-----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, DRly9tOsrHn2pCANFUKioZyYzdiUDIAxhOsfe4t11jV0apiFh0UO8NBWPGUHUJ/E C0wpoCji8dz1spHDDLKUew== 0001015402-01-501854.txt : 20010717 0001015402-01-501854.hdr.sgml : 20010717 ACCESSION NUMBER: 0001015402-01-501854 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20010716 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: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-13150 FILM NUMBER: 1682056 BUSINESS ADDRESS: STREET 1: 4375 RIVER GREEN PARKWAY CITY: DULUTH STATE: GA ZIP: 30097 BUSINESS PHONE: 6782584000 MAIL ADDRESS: STREET 1: 4375 RIVER GREEN PARKWAY CITY: DULUTH STATE: GA ZIP: 30097 FORMER COMPANY: FORMER CONFORMED NAME: MASSACHUSETTS COMPUTER CORP DATE OF NAME CHANGE: 19881018 10-Q/A 1 doc1.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM 10-Q/A (Mark One) X Quarterly Report Pursuant to Section 13 or 15(d) of --- the Securities Exchange Act of 1934 For the Quarter Ended December 31, 1999 or Transition Report Pursuant to Section 13 or 15(d) of --- the Securities Exchange Act of 1934 For the Transition Period from ____ to ____ Commission File No. 0-13150 _____________ CONCURRENT COMPUTER CORPORATION Delaware 04-2735766 (State of Incorporation) (I.R.S. Employer Identification No.) 4375 River Green Parkway, Duluth, GA 30096 Telephone: (678) 258-4000 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Number of shares of the Registrant's Common Stock, par value $0.01 per share, outstanding as of February 10, 2000 was 53,450,954. PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, 1999 1998 1999 1998 ------------------- ------------------- (UNAUDITED) (UNAUDITED) Restated Restated (see Note 11) (see Note 11) Net sales: Computer systems. . . . . . . . . . . . . . . . . $ 9,458 $ 9,068 $ 17,062 $15,796 Service and other . . . . . . . . . . . . . . . . 7,464 10,113 15,544 20,259 --------- -------- --------- -------- Total . . . . . . . . . . . . . . . . . . . . . 16,922 19,181 32,606 36,055 Cost of sales: Computer systems. . . . . . . . . . . . . . . . . 5,043 4,244 8,833 7,258 Service and other . . . . . . . . . . . . . . . . 4,126 5,103 8,380 10,214 --------- -------- --------- -------- Total . . . . . . . . . . . . . . . . . . . . . 9,169 9,347 17,213 17,472 --------- -------- --------- -------- Gross margin. . . . . . . . . . . . . . . . . . . . 7,753 9,834 15,393 18,583 Operating expenses: Selling, general and administrative . . . . . . . 8,004 6,750 14,160 12,583 Research and development. . . . . . . . . . . . . 2,409 2,545 4,631 5,249 In-process computer software technology . . . . . 14,000 - 14,000 - Relocation and restructuring. . . . . . . . . . . - - 2,367 - --------- -------- --------- -------- Total operating expenses. . . . . . . . . . . . . . 24,413 9,295 35,158 17,832 --------- -------- --------- -------- Operating income (loss) . . . . . . . . . . . . . . (16,660) 539 (19,765) 751 Interest income (expense) - net . . . . . . . . . . 73 (30) 83 (56) Other non-recurring income (expense). . . . . . . . - 341 761 (88) Other income (expense) - net. . . . . . . . . . . . (38) 151 (105) (32) --------- -------- --------- -------- Income (loss) before provision for income taxes . . (16,625) 1,001 (19,026) 575 Provision for income taxes. . . . . . . . . . . . . 150 86 300 86 --------- -------- --------- -------- Net income (loss) available to common shareholders. $(16,775) $ 915 $(19,326) $ 489 ========= ======== ========= ======== Basic and diluted net income (loss) per share . . . $ (0.33) $ 0.02 $ (0.38) $ 0.01 ========= ======== ========= ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. -1-
CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) DEC. 31, JUNE 30, 1999 1999 --------- --------- ASSETS (UNAUDITED) Restated (see Note 11) Current assets: Cash and cash equivalents. . . . . . . . . . . . . . . . . . $ 7,952 $ 6,872 Accounts receivable - net. . . . . . . . . . . . . . . . . . 14,769 14,879 Inventories. . . . . . . . . . . . . . . . . . . . . . . . . 4,383 4,641 Prepaid expenses and other current assets. . . . . . . . . . 706 1,053 --------- --------- Total current assets . . . . . . . . . . . . . . . . . . . 27,810 27,445 Property, plant and equipment - net. . . . . . . . . . . . . . 11,474 10,936 Facilities held for sale . . . . . . . . . . . . . . . . . . . - 1,223 Purchased developed computer software. . . . . . . . . . . . . 1,868 - Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,601 - Other long-term assets . . . . . . . . . . . . . . . . . . . . 1,898 965 --------- --------- Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 55,651 $ 40,569 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses. . . . . . . . . . . . $ 9,327 $ 8,973 Deferred revenue . . . . . . . . . . . . . . . . . . . . . . 2,536 3,778 --------- --------- Total current liabilities. . . . . . . . . . . . . . . . . 11,863 12,751 Other long-term liabilities. . . . . . . . . . . . . . . . . . 1,827 1,807 --------- --------- Total liabilities. . . . . . . . . . . . . . . . . . . . . 13,690 14,558 --------- --------- Stockholders' equity: Common stock . . . . . . . . . . . . . . . . . . . . . . . . 532 485 Capital in excess of par value . . . . . . . . . . . . . . . 134,038 98,916 Accumulated deficit after eliminating accumulated deficit of $81,826 at December 31, 1991, date of quasi-reorganization (92,182) (72,856) Treasury stock . . . . . . . . . . . . . . . . . . . . . . . (58) (58) Cumulative translation adjustment. . . . . . . . . . . . . . (369) (476) --------- --------- Total stockholders' equity . . . . . . . . . . . . . . . . 41,961 26,011 --------- --------- Total liabilities and stockholders' equity . . . . . . . . . . $ 55,651 $ 40,569 ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. -2-
CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) SIX MONTHS ENDED DECEMBER 31, 1999 1998 --------- --------- Restated (UNAUDITED) (see Note 11) OPERATING ACTIVITIES: Net income (loss) . . . . . . . . . . . . . . . . . . . . $(19,326) $ 489 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Write-off of in-process software technology . . . . . . 14,000 - Loss on dissolution of subsidiary . . . . . . . . . . . - 429 Depreciation, amortization and other. . . . . . . . . . 2,901 2,551 Other non-cash expenses . . . . . . . . . . . . . . . . 647 12 Changes in operating assets and liabilities: Accounts receivable . . . . . . . . . . . . . . . . . 186 1,592 Inventories . . . . . . . . . . . . . . . . . . . . . 8 75 Prepaid expenses and other current assets . . . . . . (179) (433) Other long-term assets. . . . . . . . . . . . . . . . (569) 98 Accounts payable and accrued expenses . . . . . . . . 220 (769) Deferred revenue. . . . . . . . . . . . . . . . . . . (1,242) (2,455) Other long-term liabilities . . . . . . . . . . . . . 20 197 --------- --------- Total adjustments to net income (loss). . . . . . . . . . 15,992 1,297 --------- --------- Net cash provided by (used in) operating activities . . . . (3,334) 1,786 --------- --------- INVESTING ACTIVITIES: Net additions to property, plant and equipment. . . . . . (2,168) (2,238) Proceeds from sale of facility. . . . . . . . . . . . . . 1,223 - Other . . . . . . . . . . . . . . . . . . . . . . . . . . 76 - --------- --------- Net cash used in investing activities . . . . . . . . . . . (869) (2,238) --------- --------- FINANCING ACTIVITIES: Payments of notes payable . . . . . . . . . . . . . . . . - (5) Proceeds from borrowings under revolving credit facility. - 28,054 Repayments of borrowings under revolving credit facility. - (28,255) Proceeds from sale and issuance of common stock . . . . . 5,352 390 --------- --------- Net cash provided by financing activities . . . . . . . . . 5,352 184 --------- --------- Effect of exchange rates on cash and cash equivalents . . . (69) 312 --------- --------- Increase in cash and cash equivalents . . . . . . . . . . . 1,080 44 Cash and cash equivalents at beginning of period. . . . . . 6,872 5,733 --------- --------- Cash and cash equivalents at end of period. . . . . . . . . $ 7,952 $ 5,777 ========= ========= Cash paid during the period for: Interest. . . . . . . . . . . . . . . . . . . . . . . . $ 113 $ 148 ========= ========= Income taxes (net of refunds) . . . . . . . . . . . . . $ 70 $ 318 ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. -3- CONCURRENT COMPUTER CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying condensed consolidated financial statements of Concurrent Computer Corporation ("Concurrent" or the "Company") have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The foregoing financial information is unaudited but reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods presented. All such adjustments are of a normal recurring nature. While the Company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes included in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission. The results of interim periods are not necessarily indicative of the results to be expected for the full fiscal year. 2. BASIC AND DILUTED LOSS PER SHARE Basic income (loss) per share is computed by dividing income (loss) by the weighted average number of common shares outstanding during each year. Diluted income (loss) per share is computed by dividing income (loss) by the weighted average number of shares including potential common shares issuable. Under the treasury stock method, incremental shares representing the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued are included in the computation. The number of shares used in computing basic and diluted loss per share for the three months ended December 31, 1999 and the six months ended December 31, 1999 was 51,560,000 and 50,262,000, respectively. Because of the losses for these periods, the potential common shares issuable are anti-dilutive and are not considered in the diluted EPS calculations. The number of shares used in computing basic and diluted EPS for the three months ended December 31, 1998 was 47,852,000 and 49,214,000, respectively. The number of shares used in computing basic and diluted EPS for the six months ended December 31,1998 was 47,763,000 and 49,220,000, respectively. -4- 3. INVENTORIES Inventories are valued at the lower of cost or market, with cost being determined by using the first-in, first-out ("FIFO") method. The components of inventories are as follows: (DOLLARS IN THOUSANDS)
DEC. 31, JUNE 30, 1999 1999 --------- --------- Raw materials . $ 3,185 $ 3,103 Work-in-process 891 1,175 Finished goods. 307 363 --------- --------- $ 4,383 $ 4,641 ========= =========
4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES The components of accounts payable and accrued expenses are as follows: (DOLLARS IN THOUSANDS)
DEC. 31, JUNE 30, 1999 1999 --------- --------- Accounts payable, trade . . . $ 3,020 $ 2,941 Accrued payroll, vacation and other employee expenses . . 3,599 4,314 Restructuring reserve . . . . 667 90 Other accrued expenses. . . . 2,041 1,628 --------- --------- $ 9,327 $ 8,973 ========= =========
5. COMPREHENSIVE INCOME Effective July 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("FAS No. 130"). FAS No. 130 requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. The Company's total comprehensive income is as follows:
(DOLLARS IN THOUSANDS) THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, 1999 1998 1999 1998 --------- ------ --------- ------ Net income (loss) . . . . . . . . . . . . . . $(16,775) $ 915 $(19,326) $ 489 Other comprehensive income (loss): Foreign currency translation gains (losses) (305) 247 107 1,067 --------- ------ --------- ------ Total comprehensive income (loss) . . . . . . $(17,080) $1,162 $(19,219) $1,556 ========= ====== ========= ======
-5- 6. SEGMENT INFORMATION The Company operates its business in two reportable segments: real-time and video-on-demand ("VOD"). Its real-time segment is a leading provider of high-performance, real-time computer systems, solutions and software for commercial and government markets focusing on strategic market areas that include hardware-in-the-loop and man-in-the-loop simulation, data acquisition, industrial systems, and software and embedded applications. Its VOD segment is a leading supplier of digital video server systems to a wide range of industries serving a variety of markets, including the broadband/cable, hospitality, intranet/distance learning, and other related markets. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in the consolidated financial statements and related footnotes for the fiscal year ended June 30, 1999 included in the Company's Annual Report on Form 10-K. Shared expenses are primarily allocated based 50 percent on revenues and 50 percent on headcount. There were no material intersegment sales or transfers. The following summarizes the operating income (expense) by segment for the quarter ended December 31, 1999:
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, 1999 DECEMBER 31, 1999 ---------- --------- --------- ---------- --------- --------- REAL-TIME VOD TOTAL REAL-TIME VOD TOTAL ---------- --------- --------- ---------- --------- --------- Revenue. . . . . . . . . . . . . . . $ 14,802 $ 2,120 $ 16,922 $ 29,397 $ 3,209 $ 32,606 Cost of sales. . . . . . . . . . . . 7,476 1,693 9,169 14,775 2,438 17,213 ---------- --------- --------- ---------- --------- --------- Gross margin . . . . . . . . . . . . 7,326 427 7,753 14,622 771 15,393 Selling, general and administrative. 4,670 3,334 8,004 8,640 5,520 14,160 Research and development . . . . . . 962 1,447 2,409 2,175 2,456 4,631 In-process computer software technology . . . . . . - 14,000 14,000 - 14,000 14,000 Relocation and restructuring . . . . - - - 1,208 1,159 2,367 ---------- --------- --------- ---------- --------- --------- Total operating expenses . . . . . . 5,632 18,781 24,413 12,023 23,135 35,158 ---------- --------- --------- ---------- --------- --------- Operating income (expense) . . . . . $ 1,694 $(18,354) $(16,660) $ 2,599 $(22,364) $(19,765) ========== ========= ========= ========== ========= =========
It is impracticable to attain comparable information for the quarter and six months ended December 31, 1998. 7. RESTRUCTURING AND RELOCATION In August 1999, the Company relocated its Corporate Headquarters and its VOD Division to Duluth, Georgia. In connection with this move, the Company incurred employee relocation costs of $769,000, which is recorded as an operating expense in the condensed consolidated statement of operations for the quarter ended September 30, 1999. In addition to the relocation discussed above, management decided in the first quarter to "right-size" the Real-Time Division to bring its expenses in line with its anticipated revenues. In connection with these events, the Company recorded a $1.6 million restructuring provision as on operating expense in quarter ended September 30, 1999. This expense represents workforce reductions of approximately 38 employees in all areas of the Company. Cash expenditures of $0.4 million and $0.5 million were made against this provision in the first and second quarters, respectively, leaving a $0.7 million restructuring accrual at December 31, 1999. -6- 8. DISSOLUTION OF SUBSIDIARY During the quarter ended September 30, 1998, the Company dissolved its subsidiary Concurrent Computer Corporation France (the "French Branch"). In connection with the dissolution, all assets and liabilities of the French Branch were assumed by the Company. A loss of $429,000, representing the write off of the French Branch's cumulative translation adjustment, was recorded as other non-recurring charges in the condensed consolidated statement of operations. The Company continues to operate a French Subsidiary, Concurrent Computer Corporation S.A. 9. SALE OF SUBSIDIARY On September 8, 1999, the Company entered into an agreement to sell the stock of Concurrent Vibrations, a wholly owned subsidiary of Concurrent Computer Corporation S.A., to Data Physics, Inc. The transaction, which had an effective date of August 31, 1999, resulted in a gain of $761,000. This gain is recorded in other non-recurring items in the condensed consolidated statement of operations in the quarter ended September 30, 1999. 10. ACQUISITION OF VIVID TECHNOLOGY On October 28, 1999, the Company acquired Vivid Technology ("Vivid") for total consideration of $29.4 million, consisting of 2,233,689 shares of common stock valued at $24.7 million, $0.5 million of acquisition costs, and 378,983 shares reserved for future issuance upon exercise of stock options with a value of $4.2 million. The acquisition was treated as a purchase for accounting purposes, and, accordingly, the assets and liabilities were recorded based on their fair values at the date of the acquisition. The purchase price allocation and the respective useful lives of the intangible assets are as follows:
Allocation Life Working Capital. . . . . . . . . . . . . . . . . $ 72 Fixed Assets . . . . . . . . . . . . . . . . . . 257 Other Long-Term Assets . . . . . . . . . . . . . 13 Developed Completed Computer Software Technology 1,900 10 yrs Employee Workforce . . . . . . . . . . . . . . . 400 3 yrs Goodwill . . . . . . . . . . . . . . . . . . . . 12,808 10 yrs In-Process Computer Software Technology. . . . . 14,000
