copies of such material can be obtained at prescribed rates from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a Web site at http://www.sec.gov. which contains reports, proxy statements and other information regard- ing registrants that file electronically with the Commission. The Common Stock is traded on the Nasdaq/NMS (Symbol: CCUR). In addition, material filed by Concurrent can be inspected at the offices of Nasdaq/NMS, Reports Section, 1735 K Street N.W., Washington, D.C. 20006. Concurrent has filed a registration statement (the "Regis- tration Statement") on Form S-3 with respect to the Common Stock offered hereby with the Commission under the Securities Act. This Prospectus, which constitutes a part of the Registration Statement, does not contain all the information set forth in the Registration Statement, certain items of which are contained in schedules and exhibits to the Registration Statement as permitted by the rules and regulations of the Commission. For further information with respect to Concurrent and the Common Stock offered hereby, reference is made to the Registration Statement and to the exhibits and schedules thereto. Statements contained in this Prospectus as to the contents of any agreement, instru- ment or other document referred to are not necessarily complete. With respect to each such agreement, instrument or other document filed as an exhibit to the Registration Statement, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents which have been filed with the Commission by Concurrent pursuant to the Exchange Act (Commission File No. 0-13150), are incorporated by reference in this Prospec- tus: (1) Annual Report on Form 10-K for the fiscal year ended June 30, 1995 (the "Annual Report"); (2) Quarterly Reports on Form 10-Q for the fiscal quarters ended September 30, 1995, December 31, 1995 and March 31, 1996; (3) Current Report on Form 8-K, dated April 19, 1996; and (4) Joint Proxy Statement for the Special Meeting of Stock- holders of Concurrent and Harris Computer Systems Corporation (now known as CyberGuard Corporation ("CyberGuard")) held on June 26, 1996 (the "Joint Proxy Statement"). The Annual Report contains a description of Concurrent's business. For a description of the effect of the Acquisition (as defined below) on the business of Concurrent, see "Concurrent Computer Corporation -- The Acquisition." All documents filed by Concurrent pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Common Stock made hereby shall be deemed to be incorporated by reference in the Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in this Prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. This Prospectus incorporates by reference documents relating to Concurrent which are not presented herein or delivered here- with. A copy of any documents incorporated by reference (not including exhibits to such documents other than exhibits specifi- cally incorporated by reference into such documents) are avail- able without charge to any person, including any beneficial owner, to whom this Prospectus is delivered, upon written or oral request. Requests for such documents should be directed to the General Counsel and Secretary, Concurrent Computer Corporation, Two Crescent Place, Oceanport, New Jersey 07757, telephone number (908) 870-4500. FORWARD-LOOKING STATEMENTS This Prospectus and the Joint Proxy Statement incorporated by reference herein, contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such statements include, but are not limited to, integration of the CyberGuard and Concurrent real- time businesses, achieving cost savings from the Acquisition, projected sales, gross margin and net income figures, the avail- ability of capital resources, customer reaction to the Acquisi- tion, plans concerning products and market acceptance. Forward-looking statements are inherently subject to risks and uncertainties, many of which can not be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial and otherwise, could differ materially from those set forth in or contemplated by the for- ward-looking statements herein. Important factors that could contribute to such differences are set forth below under "Risk Factors" including, but not limited to, "Changes in Market Prices of Common Stock; Shares Eligible for Future Sale," "Uncertainties in Successfully Integrating the CyberGuard Real-Time Business and Achieving Cost Savings," "Impact of Transaction Costs on Finan- cial Performance; Uncertainty of Acquisition-Related Costs," "Potential Shortfall in Liquidity," "Potentially Adverse Custom- er Reaction," "Product Obsolescence; Significant Research and Development Expenditures," "Reliance on Government Business," and "Dependence on International Operations." CONCURRENT COMPUTER CORPORATION GENERAL Concurrent is a supplier of high-performance real-time computer systems. "Real-time" systems acquire, analyze, store, display and control analog, digital and network data to provide time critical information as real-world events occur. Concurrent has over 25 years of experience in real-time systems, including specific expertise in systems, applications software, productivi- ty tools and networking. Concurrent's real-time systems offer networked and distributed computing solutions and may be config- ured to provide fault tolerance. Concurrent sells its systems worldwide to end-users as well as to original equipment manufac- turers, systems integrators, independent software vendors and value-added resellers who combine Concurrent's products with other equipment or with additional application software for resale to end-users. End uses of Concurrent's systems include product design and testing; flight simulation; air traffic control and weather forecasting; intelligence data acquisition and analysis; financial trading; and hospital information manage- ment. Concurrent designs, manufactures, sells, and supports real-time proprietary and standards-based open systems. It also offers traditional maintenance and support services and profes- sional services, such as performance and capacity analysis and systems integration. THE ACQUISITION On June 27, 1996, Concurrent acquired (the "Acquisition") the assets of the real-time computer business of CyberGuard and 683,178 newly issued shares of common stock of CyberGuard (the "CyberGuard Stock") pursuant to the Purchase and Sale Agreement dated as of March 26, 1996, as amended and restated on May 23, 1996 (the "Purchase and Sale Agreement"). CyberGuard or its predecessors has been engaged in the real-time computing business since 1974. The CyberGuard Stock represents approximately 9% of the common stock of CyberGuard outstanding immediately after the issuance of the CyberGuard Stock to Concurrent and after giving effect to the vesting and exercise of certain stock options. As consideration for the Acquisition, Concurrent issued to CyberGuard (i) 10,000,000 shares of Common Stock, which repre- sented approximately 23% of the shares of Common Stock outstand- ing immediately after such issuance, after giving effect to the vesting and exercise of all outstanding options with respect to the Common Stock, but without giving effect to the issuance of any shares of Common Stock offered hereby and (ii) 1,000,000 shares of 9.00% Class B Convertible Preferred Stock (the "Con- vertible Preferred Stock") with $8,200,000 aggregate liquidation preference (subject to post-closing adjustments to reflect, among other things, the amount of net current assets transferred to Concurrent in the Acquisition) and convertible into a maximum of 3,280,000 shares of Common Stock, subject to anti-dilution adjustments. In addition, Concurrent also assumed certain liabilities of CyberGuard relating to its real-time computing business. In connection with the Acquisition, Concurrent and CyberGuard entered into certain ancillary agreements including a Share Holding Agreement (the "Share Holding Agreement") that contains certain standstill, transfer and registration provisions relating to the Common Stock and the CyberGuard Stock, and provisions relating to the composition of the Board of Directors of Concurrent and