UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

  

 

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):

December 31, 2017

 

Concurrent Computer Corporation

(Exact Name of Registrant as Specified in its Charter)

 

Delaware 001-37706 04-2735766
(State or other jurisdiction of
incorporation)
(Commission File Number) (IRS Employer Identification No.)

 

4375 River Green Parkway, Suite 100, Duluth, Georgia   30096
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (678) 258-4000

 

Not applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

  ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

 

 

 

 

 

ITEM 2.01. Completion of Acquisition or Disposition of Assets

 

On December 31, 2017, Concurrent Computer Corporation (the “Company”) completed the previously announced sale of its “content delivery and storage” business (the “Business”) and other related assets (collectively, the “Assets”) to Vecima Networks Inc. (“Vecima”) pursuant to an Asset Purchase Agreement, dated as of October 13, 2017, between the Company and Vecima (the “Asset Purchase Agreement”).

 

Pursuant to the previously announced Escrow Agreement entered into by the Company and Vecima on December 15, 2017, the Company received $29,020,000 on the closing date, and may receive additional consideration, or be required to return a portion of the consideration received on the closing date, based on a final determination of the Business’ net working capital as of the closing date. Pursuant to the Escrow Agreement entered into by the Company and Vecima, $1.45 million of the purchase price will be held by SunTrust Bank as security for the Company’s indemnification obligations to Vecima under the Asset Purchase Agreement, which amount will be released to the Company on or before December 31, 2018 (less any portion used to make indemnification payments to Vecima).

 

The closing of the sale of the Assets to Vecima resulted in a “change in control” under our Amended and Restated 2011 Stock Incentive Plan. As a result, the Company has recognized the acceleration of the vesting and the lapse of restrictions on all restricted stock granted under our Amended and Restated 2011 Stock Incentive Plan and payment of any associated accrued dividends in connection with the consummation of the sale of the Assets to Vecima.

 

ITEM 5.02. Departure of Directors or Certain Officers’ Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

 

Departure of Directors or Certain Officers

 

On December 31, 2017, the Company and Derek Elder entered into a Separation and Consulting Agreement and General Release of Claims (the “Separation Agreement”), whereby Mr. Elder’s role as president and chief executive officer of the Company will terminate and he will cease to be a member of the Company’s board of directors and all committees thereof, effective on December 31, 2017. Mr. Elder’s separation from the Comany did not involve any disagreement with the Board, the Company or its management on any matter relating to the Company’s operations, policies or practices. Under the Separation Agreement, Mr. Elder will receive the following payments, all less applicable tax withholdings and deductions: (i) a lump sum cash severance payment of $558,000; (ii) $180,380, which equals the pro-rated portion of the maximum award payable to Mr. Elder under the Company’s annual incentive plan for the Company’s 2018 fiscal year; (iii) $19,121, which represents the difference between Mr. Elder’s monthly COBRA premium for himself and his eligible dependents who were covered under the Company's hospitalization and medical plan as of December 31, 2017 and the monthly premium that an active employee would pay for the same coverage as of December 31, 2017, multiplied by 12 and grossed up for estimated taxes; and (iv) the previously approved and announced $200,000 bonus payable on closing of the transaction with Vecima. In addition, all of Mr. Elder’s outstanding restricted stock awards and performance-based stock awards became fully vested on December 31, 2017 in accordance with the terms of the Company’s Amended and Restated 2011 Stock Incentive Plan.

 

Pursuant to the Separation Agreement, Mr. Elder will provide consulting services to the Company through December 31, 2018, unless the consulting term is terminated earlier in accordance with the terms of the Separation Agreement. As consideration for the consulting services, Mr. Elder will receive: (i) one payment of $217,722 on or about July 1, 2018; and (ii) an aggregate of $217,722 payable in six (6) substantially equal monthly installments during the period beginning on July 1, 2018 through December 31, 2018. In addition, Mr. Elder will be eligible to receive an “Incentive Transaction Bonus” (as defined in the Separation Agreement) upon the consummation of any acquisition of any entity or business (as defined in the Separation Agreement, a “Sourced Business”) by the Company that Mr. Elder sourced and introduced to the Company during the consulting term and is consummated on or before the 90th day following the termination of the consulting term (as defined by the Separation Agreement, a “Sourced Transaction”). The Incentive Transaction Bonus will equal the sum of (i) 1% of the total consideration paid by the Company for the Sourced Business in the Sourced Transaction and (ii) 7.5% of the Net Asset Value (as defined in the Separation Agreement) of an subsequent sale of the Sourced Business by the Company that is consummated on or before the 5th anniversary of the closing of the Sourced Transaction. Each portion of the Incentive Transaction Bonus shall be paid in a lump sum cash payment no later than thirty (30) days following the consummation of the applicable transaction.

 

The consideration to Mr. Elder under the Separation Agreement is in lieu of any change of control or other consideration payable to Mr. Elder under his existing employment agreement. The Separation Agreement contains a general release of claims against the Company and other “Released Parties” by Mr. Elder and a covenant not to sue such Released Parties. Pursuant to the Separation Agreement, Mr. Elder is required to comply with certain restrictive covenants regarding nondisclosure of Company information, non-disparagement, non-competition and non-solicitation of Company customers and employees.

 

The foregoing description of the Separation Agreement is qualified in its entirety by the full text of the Separation Agreement, a copy of which is furnished as Exhibit 99.1 hereto.

 

 

 

 

On January 1, 2018, Robert Pons tendered his resignation from the Board and all Board committees thereof, effective January 1, 2018. The resignation of Mr. Pons did not involve any disagreement with the Board, the Company or its management on any matter relating to the Company’s operations, policies or practices. In connection with Mr. Pons’ release of any claims against the Company, the Company agreed to accelerate the vesting of 7,500 shares of restricted stock held by Mr. Pons.

 

In connection with Mr. Pons’ resignation from the Board, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Spartan Advisors, Inc. ("Spartan"), a corporation owned and controlled by Mr. Pons. Pursuant to the Consulting Agreement, Spartan will provide consulting services to the Company as reasonably requested by the Board, which services shall include identifying and presenting investment opportunities to the Company within the parameters provided by the Board from time to time. During the term of the Consulting Agreement, which will run through December 31, 2018 unless terminated earlier in accordance with its terms, Spartan will be paid an aggregate of $85,000 in twelve monthly installments. Spartan will also be eligible to receive an “Incentive Transaction Bonus” (as defined in the Consulting Agreement upon the consummation of any acquisition (as defined in the Consulting Agreement, a “Sourced Transaction”) of an entity or business (as defined in the Consulting Agreement, a “Sourced Business”) by the Company that Spartan sourced and introduced to the Company during the term of the Consulting Agreement. Any transaction bonus payable to Spartan will equal the sum of (i) 1% of the total consideration paid by the Company for the Sourced Business in the Sourced Transaction and (ii) 7.5% of the “Net Asset Value” (as defined in the Consulting Agreement) of any subsequent sale of the Sourced Business by the Company. Each portion of the Incentive Transaction Bonus shall be paid in a lump sum cash payment no later than thirty (30) days following the consummation of the applicable transaction. Mr. Pons will also receive 7,500 shares of restricted units of common stock of the Company, which will vest in equal installments on the first, second, and third anniversary of the Consulting Agreement.

 

The foregoing description of the Consulting Agreement is qualified in its entirety by the full text of the Consulting Agreement, a copy of which is furnished as Exhibit 99.2 hereto.

 

ITEM 9.01. Financial Statements and Exhibits.

 

Attached as Exhibit 99.3 and incorporated by reference herein is (i) the unaudited pro form condensed consolidated balance sheet of the Company as of September 30, 2017, (ii) the unaudited pro forma condensed consolidated statements of operations from the three months ended September 30, 2017, and (iii) the unaudited pro forma condensed consolidated statement of operations for the years ended June 30, 2016 and June 30, 2017. These pro forma financial statements are derived from the historical consolidated financial statements of the Company and give effect to the sale of the Assets to Vecima and the receipt of the net proceeds related thereto.

 

The following exhibits are filed herewith:

 

Exhibit No.    Description
     
99.1   Separation and Consulting Agreement and General Release of Claims between the Company and Derek Elder, dated as of December 31, 2017
     
99.2   Consulting Agreement between the Company and Robert Pons, dated as of January 1, 2018
     
99.3   Unaudited Pro Forma Condensed Consolidated Financial Statements of Concurrent Computer Corporation

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: January 2, 2018

 

CONCURRENT COMPUTER CORPORATION

(Registrant)

 

  By: /s/ Warren Sutherland  
    Warren Sutherland  
    Chief Financial Officer  

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.    Description
     
99.1   Separation and Consulting Agreement and General Release of Claims between the Company and Derek Elder, dated as of December 31, 2017
     
99.2   Consulting Agreement between the Company and Robert Pons, dated as of January 1, 2018
     
99.3   Unaudited Pro Forma Condensed Consolidated Financial Statements of Concurrent Computer Corporation

 

 

 

 

 

Exhibit 99.1

 

Execution Copy

 

SEPARATION AND CONSULTING AGREEMENT AND

GENERAL RELEASE OF CLAIMS

 

This Separation and Consulting Agreement and General Release of Claims (this " Agreement ") is between CONCURRENT COMPUTER CORPORATION, a Delaware corporation (the " Company "), and DEREK ELDER (" Consultant "). The signatories to this Agreement may be referred to collectively as " Parties " and individually as a " Party ."

 

WHEREAS , Consultant and the Company are parties to an employment agreement effective as of November 21, 2014 (the " Employment Agreement "), and pursuant to the Employment Agreement, Consultant serves as the Chief Executive Officer of the Company;

 

WHEREAS , Consultant's employment with the Company will terminate on December 31, 2017, (the " Separation Date ");

 

WHEREAS , after the Separation Date, the Company desires to retain Consultant to provide certain services as a consultant to the Company; and

 

WHEREAS , the Parties intend that the terms and conditions of this Agreement shall govern all issues relating to Consultant's employment, termination of employment, consulting relationship, and post-employment and post-consultancy obligations.