Amortization of intangible assets is on a straight line basis over the assets' estimated useful life. Vivid's operations are included in the condensed consolidated statements of operations from the date of acquisition. At the acquisition date, Vivid had one product under development that had not demonstrated technological or commercial feasibility. This product was the Vivid interactive video-on-demand integrated system. The in-process technology has no alternative use in the event that the proposed product does not prove to be feasible. This development effort falls within the definition of In-Process Research and Development ("IPR&D") contained in Statement of Financial Accounting Standards ("SFAS") No. 2 and was expensed in the second quarter as a one-time charge. Vivid's interactive video-on-demand system is specifically being designed to integrate with the most popular digital set-top boxes used by General Instruments Corporation. The system is also expected to be compatible with the digital set-top boxes used by other leading cable operators such as Philips, Panasonic, Sony, etc. Vivid's VOD server is based on a cluster of Microsoft Windows NT computers with proprietary hardware and software added to provide high video streaming capacity and fault tolerance. The Vivid VOD system is being designed to eventually provide VOD service including pause, rewind, and fast forward VCR-like functions. The system will also provide necessary back office support software for video content management, video selection graphical user interface, subscriber management, purchase management, billing interfaces, content provider account settlement and consumer marketing feedback. In addition, the Vivid VOD system is being designed to support other interactive applications such as on-line banking, home shopping, merchandising and on-demand/addressable advertising. -7- The in-process computer software technology was estimated to be 80% complete at the date of acquisition and was estimated to cost an additional $650,000 to complete the VOD system technology project in December of 2000. A variety of tasks are yet to be completed which are required in order for the technology to become commercially acceptable in the VOD marketplace including the following: - The Content Manager, which is used to load movies from studios, does not have the functionality necessary to create a royalty payment affidavit which is required for the cable operators to pay the required royalties to the movie studios. Also, the Content Manager, which has been implemented using a SQL data base, will need to be ported to other relational data bases such as Oracle to support high end data base applications. - The Resource Manager has been alpha tested; however, an advanced beta test has not been completed which would validate its ability to scale up to the required number of subscribers or connections in an actual commercial deployment. - The Subscriber Manager, which has been implemented using a SQL data base, will need to be ported to other relational data bases such as Oracle to support high end data base applications. - The Set top VOD application will need to be tested under advanced beta test conditions to ensure that the back channel key stroke system performance can fulfill operational requirements. - The Hub Server, or video pump, will need to be tested under full load in an operational environment to ensure stability over an extended period of time. The random conditions resulting from the in home use of tens of thousands of subscribers can only be simulated in an advanced beta test which has yet to be performed. The method used to allocate the purchase consideration to in-process research and development ("IPR&D") was the modified income approach. Under the income approach, fair value reflects the present value of the projected free cash flows that will be generated by the IPR&D project and that is attributable to the acquired technology, if successfully completed. The modified income approach takes the income approach, modified to include the following factors: - Analysis of the stage of completion of each project - Exclusion of value related to research and development yet-to-be completed as part of the on-going IPR&D projects; and - The contribution of existing products/technologies. The projected revenues used in the income approach are based upon the incremental revenues likely to be generated upon completion of the project and the beginning of commercial sales, as estimated by Company management. The projections assume that the product will be successful and the products' development and commercialization are as set forth by management. The discount rate used in this analysis is an after-tax rate of 28%. Consistent with the Company's policy for internally developed software, the Company determined the amounts to be allocated to IPR&D based on whether technological feasibility had been achieved and whether there was any alternative future use for the technology. As of the date of the acquisition, the Company concluded that the IPR&D had no alternative future use after taking into consideration the potential for usage of the software in different products, resale of the software and internal usage. -8- The following unaudited proforma information presents the results of operations of the Company as if the acquisition had taken place on July 1, 1998 and includes the one-time charge related to the write-off of the purchased IPR&D of $14 million:
Six Months Six Months Ended Ended Dec. 31, 1999 Dec. 31, 1998 --------------- --------------- Revenues . . . . . . . . . . . . . . . . . . . $ 32,960 $ 36,455 Net income (loss). . . . . . . . . . . . . . . (20,330) (14,682) Basic and Diluted Net Income (loss) Per Share. $ (0.39) $ (0.29) =============== ===============
11. Restatement Subsequent to the issuance of the Company's financial statements for the quarter ended December 31, 1999, management changed the measurement date used to value the shares issued in conjunction with the Company's acquisition of Vivid Technology in accordance with APB 16: Business Combinations. As a result, the financial statements as of December 31, 1999 and for the three and six month periods ended December 31, 1999 have been restated from the amounts previously reported. AS OF DECEMBER 31, 1999 AS PREVIOUSLY REPORTED AS RESTATED ------------- ------------- Goodwill, net $ 3,101 $ 12,601 Capital in excess of par 124,384 134,038 Accumulated deficit (92,028) (92,182) THREE MONTHS ENDED DECEMBER 31, 1999 AS PREVIOUSLY REPORTED AS RESTATED ------------- ------------- Selling, general and administrative expenses $ 7,850 $ 8,004 Operating loss (16,506) (16,660) Loss before income taxes (16,471) (16,625) Net loss (16,621) (16,775) Net loss per share basic and diluted $ (0.32) $ (0.33) SIX MONTHS ENDED DECEMBER 31,1999 AS PREVIOUSLY REPORTED AS RESTATED ------------- ------------- Selling, general and administrative expenses $ 14,006 $ 14,160 Operating loss (19,611) (19,765) Loss before income taxes (18,872) (19,026) Net loss (19,172) (19,326) Net loss per share basic and diluted $ (0.38) $ (0.38) -9- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -10- Subsequent to the issuance of the Company's financial statements for the quarter ended December 31, 1999, management changed the measurement date used to value the shares issued in conjunction with the Company's acquisition of Vivid Technology in accordance with APB 16: Business Combinations. As a result, the financial statements as of December 31, 1999 and for the three and six month periods ended December 31, 1999 have been restated from the amounts previously reported. The accompanying discussion and analysis gives effect to that restatement. SELECTED OPERATING DATA AS A PERCENTAGE OF NET SALES
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, 1999 1998 1999 1998 ------- ------ ------- ------ Net sales: Computer systems . . . . . . . . . . . . . . . 55.9% 47.3% 52.3% 43.8% Service and other. . . . . . . . . . . . . . . 44.1 52.7 47.7 56.2 ------- ------ ------- ------ Total. . . . . . . . . . . . . . . . . . . . 100.0 100.0 100.0 100.0 Cost of sales (% of respective sales category): Computer systems . . . . . . . . . . . . . . . 53.3 46.8 51.8 45.9 Service and other. . . . . . . . . . . . . . . 55.3 50.5 53.9 50.4 ------- ------ ------- ------ Total. . . . . . . . . . . . . . . . . . . . 54.2 48.7 52.8 48.5 ------- ------ ------- ------ Gross margin . . . . . . . . . . . . . . . . . . 45.8 51.3 47.2 51.5 Operating expenses: Selling, general and administrative. . . . . . 47.3 35.2 43.4 34.9 Research and development . . . . . . . . . . . 14.2 13.3 14.2 14.6 In process computer software technology. . . . 82.7 - 42.9 - Relocation and restructuring . . . . . . . . . - - 7.3 - ------- ------ ------- ------ Total operating expenses . . . . . . . . . . . . 144.3 48.5 107.8 49.5 ------- ------ ------- ------ Operating income (loss) (98.5) 2.8 (60.6) 2.1 Interest income (expense) - net. . . . . . . . . 0.4 (0.2) 0.3 (0.2) Other non-recurring income (expense) . . . . . . - 1.8 2.3 (0.2) Other income (expense) - net . . . . . . . . . . (0.2) 0.8 (0.3) (0.1) Income (loss) before provision for income taxes. (97.3) 5.2 (57.9) 1.6 Provision for income taxes . . . . . . . . . . . 0.9 0.4 0.9 0.2 ------- ------ ------- ------ Net income (loss). . . . . . . . . . . . . . . . (99.1)% 4.8% (59.3)% 1.4% ======= ====== ======= ======
RESULTS OF OPERATIONS THE QUARTER ENDED DECEMBER 31, 1999 COMPARED WITH THE QUARTER ENDED DECEMBER 31, 1998. Net product sales were $9.5 million for the quarter ended December 31, 1999 as compared with $9.1 million for the quarter ended December 31, 1998. This increase relates to sales of VOD product, which increased from $0.2 million in the quarter ended December 31, 1998 to $2.1 million in the current quarter. The increase in product sales reverses a trend of declining Real-Time product sales the Company has experienced for a number of years. The expansion of the VOD business, coupled with a renewed focus on real-time products in existing and new markets account for the improved results, despite declining sales of proprietary systems and the lower selling price of open systems as compared with proprietary products. Service revenues decreased from $10.1 million in the quarter ended December 31, 1998 to $7.5 million in the quarter ended December 31, 1999, continuing the decline experienced over the past years as customers move from proprietary systems to open systems which require less maintenance. Gross Margin decreased by $2.1 million to $7.8 million for the three months ended December 31, 1999 as compared to $9.8 million for the quarter ended December 31, 1998. The gross margin as a percentage of sales decreased from 51.3% in the quarter ended December 31, 1998 to 45.8% in the current quarter which is primarily due to the first large scale commercial deployment of a VOD system in the cable television industry during the current quarter. Operating Income (Loss) decreased $17.2 million to a loss of $16.7 million in the current quarter as compared with a profit of $0.5 million in the quarter ended December 31, 1998. This decrease is primarily due a $14.0 million write-off of in-process computer software technology in connection with the acquisition of Vivid Technology (see Note 10 to the financial statements) and the inclusion of Vivid Technology's operating expenses in the current quarter with only a nominal increase in revenue. Net Income (Loss) decreased $17.7 million from an income of $0.9 million in the quarter ended December 31, 1998 to a loss of $16.8 million in the current quarter. The decrease is primarily due to the decrease in operating income discussed above. -11- THE SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED WITH THE SIX MONTHS ENDED DECEMBER 31, 1998. Net product sales were $17.1 million for the six months ended December 31, 1999 as compared with $15.8 million for the six months ended December 31, 1998. This increase relates to sales of VOD product, which increased from $0.2 million in the six months ended December 31, 1998 to $3.2 million in the current six-month period. The increase in VOD product sales was partially offset by a decline in sales of real-time products of $1.7 million resulting from declining sales of proprietary systems and the lower selling price of open systems as compared with proprietary products. Service revenues decreased from $20.3 million in the six months ended December 31, 1998 to $15.5 million in the six months ended December 31, 1999, continuing the decline experienced over the past years as customers move from proprietary systems to open systems which require less maintenance. Gross Margin decreased by $3.2 million to $15.4 million for the six months ended December 31, 1999 as compared to $18.6 million for the six months ended December 31, 1998. The gross margin as a percentage of sales decreased from 51.5% in the six months ended December 31, 1998 to 47.2% in the current six-month period which is primarily due to the lower margin realized in the very early stages of the VOD business. Operating Income (Loss) decreased $20.6 million to a loss of $19.8 million in the current six-month period as compared with a profit of $0.8 million in the six months ended December 31, 1998. This decrease is primarily due to a $14.0 million write-off of in-process computer software technology in connection with the acquisition of Vivid Technology (see Note 10 to the financial statements), the inclusion of Vivid Technology's operating expenses in the current quarter, and $2.4 million of restructuring and relocation provision recognized in the quarter ended September 30, 1999 (see Note 8 to the financial statements). Net Income (Loss) decreased $19.8 million from an income of $0.5 million in the six months ended December 31, 1998 to a loss of $19.3 million in the current six-month period. The decrease is primarily due to the decrease in operating income discussed above. -12- LIQUIDITY AND CAPITAL RESOURCES The Company'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 the Company depends to a significant extent on (i) the actual versus anticipated decline in sales of proprietary systems and service maintenance revenue; (ii) revenue growth from video-on-demand systems; and (iii) ongoing cost control actions. Liquidity will also be affected by: (i) timing of shipments which predominately occur during the last month of the quarter; (ii) the percentage of sales derived from outside the United States where there are generally longer accounts receivable collection cycles and which receivables are not included in the Company'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 the Company's revolving credit facility; and (iv) the number of countries in which the Company 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. The Company used cash of $3.3 million in operating activities in the first six months of fiscal year 2000 compared to generating cash of $1.8 million in the first six months of the previous year primarily due to the loss generated by the VOD business. The Company has an agreement providing for an $8 million revolving credit facility through August 1, 2000. At December 31, 1999, no amounts were outstanding under the revolving credit facility. Borrowings under the revolving credit facility bear interest at the prime rate plus .75% and are secured by substantially all of the Company's domestic assets. The Company invested $2.2 million in property, plant and equipment during each of the six-month periods ended December 31, 1999 and 1998, respectively. Current year capital expenditures primarily relate to computer, development and loaner equipment for the VOD Division and leasehold improvements for the Real-Time Division's new administrative offices. The Company received $5.4 million in proceeds from the issuance of new shares of common stock to employees and directors who exercised stock options during the six-month period ended December 31, 1999 compared to $0.4 million during the six-month period ended December 31, 1998. At December 31, 1999, the Company did not have any material commitments for capital expenditures. The Company believes that its existing cash balances, available credit facilities and funds generated by operations will be sufficient to meets its anticipated working capital and capital expenditure requirements for the foreseeable future. YEAR 2000 The Company has aggressively addressed Year 2000 issues related to the processing of date-sensitive data. A cross-functional team was assembled, and a determination was made as to which systems were Year 2000 non-compliant. The Company believes that all of the critical financial, manufacturing, R&D and other systems are fully compliant. All costs associated with making these systems Year 2000 compliant have been expensed as incurred and have been insignificant. Concurrent has reviewed customer and supplier relationships, and has a Year 2000 software product available which many of our customers have implemented. While the Company has taken all reasonable efforts, including direct mailings and internet web site, to make information on the Year 2000 readiness of its products available to its customers, this information may not have reached all customers, particularly third-party customers. Although the Company believes it has addressed Year 2000 readiness issues related to its products and through February 11, 2000 has not experienced any significant Year 2000 issues, there may be disruptions and/or product failures that are unforeseen. The Company has requested, and in many cases obtained, assurances from its major suppliers that they have addressed these issues and that products procured by the Company will function properly in the Year 2000. -13- CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Certain matters discussed in this Form 10-Q may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Concurrent Computer Corporation cautions investors that any forward-looking statements made herein are not guarantees of future performance and that a variety of factors could cause its actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks and uncertainties which could affect Concurrent Computer Corporation's performance or results include, without limitation, changes in product demand; economic conditions; various inventory risks due to changes in market conditions; uncertainties relating to the development and ownership of intellectual property; uncertainties relating to the ability of Concurrent Computer Corporation and other companies to enforce their intellectual property rights; the pricing and availability of equipment, materials and inventories; technological developments; delays in testing of new products; rapid technology changes; the highly competitive environment in which Concurrent Computer Corporation operates; the entry of new well-capitalized competitors into Concurrent Computer Corporation's markets, and other risks and uncertainties. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK As of December 31, 1999, the Company had cash and cash equivalents of $8.0 million invested in liquid money market funds or bank accounts with average maturities of less than 90 days. The cash and cash equivalents are subject to interest rate risk and we may receive higher or lower interest income if market interest rates increase or decrease. A hypothetical increase or decrease in market interest rates by 10 percent from levels at March 31, 1999 would not have a material impact on our cash or cash equivalents. We currently conduct business in a number of foreign countries and we plan to conduct business in additional regions outside of the United States. A decrease in the value of foreign currencies relative to the U.S. dollar could result in losses from foreign currency translations. The Company does not currently hedge its foreign currency risk. -14- PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: (10.1) Amended and Restated Employment Agreement of Daniel S. Dunleavy (10.2) Amended and Restated Employment Agreement of Steve G. Nussrallah (10.3) Employment Agreement of Steven R. Norton (11) Statement on computation of per share earnings (27) Financial Data Schedule (b) Reports on Form 8-K. On January 4, 2000, the Company filed a Current Report on Form 8-K announcing the promotion of Steve Nussrallah to President and Chief Executive Officer of the Company effective January 1, 2000. In addition, on January 11, 2000, the Company filed a Current Report on Form 8-K/A which amended the Form 8-K filed on November 12, 1999 announcing the acquisition of Vivid Technology, Inc. -15- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly amendment to the report for the quarter ended December 31, 1999 to be signed on its behalf by the undersigned thereunto duly authorized. Date: July 16, 2001 CONCURRENT COMPUTER CORPORATION By: /s/ Steven R. Norton ---------------------- Steven R. Norton Chief Financial Officer (Principal Financial and Accounting Officer) -16- EX-10.1 2 doc2.txt AMENDED AND RESTATED EMPLOYMENT AGREEMENT -------------------- THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of the 6th day of December, 1999 by and between CONCURRENT COMPUTER CORPORATION, a Delaware corporation ("Concurrent" or the "Company"), and DANIEL S. DUNLEAVY (the "Employee"). WHEREAS, the Company and the Employee have entered into that certain Employment Agreement dated as of June 27, 1996 (the "Original Agreement"); WHEREAS, the Company and the Employee desire to amend and restate the Original Agreement to more accurately reflect the current duties and responsibilities performed by Employee and payments to be made to Employee upon termination of employment; NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the parties agree as follows: 1. EMPLOYMENT. The Company hereby employs the Employee and the ---------- Employee hereby accepts employment with the Company for the term set forth in Paragraph 2 below, in the position and with the duties and responsibilities set forth Paragraph 3 below, and upon other terms and conditions hereinafter stated. 2. TERM. The term of employment hereunder shall commence on the ---- date hereof and shall continue until otherwise terminated by either party at any time in accordance with the terms hereof. 3. POSITION; DUTIES; RESPONSIBILITIES. ------------------------------------ a. It is intended that at all times during the term of employment hereunder, the Employee shall serve in such senior executive position as President, Real-Time Division as shall be assigned to the Employee by the Chief Executive Officer of the Company (the "Chief Executive Officer") or by the Company's Board of Directors (the "Board of Directors") from time to time. The Employee agrees to perform such senior executive and managerial services customary to such position as are necessary to the operations of the Company and as may be assigned to him from time to time by the Chief Executive Officer or the Board of Directors. b. Throughout the term of employment hereunder, the Employee shall devote his full time and undivided attention during normal business hours to the business and affairs of the Company, as appropriate to his responsibilities and duties hereunder, except for reasonable vacations and illness or other disability, but nothing in the Agreement shall preclude the Employee from devoting reasonable periods required for serving as a director or member of any advisory committee of not more than two (at any time) organizations involving no conflict of interest with the interests of the Company (subject to approval by the Board of Directors, which approval shall not be unreasonably withheld), from engaging in charitable and community activities, and from managing his personal investments, provided such activities do not materially interfere with the performance of his duties and responsibilities under the Agreement. 4. COMPENSATION ------------ a. Salary: For services rendered by the Employee during the term of employment hereunder, the Employee shall be paid a salary, payable in equal biweekly installments (or, if different, payable in accordance with the then existing applicable payroll policy of the Company, but in no event less frequently than equal monthly installments) at an annualized rate of no less than $220,000, such salary to be reviewed for increase annually with such increases as shall be awarded in the discretion of the Board of Directors taking into account such factors as corporate and individual performance and general business conditions, including changes in the Miami-Fort Lauderdale metropolitan area cost of living index. b. Annual Bonus: During the term of employment hereunder, the Employee will be provided an annual bonus opportunity in a target amount not less than 40% of the then current salary, (hereafter, the "Executive Bonus Plan") the actual amount to be paid depending upon the degree of achievement of various objectives. The objectives for each year and other terms and conditions of the bonus opportunity shall be established by the Board of Directors or a committee thereof and shall be reasonably consistent with the business plan of the Company for such year established in advance. c. Employee Benefit Plans: During the term of employment hereunder, the Employee will be eligible to participate in all employee benefit programs of the Company now or hereafter made available to senior executives, in accordance with the provisions thereof as in effect from time to time; for -2- example, to the extent made available to senior executives of the Company from time to time, any incentive compensation plan, profit sharing and savings or other retirement plans, stock option and purchase plans, group life insurance, hospitalization, medical and dental coverage, disability plans, annual physical examination, car phone, holidays and accrued vacations. In any event, the Employee shall be entitled to vacation days at the rate of four weeks per year or such greater amount as may be provided by Company policies in effect from time to time. d. Stock and Stock Options: On June 27, 1996 the Board of Directors granted to the Employee a stock option to purchase an aggregate of 320,000 shares with an exercise price equal to $2.10, pursuant to resolutions duly adopted. The employee was also granted an additional stock option to purchase an aggregate of 80,000 shares with an exercise price equal to $2.10 pursuant to resolutions duly adopted and the terms of the Long-Term Incentive Compensation Plan for the 3-year cycle ending June 30, 1999. e. Business Expense Reimbursements: During the term of employment hereunder, the Employee will be entitled to receive reimbursement by the Company for all reasonable out-of-pocket expenses incurred by him (in accordance with the policies and procedures established by the Company for its senior level executives), in connection with his performing services hereunder. 5. GROUNDS FOR TERMINATION. The Board of Directors of the Company may ------------------------ terminate this Agreement for Cause. As used herein, "Cause" shall mean any of the following: (a) the Employee has committed a willful serious act against the Company intended to enrich himself at the expense of the Company, such as embezzlement, or has been convicted of a felony involving moral turpitude; or (b) Employee has (i) willfully and grossly neglected his duties hereunder, or (ii) intentionally failed to observe specific directives or policies of the Board of Directors, which directives or policies were consistent with his positions, duties and responsibilities hereunder, and which failure had, or continuing failure will have, a material adverse effect on the Company. Prior to any such termination, Employee shall be given written notice by the Board of Directors that the Company intends to terminate his employment for Cause under this Paragraph 5, which written notice shall specify the particular acts or omissions on the basis of which the Company intends to so terminate Employee's employment, and Employee (with his counsel, if he so chooses) shall be given the opportunity, within 15 days of his receipt of such notice, to have a meeting with the Board of Directors to discuss such acts or omissions and be given reasonable time to remedy the situation. In the event of such termination, the Employee shall be promptly furnished written specification of the basis therefor in reasonable detail. -3- 6. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement at ------------------------- any time with Good Reason. "Good Reason" shall exist if: a. the Company demotes or otherwise elects or appoints the Employee to lesser offices than set forth in Paragraph 3, or fails to elect or appoint him to such positions; b. the Company causes a material change in the nature or scope of the authorities, powers, functions, duties or responsibilities attached to the Employee's positions as described in Paragraph 3; c. the Company decreases the Employee's compensation below the levels provided for by the terms of Paragraph 4 (taking into account increases made from time to time in accordance with Paragraph 4); d. the Company materially reduces the Employee's benefits under any employee benefit plan, program or arrangement of the Company (other than a change that affects all employees similarly situated) from the level in effect upon the Employee's commencement or participation; e. the Company commits any other material breach of the provisions of this Agreement (except those set forth in Paragraph 4.a.) and Employee provides at least 15 days' prior written notice to at least two members of the Company's Board of Directors of the existence of such breach and his intention to terminate this Agreement (no such termination shall be effective if such breach is cured during such period); or f. the Company fails to comply with the provisions of Paragraph 4.a. for an uninterrupted 10 day period. The Employee has the absolute right to resign and receive all benefits detailed in Paragraph 8 of this Agreement provided he has continued in the position as President of the Real-Time Division, or a more senior position, until July 1, 2002. 7. PAYMENT AND OTHER PROVISIONS UPON TERMINATION FOR CAUSE OR EMPLOYEE -------------------------------------------------------------------- CONVENIENCE. In the event Employee's employment with the Company (including its - ----------- subsidiaries) is terminated by the Company for Cause as provided in Paragraph 5 prior to a Change of Control or more than three years after the occurrence of a Change of Control (as defined in Paragraph 9.d. hereof), then the following provisions shall apply. These same provisions shall apply if the Employee terminates his employment other than in accordance with the provisions of Paragraph 6 hereof. a. Compensation: On or before Employee's last day of employment with the Company, the Company shall pay in a lump sum to Employee such amount of compensation due Employee for services rendered to the Company, as well as -4- compensation for unused vacation time, as has accrued but remains unpaid. Any and all other rights to compensation of any kind granted to Employee under this Agreement shall terminate as of the date of termination, except as may be otherwise required by statute. b. Noncompetition Period: The provisions of Paragraph 13 shall continue to apply with respect to Employee for a period of one year following the date of termination. 8. PAYMENTS AND OTHER PROVISIONS UPON TERMINATION OTHER THAN FOR CAUSE -------------------------------------------------------------------- OR FOR GOOD REASON. In the event Employee's employment with the Company - --------------------- (including its subsidiaries) is terminated by the Company for any reason other than for Cause as provided in Paragraph 5 and other than as a consequence of Employee's death, disability, or normal retirement under the Company's retirement plans and practices prior to a Change of Control or more than three years after the occurrence of a Change of Control (as defined in Paragraph 9.d. hereof), then the following provisions shall apply. These same provisions shall apply if Employee terminates his employment in accordance with the provisions of Paragraph 6 hereof, prior to a Change of Control or more than three years after the occurrence of a Change of Control (as defined in Paragraph 9.d. hereof). a. Salary and Bonus Payments: On or before Employee's last day of employment with the Company, the Company shall promptly pay in a lump sum to Employee as compensation for services rendered to the Company a cash amount equal to the amount of twice the Employee's base salary and target bonus under the Executive Bonus Plan as in effect immediately prior to his date of termination. At the election of the Company, the cash amount referred to in this subparagraph 8.a. may be paid to Employee in periodic installments in accordance with the normal salary payment procedures of the Company. b. Benefit Plan Coverage: The Company shall maintain in full force and effect for Employee and his dependents for two years after the date of termination, all life, health, accident, and disability benefit plans and other similar employee benefit plans, programs and arrangements in which Employee or his dependents were entitled to participate immediately prior to the date of termination, in such amounts as were in effect immediately prior to the date of termination, provided that such continued participation is possible under the general terms and provisions of such benefit plans, programs and arrangements. In the event that participation in any benefit plan, program or arrangement described above is barred, or any such benefit plan, program or arrangement is discontinued or the benefits thereunder materially reduced, the Company shall arrange to provide Employee and his dependents for two years after the date of termination with benefits substantially similar to those that they were entitled to receive under such benefit plans, programs and arrangements immediately prior to the date of termination. If immediately prior to the date of termination the -5- Company provided Employee with any club memberships, Employee will be entitled to continue such memberships at his sole expense. Notwithstanding any time period for continued benefits stated in this subparagraph 8.b., all benefits in this subparagraph 8.b. will terminate on the date that Employee becomes an employee of another employer and eligible to participate in the employee benefit plans of such other employer. To the extent that Employee was required to contribute amounts for the benefits described in this subparagraph 8.b. prior to his termination, he shall continue to contribute such amounts for such time as these benefits continue in effect after termination. c. Savings and Other Plans: Except as otherwise more specifically provided herein or under the terms of the respective plans relating to termination of employment, Employee's active participation in any applicable savings, retirement, profit sharing or supplemental employee retirement plans or any deferred compensation or similar plan of the Company or any of its subsidiaries shall continue only through the last day of his employment. All other provisions, including any distribution and/or vested rights under such plans, shall be governed by the terms of those respective plans. d. Noncompetition Period: The provisions of Paragraph 13 shall continue, beyond the time periods set forth in such paragraphs, to apply with respect to employee for the shorter of (x) twenty-four (24) months following the date of termination or (y) until such time as the Company has failed to comply with the provisions of subparagraph 8.a. for an uninterrupted 10-day period and such failure is not cured within 15 days after written notice of such failure is delivered to at least two non-employee directors of the Company. 