CyberGuard. The Board of Directors of Concurrent believes the Acquisi- tion offers the following significant strategic and financial benefits to Concurrent and its stockholders, as well as to its employees and customers: * Enhanced Competitive Position. As a result of the Acquisition, Concurrent expects to be in a better position to meet the challenges of the increasingly competitive environment in the real-time computing industry more effec- tively than either Concurrent or CyberGuard standing alone. In addition, Concurrent now has access to its own as well as CyberGuard's technology, allowing it to combine the best of both technologies in the next generation of products. * Larger and More Diverse Market Coverage. As a result of the Acquisition, Concurrent's service territory, installed base and product offerings are larger and more diverse than prior to the Acquisition. In addition, the combination of the best of the technologies of the two companies is expected to allow for a reduction in the time between the introduction of next generation products within Concurrent's product line, resulting in Concurrent being less dependent on the success of any individual next generation product. * Cost Savings. The Acquisition is expected to generate significant cost savings during the first fiscal year. Such savings will be primarily obtained through headcount reduc- tions, as well as facilities cost reductions. These savings will be obtained through a variety of actions including, among others, integration of corporate management and admin- istrative functions, consolidation of production and re- search and development facilities and consolidation of sales/service offices. * Liquidity. The Acquisition has provided Concurrent with additional borrowing capacity under its revolving credit facility based on the higher borrowing base resulting from the combination of the real-time businesses of the two companies. Concurrent has entered into an amendment to the loan agreement with its primary lender which, among other things, extends the term of such agreement until August 1, 1999 and effectively increases the line of credit under the revolving credit facility by $4.75 million to $12.75 mil- lion. In addition, the Acquisition has provided Concurrent with the opportunity to improve its liquidity by either selling or pledging, subject to certain restrictions, the shares of CyberGuard Stock owned by it. For a discussion of certain risks associated with the Acquisition, see "Risk Factors". CyberGuard is engaged in the development and marketing of commercial network security products designed to protect data on computer networks from access by unauthorized users. For additional information concerning the Acquisition and the real-time business of CyberGuard, see the Joint Proxy Statement incorporated by reference herein. The following former executive officers of CyberGuard became executive officers of Concurrent upon consummation of the Acqui- sition: Robert F. Chism (Vice President, Development), Daniel S. Dunleavy (Vice President and Chief Financial Officer), Robert T. Menzel (Vice President, North American Sales) and Michael N. Smith (Vice President, Marketing). In addition, John T. Stihl and George E. Chapman remain executive officers and serve as Chairman of the Board and Vice President, International Sales, respectively, of Concurrent although Mr. Stihl resigned as President and Chief Executive Officer. The employment of six individuals as executive officers of Concurrent terminated upon consummation of the Acquisition. Pursuant to their severance arrangements with Concurrent, which were amended, in part, in contemplation of the Acquisition, these former executive officers will receive severance compensation equal to their respective annual base salaries at the time of the Acquisition (an aggregate of $921,000) payable from the proceeds of the sale of a number of shares registered hereunder. Pursuant to the terms of the sever- ance arrangements, 40% of the severance obligation shall be paid to the former executive officers, not later than 30 days follow- ing consummation of the Acquisition with the remaining portion to be paid not later than 60 days following consummation of the Acquisition (i.e., August 26, 1996). See "Use of Proceeds." For additional information with respect to the severance arrange- ments, see the Joint Proxy Statement incorporated by reference herein. The employment agreement with Mr. Stihl was also amended in contemplation of the Acquisition to provide him with the option to receive (i) full severance compensation (i.e., annual base salary) for the 24-month period commencing the day following the Closing Date or (ii) the proceeds from the sale, at Mr. Stihl's direction, of shares of Concurrent Common Stock with a fair market value of $730,000. Mr. Stihl has elected to receive the proceeds from the sale of Common Stock and, accordingly, shares are registered hereunder for that purpose. Berenson Minella was engaged as financial advisor to the Board of Directors of Concurrent in connection with the Acquisi- tion. For a description of the fee arrangement between Berenson Minella and Concurrent, see "Certain Arrangements with Berenson Minella". ADDITIONAL INFORMATION Concurrent's principal offices are located at Two Crescent Place, Oceanport, New Jersey 07757. Its telephone number is (908) 870-4500. Concurrent's principal offices are being relocat- ed to 2101 West Cypress Creek Road, Fort Lauderdale, Florida 33309. Concurrent has also filed with the Commission a registration statement on Form S-3 for 14,000,000 shares of Common Stock issued or issuable by Concurrent to CyberGuard (including a maximum of 3,280,000 shares of Common Stock, subject to anti- dilution adjustments, that are issuable upon conversion of the Convertible Preferred Stock or the debentures into which such Convertible Preferred Stock is exchangeable pursuant to its terms) in connection with the Acquisition. Concurrent will not receive any of the proceeds from the sale of Common Stock offered by CyberGuard. USE OF PROCEEDS Of the 1,600,000 shares of Common Stock being offered hereby, Concurrent will sell up to 365,546 shares as directed by Berenson Minella and will pay the net proceeds thereof to Berenson Minella without deducting the related estimated expenses (other than agent's commissions or underwriter's discounts, if any) in partial satisfaction of the advisory fee due from Concur- rent to Berenson Minella for its services as financial advisor to Concurrent in connection with the Acquisition. Assuming a sale price of $2 1/16 per share (the last reported sale price of the Common Stock on July 1, 1996), the net proceeds to Berenson Minella of the sale of all of such shares would be approximately $732,000. See "Certain Arrangements with Berenson Minella" for a discussion of the rights of Berenson Minella with respect to such 365,546 shares of Common Stock. With respect to the severance owed to Mr. Stihl, based upon an assumed stock price of $2 1/16 per share without assuming any selling agent's commission, Concurrent expects to sell approximately 354,000 shares as directed by Mr. Stihl to satisfy such severance obligation. If 354,000 shares of Common Stock are insufficient to satisfy the severance obligation to Mr. Stihl, Concurrent will allocate such additional shares from the shares offered hereby as necessary to satisfy such obligation. Of the remaining shares offered hereby, Concurrent intends to sell that number of shares sufficient to result in net proceeds of $921,000, after deducting the estimated expenses related to the sale of such shares, to satisfy the severance compensation obligations to certain former executive officers. Any remaining shares after such sales will be deregistered and the Registration Statement will be terminated. See "Plan of Distribution" for a discussion of the retention of specified agents, if any, to sell the shares of Common Stock offered hereby. RISK FACTORS INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS AND INCORPORATED BY REFERENCE HEREIN, PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS IN