 

NOW THEREFORE , in consideration of the mutual promises set forth in this Agreement and other valuable consideration, the Parties agree as follows:

 

1.            Termination of Employment . Consultant acknowledges that his employment with the Company will terminate on the Separation Date. From and after the Separation Date, Consultant will have no employment relationship with the Company, whether as Chief Executive Officer or in any other employment capacity. As of the Separation Date, Consultant is deemed to have automatically resigned (a) as an officer of the Company and each of its affiliates, as applicable; (b) from the Company's Board of Directors (the " Board "); and (c) from any and all other positions he held with or on behalf of the Company, whether such be as an officer, member of the Board or in his capacity as a fiduciary.

 

2.            Separation Payments . Subject to Consultant's compliance with the terms and conditions of this Agreement, the Company shall provide for the payments and benefits described below:

 

(a)            Severance Amount . The Company will pay Consultant a lump sum cash payment of $558,000 (less applicable tax withholdings and deductions), which payment shall be paid on the Company's first regularly scheduled payroll date following the expiration of the Release Revocation Period (as defined in Section 4, below) (the " Initial Payment Date ").

 

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(b)            Fiscal Year 2018 Annual Incentive Plan . Consultant shall receive a pro-rated portion of Consultant's maximum award under the Company's Annual Incentive Plan for the Company's 2018 fiscal year, which pro-rated portion shall be equal to $194,000 and paid in a lump sum cash payment (less applicable tax withholdings and deductions) on the Initial Payment Date.

 

(c)            COBRA Payment . The Company shall pay Consultant a lump sum cash payment equal to $19,121.08 (less applicable tax withholdings and deductions) on the Initial Payment Date. Such payment represents the difference between (i) Consultant's monthly COBRA premium for himself and his eligible dependents who were covered under the Company's hospitalization and medical plan as of the Separation Date and (ii) the monthly premium that an active employee would pay for the same coverage, as of the Separation Date, multiplied by twelve (12), plus a gross up for estimated taxes.

 

(d)            Vesting of Equity Awards . Pursuant to the terms of the Company's 2011 Stock Incentive Plan and any award agreements thereunder, all of Consultant's outstanding restricted stock awards and performance-based stock awards shall become fully vested and all related accrued dividends paid (each as shown on Exhibit A hereto) as of the closing date of the transactions contemplated by the Asset Purchase Agreement entered into by the Company and Vecima Networks Inc. on October 13, 2017 (the " Asset Sale ").

 

(e)            Asset Sale Transaction Bonus . Consultant shall receive a transaction bonus in connection with the Asset Sale in the form of lump sum cash payment equal to $200,000 (less applicable tax withholdings and deductions), which amount shall be paid coincident with and contingent upon the closing of the Asset Sale.

 

3.            Consulting Relationship .

 

(a)            Services . During the Consulting Term (as defined in Section 3b, below), Consultant agrees to provide certain advisory and consulting services to the Company as reasonably requested by the Board (the " Services "). Consultant agrees to attend such meetings or calls with the Company representatives, members of the Board, the Company clients, the Company stockholders, analysts and the media as the Company may reasonably request for communication and application of his Services. Consultant shall use his best efforts to accommodate such requests for the provision of the Services, and shall devote his reasonable time and best efforts, skill and attention to the performance of the Services, including travel that is reasonably requested in the performance of such Services. Consultant shall coordinate the furnishing of the Services with representatives of the Company in order that such Services can be provided in such a way as to generally conform to the business schedules and performance standards of the Company, but the method of performance, place of performance, hours utilized in such performance, and other details of the manner of performance of Consultant's provision of the Services shall be within the sole control of Consultant. It is the intent of the Parties that Consultant will "separate from service" with the Company pursuant to the rules and regulations of Section 409A of the Internal Revenue Code of 1986, as amended (the " Code ") as of the Separation Date, therefore, the Parties reasonably anticipate that Consultant's level of bona fide services during the Consulting Term (as defined in Section 3b, below) will be no more than twenty percent (20%) of the average level of services performed by Consultant over the thirty-six-month (36) period immediately preceding the Separation Date, with the level of bona fide service calculated in accordance with Treasury Regulations Section 1.409A-1(h)(1)(ii).

 

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(b)           Consulting Term . Unless earlier terminated as provided hereunder, the " Consulting Term " shall be the period between the Separation Date and December 31, 2018 (the " Expiration Date "); provided, however, that the Consulting Term shall be terminated prior to the Expiration Date upon any of the following:

 

(i)           Consultant's death or Disability;

 

(ii)         the termination of the Consulting Term by voluntary resignation of Consultant; or

 

(iii)        the termination of the Consulting Term by the Board for Cause.

 

Upon the termination of the Consulting Term pursuant to Section 3(b)(i), the Company shall pay to Consultant's estate or representative, as applicable, a lump sum cash payment equal to any remaining unpaid Consulting Payments (as defined in Section 3(c), below), no later than thirty (30) days following the end of the Consulting Term. Upon the termination of the Consulting Term pursuant to Section 3(b)(ii), the Company shall have no further obligations to Consultant pursuant to Section 3(c) below other than payment for those Services performed prior to the date that the Consulting Term terminated. In the event the Consulting Term is terminated by the Board for Cause, all compensation under Sections 2 and 3 of this Agreement shall cease immediately. As used herein, " Disability " shall mean that Consultant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. As used herein, " Cause " shall exist in the event that: (A) Consultant breaches any of his obligations or covenants under this Agreement; (B) Consultant breaches any of his obligations under the Amended and Restated Protective Agreement attached hereto as Exhibit B (the " Amended Protective Agreement "), (C) Consultant 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 (D) Consultant has (x) willfully and grossly neglected his duties hereunder or (y) intentionally failed to observe specific lawful directives or policies of the Board, 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.

 

(c)            Consulting Payments . During the Consulting Term, and provided that Consultant complies with each of the provisions contained in this Agreement, the Company will pay Consultant (i) one payment of $217,722 on the Company's first regularly scheduled pay date following July 1, 2018 and (ii) an aggregate of $217,722 payable in six (6) substantially equal monthly installments beginning on July 1, 2018 through the Expiration Date (collectively, the " Consulting Payments ").

 

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(d)            Incentive Transaction Bonus . Consultant shall have the right to receive an incentive fee (the " Incentive Transaction Bonus ") upon the consummation of any acquisition of an entity or business (the " Sourced Business ") by the Company that Consultant sourced (as reasonably determined by the Board) and introduced to the Company during the Consulting Term and is consummated on or before the ninetieth (90th) day following the termination of the Consulting Term (the " Sourced Transaction "). The Incentive Transaction Bonus shall equal the sum of (i) 1% of the total consideration paid by the Company for the Sourced Business in the Sourced Transaction and (ii) 7.5% of the Net Asset Value of any subsequent sale of the Sourced Business by the Company that is consummated on or before the fifth (5th) anniversary of the closing of the Sourced Transaction. Each portion of the Incentive Transaction Bonus shall be paid in a lump sum cash payment no later than thirty (30) days following the consummation of the applicable transaction. As used in this Agreement, the term " Net Asset Value " means aggregate cash proceeds received by the Company upon divestiture less the sum of (i) acquisition costs and (ii) capital contributions that were made by the Company during its ownership.

 

(e)            Expenses . During the Consulting Term, Consultant 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), in connection with his performing Services hereunder. Reimbursements shall be made in accordance with the Company's normal expense reimbursement policies and procedures (including timing), and such reimbursements will be made no later than the last day of Consultant's taxable year following the taxable year in which the expense was incurred.   The expenses reimbursed by Consultant during any taxable year of the Consultant will not affect the expenses paid by the Company in another taxable year. This right to reimbursement is not subject to liquidation or exchange for another benefit.

 

(f)            Withholding . Consultant acknowledges that he will receive an IRS Form 1099-MISC from the Company for the Consulting Payments and the Incentive Transaction Bonus. Consultant acknowledges and agrees that (i) the Company is not required to, and will not, withhold from payments or benefits to be made to Consultant under this Section 3 any sums for income tax, unemployment insurance, social security, or any other withholding, or make any contributions on Consultant's behalf for unemployment insurance or social security, (ii) Consultant is solely responsible for the timely payment of all income and other taxes with respect to the Services performed by Consultant hereunder, and (iii) Consultant shall be solely responsible for making all applicable tax filings and remittances with respect to amounts paid to Consultant pursuant to this Agreement and Consultant shall indemnify and hold harmless the Company for all claims, damages, costs and liabilities arising from any failure to do so.

 

(g)            Insurance/Benefits . From and after the Separation Date, Consultant shall no longer be an employee of the Company or any other Released Party (as defined in Section 4a, below) and nothing in this Agreement or elsewhere shall change that status. During the Consulting Term, Consultant shall be an independent contractor and shall not participate in any pension or welfare benefit plans, programs or arrangements of the Company or any other Released Party, unless such benefits are made available due to Consultant's former employment status with the Company.

 

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4.            General Release .