9. PAYMENT AND OTHER PROVISIONS AFTER CHANGE OF CONTROL. In the event ----------------------------------------------------- Employee's employment with the Company is terminated within three years following the occurrence of a Change of Control (other than as a consequence of his death or disability, or of his normal retirement under the Company's retirement plans and practices) either (i) by the Company for any reason other than for Cause in accordance with Paragraph 5, or (ii) by Employee in accordance with the provisions of Paragraph 6 hereof, then the following provisions shall apply: a. Salary and Bonus Payments: On or before Employee's last day of employment with the Company, the Company shall promptly pay in a lump sum a cash amount equal to the amount of twice the Employee's annual base salary as in effect at the date of termination and the amount of the Employee's target bonus under the Executive Bonus Plan for the fiscal year in which the date of termination occurs, multiplied by two. -6- b. Noncompetition Period: In the event of a termination under the circumstances described in Paragraph 9, the provisions of Paragraph 13 shall be without force and effect and shall not apply to Employee. c. For purposes of this Agreement, the term "Change of Control" shall mean: i. The acquisition, other than from the Company, by any individual, entity or group (within the meaning of Rule 13d-3 promulgated under the Exchange Act or any successor provision)(any of the foregoing described in this Paragraph 9.c.i hereafter a "Person") of 33% or more of either (a) the then outstanding shares of Capital Stock of the Company (the "Outstanding Capital Stock") or (b) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Voting Securities"), provided, however, that any acquisition by --------- ------- (x) the Company or any of its subsidiaries, or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (y) any Person that is eligible, pursuant to Rule 13d-1(b) under the Exchange Act, to file a statement on Schedule 13G with respect to its beneficial ownership of Voting Securities, whether or not such Person shall have filed a statement on Schedule 13G, unless such Person shall have filed a statement on Schedule 13D with respect to beneficial ownership of 33% or more of the Voting Securities or (z) any corporation with respect to which, following such acquisition, more than 60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Capital Stock and Voting Securities immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the Outstanding Capital Stock and Voting Securities, as the case may be, shall not constitute a Change of Control; or ii. Individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to the Effective Date whose election or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A, or any successor Paragraph, promulgated under the Exchange Act); or -7- iii. Approval by the shareholders of the Company of a reorganization, merger or consolidation (a "Business Combination"), in each case, with respect to which all or substantially all holders of the Outstanding Capital Stock and Voting Securities immediately prior to such Business Combination do not, following such Business Combination, beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from the Business Combination; or iv. (a) a complete liquidation or dissolution of the Company or (b) a sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to which, following such sale or disposition, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors is then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Capital Stock and Voting Securities immediately prior to such sale or disposition in substantially the same proportion as their ownership of the Outstanding Capital Stock and Voting Securities, as the case may be, immediately prior to such sale or disposition. 10. TERMINATION BY REASON OF DEATH. If Employee shall die while ---------------------------------- employed by the Company both prior to termination of employment and during the effective term of this Agreement, all Employee's rights under this Agreement shall terminate with the payment of such amounts of annual base salary as have accrued but remain unpaid and a prorated amount of targeted bonus under the Executive Bonus Plan through the month in which his death occurs, plus six additional months of the fixed salary and targeted bonus. All benefits under Paragraphs 8.c. shall be extended to Employee's estate as described in such paragraphs. In addition, Employee's eligible dependents shall receive continued benefit plan coverage under Paragraph 8.b. for six months from the date of Employee's death. 11. TERMINATION BY DISABILITY. Employee's employment hereunder may be ------------------------- terminated by the Company for disability. In such event, all Employee's rights under this Agreement shall terminate with the payment of such amounts of annual base salary as have accrued but remain unpaid as of the thirtieth (30th) day after such notice is given except that all benefits under Paragraphs 8.b. and ------ 8.c. shall be extended to Employee as described in such paragraphs, provided, --------- however, that, with respect to Paragraph 8.b., the period for continued benefit - ------- plan coverage shall be limited to six months from the date of termination. In addition, the noncompetition provision of Paragraph 13 shall continue to apply -8- for a period of six months from the date of termination for disability. For purposes of this Agreement, "disability" is defined to mean that, as a result of Employee's incapacity due to physical or mental illness: a. Employee shall have been absent from his duties as an officer of the Company on a substantially full-time basis for six (6) consecutive months: and b. Within thirty (30) days after the Company notifies Employee in writing that it intends to replace him, Employee shall not have returned to the performance of his duties as an officer for the Company on a full-time basis. Such notice may be given by the Company at any time after Employee has been absent for a total of four consecutive months. 12. RETIREMENT. Employee shall be entitled to participate in the ----------- Company's Retirement Savings Plan and any other retirement plan hereafter made available to senior executive officers of the Company in accordance with the provisions thereof as in effect from time to time. 13. NON-COMPETE AND CONFIDENTIAL INFORMATION. The Company and the ------------------------------------------- Employee will enter into a non-compete and confidentiality agreement substantially in the form attached as Exhibit A hereto. ---------- 14. SUCCESSORS AND ASSIGNS ------------------------ a. Assignment by the Company: This Agreement shall be binding upon and inure to the benefit of the Company or any corporation or other entity to which the Company may transfer all or substantially all its assets and business and to which the Company may assign this Agreement, in which case "Company" as used herein shall mean such corporation or other entity. b. Assignment by the Employee: The Employee may not assign this Agreement or any part thereof without the prior written consent of the Company, which consent may be withheld by the Company for any reason it deems appropriate; provided, however, nothing herein shall preclude the Employee from designating one or more beneficiaries to receive any amount that may be payable following the occurrence of his legal incompetency or his death and shall not preclude the legal representative of his estate from assigning any right hereunder to the person or persons entitled thereto under his will or, in the case of intestacy, to the person or persons entitled thereto under the laws of intestacy applicable to his estate. The term "beneficiaries", as used in this Agreement, shall mean a beneficiary or beneficiaries so designated to receive any such amount or if no beneficiary has been so designated the legal representative of the Employee (in the event of his incompetency) or the Employee's estate. -9- 15. ARBITRATION. Any dispute or controversy under or in connection ----------- with this Agreement shall be settled exclusively by arbitration in Florida by one arbitrator in accordance with the labor arbitration rules of the American Arbitration Association then in effect. The arbitrator's award may include the manner in which fees of counsel and other expenses in connection with the dispute or controversy are to be borne. The arbitrator's authority and jurisdiction is limited to interpreting and applying the express provisions of this agreement and the arbitrator shall not have the authority to alter or add to the provisions of this agreement. Judgment may be entered upon the arbitrator's award in any court having jurisdiction. 16. GOVERNING LAW. This Agreement shall be deemed a contract made -------------- under, and for all purposes shall be construed in accordance with, the laws of the State of Florida without reference to the principles of conflicts of law. 17. ENTIRE AGREEMENT. This Agreement contains all the understandings ----------------- and representations between the parties hereto pertaining to the subject matter hereof and supersedes all undertakings and agreements, whether oral or in writing, if any there be, previously entered into by them with respect thereto. 18. AMENDMENT OR MODIFICATION; WAIVER. No provision in this Agreement ---------------------------------- may be amended or waived unless such amendment or waiver is agreed to in writing, signed by the Employee and an officer of the Company thereunto duly authorized. Except as otherwise specifically provided in the Agreement, no waiver by any party hereto of any breach by another party hereto of any condition or provision of the Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar provision or condition at the same or any prior or subsequent time. 19. NOTICES. Any notice to be given hereunder shall be in writing and ------- delivered personally or sent by certified mail, postage prepaid, return receipt requested, addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice of hereunder in writing: TO THE COMPANY: CONCURRENT COMPUTER CORPORATION 2101 WEST CYPRESS CREEK ROAD FORT LAUDERDALE, FL 33309 ATTN: CHIEF EXECUTIVE OFFICER -10- TO THE EMPLOYEE: DANIEL S. DUNLEAVY 10328 N.W. 50TH COURT CORAL SPRINGS, FL 33076 20. SEVERABILITY. In the event that any provision or portion of the ------------ Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions or portions of the Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. 21. WITHHOLDING. Anything to the contrary notwithstanding, all ----------- payments required to be made by the Company hereunder to the Employee or his estate or beneficiaries, shall be subject to withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts, in whole or in part, the Company may, in its sole discretion, accept other provision for payment of taxes as required by law, provided it is satisfied that all requirements of law affecting its responsibilities to withhold such taxes have been satisfied. 22. SURVIVORSHIP. The respective rights and obligations of the parties ------------ hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. 23. REFERENCES. In the event of the Employee's death or judicial ---------- determination of his incompetence, reference in the Agreement to the Employee shall be deemed, where appropriate, to refer to his legal representatives, or, where appropriate, to his beneficiary or beneficiaries. 24. TITLES. Titles to the Paragraphs in this Agreement are intended ------ solely for convenience and no provision of the Agreement is to be construed by reference to the title of any Paragraph. 25. COUNTERPARTS. This Agreement may be executed in several ------------ counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. -11- 26. CERTAIN LIMITATIONS ON REMEDIES. Paragraph 8.a. provides that ---------------------------------- certain payments and other benefits shall be received by Employee upon the termination of Employee by the Company other than for Cause and states that these same provisions shall apply if Employee terminates his employment in accordance with the provisions of Paragraph 6 hereof. It is the intention of this Agreement that if the Company terminates Employee other than for Cause (and other than as a consequence of Employee's death, disability or normal retirement) or if Employee terminates his employment in accordance with the provisions of Paragraph 6 hereof, then the payments and other benefits set forth in Paragraph 8.a. shall constitute the sole and exclusive remedies of Employee. This Paragraph 26 shall have no effect upon the provisions of Paragraph 9 of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. CONCURRENT COMPUTER CORPORATION EMPLOYEE /s/ E. Courtney Siegel /s/ Daniel S. Dunleavy - ------------------------------- ------------------------ E. Courtney Siegel Daniel S. Dunleavy Chairman, President and Chief Executive Officer -12- Exhibit A --------- NON-COMPETE AND CONFIDENTIALITY AGREEMENT ----------------------------------------- I, the undersigned, in consideration of and as a condition to my employment by Concurrent Computer Corporation (the "Company), do hereby agree with the Company as follows: 1. Competition. During the period of my employment by the Company, I ------------ will devote my full time and best efforts to the business of the Company and I will not, directly or indirectly, alone or as a partner, officer, director, employee or holder of more than 5% of the common stock of any other organization, engage in any business activity which competes directly or indirectly with the products or services being developed, manufactured or sold by the Company. I also agree that, following any termination of such employment, I will not, for any periods in respect of which I receive compensation continuation payments from the Company and, if longer, but only with respect to (b) below, for a period of one year after such termination, (a) solicit or seek to obtain orders for any products or services similar to those being developed, manufactured or sold by the Company from any person or organization that is or was a customer of the Company or (b) recruit or otherwise seek to induce employees of the Company to terminate their employment or violate any agreement with the Company. 2. Confidential Information. Except as may be required in the -------------------------- performance of my duties with the Company, or as may be necessary to comply with any order or decree issues by a court having competent jurisdiction, I will not at any time, whether during or after termination of my employment with the Company, reveal to any person or organization any of the trade secrets or confidential information of the Company, and I will not use or attempt to use any such information in any manner that may directly or indirectly injure or cause loss to the Company. All information concerning the business of the Company, including technical, financial and business information, shall be considered confidential unless it is or becomes publicly available through no fault of mine or unless it is disclosed by the Company to third parties without similar restrictions. Further, I agree that any and all documents, notes, or memoranda prepared by me or others and containing trade secrets or confidential information shall be and remain the sole and exclusive property of the Company, and that upon termination of my employment I will immediately deliver all of such documents, notes or memoranda, including all copies, to the Company at its main office. -13- 3. Inventions and Copyrights. If at any time or times during my ---------------------------- employment (or within six months thereafter if based on confidential information within the meaning of Paragraph 2 above), I make or discover, either alone or with others, any invention, modification, development, improvement, process or secret, whether or not patented or patentable (collectively, "inventions") in the field of computer science or instrumentation, I will disclose in reasonable detail the nature of such invention to the Company in writing, and if it relates to the business of the Company or any of the products or services being developed, manufactured or sold by the Company, such invention and the benefits thereof shall immediately become the sole and absolute property of the Company provided the Company notifies me in reasonable detail within 90 days after receipt of my disclosure of such invention that it believes such invention relates to the business of the Company or any of the products or services being developed, manufactured or sold by the Company. I also agree to transfer such inventions and benefits and rights resulting from such inventions to the Company without compensation and will communicate without cost, delay or prior publications all available information relating to the inventions to the Company. At the Company's expense I will also, whether before or after termination of my employment, sign all documents (including patent applications) and do all acts and things that the Company may deem necessary or desirable to effect the full assignment to the Company of my right and title to the inventions or necessary to defend any opposition thereto. I also agree to assign to the Company all copyrights and reproduction rights to any materials prepared by me in connection with my employment. 