EVALUATING CONCURRENT BEFORE PURCHASING ANY SHARES OF COMMON STOCK. CHANGES IN MARKET PRICES OF COMMON STOCK; SHARES ELIGIBLE FOR FUTURE SALE General Market Risk Pursuant to the Purchase and Sale Agreement, Concurrent issued 10,000,000 shares of Common Stock to CyberGuard, and CyberGuard issued 683,178 shares of CyberGuard Stock to Concur- rent. The market prices of the Common Stock will vary from such price at the date of this Prospectus. Such variation will be the result of changes in the business, operations or prospects of Concurrent, regulatory considerations, general market, economic and industry conditions, the results of operations, liquidity and the market's perception of the prospects of Concurrent as well as other factors affecting Concurrent including the risk factors set forth below. Furthermore, because Concurrent owns 9% of the CyberGuard Stock, the price of the Common Stock will also reflect changes in the price of the CyberGuard Stock and in the business prospects for CyberGuard. Despite Concurrent's ownership of the CyberGuard Stock and its right to designate one of CyberGuard's seven members of its Board of Directors, Concurrent will not be able to control CyberGuard's strategic direction or influence the day-to-day management of CyberGuard's business or the future results of CyberGuard's operations. Shares Eligible for Future Sale No assurance can be given as to the effect, if any, that future sales of shares of Common Stock, or the availability of shares of Common Stock for future sales, will have on the market price of the Common Stock from time to time. Future sales of shares of Common Stock (including shares issued upon exercise of stock options), or the possibility that such sales could occur, could adversely affect the prevailing market price of the Common Stock. As of the date of this Prospectus, the shares of Common Stock offered pursuant to this Prospectus, when aggregated with the shares of Common Stock that are issuable upon the exercise of the options, the shares of Common Stock being offered by CyberGuard (see "Concurrent Computer Corporation -- Additional Information") and the shares issuable upon the exercise of certain outstanding warrants to purchase 361,544 shares of Common Stock at $3 per share, equal approximately 43.2% of the shares of Common Stock outstanding. As of the date of this Prospectus, there are 2,556,740 shares of Common Stock issuable upon exercise of options that are fully vested of which 2,366,822 options have an exercise price equal to or less than $3.00 per share. An additional 6,056,209 shares of Common Stock or options therefor are reserved and available for future issuance under Concurrent's stock option plan. The shares of Common Stock issued to CyberGuard are subject to the terms of the Share Holding Agree- ment between Concurrent and CyberGuard pursuant to which shares of Common Stock may be sold by CyberGuard subject to certain restrictions on transfer (including certain restrictions on the sales of shares when Concurrent is engaged in or preparing to engage in a public offering of Common Stock) and on the volume of sales by CyberGuard of Common Stock. UNCERTAINTIES IN SUCCESSFULLY INTEGRATING THE CYBERGUARD REAL- TIME BUSINESS AND ACHIEVING COST SAVINGS Concurrent has begun cost savings actions relating to the Acquisition and expects full implementation thereof approximately six months after the Acquisition. These savings will require significant reductions in employees, as well as consolidation of facilities worldwide and other miscellaneous cost savings ac- tions. Obtaining these savings through the consolidation of functions, the integration of departments, systems and procedures and the relocation of staff present significant management challenges. The consolidation of development and manufacturing operations are especially challenging. The failure to effective- ly consolidate development functions may result in delays in introduction of the next generation of products. Similarly, the failure to effectively consolidate manufacturing operations could result in a delay in the shipment of certain customer orders and could affect the quality of the goods delivered. Such failures could have a material adverse effect on the future financial performance, results of operations and financial condition of Concurrent. There can be no assurance that such potential cost savings, operating efficiencies and other synergies will be successfully accomplished or accomplished within the time periods initially contemplated, particularly since liquidity issues (see " Potential Shortfall in Liquidity") may constrain Concurrent's ability to integrate the real-time businesses of Concurrent and CyberGuard. Moreover, although the primary purpose of such actions is to realize direct cost savings and other operating efficiencies, there can be no assurance of the extent to which such cost savings and efficiencies can be achieved. IMPACT OF TRANSACTION COSTS ON FINANCIAL PERFORMANCE; UNCERTAINTY OF ACQUISITION-RELATED COSTS Concurrent expects to take a pre-tax charge in the range of $29 to $32 million and to adjust goodwill to cover the transac- tion costs of the Acquisition and the costs of integrating the real-time businesses of Concurrent and CyberGuard, including the cost of facility closings and employee terminations to eliminate duplicate facilities and excess capacity and other non-recurring items. Concurrent expects that such charges and related cash transaction costs will initially have a material adverse effect on Concurrent's financial performance and financial condition within the period in which the charge and costs are taken. Approximately $18 million of these costs are expected to be paid out in cash over the next two years (primarily fiscal year 1997), $9 to $11 million of the total charge are expected to be non-cash fixed asset carrying cost adjustments and approximately $2 to $3 million are obligations which will be settled using proceeds of the offering of Common Stock made hereby. Such costs include Acquisition expenses (such as investment banker, legal and accounting fees), employee, facility and equipment relocation costs and employee out-placement costs. The $10 million of remaining cash payments will be a continuation of current funding requirements and, after their full satisfaction, are expected to positively impact Concurrent's liquidity. For example, cash expenditures for employee severance costs are expected to be paid out over time without increasing payroll costs; payroll costs are expected to decline as severance payments cease. There can be no assurances as to the actual amount of these charges or adjust- ments, and such charges or adjustments could be higher than current estimates. In addition, there may be further charges in future periods relating to the cost of integrating the real-time business of Concurrent and CyberGuard. However, the amount of such future charges cannot currently be determined. DECLINING TREND IN NET SALES Over the past five years, annual net sales of Concurrent generally have declined from a high of approximately $255 million to an annualized rate in the current fiscal year of approximately $100 million. With the exception of the quarter ended June 30, 1995, where net sales increased $162,000 over the prior quarter, net sales of Concurrent declined quarter to quarter during the fiscal year ended June 30, 1995 from $41.5 million in the first quarter to $30.5 million in the fourth quarter for total net sales during the period of $140.1 million. The trend continued in the first two quarters of the fiscal year ended June 30, 1996. Net sales for the three months ended September 30, 1995 were $26.5 million, a decrease of $15.0 million from the prior year period and a decrease of $4 million from the previous quarter. Net sales for the three months ended December 31, 1995 were $24.5 million, a decrease of $13.3 million from the prior year quarter and a decrease of $2 million from the previous quarter. Net sales for the three months ended March 31, 1996 were $26.2 million, a decrease of $4.2 million from the prior year period but an increase of $1.7 million from the previous quarter. As a result of the distractions and uncertainties associated with the Acqui- sition, net sales for the quarter ended June 30, 1996 are expect- ed to be the lowest quarterly revenues for the fiscal year ended June 30, 1996. The decline in net sales was largely the result of the anticipated decline in sales of proprietary systems, including reduced shipments under the U.S. Department of Commerce's Next Generation Weather Radar (NEXRAD) program without a corresponding increase in the sales of open systems. Declining sales of computer systems consequently results in fewer mainte- nance contracts. This, together with a decline in renewal rates on maturing maintenance contracts as installed systems are decommissioned and competitive discounting from third party maintenance providers, has led to a declining trend in service revenues. The future growth of Concurrent's business and its future financial performance will depend on, among other things, its ability to increase net sales by continuing to develop and market competitive real-time open systems products and to expand its revenue base through a combination of internal growth and strate- gic alliances. There can be no assurance as to the future growth of Concurrent's business and financial performance or as to the success of its products and strategic alliances. HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT For the nine months ended March 31, 1996 and for the fiscal years ended June 30, 1995 and 1994, Concurrent experienced losses (before extraordinary items and the cumulative effect of changes in accounting principles) of approximately $5.7 million, $2.0 million and $11.6 million, respectively. Concurrent recorded net income of $3.9 million for the fiscal year ended June 30, 1993. Pro forma to reflect the Acquisition, Concurrent would have experienced losses of approximately $7.6 million and $7.4 million for the nine months ended March 31, 1996 and the fiscal year ended June 30, 1995, respectively, assuming the Acquisition were consummated at the beginning of each such period. There can be no assurance that Concurrent will be able to achieve profitabili- ty, or if achieved, that such profitability can be maintained. For the nine months ended March 31, 1996 and for the fiscal years ended June 30, 1995, 1994 and 1993, Concurrent also experi- enced a decline in assets. On a pro forma basis as of March 31, 1996, as a result of the Acquisition, Concurrent would have had assets of approximately $109.5 million, including its CyberGuard Stock (see "Pro Forma Condensed Consolidated Financial Statements of Concurrent" in the Joint Proxy Statement incorporated by reference herein). The pro forma consolidated balance sheet at March 31, 1996 does not reflect certain restructuring adjustments which may result from the integration of the Concurrent and CyberGuard real-time businesses, such as the write-down of the carrying value of property, plant and equipment which may become excess to the needs of Concurrent. Such writedowns may exceed $10 million. There can be no assurance that Concurrent's assets will not continue to decline. POTENTIAL SHORTFALL IN LIQUIDITY Although the purchase of the CyberGuard real-time business and the integration and consolidation of development and manufac- turing operations is expected to improve Concurrent's liquidity by permitting additional borrowing availability, there can be no assurance that cash flow from the combined real-time operations will be sufficient to fund transaction costs related to the Acquisition including relocation of Concurrent's operations to Florida, anticipated restructuring costs, and ongoing working capital requirements. Concurrent's liquidity is dependent on many factors, including sales volume, operating profit ratio, debt service and the efficiency of asset use and turnover. The future liquidity of Concurrent will depend to a significant extent on (i) the actual versus anticipated decline in sales of proprietary systems and service maintenance revenue; (ii) revenue growth from open systems; (iii) both the related costs and the length of time to realize the anticipated benefits from the integration of the real-time businesses of Concurrent and CyberGuard; and (iv) ongoing cost control actions. Liquidity will also be affected by: (i) the timing of shipments, which predominantly occur during the last month of the quarter; (ii) the increasing per- centage of sales derived from outside the United States, where there are generally longer accounts receivable collection cycles and which receivables are not included in Concurrent's borrowing base under its revolving credit facility; (iii) the sales level in the United States, where related accounts receivable are included in the borrowing base of Concurrent's revolving credit facilities; and (iv) the number of countries in which Concurrent will operate, which may require maintenance of minimum cash levels in each country and, in certain cases, may restrict the repatriation of cash, such as cash held on deposit to secure office leases. Concurrent may sell or pledge some or all of the CyberGuard Stock to generate cash. To the extent CyberGuard consummates a public offering of its stock, Concurrent intends to sell at least one-half of the shares of CyberGuard Stock owned by it in connec- tion with such public offering. On May 23, 1996, Cyberguard filed a registration statement relating to a public offering of 2,500,000 million shares of its common stock of which 1,800,000 shares are being offered by Cyberguard, 341,589 are being offered by Concurrent and the balance are being offered by other selling stockholders. In addition, under the terms of the agreements relating to the Acquisition, Concurrent may sell a portion of its stock even if a public offering is not consummated. However, Concurrent's ability to sell or pledge the CyberGuard Stock is subject to a number of limitations and conditions pursuant to the terms of the Acquisition. See "Terms Of The Transaction -- The Share Holding Agreement" of the Joint Proxy Statement incorporat- ed herein by reference. These limitations and conditions may affect Concurrent's flexibility in generating cash through sales of CyberGuard Stock. Concurrent anticipates that the capital resources available will be adequate to satisfy its capital requirements through June 1997, assuming quarterly net sales of the combined real-time businesses in the range of $30 million. Concurrent's future capital requirements, however, will depend on many factors, including its ability to successfully market and sell its commer- cial products, the cost and timing of the integration of the real-time businesses of Concurrent and CyberGuard to realize potential synergies and cost savings and the cost of developing, marketing and selling competitive products. To the extent that the funds generated by operations are insufficient to satisfy Concurrent's capital requirements, Concurrent may seek additional equity or debt financing or obtain additional credit facilities. Any equity or debt financing, if available at all, may be on terms which are not favorable to Concurrent and, in the case of equity or convertible debt offerings, could result in dilution to Concurrent's then existing stockholders. Concurrent is also considering various additional financing alternatives, including a possible sale or sale and partial leaseback of its Oceanport, New Jersey facility to improve its financial flexibility. If adequate funds are not available, Concurrent may be required to curtail certain activities, including product development, marketing and sales activities. POTENTIALLY ADVERSE CUSTOMER REACTION While Concurrent believes that its customers generally favor the Acquisition due to the broader product line of Concurrent and the other operational benefits of the Acquisition, there can be no assurance as to such customer reaction. Adverse reactions by Concurrent customers could have a material adverse effect on the financial performance, results of operations and financial condition of Concurrent. LAG IN CUSTOMER ORDERS; LONG SALES CYCLE Although