 

(a)            General Release . For good and valuable consideration, including the consideration set forth in Sections 2 and 3 above, Consultant, on behalf of himself and anyone claiming through him, hereby fully and completely releases the Company, its affiliates and related entities, and each of their respective current and former employees, officers, directors, shareholders, members, managers, agents, employee benefit plans and fiduciaries, insurers, trustees, attorneys, joint venture partners, transferees, successors and assigns (each a " Released Party " and collectively, the " Released Parties "), collectively, separately, and severally, of and from any and all claims, demands, damages, causes of action, debts, liabilities, controversies, judgments, and suits of every kind and nature whatsoever, foreseen, unforeseen, known or unknown, that Consultant has had, now has, or may have against the Released Parties (or any of them) from the beginning of time through the date Consultant signs this Agreement (the claims released under this Agreement are collectively referred to as the " Released Claims "). Subject to the limitations in the immediately preceding sentence, the Released Claims include all claims arising under any federal, state or local statute or ordinance, constitutional provision, public policy or common law, including all claims under Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967 (the " ADEA "); the Equal Pay Act; the Civil Rights Act of 1866; the Civil Rights Act of 1871; the Employee Retirement Income Security Act (with respect to unvested benefits); COBRA; the Americans with Disabilities Act; the Family and Medical Leave Act of 1933; 31 U.S.C. § 3730(h); the Fair Labor Standards Act; the Georgia Equal Pay Act; the Georgia Prohibition of Age Discrimination in Employment Act; and the Georgia Equal Employment for People with Disabilities Code (all as amended); all claims for breach of any express or implied contract; all claims for breach of any covenant of good faith and fair dealing; all claims for promissory estoppel or detrimental reliance; all claims for wages, bonuses, incentive compensation, equity, fringe benefits and severance allowances or entitlements; all tort claims (including claims for fraud, slander, libel, defamation, disparagement, and negligent or intentional infliction of emotional distress); all claims for compensatory or punitive damages, or any other claim for damages or injury of any kind whatsoever; and all claims for monetary recovery, including, without limitation, attorneys' fees, experts' fees, medical fees or expenses, costs and disbursements. Consultant hereby waives any right to seek or recover any individual relief in connection with any of the Released Claims through any charge, complaint, lawsuit, or other proceeding, whether commenced or maintained by Consultant or by any other person or entity.

 

(b)            Release of ADEA Claims . The Released Claims include any claims Consultant may have against any of the Released Parties under the ADEA. Consultant understands that he has forty-five (45) days from the date this Agreement was initially delivered to him to decide whether to sign it (the " Consideration Period "), although Consultant may sign this Agreement sooner if he chooses. If Consultant decides to sign this Agreement before the expiration of the Consideration Period, Consultant represents that his decision is knowing and voluntary, and that any remaining time within the Consideration Period is waived by him and expires. Consultant agrees that any revisions made to this Agreement after it was initially delivered to him, whether material or immaterial, shall not restart the Consideration Period. Consultant may revoke this Agreement within seven days after signing it (the " Release Revocation Period "). This Agreement will not become effective or enforceable until the day immediately following the end of the Release Revocation Period (such day being the " Effective Date "), however, notwithstanding the foregoing such effectiveness is contingent upon Consultant's prior execution of the Amended Protective Agreement. In the event Consultant chooses to revoke this Agreement, Consultant must notify the Company in writing in accordance with Section 14 of this Agreement. Any such notice of revocation must be delivered to the Company in a manner calculated to ensure receipt prior to 11:59 p.m. Eastern Time on the day prior to the Effective Date. If Consultant does not sign this Agreement prior to the expiration of the Consideration Period, or if Consultant revokes this Agreement, he will not be entitled to any of the benefits set forth in Sections 2(a), 2(b), 2(c) or 3 of this Agreement.

 

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5.            Covenant Not to Sue . Except for an action to challenge the validity of Consultant's release of claims under the ADEA, or as otherwise provided in Section 12 below, Consultant promises that he will not file, instigate or participate in any proceeding against any of the Released Parties relating to any of the Released Claims. In the event Consultant breaches the covenant contained in this Section 5, Consultant agrees to indemnify the Released Parties for all damages and expenses, including attorneys' fees, incurred by any Released Parties in defending, participating in or investigating any matter or proceeding covered by this Section 5.

 

6.            Representations . Consultant represents and warrants that (a) Consultant has been fully compensated for all hours worked with the receipt of Consultant's final paycheck; (b) Consultant is not aware of any activity by the Company or any other Released Party that Consultant believes to be unlawful or potentially unlawful; (c) Consultant has not filed any complaints, claims or actions against the Company or any other Released Party; and (d) Consultant has not assigned, transferred, conveyed or otherwise disposed of any Released Claims. Consultant understands and agrees that the payments and benefits set forth in Sections 2 and 3 encompass and are in lieu of any and all other payments and benefits to which he may be entitled from the Company.

 

7.            Amended Protective Agreement . The effectiveness of this Agreement is contingent upon Consultant's timely execution of the Amended Protective Agreement.

 

8.            Non-disparagement . Except as otherwise provided in Section 12 below, Consultant agrees not to make, publish or communicate to any person or entity or in any public forum (including social media) at any time any defamatory or disparaging remarks, comments, or statements concerning the Company or its officers, directors, employees, clients or services.

 

9.            Injunctive Relief . Consultant acknowledges that any breach of his obligations under Section 8 of this Agreement or the Amended Protective Agreement would cause irreparable harm to the Company, the exact amount of which would be difficult to determine, and that the remedies at law for any such breach would be inadequate. Accordingly, Consultant agrees that, in addition to any other remedy that may be available to the Company, the Company shall be entitled to specific performance and injunctive and other equitable relief, without posting bond or other security, to enforce or prevent any violation of such provisions. In any action for injunctive relief, the prevailing party will be entitled to collect reasonable attorneys' fees and other reasonable costs from the non-prevailing party.

 

10.          Notification to Subsequent Employer . Consultant agrees to notify any subsequent employer of the existence and terms of the provisions set forth in Sections 8 and 9 of this Agreement and the Amended Protective Agreement. In addition, Consultant authorizes the Company to provide a copy of such provisions to third parties, including but not limited to Consultant's subsequent, anticipated or possible future employers.

 

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11.          Cooperation . Consultant agrees to cooperate with the Company and be reasonably available to confer with the Company with respect to continuing and/or future matters related to the period during which Consultant was employed by the Company or during the Consulting Term (including, without limitation, promptly responding to requests for information and appearing at the Company's request to give truthful testimony without requiring service of a subpoena or other legal process). The Company agrees to reimburse Consultant for all reasonable expenses incurred by Consultant in connection with providing cooperation pursuant to this Section 11 and, to the extent not prohibited by law, compensate Consultant at his reasonable hourly rate for any services so rendered.

 

12.          Protected Rights . Notwithstanding anything contained in this Agreement to the contrary, this Agreement does not constitute a release nor a waiver of any of the following claims: (a) any claims that cannot legally be waived by private agreement and any claims that may arise after the date Consultant signs this Agreement; (b) any right to file an administrative charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, or the Occupational Safety and Health Administration, provided that Consultant does release and relinquish any right to receive any money, property, or any other thing of value, or any other financial benefit or award, as a result of any proceeding of any kind or character initiated by any such governmental agencies or organizations; (c) claims pursuant to the terms and conditions of the federal law known as COBRA or similar state law; (d) claims for indemnity under any indemnification agreement with the Company or under its organizational documents, as provided by Delaware law or under any applicable insurance policy with respect to Consultant's liability as an employee, director or officer of the Company or its affiliates; and (e) claims Consultant may have as an employee participating in the Company's qualified retirement plan(s). Nothing contained in this Agreement prevents Consultant from (i) providing truthful testimony in response to a lawfully issued subpoena or court order, (ii) reporting possible violations of federal law or regulation to any government agency or entity and participating in any investigation or proceeding that may be conducted by a government agency or entity, including providing documents or other information, without notice to the Company, or (iii) receiving an award or monetary recovery pursuant to the Securities and Exchange Commission's whistleblower program. 

 

13.          Defend Trade Secrets Act . Consultant is hereby notified that under the Defend Trade Secrets Act: (a) no individual will be held criminally or civilly liable under federal or state trade secret law for disclosure of a trade secret (as defined in the Economic Espionage Act) that is: (i) made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and made solely for the purpose of reporting or investigating a suspected violation of law; or (ii) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal so that it is not made public; and (b) an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.

 

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14.          Notices . All notices, requests, demands, claims, consents and other communications which are required, permitted or otherwise delivered under this Agreement shall in every case be in writing and shall be deemed properly served if: (a) delivered personally, (b) sent by registered or certified mail, in all such cases with first class postage prepaid, return receipt requested, or (c) delivered by a recognized overnight courier service to the parties at the addresses set forth below:

 

To the Company:

 

Concurrent Computer Corporation

4375 River Green Parkway, Suite 100

Duluth, Georgia 30096

Attn: Chairman, Board of Directors

   
With a copy to:

Andrews Kurth Kenyon LLP

450 Lexington Avenue

New York, NY 10017

Attn: Paul Silverstein and Anthony Eppert

   
To Consultant: Consultant's residential address as on file with the Company.

 

or to such other address as shall be furnished in writing by either party to the other party; provided, that such notice or change in address shall be effective only when actually received by the other party. The date of service of any such notices or other communications shall be: (i) the date such notice is personally delivered, (ii) three business days after the date of mailing if sent by certified or registered mail, or (iii) one business day after the date of delivery to the overnight courier if sent by overnight courier.

