UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended June 30, 1995
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission File Number: 0-10726
C-COR Electronics, Inc.
(Exact name of Registrant as specified in its charter)
Pennsylvania 24-0811591
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
60 Decibel Road, State College, Pennsylvania 16801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 814-238-2461
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None Not Applicable
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, $.10 par value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. (X)
As of September 8, 1995, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was $313,815,223.
As of September 8, 1995, the Registrant had 9,530,226 shares of Common Stock
outstanding.
Documents Incorporated by Reference:
1) 1995 Annual Report to Shareholders (Part I, II and IV)
2) Proxy Statement dated September 15, 1995 (Part III)
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PART I
Item 1. Business
Introduction
C-COR Electronics, Inc. (the "Corporation") was incorporated in the Commonwealth
of Pennsylvania on June 30, 1953. The Corporation designs and manufactures
high-quality electronic equipment used in a variety of communication networks
worldwide. Principal customers include cable television (CATV) operators,
telephone companies, major broadcast markets and installers of broadband
communication networks for manufacturing plants, offices, campuses,
institutions, airports, and traffic control systems. In support of its products,
the Corporation offers a full line of technical customer services, including
network analysis, design, installation and maintenance assistance, and training.
The Corporation's headquarters is in State College, Pennsylvania, with
production facilities in State College, Reedsville and Tipton, Pennsylvania, and
Fremont, California. The Corporation maintains offices in Fremont; Denver,
Colorado; Chicago, Illinois; Toronto, Canada; Almere, The Netherlands; and Hong
Kong. The Corporation manufactures its analog fiber optic systems in Mexico.
During the past fiscal year, the Corporation was approved for ISO 9001
registration at three of its facilities, State College and Tipton, Pennsylvania,
and Fremont, California. It is expected that the Reedsville, Pennsylvania,
facility will achieve registration by the end of calendar year 1995. ISO 9001 is
the most comprehensive of all ISO 9000 series requirements and includes quality
assurance in design, development, production, installation and servicing. Once
registration is achieved, surveillance is scheduled at six month intervals and a
complete reassessment occurs in three years. Criteria for registration are set
by the International Organization for Standardization, whose function is to
develop global standards in an effort to improve the exchange of goods and
services internationally. This designation builds on the Corporation's
reputation as a high-quality, global provider of transmission electronics.
Products and Services
The Corporation provides three principal product families for use in broadband
voice, video, and data networks: radio frequency (RF) amplifiers, amplitude
modulation (AM) fiber optic equipment, and digital fiber optic systems.
Amplifiers include a series of FlexNet(TM) 750 MHz trunks, terminating
bridgers, and line extenders designed specifically for use in today's widely
accepted hybrid fiber/coax network architectures. Other RF distribution products
available from the Corporation include push-pull, power doubling, and
feedforward technologies; trunk, minitrunk, and split-band amplifiers; main line
passives to 1 GHz, and Cable Network Manager (CNM(TM)), a network management
software system. Additions to the product line in fiscal year 1995 include a
series of 750 MHz amplifiers designed and manufactured to meet the stringent
requirements of coaxial-based telecommunications systems. Also available is a 90
Volt powering option for the Corporation's advanced technology amplifiers.
LinkNet(TM), the Corporation's new generation of AM fiber optic transmission
equipment, was first introduced in fiscal year 1994. Ideally suited for today's
fiber-rich architectures, the LinkNet (TM) family includes a broad range of
both headend and strand-mounted equipment, including state-of-the-art
distributed feedback (DFB) transmitters; strand mount forward path receivers,
and rack mount receivers for return-path applications.
The Corporation's digital fiber optic products include multi and single channel
uncompressed digital video systems, including optical transmitters and
receivers, video and audio codecs, and intermediate frequency (IF) modulators
and quad RF converters. New to this product line in fiscal year 1995 were
C-COR's 3.1 Gb/s multichannel optical terminals. Applications for the digital
fiber optic product family include cable television, distance learning,
intelligent highways, broadcast, and satellite earth station interconnects.
In support of its products, the Corporation offers a complete line of technical
customer services, including pre-sale analysis and consultation, network design,
field engineering, technical documentation, training seminars, and equipment
repair and testing.
Sales and Distribution
The Corporation's principal customers include operators of communication
networks worldwide. Most of the Corporation's sales were of equipment
manufactured or provided by the Corporation, with the remainder being from
services. Sales efforts are conducted from the Corporation's headquarters; from
offices in California, Colorado, Illinois, Canada and Europe; and from 15
regional sales offices located throughout the United States.
For the fiscal year ended June 30, 1995, the Corporation's international sales
represented 39% of net sales, primarily in the Canadian, Asian, European, and
Latin American markets. In the fiscal years ended June 24, 1994, and
June 25, 1993, international sales were 25% and 25%, respectively, of net sales.
(See the discussion of segment information in the Corporation's 1995 Annual
Report to Shareholders, Note O, incorporated herein by reference).
During the past fiscal year, the Corporation's CATV customers who made purchases
have included 24 of the 25 largest system operators* in the United States. The
Corporation's largest customers during the fiscal year ended June 30, 1995, were
Rogers Cablesystems, Inc., accounting for 21% of net sales and Time Warner
Cable, accounting for 19% of net sales. During the fiscal year ended June 24,
1994, the Corporation's largest customers were Time Warner Cable, accounting for
25% of the net sales, and Rogers Cablesystems, Inc., accounting for 17% of the
net sales. During the fiscal year ended June 25, 1993, the Corporation's largest
customer was Time Warner Cable, accounting for 11% of the net sales. No
other customers accounted for 10% or more of net sales in any of the three
fiscal years ended June 30, 1995.
At June 30, 1995, the Corporation's backlog of orders was $54.7 million; at June
24, 1994, it was $38.9 million; and at June 25, 1993, it was $9.2 million.
*The ranking of system operators herein is based upon number of subscribers
served, as published by Cablevision - July 17, 1995, International Thomson
Communications, Inc., Denver, Colorado.
Research and Product Development
The Corporation operates in an industry that is subject to rapid changes in
technology. The Corporation's ability to compete successfully depends in large
part upon its ability to react to such changes. Accordingly, the Corporation is
engaged in ongoing research and development (R&D) activities that are intended
to advance existing product lines, provide custom-designed variations of
existing product lines, and develop or evaluate new products. R&D activities for
RF and AM fiber optic products are conducted at the Corporation's headquarters,
while digital fiber optic product development activities occur at the
Corporation's California location. The Corporation has an interdepartmental
team which assigns product development priorities. The result is a
market-driven set of guidelines for the timely development of new products.
During this past fiscal year, research and product development
expenditures have been primarily directed at continuing the Corporation's
commitment to the new RF and fiber optic technology products that enhance its
image as a technology leader in the industry.
The Corporation currently employs 463 degreed engineers and technicians
worldwide, 73 of whom are dedicated to research and product development. The
remainder are involved in such corporate activities as sales, sales engineering,
product management, manufacturing support and test, and a variety of service
functions.
During the fiscal years ended June 30, 1995, June 24, 1994, and June 25, 1993,
the Corporation spent approximately $6,622,000, $4,337,000 and $3,326,000,
respectively, on R&D, primarily related to RF distribution equipment and fiber
optic systems. None of the research and product development expenditures have
been capitalized.
Competition
The Corporation's products are marketed with emphasis on their premium quality
and are generally priced competitively with other manufacturers' product lines.
Equipment reliability, superior customer service and an enhanced warranty
program are several of the bases for competition. In these respects, the
Corporation considers its competitive position to be favorable. Other bases for
competition include pricing and technological leadership. Although less
expensive products are available, the Corporation believes it is in a good
competitive position with respect to pricing. The Corporation believes that its
strong commitment to efficient network design, a broad offering of technical
customer services, and its focus on R&D enhance its competitive position in the
market.
There are several competing equipment vendors selling network products in the
United States, a few of which have greater sales of similar equipment than the
Corporation. However, the Corporation is regarded as having a broader product
line in the RF distribution amplifier segment of the market.
Currently CATV networks serve more than 60 million subscribers in the United
States. CATV construction has evolved to the point where this network passes
over 92% of the homes in the United States. The CATV industry claims that their
market penetration exceeds 55% and is approaching 60%. Over the next several
years, most industry observers expect this trend to continue. However, there are
alternative methods of distributing entertainment video or information services
to subscribers. All of the vehicles compete, to a limited extent, with
conventional CATV services. The alternative distribution technologies include
Off Air of Broadcast Service, Multipoint Multichannel Distribution Service
(MMDS), Satellite Master Antenna Television (SMATV) and Direct Broadcast
Satellite Service (DBS). As a general rule, these alternative technologies are
limited in terms of their ability to deliver two-way service and local
programming. There is a general consensus in the telecommunications industry
that these alternative technologies will mature to the point that they
serve a relatively narrow segment of the market. A CATV network by
definition has two-way capability and has the ability to deliver vast amounts
of information to subscribers. Evidence suggests the CATV industry is uniquely
positioned to benefit from the evolution that is occurring in the
telecommunications industry. Similarly, due to its reputation and long
standing tradition of serving the CATV industry with excellence, the
Corporation is strategically positioned to grow and expand with the industry.
External Influences/Industry
The primary market factors affecting the CATV industry include access to
financial markets, technology advancements and governmental regulation. During
the Corporation's fiscal year 1991, many lending institutions designated
loans to multiple system operators as "highly leveraged transactions"
(HLT's) and aggressively clamped down on the size and terms of loans to
this specific group. This fiscal conservatism in the capital markets
curtailed a large portion of the industry's capital expenditures.
The entire CATV industry experienced a downturn which caused many equipment
vendors to downsize their operations. During the past three years, most
cable operators have focused on strengthening their balance sheets. At the
same time, lending institutions began to relax many of their more stringent
lending policies. Currently, the CATV industry is experiencing
considerable strategic acquisition and alliance activity. In the area of
technology, advancements in the CATV network are occurring at a rapid rate.
Traditional, one-way broadband amplifier cascades are being replaced with
two-way, hybrid fiber/coax (HFC) architectures which employ fiber optic
electronics to small residential cells (serving areas). CATV operators
have concluded that constructing an HFC network is a sound tactical decision
that could have significant strategic advantages in the future as networks
become more interactive in nature. A number of telephone companies (telcos)
have come to the same conclusion. The Corporation has combined its strength
in conventional RF amplifiers with an increasing presence in the areas of
digital and analog fiber optic equipment and believes that it is strongly
positioned to be an aggressive competitor in the evolving interactive
multimedia network industry.
Historically, the CATV industry has been allowed to operate in a relatively
regulation free environment. The assumption that policy makers had made was that
a "free market" approach would encourage technology advancements and encourage
CATV operators to build a ubiquitous network. However, in 1992, faced with
increased subscriber complaints regarding the pricing structure and level of
service being provided by CATV operators, the Federal Communications Commission
(FCC) concluded that it was now appropriate to regulate the CATV industry. The
Cable Act of 1992 established policies regarding programming, service and CATV
rates. Along with CATV rate freezes, the FCC included an "incentive upgrade
plan" in an attempt to encourage operators to continue their upgrade schedule.
In addition, many operators have adopted a strategy of focusing on the
"non-regulated" side of their business, namely, new programming and voice
service.
Over the last several years, there has been a softening in the position held at
the FCC prohibiting the telcos from entering into the video business. In August
1993, a federal judge presiding over a U.S. District Court ruled in favor of
Bell Atlantic, allowing them to provide video programming to customers inside
their telephone service areas. In a similar ruling in June 1994, a federal judge
in Seattle ruled that US West should have the right to offer video programming
in its 14 state region. Across the U.S. all seven of the Regional Bell Operating
Companies (RBOC) are either planning or currently constructing networks which
will support video experiments.
The sentiment in Washington appears to support a competitive environment for the
delivery of voice, video and data services. In June 1995, the Senate
overwhelmingly passed Telcom Reform Bill S.652. The House passed HR 1555 in
August 1995, by a two-to-one margin. Currently the two are being combined into a
conference report which will be voted upon by the Senate and House. Upon
passage, the legislation will be forwarded to the White House. Key provisions of
both the House and Senate bills which are perceived to have a benefit for the
Corporation are that they: permit telephone companies to sell video services,
and in some cases, to buy out local cable companies; allow cable operators
to charge what they wish for many channels; allow RBOCs to sell long distance
services, under certain conditions; require local phone companies to open
their networks to competitors; and allow RBOCs to manufacture customer
equipment. A competitive environment in the communications industry is
expected to have a positive impact on the Corporation. If its two major
customer groups (CATV operators and telephone companies) are competing to build
networks and offer similar services, the Corporation stands to benefit near
and long term as a key equipment provider for those networks.
Employees
The Corporation had 1,409 employees (as well as an additional 85 temporary
personnel) as of September 1, 1995, of whom approximately 70% are engaged in
manufacturing, inspection, and quality control activities. The remainder are
engaged in executive, administrative, sales, product development, research, and
technical customer services activities. The staff includes 65 engineers with
baccalaureate or more advanced degrees, and an additional 398 persons with at
least two years of technical college or military education equivalent to a
2-year degree. None of the employees are represented by a collective bargaining
representative.
Suppliers
The Corporation monitors supplier delivery performance and quality very closely
and employs a strategy of limiting the total number of suppliers to those who
are quality leaders in their respective specialties and who will work with the
Corporation as partners in the supply function. Typical items purchased are
diecast aluminum housings, RF hybrids, printed circuit boards, and standard
electronic components.
The Corporation's finished goods inventory has traditionally been maintained at
a level adequate to satisfy customer delivery requirements, and monthly
production has been scheduled at a rate that approximates monthly shipping
volume. Late in fiscal year 1995, and continuing through fiscal year 1996, the
Corporation has launched the RapidCycle(R) Program*. The goal of this
corporate-wide effort is to improve delivery intervals, reduce inventory and cut
working capital. The anticipated result is enhanced customer service, increased
market share and additional cash to stimulate growth and company value.
Arrangements for the return of merchandise and payment terms are consistent with
those of the industry.
*RapidCycle(R) is a registered trademark of The George Group.
Item 2. Properties
The Corporation's executive offices, primary research facilities, and principal
manufacturing plant are located in State College, Pennsylvania. Facilities have
expanded at this location to their present size of 133,000 square feet. This
includes a 90,000 square foot, two story addition that was completed in
December 1994. This new facility is occupied by the Corporation's manufacturing
functions as well as its services groups, including the equipment service
center, network design, technical customer services, two environmental chambers
and a fully-equipped training center. The existing 43,000 square foot facility,
which is on one level, is currently being renovated. The renovation, expected to
be fully completed in October 1995, includes expansion of the engineering
lab, and administrative offices. The full project has required significant
capital expenditures, including the purchase of ergonomic work stations,
advanced surface mount technology and test equipment, and an upgrade of the
Corporation's corporate information system. As of September 1, 1995, there were
544 employees based at this location.
The Corporation owns a 40,000 square foot manufacturing facility in Tipton,
Pennsylvania, located approximately 30 miles from the corporate headquarters in
State College. The plant is situated on a 15-acre site in an industrial park. As
of September 1, 1995, there were 515 employees at this location.
During the fiscal year ended June 30, 1995, the Corporation leased and began
occupying a 60,000 square foot manufacturing facility in Reedsville,
Pennsylvania, located approximately 25 miles from the corporate headquarters in
State College, Pennsylvania. A total of 232 employees were at this location as
of September 1, 1995.
The Corporation leases and occupies a 30,000 square foot facility in Fremont,
California. The facility is used primarily for the development and manufacture
of digital fiber optic equipment. A total of 74 employees were at this location
as of September 1, 1995.
During the fiscal year ended June 30, 1995, the Corporation leased and began
occupying a 6,790 square foot sales office in Denver, Colorado. A total of 12
employees were at this location as of September 1, 1995.
During the fiscal year ended June 30, 1995, the Corporation leased and began
occupying a 308 square foot sales office in Chicago, Illinois. A total of 2
employees were at this location as of September 1, 1995.
The Corporation's international office is located in Almere, The Netherlands, in
a leased 14,100 square foot facility. The location houses sales, marketing, and
field engineering personnel. A total of 15 employees were at this location as of
September 1, 1995.
The Corporation's Canadian office, located in Ajax, Ontario, Canada, leases and
occupies a 5,000 square foot facility for its sales, marketing, repair, and
field engineering personnel. A total of 14 employees were at this location as of
September 1, 1995.
The Corporation has established an office in Hong Kong where one employee is
engaged in sales and marketing activities.
Item 3. Legal Proceedings
On or about March 31, 1995, James and Elizabeth McCarthy, who own 150 shares of
the Registrant's Common Stock, filed a complaint in the United States District
Court for the Eastern District of Pennsylvania against the Corporation and its
Chief Executive Officer, Richard E. Perry, alleging that, during the period
January 17, 1995, through March 24, 1995, the defendants knowingly or recklessly
omitted material information about the Registrant in violation of Sections 10
(b) and 20 (a) of the Securities Exchange Act of 1934 and common law. The
complaint seeks permission to proceed as a class action on behalf of certain
persons who purchased shares of the Registrant's Common Stock during the period
January 17, 1995, through March 24, 1995, and who were allegedly damaged. The
complaint seeks compensatory damages in an unspecified amount and costs and
expenses relating to the complaint, including reasonable attorneys' fees.
The Corporation denies plaintiff's allegations and has filed a motion to dismiss
the complaint on the grounds, inter alia, that the statements made in its
January 17, 1995, press release are true. The motion has not yet been decided.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the fourth
quarter of the fiscal year ended June 30, 1995.
Executive Officers of the Registrant
All executive officers of the Corporation are elected annually at the Annual
Meeting of the Board of Directors (which is normally held on the date of the
Annual Meeting of Shareholders of the Corporation) to serve in their office for
the next succeeding year and until their successors are duly elected and
qualified. The listing immediately following this paragraph gives certain
information about the Corporation's executive officers, including the age,
present position, and business experience during the past five years.
Richard E. Perry, 65, Chairman since June 1986. President(*) from July 1985 to
December 1992; Chief Executive Officer since July 1985.
David J. Eng, 42, Vice President-Sales and Marketing since August 1994.
Director, Regional Telephony Sales, Scientific Atlanta, Inc.
from March 1993 to July 1994; Regional Sales Manager, Scientific Atlanta, Inc.
from April 1985 to February 1993.
Robert E. Hoffman, 51, Vice President-Engineering since June 1994.
Vice President-Engineering, Cincinnati Microwave, Inc. from January 1993 to
June 1994; President/CEO, Comband Technologies, Inc. from July 1986 to
December 1992.
Chris A. Miller, 42, Vice President-Finance, Secretary and Treasurer since July
1995; Controller, Planning Manager and Assistant Secretary from February 1993 to
July 1995. Controller and Assistant Secretary from February 1987 to
February 1993.
Donald F. Miller, 53, Vice President-Operations and Manufacturing since August
1995. Plant Manager since September 1987.
Gerhard B. Nederlof, 47, Vice President-International since January 1992.
Managing Director of DataCable B.V. from November 1981 to January 1992.
(*)The position of President has been vacant since March 31, 1995, when Daniel
W. Finch resigned from his positions as President and Chief Operating Officer.
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters
The information required by this item is incorporated herein by reference to
page 28 of the Registrant's 1995 Annual Report to Shareholders under the caption
"Stock Listing".
Item 6. Selected Financial Data
The information required by this item is incorporated herein by reference to
page 1 of the Registrant's 1995 Annual Report to Shareholders.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by this item is incorporated herein by reference to
pages 14 and 15 of the Registrant's 1995 Annual Report to Shareholders.
Item 8. Financial Statements and Supplementary Data
The information required by this item is incorporated herein by reference to
pages 16 through 26 of the Registrant's 1995 Annual Report to Shareholders.
Item 9. Changes and Disagreements on Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information with respect to Directors required by this item is incorporated
herein by reference to pages 2 and 3 of the Registrant's Proxy Statement dated
September 15, 1995.
The information with respect to Executive Officers required by this item is set
forth in Part I of this report.
The information with respect to compliance with Section 16 (a) of The Securities
Exchange Act of 1934 is incorporated herein by reference to page 11 of the
Registrant's Proxy Statement dated September 15, 1995.
Item 11. Executive Compensation
The information required by this item is incorporated herein by reference to
pages 6 through 11 of the Registrant's Proxy Statement dated September 15, 1995.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated herein by reference to
pages 3, 5 and 6 of the Registrant's Proxy Statement dated September 15, 1995.
Item 13. Certain Relationships and Related Transactions
The Registrant had no related transactions or relationships requiring disclosure
under Regulation S-K, Item 404, during the fiscal year 1995, nor are any such
transactions or relationships currently under proposal.
PART IV
Item 14. Exhibits, Financial Statements and Reports on Form 8-K
(a) The following documents are filed as part of this report:
(1) As indicated in Item 8 of Part II, the following financial statements
of the Registrant included in the Registrant's 1995 Annual Report to
Shareholders for the year ended June 30, 1995, are incorporated by reference
to pages 16 through 26 of the Registrant's Annual Report to Shareholders.
Consolidated Balance Sheets -- Years ended June 30, 1995, and June 24, 1994.
Consolidated Statements of Income -- Years ended June 30, 1995, June 24, 1994
and June 23, 1993.
Consolidated Statements of Cash Flows -- Years ended June 30, 1995, June 24,
1994 and June 25, 1993.
Consolidated Statements of Shareholders' Equity -- Years ended June 30, 1995,
June 24, 1994 and June 25, 1993.
Notes to Consolidated Financial Statements.
(2) The following financial statement schedule of the Registrant is filed as a
part of this Report:
Schedule II -- Valuation and Qualifying Accounts
Schedules, other than the one listed above, have been omitted because they are
not applicable or the required information is shown in the consolidated
financial statements or notes thereto.
<PAGE>
(3) Exhibits
NUMBER DESCRIPTION OF DOCUMENTS
(2) (a) Option Agreement to purchase COMLUX shares plus exhibits dated December
1, 1989 by and among the Registrant, COMLUX, Joseph Hawkins, Thomas Reynolds and
Kenneth Regnier (incorporated by reference to Exhibit (2) (a) to the
Registrant's Form 10-K for the year ended June 30, 1990, Securities and Exchange
Commission File No. 0-10726).
(2) (b) Agreement and Plan of Merger dated July 2, 1990, between the Registrant,
C-COR/COMLUX, Inc. and COMLUX (incorporated by reference to Exhibit (2) (b) to
the Registrant's Form 10-K for the year ended June 30, 1990, Securities and
Exchange Commission File No. 0-10726).
(2) (c) Agreement regarding income taxes dated September 13, 1990, by and among
the Registrant, C-COR/COMLUX, Inc. and the Shareholders of COMLUX (incorporated
by reference to Exhibit (2) (c) to Registrant's Form 10-K for the year ended
June 30, 1990, Securities and Exchange Commission File No. 0-10726).
(2) (d) Agreement for Purchase of Shares by and between C-COR Europe B.V.
("Purchaser") and Nederlof Holding B.V. and Matel B.V.
("Vendors") dated January 17, 1992,(incorporated by reference to
Exhibit (2)(d) to the Registrant's Form 10-K for the year ended June 26, 1992,
Securities and Exchange Commission File No. 0-10726).
(3) (a) Restated Articles of Incorporation of Registrant (incorporated
by reference to Exhibit 3-a.1. to Amendment No. 2 to Form S-1 Registration
Statement, File No. 2-70661).
(3) (b) Amendment to Articles of Incorporation of Registrant filed on September
21, 1995.
(3) (c) Bylaws of Registrant, as amended October 27, 1987, (incorporated by
reference to Exhibit (3) (b) to the Registrant's Form 10-K for the year ended
June 30, 1988, Securities and Exchange Commission File No. 0-10726).
(4) Specimen of Common Stock Certificate (incorporated by reference to
Exhibit 4 to Amendment No. 1 to Form S-1 Registration Statement,
File No. 2-70661).
(10) (a) Forms of Indemnification Agreement between the Registrant and certain
officers and directors (incorporated by reference to Exhibit (10) (h) to the
Registrant's Form 10-K for the year ended June 30, 1988, Securities and Exchange
Commission File No. 0-10726).
(10) (b) 1988 Stock Option Plan (incorporated by reference to Exhibit 28 to
Form S-8 Registration Statement, File No. 33-27440).
(10) (c) Registrant's Retirement Savings and Profit Sharing Plan effective July
1, 1989, (incorporated by reference to Exhibit (10) (s) to the Registrant's Form
10-K for the year ended June 30, 1989, Securities and Exchange Commission File
No. 0-10726).
(10) (d) Deferred Compensation Plan between the Registrant and Richard E. Perry
dated December 6, 1989, (incorporated by reference to Exhibit (10) (y) to the
Registrant's Form 10-K for the year ended June 30, 1990, Securities and
Exchange Commission File No. 0-10726).
(10) (e) 1989 Non-Employee Directors' Non-Qualified Stock Option Plan
(incorporated by reference to Exhibit 28 to Form S-8 Registration Statement,
File No. 33-35208).
(10) (f) Forms of Indemnification Agreement between the Registrant and certain
officers and directors (incorporated by reference to Exhibit (10) (aa) to the
Registrant's Form 10-K for the year ended June 30, 1990, Securites and Exchange
Commission File No. 0-10726).
(10) (g) Indemification Agreement dated January 2, 1991, between the Registrant
and certain directors (incorporated by reference to Exhibit (10)(gg) to the
Registrants' form 10-K for the year ended June 28, 1991, Securities and Exchange
Commission File No. 0-10726).
(10)(h) Employment Agreement dated January 1, 1992, between the
Registrant and Gerhard B. Nederlof (incorporated by reference to Exhibit (10)(v)
to the Registrant's Form 10-K for the year ended June 26, 1992, Securities and
Exchange Commission File No. 0-10726).
(10) (i)Management Agreement dated January 17, 1992, between DataCable B.V.
and Matel Holding B.V. (incorporated by reference to Exhibit (10)(aa) to the
Registrant's Form 10-K for the year ended June 26, 1992, Securities and Exchange
Commission File No. 0-10726).
(10) (j) Supplemental Agreement dated January 28, 1992, to Management Agreement
dated January 17, 1992, between DataCable B.V. and Matel Holding B.V.
(incorporated by reference to Exhibit (10) (bb) to the Registrant's Form 10-K
for the year ended June 26, 1992, Securities and Exchange Commission File No.
0-10726).
(10) (k) Indemnification Agreement dated February 3, 1992, between the
Registrant and Gerhard B. Nederlof (incorporated by reference to Exhibit (10)
(gg) to the Registrant's Form 10-K for the year ended June 26, 1992, Securities
and Exchange Commission File No. 0-10726).
(10) (l) 1992 Employee Stock Purchase Plan (incorporated by reference to
Exhibit 4.2 to Form S-8 Registration Statement, File No. 33-66590).
(10) (m) Supplemental Retirement Plan Participation Agreement dated April 20,
1993, between the Registrant and Gerhard B. Nederlof (incorporated by reference
to Exhibit (10) (bb) to the Registrant's Form 10-K for the year ended June 25,
1993, Securities and Exchange Commission File No. 0-10726).
(10) (n) Change of Control Agreement dated May 21, 1993, between the Registrant
and Gerhard B. Nederlof (incorporated by reference to Exhibit (10) (gg) to the
Registrant's Form 10-K for the year ended June 25, 1993, Securities and Exchange
Commission File No. 0-10726).
(10)(o) Fiscal Year 1994 Profit Incentive Plan (incorporated by reference to
Exhibit (10) (ll) to the Registrant's Form 10-K for the year ended June 25,
1993, Securities and Exchange Commission File No. 0-10726).
(10) (p) Amended and Restated Employment Agreement dated
April 19, 1994, between the Registrant and Richard E. Perry (incorporated by
reference to Exhibit (10) (cc) to the Registrant's Form 10-K for the year
ended June 24, 1994, Securities and Exchange Commission File No. 0-10726).
(10) (q) Agreement dated June 9, 1994, between the Registrant and Ralph J.
Albarano and Sons, Inc. for the construction of a "new manufacturing and
office building" (incorporated by reference to Exhibit (10)(dd) to the
Registrant's Form 10-K for the year ended June 24, 1994, Securities and Exchange
Commission File No. 0-10726).
(10) (r) Change of Control Agreement dated June 27, 1994, between the Registrant
and Robert E. Hoffman (incorporated by reference Exhibit (10) (ee) to the
Registrant's Form 10-K for the year ended June 24, 1994, Securities and Exchange
Commission File No. 0-10726).
(10) (s) Form of Indemnification Agreement dated June 27, 1994, between the
Registrant and Robert E. Hoffman (incorporated by reference to Exhibit (10)
(gg) to the Registrant's Form 10-K for the year ended June 24, 1994, Securities
and Exchange Commission File No. 0-10726).
(10) (t) Supplemental Retirement Plan Participation Agreement dated June 27,
1994, between the Registrant and Robert E. Hoffman (incorporated by reference to
Exhibit (10) (ii) to the Registrant's Form 10-K for the year ended June 24,
1994, Securities and Exchange Commission File No. 0-10726).
(10) (u) Note and Security Agreement dated August 31, 1994, between the
Registrant and Mellon Bank, N.A. (incorporated by reference to Exhibit (10) (kk)
to the Registrant's Form 10-K for the year ended June 24, 1994, Securities and
Exchange Commission File No.0-10726).
(10) (v) Supplement to Note and Security Agreement dated August 31, 1994,
between the Registrant and Mellon Bank, N.A. (incorporated by reference to
Exhibit (10) (ii) to the Registrant's Form 10-K for the year ended June 24,
1994, Securities and Exchange Commission File No. 0-10726).
(10) (w) Revolving Line of Credit Agreement dated August 31, 1994, between the
Registrant and Mellon Bank, N.A. (incorporated by reference to Exhibit (10) (mm)
to the Registrant's Form 10-K for the year ended June 24, 1994, Securities and
Exchange Commission File No. 0-10726).
<PAGE>
(10) (x) Supplement to Revolving Line of Credit Agreement dated August 31, 1994,
between the Registrant and Mellon Bank, N.A. (incorporated by reference to
Exhibit (10) (nn) to the Registrant's Form 10-K for the year ended June 24,
1994, Securities and Exchange Commission File No. 0-10726).
(10) (y) Change of Control Agreement dated August 22, 1994, between the
Registrant and David J. Eng (incorporated by reference to Exhibit (10) (oo) to
the Registrant's Form 10-K for the year ended June 24, 1994, Securities and
Exchange Commission File No. 0-10726).
(10) (z) Form of Indemnification Agreement dated August 22, 1994, between the
Registrant and David J. Eng (incorporated by reference to Exhibit (10) (pp) to
the Registrant's Form 10-K for the year ended June 24, 1994, Securities and
Exchange Commission File No. 0-10726).
(10) (aa) Supplemental Retirement Plan Participation Agreement dated August 22,
1994, between the Registrant and David J. Eng (incorporated by reference to
Exhibit (10) (qq) to the Registrant's Form 10-K for the year ended June 24,
1994, Securities and Exchange Commission File No. 0-10726).
(10) (bb) Fiscal Year 1995 Profit Incentive Plan (incorporated by reference to
Exhibit (10) (rr) to the Registrant's Form 10-K for the year ended June 24,
1994, Securities and Exchange Commission File No. 0-10726).
(10) (cc) Note and Security Agreement dated June 21, 1995, between the
Registrant and Mellon Bank, N.A.
(10) (dd) Supplement to Note and Security Agreement dated June 21, 1995, between
the Registrant and Mellon Bank, N.A.
(10) (ee) Revolving Line of Credit Agreement dated June 21, 1995, between the
Registrant and Mellon Bank, N.A.