4. Conflicting Agreements. I represent that I have attached to this ------------------------ Agreement a copy of any agreement which presently affects my ability to comply with the terms of this Agreement, and that to the best of my knowledge my employment with the Company will not conflict with any agreement to which I am subject. I have returned all documents and materials belonging to any of my former employers. I will not disclose to the Company or induce any of the Company's employees to use confidential information of any of my former employers. 5. Miscellaneous. -------------- (a) I hereby give the Company permission to use photographs of me, during my employment, with or without using my name, for any purposes the Company deems necessary or desirable. (b) The Company shall have, in addition to any and all remedies of law, the right to an injunction, specific performance and other equitable relief as may be appropriate to prevent the violation of my obligations hereunder. (c) I understand that this Agreement does not create an obligation on the Company or any other person to continue my employment. -14- (d) This Agreement shall be construed in accordance with the laws of the State of Florida. I agree that each provision of this Agreement shall be treated as a separate and independent clause, and the unenforceability of any clause shall in no way impair the enforceability of any of the other clauses. Moreover, if one or more of the provisions contained in this Agreement shall for any reason be held to be extensively broad as to scope, activity, geographical area or subject so as to be unenforceable at law, such provision or provisions shall be construed by the appropriate judicial body by limiting and reducing it or them so as to be enforceable to the extent compatible with applicable law as it shall then appear. (e) My obligations under this Agreement shall survive the termination of my employment regardless of the manner of such termination for the time periods set forth in paragraphs 1 and 3, above, with respect to the matters covered therein and shall be binding upon my heirs, executors and administrators. (f) The term "Company" as used in this Agreement includes Concurrent Computer Corporation and any of its subdivisions or affiliates. The Company shall have the right to assign this Agreement to its successors and assigns. (g) The foregoing is the entire agreement between the Company and me with regard to its subject matter, and may not be amended or supplemented except by a written instrument signed by both the Company and me. The Paragraph headings are inserted for convenience only, and are not intended to affect the meaning of this Agreement. /s/ Daniel S. Dunleavy - ----------------------- Daniel S. Dunleavy Date: December 6, 1999 ---------------- -15- EX-10.2 3 doc3.txt AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of the ________ day of November, 1999 by and between CONCURRENT COMPUTER CORPORATION, a Delaware corporation with its corporate headquarters in Georgia ("Company"), and STEVE G. NUSSRALLAH ("Employee"). WHEREAS, the Company and Employee have entered into an Employment Agreement dated as of November 17, 1998 (the "Original Agreement"); and WHEREAS, the Company and Employee desire to amend and restate the Original Agreement and thereby to replace and supercede it with this Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 1. EMPLOYMENT. The Company hereby employs Employee, and Employee ---------- hereby accepts employment, upon the terms of and subject to this Agreement. 2. TERM. The term ("Term") of this Agreement shall commence and this ---- Agreement shall become effective as of the date hereof, and shall continue until otherwise terminated by either party at any time in accordance with the terms hereof. 3. DUTIES. During his employment hereunder from the date hereof ------ through December 31, 1999, Employee shall serve as the President and Chief Operating Officer of the Company. In such capacity, Employee shall have responsibility for the day-to-day operations of the Company, subject to the authority and control of the Chief Executive Officer of the Company. The Company shall take such actions as necessary to appoint Employee as a member of the Board of Directors of the Company effective on the date hereof or as soon thereafter as practicable. Commencing January 1, 2000, Employee shall serve as the President and Chief Executive Officer of the Company. In such capacity, Employee shall have general and active charge of the business and affairs of the Company, and responsibility for the day-to-day operations of the Company, subject to the authority and control of the Board of Directors of the Company. Throughout the term of employment hereunder, the Employee shall devote his full time and undivided attention during normal business hours to the business and affairs of the Company, as appropriate to his duties and responsibilities hereunder, except for reasonable vacations and illness or other disability, but nothing in this Agreement shall preclude the Employee from devoting reasonable periods required for serving as a director or member of any advisory committee of not more than two (at any time) "for profit" organizations involving no conflict of interest with the interests of the Company (subject to approval by the Board of Directors, which approval shall not be unreasonably withheld), or from engaging in charitable and community activities, or from managing his personal investments, provided such activities do not materially interfere with the performance of his duties and responsibilities under this Agreement. -1- 4. COMPENSATION. ------------ a. Salary: Employee shall be paid an initial salary of $280,000 per year, payable in equal installments not less than monthly. Commencing January 1, 2000, Employee shall be paid a salary of $318,000 per year payable in equal installments not less than monthly. The Employee's salary shall be reviewed at least annually. b. Stock Option/Bonus: In addition to salary, Employee shall be entitled to participate in the Company's Stock Option Plan (the "Stock Option Plan") and Employee was granted an option (herein "Option # 1") to purchase 1,000,000 shares of common stock of the Company (such number to be subject to adjustment as provided in section 5, paragraph 3, of the Stock Option Plan), such grant occurring on November 17, 1998. The per share exercise price of the option was the fair market value of the Company's common stock as of the date of grant ($2.75), and the option vests in three equal annual installments over the three-year period that commenced November 17, 1998. The Employee was also granted a long-term option (herein "Option # 2") to purchase up to 250,000 shares of common stock of the Company, such grant occurring on November 17, 1998, at an exercise price equal to the fair market value of a share of common stock as of the date of grant ($2.75), and the option shall vest in its entirety on November 17, 2001, and the Employee has also been granted an option (herein "Option # 3") to purchase up to 50,000 shares of common stock of the Company, such grant occurring on August 17, 1999, at an exercise price equal to the fair market value of a share of common stock as of the date of grant ($8.00), and the option shall vest in three equal annual installments over the three year period that commenced on August 17, 1999. Further, Employee has been and will be provided with an annual bonus opportunity with an initial target bonus for Employee of $150,000, representing 60% of Employee's prior annual salary under the Original Agreement (hereafter the "Executive Bonus Plan"), the actual amount to be paid depending upon the degree of achievement of various objectives. Commencing January 1, 2000, Employee shall be provided with an annual bonus opportunity of 65% of Employee's annual salary as set forth in Paragraph 4.a above, the actual amount to be paid depending upon the degree of achievement of various objectives. The objectives for each year and other terms and conditions of the bonus opportunity shall be established by the Board of Directors or a committee thereof and shall be reasonably consistent with the business plan of the Company for such year, or portion thereof, established in advance. The target bonus opportunity may be increased to no more than an additional 100% for superior performance as defined and determined under the Executive Bonus Plan. c. Insurance: During his employment hereunder, Employee shall be entitled to participate in such health, life, disability and other insurance programs, if any, that the Company may offer to other key executive employees of the Company from time to time. d. Other Benefits: During his employment hereunder, Employee shall be entitled to such other benefits, if any, that the Company may offer to other key executive employees of the Company from time to time. Certain other benefits are described on Schedule A hereto. In addition, the Company and Employee have entered into an Indemnification Agreement in the form the Company may enter into with other key executive employees of the Company from time to time. -2- e. Vacation: Employee shall be entitled to four weeks vacation leave (in addition to holidays) in each calendar year during the Term, or such additional amount as may be set forth in the vacation policy that the Company shall establish from time to time. f. Expense Reimbursement: Employee shall, upon submission of appropriate supporting documentation, be entitled to reimbursement of reasonable out-of-pocket expenses incurred in the performance of his duties hereunder in accordance with policies established by the Company. Such expenses shall include, without limitation, reasonable entertainment expenses, gasoline and toll expenses and cellular phone use charges, if such charges are directly related to the business of the Company. 5. GROUNDS FOR TERMINATION. The Company may terminate this Agreement ------------------------- for Cause. As used herein, "Cause" shall mean any of the following: (a) the Employee (1) has been convicted of a felony, or (2) has been held liable to the Company by a court of competent jurisdiction for a breach of fiduciary duty, tort or other violation of law, which results in a material adverse affect on the Company; or (b) the Employee (i) has willfully and grossly neglected his duties as set forth under this Agreement, or (ii) has intentionally failed to observe specific written directives or policies of the President and Chief Executive Officer or the Board of Directors, which directives or policies were consistent with his positions, duties and responsibilities hereunder and did not violate applicable law, and which neglect or failure had, or will have, a material adverse effect on the Company. Prior to any termination for Cause, the Employee shall be given written notice (the "Cause Notification") by the Board of Directors which notice shall set forth (1) the specific action(s) or inaction(s) which constitute "Cause" under this Agreement, (2) that the Company intends to terminate the Employee's employment for Cause under this Section 5 unless the Employee takes remedial action (as set forth below), and (3) the remedial action(s) which the Company would accept. Within 15 days of his receipt of such Cause Notification, the Employee shall have the right to have a meeting with the Board of Directors to discuss such specific actions or omissions. Within 30 days after receipt of such Cause Notification (or such later date as the Board may determine in good faith and communicate to Employee), but in no event less than a reasonable period after the receipt of the Cause Notification by the Employee (the "Remedy Period"), the Employee shall have the opportunity to remedy the situation. In the event that the Employee is terminated following the Remedy Period, the Employee shall be furnished as of his date of termination an additional written notice specifying (1) his date of termination, (2) each and every reason for the Employee's termination for Cause by the Company, and (3) each and every reason that the Company does not accept the remedial action taken by the Employee. To the extent that the Employee incurs legal expenses by seeking the advice and representation of legal counsel to respond to a Cause Notification for an event listed in clause (b) above (but not clause (a) above) or to respond to a subsequent termination of the Employee for such Cause under this Agreement (including, but not limited to, any legal action against the Company challenging such termination), the Employee shall be entitled to reimbursement by the Company of all such legal expenses incurred by the Employee up to a maximum aggregate amount of $100,000. In the event that the Company terminates the employment of the Employee for Cause in accordance with the provisions of this Paragraph 5, then the provisions of Paragraph 7 of this Agreement shall apply. -3- 6. TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may terminate ------------------------------------------- this Agreement and his employment with the Company (including its subsidiaries) at any time with Good Reason. "Good Reason" shall exist if: a. the Company demotes or otherwise elects or appoints the Employee to lesser offices than set forth in Section 3, or fails to elect or appoint him to such; provided, however, that it shall not constitute Good Reason for Employee to terminate this Agreement or his employment if Employee is not elected or re-elected to, or is removed from, the Board of Directors of the Company by its shareholders pursuant to the Company's Articles of Incorporation or Bylaws or otherwise as permitted by law. b. the Company causes a material change in the nature or scope of the authorities, powers, functions, duties or responsibilities attached to the Employee's positions as described in Section 3; c. the Company causes Employee to relocate more than 50 miles from Atlanta, Georgia; d. the Company decreases the Employee's compensation below the levels provided for by the terms of Section 4 (taking into account increases made from time to time in accordance with Section 4); e. the Company materially reduces the Employee's benefits under any employee benefit plan, program or arrangement of the Company (other than a change that affects all employees similarly situated) from the level in effect upon the Employee's commencement or participation; f. the Company commits any other material breach of the provisions of this Agreement (except those set forth in Paragraph 4.a) and employee provides at least 15 days' prior written notice to at least two members of the Company's Board of Directors of the existence of such breach and his intention to terminate this Agreement (no such termination shall be effective if such breach is cured during such period); g. the Company fails to comply with the provisions of Paragraph 4.a. for an uninterrupted 10 day period; or h. in the event the Company fails to dispose of its real-time division by January 1, 2000 and the Company fails to complete a public offering by June 15, 2000, raising at least $40,000,000, with respect to the Video-on-Demand division, whereby, 1) the Video-on-Demand division is spun off from the Company and becomes a publicly traded company, and 2) the Employee shall become the CEO of the new video-on-demand public company. In the event that the Employee terminates his employment in accordance with the provisions of this Paragraph 6, then the provisions of Paragraph 8 of this Agreement shall apply. 7. PAYMENT AND OTHER PROVISIONS FOR TERMINATION FOR CAUSE OR BY -------------------------------------------------------------------- EMPLOYEE WITHOUT GOOD REASON. In the event Employee's employment with the - ------------------------------- Company (including its subsidiaries) is terminated by the Company for Cause as provided in Paragraph 5 then, on or before Employee's last day of employment with the Company, the provisions of this Paragraph 7 shall apply. These same provisions shall apply if the Employee terminates his employment other than for Good Reason in accordance with the provisions of Paragraph 6 hereof. a. Compensation: The Company shall pay in a lump sum to employee such amount of compensation due Employee for services rendered to the Company, -4- as well as compensation for unused vacation time, as has accrued but remains unpaid. Any and all other rights to compensation of any kind granted to Employee under this Agreement shall terminate as of the date of termination, except as may be otherwise required by statute. b. Noncompetition/Nonsolicitation Period: The provisions of Paragraphs 14 and 15 shall continue to apply with respect to Employee for a period of one year following the date of termination. 