 

15.          Arbitration . Any disputes or claims of any kind or nature, including as to arbitrability under this Agreement, between Consultant and the Company arising out of, related to, or in connection with any aspect of Consultant's employment with or engagement by the Company or the termination thereof, including all claims arising out of this Agreement, the Amended Protective Agreement and claims for alleged discrimination, harassment, or retaliation in violation of Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, 42 U.S.C. § 1981, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, or any other federal, state, or local law, shall be settled by final and binding arbitration in Fulton County, Georgia. Either party may file a written demand for arbitration with the American Arbitration Association pursuant to its National Rules for the Resolution of Employment Disputes. The arbitration shall be conducted by a single neutral arbitrator who is a member of the Bar of the State of Georgia, has been actively engaged in the practice of law for at least fifteen (15) years, and has substantial experience in connection with business transactions and interpretation of contracts. In considering the relevancy, materiality, discoverability, and admissibility of evidence, the arbitrator shall take into account, among other things, applicable principles of legal privilege, including the attorney-client privilege, the work product doctrine, and appropriate protection of the Company's confidential information. Upon the request of either party, the arbitrator's award shall be written and include findings of fact and conclusions of law. Judgment on the award rendered by the arbitrator may be entered by any court having jurisdiction. Any arbitration of any claim by Consultant may not be joined or consolidated with any other arbitration(s) by or against the Company, including through class or collective arbitration. The prevailing party in any such arbitration, or in any action to enforce this Section 15 is or any arbitration award hereunder, shall be entitled to recover that party's attendant attorneys' fees and related expenses from the other party to the maximum extent permitted by law. The Company shall be responsible for payment of all mediation and arbitration filing and administrative fees, and all fees and expenses of the mediator or arbitrators, irrespective of the outcome, as to any federal statutory claims by Consultant or as may otherwise be required by law for this Agreement to be enforceable. Notwithstanding any other provision of this Agreement, the Company may seek temporary, preliminary, or permanent injunctive relief against the Consultant at any time without resorting to arbitration. The parties agree that this Agreement involves interstate commerce and that this arbitration provision is therefore subject to and governed by the Federal Arbitration Act.

 

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16.          General Provisions .

 

(a)            No Admission of Liability . The Company and its agents expressly deny that they have any liability to Consultant, and this Agreement is not to be construed as an admission of any such liability. If this Agreement does not become effective, it shall be deemed negotiation for settlement purposes only and will not be admissible or usable for any purpose.

 

(b)            Entire Agreement; Modification . This Agreement, including the Exhibits, which are incorporated by reference herein and made a part hereof, sets forth the entire agreement between the parties regarding the subject matter of this Agreement, and supersedes and replaces any and all other agreements, written or oral, express or implied, between the parties concerning the same subject matter, with the exception of any prior restrictive covenants or invention assignment agreements between the Parties, which remain in effect. Except as expressly provided herein, this Agreement will supersede and render null and void any and all prior agreements between the Parties and their agents and personnel on the subject of this Agreement. No provision of this Agreement may be amended, changed, altered, or modified, except by mutual written agreement of Consultant and a duly authorized representative of the Company.

 

(c)            Waiver . No term or condition of this Agreement shall be deemed to have been waived, nor shall there be an estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel.

 

(d)            Severability . Should any provision of this Agreement be declared or determined by any court of competent jurisdiction to be unenforceable or invalid for any reason, the validity of the remaining parts, terms or provisions of this Agreement shall not be affected thereby and the invalid or unenforceable part, term or provision shall be deemed not to be a part of this Agreement. In the event a court of competent jurisdiction determines that any restrictive covenant set forth in this Agreement is excessive in duration or scope or is otherwise unreasonable or unenforceable as drafted, it is the intent of the parties that such restriction be modified to render it enforceable to the maximum extent permitted by law.

 

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(e)            Successors and Assigns . Consultant may not assign this Agreement or any part hereof, and any purported assignment by Consultant shall be null and void; provided, however, that Consultant may assign this Agreement to a corporation, limited liability company or other entity in which Consultant owns one hundred percent (100%) of the equity interests; provided, however, that the consulting relationship shall always be based upon the personal services of Consultant, and this Agreement may be assigned only if the consulting services to be rendered by Consultant may not be assigned to another individual, although the services may be rendered through the assignee-entity. This Agreement shall be assignable by the Company. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, assignees, heirs, distributees, devisees and legatees.

 

(f)            Survival . Upon termination of the Consulting Term for any reason, this Agreement shall terminate and the Company shall have no further obligation to Consultant; provided that the provisions set forth in Sections 5 through 16 and the Amended Protective Agreement shall remain in full force and effect after the termination of this Agreement for any reason.

 

(g)            Governing Law; Venue . This Agreement shall be deemed to be made in, and in all respects shall be interpreted, construed, and governed by and in accordance with the laws of the State of Georgia, irrespective of its choice of law rules. While it is the intention of the parties that Section 15 of this Agreement be fully enforced, to the extent any judicial action is required in aid of Section 15 of this Agreement or otherwise, any such action arising under or related to this Agreement or Consultant's employment with or engagement by the Company shall be filed exclusively in the state or federal courts with jurisdiction over Fulton County, Georgia, and the parties hereby consent to the jurisdiction and venue of such courts.

 

(h)            Construction . In the event that an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. As used herein, the phrase "including" means "including, but not limited to" in each instance. "Or" is used in the inclusive sense of "and/or". The headings and captions used in this Agreement are for convenience of reference only, and shall in no way define, limit, expand, or otherwise affect the meaning or construction of any provision of this Agreement.

 

(i)            Counterparts . This Agreement may be executed in two or more counterparts, each of which will be deemed an original, and all of which together will constitute one document. This Agreement may be signed and delivered by fax transmission or email, which shall be effective as an original.

 

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(j)            Section 409A . Payments pursuant to this Agreement are intended to be exempt from or comply with Section 409A of the Code and accompanying regulations and other binding guidance promulgated thereunder (collectively, " Section 409A "), and the provisions of this Agreement will be administered, interpreted and construed accordingly. Notwithstanding any other provision in this Agreement to the contrary, the Company shall have the right, in its sole discretion, to adopt such amendments to this Agreement or take such other actions (including amendments and actions with retroactive effect) as it determines is necessary or appropriate for this Agreement to comply with Section 409A. Notwithstanding the foregoing provisions of this Section 16(j), Consultant is responsible for any and all taxes (including any taxes imposed under Section 409A) associated with any payments under this Agreement. Notwithstanding any other provision of this Agreement, if (A) any payment pursuant to this Agreement is conditioned upon the execution and delivery by Consultant of a release of claims, and if (B) the period beginning with the earliest date the release could be delivered to the Company by Consultant and ending with the latest date the release could become irrevocable after its execution and delivery by Consultant begins in one calendar year and ends in a later calendar year, then such payment shall be made no earlier than the first business day of such later calendar year. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with or are exempt from Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Consultant on account of non-compliance with Section 409A.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date(s) indicated below to be effective on the Effective Date.

 

CONSULTANT:   CONCURRENT COMPUTER CORPORATION:
       
/s/ Derek Elder   By: /s/ Wayne Barr
DEREK J. ELDER      
    Its: Chairman
Date: December 31, 2017      
      Date: December 31, 2017

 

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EXHIBIT A

 

SEPARATION AND CONSULTING AGREEMENT AND

GENERAL RELEASE OF CLAIMS

 

Outstanding Equity Schedule

 

This Exhibit A to the Separation and Consulting Agreement and General Release of Claims (the " Agreement ") by and between Concurrent Computer Corporation, and Derek Elder (" Consultant ") dated December 31, 2017 sets forth Consultant's outstanding restricted stock awards and performance-based stock awards and all related accrued dividends in accordance with Section 2(d) of the Agreement.

 

Grant
Date
  Type   Total
Unvested
Shares
    Shares
Accelerated
    Dividends
Accrued
    Dividends
Accelerated
 
8/27/2015   Time-Based Restricted Stock Awards     55,000       55,000     $ 66,000     $ 66,000  
10/15/2015   Time-Based Restricted Stock Awards     15,000       15,000     $ 16,200     $ 16,200  
2/11/2016   Time-Based Restricted Stock Awards     50,000       50,000     $ 48,000     $ 48,000  
9/1/2016   Time-Based Restricted Stock Awards     15,000       15,000     $ 10,800     $ 10,800  
9/1/2016   Performance-Based Restricted Stock Awards     30,000       30,000     $ 21,600     $ 21,600  
2/10/2017   Time-Based Restricted Stock Awards     10,000       10,000     $ 4,800     $ 4,800  
                                     
TOTAL         175,000       175,000     $ 167,400     $ 167,400  

 

 

 

  

EXHIBIT B

 

AMENDED AND RESTATED

PROTECTIVE AGREEMENT

 

This Amended and Restated Protective Agreement (this " Amended Protective Agreement ") is between CONCURRENT COMPUTER CORPORATION, a Delaware corporation (the " Company "), and DEREK ELDER (" Consultant ").

 

WHEREAS, Consultant previously executed the Protective Agreement attached as Exhibit B to the Employment Agreement by and between the Company and Derek Elder effective as of November 21, 2014 (the " Original Protective Agreement ");

 

WHEREAS, the Original Protective Agreement may be amended by written instrument signed by the Company and Consultant pursuant to Section 5(g) of the Original Protective Agreement; and

 

WHEREAS, the Company and Consultant desire to amend the Original Protective Agreement in contemplation of Consultant's termination of employment and future role as a consultant of the Company pursuant to the Separation and Consulting Agreement and General Release of Claims by and between the Company and Derek Elder dated December 31, 2017 (the " Separation Agreement ").

 

NOW THEREFORE, the Company and Consultant, in consideration of the agreements, covenants, and conditions herein, hereby agree as follows:

 

1.            Non-compete and Non-solicitation of Customers or Employees of the Content Delivery Business . Following December 31, 2017 (the " Separation Date "), Consultant will not, directly or indirectly, for a period of two (2) years, (a) engage in or provide any services of the type that Consultant provided to the Company at any time during the last twelve (12) months of his employment to or on behalf of any person or entity that competes with the Company or Vecima Networks Inc. (" Vecima ") in any business focused on the development, marketing, and supporting of software applications and solutions for video content delivery and storage technologies (the " Content Delivery Business ") anywhere in the continental United States, which Consultant acknowledges and agrees is the primary geographic area in which the Company and/or Vecima competes in the Content Delivery Business and thus, by virtue of Consultant's senior executive position and responsibilities with the Company, also the primary geographic area of Consultant's employment with the Company, (b) solicit or attempt to solicit, for the purpose of competing with the Company and/or Vecima in the Content Delivery Business, any customers or active prospects of the Company and/or Vecima with which Consultant had any material business contact for or on behalf of the Company at any time during the last twelve (12) months of Consultant's employment, or (c) recruit or otherwise seek to induce any employees of the Company and/or Vecima to terminate their employment or violate any agreement with the Company and/or Vecima.