Concurrent pursues significant programs with the potential for high volume unit sales of its systems, it neither has nor relies on fixed term or fixed quantity contracts for future sales. Consequently, Concurrent relies on customer orders in a given quarter for net sales for the quarter and on internal forecasts of customer demand to plan operating expenditures. The internal forecasts generally have proven to be optimistic. The ability to match expenditures to anticipated sales is further complicated by the trend of a majority of customers to delay orders to the last month of a quarter. Further, the manufacture of systems in anticipation of firm orders introduces the risk of over-production and investing limited cash resources in potential excess inventory. As a result, substantial efforts must be undertaken on a continuous basis to maintain existing levels of business and to manage expenditures consistent with anticipated sales. The sale of real-time products generally involves signifi- cant education and commitment of capital by prospective custom- ers, with the attendant delays frequently associated with large capital expenditures and lengthy procurement procedures. For these and other reasons, the expected sales cycle associated with the sale of Concurrent's products is typically long and subject to a number of significant risks over which Concurrent does not have significant control. As a result, Concurrent may expend significant resources pursuing potential sales that will not be consummated, which in turn result in decreased revenues and cash flow, potentially resulting in a material adverse effect on the financial performance, results of operations and financial condition of Concurrent. SHIFT IN EMPHASIS AWAY FROM PROPRIETARY SYSTEMS Many of Concurrent's target markets have undergone or are undergoing a shift away from "proprietary" to "open" systems. Sales related to Concurrent's proprietary systems, while declin- ing, continue to represent more than 50% of its total systems sales. Concurrent had approximately $25 million in open system sales and $47 million in proprietary systems sales in its fiscal year ended June 30, 1995 and $15 million in open systems sales and $21 million in proprietary systems sales for the nine months ended March 31, 1996. Although Concurrent's installed base of proprietary systems is currently its largest market, Concurrent's growth and its long-term financial performance will depend largely on its ability to continue to develop and market industry leading open systems that meet the real-time computing needs of its targeted customers. Concurrent plans to capitalize on the trend to open systems by focusing on its target markets as well as entering into strategic alliances with third parties to bring to market new solutions and software applications for new and existing customers. Concurrent does not expect the shift in emphasis to open systems to result in either significant incre- mental costs over current cost levels or incremental capital investment. A shift in emphasis to open systems may, however, result in lower gross margins on systems sales. Currently, gross margins on open systems are lower than gross margins on propri- etary systems. Concurrent's operating income would be adversely affected by such a shift unless total net sales increase, the gross margins on its open systems improve and/or total operating expenses are reduced. Servicing Concurrent's large installed base, particularly its proprietary systems, is an important element in Concurrent's business strategy and generates significant revenue and cash flow to Concurrent. The shift in emphasis to open systems may also have an adverse impact on maintenance revenues. Generally, open systems require less maintenance and can, in many cases, be serviced by the customers themselves or by third party providers. For Concurrent, the shift in emphasis, together with declining systems sales, resulted in the decline of service revenue from $87.6 million for the year ended June 30, 1993 to $68.1 million for the year ended June 30, 1995, respectively. For the nine months ended March 31, 1996, Concurrent's service revenue was $41.4 million compared to $51.8 million in the prior year period. There can be no assurance that the decline in service revenue will not continue. Should such decline continue, Concurrent's operating income would be adversely affected by such a decline unless non-service revenues increase and/or total operating expenses are reduced. PRODUCT OBSOLESCENCE; SIGNIFICANT RESEARCH AND DEVELOPMENT EXPENDITURES The information technology industry is characterized by rapid advances in technology and demand for more cost effective "solutions." The technologies incorporated by Concurrent into its products and future products are in a continuous state of development and tend to be surpassed by new developments within 18-24 months of initial commercial use. Continued rapid advances in technology will further accelerate the technological obsoles- cence of these products as well as those of Concurrent's competi- tors, which may affect Concurrent's financial performance, results of operations and financial condition. Concurrent's success will depend, to a significant extent, upon the ability to enhance existing products, to integrate the best technologies of Concurrent and CyberGuard and to introduce new products and features in a timely manner to meet changing customer require- ments. It will also be dependent on the success of strategic technological alliances. In order to accomplish these objec- tives, Concurrent must maintain certain levels of investment in research and development and effectively use this investment. Concurrent must obtain and incorporate new hardware, software, communications and peripheral technologies that are primarily developed by others. There can be no assurance that the new product development activities will be successful, that new technologies will be available to Concurrent, that it will be able to deliver commercial products in a timely manner or that its products will achieve market acceptance. The business of Concurrent will be adversely affected if it, its strategic partners, or its suppliers incur delays in developing new prod- ucts or enhancements, or if such products or enhancements do not gain market acceptance because of competing technology. In addition, some new product introductions are intended to replace existing products. Although reasonable commercial efforts will be made to monitor and manage new product introductions, there can be no assurance that a new product introduction will not result in a material amount of obsolete inventory. Consequently, there may be a material adverse effect on liquidity of Concurrent in the event there is significant inventory that Concurrent is unable to dispose of in a reasonable time frame at an aggregate value approximately equal to its aggregate book value. There can be no assurance that new product introductions will be executed without a material adverse effect on the financial performance, results of operations or the financial condition of Concurrent. The costs of developing future products in the real-time comput- ing and multimedia markets is expected to be significant. While Concurrent's real-time computing sectors are well developed and have an extensive operational history, its multimedia sector is in the relatively early stages of market development and is likely to require extensive development, sales and marketing expense before it may be in a position to contribute significant revenue or cash flow. There can be no assurance as to the cost of funding future products in either product sector or on the ability of these product sectors to contribute to the revenues or cash flows of Concurrent. NEED TO ESTABLISH ADDITIONAL MARKETING RELATIONSHIPS A significant business strategy of Concurrent is to enter into strategic marketing alliances or other similar collaborative relationships. There can be no assurance that existing or contemplated collaborative relationships will be commercially successful, that Concurrent will be able to negotiate