(10) (ff) Supplement to Revolving Line of Credit Agreement dated June 21, 1995,
between the Registrant and Mellon Bank, N.A.
(10) (gg) Change of Control Agreement dated May 23, 1995, between the
Registrant and Joseph E. Zavacky.
(10) (hh) Form of Indemnification Agreement dated May 23, 1995, between the
Registrant and Joseph E. Zavacky.
(10) (ii) Supplemental Retirement Plan Participation Agreement dated May 22,
1995, between the Registrant and Chris A. Miller.
(10) (jj) Change of Control Agreement dated May 22, 1995, between the
Registrant and Chris A. Miller.
(10) (kk) Form of Indemnification Agreement dated May 22, 1995, between the
Registrant and Chris A. Miller.
(10) (ll) Supplemental Retirement Plan Participation Agreement dated August24,
1995, between the Registrant and Donald F. Miller.
(10) (mm) Change of Control Agreement dated August 24, 1995, between the
Registrant and Donald F. Miller.
(10) (nn) Form of Indemnification Agreement dated August 24, 1995, between the
Registrant and Donald F. Miller.
(10) (oo) Lease Agreement dated November 10, 1994, between the Registrant and
Mifflin County Industrial Development Corporation for a manufacturing building.
(10) (pp) Fiscal Year 1996 Profit Incentive Plan.
(11) Statement re Computation of Earnings Per Share.
(13) Annual Report to Shareholders for the year ended June 30, 1995.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Auditors
(27) Financial Data Schedule.
(b) Reports on Form 8-K filed in the fourth quarter of the fiscal year 1995:
Form 8-K dated March 31, 1995, to report under Item 5 that a complaint was filed
in the United States District Court for the Eastern District of
Pennsylvania against the Corporation and one of its executive officers alleging
that, during the period January 17, 1995, through March 24, 1995, the defendants
knowingly or recklessly omitted material information about the Registrant in
violation of Sections 10 (b) and 20 (a) of the Securities Exchange Act of 1934
and common law.
Form 8-K date May 10, 1995, to report under Item 5 that Daniel W. Finch had
resigned as President and Chief Operating Officer of the Registrant.
(c) Exhibits: See (a)(3) above.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
C-COR ELECTRONICS, INC.
(Registrant)
September 20, 1995
/s/Richard E. Perry
Chairman and Chief Executive Officer
(principal executive officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated on the 20th day of September 1995.
/s/Richard E. Perry, Director, Chairman
/s/Frank Rusinko, Jr., Director
/s/Donald M. Cook, Jr., Director
/s/James J. Tietjen, Director
/s/I.N. Rendall Harper, Jr., Director
/s/Philip L. Walker, Jr., Director
Anne P. Jones, Director
/s/Chris A. Miller, Vice President-Finance,
Secretary and Treasurer (principal
financial officer)
/s/John J. Omlor, Director
Independent Auditors' Report
The Board of Directors
C-COR Electronics, Inc. and Subsidiaries:
Under date of August 4, 1995, we reported on the consolidated balance sheets of
C-COR Electronics, Inc. and Subsidiaries as of June 30, 1995 and June 24, 1994
and the related statements of income, shareholders' equity, and cash flows for
each of the years in the three-year period ended June 30, 1995 as contained in
the 1995 Annual Report to Shareholders. These consolidated financial statements
and our report thereon are incorporated by reference in the Annual Report on
Form 10-K for the three-year period ended June 30, 1995. In connection with our
audits of the aforementioned consolidated financial statements, we also have
audited the related financial statement schedule for the three-year period ended
June 30, 1995 as listed at Item 14(a)(2). This financial statement schedule is
the responsibility of the Company's management. Our responsibility is to express
an opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
State College, Pennsylvania
September 25, 1995
<TABLE>
<CAPTION>
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
COL. A COL. B COL. C COL. D COL. E
ADDITIONS
DESCRIPTION Balance Charged Charged to Balance
at Beginning to Costs Other Accounts- Deductions- at End
of Period and Expenses Describe Describe of Period
Year ended June 30, 1995
<S> <C> <C> <C> <C> <C>
Deduction from Asset Accounts:
Allowance for Doubtful Accounts $ 348,000 $ 313,000 $0 $ 4,000(1) $ 657,000
Reserve for Inventory
Obsolescence 648,000 1,277,000 0 476,000(2) 1,449,000
$ 996,000 $1,590,000 $0 $ 480,000 $2,106,000
Product Warranty Reserve $ 602,000 $2,358,000 $0 $1,206,000(3) $1,754,000
Year ended June 24, 1994
Deduction from Asset Accounts:
Allowance for Doubtful Accounts $ 433,000 $ 75,000 $0 $ 160,000(1) $ 348,000
Reserve for Inventory
Obsolescence 552,000 1,422,000 0 1,326,000(2) 648,000
$ 985,000 $1,497,000 $0 $1,486,000 $ 996,000
Product Warranty Reserve $ 237,000 $ 699,000 $0 $ 334,000(3) $ 602,000
Year ended June 25, 1993
Deduction from Asset Accounts:
Allowance for Doubtful Accounts $ 502,000 $ 83,000 $0 $ 152,000(1) $ 433,000
Reserve for Inventory
Obsolescence 864,000 792,000 0 1,104,000(2) 552,000
$1,366,000 $ 875,000 $0 $1,256,000 $ 985,000
Product Warranty Reserve $ 0 $ 561,000 $0 $ 324,000(3) $ 237,000
<FN>
(1) Uncollectible accounts written off, net of recoveries.
(2) Obsolete inventory disposals.
(3) Warranty claims honored during year.
</FN>
</TABLE>
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 90)
In compliance with the requirements of 15 Pa.C.S. Section 1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that
1. The Name of the corporation is: C-COR Electronics, Inc.
2. The (a)address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and the
county of venue is (the Department is hereby authorized to correct the following
information to conform to the records of the Department):
(a) 60 Decibel Road State College PA 16801 Centre
Number and Street City State Zip County
(b) c/o: (Name of Commercial Registered Office Provider)
For a corporation represented by a commercial registered office provider, the
county in (b) shall be deemed the county in which the corporation is located for
venue and official publication purposes.
3. The statute by or under which it was incorporated is:
Pennsylvania Business Corporation Law of 1933.
4. The date of its incorporation is: June 30, 1953
5. (Check, and if appropriate complete, one of the following)
X The amendment shall be effective upon filing these Articles of Amendment
in the Department of State
6. (Check one of the following)
X The amendment was adopted by the shareholders (or members) pursuant
to 15 Pa.C.S. Section 1914(a) and (b).
7. (Check, and if appropriate complete, one of the following):
X The amendment adopted by the corporation as set forth in full in Exhibit A
attached hereto and made a part hereof.
In Testimony Whereof, the undersigned corporation has caused these Articles of
Amendment to be signed by a duly authorized officer thereof this 21st day of
September, 1995.
C-COR Electronics, Inc.
EXHIBIT A
TO
ARTICLES OF AMENDMENT
OF
C-COR ELECTRONICS, INC.
7. The amendment adopted by the Corporation, set forth
in full, is as follows:
RESOLVED, that article 5(a) of C-COR Electronics, Inc.'s Amended
and Restated Articles of Incorporation which presently reads as follows:
5(a). The aggregate numbers of shares which the
corporation should have authority to issue is:
Eight Million (8,000,000) shares of Common Stock having a par value of $.10 (ten
cents) per share and Two Million (2,000,000) shares of Preferred Stock, no par
value per share.
be amended to read in full as follows:
5(a). The aggregate number of shares which the
corporation should have authority to issue is:
Twenty Four Million (24,000,000) shares of Common stock having a par value of
$.10 (ten cents) per share and Two Million (2,000,000) shares of Preferred
Stock, no par value per share.
Mellon Bank
Note and Security Agreement
AMENDED AND RESTATED
23,000,000.00
June 21,1995
For value received, and intending to be legally bound, Undersigned, as defined
below, promises to pay to Mellon Bank, NA ("Bank") or its order at State
College, Pennsylvania
the sum of Twenty-Three Million and No/ 100 Dollars (23,000,000.00) or such
lesser or greater principal amount as may be outstanding from time to time under
the Revolving Line of Credit Agreement dated June 21, 1995 (as amended and
supplemented from time to time, the "Credit Agreement"), between Bank and
Undersigned, with interest on the outstanding balance from the date of this Note
and Security Agreement ("Note") at the rate(s) ("Contractual Rate(s)") specified
herein.
Payment of principal and interest shall be due and payable, as set forth in the
attached Supplement to Note and Security Agreement.
This Note and Security Agreement is given in replacement of that original Note
and Security Agreement dated August 31, 1994, and as amended and restated on
November 1, 1994, December 29, 1994, February 1, 1995, and April 3, 1995, in
order to increase the Note amount. This is not a novation of the prior Note and
Security Agreements). All prior security interests granted shall carry to this
Note and Security Agreement.
After maturity, whether by acceleration or otherwise, interest shall accrue at a
rate 2 percent per annum above the Contractual Rate(s) specified until all sums
due hereunder are paid. Interest shall continue to accrue after the entry of
judgment by confession or otherwise at the Contractual Rate(s) until all sums
due hereunder and/or under the judgment are paid, unless the Contractual Rate(s)
is (are) altered by subsequent maturity. Undersigned agrees to pay to Bank, as
consideration for Bank's commitment under the Credit Agreement.
If any law, regulation, order, decree or guideline or interpretation or
application thereof by any governmental authority charged with the
interpretation or administration thereof or compliance by Bank with any request
or directive of any governmental authority (whether or not having the force of
law) shall either impose, modify or deem applicable any capital adequacy or
similar requirement against assets (funded or contingent) of, or credits or
commitments to extend credit extended by Bank and the result of any of the
foregoing is to increase the cost to, reduce the income receivable by, or impose
any expense (including loss of margin) upon Bank with respect to the Credit
Agreement, this Note, or the making, maintenance or funding of any part of the
Loans (or, in the case of capital adequacy or similar requirement, to have the
effect of reducing the rate of return on Bank's capital, taking into account
Bank's policies with regard to capital adequacy) by an amount which Bank deems
to be material, Bank shall from time to time notify Undersigned of the amount
determined in good faith by Bank (which determination shall be conclusive absent
manifest error) to be necessary to compensate Bank for such increase, reduction
or imposition. Such amount shall be due and payable by Undersigned to Bank ten
(10) business days after such notice is given.
So long as Bank is the holder hereof, Bank's books and records shall be
presumed, except in the case of manifest error, to accurately evidence at all
times all amounts outstanding under this Note and the date and amount of each
advance and payment made pursuant hereto.
The prompt and faithful performance of all of Undersigned's obligations
hereunder, including without limitation time of payment, is of the essence of
this Note.
Certain terms used in this Note are defined in Section 9 below.
1.Security Interest. Undersigned hereby grants to Bank a security interest in
the following property now owned or hereafter acquired by Undersigned:
(b) all inventory (whether held for sale or lease or to be furnished under
contracts of service), raw materials, work in process, and materials used or
consumed in the conduct of Undersigned's business, and all books, records,
invoices and other documents which describe or evidence the same;
(d) all accounts, contract rights, general intangibles, chooses in action,
instruments, chattel paper, documents (including all documents of title and
warehouse receipts) and all lights to the payment of money, however evidenced or
arising;
(g) In addition to the foregoing, Undersigned (1) grants to Bank a security
interest in all accessions, parts, accessories, attachments and appurtenances in
any way used with, attached or related to, or installed in, any equipment or
inventory constituting "Collateral" hereunder; (2) grants to Bank a security
interest in all substitutions for, renewals of, improvements, replacements and
additions to, and the products and proceeds (cash and non-cash) of all property
constituting "Collateral" hereunder and any insurance policies relating thereto;
(3) grants to Bank a security interest in, lien upon, and right of setoff
against, all deposit accounts, credits, securities, moneys or other property of
Undersigned which may at any time be in the possession of, delivered to, or owed
by Bank, including any proceeds or returned or unearned premiums of insurance,
and the proceeds (cash and non-cash) of all the foregoing property; and (4)
assigns to Bank all moneys which may become payable on any policy of insurance
required to be maintained under this Note, including any returned or unearned
premiums.
All such property subject to Bank's security interests described in this Section
1 is referred to herein collectively as the "Collateral". With respect to
Section 4 hereunder, the term "Collateral" shall not include the property
described in subsections (g) (3) and (g) (4) of this Section 1.
All security interests in Collateral shall be deemed to arise and be perfected
under and governed by the Uniform Commercial Code, except to the extent that
such law does not apply to certain types of transactions or Collateral, in which
case applicable law shall govern.
2. Obligations Secured. The Collateral shall secure the following obligations
("Obligations") of Undersigned to Bank: (a) all amounts at any time owing or
payable under this Note; (b) all costs and expenses incurred by Bank in the
collection or enforcement of this Note or the protection of the Collateral; (c)
all future advances made by Bank for taxes, levies, insurance, and repairs to or
maintenance of the Collateral; and (d) any other indebtedness, liability or
obligation of Undersigned to Bank, past, present, or future, direct or indirect,
absolute or contingent, individual, joint or several, now due or to become due,
whether as drawer, maker, endorser, guarantor, surety or otherwise, except that
none of the security interests created herein shall secure any obligation
incurred by Undersigned which is defined as consumer credit" by Federal Reserve
Board Regulation Z, 12 C.F.R. Section 226.1 et seq., and is not exempted from
the application of that Regulation.
3. Representations. Undersigned hereby makes the following representations and
warranties which shall be true correct on the date of this Note and shall
continue to be true and correct at the time of the creation of any Obligation
secured hereby and until the Obligations secured hereby shall have been paid in
full: (a) Undersigned's residence and/or Chief Executive Office, as the case may
be, is as stated below or as otherwise stated in a subsequent written notice
delivered to Bank pursuant to the terms hereof, (b) Undersigned has good and
marketable title to the Collateral subject to no security interest, lien or
encumbrance, except as indicated to the contrary to Bank in writing prior to the
execution of this Note; and (c) if any of the undersigned is an individual, each
such individual is at least 18 years of age and under no legal disability or
incapacity.
4. Covenants. Undersigned covenants and agrees that until the Obligations
secured hereunder have been paid in full, Undersigned shall: (a) use the
proceeds of the Loans evidenced hereby only for the purpose(s) specified to the
Bank at or prior to the execution hereof, (b) not permit use of the Collateral
for any illegal purposes; (c) promptly notify Bank in writing of any change in
its or their residence or Chief Executive Office; (d) not permit removal of any
of the Collateral from county to county or state to state unless Bank has given
written consent in advance; (e) maintain at all times good and marketable title
to all Collateral, free and clear of any security interest, lien or encumbrance
(except as to which Bank may grant its prior written consent pursuant to section
4(f) below), and defend such title against the claims and demands of all
persons; (f) not (1) affix the Collateral or permit the Collateral to be affixed
to real estate or to any other goods, (2) lease, mortgage pledge or encumber the
Collateral, (3) permit the Collateral's identity to be lost, (4) permit the
Collateral to be levied upon or attached under any legal process, (5) permit or
cause any security interest or lien to arise with respectto the Collateral
(other than those created in this Note), or (6) except Collateral customarily
sold by Undersigned in the ordinary course of business and so sold in such
manner for full value, sell, consign, part with possession of, or otherwise
dispose of the Collateral or any rights therein, except as Bank may grant its
prior specific written consent with respect to acts or events specified in
subsections (1), (2), (5) or (6) hereof; (g) maintain the Collateral in good
condition and repair, excepting only reasonable wear and tear; pay and discharge
all taxes and other levies on the Collateral, as well as the costs of repair and
maintenance thereof, and furnish to Bank upon request documentary proof of
payment of such taxes, levies and costs; (h) provide additional collateral at
such times and having such value as Bank may request, if Bank shall have
reasonable grounds for believing that the value of the Collateral has become
insufficient to secure all Obligations evidenced or secured by this Note; (i)
purchase and maintain policies of insurance (including flood insurance) to
protect the Collateral or other property against such risks and casualties, and
in such amounts, as shall be required by Bank and/or applicable law, which
policies shall (1) be in form and substance satisfactory to Bank, (2) designate
Bank as loss payee and, at Bank's option, as additional insured, and (3) be (or
certificates evidencing same shall be) deposited with Bank; 0) provide, upon
request, financial or other information, documentation or certifications to Bank
(including balance sheets and income statements), all in form and content
satisfactory to Bank; (k) execute, upon demand by Bank, any financing statements
or other documents which Bank may deem necessary to perfect or maintain
perfection of the security interest(s) created in this Note and pay all costs
and fees pertaining to the filing of any financing, continuation or termination
statements with regard to such security interests; (1) procure, and cause a
statement of Bank's security interest to be noted on, any certificate of title
issued or required by law to be issued with respect to any motor vehicle
constituting part of the Collateral, and cause any such certificate to be
delivered to Bank within 10 days from the later of the date of this Note or the
date of the issuance of such certificate; (m) pay, upon demand, all amounts
incurred by Bank in connection with any action or proceeding taken or commenced
by Bank to enforce or collect this Note or protect, insure or realize upon the
Collateral, including attorney's fees equal to the lesser of (a) 20% of the
above sum and interest then due hereunder, or $500.00, whichever is greater, or
(b) the maximum amount permitted by law, and attorney's costs and all costs of
legal proceedings; and (n) immediately notify Bank if any of Undersigned's
accounts arise out of contracts with the United States or any department, agency
or instrumentality thereof, and execute any instruments and take any steps
required by Bank in order that all moneys due and to become due under any such
contracts shall be assigned to Bank and notice thereof given to the United
States under the Federal Assignment of Claims Act.
5. Events of Default. The occurrence of any of the following shall constitute an
"Event of Default" hereunder (a) default in payment or performance of any of the
Obligations evidenced or secured by this Note or any other evidence of liability
of Undersigned to Bank; (b) the breach by any Obligor (defined as Undersigned
and each surety or guarantor of any of Undersigned's liabilities to Bank, as
well as any person or entity granting Bank a security interest in property to
secure the Obligations evidenced hereby) of any covenant contained in the Credit
Agreement, this Note, or in any separate security, guarantee or suretyship
agreement between Bank and any Obligor, the occurrence of an default hereunder
or under the terms of any such agreement, or the discovery by Bank of any false
or misleading representation made by any Obligor herein or in any such agreement
or in any other information submitted to Bank by any Obligor; (c) with respect
to any Obligor: (1)death or incapacity of any individual or general partner; or
(2) dissolution of any partnership or corporation; (d) any assignment for the
benefit of creditors by any Obligor; (e) insolvency of any Obligor; (f) the
filing or commencement of any petition, action, case or proceeding, voluntary or
involuntary, under any state or federal law regarding bankruptcy, insolvency,
reorganization, receivership or dissolution, including the Bankruptcy Reform Act
of 1978, as amended, by or against any Obligor; (g) default under the terms of
any lease of or mortgage on the premises where any Collateral is located; (h)
garnishment, attachment or taking by governmental authority of any Collateral or
other property of the Undersigned which is in Bank's possession; (i) a
determination by bank, which determination shall be conclusive if made in good
faith, that a material adverse change has occurred in the financial or business
condition of Undersigned; or 0) the maturity of any life insurance policy held
as collateral under this Note by reason of the death of the insured or
otherwise.
6. Acceleration; Remedies. Upon the occurrence of any Event of Default: (a) all
amounts due under this Note, including the unpaid balance of principal and
interest hereof, all become immediately due and payable at the option of Bank,
without any demand or notice whatsoever; (b) Undersigned shall, upon demand by
Bank, assemble the Collateral and promptly make it available to Bank at any
place designated by Bank which is reasonably convenient to both parties; (c)
Bank may immediately and without demand exercise any of its rights and remedies
granted herein, under applicable law, or which it may otherwise have, against
the Undersigned, the Collateral, or otherwise; and (d) Bank may, without notice
or process of any sort, peaceably enter any premises where any vehicle
constituting a part of the Collateral is located and take possession, retain and
dispose of such vehicle and all property located in or upon it. Bank shall have
no obligation to return any property not constituting Collateral found in any
such vehicle unless Bank actually receives Undersigned's written request
therefor specifically describing such property within 72 hours after
repossession thereof. Notwithstanding any provision to the contrary contained
herein, upon the occurrence of an Event of Default as described in Section 5 (f)
hereof, all amounts due under this Note shall become immediately due and
payable, without any demand, notice, or further action by Bank whatsoever, and
an action therefor shall immediately accrue.
7. Bank's Rights. Undersigned hereby authorizes Bank, and Bank shall have the
continuing right, at its sole option and discretion, to: (a) do anything which
Undersigned is required but fails to do hereunder, and in particular Bank may,
if Undersigned fails to do so, (1) insure or take any reasonable steps to
protect the Collateral, (2) pay all taxes, levies, expenses and costs arising
with respect to the Collateral, or (3) pay any premiums payable on any policy of
insurance required to be obtained or maintained hereunder, and add any amounts
paid under this Section 7(a) to the principal amount of the indebtedness secured
by this Note; (b) direct any insurer to make payment of any insurance proceeds,
including any returned or unearned premiums, directly to Bank, and apply such
moneys to any Obligations or other amounts evidenced or secured hereby in such
order or fashion as Bank may elect; (c) inspect the Collateral at any reasonable
time; (d) pay any amounts Bank elects to pay or advance hereunder on account of
insurance, taxes, or other costs, fees or charges arising in connection with the
Collateral, either directly to the payee of such cost, fee or charge, directly
to Undersigned, or to such payee(s) and Undersigned jointly; and (e) pay the
proceeds of the Loans evidenced by this Note to any and all of the Undersigned
individually or jointly, or to other persons as any of the Undersigned may
direct.
In addition to all rights given to Bank by this Note, Bank shall have all the
rights and remedies of a secured party under any applicable law, including
without limitation, the Uniform Commercial Code.
8. Miscellaneous Provisions. (a) Undersigned waives protest of all commercial
paper at any time held by Bank on which Undersigned is in any way liable, notice
of nonpayment at maturity of any and all accounts, and (except where requested
hereby notice of action taken by Bank; and hereby ratifies and confirms whatever
Bank may do. Bank shall be entitled to exercise any right notwithstanding any
prior exercise, failure to exercise or delay in exercising any such right. (b)
Bank shall retain the lien of an judgment entered on account of the indebtedness
evidence hereby, as well as any security interest previously granted to secure
repayment of the indebtedness evidenced hereby ' y, and Undersigned warrants
that Undersigned has no defense whatsoever to any action or proceeding that may
be brought to enforce or realize on such . judgment or security interest. (c) If
any provision hereof shall for any reason be held invalid or unenforceable, no
other provision shall be affected thereby, and this Note shall be construed as
if the invalid or unenforceable provision had never been a part of it. The
descriptive headings of this Note are for convenience only and shall not in any
way affect the meaning or construction of any provision hereof. (d) The rights
and privileges of Bank contained in this Note shall inure to the benefit of its
successors and assigns, and the duties of Undersigned shall bind all heirs,
personal representatives, successors and assigns. (e) This Note shall in all
respects be governed by the laws of the state in which this Note is payable
(except to the extent that federal law governs), and all references to the
Uniform Commercial Code shall be deemed to refer to the Uniform Commercial Code
as enacted in such state. (f) Undersigned hereby irrevocably appoints Bank and
each holder hereof as Undersigned's attorney-in-fact to: (1) endorse
Undersigned's name to any draft or check which may be payable to Undersigned in
order to collect the proceeds of any insurance or any returned or unearned
premiums in respect of any policies of insurance required to be maintained
hereunder; and (2) take any action Bank deems necessary to perfect or maintain
perfection of any security interest granted to Bank herein, including executing
any document on Undersigned's behalf. (g) Undersigned shall bear the risk of
loss of, damage to, or destruction of the Collateral, and Undersigned hereby
releases Bank from all claims for loss or damage to the Collateral caused by any
act or omission on the part of Bank, except for willful misconduct. (b) Copies
or reproductions of this document or of any financing statement may be filed as
a financing statement.
9. Definitions. As used herein: (a) "account", "chattel paper", "contract
right", "document", "instrument", and "inventory" have the same respective
meanings given to those terms in the Uniform Commercial Code; (b) "general
intangibles has the meaning given to that term in the Uniform Commercial Code,
including without limitation, customer lists, books and records (including
without limitation, all correspondence, files, tapes, cards, book entries,
computer runs, computer programs and other papers and documents, whether in the
possession or control of Undersigned or any computer service bureau), rights in
franchises and sales contracts, patents, copyrights, trademarks, logos,
goodwill, trade names, label designs, royalties, brand names, plans, blueprints,
inventions, patterns, trade secrets, licenses, jigs, dies, molds, and formulas;
(c) "Chief Executive Office" means the place from which the main part of the
business operations of an entity is managed; and (d) "Undersigned" refers
individually and collectively to all makers of this Note, including, in the case
of any partnership, all general partners of such partnership individually and
collectively, whether or not such partners sign below. Undersigned shall each be
jointly and severally bound by the terms hereof, and, with respect to any
partnership executing this Note, each general partner shall be bound hereby both
in such general partner's individual and partnership capacities.
Capitalized terms not defined in this Note shall have the same meanings set
forth in the Credit Agreement.
10. Confession of Judgment. Undersigned hereby empowers the prothonotary or any
attorney of any court of record to appear for Undersigned and to confess
judgment as often as necessary against Undersigned in favor of the holder
hereof, as of any term, for the above sum plus interest due under the terms
hereof, together with costs of legal proceedings and an attorney's commission
equal to the lesser of (a) 20% of the above sum and interest then due hereunder
or $500.00, whichever is greater, or (b) the maximum amount permitted by law,
with release of all errors. Undersigned waives all laws exempting real or
personal property from execution.
Witness the due execution hereof.
Attest/Witness;
/s/Chris A. Miller
Corporation or Other Entity
C-Cor Electronics, Inc.
/s/Jack B. Andrews, VP-Finance
Business Address
60 Decibel Road, State College, PA 16801
Mellon Bank
AMENDED AND RESTATED
SUPPLEMENT TO NOTE AND SECURITY AGREEMENT
This Amended and Restated Supplement to Note and Security Agreement (this
"Supplement") is annexed to and is part of the Amended and Restated Note and
Security Agreement dated to be effective as of June 21, 1995, of Undersigned
payable to MELLON BANK, N.A. ("Bank") in the stated principal amount of
TWENTY-THREE MILLION DOLLARS ($23,000,000). Such Amended and Restated Note and
Security Agreement, as supplemented by this Supplement, shall be referred to as
the "Note".
1. Payment. Principal on the Note shall be due and payable on October 31, 1995.
Accrued interest on the Prime Rate Portion and the ABS Rate Portion shall be due
and payable on the last Business Day of each calendar month after the date
hereof and on October 31, 1995. Interest on each Rate Segment of the Euro-Rate
Portion shall be due and payable on the last day of the corresponding Rate
Period. After maturity of any part of the Note (by acceleration or otherwise),
interest on such part of the Note shall be due and payable on demand.
2. Interest Rate. The unpaid principal amount of the Note shall bear interest
for each day until due on one or more bases selected by Undersigned from among
the Interest Rate Options set forth below. Undersigned understands and agrees:
(a) that Bank may in its sole discretion from time to time determine that the
right of Undersigned to select, convert to or renew the Prime Rate Option or the
Euro-Rate Option is not available and (b) that subject to the provisions of this
Supplement Undersigned may select any number of Options to apply simultaneously
to different parts of the unpaid principal amount of the Note and may select any
number of Rate Segments to apply simultaneously to different parts of the
Euro-Rate Portion.
Available Interest Rate Options
Prime Rate Option: A rate, per annum (computed on the basis of a year of 360
days and actual days elapsed) for each day equal to the Prime Rate.
Euro-Rate Option: For each Rate Segment of the Euro-Rate Portion, a rate per
annum (computed on the basis of a year of 360 days and actual days elapsed) for
each day equal to the Euro-Rate for such Rate Segment for such day plus 135
Basis Points.
ABS-Rate Option: A rate per annum (computed on the basis of a year of 360 days,
as the case may be) for each day equal to the ABS Rate for such day plus 135
Basis Points.
3. Rate Periods. At any time when Undersigned selects, converts to or renews the
Euro-Rate option, Undersigned shall fix a period (the "Rate Period") which shall
be one, two, or three months, which shall be acceptable to Bank in Bank's sole
discretion, during which the Euro-Rate Option shall apply to the Corresponding
Rate Segment. Bank's right to payment of principal and interest under the Note
shall in no way be affected by the fact that one or more Rate Periods may be in
effect.
4. Amounts. Every selection of, conversion to or renewal of the EuroRate
Option shall be in a principal amount selected by Undersigned and acceptable
to Bank in Bank's sole discretion.
5. Interest After Maturity. After the principal amount of any part of the Prime
Rate Portion or the ABS-Rate Portion shall have become due and payable, such
amount shall bear interest for each day until paid (before and after judgment)
at a rate per annum (based on a 360-day year and actual days elapsed) which for
each day shall be the greater of (a) 2% above the Prime Rate Option on the day
such amount became due and (b) 2% above the Prime Rate option, such interest
rate to change automatically from time to time effective as of the effective
date of each change in the Prime Rate. After the principal amount of any part of
the Euro-Rate Portion shall have become due and payable, such amount shall bear
interest for each day until paid (before and after judgment) (a) until the end
of the applicable then-current Rate Period at a rate per annum 2% above the
Euro-Rate Option otherwise applicable to such part and (b) thereafter in
accordance with the previous sentence.
6. Late Payment Charge. If any payment (including without limitation any
regularly scheduled payment, balloon payment and final payment) is not paid
within 25 days after it is due, Undersigned will pay a late charge equal to 5%
of the entire payment due (regardless of whether part of the payment due had
been made, and regardless of whether the payment due consists of principal and
interest, principal only or interest only). (Such late charge will be in
addition to any increase made to the interest rate(s) applicable to the
outstanding balance hereof as a result of maturity of this Note or otherwise, as
well as in addition to any other applicable fees, charges and costs.) Also, Bank
reserves the right to modify, in its sole discretion and upon thirty (30) days
prior written notice to Undersigned, the late charge set forth herein.
7. Selection, Conversion or Renewal of Rate Options. Subject to the other
provisions of this Supplement, Undersigned may select any interest rate Option
to apply to the initial borrowing evidenced by the Note. Subject to the other
provisions of this Supplement, Undersigned may convert any part of the unpaid
principal amount of the Note from any interest rate option to the other interest
rate Option(s): (a) at any time with respect to conversion from the Prime Rate
Option or the ABS-Rate Option to any other interest rate Option and (b) at the
expiration of any Rate Period with respect to conversion from or renewals of the
Euro-Rate Option as to the Rate Segment corresponding to such expiring Rate
Period. Whenever Undersigned desires to select, convert or renew the Euro-Rate
Option Undersigned shall give Bank Standard Notice thereof (which shall be
irrevocable), specifying the date, amount and type of the proposed new Rate
Option. If such notice has been duly given, and if Bank in its sole discretion
approves the proposed selection, conversion or renewal, on and after the date
specified in such notice interest shall be calculated upon the unpaid principal
amount of the Note taking into account such selection, conversion or renewal.