 

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EXHIBIT B

 

2.            Non-compete and Non-solicitation of Customers or Employees for Future Business . Consultant also agrees that, following the termination of the Consulting Term (as defined in the Separation Agreement), Consultant will not, directly or indirectly, for a period of one (1) year, (a) engage in or provide any services of the type that Consultant provided to the Company at any time during the Consulting Term to or on behalf of any person or entity that competes with the Company in any business that the Company may develop or acquire during the Consulting Term (the " Future Business ") anywhere in the continental United States, (b) solicit or attempt to solicit, for the purpose of competing with the Company as it relates to the Future Business, any customers or active prospects of the Company with which Consultant had any material business contact for or on behalf of the Company at any time during the Consulting Term, or (c) recruit or otherwise seek to induce any employees of the Company to terminate their employment or violate any agreement with the Company.

 

3.            Trade Secrets and Other Confidential Information. Except as may be required in the performance of Consultant's duties with the Company, or as may be required by law, Consultant will not, either prior to, during or after the Consulting Term, reveal to any person or entity or use any Confidential Information. For purposes of this Amended Protective Agreement, " Confidential Information " means trade secrets and other confidential information relating to the business of the Company that has value to the Company and is not generally known to its competitors. Confidential Information includes, but is not limited to, lists of actual or prospective customers, details of customer contracts, current or anticipated customer requirements, pricing policies, price lists, business plans, licensing strategies, operational methods, marketing plans or strategies, product development techniques, computer software programs (including object code and source code), data and documentation, data base technologies, systems, structures and architectures, research and development, financial information, information regarding recruitment and hiring activities, and personnel information. Confidential Information includes trade secrets (as defined under Georgia law) as well as information that does not rise to the level of a trade secret. However, Confidential Information does not include any data or information that has been voluntarily disclosed to the public by the Company (except where such public disclosure has been made by Consultant without authorization) or that has been independently developed and disclosed by others, or that otherwise enters the public domain through lawful means. Consultant understands that Consultant's obligations as set forth in this Section 3 of this Amended Protective Agreement are in addition to and not in lieu of any other obligations Consultant may have to protect Confidential Information (including, but not limited to, obligations arising under the Company's policies, ethical rules, and applicable law), and such obligations will continue for so long as the information in question continues to constitute Confidential Information. In the event Consultant is requested or required pursuant to any legal, governmental, or investigatory proceeding or process or otherwise to disclose any Confidential Information, Consultant agrees to promptly notify the Company in writing prior to disclosing any such Confidential Information (unless such notification would be prohibited by law) so that the Company may seek a protective order or other appropriate remedy. Consultant agrees to cooperate with the Company to preserve the confidentiality of such Confidential Information consistent with applicable law or court order and to use Consultant's best efforts to limit any such disclosure to the minimum disclosure necessary to comply with such law or court order. Notwithstanding the foregoing, Consultant is not prohibited from reporting possible violations of federal law or regulation to any government agency or entity or making other disclosures that are protected under whistleblower provisions of law and Consultant does not need prior authorization to make such reports or disclosures.

 

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EXHIBIT B

 

4.            Return of Company Property . Consultant agrees that any and all documents, disks, databases, notes, or memoranda prepared by Consultant or others and containing Confidential Information shall be and remain the sole and exclusive property of the Company, and that upon termination of the Consulting Term or prior request of the Company, Consultant will immediately deliver all of such documents, disks, databases, notes or memoranda, including all copies, to the Company at its main office. Further, Consultant agrees that all Company property, such as, but not limited to cell phone(s), personal computers, software, PDAs, etc., shall be and remain the sole and exclusive property of the Company, and that upon termination of the Consulting Term or prior request of the Company, Consultant will immediately return all such property to the Company, provided that Consultant may retain the laptop computer and iPad that was assigned to him by the Company as of the Separation Date, provided further that the information contained on the computer and iPad is the property of the Company and must be permanently deleted at the end of the Consulting Term.

 

5.            Inventions and Copyrights . If at any time or times during Consultant's employment or the Consulting Term (or within six (6) months thereafter if based on Confidential Information), Consultant makes or discovers, 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, Consultant 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 Consultant in reasonable detail within ninety (90) days after receipt of Consultant's 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. Consultant also agrees 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 Consultant will also, whether before or after termination of Consultant's employment or engagement, 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 Consultant's right and title to the Inventions or necessary to defend any opposition thereto. Consultant also agrees to assign to the Company all copyrights and reproduction rights to any materials prepared by Consultant in connection with Consultant's employment or engagement.

 

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CONSULTANT:   CONCURRENT COMPUTER CORPORATION:
       
/s/ Derek Elder   By: /s/ Wayne Barr
DEREK J. ELDER      
      Its: Chairman
Date: December 31, 2017      
      Date: December 31, 2017

 

  Page 4 of 4  

 

 

Exhibit 99.2

 

CONSULTING AGREEMENT

 

This Consulting Agreement (this " Agreement ") between CONCURRENT COMPUTER CORPORATION, a Delaware corporation (the " Company "), and SPARTAN ADVISORS, INC. (" Consultant "), is entered into as of January 1, 2018 (the " Effective Date "). The signatories to this Agreement may be referred to collectively as " Parties " and individually as a " Party ."

 

1.            Consulting Relationship .

 

(a)           Services . During the Consulting Term (as defined in Section 1b, below), Consultant agrees to provide certain advisory and consulting services (the " Services ") to the Company as reasonably requested by the Company's Board of Directors (the " Board "), which services shall include identifying and presenting investment opportunities to the Company within the parameters provided by the Board from time to time. Consultant agrees to attend such meetings or calls with the Company representatives, members of the Board, the Company clients, the Company stockholders, analysts and the media as the Company may reasonably request for communication and application of his Services. Consultant shall use his best efforts to accommodate such requests for the provision of the Services, and shall devote his reasonable time and best efforts, skill and attention to the performance of the Services, including travel that is reasonably requested in the performance of such Services. Consultant shall coordinate the furnishing of the Services with representatives of the Company in order that such Services can be provided in such a way as to generally conform to the business schedules and performance standards of the Company, but the method of performance, place of performance, hours utilized in such performance, and other details of the manner of performance of Consultant's provision of the Services shall be within the sole control of Consultant.

 

(b)           Consulting Term . Unless earlier terminated as provided hereunder, the " Consulting Term " shall be the period between January 1, 2018 and December 31, 2018 (the " Expiration Date "); provided, however, that the Consulting Term shall be terminated prior to the Expiration Date upon any of the following:

 

(i)           Consultant's death or disability (as reasonably determined to exist by the Company);

 

(ii)         the termination of the Consulting Term by the Company without Cause;

 

(iii)        the termination of the Consulting Term by voluntary resignation of Consultant; or

 

(iv)        the termination of the Consulting Term by the Board for Cause.

 

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Upon the termination of the Consulting Term pursuant to Sections 1(b)(i) or 1(b)(ii), the Company shall pay to Consultant or Consultant's estate or representative, as applicable, a lump sum cash payment equal to any remaining unpaid Consulting Payments (as defined in Section 1(c), below), no later than thirty (30) days following the end of the Consulting Term. Upon the termination of the Consulting Term pursuant to Section 1(b)(iii), the Company shall have no further obligations to Consultant pursuant to Section 1(c) below other than payment for those Services performed prior to the date that the Consulting Term terminated. In the event the Consulting Term is terminated by the Board for Cause, all compensation under Section 1 of this Agreement shall cease immediately. As used herein, " Cause " shall exist in the event that: (A) Consultant breaches any of his obligations or covenants under this Agreement; (B) Consultant 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 (C) Consultant has (x) willfully and grossly neglected his duties hereunder or (y) intentionally failed to observe specific lawful directives or policies of the Board, 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.

 

(c)            Consulting Payments . During the Consulting Term, and provided that Consultant complies with each of the provisions contained in this Agreement, the Company will pay Consultant an aggregate of $85,000 payable in twelve (12) monthly installments beginning on the Effective Date through the Expiration Date (collectively, the " Consulting Payments ").

 

(d)            Incentive Transaction Bonus . Consultant shall have the right to receive an incentive fee (the " Incentive Transaction Bonus ") upon the consummation of any acquisition of an entity or business (the " Sourced Business ") by the Company that Consultant sourced (as reasonably determined by the Board) and introduced to the Company during the Consulting Term and is consummated on or before the ninetieth (90th) day following the termination of the Consulting Term (the " Sourced Transaction "). The Incentive Transaction Bonus shall equal the sum of (i) 1% of the total consideration paid by the Company for the Sourced Business in the Sourced Transaction and (ii) 7.5% of the Net Asset Value of any subsequent sale of the Sourced Business by the Company that is consummated on or before the fifth (5th) anniversary of the closing of the Sourced Transaction. Each portion of the Incentive Transaction Bonus shall be paid in a lump sum cash payment no later than thirty (30) days following the consummation of the applicable transaction. As used in this Agreement, the term " Net Asset Value " means aggregate cash proceeds received by the Company upon divestiture less the sum of (i) acquisition costs and (ii) capital contributions that were made by the Company during its ownership. Additionally, Consultant shall be eligible for incentive compensation for transactions consummated by the Company other than a Sourced Transaction with respect to which Consultant provided Services in an amount to be determined in good faith by the Board.

 

(e)            Equity . As soon as reasonably practicable following the Effective Date, the Company will grant Consultant 7,500 restricted shares of Company common stock, subject to the terms and conditions set forth in the applicable award agreement.