additional collaborative relationships, that such additional collaborations will be available to Concurrent on acceptable terms or that any such relationships, if established, will be commercially success- ful. The potential increased revenues from such relationships may be reduced by requirements to provide volume price discounts and other allowances, and potential significant costs incurred in customizing products. In addition, there can be no assurance that parties with whom collaborative relationships are estab- lished will not pursue alternative technologies or develop alternative products in addition to or in lieu of Concurrent's products, either on their own or in collaboration with others, including Concurrent's competitors. Such alternative technolo- gies or products, if developed, may be in direct competition with Concurrent's technologies or products and may significantly erode the benefits of such strategic marketing alliances or collabora- tive relationships. LIMITED PROTECTION OF INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS; RISK OF LITIGATION; RELIANCE ON LICENSED TECHNOLOGY Concurrent relies on patent, trademark, copyright and trade secret laws, employee and third-party non-disclosure agreements and other methods to protect its rights. Concurrent holds patents and may apply for patents which cover certain aspects of its technology. There can be no assurance that any pending or future patent applications will be granted or that any current or future patents will not be challenged, invalidated or circumvent- ed or that the rights granted thereunder will provide competitive advantages to Concurrent. There can be no assurance that Concur- rent s trade secrets or non-disclosure agreements will provide meaningful protection of its proprietary information. Further- more, there can be no assurance that others will not independent- ly develop similar technologies or duplicate any technology developed by Concurrent or that the technology will not infringe upon patents or other rights owned by others. Further, Concur- rent may be subject to risk as it enters into transactions in countries where intellectual property laws are not well developed or are poorly enforced. Legal protections of Concurrent's rights may be ineffective in such countries, and technology developed in such countries may not be protectable in jurisdictions where protection is ordinarily available. Concurrent s inability to maintain a competitive advantage based on proprietary rights would have a material adverse effect on its financial perfor- mance, results of operations and financial condition. As the number of real-time computing products in the indus- try increases and the functionality of these products further overlaps, software developers and publishers may increasingly become subject to infringement claims. There can be no assurance that third parties will not assert infringement claims against Concurrent in the future with respect to current or future products. There has been substantial litigation regarding patent, copyright, trademark and other intellectual property rights involving computer companies generally. Concurrent has been separately notified by IBM and BTG (British Technology Group), that each believes that certain of Concurrent s technolo- gy may infringe on certain patents held by their respective companies. These and any claims or litigation, with or without merit, could be costly and could result in a diversion of manage- ment s attention, which could have a material adverse effect on Concurrent's financial performance, results of operations and financial condition. Adverse determinations in such claims or litigation could also have a material adverse effect on Concurrent's financial performance, results of operations and financial condition. From time to time, other companies and individuals assert exclusive patent, copyright, trademark and other intellectual property rights to technologies or marks that are important to the computer industry or Concurrent's business. Concurrent evaluates each claim relating to its products and, if appropri- ate, seeks a license to use the protected technology. The licensing agreements generally do not protect Concurrent from trade secret, copyright or other violations by Concurrent or its suppliers in developing or selling these products. There can be no assurance, however, that Concurrent will be able to obtain licenses to intellectual property of third parties on commercial- ly reasonable terms, if at all. In addition, Concurrent could be at a disadvantage if its competitors obtain licenses for protect- ed technologies with more favorable terms than does Concurrent. If Concurrent or its suppliers are unable to license protected technology used in its products, Concurrent could be prohibited from marketing those products or may have to market products without desirable features. Concurrent could also incur substan- tial costs to redesign its products or to defend any legal action taken against it. If Concurrent's products should be found to infringe protected technology, it could be enjoined from further infringement and required to pay damages to the infringed party. RELIANCE ON GOVERNMENT BUSINESS Concurrent derives a significant portion of its revenues from the supply of systems under government contracts. For its fiscal year ended June 30, 1995, approximately $39.2 million of Concurrent's revenues were directly or indirectly related to agencies of the U.S. Government. This amount represented approx- imately 28% of Concurrent's worldwide revenues for fiscal year 1995, compared to 31% and 29% for its 1994 and 1993 fiscal years, respectively. For the nine months ended March 31, 1996, approxi- mately $14 million (18%) of Concurrent s revenues were directly or indirectly related to agencies of the U.S. Government. Concurrent's revenues related to sales to the U.S. Government are derived from various federal agencies, no one of which accounted for more than 5% of total revenues (e.g., several agencies participate under the NEXRAD program). Sales to Unisys Corp., as prime contractor, under the NEXRAD program contributed approxi- mately $17.5 million, $23 million and $35 million in revenues for fiscal years 1995, 1994 and 1993, respectively. The program is largely completed and no significant revenue is expected for future periods. Government business is, in general, subject to special risks, such as delays in funding, termination of con- tracts or subcontracts for convenience of the government or for default by the contractor, reduction or modification of contracts or subcontracts, failure to exercise options, changes in govern- mental policies and the imposition of budgetary constraints. A loss of government contract revenues could have a material adverse effect on the financial performance, results of opera- tions and financial condition of Concurrent. DEPENDENCE ON INTERNATIONAL OPERATIONS The financial results of Concurrent are increasingly depen- dent on its international operations. Approximately 46% of total revenues for its fiscal year 1995 were derived from inter- national operations. For the nine months ended March 31, 1996, approximately 51% of total revenues were derived from interna- tional operations. Concurrent expects international operations to continue to account for a significant percentage of total revenues. Certain risks are inherent in international opera- tions, including exposure to currency fluctuations, the imposi- tion of government controls, export license requirements, re- strictions on the export of critical technology, political and economic instability, trade restrictions, changes in tariffs, taxes and freight rates, generally longer payment cycles, diffi- culties in staffing and managing international operations and general economic conditions. From time to time in the past, financial results of Concurrent have been affected both favorably and unfavorably by fluctuations in currency exchange rates. Future unfavorable fluctuations in currency exchange rates may have an adverse impact on the financial performance, results of operations and financial