8. PAYMENT AND OTHER PROVISIONS FOR TERMINATION FOR GOOD REASON OR BY -------------------------------------------------------------------- THE COMPANY OTHER THAN FOR CAUSE. In the event Employee's employment with the - ---------------------------------- Company (including its subsidiaries) is terminated by the Company for any reason other than for Cause as provided in Paragraph 5 and other than as a consequence of Employee's death or disability, then the following provisions apply. These same provisions shall apply if Employee terminates his employment for Good Reason in accordance with the provisions of Paragraph 6 hereof, however, if the Employee exercises his right to terminate under section 6h above, the Employee agrees to give the Company at least 90 days notice of his intent to terminate his employment under such section 6h. The Employee may give such notice beginning March 15, 2000. a. Salary and Bonus Payments: On or before Employee's last day of employment with the Company, the Company shall promptly pay in a lump sum to Employee as compensation for services rendered to the Company a cash amount equal to twice (three times such sum in the case of a termination occurring during the period (a "Change of Control Period") beginning on the occurrence of a Change in Control (as defined in Paragraph 8.f. below) and ending on the third anniversary of such Change in Control) the sum of the amount of Employee's annual base salary and the target bonus under the Executive Bonus Plan as in effect immediately prior to his date of termination. At the election of the Company, the cash amount referred to in this Paragraph 8.a. may be paid to Employee in periodic installments in accordance with the normal salary payment procedures of the Company, except that for a termination occurring during a Change of Control Period, the cash amount referred to in this Paragraph 8.a. shall be paid in a single lump sum on the date of termination. b. Vesting of Options and Rights: Notwithstanding the vesting period provided for in the Stock Option Plan and related stock option agreements between the Company and Employee for stock options ("options") and stock appreciation rights ("rights") granted Employee by the Company, one-third of the options and stock appreciation rights provided to Employee under section 4b of this Agreement, excluding Option #3 and the portion of Option #1 and Option #2 which have already vested prior to termination, shall be exercisable upon termination of employment. In addition, Employee shall have the right to exercise such options and rights for the shorter of (i) one year (three years in the case of a termination occurring during a Change of Control Period) following his termination of employment or (ii) with respect to each option, the remainder of the period of exercisability under the terms of the appropriate documents that grant such options. However, notwithstanding the foregoing and the vesting period provided for in the Stock Option Plan and any related stock option agreements between the Company and Employee, all options and rights shall be fully vested and exercisable upon termination of employment occurring during a Change in Control Period, and the period of exercise shall be as described in the preceding sentence. c. Benefit Plan Coverage: The Company shall maintain in full force and effect for Employee and his dependents for two years after the date of -5- termination, all life, health, accident, and disability benefit plans and other similar employee benefit plans, programs and arrangements in which Employee or his dependents were entitled to participate immediately prior to the date of termination, in such amounts as were in effect immediately prior to the date of termination, provided that such continued participation is possible under the general terms and provisions of such benefit plans, programs and arrangements. In the event that participation in any benefit plan, program or arrangement described above is barred, or any such benefit plan, program or arrangement is discontinued or the benefits thereunder materially reduced, the Company shall arrange to provide Employee and his dependents for two years after the date of termination with benefits substantially similar to those that they were entitled to receive under such benefit plans, programs and arrangements immediately prior to the date of termination. If immediately prior to the date of termination the Company provided Employee with any club memberships, Employee shall be entitled to continue such memberships at his sole expense. Notwithstanding any time period for continued benefits stated in this Paragraph 8.c., all benefits in this Paragraph 8.c. will terminate on the date that Employee becomes an employee of another employer and eligible to participate in the employee benefit plans of such other employer. To the extent that Employee was required to contribute amounts for the benefits described in this Paragraph 8.c. prior to his termination, he shall continue to contribute such amounts for such time as these benefits continue in effect after termination. d. Savings and Other Plans: Except as otherwise more specifically provided herein or under the terms of the respective plans relating to termination of employment, Employee's active participation in any applicable savings, retirement, profit sharing or supplemental employment retirement plans or any deferred compensation or similar plan of the Company or any of its subsidiaries shall continue only through the last day of his employment. All other provisions, including any distribution and/or vested rights under such plans, shall be governed by the terms of those respective plans. e. Noncompetition/Nonsolicitation Period: The provisions of Paragraph 14 and 15 shall continue, beyond the time periods set forth in such paragraphs, to apply with respect to employee for the shorter of (x) twenty-four (24) months following the date of termination or (y) until such time as the Company has failed to comply with the provisions of subparagraph 8.a. for an uninterrupted 10-day period and such failure is not cured within 15 days after written notice of such failure is delivered to at least two non-employee directors of the Company, provided, that in such circumstances, Employee shall remain entitled to exercise his rights under this Agreement. However, in the case of a termination occurring during a Change of Control Period, the provisions of Paragraphs 14 and 15 shall be without force and effect and shall not apply to Employee. f. For purposes of this Agreement, the term "Change of Control" shall mean: i. The acquisition, other than from the Company, by any individual, entity or group (within the meaning of Rule 13d-3 promulgated under the Exchange Act or any successor provision)(any of the foregoing described in this Paragraph 8.c.i. hereafter a "Person") of 33% or more of either (a) the then outstanding shares of Capital Stock of the Company (the "Outstanding Capital Stock") or (b) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Voting Securities"), provided, however, that any acquisition by (x) the Company or any of it subsidiaries, or any employee benefit plan (or -6- related trust) sponsored or maintained by the Company or any of its subsidiaries or (y) any Person that is eligible, pursuant to Rule 13d-1(b) under the Exchange Act, to file a statement on Schedule 13D with respect to its beneficial ownership of Voting Securities, whether or not such Person shall have filed a statement on Schedule 13G, unless such Person shall have filed a statement on Schedule 13D with respect to beneficial ownership of 33% or more of the Voting Securities or (z) any corporation with respect to which, following such acquisition, more than 60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Capital Stock and Voting Securities immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the Outstanding Capital Stock and Voting Securities, as the case may be, shall not constitute a Change of Control; or ii. Individuals who, as of November 17, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to November 17, 1998 whose election or nomination for election by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A, or any successor section, promulgated under the Exchange Act); or iii. Approval by the shareholders of the Company of a reorganization, merger or consolidation (a "Business Combination"), in each case, with respect to which all or substantially all holders of the Outstanding Capital Stock and Voting Securities immediately prior to such Business Combination do not, following such Business Combination, beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from the Business Combination; or iv. (a) a complete liquidation or dissolution of the Company or (b) a sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to which, following such sale or disposition, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors is then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Capital Stock and Voting Securities immediately prior to such sale or disposition in substantially the same proportion as their ownership of the Outstanding Capital Stock and Voting Securities, as the case may be, immediately prior to such sale or disposition. 9. TERMINATION BY REASON OF DEATH. If Employee shall die while ----------------------------------- employed by the Company and during the effective term of this Agreement, all Employee's rights under this Agreement shall terminate with the payment of such amounts of annual base salary as have accrued but remain unpaid and prorated -7- amount of targeted bonus under the Executive Bonus Plan through the month in which his death occurs, plus six additional months of the fixed salary and targeted bonus. All benefits under Paragraphs 8.b. and 8.d. shall be extended to Employee's estate as described in such paragraphs. In addition, Employee's eligible dependents shall receive continued benefit plan coverage under Paragraph 8.c. for six months from the date of Employee's death. 10. TERMINATION BY DISABILITY. Employee's employment hereunder may be ------------------------- terminated by the Company for disability. In such event, all Employee's rights under this Agreement shall terminate with the payment of such amounts of annual base salary as have accrued but remain unpaid as of the thirtieth (30th) day after such notice is given except that all benefits under Paragraphs 8.b., 8.c. and 8.d. shall be extended to Employee as described in such paragraphs, provided, however, that with respect to Paragraph 8.c., the period for continued benefit plan coverage shall be limited to six months from the date of termination. In addition, the noncompetition and nonsolicitation provisions of Paragraphs 14 and 15 shall continue to apply for a period of six months from the date of termination for disability. For purposes of this Agreement, "disability" is defined to mean that, as a result of Employee's incapacity due to physical or mental illness: a. Employee shall have been absent from his duties as an officer of the Company on a substantially full-time basis for six (6) consecutive months; and b. Within thirty (30) days after the Company notifies Employee in writing that it intends to replace him, Employee shall not have returned to the performance of his duties as an officer for the Company on a full-time basis. Such notice may be given by the Company at any time after Employee has been absent for a total of four consecutive months. 11. RETIREMENT. Employee shall be entitle to participate in the ---------- Company's Retirement Savings Plan and any other retirement plan hereafter made available to senior executive officers of the Company in accordance with the provisions thereof as in effect from time to time. 12. INDEMNIFICATION. If litigation shall be brought to enforce or --------------- interpret any provision contained herein, the non-prevailing party shall indemnify the prevailing party for reasonable attorneys' fees (including those for negotiations, trial and appeals) and disbursements incurred by the prevailing party in such litigation, and hereby agrees to pay prejudgment interest on any money judgment obtained by the prevailing party calculated at the generally prevailing Nations Bank of Florida, N.A. (or any successor thereto) base rate of interest charge to its commercial customers in effect from time to time from the date that payments(s) to him should have been made under this Agreement. 13. NONCOMPETITION. -------------- a. At all times during Employee's employment hereunder, and for such additional periods as may otherwise be set forth in this Agreement in reference to this Paragraph 13, Employee shall not, directly or indirectly, engage in any business, enterprise or employment, whether as owner, operator, shareholder, director, partner, creditor, consultant, agent or any capacity whatsoever that manufactures products designed to compete directly with products of the Company or markets such products anywhere in the world where the Company (i) is engaged in business or (ii) has evidenced an intention of engaging in business. Employee acknowledges that he has read the foregoing and agrees that -8- the nature of the geographical restrictions are reasonable given the international nature of the Company's business. In the event that these geographical or temporal restrictions are judicially determined to be unreasonable, the parties agree that the restrictions shall be judicially reformed to the maximum restrictions which are reasonable. b. Notwithstanding the provisions of the preceding Subparagraph, the Employee may accept employment with a company that would be deemed to be a competitor of the Company as described in the previous subparagraph ("Competitor"), so long as (i) the Competitor has had annual revenues of at least $1 billion in each of the prior two fiscal years, (ii) the Competitor's revenues for products and maintenance in direct competition with the Company do not exceed 50% of its total revenues, and (iii) the Employee's responsibilities are solely for divisions or subsidiaries of the Competitor that do not compete with the Company. 14. NONSOLICITATION OF EMPLOYEES AND CUSTOMERS. At all times during --------------------------------------------- the Employee's employment hereunder, and for such additional periods as may otherwise be set forth in this Agreement, in reference to this Paragraph 14, the Employee shall not, directly or indirectly, for himself or for any other person, firm, corporation, partnership, association or other entity (a) attempt to employ, employ or enter into any contractual arrangement with any employee or former employee of the Company, its affiliates, subsidiaries or predecessors in interest, unless such employee or former employee has not been employed by the Company, its affiliates, subsidiaries or predecessors in interest, during the six months prior to the Employee's attempt to employ him, or (b) call on or solicit any of the actual or targeted prospective customers of the Company or its affiliates, subsidiaries or predecessors in interest with respect to any matters related to or competitive with the business of the Company. 15. CONFIDENTIALITY. --------------- a. Nondisclosure: The Employee acknowledges and agrees that the Confidential Information (as defined below) is a valuable, special and unique asset of the Company's business. Accordingly, except in connection with the performance of his duties hereunder, the Employee shall not at any time during or subsequent to the term of his employment hereunder disclose, directly or indirectly, to any person, firm, corporation, partnership, association or other entity any proprietary or confidential information relating to the Company or any information concerning the Company's financial condition or prospects, the Company's customers, the design, development, manufacture, marketing or sale of the Company's products or the Company's methods of operating its business (collectively, "Confidential Information"). Confidential Information shall not include information which, at the time of disclosure, is known or available to the general public by publications or otherwise through no act or failure to act on the part of Employee. b. Return of Confidential Information: Upon termination of Employee's employment, for whatever reason and whether voluntary or involuntary, or at any time at the request of the Company, Employee shall promptly return all Confidential Information in the possession or under the control of Employee to the Company and shall not retain any copies or other reproductions or extracts thereof. Employee shall at any time at the request of the Company destroy or have destroyed all memoranda, notes, reports, and documents, whether in "hard copy" form or as stored on magnetic or other media, and all copies and other reproductions and extracts thereof, prepared by Employee and shall provide the Company with a certificate that the foregoing materials have in fact been returned or destroyed. -9- c. Books and Records: All books, records and accounts whether prepared by Employee or otherwise coming into Employee's possession, shall be the exclusive property of the Company and shall be returned immediately to the Company upon termination of Employee's employment hereunder or upon the Company's request at any time. 16. INJUNCTION/SPECIFIC PERFORMANCE/SETOFF. Employee acknowledges that -------------------------------------- a breach of any of the provisions of Paragraphs 13, 14, or 15 hereof would result in immediate and irreparable injury to the Company which cannot be adequately or reasonably compensated at law. Therefore, Employee agrees that the Company shall be entitled, if any such breach shall occur or be threatened or attempted, to a decree of specific performance and to a temporary and permanent injunction, without the posting of a bond, enjoining and restraining such breach by Employee or his agents, either directly or indirectly, and that such right to injunction shall be cumulative to whatever other remedies for actual damages to which the Company is entitled. Employee further agrees that the Company may set off against or recoup from any amounts due under this Agreement to the extent of any losses incurred by the Company as a result of any breach by Employee of the provisions of Paragraphs 13, 14 or 15 hereof. 