 

(f)            Expenses . During the Consulting Term, Consultant 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), in connection with his performing Services hereunder. Reimbursements shall be made in accordance with the Company's normal expense reimbursement policies and procedures (including timing), and such reimbursements will be made no later than the last day of Consultant's taxable year following the taxable year in which the expense was incurred.   The expenses reimbursed by Consultant during any taxable year of the Consultant will not affect the expenses paid by the Company in another taxable year. This right to reimbursement is not subject to liquidation or exchange for another benefit.

 

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(g)            Withholding . Consultant acknowledges that he will receive an IRS Form 1099-MISC from the Company for the Consulting Payments and the Incentive Transaction Bonus. Consultant acknowledges and agrees that (i) the Company is not required to, and will not, withhold from payments or benefits to be made to Consultant under this Section 1 any sums for income tax, unemployment insurance, social security, or any other withholding, or make any contributions on Consultant's behalf for unemployment insurance or social security, (ii) Consultant is solely responsible for the timely payment of all income and other taxes with respect to the Services performed by Consultant hereunder, and (iii) Consultant shall be solely responsible for making all applicable tax filings and remittances with respect to amounts paid to Consultant pursuant to this Agreement and Consultant shall indemnify and hold harmless the Company for all claims, damages, costs and liabilities arising from any failure to do so.

 

2.            Trade Secrets and Other Confidential Information. Except as may be required in the performance of Consultant's duties with the Company, or as may be required by law, Consultant will not, during or after the Consulting Term, reveal to any person or entity or use any Confidential Information. For purposes of this Agreement, " Confidential Information " means trade secrets and other confidential information relating to the business of the Company, that has value to the Company and is not generally known to its competitors. Confidential Information includes, but is not limited to, lists of actual or prospective customers, details of customer contracts, current or anticipated customer requirements, pricing policies, price lists, business plans, licensing strategies, operational methods, marketing plans or strategies, product development techniques, computer software programs (including object code and source code), data and documentation, data base technologies, systems, structures and architectures, research and development, financial information, information regarding recruitment and hiring activities, and personnel information. Confidential Information includes trade secrets (as defined under Georgia law) as well as information that does not rise to the level of a trade secret. However, Confidential Information does not include any data or information that has been voluntarily disclosed to the public by the Company (except where such public disclosure has been made by Consultant without authorization) or that has been independently developed and disclosed by others, or that otherwise enters the public domain through lawful means. Consultant understands that Consultant's obligations as set forth in this Section 2 are in addition to and not in lieu of any other obligations Consultant may have to protect Confidential Information (including, but not limited to, obligations arising under the Company's policies, ethical rules, and applicable law), and such obligations will continue for so long as the information in question continues to constitute Confidential Information. In the event Consultant is requested or required pursuant to any legal, governmental, or investigatory proceeding or process or otherwise to disclose any Confidential Information, Consultant agrees to promptly notify the Company in writing prior to disclosing any such Confidential Information (unless such notification would be prohibited by law) so that the Company may seek a protective order or other appropriate remedy. Consultant agrees to cooperate with the Company to preserve the confidentiality of such Confidential Information consistent with applicable law or court order and to use Consultant's best efforts to limit any such disclosure to the minimum disclosure necessary to comply with such law or court order. Notwithstanding the foregoing, Consultant is not prohibited from reporting possible violations of federal law or regulation to any government agency or entity or making other disclosures that are protected under whistleblower provisions of law and Consultant does not need prior authorization to make such reports or disclosures.

 

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3.            Return of Company Property . Consultant agrees that any and all documents, disks, databases, notes, or memoranda prepared by Consultant or others and containing Confidential Information shall be and remain the sole and exclusive property of the Company, and that upon termination of the Consulting Term or prior request of the Company, Consultant will immediately deliver all of such documents, disks, databases, notes or memoranda, including all copies, to the Company at its main office. Further, Consultant agrees that all Company property, such as, but not limited to cell phone(s), personal computers, software, PDAs, etc., shall be and remain the sole and exclusive property of the Company, and that upon termination of the Consulting Term or prior request of the Company, Consultant will immediately return all such property to the Company.

 

4.            Non-disparagement . Consultant agrees not to make, publish or communicate to any person or entity or in any public forum (including social media) at any time any defamatory or disparaging remarks, comments, or statements concerning the Company or its officers, directors, employees, clients or services.

 

5.            Confidentiality . Except necessary to comply with Consultant's obligations under Section 7 below, Consultant shall not disclose any of the terms of this Agreement to any individual or entity except Consultant's attorneys and tax advisors. Such individuals will be considered Consultant’s agents and will also be bound by this Agreement to the extent permitted by law.

 

6.            Injunctive Relief . Consultant acknowledges that any breach of his obligations under Sections 2, 3, 4 and 5 of this Agreement would cause irreparable harm to the Company, the exact amount of which would be difficult to determine, and that the remedies at law for any such breach would be inadequate. Accordingly, Consultant agrees that, in addition to any other remedy that may be available to the Company, the Company shall be entitled to specific performance and injunctive and other equitable relief, without posting bond or other security, to enforce or prevent any violation of such provisions. In any action for injunctive relief, the prevailing party will be entitled to collect reasonable attorneys' fees and other reasonable costs from the non-prevailing party.

 

7.            Notification to Subsequent Employer . Consultant agrees to notify any subsequent employer of the existence and terms of the provisions set forth in Sections 2 through 6 of this Agreement. In addition, Consultant authorizes the Company to provide a copy of such provisions to third parties, including but not limited to Consultant's subsequent, anticipated or possible future employers.

 

8.            Defend Trade Secrets Act . Consultant is hereby notified that under the Defend Trade Secrets Act: (a) no individual will be held criminally or civilly liable under federal or state trade secret law for disclosure of a trade secret (as defined in the Economic Espionage Act) that is: (i) made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and made solely for the purpose of reporting or investigating a suspected violation of law; or (ii) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal so that it is not made public; and (b) an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.

 

  Page 4 of 8  

 

  

9.            Notices . All notices, requests, demands, claims, consents and other communications which are required, permitted or otherwise delivered under this Agreement shall in every case be in writing and shall be deemed properly served if: (a) delivered personally, (b) sent by registered or certified mail, in all such cases with first class postage prepaid, return receipt requested, or (c) delivered by a recognized overnight courier service to the parties at the addresses set forth below:

 

To the Company:

 

 

 

Concurrent Computer Corporation

4375 River Green Parkway, Suite 100

Duluth, Georgia 30096

Attn: Chairman, Board of Directors

   
With a copy to:

Andrews Kurth Kenyon LLP

450 Lexington Avenue

New York, NY 10017

Attn: Paul Silverstein and Anthony Eppert

   
To Consultant: Consultant's address as on file with the Company.

 

or to such other address as shall be furnished in writing by either party to the other party; provided, that such notice or change in address shall be effective only when actually received by the other party. The date of service of any such notices or other communications shall be: (i) the date such notice is personally delivered, (ii) three business days after the date of mailing if sent by certified or registered mail, or (iii) one business day after the date of delivery to the overnight courier if sent by overnight courier.

 

10.          Arbitration . Any disputes or claims of any kind or nature, including as to arbitrability under this Agreement, between Consultant and the Company arising out of, related to, or in connection with any aspect of Consultant's engagement by the Company or its termination, including all claims arising out of this Agreement, and claims for alleged discrimination, harassment, or retaliation in violation of Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, 42 U.S.C. § 1981, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, or any other federal, state, or local law, shall be settled by final and binding arbitration in Fulton County, Georgia. Either party may file a written demand for arbitration with the American Arbitration Association pursuant to its National Rules for the Resolution of Employment Disputes. The arbitration shall be conducted by a single neutral arbitrator who is a member of the Bar of the State of Georgia, has been actively engaged in the practice of law for at least fifteen (15) years, and has substantial experience in connection with business transactions and interpretation of contracts. In considering the relevancy, materiality, discoverability, and admissibility of evidence, the arbitrator shall take into account, among other things, applicable principles of legal privilege, including the attorney-client privilege, the work product doctrine, and appropriate protection of the Company's confidential information. Upon the request of either party, the arbitrator's award shall be written and include findings of fact and conclusions of law. Judgment on the award rendered by the arbitrator may be entered by any court having jurisdiction. Any arbitration of any claim by Consultant may not be joined or consolidated with any other arbitration(s) by or against the Company, including through class or collective arbitration. The prevailing party in any such arbitration, or in any action to enforce this Section or any arbitration award hereunder, shall be entitled to recover that party's attendant attorneys' fees and related expenses from the other party to the maximum extent permitted by law. The Company shall be responsible for payment of all mediation and arbitration filing and administrative fees, and all fees and expenses of the mediator or arbitrators, irrespective of the outcome, as to any federal statutory claims by Consultant or as may otherwise be required by law for this Agreement to be enforceable. Notwithstanding any other provision of this Agreement, the Company may seek temporary, preliminary, or permanent injunctive relief against the Consultant at any time without resorting to arbitration. The parties agree that this Agreement involves interstate commerce and that this arbitration provision is therefore subject to and governed by the Federal Arbitration Act.

 

  Page 5 of 8  

 

  

11.          General Provisions .

 

(a)            No Admission of Liability . The Company and its agents expressly deny that they have any liability to Consultant, and this Agreement is not to be construed as an admission of any such liability. If this Agreement does not become effective, it shall be deemed negotiation for settlement purposes only and will not be admissible or usable for any purpose.

 

(b)            Entire Agreement; Modification . This Agreement sets forth the entire agreement between the parties regarding the subject matter of this Agreement, and supersedes and replaces any and all other agreements, written or oral, express or implied, between the parties concerning the same subject matter, with the exception of any prior restrictive covenants or invention assignment agreements between the Parties, which remain in effect. Except as expressly provided herein, this Agreement will supersede and render null and void any and all prior agreements between the Parties and their agents and personnel on the subject of this Agreement. No provision of this Agreement may be amended, changed, altered, or modified except by mutual written agreement of Consultant and a duly authorized representative of the Company.