8. Prime Rate Fallback. If any Rate Period expires, any part of the Rate Segment
corresponding to such Rate Period which has not been converted or renewed in
accordance with Section 6 hereof automatically shall be converted to the Prime
Rate Option. If Undersigned fails to select, or if Bank fails to approve, an
interest rate Option to apply to the initial borrowing evidenced by the Note,
such initial borrowing shall be deemed to be at the Prime Rate Option. If at any
time the Bank shall have determined in good faith (which determination shall be
conclusive) that the accrual of interest at any of the Interest Rate options has
been made impractical or unlawful by compliance with the Bank in good faith with
any law (including common law), constitution, statute, treaty, regulation, rule,
ordinance, order, injunction, writ, decree or award of any government or
political subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality of either, or any court, tribunal,
grand jury or arbitrator, in each case whether foreign or domestic, or
administration thereof by any official body charged with the interpretation or
administration thereof or with any request or directive of any such official
body (whether or not having the force of law), then, and in any such event, the
outstanding principal amount of this Note subject to such Interest Rate Option
shall accrue interest at the Prime Rate Option and the Undersigned shall not
have the right to select such Interest Rate Option.
9. Prepayments. Undersigned shall have the right at its option from time to time
to prepay the Prime Rate Portion or the ABS-Rate Portion in whole or in part.
Prepayments shall be applied first, against any amount, other than principal or
interest, which may be due and payable under this Note or under any of the
documents executed and delivered by Undersigned in connection herewith; then,
against unpaid interest due and payable at the time of such prepayment; then
against any accrued and unpaid interest; then against any outstanding principal
amount. Undersigned shall have no right to prepay any part of the Euro-Rate
Portion at any time without the prior written consent of Bank except that
Undersigned may prepay any part of any Rate Segment at the expiration of the
Rate Period corresponding to such Rate Segment. Prepayments shall be made by
giving the Bank Standard Notice thereof (which shall be irrevocable), specifying
the date, and amount and type of prepayment, and upon such date the amount so
specified and accrued interest thereon shall be due and payable.
10. Indemnity. Undersigned shall indemnify Bank against any loss or
expense (including loss of margin) which Bank has sustained or incurred as a
consequence of:
(i) payment, prepayment or conversion of any part of any Rate Segment of the
Euro-Rate Portion on a day other than the last day of the corresponding Rate
Period (whether or not any such payment is pursuant to demand by Bank under the
Note and whether or not any such payment, prepayment or conversion is consented
to by Bank, unless Bank shall have expressly waived such indemnity in writing);
(ii) attempt by Undersigned to revoke in whole or part any irrevocable notice
given pursuant to Section 6 of this Supplement; or
(iii) breach of or default by any obligor in the performance or observance of
any covenant or condition contained in the Note or any separate security,
guarantee or suretyship agreement between Bank and any Obligor.
If Bank sustains any such loss or expense it shall from time to time notify
Undersigned of the amount determined in good faith by Bank (which determination
shall be conclusive) to be necessary to indemnify Bank for such loss or expense.
Such amount shall be due and payable by Undersigned on demand.
11. Records. The unpaid principal amount of the Note, the unpaid interest
accrued thereon, the interest rate or rates applicable to such unpaid principal
amount, the duration of such applicability and the date and amount of each
payment or demand shall at all times be ascertained from the books and records
created by Bank, which shall be conclusive absent manifest error.
12. Notices. All notices under Sections 6 or 8 of this Supplement shall be in
writing or by telephone promptly confirmed in writing, and all such writings
shall be sent by first-class, first-class express or certified mail or by hand
delivery, in all cases with charges prepaid. All notices shall be sent to the
applicable party at the address stated on the signature page hereof or in
accordance with the last unrevoked written direction from such party to the
other parties hereto. All notices by Undersigned shall be effective when
received by Bank and all notices by Bank shall be effective when telephoned,
deposited in the mail or hand delivered. Written notices or confirmations by
Undersigned shall not be deemed records of Bank within the meaning of section 10
of this Supplement whether or not received by Bank. Bank may conclusively rely
without inquiry on any notice or confirmation purporting to be from or
authorized by Undersigned.
13. Definitions. As used in this Supplement:
"Business Day" shall mean any day on which Bank is open for business at the
location where the Note is payable.
"Euro-Rate Reserve Percentage" for any day shall mean the percentage (rounded
upward to the nearest 1/100 of 1%), as determined in good faith by Bank (which
determination shall be conclusive) as representing for such day the maximum
effective reserve requirement (including without limitation supplemental,
marginal and emergency requirements) for member banks of the Federal Reserve
System with respect to eurocurrency funding (currently referred to as
"Eurocurrency liabilities") of any maturity. Each Euro-Rate shall be adjusted
automatically as of the effective date of any change in the Euro-Rate Reserve
Percentage.
"Euro-Rate" for any day for any proposed or existing Rate Segment corresponding
to a Rate Period shall mean the rate per annum determined by Bank to be the rate
per annum obtained by dividing (the resulting quotient to be rounded upward to
the nearest 1/100 of 1%) (A) the rate of interest (which shall be the same for
each day in such Rate Period estimated in good faith by Bank in accordance with
its usual procedures (which determination shall be conclusive) to be the average
of the rates per annum for deposits in United States dollars offered to major
money center banks in the London interbank market at approximately 11:00 a.m.,
London time, two London Business Days prior to the first day of such Rate Period
for delivery on the first day of such Rate Period in amounts comparable to such
Rate Segment (or, if there are no such comparable amounts actively traded, the
smallest amounts actively traded) and having maturity comparable to such Rate
Period by (B) a number equal to 1.00 minus the Euro-Rate Reserve Percentage for
such day.
The "Euro-Rate" may also be expressed by the following formula:
average of rates offered to major
money banks in the London inter-
bank market estimated by the Bank
Euro-Rate = as set forth in (A) above
1.00 - Euro-Rate Reserve Percentage
"London Business Day" shall mean a day for dealing in deposits in United States
dollars by and among banks in the London interbank market.
"Portion": "Prime Rate Portion" or "ABS-Rate Portion" shall mean at any time the
part, including the whole, of the unpaid principal amount of the Note bearing
interest at such time under the Prime Rate Option or the ABS Rate Portion or in
accordance with the first sentence of Section 5 of this Supplement. "Euro-Rate
Portion" shall mean at any time, the part, including the whole, of the unpaid
principal amount of the Note bearing interest at such time under the Euro-Rate
Option.
"Prime Rate" shall mean the interest rate per annum announced from time to time
by Bank as its Prime Rate. The Prime Rate may be greater or less than other
interest rates charged by Bank to other borrowers and is not solely based or
dependent upon the interest rate which Bank may charge any particular borrower
or class of borrowers.
"Standard Notice" shall mean an irrevocable notice provided to the Bank on a
Business Day which is:
(i) on the same Business Day in the case of selection of, conversion to or
renewal of the Prime Rate Option or ABS-Rate Option or prepayment of
any Prime Rate Portion or ABS-Rate Option; and
(ii) at least two London Business Days in advance in the case of selection
of, conversion to or renewal of the Euro-Rate Option or prepayment of
any Euro-Rate Portion.
Standard Notice must be provided no later than 1:00 o'clock p.m., Pittsburgh
time, on the last day permitted for such notice.
Witness the due execution hereof intending to be legally bound this .21st day of
June, 1995.
Attest/Witness:
/s/Chris A. Miller
C-COR ELECTRONICS, INC.
/s/Jack B. Andrews
Vice President - Finance
Business Address:
60 Decibel Road
State College, PA 16801
MELLON BANK
/s/Linda R. Burns
Assistant Vice President
Office Address:
P.O. Box 19
State College, PA 16804-0019
Revolving Line of Credit agreement
Mellon Bank
AMENDED AND RESTATED
C-COR Electronics, Inc.(Borrower) has requested Mellon Bank, NA ("Bank") to make
loans (the "Loans") to Borrower from time to time during the period set forth
below (the "Commitment Period") in an aggregate principal amount outstanding at
any one time not to exceed Bank's commitment set forth below (the "Commitment
Amount") and, subject to the terms and conditions set forth herein and in the
Note and the other Credit Documents (hereinafter defined) and, relying upon the
representations and warranties herein and therein set forth, Bank is willing to
make such Loans.
Commitment Period:
From the date hereof to but not including November 1,1995
Commitment Amount:
The lesser of (i) 23,000,000.00
or (ii) the sum of 80% of Eligible
Accounts (as hereinafter defined)
and 0% of Eligible Inventory
(as hereinafter defined).
Within the limits of time and amount set forth above and subject to the terms
and conditions set forth herein and in the Note and the other Credit Documents,
Borrower may borrow, repay and reborrow hereunder. Borrower may at any time or
from time to time reduce the Commitment Amount to an amount not less than the
sum of the unpaid principal amount of the Loans then outstanding plus the
principal amount of all Loans not yet made as to which notice has been given by
Borrower under Section 2 hereof, by providing not less than five days' prior
written notice (which notice shall be irrevocable) to such effect to Bank. If
Bank allows Loans above the Commitment Amount, all the terms and conditions set
forth herein and in the Note and the other Credit Documents will apply to such
Loans.
The obligation of Borrower to repay the Loans, to pay interest thereon and to
pay fees, if any, with respect to the Commitment Amount shall. be evidenced by
one or more promissory notes, note and security agreements, letter of credit
applications, or other instruments other documents (collectively, the "Note"),
which together with this Agreement, including any Supplement hereto, and any
security agreements, instruments and other documents executed by Borrower in
connection herewith are sometimes referred to herein as the "Credit Documents".
In consideration of the foregoing and intending to be legally bound, Borrower
agrees with Bank as follows:
1. Representations and Warranties. In addition to the representations and
warranties contained in the Note and any other Credit Documents, Borrower hereby
makes the following representations and warranties which shall be true and
correct on the date hereof and shall continue to be true and correct at the time
of the creation of any of the Loans and until the Loans shall have been paid in
full, or if there are no Loans outstanding so long as the Commitment Period has
not expired:
(a) Organization-Corporation and Partnership. If Borrower is a corporation or a
partnership, Borrower is duly organized, validly existing, and in good standing
under the laws of the jurisdiction in which Borrower is incorporated or was
formed; Borrower has the power and authority to own its properties and assets,
to carry on its businesses as now being conducted and is qualified to do
business in every jurisdiction in which it is required to qualify to do
business.
(b) Validity and Binding Nature. Borrower has the power to execute, deliver, and
perform this Agreement, the Note and all other Credit Documents, and when
executed and delivered, this Agreement, the Note and all other Credit Documents
will be valid and binding obligations of Borrower, enforceable in accordance
with their terms; provided, however, that this representation with respect to
enforceability is limited by bankruptcy, insolvency, or other laws of general
application relating to or affecting the enforcement of creditors' rights.
(e) Due Authorization-Corporation and Partnership. The execution, delivery and
performance of this Agreement, the Note and all other Credit Documents have been
duly authorized by all corporate or partnership action required for the lawful
creation and issuance and performance thereof and will not violate any provision
of law, any order of any court or governmental agency, the charter documents and
by-laws of, or partnership agreement of Borrower.
(d) Conflicting Instruments. The execution, delivery and performance of this
Agreement, the Note and all other Credit Documents will not violate any
provisions of any indenture, agreement, or other instrument to which Borrower or
any of Borrower's properties or assets are bound, and will not be in conflict
with, result in a breach of, or constitute (with due notice and/or lapse of
time) a default under any such indenture, agreement, or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the properties or assets of Borrower.
(e) Authorization and Consents. No authorization, consent, approval, license or
exemption of, and no registration, qualification, designation, declaration or
filing with any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, is necessary to the valid
execution, delivery and performance of this Agreement, the Note or any other
Credit Document.
(f) Financial Condition. The most recent financial statements of Borrower
delivered to the Bank are true and correct and represent fairly its financial
position as of the date thereof-, and the results of its operations for the
period or periods indicated; and show all known liabilities, direct or
contingent, of Borrower as of the date thereof. Since the date of such financial
statements, there has been no material adverse change in the condition,
financial or otherwise, of Borrower or in the operations, business, prospects or
properties of Borrower and, since such date, Borrower has not incurred, other
than in the ordinary course of business, any indebtedness, liabilities,
obligations or commitments, contingent or otherwise, other than indebtedness
created hereunder.
(g) Compliance with Laws. Neither the Borrower nor any subsidiary is in
violation of or subject to any contingent liability on account of any law or any
order or regulation issued by any court or governmental authority, state or
federal, including but not limited to the Employee Retirement Income Security
Act of' 1974, as amended ("ERISA"), the Internal Revenue Code of 1986, as
amended (the "Code"), any applicable occupational and health or safety law,
environmental protection or pollution control law or hazardous waste or toxic
substances management, handling or disposal law.
(h) Litigation. Except as previously disclosed in writing to Bank prior to the
date of this Agreement, there is no action, suit or proceeding at law or in
equity or by or before any governmental instrumentality or other agency now
pending, or to the knowledge of Borrower, threatened by or against or affecting
Borrower or any of the properties or rights of Borrower which, if adversely
determined, would impair the right of Borrower to carry on its business
substantially as now conducted or would adversely affect the financial
condition, business or operations of Borrower.
(i) Misrepresentation. Neither this Agreement, the Note, the other Credit
Documents, nor any other document, statement financial statement, or certificate
furnished to Bank by or on behalf of Borrower in connection herewith, contains
an untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained therein not misleading and, insofar
as Borrower can now foresee, there is no event or condition which may in the
future materially adversely affect the financial condition, operations or
properties of Borrower which has not been set forth in this Agreement or in a
document, statement, financial statement, or certificate furnished to Bank in
connection herewith.
2.Conditions. The obligation of Bank to make any Loan hereunder is subject to
the performance by Borrower of its obligations to be performed hereunder and
under the Note and the other Credit Documents on or before the date of such Loan
and to the satisfaction of the following further conditions:
(a) The representations and warranties contained herein, in the Note and in the
other Credit Documents shall be true on and as of' the date of each Loan
hereunder with the same effect as though made on and as of each such date; on
each such date no "Event of Default" under and as defined in the Note and no
event, act or condition which with notice or the passage of time or both would
constitute such an Event of Default shall have occurred and be continuing or
exist or shall occur or exist after giving effect to the Loan to be made on such
date; and any request for borrowing under Section 2.(b) below shall constitute a
certification by Borrower to both such effects.
(b) Borrower shall have provided Bank with written notice (or telephonic notice
confirmed in writing) of the proposed Loan specifying the principal amount
thereof and the proposed date thereof, which notice shall be received by Bank at
its designated office no later than 1:00 p.m., local time at the place where the
proposed Loan is to be payable, on the date (which shall be a day on which Bank
is opened for business ) of such proposed Loan. Such notice shall contain a
certification as to the amounts of' the then current Eligible Accounts and
Eligible Inventory. In the event Bank receives telephonic notice, Bank may act
in reliance upon such telephonic notice, provided Hank has acted in good faith.
(c) The conditions, if any, specified in any Supplement hereto and in the Note
or any Credit Document shall have been met to the satisfaction of Bank.
(d) All legal details and proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory to Bank and Bank shall have
received all such counterpart originals or certified or other copies of such
documents and records of proceedings in connection with such transactions, in
form and substance satisfactory to Bank, as Bank may from time to time request.
3. General Covenants. In addition to the covenants contained in the Note and the
other Credit Documents, Borrower hereby covenants and agrees that, so long as
any of the Loans are outstanding, or if there are no Loans outstanding so long
as the Commitment Period has not expired, Borrower shall, except as Bank may
otherwise agree in writing:
(a) Financial Statements-Annual. Furnish to Bank, within 90 - days after the end
of each fiscal year of Borrower, a financial statement of Borrower's profit and
loss and surplus for such fiscal year and a balance sheet as of the end of such
fiscal year, in each case setting forth in comparative form the corresponding
figures for the preceding fiscal year, all in reasonable detail and audited by
an independent certified public accountant not factory to Bank.
(b)Accounts Receivable and Inventory Reporting.
Furnish to Bank, a report containing Borrower's account receivable aging and a
description of raw material and finished goods inventory, including a listing of
Eligible Accounts and Eligible Inventory, all in reasonable detail and in form
and content satisfactory to Bank.
(c) Financial Statements-Other. Furnish to Bank each financial statement
required to be delivered to Bank by any supplement, addendum or amendment
hereto, and such other information concerning the financial or business affairs
of Borrower as may be requested by Bank from time to time.
(d) Property. Maintain and keep all its property in good repair, working order
and condition and make or cause to be made all necessary or appropriate repairs,
renewals, replacements, substitutions, additions, betterments and improvements
thereto so that the efficiency of all such properties shall at all times I)c,
properly preserved and maintained.
(e) Taxes and Assessments. Duly pay and discharge all taxes, assessments and
governmental charges levied upon or assessed against it or against its
properties or income prior to the date on which penalties are attached thereto,
unless and except to the extent only that such taxes, assessments and charges
shall be contested in good faith and by appropriate proceedings diligently
conducted by Borrower (unless and until foreclosure, distraint, sale or other
similar proceedings shall have been commenced) and provided that such reserve or
their appropriate provisions, if any, as shall be required by generally accepted
accounting principles shall have been made therefor.
(f) Litigation. Promptly give notice in writing to Bank of the occurrence of any
material litigation, arbitration 01, governmental proceeding affecting Borrower,
and of any governmental investigation or labor dispute pending or, to the
knowledge of Borrower, threatened which could reasonably be expected to
interfere substantially with normal operations of the business of Borrower or
materially adversely, affect the financial condition, business, or operations of
Borrower.
(g) Books and Records. Maintain and keep proper records and books of account in
conformance with generally accepted accounting principles applied on a
consistent basis in which full, true and correct entries shall be made of all
its dealings and business affairs.
(h) Access to Properties, Books and Records. Permit any of the officers,
employees or representatives of Bank to visit and inspect any of the properties
of Borrower and to examine its books and records and discuss the affairs,
finances and accounts of Borrower with representatives thereof, during normal
business hours, and as often as Bank may request.
(i) Financial Information-Guarantors. Cause any third party guarantor of the
Loans to submit annually or at any time there is a material change in their
financial position, personal or business financial statements containing such
financial information as may be requested by Bank from time to time.
(j)Other Obligations. Maintain all obligations of Borrower in whatsoever manner
incurred, including but not limited to obligations for borrowed money or for
services or goods purchased by Borrower, in a current status.
(k)Continuance of Business. Not engage in any line of business other than those
in which it is actively engaged in on the date hereof.
(1) Compliance with Laws. Comply, and shall cause any subsidiary to comply, with
all laws, and all regulations or orders issued pursuant thereto, including but
not limited to ERISA, the Code, any applicable occupational, and health or
safety law, environmental protection or pollution control law or hazardous waste
or toxic substances management, handling or disposal law.
(m) Sale of Assets. Except for sales or other dispositions of inventory in the
ordinary course of business, not sell, lease, transfer, or otherwise dispose of
in a single transaction, or a series of related transactions, all or a
substantial part of the property and assets of Borrower, whether now owned or
hereafter acquired, to any person, firm or corporation.
(n) Acquisition of Assets. Not purchase or otherwise acquire all or
substantially all of the operating assets of any other person, firm or
corporation and, if Borrower is a corporation, not merge or consolidate with or
into any other person, firm or corporation, or permit any other person, firm or
corporation to merge with or into it, or acquire all or substantially all of the
property or assets of any other person, firm or corporation.
(o) Selling Accounts Receivable. Not sell, assign or discount any of its
accounts receivable or any promissory note held by it, with or without recourse,
other than the discount of such receivables or notes in the ordinary course of
business for collection.
(p) Payments on Outstanding Stock. Pursuant to or in contemplation of
termination, liquidation, dissolution or winding up of Borrower, not purchase,
redeem or retire or make any dividend on or distribution on account of, if
Borrower is a corporation, any shares of the capital stock of Borrower or if
Borrower is a partnership, any capital account of any partner of such
partnership.
(q)Affiliated Entities. Not establish any partnership, subsidiary, corporation,
joint venture or other form of business combination.
(r) Insurance. Keep all insurable property, real and personal, now owned or
hereafter acquired, insured at all times against loss or damage by fire and
extended coverage risks and other hazards of the kinds customarily insured
against and in amounts customarily carried by businesses engaged in comparable
businesses and comparably situated; effect all such insurance under valid and
enforceable policies issued by insurers of recognized responsibility not
unacceptable to Bank; and, promptly from time to time upon request of Bank,
deliver to Bank a summary schedule indicating all insurance then in effect.
(s) Investments. Not purchase, own, invest in or otherwise acquire, directly or
indirectly, any stock or other securities, or make or permit to exist any
investment or capital contribution or acquire any interest whatsoever, in any
other person, firm or corporation or permit to exist any loans or advances for
such purposes except for investments in direct obligations of the United States
of America or any agency thereof, obligations guaranteed by the United States of
America, certificates of deposit issued by a bank or trust company, organized
under the laws of the United States, or any state thereof, or marketable
securities which are publicly traded on a nationally recognized market.
(t) Patents. Preserve and protect its patents, franchises, licenses, trademarks,
trademark rights, tradenames, tradename rights, and copyrights used or useful in
the conduct of its business.
(u) Guarantees and Contingencies. Not endorse, assume, guarantee, become surety
for, or otherwise become or remain liable in connection with the obligations of
any person, firm or corporation, except Borrower may endorse negotiable or other
instruments for deposit or collection or similar transactions in the ordinary
course of its business.
(v) Transactions with Affiliates. Not enter into any transaction, including,
without limitation, the purchase, sale, leasing or exchange of property, real or
personal, or the rendering of any service, with any person, firm or corporation
affiliated with Borrower, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's business and upon fair and reasonable
terms no less favorable to Borrower than would be obtained in a comparable
arm's-length transaction with any other person, firm or corporation not
affiliated with Borrower.
(w)Modifications to Other Agreements. Not amend or modify any existing agreement
with any person, firm or corporation in any manner materially adverse to
Borrower.
(x) Notice of Event of Default. Promptly give notice in writing to Bank of the
occurrence of any Event of Default under and as defined in the Note, and of any
condition, event, act or omission which, with the giving of notice or the lapse
of time or both, would constitute such an Event of Default.
4. General Provisions.
(a) Waivers. The provisions of this Agreement may from time to time be waived in
writing by Bank in its sole discretion. Any such waiver of any kind on the part
of Bank of any breach or default under this Agreement or any waiver of any
provision or condition of this Agreement must be in writing and shall be
effective only to the extent set forth in such writing. No delay by Bank in
exercising any right or remedy hereunder shall operate as a waiver thereof.
(b) Financial Covenants. Compliance or non-compliance with all financial
covenants of Borrower contained herein, or in any supplement, addendum or
amendment hereto, shall be determined in accordance with generally accepted
accounting principles applied on a consistent basis. All financial statements of
Borrower required to be delivered to Bank hereby, or by any written supplement
now or hereafter executed by Borrower in which reference to this Agreement is
made, shall be prepared on the basis of generally accepted accounting principles
applied on a consistent basis.
(c) Binding Nature. The rights and privileges of Bank contained in this
Agreement shall inure to the benefit of its successors and assigns, and the
duties of Borrower shall bind all heirs, personal representatives, successors,
and assigns. "Borrower" refers individually and collectively to all signers of
this Agreement, including, in the case of any partnership, all general partners
of such partnership individually and collectively, whether or not such partners
sign below. Each of the signers shall be jointly and severally bound by the
terms hereof, and, with respect to any partnership executing this Agreement,
each general partner shall be bound hereby both in such general partner's
individual and partnership capacities.
(d) Governing Law. Time of performance hereunder is of the essence of this
Agreement. This Agreement and any written supplement hereto executed by Borrower
in which reference to this Agreement is made shall in all respects be governed
by the laws of the state where the Note is payable (except to the extent that
federal law governs).
(e) Severability. If any provision hereof shall for any reason be held invalid
or unenforceable, no other provision shall be affected thereby, and this
Agreement shall be construed as if the invalid or unenforceable provision bad
never been a part of it. The descriptive headings hereof are for convenience
only and shall not in any way affect the meaning or construction of any
provision hereof.
(f) Definitions. i) "Eligible Accounts" shall be defined as trade accounts
receivable created or acquired by Borrower in the ordinary course of business
which are and at all times continue to be acceptable to Bank and in which Bank
has a Prior Security Interest at all times. Standards of acceptability shall be
fixed and may be revised from time to time solely by Bank in its exclusive
judgment.
ii) "Eligible Inventory" shall be defined as Borrower's inventory, excluding
work in process, of saleable raw materials and finished goods manufactured or
acquired by Borrower in the ordinary course of business, in its sole possession
or control, stored in a location or locations and in a manner acceptable to
Bank, valued at the lower of cost or market value, which inventory is and at all
times continues to be acceptable to Bank and in which Bank has a Prior Security
Interest at all times. Standards of acceptability shall be fixed and may be
revised from time to time solely by Bank in its exclusive judgment.
iii) "Prior Security Interest" shall be defined as an enforceable, perfected
security interest (under the Uniform Commercial Code), which interest is senior
and prior to all liens (including without limitation all security interests,
pledges, bailments, leases, mortgages, conditional sales and title retention
agreements, charges, claims, encumbrances, judgments, levies and all other types
of liens whatsoever).
5. Loans Above Commitment Amount. Notwithstanding any other provision of this
Agreement, the Note or the other Credit Documents, if, in Bank's sole
determination, the principal balance of the Loans hereunder shall at any time
exceed the Commitment Amount, Borrower shall pay such excess to Bank on demand.
6. Special Covenants. In addition to the covenants contained herein and in the
Note and the other Credit Documents, Borrower hereby agrees that, so long as any
of the Loans are outstanding, or if there are no Loans outstanding so long as
the Commitment Period has not expired, Borrower shall, except as Bank may grant
its prior written consent, comply with the special provisions or covenants set
forth in any written supplement, now or hereafter executed by Borrower, in which
reference to this Agreement is made.
Witness the due execution hereof intending to be legally bound this 21st day of
June, 1995.
Attest/Witness
/s/Chris A. Miller
Corporation
C-COR Electronics, Inc.
By:
/s/Jack B. Andrews
VP Finance
Mellon Bank
By:
/s/Linda R. Burns, AVP
Mellon Bank
Supplement to Revolving Line of Credit Agreement
AMENDED AND RESTATED
The following constitutes the special provisions and/or special covenants and/or
modifications referred to in that Revolving Line of Credit Agreement dated June
21, 1995 (the "Credit Agreement") covering the Loans (as that term is defined in
the Credit Agreement)of the undersigned(the "Borrower")from Mellon Bank, NA
("Bank"). The following shall supersede any special provision or covenant
contained in any prior Supplement to Revolving Line of Credit Agreement and
shall be applicable to all Loans in existence on the date hereof or incurred
hereafter.
1. The provisions of this supplement shall, as of the date hereof, be deemed to
be fully incorporated by reference in, constitute a part of, and supplement the
provisions of, the Credit Agreement, which, except as supplemented hereby, shall
continue in full force and effect in accordance with its terms and conditions.
2. Borrower hereby covenants and agrees that, so long as any Loans are
outstanding, Borrower shall, except as Bank may grant its prior written consent:
a) Furnish to Bank, within 90 days after the end of each fiscal year of
Borrower, a financial statement of Borrower's profit and loss and surplus of
such fiscal year and a balance sheet as of the end of such fiscal year, in each
case setting forth in comparative form the corresponding figures for the
preceding fiscal year, all in reasonable detail and audited by an independent
certified public accountant not unsatisfactory to Bank, and certified by the
principal financial officer of Borrower.
b) Provide within 45 days from the end of each quarter an internal financial
statement of Borrower's profit and loss and a balance sheet as of the end of
such period, in each case setting forth in comparative form corresponding
figures for the preceding like period, all in reasonable detail.
Borrower to also furnish to Bank, within 45 days from the end of each quarter, a
report, as of the end of the preceding fiscal quarter, containing Borrower's
accounts receivable aging and a description of raw material and finished goods
inventory, including a listing of eligible Accounts Receivable and eligible
Inventory, all in reasonable detail and in form and content satisfactory to
Bank.
C)Furnish to Bank a Copy of Form(s) 10-K and 10-Q when provided to the
Securities and Exchange Commission.
d)Maintain at all times a ratio of Borrower's current assets to current
liabilities (as defined by GAAP) of not less than 1.75 to 11
Witness the due execution hereof intending to be legally bound this
21st day of June, 1995
Witness:
Individual:
/s/Chris A. Miller
Corporation or Other Entity
C-COR Electronics, Inc.
/s/Jack B. Andrews
VP-Finance
Business Address
60 Decibel Road, State College, PA 16801
MELLON BANK N.A.
/s/Linda R. Burns, AVP
P.O. Box 19, State College, PA 16804-0019
AMENDED AND RESTATED
The following constitutes the special provisions and/or special covenants and/or
modifications referred to in that Revolving Line of Credit Agreement dated June
21,1995 (the "Credit Agreement") covering the Loans (as that term is defined in
the Credit Agreement)of the undersigned (the "Borrower")from Mellon Bank N.A.
("Bank"). The following shall supersede any special provision or covenant
contained in any prior Supplement to Revolving Line of Credit Agreement and
shall be applicable to all Loans in existence on the date hereof or incurred
hereafter.
1. The provisions of this Supplement shall, as of the date hereof, be deemed to
be fully incorporated by reference in, constitute a part of, and supplement the
provisions of, the Credit Agreement, which, except as supplemented hereby, shall
continue in full force and effect in accordance with its terms and conditions.
2. Borrower hereby covenants and agrees that, so long as any Loans are
outstanding, Borrower shall, except as Bank may grant its prior written consent:
e)Maintain at all times a ratio of Borrower's total liabilities to tangible net
worth (as defined by GAAP) of not more than 1 to 1.
For purposes of this agreement, Tangible Net Worth shall mean stockholder's
equity in Borrower less treasury stock and less all items properly classified as
intangible, as determined in accordance with generally accepted accounting
principles consistently applied.
f) Maintain at all times a ratio of pre-tax interest coverage (defined as net
income before interest expense, taxes and depreciation divided by interest
expense) of not less than 15 to 1.
g) Not permit the outstanding balance and accrued but unpaid interest under
Borrower's Line of Credit extended pursuant to the terms hereof (The Revolving
"Line of Credit") to exceed an amount equal to 80% of the outstanding dollar
amount of Borrower's Eligible Accounts (as defined below).
"Eligible Accounts" means United States accounts, aged 90 days or less, created
or acquired by Borrower in the ordinary course of business which are and at all
times continue to be acceptable to Bank and in which Bank has a prior security
interest at all times, Standards of acceptability shall be fixed and may be
revised from time to time solely by Bank in its exclusive judgment.
Borrower agrees and acknowledges that Bank, at its sole discretion, may lend
additional amounts to Borrower in excess of the limitations set forth above and
may, from time to time upon 30 days notice, change the percentage loan limit of
Eligible Accounts set forth above.
Witness the due execution Hereof intending to be legally bound this 21st day of
June, 1995
Attest:
/s/Chris A. Miller
Corporation or Other Entity
C-COR Electronics, Inc.
/s/Jack B. Andrews, VP-Finance
Business Address
60 Decibel Road, State College, PA 16801
MELLON BANK, N.A.
/s/Linda R. Burns, AVP
P.O. Box 19, State College, PA 16804-0019
AMENDED AND RESTATED
The following constitutes the special provisions and/or special covenants and/or
modifications referred to in that Revolving Line of Credit Agreement dated June
21,1 1995 (the "Credit Agreement") covering the Loans (as that term is defined
in the Credit Agreement) of the undersigned (the "Borrower") from Mellon Bank,
N.A. ("Bank"). The following shall supersede any special provision or covenant
contained in any prior Supplement to Revolving Line of Credit Agreement and
shall be applicable to all Loans in existence on the date hereof or incurred
hereafter.
1. The provisions of this Supplement shall, as of the date hereof, be deemed to
be fully incorporated by reference in, constitute a part of, and supplement the
provisions of, the Credit Agreement, which, except as supplemented hereby, shall
continue in full force and effect in accordance with its terms and conditions.