condition of Concurrent. Although international revenues continue to represent an increasing percentage of total revenues, accounts receivable from such international revenues are not included in the borrowing base under Concurrent's revolving credit facility. COMPETITION Concurrent operates in highly competitive environments driven by rapid technological innovation. Many of its competi- tors have greater financial and operating resources. In addi- tion, companies with greater resources that currently do not compete may enter into various of the company's target business- es. The success of Concurrent will depend in part upon the ability of its management to demonstrate to potential customers the performance and reliability of its products and services. There can be no assurance that management will be successful in these efforts. An increase in competition could result in, among other things, price reductions and loss of sales volume. Such competi- tion and any resulting reduction in aggregate revenues and/or gross margins could have a material adverse effect on the future financial performance, results of operations and financial condition of Concurrent. There can be no assurance that Concurrent's competitors will not develop real-time products that may be more effective than Concurrent's current or future prod- ucts or that Concurrent's technologies and products will not be rendered obsolete by such developments. LIMITED SOURCES OF SUPPLY In limited cases, Concurrent purchases components from a single supplier to obtain the required technology and the most favorable price and delivery terms. Concurrent estimates that a lead time of up to 16-24 weeks may be necessary to switch to an alternative supplier of certain custom application specific integrated circuits ("ASICS") and printed circuit assemblies. A change in the supplier of these components without the appropri- ate lead time could result in a material delay in shipments by Concurrent of certain products and possibly, a material adverse effect on the financial performance, results of operations and financial condition of Concurrent. Concurrent purchases components, including customized components such as certain computer peripheral equipment incorpo- rated into NightHawk computers, from a single supplier to obtain the required technology and the most favorable price and delivery terms. This single supplier will continue to be relied upon by Concurrent. In the manufacture of the current generation 6000 series of NightHawk computers, Concurrent depends on the avail- ability of Power PC chips provided by both IBM and Motorola. In addition, the manufacturing process requires a high volume of quality components that are procured from third-party suppliers. Reliance on suppliers, as well as industry supply condi- tions, generally involve several risks, including the possibility of defective parts, a shortage of components, increase in compo- nent costs, and reduced control over delivery schedules, any or all of which could adversely affect Concurrent's respective financial results. Where alternative sources are available, qualification of the alternative suppliers and establishment of reliable supplies of components from such sources may result in delays. Problems with supplier performance or delays in delivery of components may cause a delay in shipments of various products. Since revenue is recognized typically upon shipment, any delay in shipment may also result in a delay in revenue recognition, possibly outside the fiscal period originally planned, and, as a result, may adversely affect financial results for that particu- lar period. POTENTIAL NEED TO EXPAND INFRASTRUCTURE If Concurrent experiences rapid growth, of which there can be no assurance, it will need to continue to improve and expand its infrastructure. There can be no assurance that Concurrent will be able to manage expansion of its infrastructure to support future growth effectively, if required. Concurrent expects to transition its management information systems to more fully integrate them on an enterprise wide basis, to reduce redundancy and to incorporate enhanced functionality. There can be no assurance that this management information system transition can be accomplished on a timely basis or without disruptions of Concurrent's operations, or management information functions, which could have a material adverse effect on Concurrent's financial performance, results of operations and financial condition. DEPENDENCE ON KEY EMPLOYEES As a high technology company in a highly competitive indus- try, the success of Concurrent depends in part on its ability to attract and retain highly skilled technical, managerial, sales and marketing employees. Competition for these key employees is intense. The uncertainty as to which employees will remain as part of Concurrent and the locations of various functions in connection with the integration of the CyberGuard real-time business as well as other factors beyond Concurrent's control may lead certain employees to choose alternative employment. Al- though Concurrent is not dependent on any one employee, the loss of a number of key employees in significant positions and the inability to attract and retain qualified replacement employees in a timely manner could adversely affect the financial perfor- mance, results of operations and financial condition of Concur- rent. DIVIDEND POLICY It is currently contemplated that Concurrent will not pay cash dividends on the Common Stock in the immediately foreseeable future. Concurrent's dividend policy will be reviewed by its Board of Directors at such future time as may be appropriate in light of relevant factors existing at such times. CERTAIN BARRIERS TO CHANGES OF CONTROL; EFFECTS OF CHANGES OF CONTROL Rights associated with Common Stock may have the effect of discouraging a third party from making an acquisition proposal to Concurrent, and may thereby inhibit a change in control of the company in circumstances that could give the holders of Common Stock the opportunity to realize a premium over the then prevail- ing market price. Such provisions may also adversely affect the market price of Common Stock. In addition, loans under certain credit agreements may be accelerated at the option of the lenders in the event of a "change in control" of Concurrent (as that term is defined in the credit agreements governing such loans). The charter and by-laws of Concurrent and the Delaware General Corporation Law (the "DGCL") contain certain provisions that may have the effect of inhibiting a non-negotiated merger or other business combination. The Board of Directors of Concurrent has the authority to issue shares of preferred stock and to determine the designa- tions, preferences, and rights and the qualifications or restric- tions of those shares without any further vote or action by the stockholders. The rights of the holders of Common Stock will be subject to, and may be materially adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock, while providing desirable flexibility in connection with possible acquisitions and other corporate actions, could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, as the case may be. With the excep- tion of the Convertible Preferred Stock issued to CyberGuard, Concurrent has no present plan to issue shares of preferred stock. LIMITATIONS ON THE USE OF CERTAIN TAX LOSS CARRYFORWARDS Concurrent has substantial tax loss carryforwards available to offset future taxable income. Under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), the use of Concurrent's tax loss carryforwards could be limited in the event of an "ownership change" involving more than 50% of Concurrent's stock, including ownership changes arising by reason of stock issuances by Concurrent. Although Concurrent has issued a significant amount of stock in connection with the Acquisition, the "ownership shift" resulting from such issuance, when coupled with other ownership shifts involving certain 5% stockholders of Concurrent since July 21, 1993, is not sufficient to constitute a 50% ownership change within the meaning of Section 