 

(c)            Waiver . No term or condition of this Agreement shall be deemed to have been waived, nor shall there be an estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel.

 

(d)            Severability . Should any provision of this Agreement be declared or determined by any court of competent jurisdiction to be unenforceable or invalid for any reason, the validity of the remaining parts, terms or provisions of this Agreement shall not be affected thereby and the invalid or unenforceable part, term or provision shall be deemed not to be a part of this Agreement. In the event a court of competent jurisdiction determines that any restrictive covenant set forth in this Agreement is excessive in duration or scope or is otherwise unreasonable or unenforceable as drafted, it is the intent of the parties that such restriction be modified to render it enforceable to the maximum extent permitted by law.

 

  Page 6 of 8  

 

  

(e)            Successors and Assigns . Consultant may not assign this Agreement or any part hereof, and any purported assignment by Consultant shall be null and void. This Agreement shall be assignable by the Company. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, assignees, heirs, distributees, devisees and legatees.

 

(f)            Survival . Upon termination of the Consulting Term for any reason, this Agreement shall terminate and the Company shall have no further obligation to Consultant; provided that the provisions set forth in Sections 2 through 11 shall remain in full force and effect after the termination of this Agreement for any reason.

 

(g)            Governing Law; Venue . This Agreement shall be deemed to be made in, and in all respects shall be interpreted, construed, and governed by and in accordance with the laws of the State of Georgia, irrespective of its choice of law rules. While it is the intention of the parties that Section 10 of this Agreement be fully enforced, to the extent any judicial action is required in aid of Section 10 of this Agreement or otherwise, any such action arising under or related to this Agreement or Consultant's engagement by the Company shall be filed exclusively in the state or federal courts with jurisdiction over Fulton County, Georgia, and the parties hereby consent to the jurisdiction and venue of such courts.

 

(h)            Construction . In the event that an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. As used herein, the phrase "including" means "including, but not limited to" in each instance. "Or" is used in the inclusive sense of "and/or". The headings and captions used in this Agreement are for convenience of reference only, and shall in no way define, limit, expand, or otherwise affect the meaning or construction of any provision of this Agreement.

 

(i)            Counterparts . This Agreement may be executed in two or more counterparts, each of which will be deemed an original, and all of which together will constitute one document. This Agreement may be signed and delivered by fax transmission or email, which shall be effective as an original.

 

(j)            Section 409A . Payments pursuant to this Agreement are intended to be exempt from Section 409A of the Code and accompanying regulations and other binding guidance promulgated thereunder (collectively, " Section 409A "), and the provisions of this Agreement will be administered, interpreted and construed accordingly. Notwithstanding any other provision in this Agreement to the contrary, the Company shall have the right, in its sole discretion, to adopt such amendments to this Agreement or take such other actions (including amendments and actions with retroactive effect) as it determines is necessary or appropriate for this Agreement to comply with Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with or are exempt from Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Consultant on account of non-compliance with Section 409A.

 

[SIGNATURES ON NEXT PAGE]

 

  Page 7 of 8  

 

  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date(s) indicated below to be effective on the Effective Date.

 

SPARTAN ADVISORS, INC.:   CONCURRENT COMPUTER CORPORATION:
         
By: /s/ Robert Pons   By: /s/ Wayne Barr
         
Its: President & CEO   Its: Chairman
         
Date: January 1, 2018   Date: January 1, 2018

 

  Page 8 of 8  

 

 

Exhibit 99.3

 

Concurrent Computer Corporation

Unaudited Pro Forma Condensed Consolidated Financial Statements

 

On December 31, 2017, Concurrent Computer Corporation (“Concurrent” or the “Company”) completed the sale of substantially all of the assets and liabilities related to its “Content Delivery and Storage” business (the “Asset Sale”) to Vecima Networks Inc. (“Purchaser”) pursuant to the previously announced Asset Purchase Agreement, dated October 13, 2017, between the Company and Vecima, for a base purchase price of $29.0 million. The base purchase price payable by Vecima is subject to adjustment based on a final determination of the net working capital of the Content Delivery and Storage business under the terms of the Asset Purchase Agreement. Pursuant to the escrow agreement entered into by the Company and Vecima, $1.45 million of the purchase price will be held by SunTrust Bank as security for the Company’s indemnification obligations to Vecima under the Asset Purchase Agreement, which amount will be released to the Company on or before December 31, 2018 (less any portion used to make indemnification payments to Vecima).

 

The following unaudited pro forma condensed consolidated financial statements give effect to the Asset Sale, the receipt of net proceeds from the Asset Sale, and the other assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements. These adjustments are based upon information and assumptions available at the time of the filing of this financial information on Form  8-K .

 

The unaudited pro forma condensed financial information is based on financial statements prepared in accordance with U.S. generally accepted accounting principles, which are subject to change and interpretation. The unaudited pro forma condensed consolidated financial statements were based on and derived from the Company’s historical consolidated financial statements, adjusted for those amounts which were determined to be directly attributable to the Asset Sale, factually supportable, and with respect to the Unaudited Pro Forma Condensed Consolidated Statements of Operations, expected to have a continuing impact on the consolidated results. In the opinion of management, all necessary adjustments to the unaudited pro forma condensed consolidated financial information have been made. Actual adjustments, however, may differ materially from the information presented.

 

The unaudited pro forma condensed financial information is based upon available information and assumptions that management considers to be reasonable, and such assumptions have been made solely for purposes of developing such unaudited pro forma condensed financial information for illustrative purposes in compliance with the disclosure requirements of the Securities and Exchange Commission. The unaudited pro forma condensed financial information is not necessarily indicative of the financial position or results of operations that would have occurred had the Asset Sale occurred on the dates indicated. In addition, these unaudited pro forma condensed consolidated financial statements should not be considered indicative of the future financial performance and results of operations of the Company.

 

The unaudited pro forma condensed consolidated balance sheet as of September 30, 2017 gives effect to the Asset Sale and adjustments as if it occurred on the date of the balance sheet.

 

The unaudited pro forma condensed consolidated statements of operations for the fiscal years ended June 30, 2016 and 2017, and the three months ended September 30, 2017, give effect to the Asset Sale and adjustments as if they had occurred on July 1, 2015 and carried forward through the latest period presented.

 

The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the Company’s historical audited consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended June 30, 2017 and Quarterly Report on Form 10-Q for the three months ended September 30, 2017.

 

The unaudited condensed consolidated pro forma financial statements are prepared in accordance with Article 11 of Regulation S-X.

 

 

 

  

Concurrent Computer Corporation

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of September 30, 2017

(Amounts in thousands of U.S. dollars)

 

    As Reported     Sale of
CDN/Storage
Business
    Proceeds
from Sale
    Pro Forma
Adjustments
    Pro Forma  
                               
ASSETS                                        
Current assets:                                        
Cash and cash equivalents   $ 31,624     $ -     $ 27,661 (b)   $ (465 )(d)   $ 58,820  
Short-term investments     6,284       -       -       -       6,284  
Accounts receivable, net     6,940       6,933 (a)     -       -       7  
Escrow receivable     2,000       -       1,450 (b)     -       3,450  
Inventories     1,627       1,627 (a)     -       -       -  
Prepaid expenses and other current assets     1,752       365 (a)     -       -       1,387  
Total current assets     50,227       8,925       29,111       (465 )     69,948  
                                         
Property and equipment, net     1,623       1,462 (a)     -       -       161  
Deferred income taxes, net     16       -       -       -       16  
Other long-term assets, net     1,266       672 (a)     -       -       594  
Total assets   $ 53,132     $ 11,059     $ 29,111     $ (465 )   $ 70,719  
                                         
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
Current liabilities:                                        
Accounts payable and accrued expenses   $ 5,808     $ 3,280 (a)   $ 1,216 (c)   $ 176 (d)   $ 3,920  
Deferred revenue     1,138       1,138 (a)     -       -       -  
Total current liabilities     6,946       4,418       1,216       176       3,920  
                                         
Long-term liabilities:                                        
Deferred revenue     53       53 (a)     -       -       -  
Pension liability     3,729       -       -       -       3,729  
Other long-term liabilities     941       213 (a)     -       (176 )(d)     552  
Total liabilities     11,669       4,684       1,216       -       8,201  
                                         
Commitments and contingencies                                        
                                         
Stockholders' equity:                                        
Series preferred stock     -       -       -       -       -  
Class A preferred stock     -       -       -       -       -  
Common stock     94       -       -       5 (d)     99  
Capital in excess of par value     212,239       -       -       1,655 (d)     213,894  
Accumulated deficit     (167,689 )     6,375 (a)     27,895 (c)     (2,125 )(d)     (148,294 )
Treasury stock, at cost     (255 )     -       -       -       (255 )
Accumulated other comprehensive income (loss)     (2,926 )     -       -       -       (2,926 )
Total stockholders' equity     41,463       6,375       27,895       (465 )     62,518  
Total liabilities and stockholders' equity   $ 53,132     $ 11,059     $ 29,111     $ (465 )   $ 70,719  

 

See accompanying notes to these unaudited pro forma condensed consolidated financial statements

 

 

 

   

Concurrent Computer Corporation

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Three Months Ended September 30, 2017

(Amounts in thousands of U.S. dollars, except for share and per share amounts)

 

    As Reported     Sale of
CDN/Storage
Business
    Pro Forma  
Revenues:                        
Product   $ 5,297     $ 5,297 (e)   $ -  
Service     2,573       2,573 (e)     -  
Total revenues     7,870       7,870       -  
                         
Cost of sales:                        
Product     2,217       2,217 (e)     -  
Service     1,003       1,003 (e)     -  
Total cost of sales     3,220       3,220       -  
Gross margin     4,650       4,650       -  
                         