17. SEVERABILITY. Any provision in this Agreement that is prohibited ------------ or unenforceable in any jurisdiction shall, as to such jurisdiction, by ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 18. SUCCESSORS: This Agreement shall be binding upon Employee and ---------- inure to the benefit of the Company and any permitted successor of the Company. Neither this Agreement nor any rights arising hereunder may be assigned or pledged by Employee or anyone claiming through Employee; or by the Company, except to any corporation which is the successor in interest to the Company by reason of a merger, consolidation or sale of substantially all of the assets of the Company. The foregoing sentence shall not be deemed to have any effect upon the rights of Employee upon a Change of Control. 19. CONTROLLING LAW: This Agreement shall in all respects be governed ---------------- by, and construed in accordance with, the laws of the State of Georgia. 20. NOTICES: Any notice required or permitted to be given hereunder ------- shall be written and sent by registered or certified mail, telecommunicated or hand delivered at the address set forth herein or to any other address of which notice is given: TO THE COMPANY: CONCURRENT COMPUTER CORPORATION 4375 RIVER GREEN PARKWAY DULUTH, GEORGIA 30096 TO THE EMPLOYEE: STEVE G. NUSSRALLAH 605 BUTTERCUP TRACE ALPHARETTA, GEORGIA 30022 21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement ----------------- between the parties hereto on the subject matter hereof and may not be modified without the written agreement of both parties hereto. As such, this Agreement completely replaces and supercedes the Original Agreement. -10- 22. WAIVER. A waiver by any party of any of the terms and conditions ------ hereof shall not be construed as a general waiver by such party. 23. COUNTERPARTS. This Agreement may be executed in counterparts, ------------ each of which shall be deemed an original and both of which together shall constitute a single agreement. 24. INTERPRETATION. In the event of a conflict between the provisions -------------- of this Agreement and any other agreement or document defining rights and duties of Employee or the Company upon Employee's termination, including the Original Agreement, the rights and duties set forth in this Agreement shall control. 25. CERTAIN LIMITATIONS ON REMEDIES. Paragraph 7.b provides that ---------------------------------- certain payments and other benefits shall be received by Employee upon the termination of Employee by the Company other than for Cause and states that these same provisions shall apply if Employee terminates his employment in accordance with the provisions of paragraph 6 hereof. It is the intention of this Agreement that if the Company terminates Employee other than for Cause (and other than as a consequence of Employee's death, disability or normal retirement) or if Employee terminates his employment in accordance with the provisions of paragraph 6 hereof, then the payments and other benefits set forth in Paragraph 7.b shall constitute the sole and exclusive remedies of Employee. This Paragraph 25 shall have no effect upon the provisions of Paragraph 8 of this Agreement. IN WITNESS WHEREOF, this Employment Agreement has been executed by the parties as of the date first above written. CONCURRENT COMPUTER CORPORATION EMPLOYEE /S/ E. Courtney Siegel /S/ Steve G. Nussrallah - ---------------------- ------------------------- E. Courtney Siegel Steve G. Nussrallah Chairman, President and Chief Executive Officer 555839.4 -11- SCHEDULE A OTHER BENEFITS -------------- 1. Use of golf club membership maintained by the Company at a private country club to be designated by Employee. The initiation fee for such membership should not exceed $70,000 without the approval of the Board. 2. Commencing January 1,2000, first class tickets on airlines when travelling on Company business. -12- EX-10.3 4 doc4.txt EMPLOYMENT AGREEMENT -------------------- EMPLOYMENT AGREEMENT, made and entered into as of the 28th day of October, 1999 by and between CONCURRENT COMPUTER CORPORATION, a Delaware corporation ("Concurrent" or the "Company"), and Steven R. Norton (the "Employee"). W I T N E S S E T H : - - - - - - - - - - - WHEREAS, the Company desires to employ the Employee and the Employee desires to accept such employment with the Company; NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the parties agree as follows: 1. Employment ---------- The Company hereby employs the Employee and the Employee hereby accepts employment with the Company for the term set forth in Section 2 below, in the position and with the duties and responsibilities set forth in Section 3 below, and upon other terms and conditions hereinafter stated. 2. Term ---- The term of employment hereunder shall commence on the date hereof and shall continue until otherwise terminated by either party at any time in accordance with the terms hereof. 3. Position; Duties; Responsibilities ------------------------------------ 3.1 It is intended that at all times during the term of employment hereunder, the Employee shall serve as Executive Vice President, Chief Financial Officer reporting to the Chief Executive Officer of the Company (the "Chief Executive Officer"). The Employee agrees to perform such senior executive and managerial services customary to such position as are necessary to the operations of the Company and as may be assigned to him from time to time by the Chief Executive Officer or by the Company's Board of Directors (the "Board of Directors"). 3.2 Throughout the term of employment hereunder, the Employee shall devote his full time and undivided attention during normal business hours to the business and affairs of the Company, as appropriate to his responsibilities and duties hereunder, except for reasonable vacations and illness or other disability, but nothing in this Agreement shall preclude the Employee from devoting reasonable periods required for serving as a director or member of any advisory committee of not more than two (at any time) "for profit" organizations involving no conflict of interest with the interests of the Company (subject to approval by the Chief Executive Officer, which approval shall not be unreasonably withheld), or from engaging in charitable and community activities, or from managing his personal investments, provided such activities do not materially interfere with the performance of his duties and responsibilities under this Agreement. 4. Compensation ------------ 4.1 Salary ------ For services rendered by the Employee during the term of employment hereunder, the Employee shall be paid a salary, payable in equal biweekly installments (or, if different, payable in accordance with the then existing applicable payroll policy of the Company, but in no event less frequently than equal monthly installments) at an annualized rate of no less than $175,000.00, such salary to be reviewed for increase annually with such increases, if any, as shall be awarded taking into account such factors as corporate and individual performance and general business conditions, including changes in the Atlanta metropolitan area cost of living index. 4.2 Annual Bonus Opportunity -------------------------- During the term of employment hereunder, the Employee will be provided an annual bonus opportunity in a target amount of $70,000.00 (pro-rated based on the Employee's start date). The objectives for each year and other terms and conditions of the bonus opportunity shall be established by the Board of Directors or a committee thereof and shall be reasonably consistent with the business plan of the Company for such year established in advance. 4.3 Employee Benefit Plans ------------------------ During the term of employment hereunder, the Employee will be eligible to participate in all employee benefit programs of the Company now or hereafter made available to senior executives, in accordance with the provisions thereof as in effect from time to time. In any event, the Employee shall be entitled to vacation days at the rate of three weeks per calendar year or such greater amount as may be provided by Company policies in effect from time to time. During the term of employment hereunder, the Company agrees to pay the Employee's normal recurring monthly membership fee at the Atlanta Athletic Club. 4.4 Stock Options -------------- Employee has initially been granted an option to purchase 400,000 shares of the Company's common stock. The per share exercise price of the option is the fair market value of the Company's common stock ($10.125), and the option vests 31.25% on the first anniversary date, 31.25% on the second anniversary date and 37.5% on the third anniversary date of employment. The remaining terms and conditions of this grant are as provided in the Company's Stock Option Plan. 2 4.5 Business Expense Reimbursements --------------------------------- During the term of employment hereunder, the Employee will be entitled to receive reimbursement by the Company for all reasonable out-of-pocket expenses incurred by him (in accordance with the policies and procedures established by the Company for its senior level executives), in connection with his performing services hereunder. 5. Consequences of Termination of Employment --------------------------------------------- 5.1 Death ----- In the event of the death of the Employee during the term of employment hereunder, the estate or other legal representatives of the Employee shall be entitled to continuation of the salary provided for in Section 4.1 for a period of 6 months from the date of the Employee's death, at the rate in effect at such date. 5.2 Continuing Disability ---------------------- Notwithstanding anything in this Agreement to the contrary, the Company is hereby given the option to terminate the Employee's employment in the event of the Employee's Continuing Disability. Such option shall be exercised by the Company by giving notice to the employee of the Company's intention to terminate his employment due to Continuing Disability not earlier than 15 days from the receipt of such notice. In the event of the termination of the Employee's employment due to Continuing Disability, the Employee shall be entitled to compensation in accordance with the terms of all disability plan(s) made available to the Employee in which he is a participant at the time of such termination, if any; provided, however, that for a period of 6 months from such date of termination, the Employee shall receive an amount at least equal to the salary provided for in Section 4.1 above, at the rate in effect at the time of such termination, to the extent not provided under any such disability plan. Other rights and benefits under employee benefit plans and programs of the Company, generally, will be determined in accordance with the terms and provisions of such plans and programs. For purposes hereof, Continuing Disability shall mean the inability to perform the essential functions connected with the Employee's duties hereunder, with or without reasonable accommodation, which inability shall have existed for a period of 250 days, even though not consecutive, in any 24 month period. In the event the Employee does not agree with the Company that his inability may reasonably be expected to exist for such period, the opinion of a qualified medical doctor selected by the Employee and reasonably satisfactory to the Company shall be determinative. If, following a termination of employment hereunder due to Continuing Disability, the Employee becomes otherwise employed (whether as an 3 employee, consultant or otherwise, but not solely as a member of a board of directors), any salary or other benefits earned by him from such employment shall be offset against any disability compensation or salary continuation due hereunder. 5.3 Termination by the Company for Due Cause ---------------------------------------------- Nothing herein shall prevent the Company from terminating the employment of the employee for Due Cause. The Employee shall continue to receive salary and any accrued and due bonus payments provided for herein only through the period ending with the date of such termination and any other rights and benefits he may have under employee benefit plans and programs of the Company, generally, shall be determined in accordance with the terms of such plans and programs. The term "Due Cause", as used herein, shall mean that (a) the Employee has committed a willful serious act, such as embezzlement, against the Company intended to enrich himself at the expense of the Company or has been convicted of a felony involving moral turpitude or (b) the Employee has (i) willfully and grossly neglected his duties hereunder or (ii) intentionally failed to observe specific directives or policies of the Board of Directors or CEO, which directives or policies were consistent with his positions, duties and responsibilities hereunder, and which failure had, or continuing failure will have, a material adverse effect on the Company. Prior to any such termination, the Employee shall be given written notice by the Board of Directors or CEO that the Company intends to terminate his employment for Due Cause under this Section 5.3, which written notice shall specify the particular acts or omissions on the basis of which the Company intends to so terminate the Employee's employment, and the Employee (with his counsel, if he so chooses) shall be given the opportunity, within 15 days of his receipt of such notice, to have a meeting with the Board of Directors to discuss such acts or omissions and given reasonable time to remedy the situation, if it is deemed by the Board of Directors, in their good faith business judgment, to be remediable. In the event of such termination, the Employee shall be promptly furnished written specification of the basis therefor in reasonable detail. 5.4 Termination by the Company other than for Due Cause ----------------------------------------------------------- The foregoing notwithstanding, the Company may terminate the Employee's employment for whatever reason it deems appropriate; provided, however, that in the event such termination is not based on death or disability as provided in Sections 5.1 or 5.2, above, or on Due Cause as provided in Section 5.3 above, the Employee will be entitled to receive Severance Compensation (as defined below) for a period of 12 months from the date of such termination. For purposes of the foregoing, Severance Compensation shall consist of salary continuation, payable in equal biweekly installments (or, if different, payable in accordance with the then existing applicable payroll policy of the Company, but in no event less frequently than equal monthly installments), at the rate in effect, pursuant to Section 4.1 above, immediately prior to such termination. 4 During the period beginning with the Employee's termination and continuing through the period for which Severance Compensation is paid hereunder, the Company will use its best efforts to continue the Employee's existing coverage under its group life insurance, hospitalization, medical and dental plans. To the extent he is not eligible under the terms of one or more of such plans and programs, the Company will provide the Employee with the economic equivalent for the 12 month period during which Severance Compensation is paid hereunder. For this purpose, "economic equivalent" shall mean the cost the Employee would incur if he were to provide himself with a benefit comparable to the reduced or eliminated benefit. The amount paid to the Employee as the economic equivalent, less the amount of the premium payment which is the Employee's responsibility in accordance with the Company benefit plan, will be "grossed-up", if taxable (that is, the amount necessary to make the Employee whole after taking into account (i) the cost of the benefit and (ii) additional income taxes, if any, incurred by the employee on amounts paid to him pursuant to this sentence)). The foregoing notwithstanding, upon a termination triggering Severance Compensation payments hereunder the Company shall be under no obligation to continue the Employee's coverage under any long term disability plan or program; and the date of such termination shall be considered a termination for purposes of participation in the Company's Retirement Savings Plan. Except as specifically set forth in this Section 5.4, the Employee shall not be entitled to any other compensation or benefits following a termination of employment by the Company as provided in this Section 5.4. 