2. Borrower hereby covenants and agrees that, so long as any Loans are
outstanding, Borrower shall, except as Bank may grant its prior written consent:
If the outstanding principal balance and accrued but unpaid interest on
Borrower's Line of Credit shall at any time exceed the limit set forth above,
then Borrower shall, upon Bank's request, pay immediately to Bank such excess on
demand or deliver immediately to Bank such additional collateral security as
Bank in its sole discretion may deem appropriate.
h) Except (i) indebtedness to Bank, (ii) current indebtedness arising from
transactions (other than loans) in the ordinary course of business, and (iii)
indebtedness reflected in the most recent financial statement of Borrower
submitted to Bank prior hereto, not incur, create, assume or permit to excess
any indebtedness or liability, in excess at any one time of $100,000.00.
Not incur, create, assume or permit to exist, any pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its accounts receivable and
inventory, now or hereafter owned, other than (i) such encumbrances reflected in
the most recent financial statement of Borrower submitted to Bank prior hereto,
(ii) security interests granted in favor of Bank, (iii) pledges or deposits
under workers' compensation, unemployment insurance and social security laws, or
to secure the performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases or to secure statutory obligations or
surety or other similar bonds used in the ordinary course of business, (iv) tax
liens which are being contested in good faith and by appropriate proceedings
diligently
Witness the due execution hereof intending to be legally bound this 21st day of
June 1995.
Witness:
/s/Chris A. Miller
Corporation or Other Entity
C-COR Electronics, Inc.
/s/Jack B. Andrews VP-Finance
Business Address
60 Decibel Road, State College, PA 16801 MELLON BANK N.A.
/s/Linda R. Burns, AVP
P.O. Box 19, State College, PA 16804-0019
AMENDED AND RESTATED
The following constitutes the special provisions and/or special covenants and/or
modifications referred to in that Revolving Line of Credit Agreement dated June
21, 1995 (the "Credit Agreement") covering the Loans (as that term is defined in
the Credit Agreement) of the undersigned (the "Borrower") from Mellon Bank N.A.
("Bank"). The following shall supersede any special provision or covenant
contained in any prior Supplement to Revolving Line of Credit Agreement and
shall be applicable to all Loans in existence on the date hereof or incurred
hereafter.
1. The provisions of this Supplement shall, as of the date hereof, be deemed to
be fully incorporated by reference in, constitute a part of, and supplement the
provisions of, the Credit Agreement, which, except as supplemented hereby, shall
continue in full force and effect in accordance with its terms and conditions.
2. Borrower hereby covenants and agrees that, so long as any Loans are
outstanding, Borrower shall, except as Bank may grant its prior written consent:
conducted (unless and until foreclosure, sale or other similar proceedings have
been commenced) and provided that such reserve or other appropriate provisions,
if any, as shall be required by generally accepted accounting principles shall
have been made therefor, and (v) any unfiled materialmen's, mechanics,
workmen's, and repairman's liens (provided, that if such a lien shall be
perfected, it shall be discharged of record immediately by payment, bond or
otherwise).
3. Advances under this credit agreement will be made in accordance with prudent
banking practice and at the discretion of Bank during the term of the
commitment. However, the Bank reserves the right to discontinue advances and/or
demand payment in full if, in Bank's opinion,, changes occur in Borrower's
financial condition that would increase Bank's risk or impair Borrower's ability
to repay.
4.This Supplement is executed to modify the prior Agreement executed April 3
1995. The term Commitment Period as set forth in that Agreement is hereby
deleted and restated as set forth below:
Commitment Period: From the date hereof to but not including November 1, 1995.
Witness the due execution hereof intending to he legally bound this 21st day of
June 1995.
Witness:
Individual:
/s/Chris A. Miller
Corporation or Other Entity
C-COR Electronics, Inc.
/s/Jack B. Andrews, VP-Finance
Business Address
60 Decibel Road, State College, PA 16801
MELLON BANK N.A.
/s/Linda R. Burns, AVP
P.O. Box 19, State College, PA 16804-0019
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT, dated May 23, 1995, by and between: C-COR ELECTRONICS, INC., a
Pennsylvania corporation (the "Company") and Joseph E. Zavacky (the "Employee").
Recital
A.Employee is an executive of the Company with significant policy-making and
operational responsibilities in the conduct of its business.
B.The Company recognizes that Employee is a valuable resource for the Company
and the Company desires to be assured of the continued service of Employee.
C. The Company is concerned that upon a possible or threatened change in control
Employee may have concerns about the continuation of his employment and/or his
status and responsibilities and may be approached by others with employment
opportunities, and desires to provide Employee some assurance as to the
continuation of his employment status and responsibilities on a basis consistent
with that which he has earned in the event of such possible or threatened change
in control.
D. The Company desires to assure that if a possible change of control situation
should arise and Employee should be involved in deliberations or negotiations in
connection therewith that Employee would be in a secure position to consider
and/or negotiate such transaction as objectively as possible and without implied
threat to his financial well-being.
E.The Company is concerned about the possible effect on Employee of the
uncertainties created by any proposed change in control of the Company.
F. Employee is willing to continue to serve but desires that in the event of
such a change in control he will continue to have the responsibility, status,
income, benefits and perquisites that he received immediately prior to that
event.
Agreements
The parties do hereby agree as follows:
1. Change of Control. The provisions of Section 2 and 3 of this Agreement
shall become operative upon a change in control of the Company, as hereinafter
defined. For purposes of this Agreement, a "change in control" shall be deemed
to have occurred if and when:
(a) Subsequent to the date of this Agreement, any person or group of persons
acting in concert shall have acquired ownership of or the right to vote or to
direct the voting of shares of capital stock of the Company representing 30% or
more of the total voting power of the Company, or
(b) The Company shall have merged into or consolidated with another corporation,
or merged another corporation into the Company, on a basis whereby less than 50%
of the total voting power of the surviving corporation is represented by shares
held by former shareholders of the Company prior to such merger or
consolidation, or
(c)The Company shall have sold more than 50% of its assets to another
corporation or other entity or person, or
(d) As the result of, or in connection with, any cash tender or exchange offer,
merger or other business combination, sale of assets or contested election, the
persons who were Directors of the Company before such transaction cease to
constitute a majority of Directors of the Company.
2.Termination Within Eighteen (18) Months. In the event that the employment of
Employee with the Company is terminated involuntarily within eighteen (18)
months after a change in control occurs:
(a)Employee shall be entitled to receive an amount of cash equal to the sum of
the following amounts:
(i) two (2) times his annual salary at his rate on the date of termination of
employment (but not less than two times Employee's annual salary prior to the
Change of Control); and
(ii) two (2) times the Company's annual 401(k) retirement plan contribution at
the Employee's contribution rate on the termination of his employment (but not
less than the amount the company was matching prior to Change of Control)
(subject to applicable limitations of the Internal Revenue Code, which may
dictate that such amount shall not be added to the retirement plan but shall be
paid in cash). The sum of these amounts shall be paid in equal monthly
installments over a period of twenty-four (24) months, the first such
installment to be paid within ten (10) days after Employee's termination of
employment.
(b) Employee shall be entitled to receive an amount of cash equal to two times
the average of the Profit Incentive Plan ("PIP") payments of the last two years
awarded to him under the PIP of the Company, pursuant to the terms of such Plan
as in effect immediately prior to such change of control. Such amount will be
paid to the Employee within ten (10) days after termination of employment.
(c) Employee shall continue for a period of 24 months from the date of his
termination to be covered at the expense of the Company by the same or
equivalent health, dental, accident, life and disability insurance coverages as
he was enrolled in immediately prior to termination of his employment; provided,
however, that the Employee may elect to be paid in cash within thirty (30) days
after termination of his employment an amount equal to the Company's cost of
providing such coverages during such period.
(d) If on the date of termination of employment, Employee were a participant in
the Company's Supplemental Retirement Plan, Employee shall become eligible for
the benefits payable under such Plan and such benefits shall be paid to
Employee, or, if applicable, Employee's beneficiary, in the same manner, amounts
and intervals as if Employee had, on the date of his termination of employment
following a change of control, retired from employment with the Company. If
Employee has not attained age fifty-five (55) on the date of his termination of
employment due to a change of control, Employee shall be deemed to have attained
age fifty-five (55) for the purpose of determining his eligibility for benefits
under the Supplemental Retirement Plan, and only for this purpose.
(e) All outstanding options held by Employee, both exercisable and
nonexercisable, shall be immediately exercisable regardless of the time the
option has been held by Employee and shall remain exercisable until their
original expiration date, subject to applicable requirements of the Internal
Revenue Code.
3. Other Events. If Employee resigns from the Company within eighteen (18)
months of a change of control, Employee shall be entitled to receive all
payments and enjoy all of the benefits specified in Section 2 hereof should one
or more of the following events occur within eighteen (18) months following a
change in control:
(a) If Employee determines that there has been a significant change in his
responsibilities or duties with the Company and, for that reason, Employee
resigns from the Company; or
(b) If the base salary paid by the Company to Employee is reduced by more than
ten (10%) percent from his salary immediately prior to the change in control; or
(c) If the Company requires Employee to relocate his principal place of work to
a location more than forty (40) miles from the Employee's former place of work.
4. Agreements Not Exclusive. The specific agreements referred to herein are not
intended to exclude Employee's participation in other benefits available to
executive personnel generally or to preclude other compensation benefits as may
be authorized by the Board of Directors of the Company at any time, and shall be
in addition to the provisions of any other employment or similar agreements.
5. Enforcement Costs. The Company is aware that upon the occurrence of a change
in control the Board of Directors or a shareholder of the Company may then cause
or attempt to cause the Company to refuse to comply with its obligations under
this Agreement, or may cause or attempt to cause the Company to institute, or
may institute, litigation seeking to have this Agreement declared unenforceable,
or may take, or attempt to take, other action to deny Employee the benefits
intended under this Agreement. In these circumstances, the purpose of this
Agreement could be frustrated. It is the intent of the company that Employee not
be required to incur the expenses associated with the enforcement of his rights
under this agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits extended to
Employee hereunder, nor be bound to negotiate any Battlement of his rights
hereunder under threat of incurring such expenses. Accordingly, it following a
change of control, it should appear to Employee that the Company has failed to
comply with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this agreement void or
unenforceable, or institutes any litigation or other legal action designed to
deny, diminish or to recover from Employee the benefits intended to be provided
to Employee hereunder and that Employee has complied with all reasonable
obligations related to Employee's employment with the Company, the Company
irrevocably authorizes Employee from time to time to retain counsel of his
choice at the direct expense and liability of the company as provided in this
section 5, to represent Employee in connection with the initiation or defense of
any litigation or other legal action, whether by or against the Company or any
director, officer, shareholder or other person affiliated with the Company, in
any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to Employee entering into an attorney-client relationship with such
counsel, and in that connection the Company and Employee agree that a
confidential relationship shall exist between Employee and such counsel. The
reasonable fees and expenses of counsel selected from time to time by Employee
as hereinabove provided shall be paid or reimbursed to Employee by the company
on a regular, periodic basis upon presentation by Employee of a statement or
statements prepared by such counsel in accordance with its customary practices
up to a maximum aggregate amount or $500,000, said to be "grossed up" to cover
federal and state income taxes. The amount of the gross up shall be calculated
in accordance with the following formula: A/ (1-R), where A is the amount of
legal fees and R is the combined highest marginal tax rate applicable to
employee in the tax year that the payment is made.
6. No Set.-Off. The company shall not be entitled to set-off against the amount
payable to Employee any amounts earned by Employee in other employment after
termination of his employment with the Company, or any amounts which might have
been earned by Employee in other employment had he sought other employment. The
amounts payable to Employee under this Agreement shall not be treated as damages
but as severance compensation to which Employee is entitled by reason of
termination of his employment in the circumstances contemplated by this
Agreement. However, a set-off may be taken by the Company against the amounts
payable to Employee for expenses covering the same or equivalent hospital,
medical, accident and disability insurance coverages as set forth in Section
2(c) of this Agreement if such benefit is paid for the Employee by the Employer
to which the Employee may Join after termination by the Company or after
resignation as defined in Section 3 of this Agreement.
7. Termination. This Agreement has no specific term, but shall terminate if,
prior to a change in control of the Company, the employment of Employee with the
Company shall terminate, so long as such termination was not in anticipation of
or related to change of Control.
8.Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, and shall be binding
upon and inure to the benefit. of Employee and his legal representatives, heirs,
and assigns.
9. Severability. In the event that any Section, paragraph, clause or other
provision of this Agreement shall be determined to be invalid or unenforceable
in any jurisdiction for any reason, such Section, paragraphs clause or other
provision shall be enforceable in any other jurisdiction in which valid and
enforceable and, in any event, the remaining Sections, paragraphs, clauses and
other provisions of this Agreement shall be unaffected and shall remain in full
force and effect to the fullest permitted by law.
10.Governing Law. This Agreement shall be interpreted, construed and governed
by the laws of the Commonwealth of Pennsylvania.
11.Headings. The headings used in this Agreement are for ease of reference only
and are not intended to affect the meaning or interpretation of any of the terms
hereof.
12.Gender and Number. whenever the context shall require, all words in this
Agreement in the male gender shall be deemed to include the female or neuter
gender, all singular words shall include the plural, and all plural words shall
include the singular.
IN WITNESS WHEREOF, this Agreement has been executed the date and year first
above written.
ATTEST:
C-COR ELECTRONICS, INC.
/s/Richard E. Perry
Chairman, and Chief
Executive Officer
/s/Joseph E. Zavacky
Employee
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of the 23rd day of May, 1995 between C-COR
ELECTRONICS, INC., a Pennsylvania corporation ("Corporation") and Joseph E.
Zavacky with an address at 31 Colonial Dr, Reedsville, PA ("Officer")
WITNESSETH:
WHEREAS, Officer is an officer of Corporation and in such capacity is performing
a valuable service for Corporation; and WHEREAS, the stockholders of Corporation
have adopted Bylaws (the "Bylaws") providing for the indemnification of the
officers and directors of Corporation to the fullest extent now or hereafter
permitted by law ("the "Law,'); and WHEREAS, the Bylaws and the Law provide
specifically that they are not exclusive, and thereby contemplate that contracts
may be entered into between Corporation and its officers with respect to
indemnification of such officers; and WHEREAS, in accordance with the
authorization provided by the Bylaws and the Law, Corporation has purchased and
presently maintains a policy or policies of Directors' and officers' Liability
Insurance ("D&O Insurance") , covering certain liabilities which may be incurred
by its directors and officers in the performance of their services for
corporation; and WHEREAS, recent developments with respect to the terms and
availability of D&O Insurance and with respect to the application, amendment and
enforcement of statutory and bylaw indemnification provisions generally have
raised questions concerning the adequacy and reliability of the protection
afforded to officers thereby; and WHEREAS, in order to resolve such questions
and thereby induce Officer to continue to serve as an officer of corporation,
Corporation has determined and agreed to enter into this contract with officer.
NOW, THEREFORE, in consideration of Officer's continued service as an officer
after the date hereof, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Indemnity of Officer. Corporation hereby agrees to hold harmless and
indemnify officer to the full extent authorized or permitted by the provisions
of the Law, or by any amendment thereof or other statutory provisions
authorizing or permitting such indemnification which is adopted after the date
hereof.
2. Maintenance of Insurance and Self Insurance.
(a) Corporation represents that it presently has in force and effect policies of
D&O Insurance in insurance companies and amounts as follows (the "Insurance
Policies"):
Insurer-CNA Insurance Company
Amount-$5,000,000
Deductible-$250,000 Insured Organization
Insurer-Lloyd's London
Amount-$5,000,000
Deductible-$250,000 Insured Organization
Subject only to the provisions of Section 2(b) hereof, Corporation hereby agrees
that, so long as officer shall continue to serve as an officer of Corporation
(or shall continue at the request of Corporation to serve as an officer,
director, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise) and thereafter so long as Officer shall be subject to
any possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal or investigative by reason of the fact that
Officer was an officer of Corporation (or served in any of said other
capacities), Corporation will purchase and maintain in effect for the benefit of
officer one or more valid, binding and enforceable policy or policies of D&O
Insurance providing, in all respects, coverage at least comparable to that
presently provided pursuant to the Insurance Policies.
(b) Corporation shall not be required to maintain said policy or policies of D&O
Insurance in effect if said insurance is not reasonably available or if, in the
reasonable business judgment of the then directors of Corporation, either (i)
the premium cost for such insurance is substantially disproportionate to the
amount of coverage, or (ii) the coverage provided by such insurance is so
limited by exclusions that there is insufficient benefit from such insurance.
(c) In the event Corporation does not purchase and maintain in effect said
policy or policies of D&O Insurance pursuant to the provisions of Section 2(b)
hereof, Corporation agrees to hold harmless and indemnify officer to the full
extent of the coverage which would otherwise have been provided for the benefit
of officer pursuant to the Insurance Policies.
3. Additional Indemnity. Subject only to the exclusions set forth in Section 4
hereof, Corporation hereby further agrees to hold harmless and indemnify
Officer:
(a) Against any and all expenses (including attorneys' fees) , judgments, fines
and amounts paid in settlement actually and reasonably incurred by officer in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (including an action by
or in the right of the Corporation) to which officer is, was or at any time
becomes a party, or is threatened to be made a party, by reason of the fact that
Officer is, was or at any time becomes an officer, director, employee or agent
of Corporation, or is or was serving or at any time serves at the request of
Corporation as an officer, director, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; and
(b) Otherwise to the fullest extent as may be provided to officer by Corporation
under the non-exclusivity provisions of Section 7-1 of the Bylaws of Corporation
and the Law.
4.Limitations on Additional Indemnity. No indemnity pursuant to Section 3
hereof shall be paid by Corporation:
(a) Except to the extent the aggregate of losses to be indemnified thereunder
exceeds the sum of $1,000 plus the amount of such losses for which Officer is
indemnified either pursuant to Sections 1 or 2 hereof or pursuant to any D&O
Insurance purchased and maintained by the Corporation;
(b) In respect to remuneration paid to Officer if it shall be determined by a
final judgment or other final adjudication that such remuneration was in
violation of Law;
(c) On account of any suit in which judgment is rendered against Officer f or an
accounting of profits made from the purchase or sale by Officer of securities of
Corporation pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law;
(d) On account of Officer's conduct which is finally adjudged by a court of
competent jurisdiction to have been knowingly fraudulent or deliberately
dishonest or to have constituted willful misconduct or recklessness; and
(e)If a final decision by a court of competent jurisdiction shall determine that
such indemnification is not lawful.
5. Continuation of Indemnity. All agreements and obligations of Corporation
contained herein shall continue during the period Officer is an officer,
director, employee or agent of Corporation (or is or was serving at the request
of Corporation as an officer, director, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Officer shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether, civil,
criminal or investigative, by reason of the fact that Officer was an officer of
Corporation or serving in any other capacity referred to herein.
6. Notification and Defense of Claim. Promptly after receipt by Officer of
notice of the commencement of any action, suit or proceeding, officer will, if a
claim in respect thereof is to be made against Corporation under this Agreement,
notify Corporation of the commencement thereof ; but the omission so to notify
Corporation will not relieve it from any liability which it may have to officer
otherwise than under this Agreement. With respect to any such action, suit or
proceeding as to which Officer notifies Corporation of the commencement thereof:
(a)Corporation will be entitled to participate therein at its own expense; and
(b) Except as otherwise provided below, to the extent that it may wish,
Corporation jointly with any other indemnifying party similarly notified will be
entitled to assume the defense thereof, with counsel satisfactory to Officer.
After notice from Corporation to Officer of its election so to assume the
defense thereof, Corporation will not be liable to Officer under this Agreement
for any legal or other expenses subsequently incurred by Officer in connection
with the defense thereof other than reasonable costs of investigation or as
otherwise provided below. officer shall have the right to employ its counsel in
such action, suit or proceeding but the fees and expenses of such counsel
incurred after notice from Corporation of its assumption of the defense thereof
shall be at the expense of Officer unless (i) the employment of counsel by
Officer has been authorized by corporation, (ii) Officer shall have reasonably
concluded that there may be a conflict of interest between Corporation and
officer in the conduct of the defense of such action or, (iii) corporation shall
not in fact have employed counsel to assume the defense of such action, in each
of which cases the fees and expenses of counsel shall be at the expense of
Corporation. Corporation shall not be entitled to assume the defense of any
action, suit or proceeding brought by or on behalf of Corporation or as to which
officer shall have made the conclusion provided for in (ii) above.
(c) Corporation shall not be liable to indemnify Officer under this Agreement
for any amounts paid in settlement of any action or claim effected without its
written consent. Corporation shall not settle any action or claim in any manner
which would impose any penalty or limitation on Officer without Officer's
written consent. Neither Corporation or Officer will unreasonably withhold its
or his consent to any proposed settlement.
7. Repayment of Expenses. Officer will reimburse Corporation for all reasonable
expenses paid by Corporation in defending any civil or criminal action, suit or
proceeding against officer in the event and only to the extent that it shall be
ultimately determined that officer is not entitled to be indemnified by
Corporation for such expenses under the provisions of the Law, the Bylaws, this
Agreement or otherwise.
8. Enforcement.
(a) Corporation expressly confirms and agrees that it has entered into this
Agreement and assumed the obligations imposed on Corporation hereby in order to
induce officer to continue as an officer of Corporation, and acknowledges that
Officer is relying upon this Agreement in continuing in such capacity.
(b) In the event Officer is required to bring any action to enforce rights or to
collect moneys due under this Agreement and is successful in such action,
Corporation shall reimburse Officer for all of officer's reasonable fees and
expenses in bringing and pursuing such action.
9.Separability. Each of the provisions of this Agreement is a separate and
distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or enforceability
of the other provisions hereof.
10.Governing Law; Binding Effect; Amendment and Termination.
(a) This Agreement shall be interpreted and enforced in accordance with the laws
of the Commonwealth of Pennsylvania.
(b) This Agreement shall be binding upon Officer and upon Corporation, its
successors and assigns, and shall inure to the benefit of officer, his heirs,
personal representatives and assigns and to the benefit of Corporation, its
successors and assigns.
/s/Richard E. Perry
Chairman,
Chief Executive Officer
/s/Joseph E. Zavacky
Employee
C-COR Electronics, Inc.
Supplemental Retirement Plan
1.Selection of Participation. This Plan is an unfunded nonqualified arrangement
for a select group of management and/or highly compensated employees of C-COR
Electronics, Inc. (hereinafter "Corporation"). Each employee selected by
Corporation for participation hereunder (hereinafter "Participant") shall
indicate his agreement to the terms of this Plan by executing a Participation
Agreement to be provided by Corporation.
2.Definitions. Certain terms shall be defined hereunder as follows:
a."Beneficiary" means a person, persons,, trust or trusts which a Participant
shall, from time to time, designate in writing to receive any benefits payable
to him under this Plan in the event of his death.
b."Committee" means the Compensation Committee of the Board of Directors of
Corporation.
c."Disability" shall have the same meaning as the term is defined in
Corporation's Long Term Disability Plan.
d."Effective Date of Plan" means April 20 , 1993.
e."Supplement Retirement Benefit" means a benefit provided to a Participant if
he elects to participate under the Plan and remains in Corporation's employ
until attaining the age specified in Section 3 of the Plan.
f.(1)"Participant" means a full-time employee working more than 2,OOO hours per
year. f.(2)"Participant Status Requirement" moans a participant who has been a
participant in the Plan for five years, hired directly in the plan; or an
employee who has been a participant in the Plan for three years by being
promoted into the Plan and who has at least two additional years as an employee
of C-COR Electronics, Inc.
g."Participant Agreement" means the Agreement signed by Participant that
evidences his participation in the Plan. A blank Participation Agreement is
attached to this Plan and incorporated herein by this reference.
h."Plan" means the Supplemental Retirement Plan of Corporation effective April
20 , 1993, and as it may be amended from time to time by the Corporation.
i."Plan Administrator" means Corporation. Provided, however, that Corporation
shall only be designated as Plan Administrator and named Fiduciary of the Plan
for purposes of implementing the claims procedure contained in Paragraph 14, and
for no other purpose.
j. "Survivor Benefit" means a benefit provided to Participant's Beneficiary if
Participant elects to participate in the Plan and dies prior to commencement of
the Supplemental Retirement Benefit while in the employ of Corporation.
k."Death Benefit" moans a benefit provided to Participant's Beneficiary if
Participant elects to participate in the Plan and dies after commencement of the
Supplemental Retirement Benefit.
1."Year of Service" means a consecutive 12-month period during which an employee
completes at least 2,000 hours of service with the Corporation.
3. Payments at Retirement.
a. Normal Retirement Date. If a Participant continues in employment with
corporation until he attains age 65 and 10 years of participant status, then,
upon retirement, the Participant shall be entitled to receive from the
Corporation a Supplemental Retirement Benefit in the amount specified in his
Participation Agreement, payable in equal monthly installments, for a period of
15 years. Such payments shall begin on the first day of the month following the
Participant's attainment of his Normal Retirement Date.
b. Early Retirement.
(3.) if a Participant's employment with the corporation terminates due to Early
Retirement or Disability prior to his attainment of Normal Retirement Date but
following his attainment of age 55 and ten (10) years of participant status,
such Participant may retire before his Normal Retirement Date and receive early
retirement benefits from the Plan. The early retirement benefit shall be equal
to the actuarial equivalent of the Supplemental Retirement Benefit (as specified
in the Participant's Agreement) commencing at the Normal Retirement Date. Such
actuarial equivalent early retirement benefit shall be equal to the Supplemental
Retirement Benefit multiplied by the early retirement factor set forth in
Appendix A.
(2) If a Participant's employment with the corporation terminates due to Early
Retirement or Disability prior to his attainment of Normal Retirement Date but
following his attainment of age 60 and attainment of participant status
requirements, but less than tan (10) years of participant status, such
Participant may retire before his Normal Retirement Date and receive early
retirement benefits from the Plan. This early retirement benefit shall be equal
to the early retirement benefit as calculated in Section 3.b.(l) and then
multiplied by a benefit percentage factor for years of participant status less
than ten (10) years as set forth in Appendix-B.
(3) The Early Retirement or Disability Benefit to which the Participant is
entitled shall be paid in equal monthly installments for a period of 15 years.
Such payments shall begin on the first day of the month following the
Participant's termination of employment. Provided, however, that no early
retirement or disability benefit shall be payable under this S @ ion 3.b. if the
Participant has not satisfied the participant status requirement. For
calculating participant status, the Extended Salary Plan of the Corporation,
effective October 1, 1987, shall be a predecessor plan to this Plan.
c. Late Retirement. If a Participant remains employed after the attainment of
his Normal Retirement Date, such benefit shall not commence until he actually
retires. The amount of the Participant's late retirement benefit shall be equal
to the actuarial equivalent of his Supplemental Retirement Benefit that would
have commenced at his Normal Retirement Date. Such actuarial equivalent late
retirement benefit shall be equal to the Supplemental Retirement Benefit
multiplied by the late retirement factors set forth in Appendix C and payable in
equal monthly installments for a period of 15 years.
d. Death Following Retirement. If a Participant should die after payment of a
Supplemental Retirement Benefit begins, but before receipt of the last of such
payments, the remaining balance of such payments shall be paid on their due
dates to the Participant's beneficiary designated in the Participant's Agreement
or, failing such designation, to the Participant's estate. As stated in Section
3.a., the total monthly payments of the Supplemental Retirement Benefit (for pre
and post death) shall not exceed fifteen (15) years.
4.Other Termination of Employment or Participant Status Short of Required
Participant Status.
If a Participant's employment with the corporation terminates for any other
reason (other than Death, Disability or Retirement), or a Participant has not
met the participant status requirements, then he shall not be entitled to
payment of a Supplemental Retirement Benefit under the Plan.
5. Survivor Benefit (Pre-Retirement Death of Participant). (1) If an eligible
Participant should die while in the Corporation's employment, and the
Participant has become eligible for either Early, Normal, or Late Retirement,
but before commencement of the Supplemental Retirement benefit, such eligible
benefit shall become payable to the Participant's beneficiary or, failing such
designation, to the Participant's estate. Such benefit shall be paid in equal
monthly installments, for a period of 15 years. Such payments shall begin on the
first day of the month following the Participant's death.
(2) If a Participant should die while in the Corporation's employment,, and the
Participant has become eligible for either Early, Normal, or Late Retirement,
but has met the participant status requirements, the Participant's beneficiary
or failing such designation, the Participant Is estate, shall be entitled to a
survivor benefit. This survivor benefit shall be equal to that actuarial
equivalent of the Supplemental Retirement Benefit commencing at Normal
Retirement Date. Such actuarial equivalent survivor benefit shall be equal to
the Supplemental Retirement Benefit multiplied by the early retirement factors
set forth in Appendix A and payable in equal monthly installments for a period
of 15 years.
6. Status of Investments. All investments made by Corporation under this Plan
will be deemed made solely for the purpose of aiding corporation in measuring
and meeting its obligations under this Plan. Corporation shall be the sole owner
of all such investments and of all rights and privileges conferred by the terms
of the instruments evidencing such investments. Nothing stated herein will cause
such investments to be treated as anything but the general assets of
corporation, nor will anything stated herein cause such investments to represent
the vested, secured or preferred interest of any participants or his
Beneficiaries.
7. General Creditor-Status. A Participant shall have no claim with respect to
any particular asset of Corporation, but shall be and shall remain at all times
a general creditor of Corporation therefore, a Participant's rights under the
Plan shall have priority over the rights of any general creditor of Corporation.
8. No Assignment. Neither a Participant nor his personal representative shall
have any right to commute, sell, assign, transfer, encumber or otherwise dispose
of the right to receive payments hereunder which payments and the right thereto
are expressly declared to by non-assignable and non-transferable. Any attempted
assignment or transfer by a Participant or his personal representative shall be
of no affect. Corporation shall have the right to assign this Plan and to
transfer its obligations hereunder.
9. Revocation and Amendment. This Plan may be amended or terminated at any time
at the sole discretion of the Board of Directors of corporation; provided,
however, that any such amendment or termination shall not affect the rights of
any Participant which may have accrued under the Plan at the time of amendment
or termination.
10.No employment Guarantee. Nothing contained in this Plan shall be construed as
conferring upon any Participant the right to continue in the employment of
Corporation.
11. Authority of Committee. The Committee shall have the full power and
authority to interpret, construe and administer this Plan. The Committee's
interpretations and construction hereof and actions hereunder shall be binding
and conclusive on all persons f or all purposes. No member of the Committee
shall be liable to any person for any action taken or omitted in connection with
the interpretation or administration of this Plan unless attributable to his own
willful misconduct or lack of good faith.
12. Liability of the Corporation. Nothing contained in the Plan or the
Participation Agreement shall constitute the creation of a trust or other
fiduciary relationship between Corporation and Participant or between
Corporation and Beneficiary or any other person. Corporation shall not be
considered a trustee by reason of the existence of this Plan or the
Participation Agreement.
13. Funding Assets. Corporation reserves the absolute right in its sole and
exclusive discretion either to fund the obligations of corporation undertaken by
this Plan or to refrain from funding the same, and to determine the extent,
nature and method of such funding. Should corporation elect to fund this Plan,,
in whole or in part,, through life insurance contracts, Corporation shall be the
owner and beneficiary of each such policy. Corporation reserves the absolute
right, in its sole discretion, to terminate any such contract, as well as any
other funding program, at any time, either in whole or in part. Title to, and
beneficial ownership of, any assets which Corporation may earmark to pay the
benefits hereunder shall at all times remain in Corporation. Participant and
Participant's Beneficiary shall not have any property interest whatsoever in any
specific assets of corporation. Nothing set forth in this Plan shall cause such
assets to be treated as anything but the general assets of Corporation. if
corporation purchases life insurance contracts on the life of the Participant
Participant agrees to sign any applications that may be reasonably required for
that purpose and to undergo any medical examination or tests which may be
reasonably necessary in such regard.