Operating expenses:                        
Sales and marketing     2,158       2,158 (e)     -  
Research and development     1,678       1,678 (e)     -  
General and administrative     1,929       477 (e)     1,452  
Total operating expenses     5,765       4,313       1,452  
Operating income (loss)     (1,115 )     337       (1,452 )
                         
Interest income     70       -       70  
Other income (loss), net     (87 )     (110 )(e)     23  
Loss from continuing operations before income taxes     (1,132 )     227       (1,359 )
                         
Provision for income taxes     (122 )     24 (e)     (146 )
Loss from continuing operations   $ (1,010 )   $ 203     $ (1,213 )
                         
Basic and diluted loss per share   $ (0.11 )           $ (0.12 )
Weighted average shares outstanding - basic and diluted     9,392,197       326,920 (f)     9,719,117  
                         
Cash dividends declared per common share   $ 0.12             $ 0.12  

 

See accompanying notes to these unaudited pro forma condensed consolidated financial statements

 

 

 

 

Concurrent Computer Corporation

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Year Ended June 30, 2017

(Amounts in thousands of U.S. dollars, except for share and per share amounts)

 

    As Reported     Sale of
CDN/Storage
Business
    Pro Forma  
Revenues:                        
Product   $ 17,141     $ 17,141 (e)   $ -  
Service     10,506       10,506 (e)     -  
Total revenues     27,647       27,647       -  
                         
Cost of sales:                        
Product     7,632       7,632 (e)     -  
Service     4,820       4,820 (e)     -  
Total cost of sales     12,452       12,452       -  
Gross margin     15,195       15,195       -  
                         
Operating expenses:                        
Sales and marketing     11,130       11,130 (e)     -  
Research and development     8,233       8,233 (e)     -  
General and administrative     8,068       3,077 (e)     4,991  
Total operating expenses     27,431       22,440       4,991  
Operating loss     (12,236 )     (7,245 )     (4,991 )
                         
Interest income     82       1 (e)     81  
Interest expense     (1 )     - (e)     (1 )
Other income, net     7       23 (e)     (16 )
Loss from continuing operations before income taxes     (12,148 )     (7,221 )     (4,927 )
                         
Benefit from income taxes     (1,037 )     (616 )(e)     (421 )
Loss from continuing operations   $ (11,111 )   $ (6,605 )   $ (4,506 )
                         
Basic and diluted loss per share   $ (1.20 )           $ (0.47 )
Weighted average shares outstanding - basic and diluted     9,252,275       258,338 (f)     9,510,613  
                         
Cash dividends declared per common share   $ 0.48             $ 0.48  

 

 See accompanying notes to these unaudited pro forma condensed consolidated financial statements

 

 

 

   

Concurrent Computer Corporation

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Year Ended June 30, 2016

(Amounts in thousands of U.S. dollars, except for share and per share amounts)

 

    As Reported     Sale of
CDN/Storage
Business
    Pro Forma  
Revenues:                        
Product   $ 2,044     $ 22,044 (e)   $ -  
Service     9,963       9,963 (e)     -  
Total revenues     32,007       32,007       -  
                         
Cost of sales:                        
Product     8,544       8,544 (e)     -  
Service     4,660       4,660 (e)     -  
Total cost of sales     13,204       13,204       -  
Gross margin     18,803       18,803       -  
                         
Operating expenses:                        
Sales and marketing     9,950       9,950 (e)     -  
Research and development     10,549       10,549 (e)     -  
General and administrative     7,556       3,089 (e)     4,467  
Gain on sale of product line, net     (4,100 )     (4,100 )(e)     -  
Total operating expenses     23,955       19,488       4,467  
Operating income (loss)     (5,152 )     (685 )     (4,467 )
                         
Interest income     37       -       37  
Other income (loss), net     409       425 (e)     (16 )
Loss from continuing operations before income taxes     (4,706 )     (260 )     (4,446 )
                         
Provision for income taxes     8,031       444 (e)     7,587  
Loss from continuing operations   $ (12,737 )   $ (704 )   $ (12,033 )
                         
Basic and diluted loss per share   $ (1.39 )           $ (1.29 )
Weighted average shares outstanding - basic and diluted     9,154,437       151,109 (f)     9,305,546  
                         
Cash dividends declared per common share   $ 0.48             $ 0.48  

 

See accompanying notes to these unaudited pro forma condensed consolidated financial statements

 

 

 

   

Concurrent Computer Corporation

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

1. Basis of Presentation

 

The unaudited pro forma condensed consolidated statements of operations for the years ended June 30, 2016 and 2017 were derived from the historical audited consolidated financial statements for the years ended June 30, 2016 and 2017 included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2017. The unaudited pro forma condensed consolidated statements of operations for the three months ended September 30, 2017 and the unaudited pro forma condensed consolidated balance sheet as of September 30, 2017 were derived from the historical unaudited consolidated financial statements included in the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2017.

 

2. Disposition of Content Delivery and Storage Business

 

On December 31, 2017, Concurrent Computer Corporation (“Concurrent” or the “Company”) completed the sale of substantially all of the assets and liabilities related to its “Content Delivery and Storage” business (the “Asset Sale”) to Vecima Networks Inc. (“Purchaser”) pursuant to the previously announced Asset Purchase Agreement, dated October 13, 2017, between the Company and Vecima, for a base purchase price of $29.0 million.

 

Proceeds from the sale are payable to the Company as follows: (1) a $27.55 million payment to be received by the Company at closing (subject to an adjustment for estimated working capital) and (2) $1.45 million (the “Escrow Amount”) placed in escrow to satisfy the Company’s post-closing indemnity obligations (which amount will be released to the Company on or before December 31, 2018, less any portion used to make indemnification or purchase price adjustment payments to the Purchaser). On the closing date, the company received $1.470 million in additional proceeds based on the estimated closing date net working capital of the Content Delivery and Storage business. Such amount is not reflected in the pro forma condensed consolidated financial statements presented herein because the net working capital of the Content Delivery and Storage business remains subject to a final determination under the terms of the Asset Purchase Agreement and, as such, the Company may be required to return all or a portion of such $1.470 million to Vecima. Estimated external transaction costs directly attributable to the transaction consisting of investment banking fees, legal, tax, accounting and other professional fees are approximately $1.7 million; taxes are estimated at $1.2 million; and the net book value of assets being transferred in the Asset Sale are estimated to be approximately $6.4 million as of September 30, 2017. The resulting pre-tax gain of approximately $22.7 million will be reflected within the discontinued operations of the Company’s unaudited condensed consolidated financial statements for the three and six months ended December 31, 2017.

 

Additionally, internal transaction-related costs for employee bonuses and other costs are approximately $0.5 million. As a result of a change-in-control under the Company’s Amended and Restated 2011 Stock Incentive Plan, acceleration of share-based compensation expense for 489,424 unvested restricted share awards is approximately $1.7 million.

 

 

 

   

3. Pro Forma Adjustments

 

The unaudited pro forma condensed consolidated balance sheet as of September 30, 2017 reflects the following adjustments:

 

(a) Represents the unaudited amounts of Content Delivery and Storage assets and liabilities which were sold or transferred to the Buyer as if the Asset Sale had occurred on September 30, 2017.

 

(b) Reflects the net proceeds expected to be received at closing from the Asset Sale. The sale price of $29.0 million has been (1) increased by approximately $1.8 million based on the excess working capital of the Content Delivery and Storage business as of September 30, 2017 and reduced by (2) $1.45 million withheld as the Escrow Amount and (3) approximately $1.7 million for estimated external transaction expenses assumed to be paid at closing.

 

(c) Reflects (1) the excess of the proceeds identified in (b) above over the net book value of Content Delivery and Storage net assets sold of $6.4 million at September 30, 2017, less (2) tax liabilities from the sale and (3) payment of estimated external transaction-related expenses. The Company is in a net operating loss position offset with a full valuation allowance in the U.S. where the predominance of the net assets for the Content Delivery and Storage business were sold. As a result, the Company expects to utilize its existing U.S. federal net operating losses to offset the gain on sale resulting from the Asset Sale. However, we do expect to incur U.S. federal alternative minimum tax, U.S. state income tax and other jurisdictional income taxes which are estimated at $1.2 million in the aggregate.

 

(d) Reflects (1) $0.5 million in estimated internal transaction bonuses and (2) $1.7 million in accelerated share-based compensation expense triggered by a change in control for 490,613 unvested restricted share awards (existing at September 30, 2017). The internal transaction bonuses are assumed to be paid at closing. These amounts are excluded from the unaudited pro forma condensed consolidated statements of operations because they are charges directly attributable to the Asset Sale that will not have a continuing impact on the Company’s operations; however, the total amount is reflected as an increase to the accumulated deficit in the unaudited pro forma balance sheet. Additionally, reflects the reclassification of $0.2 million in dividends payable as a current liability since all accrued dividends on the unvested restricted share awards being accelerated for vesting become immediately payable. An aggregate total $0.3 million in dividends payable is due as a result of the acceleration.

 

The unaudited pro forma condensed consolidated statements of operations for the years ended June 30, 2016 and 2017, and the three months ended September 30, 2017, reflect the following adjustments:

 

(e) The elimination of operating results of the Content Delivery and Storage business in the unaudited condensed consolidated statements of operations for the Company for the years ended June 30, 2016 and 2017, and the three months ended September 30, 2017, as if the Asset Sale had occurred on July 1, 2015. Adjustments to income taxes reflects the estimated income tax expense using the applicable statutory rates of the Company calculated on a jurisdictional basis related to the elimination of operating results of the Content Delivery and Storage business due to the Asset Sale. In jurisdictions where we have a full valuation allowance on our deferred tax assets, that rate has been adjusted to zero.

 

(f) Reflects the incremental weighted-average number of shares due to the assumed acceleration of unvested restricted share awards during the years ended June 30, 2016 and 2017, and the three months ended September 30, 2017, as if the Asset Sale had occurred on July 1, 2015.