5.5 Constructive Termination of Employment by the Company without Due ---------------------------------------------- ------------------ Cause ----- Anything herein to the contrary notwithstanding, if the Company: (A) demotes or otherwise elects or appoints the Employee to a lesser office than set forth in Section 3.1 or fails to elect or appoint him to such position; (B) causes a material change in the nature or scope of the authorities, powers, functions, duties or responsibilities attached to the Employee's position as described in Section 3.1; (C) decreases the Employee's salary or annual bonus opportunity below the levels provided for by the terms of Sections 4.1 and 4.2 (taking into account any salary increases made from time to time in accordance with Section 4.1); (D) materially reduces the Employee's benefits under any employee benefit plan, program, or arrangement of the Company (other than a change that affects all employees similarly situated) from the level in effect upon the Employee's commencement of participation; or 5 (E) commits any other material breach of this Agreement, then such action (or inaction) by the Company, unless consented to in writing by the Employee, shall constitute a termination of the Employee's employment by the Company other than for Due Cause pursuant to Section 5.4 above. If, within thirty (30) days of learning of the action (or inaction) described herein as a basis for a constructive termination of employment, the Employee (unless he has given written consent thereto) notifies the Company in writing that he wishes to effect a constructive termination of his employment pursuant to this Section 5.5, and such action (or inaction) is not reversed or otherwise remedied by the Company within 30 days following receipt by the Company of such written notice, then effective at the end of such second 30 day period, the employment of the Employee hereunder shall be deemed to have terminated pursuant to Section 5.4 above. 5.6 Voluntary Termination by Employee ------------------------------------ In the event the Employee terminates his employment of his own volition (other than as provided in Section 5.5 above), such termination shall constitute a voluntary termination and in such event the Employee shall be limited to the same rights and benefits as provided in connection with termination for Due Cause under the second sentence of Section 5.3 above. For the purposes hereof, a decision by the Employee to voluntarily retire shall constitute a voluntary termination. 6. Protective Agreement --------------------- Concurrently with entering into this Agreement, the Employee will enter into a Protective Agreement in favor of the Company substantially in the form attached as Exhibit A hereto (the "Protective Agreement"). ---------- 7. Successors and Assigns ------------------------ 7.1 Assignment by the Company ---------------------------- This Agreement shall be binding upon and inure to the benefit of the Company or any corporation or other entity to which the Company may transfer all or substantially all its assets and business and to which the Company may assign this Agreement, in which case "Company" as used herein shall mean such corporation or other entity. 7.2 Assignment by the Employee ----------------------------- The Employee may not assign this Agreement or any part thereof without the prior written consent of the Company, which consent may be withheld by the Company for any reason it deems appropriate; provided, however, nothing herein shall preclude the Employee from designating one or more beneficiaries to receive any amount that may be payable following the occurrence of his legal incompetency or his death and shall not preclude the legal representative of his 6 estate from assigning any right hereunder to the person or persons entitled thereto under his will or, in the case of intestacy, to the person or persons entitled thereto under the laws of intestacy applicable to his estate. The term "beneficiaries", as used in this Agreement, shall mean a beneficiary or beneficiaries so designated to receive any such amount or if no beneficiary has been so designated the legal representative of the Employee (in the event of his incompetency) or the Employee's estate. 8. Arbitration ----------- Any dispute or controversy arising out of, in connection with, or relating to this Agreement or the Employee's employment by the Company or its termination shall be settled exclusively by arbitration in Atlanta, Georgia by one arbitrator in accordance with the employment arbitration rules of the American Arbitration Association then in effect; provided, however, that this arbitration agreement shall not preclude the Company from seeking to enforce the Protective Agreement in any court of competent jurisdiction without resort to arbitration. The arbitrator's award may include the manner in which fees of counsel and other expenses in connection with the dispute or controversy are to be borne by the parties. The arbitrator's authority and jurisdiction is limited to interpreting and applying the express provisions of this Agreement and the arbitrator shall not have the authority to alter or add to the provisions of this Agreement. Judgment may be entered upon the arbitrator's award in any court of competent jurisdiction. 9. Governing Law -------------- This Agreement shall be deemed a contract made under, and for all purposes shall be construed in accordance with, the laws of the State of Georgia (without reference to the principles of conflicts of law). 10. Entire Agreement ----------------- This Agreement, including the Protective Agreement, contains all the understandings and representations between the parties hereto pertaining to the subject matter hereof and supersedes all undertakings and agreements, whether oral or in writing, if any there be, previously entered into by them with respect thereto. 11. Amendment or Modification; Waiver ------------------------------------ No provision in this Agreement may be amended or waived unless such amendment or waiver is agreed to in writing, signed by the Employee and an officer of the Company thereunto duly authorized. Except as otherwise specifically provided in the Agreement, no waiver by any party hereto of any breach by another party hereto of any condition or provision of the Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar provision or condition at the same or any prior or subsequent time. 7 12. Notices ------- Any notice to be given hereunder shall be in writing and delivered personally or sent by certified mail, postage prepaid, return receipt requested, addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice of hereunder in writing: COMPANY: Concurrent Computer Corporation 4375 River Green Parkway Duluth, GA 30096 Attn: Chief Executive Officer With a copy to: King & Spalding 191 Peachtree Street Atlanta, GA 30303-1763 ATTN: Jack Capers EMPLOYEE: Steven R. Norton 3095 Leeds Garden Lane Alpharetta, GA 30022 13. Severability ------------ In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions or portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. 14. Withholding ----------- Anything to the contrary notwithstanding, all payments required to be made by the Company hereunder to the Employee or his estate or beneficiaries, shall be subject to withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts, in whole or in part, the Company may, in its sole discretion, accept other provision for payment of taxes as required by law, provided it is satisfied that all requirements of law affecting its responsibilities to withhold such taxes have been satisfied. 15. Survivorship ------------ The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. 8 16. References ---------- In the event of the Employee's death or judicial determination of his incompetence, reference in this Agreement to the Employee shall be deemed, where appropriate, to refer to his legal representatives, or, where appropriate, to his beneficiary or beneficiaries. 17. Titles ------ Titles to the sections in this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the title of any section. 18. Counterparts ------------ This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. CONCURRENT COMPUTER CORPORATION By: /S/ Steve Nussrallah ---------------------- Steve Nussrallah President and CEO EMPLOYEE /S/ Steven R. Norton ----------------------- Steven R. Norton 9 Exhibit A --------- PROTECTIVE AGREEMENT -------------------- I, the undersigned, in consideration of and as a condition to my employment by Concurrent Computer Corporation (the "Company), do hereby agree with the Company as follows: 1. Noncompete and Nonsolicitation of Customers or Employees. During my --------------------------------------------------------- employment by the Company, I will devote my full time and best efforts to the business of the Company and I will not, directly or indirectly, alone or as a partner, officer, director, employee or holder of more than 5% of the common stock of any other organization, engage in any business activity which competes directly or indirectly with the products or services being developed, manufactured or sold by the Company. I also agree that, following any termination of such employment, I will not, directly or indirectly, for any period in which I receive severance payments from the Company, plus one (1) year, (a) engage in or provide any services substantially similar to the services that I provided to the Company at any time during the last twelve (12) months of my employment to or on behalf of any person or entity that competes with the Company in the "real time" or "video-on-demand" businesses anywhere in the continental United States, which I acknowledge and agree is the primary geographic area in which the Company competes in these businesses and thus, by virtue of my senior executive position and responsibilities with the Company, also the primary geographic area of my employment with the Company, (b) solicit or attempt to solicit, for the purpose of competing with the Company in its "real time" or "video-on-demand" businesses, any customers or active prospects of the Company with which I had any material business contact for or on behalf of the Company at any time during the last twelve (12) months of my employment, or (c) recruit or otherwise seek to induce any employees of the Company to terminate their employment or violate any agreement with the Company. 2. Trade Secrets and Other Confidential Information. Except as may be -------------------------------------------------- required in the performance of my duties with the Company, or as may be required by law, I will not, whether during or after termination of my employment with the Company, reveal to any person or entity or use any of the trade secrets of the Company for as long as they remain trade secrets. I also agree to these same restrictions, during my employment with the Company and for a period of three (3) years thereafter, with respect to all other confidential information of the Company, including its technical, financial and business information, unless such confidential information becomes publicly available through no fault of mine or unless it is disclosed by the Company to third parties without similar restrictions. Further, I agree that any and all documents, disks, databases, notes, or memoranda prepared by me or others and containing trade secrets or confidential information of the Company shall be and remain the sole and exclusive property of the Company, and that upon termination of my employment or prior request of the Company I will immediately deliver all of such documents, disks, databases, notes or memoranda, including all copies, to the Company at its main office. 3. Inventions and Copyrights. If at any time or times during my ---------------------------- employment (or within six (6) months thereafter if based on trade secrets or confidential information within the meaning of Paragraph 2 above), I make or discover, either alone or with others, any invention, modification, development, improvement, process or secret, whether or not patented or patentable (collectively, "inventions") in the field of computer science or instrumentation, I will disclose in reasonable detail the nature of such invention to the Company in writing, and if it relates to the business of the Company or any of the products or services being developed, manufactured or sold by the Company, such invention and the benefits thereof shall immediately become the sole and absolute property of the Company provided the Company notifies me in reasonable detail within ninety (90) days after receipt of my disclosure of such invention that it believes such invention relates to the business of the Company or any of the products or services being developed, manufactured or sold by the Company. I also agree to transfer such inventions and benefits and 2 rights resulting from such inventions to the Company without compensation and will communicate without cost, delay or prior publications all available information relating to the inventions to the Company. At the Company's expense I will also, whether before or after termination of my employment, sign all documents (including patent applications) and do all acts and things that the Company may deem necessary or desirable to effect the full assignment to the Company of my right and title to the inventions or necessary to defend any opposition thereto. I also agree to assign to the Company all copyrights and reproduction rights to any materials prepared by me in connection with my employment. 4. Conflicting Agreements. I represent that I have attached to this ------------------------ Agreement a copy of any written agreement, or a summary of any oral agreement, which presently affects my ability to comply with the terms of this Agreement, and that to the best of my knowledge my employment with the Company will not conflict with any agreement to which I am subject. I have returned all documents and materials belonging to any of my former employers. I will not disclose to the Company or induce any of the Company's employees to use trade secrets or confidential information of any of my former employers. 5. Miscellaneous. -------------- (a) I hereby give the Company permission to use photographs of me, during my employment, with or without using my name, for any purposes the Company deems necessary or desirable. (b) The Company shall have, in addition to any and all remedies of law, the right to an injunction, specific performance and other equitable relief as may be appropriate to prevent the violation of my obligations hereunder. (c) I understand that this Agreement does not create an obligation on the Company or any other person to continue my employment for any period of time. (d) This Agreement shall be construed in accordance with the laws of the State of Georgia. I agree that each provision of this Agreement shall be treated as a separate and independent clause, and the unenforceability of any clause shall in no way impair the enforceability of any of the other clauses. 3 Moreover, if one or more of the provisions contained in this Agreement shall for any reason be held to be extensively broad as to scope, activity, time, geographical area or subject so as to be unenforceable at law, such provision or provisions shall be construed by the appropriate judicial body by limiting and reducing it or them so as to be enforceable to the maximum extent compatible with applicable law as it shall then appear. (e) My obligations under this Agreement shall survive the termination of my employment regardless of the manner of such termination for the time periods set forth in this Agreement, and shall be binding upon my heirs, executors and administrators. (f) The term "Company" as used in this Agreement includes Concurrent Computer Corporation and any of its subdivisions or affiliates. The Company shall have the right to assign this Agreement to its successors and assigns. (g) The foregoing is the entire agreement between the Company and me with regard to its subject matter, and may not be amended or supplemented except by a written instrument signed by both the Company and me. The section headings are inserted for convenience only, and are not intended to affect the meaning of this Agreement. /S/ Steven R. Norton _______________________________ Steven R. Norton 4 EX-11 5 doc5.txt
CONCURRENT COMPUTER CORPORATION EXHIBIT 11 BASIC AND DILUTED EARNINGS PER SHARE COMPUTATION THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, 1999 DECEMBER 31, 1999 ------------------- ------------------ BASIC/DILUTED BASIC/DILUTED ------------------- ------------------ Average outstanding shares:. 51,560 50,262 Dilutive options outstanding - - ------------------- ------------------ Equivalent Shares. . . . . . 51,560 50,262 =================== ================== Net Loss . . . . . . . . . . ($16,775) ($19,326) =================== ================== Loss per share . . . . . . . (0.33) (0.38) =================== ==================
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, 1998 DECEMBER 31, 1998 ----------------- ----------------- BASIC DILUTED BASIC DILUTED ------- -------- ------- -------- Average outstanding shares:. 47,852 47,852 47,763 47,763 Dilutive options outstanding - 1,362 - 1,457 ------- -------- ------- -------- Equivalent Shares. . . . . . 47,852 49,214 47,763 49,220 ======= ======== ======= ======== Net income . . . . . . . . . $ 915 $ 915 $ 489 $ 489 ======= ======== ======= ======== Earnings per share . . . . . $ 0.02 $ 0.02 $ 0.01 $ 0.01 ======= ======== ======= ========
EX-27 6 doc6.txt WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 [LEGEND] This schedule contains summary financial information extracted from the Companys Consolidated Balance Sheet at December 31, 1999 and Consolidated Statement of Operations for the six months ended December 31, 1999, and is qualified in its entirety by reference to such financial statements. [/LEGEND] 1000 6-MOS JUN-30-2000 JUL-01-1999 DEC-31-1999 7952 0 15031 262 4383 27810 37964 26490 55651 11863 0 0 0 532 41429 55651 17057 32606 8779 17213 0 29 50 (19026) 300 (19326) 0 0 0 (19326) (.38) (.38)
-----END PRIVACY-ENHANCED MESSAGE-----