14. Claims Procedure. In the event that benefits under paragraph 3 or 5 of this
Plan are not paid to the Participant or his Beneficiary, and such person feels
entitled to receive them, a claim shall be made in writing to the Plan
Administrator within 60 days from the date payments are not made. Such claim
shall be reviewed by the Plan Administrator. If the claim is denied, in full or
in part, the Plan Administrator shall provide a written notice within 90 days
setting forth the specific reasons for denial, specific reference to the
provisions of this Plan upon which the denial is based, and any additional
material or information necessary to perfect the claim, if any. Also, such
written notice shall indicate the steps to be taken if a review of the denial is
desired.
If a claim is denied and a review is desired, the Participant shall notify the
Plan Administrator in writing within 60 days (and a claim shall be deemed denied
if the Plan Administrator does not take any action with the aforesaid 90 day
period). In requesting review, the Participant may review this Plan or any
documents relating to it and it any written issues and comments the Participant
may feel appropriate. In its sole discretion, the Plan Administrator shall then
review the claim and provide a written decision within 60 days. This decision
likewise shall state the specific reasons for the decision and shall include
specific reference to specific provisions of this Plan on which the decision is
based.
15. Governing Law. This Plan shall be governed by the laws of the Commonwealth
of Pennsylvania.
16.Language. Whenever used in this Plan, the singular number shall include
the plural, the plural the singular and the use of any gender shall include
all genders.
17. Effective Date. This Plan shall be effective beginning April 20, 1993.
C-COR ELECTRONICS, INC.
/s/Richard E. Perry
Chairman and Chief Executive Officer
Approved by C-COR Board of Directors on April 20, 1993.
APPENDIX A
NUMBER OF EARLY RETIREMENT
YEARS PRIOR TO FACTOR
NORMAL RETIREMENT
DATE
1 0.9145
2 0.8372
3 0.7670
4 0.7034
5 0.6456
6 0.5932
7 0.5454
8 0.5020
9 0.4625
10 0.4264
11 0.3935
12 0.3635
13 0.3360
14 0.3108
15 0.2877
16 0.2665
17 0.2471
18 0.2292
19 0.2127
20 0.1976
21 0.1836
22 0.1707
23 0.1588
24 0.1479
25 0.1377
26 0.1283
27 0.1196
28 0.1116
29 0.1041
30 0.0972
SOURCE: MODIFIED UP-84 MORTALITY TABLE AT 6.25%
APPENDIX B
NUMBER OF YEARS BENEFIT
LESS THAN TEN YEARS PERCENTAGE
OF PARTICIPANT STATUS
1 90%
2 80%
3 70%
4 60%
5 50%
SOURCE: BASED ON A STRAIGHT-LINE PERCENTAGE REDUCTION
APPENDIX C
NUMBER OF LATE RETIREMENT
YEARS AFTER FACTOR
NORMAL RETIREMENT
DATE
1 1.0817
2 1.1714
3 1.2700
4 1.3787
5 OR MORE 1.4986
SOURCE: MODIFIED UP-84 MORTALITY TABLE AT 6.25%
Attachment D
C-COR ELECTRONICS. INC.
Supplemental Retirement Plan Participation Agreement
1.I, the undersigned Participant ("Participant"), hereby acknowledge receipt of
a copy of the Supplemental Retirement Plan of C-COR Electronics, Inc.
("Corporation"), effective April 20 , 1993 (the "Plan"). By completion of this
Agreement, I agree to comply with the terms of the Plan in all respects,
understand that all provisions of the Plan are hereby made a part of this
Agreement.
2. In consideration of the foregoing and subject to the terms of the Plan,
Corporation promises to pay the Supplemental Retirement Benefit therein
described of $ 1,500.00 per month.
3.Tax Advice. I agree I have been advised by Corporation to consult my own tax
advisors with respect to this Agreement and that neither corporation nor its
representatives have made or make any representation or warranties as to such
consequences.
4. Insurance Policies. I understand that corporation may make application to
purchase a life insurance policy or policies on my life, which will be owned by
corporation and under which it will be the sole beneficiary. I agree to provide
Corporation with such information as it may require in order to make such
application and to cooperate fully with Corporation in respect of such
application, including the taking of a physical examination if requested to do
so. In this connection, I represent that my date or birth is October 11, 1952.
In the event the insurance company to which application is made declines to
issue the policy at standard premium rates, this Agreement will be void unless
corporation decides otherwise. Similarly, if I should die prior to the date on
which payment of the Supplemental Retirement Benefit commences and the proceeds
of a policy on my life are not paid to corporation because the information I
have furnished in connection with the application is materially false or my
death was caused by suicide within two (2) years of the date on the policy an my
life issues, corporation will be under no obligation to pay the Survivor Benefit
herein provided.
5.No Employment Commitment. Nothing in this Agreement shall be construed to
imply any commitment on the part of Corporation to continue me in its employ.
6.Beneficiary. I hereby designate the following person or persons as my
beneficiary or beneficiaries under this Agreement. Linda G. Miller (wife)
I reserve the right to change my beneficiary at any time and for any reason and
without notice to or the consent of the beneficiary or beneficiaries, by
delivering a writing to that effect to the office of the Secretary of
Corporation or its successor.
7. Additional conditions-none
8.This Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania.
Dated: May 19, 1995
/s/Chris A. Miller
Participant
C-COR ELECTRONICS, INC.
/s/Richard E. Perry
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT, dated May 22, 1995, by and between: C-COR ELECTRONICS, INC., a
Pennsylvania corporation (the "Company") and Chris A. Miller (the "Employee").
Recital
A.Employee is an executive of the Company with significant policy-making and
operational responsibilities in the conduct of its business.
B.The Company recognizes that Employee is a valuable resource for the Company
and the Company desires to be assured of the continued service of Employee.
C. The Company is concerned that upon a possible or threatened change in control
Employee may have concerns about the continuation of his employment and/or his
status and responsibilities and may be approached by others with employment
opportunities, and desires to provide Employee some assurance as to the
continuation of his employment status and responsibilities on a basis consistent
with that which he has earned in the event of such possible or threatened change
in control.
D. The Company desires to assure that if a possible change of control situation
should arise and Employee should be involved in deliberations or negotiations in
connection therewith that Employee would be in a secure position to consider
and/or negotiate such transaction as objectively as possible and without implied
threat to his financial well-being.
E.The Company is concerned about the possible effect on Employee of the
uncertainties created by any proposed change in control of the Company.
F. Employee is willing to continue to serve but desires that in the event of
such a change in control he will continue to have the responsibility, status,
income, benefits and perquisites that he received immediately prior to that
event.
Agreements
The parties do hereby agree as follows:
1.Change of Control. The provisions of Section 2 and 3 of this Agreement shall
become operative upon a change in control of the Company, as hereinafter
defined. For purposes of this Agreement, a "change in control" shall be deemed
to have occurred if and when:
(a) Subsequent to the date of this Agreement, any person or group of persons
acting in concert shall have acquired ownership of or the right to vote or to
direct the voting of shares of capital stock of the Company representing 30% or
more of the total voting power of the Company, or
(b) The Company shall have merged into or consolidated with another corporation,
or merged another corporation into the Company, on a basis whereby less than 50%
of the total voting power of the surviving corporation is represented by shares
held by former shareholders of the Company prior to such merger or
consolidation, or
(c)The Company shall have sold more than 50% of its assets to another
corporation or other entity or person, or
(d) As the result of, or in connection with, any cash tender or exchange offer,
merger or other business combination, sale of assets or contested election, the
persons who were Directors of the Company before such transaction cease to
constitute a majority of Directors of the Company.
2.Termination Within Eighteen (18) Months. In the event that the employment of
Employee with the Company is terminated involuntarily within eighteen (18)
months after a change in control occurs:
(a)Employee shall be entitled to receive an amount of cash equal to the sum of
the following amounts:
(i) two (2) times his annual salary at his rate on the date of termination of
employment (but not less than two times Employee's annual salary prior to the
Change of Control); and
(ii) two (2) times the Company's annual 401(k) retirement plan contribution at
the Employee's contribution rate on the termination of his employment (but not
less than the amount the company was matching prior to Change of Control)
(subject to applicable limitations of the Internal Revenue Code, which may
dictate that such amount shall not be added to the retirement plan but shall be
paid in cash). The sum of these amounts shall be paid in equal monthly
installments over a period of twenty-four (24) months, the first such
installment to be paid within ten (10) days after Employee's termination of
employment.
(b) Employee shall be entitled to receive an amount of cash equal to two times
the average of the Profit Incentive Plan ("PIP") payments of the last two years
awarded to him under the PIP of the Company, pursuant to the terms of such Plan
as in effect immediately prior to such change of control. Such amount will be
paid to the Employee within ten (10) days after termination of employment.
(c) Employee shall continue for a period of 24 months from the date of his
termination to be covered at the expense of the Company by the same or
equivalent health, dental, accident, life and disability insurance coverages as
he was enrolled in immediately prior to termination of his employment; provided,
however, that the Employee may elect to be paid in cash within thirty (30) days
after termination of his employment an amount equal to the Company's cost of
providing such coverages during such period.
(d) If on the date of termination of employment, Employee were a participant in
the Company's Supplemental Retirement Plan, Employee shall become eligible for
the benefits payable under such Plan and such benefits shall be paid to
Employee, or, if applicable, Employee's beneficiary, in the same manner, amounts
and intervals as if Employee had, on the date of his termination of employment
following a change of control, retired from employment with the Company. If
Employee has not attained age fifty-five (55) on the date of his termination of
employment due to a change of control, Employee shall be deemed to have attained
age fifty-five (55) for the purpose of determining his eligibility for benefits
under the Supplemental Retirement Plan, and only for this purpose.
(e) All outstanding options held by Employee, both exercisable and
nonexercisable, shall be immediately exercisable regardless of the time the
option has been held by Employee and shall remain exercisable until their
original expiration date, subject to applicable requirements of the Internal
Revenue Code.
3. Other Events. If Employee resigns from the Company within eighteen (18)
months of a change of control, Employee shall be entitled to receive all
payments and enjoy all of the benefits specified in Section 2 hereof should one
or more of the following events occur within eighteen (18) months following a
change in control:
(a) If Employee determines that there has been a significant change in his
responsibilities or duties with the Company and, for that reason, Employee
resigns from the Company; or
(b) If the base salary paid by the Company to Employee is reduced by more than
ten (10%) percent from his salary immediately prior to the change in control; or
(c) If the Company requires Employee to relocate his principal place of work to
a location more than forty (40) miles from the Employee's former place of work.
4. Agreements Not Exclusive. The specific agreements referred to herein are not
intended to exclude Employee's participation in other benefits available to
executive personnel generally or to preclude other compensation benefits as may
be authorized by the Board of Directors of the Company at any time, and shall be
in addition to the provisions of any other employment or similar agreements.
5. Enforcement Costs. The Company is aware that upon the occurrence of a change
in control the Board of Directors or a shareholder of the Company may then cause
or attempt to cause the Company to refuse to comply with its obligations under
this Agreement, or may cause or attempt to cause the Company to institute, or
may institute, litigation seeking to have this Agreement declared unenforceable,
or may take, or attempt to take, other action to deny Employee the benefits
intended under this Agreement. In these circumstances, the purpose of this
Agreement could be frustrated. It is the intent of the company that Employee not
be required to incur the expenses associated with the enforcement of his rights
under this agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits extended to
Employee hereunder, nor be bound to negotiate any Battlement of his rights
hereunder under threat of incurring such expenses. Accordingly, it following a
change of control, it should appear to Employee that the Company has failed to
comply with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this agreement void or
unenforceable, or institutes any litigation or other legal action designed to
deny, diminish or to recover from Employee the benefits intended to be provided
to Employee hereunder and that Employee has complied with all reasonable
obligations related to Employee's employment with the Company, the Company
irrevocably authorizes Employee from time to time to retain counsel of his
choice at the direct expense and liability of the company as provided in this
section 5, to represent Employee in connection with the initiation or defense of
any litigation or other legal action, whether by or against the Company or any
director, officer, shareholder or other person affiliated with the Company, in
any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to Employee entering into an attorney-client relationship with such
counsel, and in that connection the Company and Employee agree that a
confidential relationship shall exist between Employee and such counsel. The
reasonable fees and expenses of counsel selected from time to time by Employee
as hereinabove provided shall be paid or reimbursed to Employee by the company
on a regular, periodic basis upon presentation by Employee of a statement or
statements prepared by such counsel in accordance with its customary practices
up to a maximum aggregate amount or $500,000, said to be "grossed up" to cover
federal and state income taxes. The amount of the gross up shall be calculated
in accordance with the following formula: A/ (1-R), where A is the amount of
legal fees and R is the combined highest marginal tax rate applicable to
employee in the tax year that the payment is made.
6. No Set.-Off. The company shall not be entitled to set-off against the amount
payable to Employee any amounts earned by Employee in other employment after
termination of his employment with the Company, or any amounts which might have
been earned by Employee in other employment had he sought other employment. The
amounts payable to Employee under this Agreement shall not be treated as damages
but as severance compensation to which Employee is entitled by reason of
termination of his employment in the circumstances contemplated by this
Agreement. However, a set-off may be taken by the Company against the amounts
payable to Employee for expenses covering the same or equivalent hospital,
medical, accident and disability insurance coverages as set forth in Section
2(c) of this Agreement if such benefit is paid for the Employee by the Employer
to which the Employee may Join after termination by the Company or after
resignation as defined in Section 3 of this Agreement.
7.Termination. This Agreement has no specific term, but shall terminate if,
prior to a change in control of the Company, the employment of Employee with the
Company shall terminate, so long as such termination was not in anticipation of
or related to change of Control.
8.Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, and shall be binding
upon and inure to the benefit. of Employee and his legal representatives, heirs,
and assigns.
9. Severability. In the event that any Section, paragraph, clause or other
provision of this Agreement shall be determined to be invalid or unenforceable
in any jurisdiction for any reason, such Section, paragraphs clause or other
provision shall be enforceable in any other jurisdiction in which valid and
enforceable and, in any event, the remaining Sections, paragraphs, clauses and
other provisions of this Agreement shall be unaffected and shall remain in full
force and effect to the fullest permitted by law.
10.Governing Law. This Agreement shall be interpreted, construed and governed
by the laws of the Commonwealth of Pennsylvania.
11.Headings. The headings used in this Agreement are for ease of reference only
and are not intended to affect the meaning or interpretation of any of the terms
hereof.
12.Gender and Number. whenever the context shall require, all words in this
Agreement in the male gender shall be deemed to include the female or neuter
gender, all singular words shall include the plural, and all plural words shall
include the singular.
IN WITNESS WHEREOF, this Agreement has been executed the date and year first
above written.
ATTEST:
C-COR ELECTRONICS, INC.
/s/Richard E. Perry
Chairman, and Chief
Executive Officer
/s/Chris A. Miller
Employee
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of the 22nd day of May, 1995 between C-COR
ELECTRONICS, INC., a Pennsylvania corporation ("Corporation") and Chris A.
Miller with an address at Boalsburg, PA ("Officer")
WITNESSETH:
WHEREAS, Officer is an officer of Corporation and in such capacity is performing
a valuable service for Corporation; and WHEREAS, the stockholders of Corporation
have adopted Bylaws (the "Bylaws") providing for the indemnification of the
officers and directors of Corporation to the fullest extent now or hereafter
permitted by law ("the "Law,'); and WHEREAS, the Bylaws and the Law provide
specifically that they are not exclusive, and thereby contemplate that contracts
may be entered into between Corporation and its officers with respect to
indemnification of such officers; and WHEREAS, in accordance with the
authorization provided by the Bylaws and the Law, Corporation has purchased and
presently maintains a policy or policies of Directors' and officers' Liability
Insurance ("D&O Insurance") , covering certain liabilities which may be incurred
by its directors and officers in the performance of their services for
corporation; and WHEREAS, recent developments with respect to the terms and
availability of D&O Insurance and with respect to the application, amendment and
enforcement of statutory and bylaw indemnification provisions generally have
raised questions concerning the adequacy and reliability of the protection
afforded to officers thereby; and WHEREAS, in order to resolve such questions
and thereby induce Officer to continue to serve as an officer of corporation,
Corporation has determined and agreed to enter into this contract with officer.
NOW, THEREFORE, in consideration of Officer's continued service as an officer
after the date hereof, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Indemnity of Officer. Corporation hereby agrees to hold harmless and
indemnify officer to the full extent authorized or permitted by the provisions
of the Law, or by any amendment thereof or other statutory provisions
authorizing or permitting such indemnification which is adopted after the date
hereof.
2. Maintenance of Insurance and Self Insurance.
(a) Corporation represents that it presently has in force and effect policies of
D&O Insurance in insurance companies and amounts as follows (the "Insurance
Policies"):
Insurer-CNA Insurance Company
Amount-$5,000,000
Deductible-$250,000 Insured Organization
Insurer-Lloyd's London
Amount-$5,000,000
Deductible-$250,000 Insured Organization
Subject only to the provisions of Section 2(b) hereof, Corporation hereby agrees
that, so long as officer shall continue to serve as an officer of Corporation
(or shall continue at the request of Corporation to serve as an officer,
director, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise) and thereafter so long as Officer shall be subject to
any possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal or investigative by reason of the fact that
Officer was an officer of Corporation (or served in any of said other
capacities), Corporation will purchase and maintain in effect for the benefit of
officer one or more valid, binding and enforceable policy or policies of D&O
Insurance providing, in all respects, coverage at least comparable to that
presently provided pursuant to the Insurance Policies.
(b) Corporation shall not be required to maintain said policy or policies of D&O
Insurance in effect if said insurance is not reasonably available or if, in the
reasonable business judgment of the then directors of Corporation, either (i)
the premium cost for such insurance is substantially disproportionate to the
amount of coverage, or (ii) the coverage provided by such insurance is so
limited by exclusions that there is insufficient benefit from such insurance.
(c) In the event Corporation does not purchase and maintain in effect said
policy or policies of D&O Insurance pursuant to the provisions of Section 2(b)
hereof, Corporation agrees to hold harmless and indemnify officer to the full
extent of the coverage which would otherwise have been provided for the benefit
of officer pursuant to the Insurance Policies.
3. Additional Indemnity. Subject only to the exclusions set forth in Section 4
hereof, Corporation hereby further agrees to hold harmless and indemnify
Officer:
(a) Against any and all expenses (including attorneys' fees) , judgments, fines
and amounts paid in settlement actually and reasonably incurred by officer in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (including an action by
or in the right of the Corporation) to which officer is, was or at any time
becomes a party, or is threatened to be made a party, by reason of the fact that
Officer is, was or at any time becomes an officer, director, employee or agent
of Corporation, or is or was serving or at any time serves at the request of
Corporation as an officer, director, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; and
(b) Otherwise to the fullest extent as may be provided to officer by Corporation
under the non-exclusivity provisions of Section 7-1 of the Bylaws of Corporation
and the Law.
4.Limitations on Additional Indemnity. No indemnity pursuant to Section 3
hereof shall be paid by Corporation:
(a) Except to the extent the aggregate of losses to be indemnified thereunder
exceeds the sum of $1, 000 plus the amount of such losses for which Officer is
indemnified either pursuant to Sections 1 or 2 hereof or pursuant to any D&O
Insurance purchased and maintained by the Corporation;
(b) In respect to remuneration paid to Officer if it shall be determined by a
final judgment or other final adjudication that such remuneration was in
violation of Law;
(c) On account of any suit in which judgment is rendered against Officer f or an
accounting of profits made from the purchase or sale by Officer of securities of
Corporation pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law;
(d) On account of Officer's conduct which is finally adjudged by a court of
competent jurisdiction to have been knowingly fraudulent or deliberately
dishonest or to have constituted willful misconduct or recklessness; and
(e)If a final decision by a court of competent jurisdiction shall determine that
such indemnification is not lawful.
5. Continuation of Indemnity. All agreements and obligations of Corporation
contained herein shall continue during the period Officer is an officer,
director, employee or agent of Corporation (or is or was serving at the request
of Corporation as an officer, director, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Officer shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether, civil,
criminal or investigative, by reason of the fact that Officer was an officer of
Corporation or serving in any other capacity referred to herein.
6. Notification and Defense of Claim. Promptly after receipt by Officer of
notice of the commencement of any action, suit or proceeding, officer will, if a
claim in respect thereof is to be made against Corporation under this Agreement,
notify Corporation of the commencement thereof ; but the omission so to notify
Corporation will not relieve it from any liability which it may have to officer
otherwise than under this Agreement. With respect to any such action, suit or
proceeding as to which Officer notifies Corporation of the commencement thereof:
(a)Corporation will be entitled to participate therein at its own expense; and
(b) Except as otherwise provided below, to the extent that it may wish,
Corporation jointly with any other indemnifying party similarly notified will be
entitled to assume the defense thereof, with counsel satisfactory to Officer.
After notice from Corporation to Officer of its election so to assume the
defense thereof, Corporation will not be liable to Officer under this Agreement
for any legal or other expenses subsequently incurred by Officer in connection
with the defense thereof other than reasonable costs of investigation or as
otherwise provided below. officer shall have the right to employ its counsel in
such action, suit or proceeding but the fees and expenses of such counsel
incurred after notice from Corporation of its assumption of the defense thereof
shall be at the expense of Officer unless (i) the employment of counsel by
Officer has been authorized by corporation, (ii) Officer shall have reasonably
concluded that there may be a conflict of interest between Corporation and
officer in the conduct of the defense of such action or, (iii) corporation shall
not in fact have employed counsel to assume the defense of such action, in each
of which cases the fees and expenses of counsel shall be at the expense of
Corporation. Corporation shall not be entitled to assume the defense of any
action, suit or proceeding brought by or on behalf of Corporation or as to which
officer shall have made the conclusion provided for in (ii) above.
(c) Corporation shall not be liable to indemnify Officer under this Agreement
for any amounts paid in settlement of any action or claim effected without its
written consent. Corporation shall not settle any action or claim in any manner
which would impose any penalty or limitation on Officer without Officer's
written consent. Neither Corporation or Officer will unreasonably withhold its
or his consent to any proposed settlement.
7. Repayment of Expenses. Officer will reimburse Corporation for all reasonable
expenses paid by Corporation in defending any civil or criminal action, suit or
proceeding against officer in the event and only to the extent that it shall be
ultimately determined that officer is not entitled to be indemnified by
Corporation for such expenses under the provisions of the Law, the Bylaws, this
Agreement or otherwise.
8. Enforcement.
(a) Corporation expressly confirms and agrees that it has entered into this
Agreement and assumed the obligations imposed on Corporation hereby in order to
induce officer to continue as an officer of Corporation, and acknowledges that
Officer is relying upon this Agreement in continuing in such capacity.
(b) In the event Officer is required to bring any action to enforce rights or to
collect moneys due under this Agreement and is successful in such action,
Corporation shall reimburse Officer for all of officer's reasonable fees and
expenses in bringing and pursuing such action.
9.Separability. Each of the provisions of this Agreement is a separate and
distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or enforceability
of the other provisions hereof.
10. Governing Law; Binding Effect; Amendment and Termination.
(a) This Agreement shall be interpreted and enforced in accordance with the laws
of the Commonwealth of Pennsylvania.
(b) This Agreement shall be binding upon Officer and upon Corporation, its
successors and assigns, and shall inure to the benefit of officer, his heirs,
personal representatives and assigns and to the benefit of Corporation, its
successors and assigns.
/s/Richard E. Perry
Chairman,
Chief Executive Officer
/s/Chris A. Miller
Employee
C-COR Electronics, Inc.
Supplemental Retirement Plan
1.Selection of Participation. This Plan is an unfunded nonqualified arrangement
for a select group of management and/or highly compensated employees of C-COR
Electronics, Inc. (hereinafter "Corporation"). Each employee selected by
Corporation for participation hereunder (hereinafter "Participant") shall
indicate his agreement to the terms of this Plan by executing a Participation
Agreement to be provided by Corporation.
2.Definitions. Certain terms shall be defined hereunder as follows:
a."Beneficiary" means a person, persons,, trust or trusts which a Participant
shall, from time to time, designate in writing to receive any benefits payable
to him under this Plan in the event of his death.
b."Committee" means the Compensation Committee of the Board of Directors of
Corporation.
c."Disability" shall have the same meaning as the term is defined in
Corporation's Long Term Disability Plan.
d."Effective Date of Plan" means April 20 , 1993.
e."Supplement Retirement Benefit" means a benefit provided to a Participant if
he elects to participate under the Plan and remains in Corporation's employ
until attaining the age specified in Section 3 of the Plan.
f.(1)"Participant" means a full-time employee working more than 2,OOO hours per
year. f.(2)"Participant Status Requirement" moans a participant who has been a
participant in the Plan for five years, hired directly in the plan; or an
employee who has been a participant in the Plan for three years by being
promoted into the Plan and who has at least two additional years as an employee
of C-COR Electronics, Inc.
g."Participant Agreement" means the Agreement signed by Participant that
evidences his participation in the Plan. A blank Participation Agreement is
attached to this Plan and incorporated herein by this reference.
h."Plan" means the Supplemental Retirement Plan of Corporation effective April
20 , 1993, and as it may be amended from time to time by the Corporation.
i."Plan Administrator" means Corporation. Provided, however, that Corporation
shall only be designated as Plan Administrator and named Fiduciary of the Plan
for purposes of implementing the claims procedure contained in Paragraph 14, and
for no other purpose.
j. "Survivor Benefit" means a benefit provided to Participant's Beneficiary if
Participant elects to participate in the Plan and dies prior to commencement of
the Supplemental Retirement Benefit while in the employ of Corporation.
k."Death Benefit" moans a benefit provided to Participant's Beneficiary if
Participant elects to participate in the Plan and dies after commencement of the
Supplemental Retirement Benefit.
1."Year of Service" means a consecutive 12-month period during which an employee
completes at least 2,000 hours of service with the Corporation.
3. Payments at Retirement.
a. Normal Retirement Date. If a Participant continues in employment with
corporation until he attains age 65 and 10 years of participant status, then,
upon retirement, the Participant shall be entitled to receive from the
Corporation a Supplemental Retirement Benefit in the amount specified in his
Participation Agreement, payable in equal monthly installments, for a period of
15 years. Such payments shall begin on the first day of the month following the
Participant's attainment of his Normal Retirement Date.
b. Early Retirement.
(3.) if a Participant's employment with the corporation terminates due to Early
Retirement or Disability prior to his attainment of Normal Retirement Date but
following his attainment of age 55 and ten (10) years of participant status,
such Participant may retire before his Normal Retirement Date and receive early
retirement benefits from the Plan. The early retirement benefit shall be equal
to the actuarial equivalent of the Supplemental Retirement Benefit (as specified
in the Participant's Agreement) commencing at the Normal Retirement Date. Such
actuarial equivalent early retirement benefit shall be equal to the Supplemental
Retirement Benefit multiplied by the early retirement factor set forth in
Appendix A.
(2) If a Participant's employment with the corporation terminates due to Early
Retirement or Disability prior to his attainment of Normal Retirement Date but
following his attainment of age 60 and attainment of participant status
requirements, but less than tan (10) years of participant status, such
Participant may retire before his Normal Retirement Date and receive early
retirement benefits from the Plan. This early retirement benefit shall be equal
to the early retirement benefit as calculated in Section 3.b.(l) and then
multiplied by a benefit percentage factor for years of participant status less
than ten (10) years as set forth in Appendix-B.
(3) The Early Retirement or Disability Benefit to which the Participant is
entitled shall be paid in equal monthly installments for a period of 15 years.
Such payments shall begin on the first day of the month following the
Participant's termination of employment. Provided, however, that no early
retirement or disability benefit shall be payable under this S @ ion 3.b. if the
Participant has not satisfied the participant status requirement. For
calculating participant status, the Extended Salary Plan of the Corporation,
effective October 1, 1987, shall be a predecessor plan to this Plan.
c. Late Retirement. If a Participant remains employed after the attainment of
his Normal Retirement Date, such benefit shall not commence until he actually
retires. The amount of the Participant's late retirement benefit shall be equal
to the actuarial equivalent of his Supplemental Retirement Benefit that would
have commenced at his Normal Retirement Date. Such actuarial equivalent late
retirement benefit shall be equal to the Supplemental Retirement Benefit
multiplied by the late retirement factors set forth in Appendix C and payable in
equal monthly installments for a period of 15 years.
d. Death Following Retirement. If a Participant should die after payment of a
Supplemental Retirement Benefit begins, but before receipt of the last of such
payments, the remaining balance of such payments shall be paid on their due
dates to the Participant's beneficiary designated in the Participant's Agreement
or, failing such designation, to the Participant's estate. As stated in Section
3.a., the total monthly payments of the Supplemental Retirement Benefit (for pre
and post death) shall not exceed fifteen (15) years.
4.Other Termination of Employment or Participant Status Short of Required
Participant Status.
If a Participant's employment with the corporation terminates for any other
reason (other than Death, Disability or Retirement), or a Participant has not
met the participant status requirements, then he shall not be entitled to
payment of a Supplemental Retirement Benefit under the Plan.
5. Survivor Benefit (Pre-Retirement Death of Participant). (1) If an eligible
Participant should die while in the Corporation's employment, and the
Participant has become eligible for either Early, Normal, or Late Retirement,
but before commencement of the Supplemental Retirement benefit, such eligible
benefit shall become payable to the Participant's beneficiary or, failing such
designation, to the Participant's estate. Such benefit shall be paid in equal
monthly installments, for a period of 15 years. Such payments shall begin on the
first day of the month following the Participant's death.
(2) If a Participant should die while in the Corporation's employment,, and the
Participant has become eligible for either Early, Normal, or Late Retirement,
but has met the participant status requirements, the Participant's beneficiary
or failing such designation, the Participant Is estate, shall be entitled to a
survivor benefit. This survivor benefit shall be equal to that actuarial
equivalent of the Supplemental Retirement Benefit commencing at Normal
Retirement Date. Such actuarial equivalent survivor benefit shall be equal to
the Supplemental Retirement Benefit multiplied by the early retirement factors
set forth in Appendix A and payable in equal monthly installments for a period
of 15 years.
6. Status of Investments. All investments made by Corporation under this Plan
will be deemed made solely for the purpose of aiding corporation in measuring
and meeting its obligations under this Plan. Corporation shall be the sole owner
of all such investments and of all rights and privileges conferred by the terms
of the instruments evidencing such investments. Nothing stated herein will cause
such investments to be treated as anything but the general assets of
corporation, nor will anything stated herein cause such investments to represent
the vested, secured or preferred interest of any participants or his
Beneficiaries.
7. General Creditor-Status. A Participant shall have no claim with respect to
any particular asset of Corporation, but shall be and shall remain at all times
a general creditor of Corporation therefore, a Participant's rights under the
Plan shall have priority over the rights of any general creditor of Corporation.
8. No Assignment. Neither a Participant nor his personal representative shall
have any right to commute, sell, assign, transfer, encumber or otherwise dispose
of the right to receive payments hereunder which payments and the right thereto
are expressly declared to by non-assignable and non-transferable. Any attempted
assignment or transfer by a Participant or his personal representative shall be
of no affect. Corporation shall have the right to assign this Plan and to
transfer its obligations hereunder.