382 of the Code. Accordingly, the Acquisition has not impaired the avail- ability of these tax loss carryforwards to Concurrent. It is possible, however, that future ownership shifts involving the stock of Concurrent could limit its ability to use these tax loss carryforwards, including changes which occur by reason of addi- tional stock issuances by Concurrent or acquisitions or disposi- tions of Common Stock by persons who are or become owners of 5% or more of Common Stock. ANTI-TAKEOVER PROVISIONS Concurrent has adopted and implemented a Rights Agreement that will expire by its terms on August 14, 2002 pursuant to which each share of Common Stock has attached to it a right to purchase a share of preferred stock under certain circumstances. This agreement is intended to encourage a person interested in acquiring Concurrent to negotiate with, and to obtain the approv- al of, the Board of Directors in connection with such a transac- tion. However, this agreement may discourage a future acquisi- tion of Concurrent, including an acquisition in which stockhold- ers might otherwise receive a premium for their shares. As a result, stockholders who might desire to participate in such a transaction may not have the opportunity to do so. CERTAIN ARRANGEMENTS WITH BERENSON MINELLA In June 1995, Concurrent engaged Berenson Minella as its financial advisor to assist senior management in restructuring and/or refinancing Concurrent's bank debt and to explore various options with respect to raising capital and combination transac- tions with other parties As part of such engagement, Berenson Minella acted as Concurrent's financial advisor in connection with the Acquisition. Since June 1995, Berenson Minella has received fees total- ling $280,000 for its financial advisory services to Concurrent. In connection with the Acquisition, Concurrent agreed to pay Berenson Minella a transaction fee of $971,690 equal to 1.5% of the average aggregate value of the outstanding Common Stock (as of the close of business) for the five business days prior to the date of consummation of the Acquisition (the "Closing Price"). Of such fee, $300,000 was paid at the closing of the Acquisition (offset by previously paid retainer fees as described in the preceding sentence), and the remainder of $671,690 (the "Remain- der Amount") is payable by delivery to Berenson Minella of the proceeds from the sale by Concurrent at the direction of Berenson Minella of the 365,546 shares of Common Stock offered hereby; provided, however, that if the aggregate net proceeds from the sale of the shares are less than the Remainder Amount, Concurrent has agreed to pay Berenson Minella the amount of the difference in cash on or before the twenty-fifth business day following the closing of the Acquisition or, if Berenson Minella so elects, to deliver such unsold shares to Berenson Minella, which shares would be unregistered and without registration rights. Concur- rent will sell up to 365,546 of the shares of Common Stock offered hereby only as directed by Berenson Minella and will not be entitled to any of the proceeds therefrom. See "Plan of Distribution." Pursuant to the terms of the engagement, the number of shares was determined by using a price per share equal to the product of (i) the Closing Price and (ii) .875. Concur- rent has also agreed to reimburse Berenson Minella for its reasonable out of pocket expenses (including the fees and expens- es of its counsel) and to indemnify Berenson Minella and certain related persons against certain liabilities and expenses in connection with its services as financial advisor and the sale of the 365,546 shares of Common Stock in connection with the compen- sation therefor, including liabilities under federal securities laws. PLAN OF DISTRIBUTION The distribution of the shares of Common Stock is not subject to any underwriting agreement. Any or all of the shares of Common Stock offered hereby may be offered and sold to purchasers directly by or on behalf of Concurrent from time to time in the over-the-counter market, in privately negotiated transactions, or otherwise at prices prevailing in such market or as may be negotiated at the time of the sale. With respect to 365,546 of the shares of Common Stock offered hereby, Concurrent has, at the direction of Berenson Minella, designated Bear, Stearns & Co., Inc. ("Bear Stearns") as the selling agent. An account has been established at Bear Stearns for the benefit of Berenson Minella. Concurrent, upon notification by Berenson Minella, will direct the sale of the 365,546 shares by Bear Stearns. To the extent that the aggregate net proceeds generated from the sale of the shares of Common Stock exceed the Remainder Amount, Berenson Minella will retain such excess proceeds in accordance with the terms of its fee arrangement with Concurrent. Bear Stearns will earn an agency fee of $.06 per share of Common Stock sold. Alternatively, Bear Stearns, which is a market-maker in the Common Stock, may act as principal in the purchase of such shares. Concurrent expects to sell the remaining shares of Common Stock from time to time through selling agents or brokers to be designated from time to time. To the extent that the aggregate net proceeds from the sale of shares of Common Stock are insufficient to fund the obliga- tions to Mr. Stihl or the executive officers, Concurrent may use cash or register additional shares of Common Stock for sale pursuant to a new registration statement. Under certain circumstances, agents that participate in the distribution of shares of the Common Stock may be deemed to be underwriters, and any profit on the sale of the shares of the Common Stock by them and any commissions received by them may be deemed to be underwriting discounts and commissions under the Securities Act. The agents may also engage in other transactions with, and perform services for, Concurrent. At the time a particular offer of the shares of Common Stock is made, to the extent required, a supplement to this Prospectus will be distrib- uted which will set forth the aggregate number of shares of Common Stock being offered, and the terms of the offering, the name or names of any agents, any underwriting discounts or commissions and other items constituting compensation from, and the resulting net proceeds to, Concurrent, any discounts, commis- sions or concessions allowed or reallowed or paid to dealers and, if applicable, the purchase price to be paid by any underwriter for shares of Common Stock purchased from Concurrent. In order to comply with the securities laws of certain states, sales of shares of the Common Stock to the public in such states may be made only through broker-dealers who are registered or licensed in such states. Sales of shares of the Common Stock must also be made by Concurrent in compliance with other applica- ble state securities laws and regulations. In connection with Berenson Minella's engagement as finan- cial advisor to Concurrent, Concurrent has agreed to indemnify Berenson Minella and each other person, if any, who controls Berenson Minella within the meaning of the Securities Act, and its respective directors, officers, partners, agents and affili- ates, against certain liabilities which may be incurred in connection with the sale of shares of Common Stock under this Prospectus. The terms of the indemnification agreement also provide for rights of contribution if such indemnification is not available. LEGAL OPINIONS The validity of the Common Stock offered hereby will be passed on for Concurrent by Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York 10022. EXPERTS Concurrent Computer Corporation's consolidated balance sheets as of June 30, 1995 and 1994 and the consolidated state- ment of operations, shareholders' equity (deficiency ) and cash flow for each of the three years in the period ended June 30, 1995 incorporated by reference in this Prospectus have been incorporated herein in reliance on the report of Coopers & Lybrand L.L.P., independent accountants, given on the authority of that firm as experts in accounting and auditing. -----END PRIVACY-ENHANCED MESSAGE-----