9. Revocation and Amendment. This Plan may be amended or terminated at any time
at the sole discretion of the Board of Directors of corporation; provided,
however, that any such amendment or termination shall not affect the rights of
any Participant which may have accrued under the Plan at the time of amendment
or termination.
10.No employment Guarantee. Nothing contained in this Plan shall be construed as
conferring upon any Participant the right to continue in the employment of
Corporation.
11. Authority of Committee. The Committee shall have the full power and
authority to interpret, construe and administer this Plan. The Committee's
interpretations and construction hereof and actions hereunder shall be binding
and conclusive on all persons f or all purposes. No member of the Committee
shall be liable to any person for any action taken or omitted in connection with
the interpretation or administration of this Plan unless attributable to his own
willful misconduct or lack of good faith.
12. Liability of the Corporation. Nothing contained in the Plan or the
Participation Agreement shall constitute the creation of a trust or other
fiduciary relationship between Corporation and Participant or between
Corporation and Beneficiary or any other person. Corporation shall not be
considered a trustee by reason of the existence of this Plan or the
Participation Agreement.
13. Funding Assets. Corporation reserves the absolute right in its sole and
exclusive discretion either to fund the obligations of corporation undertaken by
this Plan or to refrain from funding the same, and to determine the extent,
nature and method of such funding. Should corporation elect to fund this Plan,,
in whole or in part,, through life insurance contracts, Corporation shall be the
owner and beneficiary of each such policy. Corporation reserves the absolute
right, in its sole discretion, to terminate any such contract, as well as any
other funding program, at any time, either in whole or in part. Title to, and
beneficial ownership of, any assets which Corporation may earmark to pay the
benefits hereunder shall at all times remain in Corporation. Participant and
Participant's Beneficiary shall not have any property interest whatsoever in any
specific assets of corporation. Nothing set forth in this Plan shall cause such
assets to be treated as anything but the general assets of Corporation. if
corporation purchases life insurance contracts on the life of the Participant
Participant agrees to sign any applications that may be reasonably required for
that purpose and to undergo any medical examination or tests which may be
reasonably necessary in such regard.
14. Claims Procedure. In the event that benefits under paragraph 3 or 5 of this
Plan are not paid to the Participant or his Beneficiary, and such person feels
entitled to receive them, a claim shall be made in writing to the Plan
Administrator within 60 days from the date payments are not made. Such claim
shall be reviewed by the Plan Administrator. If the claim is denied, in full or
in part, the Plan Administrator shall provide a written notice within 90 days
setting forth the specific reasons for denial, specific reference to the
provisions of this Plan upon which the denial is based, and any additional
material or information necessary to perfect the claim, if any. Also, such
written notice shall indicate the steps to be taken if a review of the denial is
desired.
If a claim is denied and a review is desired, the Participant shall notify the
Plan Administrator in writing within 60 days (and a claim shall be deemed denied
if the Plan Administrator does not take any action with the aforesaid 90 day
period). In requesting review, the Participant may review this Plan or any
documents relating to it and it any written issues and comments the Participant
may feel appropriate. In its sole discretion, the Plan Administrator shall then
review the claim and provide a written decision within 60 days. This decision
likewise shall state the specific reasons for the decision and shall include
specific reference to specific provisions of this Plan on which the decision is
based.
15. Governing Law. This Plan shall be governed by the laws of the Commonwealth
of Pennsylvania.
16.Language. Whenever used in this Plan, the singular number shall include
the plural, the plural the singular and the use of any gender shall include
all genders.
17. Effective Date. This Plan shall be effective beginning April 20, 1993.
C-COR ELECTRONICS, INC.
/s/Richard E. Perry
Chairman and Chief Executive Officer
Approved by C-COR Board of Directors on April 20, 1993.
APPENDIX A
NUMBER OF EARLY RETIREMENT
YEARS PRIOR TO FACTOR
NORMAL RETIREMENT
DATE
1 0.9145
2 0.8372
3 0.7670
4 0.7034
5 0.6456
6 0.5932
7 0.5454
8 0.5020
9 0.4625
10 0.4264
11 0.3935
12 0.3635
13 0.3360
14 0.3108
15 0.2877
16 0.2665
17 0.2471
18 0.2292
19 0.2127
20 0.1976
21 0.1836
22 0.1707
23 0.1588
24 0.1479
25 0.1377
26 0.1283
27 0.1196
28 0.1116
29 0.1041
30 0.0972
SOURCE: MODIFIED UP-84 MORTALITY TABLE AT 6.25%
APPENDIX B
NUMBER OF YEARS BENEFIT
LESS THAN TEN YEARS PERCENTAGE
OF PARTICIPANT STATUS
1 90%
2 80%
3 70%
4 60%
5 50%
SOURCE: BASED ON A STRAIGHT-LINE PERCENTAGE REDUCTION
APPENDIX C
NUMBER OF LATE RETIREMENT
YEARS AFTER FACTOR
NORMAL RETIREMENT
DATE
1 1.0817
2 1.1714
3 1.2700
4 1.3787
5 OR MORE 1.4986
SOURCE: MODIFIED UP-84 MORTALITY TABLE AT 6.25%
Attachment D
C-COR ELECTRONICS. INC.
Supplemental Retirement Plan Participation Agreement
1.I, the undersigned Participant ("Participant"), hereby acknowledge receipt of
a copy of the Supplemental Retirement Plan of C-COR Electronics, Inc.
("Corporation"), effective April 20 , 1993 (the "Plan"). By completion of this
Agreement, I agree to comply with the terms of the Plan in all respects,
understand that all provisions of the Plan are hereby made a part of this
Agreement.
2. In consideration of the foregoing and subject to the terms of the Plan,
Corporation promises to pay the Supplemental Retirement Benefit therein
described of $ 1,500.00 per month.
3.Tax Advice. I agree I have been advised by Corporation to consult my own tax
advisors with respect to this Agreement and that neither corporation nor its
representatives have made or make any representation or warranties as to such
consequences.
4. Insurance Policies. I understand that corporation may make application to
purchase a life insurance policy or policies on my life, which will be owned by
corporation and under which it will be the sole beneficiary. I agree to provide
Corporation with such information as it may require in order to make such
application and to cooperate fully with Corporation in respect of such
application, including the taking of a physical examination if requested to do
so. In this connection, I represent that my date or birth is January 12, 1942.
In the event the insurance company to which application is made declines to
issue the policy at standard premium rates, this Agreement will be void unless
corporation decides otherwise. Similarly, if I should die prior to the date on
which payment of the Supplemental Retirement Benefit commences and the proceeds
of a policy on my life are not paid to corporation because the information I
have furnished in connection with the application is materially false or my
death was caused by suicide within two (2) years of the date on the policy an my
life issues, corporation will be under no obligation to pay the Survivor Benefit
herein provided.
5.No Employment Commitment. Nothing in this Agreement shall be construed to
imply any commitment on the part of Corporation to continue me in its employ.
6.Beneficiary. I hereby designate the following person or persons as my
beneficiary or beneficiaries under this Agreement. Bonnie J. Miller (wife)
I reserve the right to change my beneficiary at any time and for any reason and
without notice to or the consent of the beneficiary or beneficiaries, by
delivering a writing to that effect to the office of the Secretary of
Corporation or its successor.
7. Additional conditions-none
8.This Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania.
Dated: August 24, 1995
/s/Donald F.. Miller
Participant
C-COR ELECTRONICS, INC.
/s/Edwin S. Childs
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT, dated August 24, 1995, by and between: C-COR ELECTRONICS, INC.,
a Pennsylvania corporation (the "Company") and Donald F. Miller
(the "Employee").
Recital
A.Employee is an executive of the Company with significant policy-making and
operational responsibilities in the conduct of its business.
B.The Company recognizes that Employee is a valuable resource for the Company
and the Company desires to be assured of the continued service of Employee.
C. The Company is concerned that upon a possible or threatened change in control
Employee may have concerns about the continuation of his employment and/or his
status and responsibilities and may be approached by others with employment
opportunities, and desires to provide Employee some assurance as to the
continuation of his employment status and responsibilities on a basis consistent
with that which he has earned in the event of such possible or threatened change
in control.
D. The Company desires to assure that if a possible change of control situation
should arise and Employee should be involved in deliberations or negotiations in
connection therewith that Employee would be in a secure position to consider
and/or negotiate such transaction as objectively as possible and without implied
threat to his financial well-being.
E.The Company is concerned about the possible effect on Employee of the
uncertainties created by any proposed change in control of the Company.
F. Employee is willing to continue to serve but desires that in the event of
such a change in control he will continue to have the responsibility, status,
income, benefits and perquisites that he received immediately prior to that
event.
Agreements
The parties do hereby agree as follows:
1.Change of Control. The provisions of Section 2 and 3 of this Agreement shall
become operative upon a change in control of the Company, as hereinafter
defined. For purposes of this Agreement, a "change in control" shall be deemed
to have occurred if and when:
(a) Subsequent to the date of this Agreement, any person or group of persons
acting in concert shall have acquired ownership of or the right to vote or to
direct the voting of shares of capital stock of the Company representing 30% or
more of the total voting power of the Company, or
(b) The Company shall have merged into or consolidated with another corporation,
or merged another corporation into the Company, on a basis whereby less than 50%
of the total voting power of the surviving corporation is represented by shares
held by former shareholders of the Company prior to such merger or
consolidation, or
(c)The Company shall have sold more than 50% of its assets to another
corporation or other entity or person, or
(d) As the result of, or in connection with, any cash tender or exchange offer,
merger or other business combination, sale of assets or contested election, the
persons who were Directors of the Company before such transaction cease to
constitute a majority of Directors of the Company.
2.Termination Within Eighteen (18) Months. In the event that the employment of
Employee with the Company is terminated involuntarily within eighteen (18)
months after a change in control occurs:
(a)Employee shall be entitled to receive an amount of cash equal to the sum of
the following amounts:
(i) two (2) times his annual salary at his rate on the date of termination of
employment (but not less than two times Employee's annual salary prior to the
Change of Control); and
(ii) two (2) times the Company's annual 401(k) retirement plan contribution at
the Employee's contribution rate on the termination of his employment (but not
less than the amount the company was matching prior to Change of Control)
(subject to applicable limitations of the Internal Revenue Code, which may
dictate that such amount shall not be added to the retirement plan but shall be
paid in cash). The sum of these amounts shall be paid in equal monthly
installments over a period of twenty-four (24) months, the first such
installment to be paid within ten (10) days after Employee's termination of
employment.
(b) Employee shall be entitled to receive an amount of cash equal to two times
the average of the Profit Incentive Plan ("PIP") payments of the last two years
awarded to him under the PIP of the Company, pursuant to the terms of such Plan
as in effect immediately prior to such change of control. Such amount will be
paid to the Employee within ten (10) days after termination of employment.
(c) Employee shall continue for a period of 24 months from the date of his
termination to be covered at the expense of the Company by the same or
equivalent health, dental, accident, life and disability insurance coverages as
he was enrolled in immediately prior to termination of his employment; provided,
however, that the Employee may elect to be paid in cash within thirty (30) days
after termination of his employment an amount equal to the Company's cost of
providing such coverages during such period.
(d) If on the date of termination of employment, Employee were a participant in
the Company's Supplemental Retirement Plan, Employee shall become eligible for
the benefits payable under such Plan and such benefits shall be paid to
Employee, or, if applicable, Employee's beneficiary, in the same manner, amounts
and intervals as if Employee had, on the date of his termination of employment
following a change of control, retired from employment with the Company. If
Employee has not attained age fifty-five (55) on the date of his termination of
employment due to a change of control, Employee shall be deemed to have attained
age fifty-five (55) for the purpose of determining his eligibility for benefits
under the Supplemental Retirement Plan, and only for this purpose.
(e) All outstanding options held by Employee, both exercisable and
nonexercisable, shall be immediately exercisable regardless of the time the
option has been held by Employee and shall remain exercisable until their
original expiration date, subject to applicable requirements of the Internal
Revenue Code.
3. Other Events. If Employee resigns from the Company within eighteen (18)
months of a change of control, Employee shall be entitled to receive all
payments and enjoy all of the benefits specified in Section 2 hereof should one
or more of the following events occur within eighteen (18) months following a
change in control:
(a) If Employee determines that there has been a significant change in his
responsibilities or duties with the Company and, for that reason, Employee
resigns from the Company; or
(b) If the base salary paid by the Company to Employee is reduced by more than
ten (10%) percent from his salary immediately prior to the change in control; or
(c) If the Company requires Employee to relocate his principal place of work to
a location more than forty (40) miles from the Employee's former place of work.
4. Agreements Not Exclusive. The specific agreements referred to herein are not
intended to exclude Employee's participation in other benefits available to
executive personnel generally or to preclude other compensation benefits as may
be authorized by the Board of Directors of the Company at any time, and shall be
in addition to the provisions of any other employment or similar agreements.
5. Enforcement Costs. The Company is aware that upon the occurrence of a change
in control the Board of Directors or a shareholder of the Company may then cause
or attempt to cause the Company to refuse to comply with its obligations under
this Agreement, or may cause or attempt to cause the Company to institute, or
may institute, litigation seeking to have this Agreement declared unenforceable,
or may take, or attempt to take, other action to deny Employee the benefits
intended under this Agreement. In these circumstances, the purpose of this
Agreement could be frustrated. It is the intent of the company that Employee not
be required to incur the expenses associated with the enforcement of his rights
under this agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits extended to
Employee hereunder, nor be bound to negotiate any Battlement of his rights
hereunder under threat of incurring such expenses. Accordingly, it following a
change of control, it should appear to Employee that the Company has failed to
comply with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this agreement void or
unenforceable, or institutes any litigation or other legal action designed to
deny, diminish or to recover from Employee the benefits intended to be provided
to Employee hereunder and that Employee has complied with all reasonable
obligations related to Employee's employment with the Company, the Company
irrevocably authorizes Employee from time to time to retain counsel of his
choice at the direct expense and liability of the company as provided in this
section 5, to represent Employee in connection with the initiation or defense of
any litigation or other legal action, whether by or against the Company or any
director, officer, shareholder or other person affiliated with the Company, in
any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to Employee entering into an attorney-client relationship with such
counsel, and in that connection the Company and Employee agree that a
confidential relationship shall exist between Employee and such counsel. The
reasonable fees and expenses of counsel selected from time to time by Employee
as hereinabove provided shall be paid or reimbursed to Employee by the company
on a regular, periodic basis upon presentation by Employee of a statement or
statements prepared by such counsel in accordance with its customary practices
up to a maximum aggregate amount or $500,000, said to be "grossed up" to cover
federal and state income taxes. The amount of the gross up shall be calculated
in accordance with the following formula: A/ (1-R), where A is the amount of
legal fees and R is the combined highest marginal tax rate applicable to
employee in the tax year that the payment is made.
6. No Set.-Off. The company shall not be entitled to set-off against the amount
payable to Employee any amounts earned by Employee in other employment after
termination of his employment with the Company, or any amounts which might have
been earned by Employee in other employment had he sought other employment. The
amounts payable to Employee under this Agreement shall not be treated as damages
but as severance compensation to which Employee is entitled by reason of
termination of his employment in the circumstances contemplated by this
Agreement. However, a set-off may be taken by the Company against the amounts
payable to Employee for expenses covering the same or equivalent hospital,
medical, accident and disability insurance coverages as set forth in Section
2(c) of this Agreement if such benefit is paid for the Employee by the Employer
to which the Employee may Join after termination by the Company or after
resignation as defined in Section 3 of this Agreement.
7.Termination. This Agreement has no specific term, but shall terminate if,
prior to a change in control of the Company, the employment of Employee with the
Company shall terminate, so long as such termination was not in anticipation of
or related to change of Control.
8.Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, and shall be binding
upon and inure to the benefit. of Employee and his legal representatives, heirs,
and assigns.
9. Severability. In the event that any Section, paragraph, clause or other
provision of this Agreement shall be determined to be invalid or unenforceable
in any jurisdiction for any reason, such Section, paragraphs clause or other
provision shall be enforceable in any other jurisdiction in which valid and
enforceable and, in any event, the remaining Sections, paragraphs, clauses and
other provisions of this Agreement shall be unaffected and shall remain in full
force and effect to the fullest permitted by law.
10.Governing Law. This Agreement shall be interpreted, construed and governed
by the laws of the Commonwealth of Pennsylvania.
11.Headings. The headings used in this Agreement are for ease of reference only
and are not intended to affect the meaning or interpretation of any of the terms
hereof.
12.Gender and Number. whenever the context shall require, all words in this
Agreement in the male gender shall be deemed to include the female or neuter
gender, all singular words shall include the plural, and all plural words shall
include the singular.
IN WITNESS WHEREOF, this Agreement has been executed the date and year first
above written.
ATTEST:
/s/Edwin S. Childs
C-COR ELECTRONICS, INC.
/s/Richard E. Perry
Chairman, and Chief
Executive Officer
/s/Donald F. Miller
Employee
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of the 24th day of August, 1995 between
C-COR ELECTRONICS, INC., a Pennsylvania corporation ("Corporation") and
Donald F. Miller with an address at 125 Limestone Drive, Bellefonte, PA
("Officer").
WITNESSETH:
WHEREAS, Officer is an officer of Corporation and in such capacity is performing
a valuable service for Corporation; and WHEREAS, the stockholders of Corporation
have adopted Bylaws (the "Bylaws") providing for the indemnification of the
officers and directors of Corporation to the fullest extent now or hereafter
permitted by law ("the "Law,'); and WHEREAS, the Bylaws and the Law provide
specifically that they are not exclusive, and thereby contemplate that contracts
may be entered into between Corporation and its officers with respect to
indemnification of such officers; and WHEREAS, in accordance with the
authorization provided by the Bylaws and the Law, Corporation has purchased and
presently maintains a policy or policies of Directors' and officers' Liability
Insurance ("D&O Insurance") , covering certain liabilities which may be incurred
by its directors and officers in the performance of their services for
corporation; and WHEREAS, recent developments with respect to the terms and
availability of D&O Insurance and with respect to the application, amendment and
enforcement of statutory and bylaw indemnification provisions generally have
raised questions concerning the adequacy and reliability of the protection
afforded to officers thereby; and WHEREAS, in order to resolve such questions
and thereby induce Officer to continue to serve as an officer of corporation,
Corporation has determined and agreed to enter into this contract with officer.
NOW, THEREFORE, in consideration of Officer's continued service as an officer
after the date hereof, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Indemnity of Officer. Corporation hereby agrees to hold harmless and
indemnify officer to the full extent authorized or permitted by the provisions
of the Law, or by any amendment thereof or other statutory provisions
authorizing or permitting such indemnification which is adopted after the date
hereof.
2. Maintenance of Insurance and Self Insurance.
(a) Corporation represents that it presently has in force and effect policies of
D&O Insurance in insurance companies and amounts as follows (the "Insurance
Policies"):
Insurer-Federal Insurance Company
Amount-$10,000,000
Deductible-$250,000 Insured Organization
Insurer-Lexington Insurance Company
Amount-$5,000,000 excess of $10,000,000
Deductible-none
Insurer-Stonewall Surplus Inurance Company
Amount-$5,000,000 excess of $15,000,000
Deductible-none
Subject only to the provisions of Section 2(b) hereof, Corporation hereby agrees
that, so long as officer shall continue to serve as an officer of Corporation
(or shall continue at the request of Corporation to serve as an officer,
director, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise) and thereafter so long as Officer shall be subject to
any possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal or investigative by reason of the fact that
Officer was an officer of Corporation (or served in any of said other
capacities), Corporation will purchase and maintain in effect for the benefit of
officer one or more valid, binding and enforceable policy or policies of D&O
Insurance providing, in all respects, coverage at least comparable to that
presently provided pursuant to the Insurance Policies.
(b) Corporation shall not be required to maintain said policy or policies of D&O
Insurance in effect if said insurance is not reasonably available or if, in the
reasonable business judgment of the then directors of Corporation, either (i)
the premium cost for such insurance is substantially disproportionate to the
amount of coverage, or (ii) the coverage provided by such insurance is so
limited by exclusions that there is insufficient benefit from such insurance.
(c) In the event Corporation does not purchase and maintain in effect said
policy or policies of D&O Insurance pursuant to the provisions of Section 2(b)
hereof, Corporation agrees to hold harmless and indemnify officer to the full
extent of the coverage which would otherwise have been provided for the benefit
of officer pursuant to the Insurance Policies.
3. Additional Indemnity. Subject only to the exclusions set forth in Section 4
hereof, Corporation hereby further agrees to hold harmless and indemnify
Officer:
(a) Against any and all expenses (including attorneys' fees) , judgments, fines
and amounts paid in settlement actually and reasonably incurred by officer in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (including an action by
or in the right of the Corporation) to which officer is, was or at any time
becomes a party, or is threatened to be made a party, by reason of the fact that
Officer is, was or at any time becomes an officer, director, employee or agent
of Corporation, or is or was serving or at any time serves at the request of
Corporation as an officer, director, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; and
(b) Otherwise to the fullest extent as may be provided to officer by Corporation
under the non-exclusivity provisions of Section 7-1 of the Bylaws of Corporation
and the Law.
4.Limitations on Additional Indemnity. No indemnity pursuant to Section 3
hereof shall be paid by Corporation:
(a) Except to the extent the aggregate of losses to be indemnified thereunder
exceeds the sum of $1, 000 plus the amount of such losses for which Officer is
indemnified either pursuant to Sections 1 or 2 hereof or pursuant to any D&O
Insurance purchased and maintained by the Corporation;
(b) In respect to remuneration paid to Officer if it shall be determined by a
final judgment or other final adjudication that such remuneration was in
violation of Law;
(c) On account of any suit in which judgment is rendered against Officer f or an
accounting of profits made from the purchase or sale by Officer of securities of
Corporation pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law;
(d) On account of Officer's conduct which is finally adjudged by a court of
competent jurisdiction to have been knowingly fraudulent or deliberately
dishonest or to have constituted willful misconduct or recklessness; and
(e)If a final decision by a court of competent jurisdiction shall determine that
such indemnification is not lawful.
5. Continuation of Indemnity. All agreements and obligations of Corporation
contained herein shall continue during the period Officer is an officer,
director, employee or agent of Corporation (or is or was serving at the request
of Corporation as an officer, director, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Officer shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether, civil,
criminal or investigative, by reason of the fact that Officer was an officer of
Corporation or serving in any other capacity referred to herein.
6. Notification and Defense of Claim. Promptly after receipt by Officer of
notice of the commencement of any action, suit or proceeding, officer will, if a
claim in respect thereof is to be made against Corporation under this Agreement,
notify Corporation of the commencement thereof ; but the omission so to notify
Corporation will not relieve it from any liability which it may have to officer
otherwise than under this Agreement. With respect to any such action, suit or
proceeding as to which Officer notifies Corporation of the commencement thereof:
(a)Corporation will be entitled to participate therein at its own expense; and
(b) Except as otherwise provided below, to the extent that it may wish,
Corporation jointly with any other indemnifying party similarly notified will be
entitled to assume the defense thereof, with counsel satisfactory to Officer.
After notice from Corporation to Officer of its election so to assume the
defense thereof, Corporation will not be liable to Officer under this Agreement
for any legal or other expenses subsequently incurred by Officer in connection
with the defense thereof other than reasonable costs of investigation or as
otherwise provided below. officer shall have the right to employ its counsel in
such action, suit or proceeding but the fees and expenses of such counsel
incurred after notice from Corporation of its assumption of the defense thereof
shall be at the expense of Officer unless (i) the employment of counsel by
Officer has been authorized by corporation, (ii) Officer shall have reasonably
concluded that there may be a conflict of interest between Corporation and
officer in the conduct of the defense of such action or, (iii) corporation shall
not in fact have employed counsel to assume the defense of such action, in each
of which cases the fees and expenses of counsel shall be at the expense of
Corporation. Corporation shall not be entitled to assume the defense of any
action, suit or proceeding brought by or on behalf of Corporation or as to which
officer shall have made the conclusion provided for in (ii) above.
(c) Corporation shall not be liable to indemnify Officer under this Agreement
for any amounts paid in settlement of any action or claim effected without its
written consent. Corporation shall not settle any action or claim in any manner
which would impose any penalty or limitation on Officer without Officer's
written consent. Neither Corporation or Officer will unreasonably withhold its
or his consent to any proposed settlement.
7. Repayment of Expenses. Officer will reimburse Corporation for all reasonable
expenses paid by Corporation in defending any civil or criminal action, suit or
proceeding against officer in the event and only to the extent that it shall be
ultimately determined that officer is not entitled to be indemnified by
Corporation for such expenses under the provisions of the Law, the Bylaws, this
Agreement or otherwise.
8. Enforcement.
(a) Corporation expressly confirms and agrees that it has entered into this
Agreement and assumed the obligations imposed on Corporation hereby in order to
induce officer to continue as an officer of Corporation, and acknowledges that
Officer is relying upon this Agreement in continuing in such capacity.
(b) In the event Officer is required to bring any action to enforce rights or to
collect moneys due under this Agreement and is successful in such action,
Corporation shall reimburse Officer for all of officer's reasonable fees and
expenses in bringing and pursuing such action.
9.Separability. Each of the provisions of this Agreement is a separate and
distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or enforceability
of the other provisions hereof.
10.Governing Law; Binding Effect; Amendment and Termination.
(a) This Agreement shall be interpreted and enforced in accordance with the laws
of the Commonwealth of Pennsylvania.
(b) This Agreement shall be binding upon Officer and upon Corporation, its
successors and assigns, and shall inure to the benefit of officer, his heirs,
personal representatives and assigns and to the benefit of Corporation, its
successors and assigns.
/s/Richard E. Perry
Chairman,
Chief Executive Officer
/s/Donald F. Miller
Employee
LEASE AGREEMENT
THIS AGREEMENT, made this 10th day of November,
1994, by and between MIFFLIN COUNTY INDUSTRIAL DEVELOPMENT CORPORATION
("LANDLORD"), a non-profit corporation created under the laws of the
Commonwealth of Pennsylvania, with an address at One Belle Avenue, Lewistown,
Pennsylvania 17044, and C-COR Electronics, Inc. ("Tenant"), a Pennsylvania
corporation, with its principal offices at 60 Decibel Road, State College,
Pennsylvania, 16801.
WITNESSETH:
THAT, LANDLORD hereby demises and leases to TENANT, and TENANT hereby rents from
LANDLORD, the leased property (as hereinafter defined), and under and subject to
the terms and conditions of this Lease.
I. Leased Property.
1.01. Description. The "leased property" is all that certain premises which is
(a) described on the Plan (the "Plan") attached hereto as Exhibit "A-1"; (b) is
all of the premises described as set forth on Exhibit "A-2"; (c) is situated in
Armagh Township, Mifflin County, Pennsylvania; and (d) contains approximately 19
acres, together with all buildings, structures and other improvements now or
hereafter to be erected (in accordance with the terms and conditions of this
Lease) on the said premises. 1.02. Title. The leased property is leased subject
only to, (a) any mortgage or other encumbrance consented to by Tenant, in
writing for the improvement of the property for use of Tenant which may now or
hereafter affect the leased property, (b) any statements of facts which the
survey, attached hereto as Exhibit "A-l" or physical inspection might show, on
the date of the survey, (c) all zoning, subdivision and other regulations,
restrictions, rules, laws and ordinances now in effect or hereafter adopted by a
governmental authority having jurisdiction over the leased property, including,
but not limited to, environmental laws and regulations (d) all building
restrictions, utility easements, roads and ways which are shown on
Exhibit "A-1".
Notwithstanding the above statements, the following shall apply:
1. Peaceable Possession. The LANDLORD and the TENANT each represents to the
other that it has the right and power to execute and perform this Lease, and
LANDLORD warrants that as long as the TENANT fulfills all of the terms and
conditions of this Lease, it will have quiet and peaceable possession of the
premises during the term of this Lease.
2. Quiet Enjoyment. The LANDLORD will cause to be executed and delivered to the
TENANT an agreement, in recordable form, by present and future mortgagees of the
fee interest in the property providing, in substance, that so long as such
TENANT shall comply with all the terms, conditions and provisions of this Lease,
the mortgagees, in the event of the exercise of any of their rights or remedies
under their mortgage, shall not deprive the TENANT of possession of the property
or join the TENANT as defendant party in any action or proceeding to foreclose
the mortgage or to obtain possession of the property for any reason, other than
a breach by the TENANT of the covenants of this Lease, which would entitle the
LANDLORD hereunder to dispossess the TENANT. Such agreement will provide, inter
alia, for protection of all of TENANT's rights under this Lease (including the
Option to Purchase set forth in paragraph 2.04, infra).
3.Assignment. TENANT agrees that LANDLORD shall have the right to assign this
lease or any rights hereunder and LANDLORD and TENANT shall not be relieved from
any obligations under this Lease by reason of any such assignment.
4.Zoning. The LANDLORD represents that the condition of zoning of the site is to
the best of its knowledge, information and belief as stated in the transmittal
from the Armagh Township Board of Supervisors, attached hereto and labeled
Exhibit "B".
5. Prior Condition. The "as built" plans for the factory building and
appurtenances on the leased property - as the building was acquired by LANDLORD
for the use of TENANT - were approved by the Pennsylvania Department of Labor
and Industry as noted thereon. The plans for renovations requested by TENANT
have been, or will be, submitted for approval by the PA Department of Commerce.
All such plans are or will be available for inspection by TENANT during business
hours at LANDLORD's principal office. At its expense TENANT may have copies of
all such plans.
6. Hazardous Materials. LANDLORD has no independent knowledge that hazardous
waste, as defined in the Solid Waste Management Act, Act. No. 1980-97 or
otherwise, is presently being disposed or has ever been disposed by the
LANDLORD or to the LANDLORD's actual knowledge in or upon the aforementioned
premises. LANDLORD's representation is based solely upon the environmental
assessment to be made by R.E. Wright Associates, Inc. at request of TENANT and
lenders.
1.03. Condition. TENANT acknowledges that it has inspected the leased property,
and that the leased property is acceptable to it in its present condition,
subject to substantial completion of the improvements thereto contemplated in
this Lease and in the Contract for construction to be entered into by LANDLORD,
TENANT and a contractor.
1.04. Financing of Improvements. The commencement of this Lease and the
construction contemplated prior to commencement are conditioned upon financing
for the construction being obtained by LANDLORD or TENANT, which financing must
be acceptable to LANDLORD and TENANT and approved by LANDLORD's present
Mortgagees. If, during the construction period or during the term of the Lease,
TENANT desires to refinance all or part of the loans obtained, LANDLORD shall
reasonably cooperate with TENANT to the extent that neither the terms of this
Lease nor LANDLORD's rental income are modified and that LANDLORD and its
Mortgagees' security under the Lease and under the various loan agreements is
not diminished.
II. Term.
2.01. Commencement Date. The term shall commence on such date as LANDLORD
acquires the subject premises, which date shall hereinafter be referred to as
the "commencement date". Promptly after the commencement date, LANDLORD and
TENANT shall execute an Acknowledgment of Commencement Date in the form attached
hereto as Exhibit C.
2.02. Lease Term. The term of this Lease shall begin on the commencement date
and shall end on the later of the last day of the month in which the fifteenth
(15th) anniversary of the commencement date occurs, or the month in which all of
LANDLORD's obligations incurred for benefit of TENANT are satisfied.
2.03.Termination of Lease. Unless this Lease is terminated sooner, as
hereinafter provided, this Lease shall terminate at the end of the term without
any notice by Landlord.
2.04.Option to Purchase. At any time during the term of this Lease TENANT may
elect to purchase the leased property. TENANT may exercise this option at
termination or upon default.
The option price is to be determined as follows:
(a) For the purchase of the premises and improvements contemplated, TENANT shall
pay all transfer taxes, recording fees, documentary taxes, attorneys fees and
all other expenses incident to the transfer, plus satisfaction in full of the
outstanding balance of the loan for the acquisition and improvements
contemplated by Section 5.03 of this Lease together with accrued interest and
charges thereon and any and all other taxes, assessments, charges, impositions
or costs accrued but not then paid and contemplated by this Lease. TENANT may,
if permitted by the appropriate creditors, assume the obligations described
herein provided that LANDLORD is released from the obligations thus assumed.
TENANT shall exercise its option to purchase, if at all, by notice to LANDLORD
in accordance with Section 14.01. Such notice shall set forth the closing date,
which date shall be not less than thirty (30) nor more than sixty (60) days
after the date of the notice. The closing shall occur at the offices of LANDLORD
in Lewistown, Pennsylvania. At the closing, LANDLORD shall deliver to TENANT a
Deed of Special Warranty, in recordable form, conveying the leased property to
TENANT, subject only to the exceptions set forth on Exhibit "A-111 and "A-211 or
subsequently created by or with the agreement of TENANT, and the mortgages
contemplated in this Lease. LANDLORD agrees to maintain the title to the leased
property in such condition during the term of this Lease. At the closing of
title, TENANT shall pay the option price to LANDLORD by good bank check or
certified check drawn to the order of LANDLORD or as LANDLORD shall otherwise
direct.
III. Rent.
3.01. Minimum Rent. The minimum rent (the "minimum rent") for each year ("lease
year") of the term of this Lease shall be as follows: (a) the actual sum of
monthly payments of principal and interest required by the financing of the
improvements contemplated in Section 5.03 of this Lease. The minimum rent shall
be payable by TENANT in monthly installments each on or before the first day of
each month, one month in advance of the month for which payment is due, or such
greater number of months as may be required by the Lender or Lenders of the
financing contemplated by Section 5.03 of this Lease. If the commencement date
is the first day of a month, a lease year shall begin on the commencement date
and on each anniversary thereof; otherwise, a lease year shall begin on the
first day of the month next following the commencement date and on each
anniversary of the said day, and TENANT shall pay rent in advance for the
fractional month on a per them basis.
3.02. Additional Rent. In addition to the minimum rent stated above, TENANT
shall pay as additional rent ("additional rent"), within thirty (30) days after
LANDLORD gives to TENANT notice of the amount of such additional rent (including
invoices or other reasonable evidence thereof), the following:
1. All damages and costs, including reasonable attorneys' fees and expenses
which LANDLORD may suffer or incur and all amounts which may become due from
TENANT to LANDLORD by reason of any default (as hereinafter defined) by TENANT
under this Lease (provided, however, that TENANT has the right to mitigate or to
avoid such damages by, curing the default);
2.All damages to the leased property caused by any improper act or neglect of
TENANT (provided, however, that TENANT has the right to mitigate or to avoid
such damages by curing or repairing);
3. All taxes, assessments and insurance premiums (as hereinafter defined), water
rent, sewer rent, fuel and heating costs, gas charges and/or electricity charges
which TENANT hereinafter agrees to pay but which are paid by LANDLORD after
default and upon such notice to TENANT as may be reasonable under the
circumstances, with an opportunity for TENANT to cure such default if the
circumstances permit; and
4.All costs associated with TENANT's occupancy and use of the premises (not
otherwise provided), including but not limited to administrative and
professional fees, additional insurance costs to LANDLORD, incremental
additional overhead;
5. Interest on each of the aforesaid items at the rate of the highest interest
rate then being charged to LANDLORD on any portion of the funds borrowed by
LANDLORD for TENANT for the purpose of construction of this Lease, plus two (2%)
percent per annum from the date such item becomes due (i.e., the 31st day after
notice).
3.03. Payment of Rent. All minimum rent and additional rent (individually and
collectively, the "rent") payable by TENANT to LANDLORD hereunder shall be paid
in lawful money of the United States of America at LANDLORD's address stated
above or at such other place or to such other person as LANDLORD, from time to
time, may designate by written notice to TENANT. The rent shall be paid without
notice or demand and without setoff, counterclaim, recoupment, abatement,
suspension, or deduction, except as otherwise hereafter expressly provided (in
paragraph 6.07 or elsewhere).
IV. Use and Occupancy.
4.01. Possession. TENANT shall have the same right as LANDLORD has to enter upon
the leased property from the date of the signing of this Lease for the purpose
of testing, of assisting in completion of the improvements, conducting necessary
engineering work and installation of machinery.
4.02. Use. TENANT shall use the leased property solely for the purpose of
maintaining offices and the manufacturing of products relating to the TENANT's
business and for no other purpose whatsoever, without the consent of LANDLORD,
which consent shall not unreasonably be withheld. LANDLORD does not represent or
warrant that the said use will be permitted by applicable statutes, laws,
ordinances, rules, regulations and orders of municipal, state, federal bodies or
other governmental regulations, and TENANT shall not conduct or permit any
unlawful occupation, business or trade to be conducted on the leased property or
any use to be made thereof contrary to any governmental regulation. TENANT shall
not use, occupy or permit the leased property to be used or occupied, nor do or
permit to be done anything in, or on, the leased property which in any way (a)
violates any governmental regulations, certificate of occupancy, or private
restrictions affecting the leased property; (b) makes void, voidable or
suspendable any insurance on the leased property or prevent the obtaining of
insurance which TENANT is required to furnish hereunder; (c) cause structural
damage to the leased property or any part thereof (except only that improvements
to the leased property to adapt it to TENANT's use shall not be considered to be
"damages" for the purpose of this clause); (d) constitute a public or private
nuisance; or (e) cause waste to the leased premises.
4.03. Landlord's Right of Inspection. At any reasonable time, (upon reasonable
notice to TENANT and with a representative of TENANT), and at any time whatever
in the event of an emergency,, LANDLORD retains the right by its duly authorized
agents to enter, go upon, and inspect the leased property and every part thereof
for the purpose of ascertaining whether TENANT is in default hereunder or
showing the leased property to prospective purchasers or lessees or for any
other purpose whatever permitted under the terms of this Lease, and/or, at its
option, (if TENANT fails so to do, upon ten (10) days notice to TENANT [except
in bona fide emergencies]) to make repairs or alterations and additions required
by law to the leased property; provided, however, and the foregoing
notwithstanding, LANDLORD shall not unreasonably interfere with TENANT's use and
possession of the leased property and shall take all reasonable precautions to
minimize such interference.
V. Improvements and Maintenance.
5.01. Alterations. TENANT may not, without the prior written consent of LANDLORD
(which consent shall not unreasonably be withheld), make any alterations,
improvements or additions to the leased property, or any substitutions or
replacements for any improvements on the leased property, or construct any
additional improvements. (To the extent that LANDLORD is not reasonably
restricted or prohibited from undertaking to cooperate in additional mortgage
financing for additions and improvements to the premises, LANDLORD shall
cooperate with TENANT in effecting such financing.) Nevertheless, TENANT may
without LANDLORD's consent - make interior, non-structural alterations, provided
that (a) the market value of the leased property shall not be lessened by such
alterations and its usefulness shall not be impaired; (b) the alterations shall
be performed in a good and workmanlike manner; (c) the alterations shall be
expeditiously completed in compliance with all governmental regulations; (d) all
work performed in connection with such alterations shall comply with the
requirements of all insurance policies on the leased property and with the
orders, rules and regulations of the board of fire underwriters having
jurisdiction or any other body exercising similar functions; (e) TENANT shall
promptly pay all costs and expenses of such alterations, shall obtain, in
advance of the commencement of such work, waivers of all mechanics' and material
men's liens, and shall promptly discharge all liens filed against the leased
property by reason of such work; (f) TENANT shall procure and pay for any and
all permits and licenses required in connection with such alterations, if
required by any governmental or quasi-governmental body; (g) the alterations
shall be made under the supervision of a qualified architect or engineer; and
(h) the alterations shall conform to all regulations and requirements of
mortgagees of the leased property and/or providers of grants or loans for the
improvement thereof. Prior to the commencement of any alterations to the leased
property, TENANT shall deliver to LANDLORD a brief description of the work, an
original waiver or waivers of mechanics' liens and a copy of any building permit
or permits required by governmental regulations (which permit or permits
LANDLORD shall reasonably cooperate with TENANT -- and at TENANT's sole expense
thereof -- to obtain). All alterations and improvements shall be the property of
LANDLORD and may not be removed by TENANT at the expiration or earlier
termination of this Lease. All equipment installed by TENANT whether or not
"fixed" to the premises and including but not limited to furniture, furnishings,
(and not a part of improvements made by LANDLORD under Section 5.03, whether
affixed to the leased property or not), shall be the sole property of TENANT.
TENANT shall remove same before the termination of the Lease at TENANT's sole
expense and TENANT shall pay LANDLORD for any and all damages resulting from the
installation, location, removal or failure to remove said equipment.
5.02. Maintenance. TENANT will, at its expense, (a) keep and maintain the leased
property, all immediately adjoining sidewalks and curbs of such sidewalks of the
leased property, and any altered, rebuilt, additional or substituted buildings,
structures, accessories and appurtenances thereto in good repair and
appearance,, except for ordinary wear and tear only; (b) make all interior and
exterior, structural and non-structural repairs, substitutions, and replacements
of every kind and nature which may be required to be made upon or in connection
with the leased property or any part thereof, in order to keep the leased
property in good repair and appearance; (c) do or cause others to do all shoring
of the leased property or of adjacent property and every other act necessary or
appropriate for the safety thereof by reason of any excavation or other building
operation on the leased property or any adjoining property (but this shall in no
way bar TENANT from seeking or enforcing remedies against any part (other than
LANDLORD] responsible therefor); (d) keep the leased property reasonably clean
and free from all industrial waste, trash, garbage, ashes, dirt and other refuse
matter; (e) replace all broken glass; (f) keep all waste, sewer, and drain pipes
on the leased property open; (g) use every reasonable precaution against fire;
(h) provide for the security and protection of the leased property against
vandalism, malicious mischief, burglary and other crimes and misdemeanors; (i)
maintain the premises in safe condition; (j) maintain all lighting upon the
premises; (k) make provision for and maintain any necessary fire or other hazard
sprinkler system;
(1) store and label hazardous materials in accordance with applicable laws and
regulations; and (m) do any and all acts necessary to preserve and maintain the
leased premises in good order and repair.
5.03. Improvements. LANDLORD agrees to provide improvements to the leased
property in an amount not to exceed Six Hundred Twenty Five Thousand and no/100
($625,000) Dollars to cover the costs of construction of certain improvements in
accordance with Exhibit I'D" attached hereto and made part hereof, which
improvements are hereby acknowledged to be part of the leased property, and full
title thereto shall remain with or revert to LANDLORD at the expiration or
earlier termination of this Lease (subject to TENANT's option to purchase under
Section 2.05 of this Lease). LANDLORD hereby agrees to assign to TENANT as its
interests may appear any and all warranties, guarantees and service agreements
pertaining to the leased property and the improvements located thereon as
provided for in the Construction Contract in Exhibit D. The foregoing
obligations of LANDLORD are conditioned upon securing the necessary financing at
such rates and upon such conditions as are mutually acceptable to LANDLORD and
TENANT, as provided in Section 1.04, supra.
VI. Insurance and Casualties.
6.01 Kinds of insurance. TENANT shall maintain, at its expense during the term,
insurance on the leased property of the following character:
1. Insurance against loss or damage by fire, lightning, and other risks included
in the "special extended coverage" endorsement of the standard fire insurance
policy or "all risk" coverage of various other policies, in amounts sufficient
to prevent LANDLORD and TENANT from becoming coinsurers of any loss under the
applicable policies, but not less than the full replacement value of the
improvements to the leased property. It shall be the responsibility of the
TENANT to ascertain and maintain the proper amount of insurance and to provide
LANDLORD with proper evidence thereof.
2. General public liability insurance against claims for personal injury, death
or property damage occurring in, on, or about the leased property and the
streets adjoining the leased property with combined single limits of not less
than Two Million ($2,000,000) Dollars.
3. Workers' Compensation insurance covering all persons employed in connection
with any work done on or about the leased property, and required by law to be
covered by such insurance, with respect to which claims for death or bodily
injury could be asserted against LANDLORD, TENANT or the leased property, and
TENANT shall require any contractors or employers with whom TENANT engages or
consents to do work on or about the leased property or common areas to carry
such insurance.
4. Broad form boiler and machinery insurance on all equipment and parts thereof
attached or connected to the leased property according to a schedule acceptable
to LANDLORD in the amount of Two Million ($2,000,000) Dollars (or such
additional amount as LANDLORD 'may reasonably require to insure the land, the
building, the improvements and the equipment therein) for damage to property
resulting from such perils; and
5. Rental value insurance in the amount of two (2) year's rent, during the term
of this Lease payable to LANDLORD and TENANT as their interests appear.
6. Any and all such other insurance, in such amounts and of such kind, as
LANDLORD or the holder of any mortgage or other encumbrance, on the leased
property may reasonably require. (Under this subsection 6.01.6 reasonableness
shall be determined by reference to the terms and provisions of this Lease; to
the terms and conditions of financing anticipated by this Lease; to the nature
of the interests to be protected; and to insurance carried or required on
similar properties in Mifflin County.)
6.02. Insurance Requirements. The insurance required in Section 6.01 hereof
shall be issued by companies of recognized financial standing, which are rated
"All or better in the A.M. Best Insurance Company Rating Guide, and which are
authorized to conduct an insurance business in the Commonwealth of Pennsylvania.
TENANT may self-insure Workers' Compensation Insurance so long as it is at all
times in compliance with Pennsylvania Law and TENANT provides LANDLORD at all
times with proper evidence of such compliance. All such insurance (other than
Workers' Compensation Insurance) shall name as the insured parties LANDLORD and
TENANT, as their respective interest may appear. (LANDLORD shall be named as
insured party on property damage coverage and as additional insured party or
named insured party on liability coverage.)
6.03. Insurance Claims. Subject to the provisions of Section 6.06, infra,
insurance claims by reason of damage to or destruction of any portion of the
leased property shall be adjusted by TENANT, but no settlement of a claim in
excess of Ten Thousand ($10,000.00) Dollars may be reached without the
reasonable consent in writing of the LANDLORD, and all insurance proceeds
payable by reason of such damage or destruction in excess of $10,000.00 shall be
deposited with a Bank satisfactory to LANDLORD and TENANT as Trustee for
LANDLORD and TENANT, to be disbursed to TENANT subject to approval of
Mortgagees, upon compliance by TENANT with the requirements of this Lease
relating to the matter for which such proceeds are paid.
6.04. Insurance Policies. TENANT shall deliver to LANDLORD, before the
commencement date, the original policies for insurance (or proper endorsements
or certificates thereof) required in Section 6.01, evidencing all the insurance
which TENANT is required to maintain hereunder. Within thirty (30) days prior to
the expiration of any such insurance, TENANT shall deliver original policies or
endorsements evidencing the renewal of such insurance. If TENANT fails to
effect, maintain or renew any insurance required by Section 6.01, to pay the
premium therefor, or to deliver to LANDLORD any such policies, endorsements or
certificates, LANDLORD may, at its option, after ten (10) days written notice,
procure such insurance. Any sum expended by LANDLORD to procure such insurance
shall be additional rent hereunder which shall be due on the date it is paid by
LANDLORD.
6.05. Separate Insurance. TENANT shall not obtain or carry separate insurance
concurrent in form or contributing in the event of loss with that required in
this Article VI, unless LANDLORD is included therein as a named insured, with
loss payable as herein provided; and TENANT shall immediately notify LANDLORD
whenever any such separate insurance is obtained and shall deliver to LANDLORD
the policies, endorsements or certificates evidencing the same.
6.06. Casualty. If the entire leased property or any part thereof is damaged or
destroyed by fire or other casualty, to the extent of twenty-five (25%) per cent
or more of the leased property, LANDLORD may, at its option, terminate the lease
or restore the leased property. If less than twenty-five (25%) per cent
casualty, TENANT shall repair, and the Lease shall remain in full force and
effect. If LANDLORD so elects to terminate, TENANT may, either (a) exercise its
option to purchase; (b) terminate the Lease within thirty (30) days thereof by
written notice thereof, payment to LANDLORD of all rents and charges then due or
which are required to satisfy the debts incurred by LANDLORD for benefit of the
TENANT, and payment to all governmental bodies of taxes and assessments then due
or owing; or (c) restore the Leased Property and continue the Lease.
In the event of damage or destruction of twenty-five (25%) percent or more of
the leased property, then distribution of the proceeds shall be as follows:
(a) If LANDLORD rebuilds, the proceeds shall be paid to LANDLORD therefor (and
any excess proceeds shall be payable to TENANT subject to the rights of the
Mortgagees);
(b) If TENANT rebuilds, then proceeds shall be paid to TENANT therefor;
(c) If TENANT exercises its option to buy, then
proceeds shall be paid to TENANT;
(d) If the Lease terminates and TENANT doesn't exercise its option to buy, then
proceeds shall be paid first to Mortgagees to reduce the debt, then to LANDLORD.
6.07. Special Provisions. Notwithstanding the provisions of paragraph 6.06 of
this Lease, TENANT acknowledges that LANDLORD is agreeing to pay up to One
Million Seven Hundred Twenty Seven Thousand Five Hundred and no/100 ($1,727,500)
Dollars for acquisition of the premises and for specified improvements to the
property, for which the rental due under this Lease is partial security and the
means of repayment of any debt undertaken by LANDLORD. In the event that, for
any reason, TENANT vacates the premises before such debt is repaid, TENANT shall
continue to make such payments as are necessary to repay the debt, or if said
debt is accelerated by reason of TENANT's vacancy of the leased property, TENANT
shall pay to LANDLORD, upon demand, all sums needed by LANDLORD to repay the
said debt remaining unpaid at the time of said vacancy (whether such vacancy is
occasioned by default or otherwise). LANDLORD covenants and agrees to apply the
specified portion of each rental payment to reduction of the debt (and interest
thereon) incurred on behalf of TENANT promptly as each payment becomes due. If
LANDLORD fails to make such payments in a timely manner to reduce the debt (and
interest thereon) as aforesaid, then upon notice to LANDLORD by TENANT, TENANT
may make such payments directly to the holder or holders of such debt and deduct
said payments from amounts due to LANDLORD as rent hereunder.
VII. Impositions.
7.01. Taxes and Other Impositions. TENANT shall pay promptly, when due and
payable, the following items (collectively, the "impositions") all taxes,
assessments (including, without being limited to, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not to be completed within the term hereof; however,
if such assessments are payable in installments, only those installments falling
due during the term of this Lease or any exercised renewal hereof shall be
payable by TENANT, and TENANT may not create or negotiate any imposition of
installments which exceed the term of this Lease or any exercise renewal hereof
without the consent of LANDLORD, which consent may not unreasonably be
withheld), ground rents, water, sewer and other rents, rates and charges,
excises, levies, license fees, permit fees, inspection fees and any governmental
authorization fees and charges, whether general or special, of every character
(including all interest and penalties thereon), which at any time during the
term hereof may be assessed, levied, confirmed or imposed on or with respect to
or be a lien upon (a) the leased property or any part thereof or any estate,
right or interest therein; (b) any occupancy, use or possession of or activity
conducted on the leased property or any part thereof (excluding income,
franchise and similar taxes of LANDLORD); (c) any rent, insurance hazard
assessment or other sums payable by TENANT to LANDLORD hereunder; (d) this Lease
or the leasehold estate hereby created; (e) the earnings or receipts from the
use or occupancy of the leased property; and/or (f) all charges for water, gas,
heat, light, telephone, television, electricity, power and other utility and
communication services used on or about the leased property. If the commencement
date of this Lease does not coincide with the date when such tax or imposition
is imposed then such taxes or impositions, when not levied or imposed solely by
reason of TENANT's use or occupancy of the premises, shall be apportioned
according to the fiscal period covered by such tax or imposition. LANDLORD
represents that there are (as of the date of signing of this Lease) no unpaid
taxes or assessments upon the premises, or to LANDLORD's actual knowledge,
contemplated to be assessed upon the premises.
7.02. Tax Returns. TENANT, at its expense, shall prepare and file all tax
reports required by governmental authorities which relate to the impositions.
Before the due date or penalty date (when applicable) of real estate taxes,
TENANT shall deliver to LANDLORD original receipts showing the payment of all
real estate taxes on the leased property for the year in which that day falls.
TENANT shall also deliver to LANDLORD such other receipts, returns and other
evidence of payment of impositions as LANDLORD may reasonably require.
7.03. Tax Contests. Notwithstanding anything to the contrary hereinabove
contained, TENANT shall have the right to contest any of the aforesaid
impositions, provided that TENANT shall have paid to or deposited with the
taxing authority (when such authority requires) the full amount of the contested
item, together with penalties, fines and interest and such contest shall not
jeopardize LANDLORD's interest in the leased property. LANDLORD (at TENANT's
sole expense and when able so to do under the Law) shall reasonably cooperate
with TENANT in its contest.
7.04. Apportionment of Imposition. If the leased property is not separately
assessed for tax purposes or if the leased property is only part of a building
or other property which is covered by an imposition, and the amount of the tax
or other imposition attributable to the leased property is not stated or broken
down by the taxing authority or body, TENANT shall pay that portion of such tax
or other imposition which bears the same ratio to the total imposition as the
fair market value (for tax imposition purposes) of the leased property bears to
the total fair market value of the premises subject to the imposition, or the
use or frontage (when appropriate) by the leased premises bears to the total use
or frontage subject to the imposition.
VIII. Utilities.
8.01.Tenant's Responsibility. TENANT shall be solely responsible for and
promptly pay all charges for heat, water, gas, electricity, television,
telephone, sewer and any other utility or services used or consumed in or on the
leased property.
IX. Public and Private Regulations.
9.01. Governmental Regulations. TENANT shall, at its expense, comply with all
governmental regulations affecting the leased property or any part thereof, or
the use thereof, including, without being limited to, those which require any
structural, unforeseen or extraordinary changes to the leased property and those
which involve a change of rule or regulation of a governmental body or a
limitation on the use and enjoyment of the leased property. TENANT shall, at its
expense, procure, maintain and comply with all licenses and other authorizations
required for its use of the leased property.
9.02.Private Restrictions. TENANT shall, at its expense, observe the
requirements of all insurance policies and the provisions of all contracts,
agreements and restrictions set forth in or reasonably contemplated by this
Lease affecting the leased property or any part thereof or the ownership,
occupancy or use thereof.
9.03.Conduct of Tenant. As between LANDLORD and TENANT, TENANT shall bear sole
responsibility for violations of and/or compliance with regulations and order of
the Occupational Safety and Health Administration (OSHA), Pennsylvania
Department of Environmental Resources (PA DER), and similar governmental bodies
relating to the health, safety and welfare of its premises, employees and the
effect of same upon the surrounding community. TENANT affirmatively agrees to
comply with those conditions and regulations of Pennsylvania Department of
Commerce attached hereto or otherwise referred to in Exhibit E.
X. Assignment and Subletting.
10.01. Prohibition. TENANT shall not assign, mortgage or pledge this Lease in
whole or in part, sublet the leased property or any part thereof, or permit any
other person, corporation or entity to occupy the leased property or any part
thereof without written consent by LANDLORD and its Lenders, taking into account
the financial position of the resulting assignee or sublessee, and any and all
unpaid obligations assumed by LANDLORD on behalf of TENANT. This prohibition
against assignment or subletting shall include a prohibition against assignment
or subletting by operation of law.
10.02. Consent. Any consent by LANDLORD to an assignment or subletting, which
shall not be unreasonably withheld, shall not constitute consent to any
subsequent assignment or subletting, and the collection of rent from any
assignee or subtenant shall not constitute a waiver of any requirements hereof.
Notwithstanding any assignment or sublease, TENANT shall remain fully liable on
this Lease as a principal, as if no such assignment or sublease has been made.
XI. Condemnation.
11.01. Assignment of Award. TENANT hereby irrevocably assigns to LANDLORD any
award or payment to which TENANT may be or become entitled by reason of any
taking of the leased property or any part thereof, in or by condemnation of
other eminent domain proceedings or by reason of the temporary requisition of
the use or occupancy of the leased property or any part thereof, by any
governmental authority, civil or military, except for any award payable to
TENANT, which does not reduce or affect the award payable to LANDLORD, for the
taking of Tenant's trade fixtures (as contemplated by Section 5.01 of this
Lease) or for Tenant's moving expenses or business dislocation damages. Any
award payable under this Article to LANDLORD shall reduce the option price under
Article II by being applied by LANDLORD to reduction of the outstanding debts,
interest and charges thereon.
11.02. Termination of Lease. If all or any part of the leased property is
permanently taken by condemnation or eminent domain, and the portion of the
leased property remaining, if any, cannot be used for uses permitted to TENANT
immediately prior to the taking, and to the same extent as was performed on the
leased property prior to the taking by condemnation of eminent domain, TENANT
may exercise its Option to Purchase pursuant to Section 2.04 of this Lease or
may terminate this Lease by written notice to LANDLORD as of the date on which
the condemning authority enters into possession of the leased property; however,
if TENANT so terminates this Lease, TENANT must, within five (5) days of the
date of termination, pay to LANDLORD all rents and charges then due or which are
required to satisfy all debts of LANDLORD incurred on behalf of TENANT, and
TENANT must pay to all governmental bodies the balance of taxes and assessments
then due (and of all installments falling due after the termination date)
subject to adjustment or proration by reason of the taking and/or termination of
use. After the date of termination hereunder, LANDLORD and TENANT have no
obligation to each other beyond those which shall have accrued prior thereto. In
the event that the Lease does not terminate hereunder, rent shall abate in
accordance with any reduction in Landlord's obligations incurred on behalf of
TENANT.
If in the event of condemnation, that TENANT exercises its Option to Purchase,
then TENANT shall (as between LANDLORD and TENANT) be entitled to recover all
applicable condemnation damages and LANDLORD shall be entitled to recover those
damages suffered by it as Seller (e.g. diminished land proceeds).
11.03. Other Takings. If the use or occupancy of the leased property shall be
temporarily requisitioned by any governmental body, this Lease shall continue in
full effect. The taking by condemnation or eminent domain of any part of the
common areas other than the leased property shall have no effect whatever upon
this Lease or the rent payable hereunder.
XII. Defaults and Remedies.
12.01. Events of Default. Any of the following occurrences or acts shall
constitute an event of default under this Lease: (a) if TENANT, regardless of
the pendency of any bankruptcy or other proceedings which have or might have the
effect of preventing TENANT from complying with the terms of the Lease, shall:
(i) fail to pay any rent or other sum herein required to be paid by TENANT, or
maintain insurance, within ten (10) business days after LANDLORD shall have
given notice of such failure to TENANT, or (ii) fail to observe or perform any
other covenant or agreement herein contained for thirty (30) days after LANDLORD
shall have given to TENANT notice of such failure, provided, however, that if
the nature of the default is such that it cannot be reasonably cured within the
thirty (30) day period, TENANT shall not be in default if TENANT shall, within
such period, commence to cure and thereafter use all reasonable efforts to
prosecute the same to completion (and TENANT shall and hereby does indemnify
LANDLORD against any claim or loss resulting from said failure or delay); (b) if
TENANT shall file a petition in bankruptcy, or for reorganization, under any
present or future state or federal bankruptcy or similar law, or for any
arrangement pursuant to any present or future federal or state bankruptcy law or
similar law, or if TENANT shall be adjudicated a bankrupt or insolvent or shall
make an assignment for the benefit of its creditors or shall admit in writing
its inability to pay its debts generally as they become due; (c) if any
involuntary petition proposing the adjudication of TENANT as a bankrupt or its
reorganization shall be filed in any court and shall not be discharged or denied
within ninety (90) days after the filing thereof; (d) if a receiver, trustee or
liquidator of TENANT or of all or substantially all of the assets of TENANT or
of the leased property shall be appointed in any proceeding brought by TENANT,
or if any such receiver, trustee or liquidator shall be appointed in any
proceeding brought against TENANT and shall not be discharged within ninety (90)
days after such appointment, or TENANT shall consent to or acquiesce in such
appointment; (e) if the leased property shall have been vacated or abandoned;
(f) if TENANT shall be liquidated or dissolved or bring proceedings toward its
liquidation or dissolution; (g) if the estate or interest of TENANT in the
leased property or any part thereof shall be levied upon or attached in any
proceeding, and such levy or attachment is not reasonably contested or satisfied
and such levy or attachment is not promptly stayed as a result thereof; (h) if
TENANT removes or attempts to remove any goods or property from the leased
property other than in the ordinary and usual course of business (exclusive of
relocation of equipment and materials among Tenant's plants which is not
intended to constitute a general abandonment of the use of the leased property);
(i)if TENANT shall default in any document in which LANDLORD shall have
guaranteed the performance of TENANT (TENANT shall and hereby agrees to hold
harmless LANDLORD, its successors or assigns, for damages caused thereby by such
default); or (j) if TENANT in any way permits (or represents to any person or
body that it permits) any other person or body to obtain rights in this
leasehold superior to those of the LANDLORD.
12.02. Performance by Landlord. If an event of default shall have occurred, and
is continuing, LANDLORD may perform the defaulted obligation of TENANT, and
within ten (10) days of receipt of notice thereof all costs and expenses of such
performance, including reasonable attorneys' fees, shall be due as additional
rent on the respective dates they are incurred. No such performance by LANDLORD
shall cure the event of default or relieve TENANT from any obligation hereunder,
however, LANDLORD agrees that it will give TENANT reasonable - generally ten
(10) days' notice of default (except in case of emergency) and TENANT shall have
reasonable opportunity to cure such default before LANDLORD incurs any expenses
to do so.
12.03. Acceleration of Rent. If an event of default shall have occurred, TENANT
agrees that thereupon, whether or not this Lease shall have been terminated, at
the option of LANDLORD, the entire minimum rent for the balance of the term
hereof, all other sums payable hereunder, and all costs and commissions provided
at law shall become due and payable as if by the terms of this Lease they were
payable in advance, in addition to all rent and other sums then due. In the
event that acceleration is demanded, TENANT may exercise its option to purchase
the premises and improvements with fifteen (15) days of notice of acceleration.
12.04. Termination of Lease. If an event of default shall have occurred,
LANDLORD, may, at its option, terminate this Lease by giving notice thereof to
TENANT. Upon the giving of such notice, the term of this Lease and the estate
hereby granted shall expire and terminate on the date specified in such notice,
and all rights of TENANT hereunder shall expire and terminate; but TENANT shall
remain fully liable for all its obligations hereunder. (Upon notice to TENANT of
termination hereunder, TENANT may exercise its option to Purchase under Section
2.04 of this Lease provided, however, that the option must be exercised on or
before the termination date specified in the notice).
12.05 Reentry. If an event of default shall have occurred, LANDLORD may, subject
only to TENANT'S Option to Purchase set forth in 2.04, (to the extent permitted
by applicable law), at its option and whether or not this Lease shall have
terminated, (a) require TENANT, immediately to surrender the leased property to
LANDLORD; (b) reenter and repossess the leased property or any part thereof by
force, summary proceedings, ejectment or otherwise; and (c) remove all persons
and property therefrom. LANDLORD and any agent of LANDLORD shall not be liable
for or by reason of any such entry, repossession or removal.
12.06. Reletting. At any time or from time to time after repossession of the
leased property or any part thereof, whether or not this Lease shall have
terminated, LANDLORD may (but shall not be reasonably obligated to) relet the
leased property or any part thereof, without notice to TENANT, for such term or
terms (which may be greater or less than the period which would otherwise have
constituted the balance of the term of this Lease) and on such conditions (which
may include concessions or free rent) and for such uses as LANDLORD, in its
absolute discretion, may determine. LANDLORD shall not be responsible or liable
for any failure to relet the leased property or any part thereof or for any
failure to collect any rent due upon any such reletting. LANDLORD may repair or
alter the leased property in such manner as LANDLORD may deem necessary or
advisable. TENANT agrees to pay to LANDLORD as additional rent, upon demand, all
expenses incurred by LANDLORD in obtaining possession of, repairing and
reletting the leased property, including, without being limited to, fees of
attorneys, architects, agents and brokers and any other expenses or commissions.
LANDLORD agrees to apply such proceeds as are obtained first to repayment of its
expenses incurred under this Section 12.07, then to TENANT'S other obligations
under this Lease.
12.07. Continuing Liability of Tenant. No expiration or termination of this
Lease pursuant to this Article XII, and no repossession or reletting of the
leased property or any part thereof shall relieve TENANT of its liabilities and
obligations hereunder, all of which shall survive such expiration, termination,
repossession or reletting. In the event of any termination of this Lease or
repossession of the leased property or any part thereof, TENANT shall, until the
end of what would have been the term of this Lease in the absence of such
termination or repossession, whether or not the leased property or any part
thereof shall have been relet, be liable to LANDLORD for, and shall pay to
LANDLORD, the rent and other sums which would be payable under this Lease by
TENANT in the absence of such termination or repossession, less the net
proceeds, if any, of any reletting effected pursuant to Section 12.06 hereof,
after deducting from such proceeds all LANDLORD is reasonable costs and expenses
of restoration in connection with such reletting (including, without being
limited, to all repossession costs, brokerage commissions, attorneys' expenses
and fees).
12.08. Copy of Lease. Either an original counterpart or a copy of this Lease
may be filed in any action brought pursuant to this Article XII.
12.09. Waivers. TENANT hereby waives to the extent such waiver is effective
under applicable law: (a) the right of inquisition on any real estate that may
be levied upon to collect any amount due hereunder and does hereby voluntarily
condemn the same; (b) any right to a trial by jury in any proceedings brought
hereunder.
12.10. Additional Rights of Landlord. No right or remedy conferred upon or
reserved to LANDLORD is intended to be exclusive of any other right or remedy,
and each and every right and remedy shall be cumulative and in addition to every
other right or remedy given hereunder or now or hereafter existing at law, in
equity or by governmental regulation. TENANT acknowledges that time is of the
essence, except as otherwise specified herein, in the performance of its
obligations under this Lease. Neither the failure of LANDLORD to exercise any
right or remedy upon the occurrence of any event of default, nor the failure of
LANDLORD to insist at any time upon the strict performance of any covenant or
agreement herein shall be construed as a waiver or relinquishment thereof for
the future. A receipt by LANDLORD of any rent or other sum payable hereunder
while an event of default exists shall not be deemed a waiver of such event of
default. The words "enter",, "reenter" and "reentry" as used in this Article XII
are not restricted to their technical meanings.
12.11. Expenses. TENANT shall pay to the LANDLORD as additional rent,
immediately upon demand, all expenses, including reasonable attorneys' fees,
incurred in good faith by LANDLORD in exercising any right or remedy under this
Article XII.
XIII. Expiration of Term.
13.01. Automatic Expiration. This Lease shall automatically expire and terminate
at the end of the term hereof, without any further action by LANDLORD or TENANT.
Subject to TENANT'S right to exercise its option under paragraph 2.04 of this
Lease, at the expiration or earlier termination of this Lease, TENANT shall
peaceably deliver up and surrender possession of the leased property to LANDLORD
in the same condition as TENANT has agreed herein to maintain the same during
the term hereof, except for losses by casualty when such losses are covered by
insurance (repaired, or replaced or paid over to LANDLORD) and takings by
eminent domain or otherwise where compensation is paid heretofore stated.
XIV. Notices.
14.01. Notices. All notices, demands, requests, consents, approvals and other
instruments required or permitted to be given by TENANT to LANDLORD pursuant to
the terms of this Lease must be in writing and must be given by registered or
certified mail, postage prepaid to LANDLORD at its address first above set forth
or such other address of which LANDLORD shall have given notice to TENANT. All
notices, demands, requests, consents, approvals and other instruments required
or permitted to be given by LANDLORD to TENANT must be given, by registered or
certified mail (at Landlord's option), addressed to TENANT, at its address first
above set forth (or at such other address of which TENANT shall have given
notice to LANDLORD) and at the leased property. Any notice to LANDLORD or TENANT
shall be deemed to be effective three (3) days after the date on which such
notice is deposited in the mail. Copies of all notices to TENANT shall be sent
to C-COR Electronics, at the address first above set forth or at such subsequent
address of which LANDLORD has had notice.
XV. Indemnification.
15.01. Indemnification. TENANT agrees to pay and to protect, indemnify and save
harmless LANDLORD from and against any and all liabilities, losses, damages,
penalties, costs, expenses,, causes of action, suits, claims, demands or
judgments of any nature whatsoever, howsoever caused during the term of this
Lease, except when resulting from Landlord's negligence, arising from (a) any
injury to or death of any person or any damage to property on the leased
property or in any manner growing out of or connected with the use, non-use,
condition or occupation of the leased property or any part thereof or condition
resulting from Tenant's use thereof; and (b) any event of default by TENANT
under this Lease. If any action or proceeding be brought against LANDLORD by
reason of any such claim, TENANT agrees to resist or defend such action or
proceeding by competent counsel and with immediate notice to LANDLORD.
15.02. Exceptions. Except as provided in paragraph 6.07 of this Lease, and
notwithstanding any other provision in this Lease to the contrary, TENANT is not
obligated, and shall not be obligated, to guarantee or indemnify, or otherwise
to pay in any manner whatsoever, any debt incurred by LANDLORD prior to the
signing of this Lease nor shall TENANT be obligated to guarantee or indemnify or
otherwise to pay in any manner whatsoever any future debt incurred by LANDLORD
without TENANT'S express written consent thereof; with the exception of TENANT'S
obligation to make any and all payments required to be made by TENANT pursuant
to any installment agreement by and between LANDLORD and TENANT, which
agreements TENANT acknowledges are to be assigned to LANDLORD's lenders.
XVI. Miscellaneous.
16.01. Estoppel Certificate. LANDLORD and/or TENANT will, at any time and from
time to time, upon at least thirty (30) days prior written request by either
party, execute, acknowledge and deliver to the requesting party an affidavit
certifying that this Lease is unmodified (or if modified, then specify the
modifications) and in full effect, the dates to which the rent has been paid,
and that said party is not in default thereunder or, if in default, specifying
the nature of the default.
16.02. Entire Agreement. This Lease and the Exhibits attached hereto contain the
covenants, promises, agreements, conditions and understandings between LANDLORD
and TENANT concerning the leased property; and there are no covenants, promises,
agreements, conditions or understandings, either oral or written, between them
except as set forth herein. No subsequent alteration, amendment, change or
addition to this Lease shall be binding upon LANDLORD or TENANT unless it is in
writing and is signed by both of them.
16.03. Headings. The headings preceding the text of the various articles and
sections of this Lease have been inserted solely for convenient reference and
shall not constitute a part of this Lease, nor shall they modify, amend, change
or otherwise affect the terms and provisions of this Lease.
16.04. Binding Effect. All of the covenants, conditions, agreements,
obligations, and rights contained in this Lease shall be binding upon and inure
to the benefit of the respective heirs, personal representatives, successors and
assigns of the parties hereto, subject to the aforesaid prohibition against
assignment or subletting by TENANT.
16.05. Governing Law. This Lease shall be governed by and interpreted under
the laws of the Commonwealth of Pennsylvania.
16.06. Severability. If any term or provision of this Lease or an application
thereof shall be invalid or unenforceable, the remaining terms and provisions of
this Lease and any other application of such term or provision shall not be
affected thereby. Each term and provision shall be valid and enforceable to the
extent permitted by law.
16.07. Authorization. Attached hereto and labeled Exhibit F are true and
properly certified resolutions of the signatories to this Lease evidencing the
approval of the respective bodies and incumbencies of the signatory officers.
16.08. Recording. At the request of any party hereto and at its sole expense,
either an original of this Lease or a memorandum of the terms and conditions,
including Option To Buy, hereunder may be recorded in any office competent to
receive and record same.
IN WITNESS WHEREOF, LANDLORD and TENANT have caused this Lease to be executed
and their respective seals to be affixed, as of the day and year first above
written.
Attest:
Executive Secretary
Mifflin County Industrial Development Corporation
LANDLORD
C-COR Electronics, Inc.
/s/Richard E. Perry
Chairman and CEO
ADDENDUM TO LEASE AGREEMENT
This ADDENDUM TO LEASE AGREEMENT is made this 15th day of November, 1994, and is
incorporated into and shall be deemed to amend and supplement a Lease Agreement
dated November 10, 1994, between the MIFFLIN COUNTY INDUSTRIAL, DEVELOPMENT
CORPORATION ("LANDLORD") AND C-COR ELECTRONICS, INC. ("TENANT")
WHEREAS, the parties hereto have entered into a lease Agreement dated
November 10, 1994, ("Lease Agreement") whereby Landlord has agreed to
lease to Tenant a parcel of real estate situated in Armagh Township, Mifflin
County, Pennsylvania, containing approximately 19 acres, together with all
buildings, structures and other improvements as more particularly described in
Exhibit A- I and A-2 of the Lease Agreement, and
WHEREAS, the parties wish to supplement the terms of the Lease Agreement;
NOW THEREFORE, for good and valuable consideration, the parties agree that the
Lease Agreement shall be supplemented as follows:
I . In addition to the representations, warranties and covenants made by Tenant
in the Lease Agreement, Tenant further represents, warrants and covenants with
Landlord as follows:
(a) Tenant now has and will continue to have all Environmental Permits (as
hereinafter defined) necessary for the conduct of the businesses and operations
of Tenant;
(b) Tenant conducts and will continue to conduct the businesses and operations
of Tenant in material compliance with all applicable Environmental Laws (as
hereinafter defined) and Environmental Permits,
(c) There does not exist, nor will Tenant permit to exist, any event or
condition that requires or is likely to require Tenant under any Environmental
Law to pay or expend funds by way of fines, judgments, damages, cleanup,
remediation or the like in an aggregate amount, the payment of which could
reasonably be expected to interfere substantially with normal operations of
Tenant or materially adversely affect the financial condition of Tenant;
(d) Each of them shall comply with all laws and all private covenants which at
any time are applicable to the leased property, and shall comply with the
requirements of all policies of insurance required by Landlord and of the
insurers under such policies. Tenant shall keep, or cause to be kept in full
force and effect all licenses, permits and governmental authorizations and
agreements necessary or desirable for the ownership, occupancy, operation,
management or use of the leased property. Tenant shall preserve and maintain
unimpaired any and all easements, rights-of-way, appurtenances and other
interests and rights constituting any portion of the leased property;
(e) Tenant shall notify Landlord promptly upon becoming aware of any pending or
threatened proceeding, suit, Investigation, allegation or inquiry regarding any
alleged event or condition that, if resolved unfavorably to Tenant or any
subsidiaries or affiliates of Tenant is likely to cause Tenant or any of its
subsidiaries or affiliates under any Environmental Law to pay or expend funds by
way of fines, judgments, damages, cleaning, remediation or the like; and
(f) Tenant shall provide at Tenant's cost, upon request by Landlord,
certifications, documentation, copies of pleadings and other information
regarding the above, all in form and content satisfactory to Landlord.
Landlord and its agents and representatives shall have the right at any time,
whether or not any event of default has occurred, and at its sole option and
discretion, without notice, to enter and visit the leased property for the
purpose of observing Tenant's business activities. Landlord is under no duty,
however, to visit or observe the leased property, and any such acts by Landlord
shall be solely for the purposes of protecting the leased property and
preserving Landlord's rights under the Lease documents executed and delivered in
connection with the Lease, if any. No site visit or observation by Landlord
shall result in a waiver of any default of Tenant or impose any liability on
Landlord. In no event shall any site visit or observation by Landlord be a
representation that Hazardous Substances are or are not present in, on, or under
the leased property, or that there has been or shall be compliance with any
Environmental Law. Neither Tenant nor any other party is entitled to rely on any
site visit or observation by Landlord, nor on any statements, representations,
or any other comments made by Landlord to Tenant or any other party with respect
to any Hazardous Substances or any other adverse condition affecting the leased
property. Landlord owes no duty of care to protect Tenant or any other party
against, or to inform Tenant or any other party of, any Hazardous Substances or
any other adverse condition affecting the leased property. Landlord shall not be
obligated to disclose to Tenant or any other party any report or findings made
as a result of, or in connection with, any site visit or observation by
Landlord, nor on any statements, representations or any other comments made by
Landlord to Tenant or any other party with respect to any Hazardous Substances
or any other adverse condition affecting the leased property. Landlord owes no
duty of care to protect Tenant or any other party against, or to inform Tenant
or any other party of, any Hazardous Substances or any other adverse condition
affecting the leased property. Landlord shall not be obligated to disclose to
Tenant or any other party any report or findings made as a result of, or in
connection with, any site visit observation by Landlord.
Tenant hereby agrees to indemnify and to hold Landlord harmless from and
against, any and all liability, loss, damage, cost and expense, including but
not limited to attorneys' fees including the reasonable estimate of the
allocated cost of in-house counsel and staff), directly or indirectly arising
out of or attributable to (1) the use, generation, manufacture, production,
storage, release, threatened release, discharge, disposal or presence of any
Hazardous Substance(s) on, under, or about the leased property or in connection
with or resulting from Tenant's operations; (11) any alleged obligation on
Tenants part to perform or discharge any obligation with respect to the leased
property; or (111) events which involve the leased property. Landlord shall have
no obligation or liability by reason of this Addendum to Lease (or the liens or
security interests in the leased property granted hereby) or arising out of the
leased property, nor shall Landlord be required or obligated in any manner to
perform or fulfill any obligations of Tenant with respect to the leased
property. The provisions of this Paragraph 10 shall survive repayment of all
obligations of Tenant to Landlord.
2. As used in this Addendum to Lease
(a) "Environmental Law" means any federal, state or local environmental law,
statute, regulation, rule, ordinance, court or administrative order or decree,
or private agreement or interpretation, now or hereafter in existence, relating
to the use, handling, collection, storage, treatment, disposal or otherwise of
Hazardous Substances, or in any way relating to pollution or protection of the
environment.
(b) "Environmental Permit" means any federal, state or local permit, license or
authorization issued under or in connection with any Environmental Law.
(c) "Hazardous Substances" includes hazardous wastes, hazardous substances,
hazardous materials, toxic substances, hazardous air pollutants, and toxic
pollutants, as those terms are used in the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act,
the Hazardous Materials Transportation Act, the Toxic Substances Control Act,
the Clean Air Act, the Clean Water Act, or any state or federal law or local
ordinance relating to hazardous substances now or hereafter in existence, and in
any regulations promulgated thereunder.
(d) Any term not otherwise defined in this Addendum shall have the meaning
provided to it in the Lease Agreement.
3. Except as expressly supplemented by this Addendum, the Lease Agreement
shall remain in full force and effect.
WITNESS the due execution hereof with intent to be legally bound.
ATTEST:
Executive Secretary
MIFFLIN COUNTY INDUSTRIAL
DEVELOPMENT CORPORATION (Landlord)
C-COR ELECTRONICS (Tenant)
/s/Richard E. Perry
Chairman/CEO
EXHIBIT A - DESCRIPTION OF PREMISES
Situated in the Township of Armagh, County of Mifflin and Commonwealth of
Pennsylvania:
ALL that certain parcel of land situate in the Old Mifflin County airport
location to the East of the public highway known as US Route No. 322 between
Milroy on the North and Reedsville on the South, in Armagh Township, Mifflin
County, Pennsylvania, bounded and described as follows:
BEGINNING at an iron pin found at the northeastern corner of the premises within
described, at the southern side of a public right of way known as Progress
Avenue, corner of lands now or formerly of PML Group, said pin being South 68
24' 40" E, 1500 feet from a point in the eastern right of way line of said
highway; thence along lands of PML Group and Reed Hall, S 22 18' 48" W, 930.21
feet to a set iron pin; thence along lands of Grantors, and now or formerly of
John H. Miller, N 67 24' 31" W, passing through an iron pin found at 213.03
feet, a total distance of 413.03 feet to another found iron pin at corner;
thence along lands of said Miller, S 22 35' 29" W, 400 feet to an iron pin set
in the northern line of a public street known as Royal Street; thence along the
northern side of Royal Street, N 67 24' 31" W, 335.03 feet to an iron pin set at
the corner; thence alone residue lands of Grantor, N 22 18' 56" E, 1317.10 feet
to a point in the southern side of Progress Avenue; thence along the southern
side of Progress Avenue, S 68 24' 40" E, 750 feet to an iron pin, the place of
beginning; and containing 19.0 acres and being identified and described as
Parcel No. 1 in a plan of survey of Samuel P. Sherman, P.L.S., dated 2/17/86 and
also being identified as Mifflin County Tax Assessment No. 12-06-IOOS.
EXHIBIT B
ARMAGH TOWNSHIP SUPERVISORS
MIFFLIN COUNTY
P.O. BOX 396
MILROY, PENNSYLVANIA 17063
November 10, 1994
Mifflin County Industrial
Development Corporation
1 Belle Avenue
Lewistown, PA 17044
Attention: Mr. Robert Postal
Dear Mr. Postal:
This is to advise you of the following:
1. As of this date, Armagh Township does not have a zoning ordinance.
We agree that the use of the property is acceptable for manufacturing purposes.
2. The premises is not located in the 100 year flood plain.
If you need any clarification of the above, call me.
Sincerely,
/s/Brenda E. Aumiller, Secretary
ARMAGH TOWNSHIP SUPERVISORS
EXHIBIT C
ACKNOWLEDGMENT OF COMMENCEMENT DATE
Intending to be legally bound hereby, Landlord and Tenant hereby covenant and
agree that the Commencement Date of the foregoing Lease/Option to Purchase
Agreement is November 15,1994. IN WITNESS WHEREOF, Landlord and Tenant have
caused this Lease to be executed and their respective seals to be affixed, this
10th day of November, 1994.
Tenant: C-COR Electronics, Inc.
/s/Richard E. Perry
Chairman/CEO
Attest:
/s/Jack B. Andrews
Secretary
Landlord: Mifflin County Industrial Development Corporation
FY 96 - C-COR ELECTRONICS, INC. PROFIT INCENTIVE PLAN
The Profit Incentive Plan (PIP) applies to all eligible employees and is based
entirely on the financial performance of the Company. The Board reserves the
right to review, modify and approve both Plans prior to the beginning of each
fiscal year.
PROFIT INCENTIVE PLAN
The Company-wide performance target for awarding PIP and making a payout is each
fiscal year's pre-tax, pre-bonus earnings.
Pre-Tax, Pre-PIP Profit Maximum PIP as a Percent
Target for Award: of Pre-tax, Pre-PIP Profit:
1. Loss and up to $2M profit None
2. Specific ranges: $2K up to $4K 10%
$4M up to $6M 15%
3. Less than 60% of prior year None
4. 60% up to 90% of prior year 10%
5. 90% up to 110% of prior year 15%
6. 11O% and above of prior year 20%
7. Maximum individual PIP capped at 35% of employee's base pay except for
Officers whose cap is at 75% of base pay.
No PIP will be paid on profits less than $2M and on profits less than 60% of the
prior year's. In cases where the PIP calculation is applicable in two different
target ranges, the lower amount should be paid.
Of the total PIP pool, 15% will be initially allocated for eligible Officers. If
the number of eligible Officers change from 6, this allocation will be adjusted
by 2.5% of the total PIP amount for each Officer change.
Employee PIP awards will be in the ratio of the employee's base annual salary at
fiscal year-end to the total base annual salaries of all eligible employees in
his/her class, i.e. officers vs. others, assuming all personnel were employed
the full fiscal year. Employees with less than a full fiscal year's employment
will be allocated their PIP based on a pro rate basis on time employed, provided
the employee worked one full quarter and is an employee at the close of the
fiscal year.
Quarterly payments may be made from this Plan based on each quarter's financial
results and the fiscal year's forecast. This determination will be made by the
Compensation Committee of the Board of Directors. Each quarter's payment will
not exceed 1/8 of the total year's forecasted limit and the total quarterly
payments will be deducted from the year-end PIP amount. All eligible employees
must have been C-COR employees for a full quarter to earn a quarterly PIP.
<TABLE>
<CAPTION>
C-COR Electronics, Inc.
Computation of Earnings Per Share
(in thousands except per share data)
Year Ended Year Ended Year Ended
June 30, 1995 June 24, 1994 June 25, 1993
<S> <C> <C> <C>
Primary
Average Shares Outstanding 9,332 9,133 9,058
Net effect of dilutive stock
options-based on the
treasury stock method using
average market price 527 221 127
Total(1) 9,859 9,354 9,185
Net income (loss) $8,315 $4,032 $3,389
Net income (loss) per share(1) $0.84 $0.43 $0.37
Fully Diluted
Average Shares Outstanding 9,332 9,133 9,058
Net effect of dilutive stock
options-based on the
treasury stock method using
the year-end market price of
higher than average market
price 568 306 140
Total(1) 9,900 9,439 9,198
Net income (loss) $8,315 $4,032 $3,389
Net income (loss) per share(1) $0.84 $0.43 $0.37
<FN>
(1) Adjusted to reflect a two-for-one stock split effective December 5, 1994.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Selected Financial Data
(in thousands of dollars except per share data)
Fiscal Year Ended 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Income Statement data
Net Sales $137,441 $75,046 $55,985 $52,171 $32,732
Net Income (Loss) 8,315 4,032 3,389 2,280 (3,452)
Net Income (Loss)
Per Share (1) 0.84 0.43 0.37 0.25 (0.39)
Balance sheet data
(at period end)
Working Capital $ 24,442 $25,061 $22,072 $18,824 $15,574
Total Assets 87,661 49,493 37,316 33,915 30,237
Total Indebtedness 22,623 501 588 930 2,788
Shareholders' Equity 44,725 34,139 29,499 25,728 23,444
Return On Equity 21.1% 12.8% 12.3% 9.4% -
<FN>
(1) Adjusted to reflect a two-for-one stock split effective December 5, 1994.
</FN>
</TABLE>
Results of Operations
C-COR's net sales for the year ended June 30, 1995, were $137,441,000 worldwide.
This is an 83% increase compared to fiscal year 1994's net sales of $75,046,000
and a 145% increase compared to fiscal year 1993's net sales of $55,985,000.
C-COR's traditional and new customers in the communications industry continue to
position themselves to participate in an evolving and dynamic multimedia
communications market, both domestically and internationally. Sales in the
United States were $83,864,000 in fiscal year 1995. This is a 50% increase
compared to fiscal year 1994's U.S. sales of $56,013,000 and a 99% increase
compared to fiscal year 1993's U.S. sales of $42,132,000. This domestic sales
growth for fiscal years 1995 and 1994 is a direct result of intense competition
among cable television (CATV) operators and telephone companies to improve their
communication networks, resulting in a demand for a variety of products.
Legislation, pending in the U.S. Congress, seeks to deregulate domestic
communications, bringing the benefits of competition to telephone and video
services. As competition stimulates increases in service demand, both telephone
and CATV operators will require upgraded network infrastructure, which could
impact equipment suppliers such as C-COR favorably.
C-COR's international sales for fiscal year 1995 were $53,577,000. This is a
181% increase compared to fiscal year 1994's international sales of $19,033,000
and a 287% increase compared to fiscal year 1993's international sales of
$13,853,000. The sales growth in the international marketplace for fiscal year
1995 is attributable to increased sales in Canada, as well as in Europe, Asia
and Latin America, due to global expansion of communication networks.
International sales increased 37% in fiscal year 1994 versus 1993 primarily due
to increased sales activity in Canada.
In order to better position C-COR to meet the demands in both the domestic and
international marketplaces, several significant steps were taken to increase
capacity. First, C-COR completed construction of a new 90,000 square foot
manufacturing and support services facility at its State College, Pennsylvania,
headquarters. Secondly, in December 1994, the company opened another 60,000
square foot manufacturing facility in Reedsville, Pennsylvania. The increase in
capacity as a result of expansion contributed heavily to C-COR's fourth quarter
revenues of $50,172,000.
C-COR's gross margin percentage in fiscal year 1995 was 28%. This compares to
32% in fiscal year 1994 and 36% in fiscal year 1993. The reduction in gross
margin percentage in fiscal year 1995 versus 1994 is attributable to several
factors. C-COR expanded its manufacturing work force by 61% from the beginning
until the end of fiscal year 1995, primarily due to hiring at the new Reedsville
facility in the second half of fiscal year 1995. As a result, higher unfavorable
manufacturing variances were experienced due to a decline in productivity as new
employees were trained and processes were developed at the new plant. In
addition, start-up costs related to opening the Reedsville facility impacted
manufacturing overhead, and ultimately gross margins, in the second half of
fiscal year 1995. The decrease in gross margin percentage in fiscal year 1994
versus fiscal year 1993 was primarily due to higher unfavorable manufacturing
variances because of new product introduction efforts and a significant
expansion of C-COR's manufacturing work force.
Selling and administrative expenses in fiscal year 1995 were $19,077,000, an
increase of 43% over fiscal year 1994 and 73% over fiscal year 1993. The
majority of the increase in fiscal year 1995 can be associated with the
establishment and staffing of a new sales office in Denver, Colorado, in
January, 1995. In addition, sales activities increased as a result of an
expanding international marketplace, previously discussed, as well as increases
in marketing costs resulting from new product introductions. C-COR's total
headcount increased 55% over fiscal year 1994, resulting in increased payroll
expenses, as well as human resource related expenses. Administrative expense
also increased as C-COR prepares to update its corporate information system. The
system is scheduled to be fully operational in the second quarter of fiscal year
1996.
Research and development expenses in fiscal year 1995 were $6,622,000, an
increase of 53% over fiscal year 1994 and 99% over fiscal year 1993. The
majority of the increase in fiscal year 1995 resulted from development costs in
bringing new products to market in the fiber optic area, such as a 3.1 Gb/s
digital fiber optic terminal and C-COR's own LinkNet AM fiber optic system. In
addition, development expenses continued with C-COR's FlexNet series of RF
amplifier products.
In summary, net sales worldwide were the highest in C-COR history at
$137,441,000. C-COR significantly expanded its manufacturing capacity in fiscal
year 1995 in order to address revenue growth opportunities in both its domestic
and international markets. Management anticipates continued growth in fiscal
year 1996. Pricing pressures are expected in the global marketplace as
competition for new and expanded business opportunities are pursued. Management
believes C-COR has positioned itself to compete with these pressures and has
taken and will continue to take steps to improve productivity and efficiency in
the total organization. To that end, C-COR has embarked on a new program called
RapidCycle, with the goal of increasing efficiencies in the order fulfillment
process.
Interest costs were $706,000 in fiscal year 1995 versus $26,000 and $36,000 in
fiscal years 1994 and 1993, respectively. This increase in fiscal year 1995 is
primarily a result of higher borrowings in the short term to finance the
expansion in manufacturing capacity discussed earlier.
C-COR's balance sheet at June 30, 1995, versus June 24, 1994, reflects
significant changes. Inventories increased 52% to $24,983,000 at the end of
fiscal year 1995. Even with this increase, inventory turns for fiscal year 1995
increased over those for fiscal year 1994. Factors that contributed to the
increase in inventory included the purchase of higher dollar value components
required for C-COR's AM fiber optic product line as well as the overall
increase in production volume in fiscal year 1995. In addition, an inventory
investment was required for the start-up of C-COR's Reedsville, Pennsylvania,
manufacturing facility. Accounts receivable increased 112% to $33,142,000 at the
end of fiscal year 1995. The increase is a direct result of C-COR's fourth
quarter revenues of $50,172,000.
Accounts payable and accrued liabilities increased at the end of fiscal year
1995. Accounts payable increased 17% as a direct result of inventory increases
and higher purchases of capital equipment. Accrued liabilities increased 73%.
This increase is attributable to various accruals related to salaries, vacation
expense, warranty expense and profit incentive plan (PIP) expenses.
Liquidity & Capital Resources
Cash, cash equivalents and marketable securities as of June 30, 1995, totaled
$1,938,000, a decrease of $3,151,000 during fiscal year 1995. C-COR's current
ratio at June 30, 1995, decreased to 1.6 from 2.8 at the end of fiscal year
1994. The decrease is a result of C-COR's facility expansion efforts and capital
equipment purchases during fiscal year 1995. Cash used to purchase property,
plant and equipment was $15,371,000 in fiscal year 1995. C-COR maintains a
line-of-credit under which it may borrow the lesser of $23,000,000 or a
percentage of eligible accounts receivable. The company had outstanding
borrowings of $20,451,000 at June 30, 1995. This line-of-credit was unused at
June 24, 1994. The line-of-credit carried a weighted average interest rate of
7.648% at June 30, 1995 versus 6.1875% at June 24, 1994. Borrowings are
collateralized by accounts receivable and inventories, and are subject to
certain covenants. The line-of-credit agreement is committed through October 31,
1995. Approximately $6,451,000 in low interest mortgage funding is anticipated
to be received in early fiscal year 1996 which will offset short-term
borrowings. Funding of $1,952,000 will be through the Pennsylvania Industrial
Development Authority (PIDA) at an interest rate of 2% and a maturity of fifteen
years. This funding represents 40% of the cost of the new 90,000 square foot
facility at C-COR's headquarters in State College, Pennsylvania. An
additional funding commitment has been received through the Pennsylvania
"Sunny Day Fund" which totals $4,499,000, also with an interest rate of 2%.
This funding will be evidenced by two notes, one for $488,000 with maturity
in fifteen years and the other for $4,011,000 with a maturity of up to seven
years.
Net cash and cash equivalents used in operating activities, as reflected in the
accompanying consolidated statements of cash flows, was $9,435,000 in fiscal
year 1995 versus $718,000 in fiscal year 1994. In fiscal year 1993, cash and
cash equivalents provided by operating activities was $7,108,000. The increase
in cash used in operating activities in fiscal year 1995 is attributable to an
increase in accounts receivable due to record-breaking fourth quarter revenues
and increases in inventory levels. Management believes its internal and external
sources of funds and working capital are adequate to meet the anticipated needs
of the Company subject to requirements that additional growth or strategic
development might dictate.
Inflation
Inflation was an insignificant factor in fiscal year 1995's results. There were
no significant price increases during the three years prior to June 30, 1995.
<TABLE>
<CAPTION>
Consolidated Balance Sheets
(in thousands of dollars except share data)
June 30 June 24
1995 1994
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents (Note A) $ 1,545 $ 1,361
Marketable Securities (Notes A and B) 393 3,728
Accounts Receivable, less allowance of $657 in 1995;
$348 in 1994 (Note M) 33,142 15,640
Inventories (Note C) 24,983 16,464
Deferred taxes (Note I) 2,873 1,491
Other current assets 1,210 563
Total Current Assets 64,146 39,247
Property, Plant and Equipment, net (Notes D and G) 22,129 8,249
Intangible Assets and Other Long-term Assets,
net of Accumulated Amortization of $3,001 in 1995;
$2,387 in 1994 (Notes A and E) 1,386 1,997
Total Assets $87,661 $49,493
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable $ 9,286 $ 7,918
Accrued Liabilities (Note K) 8,959 5,181
Income taxes 872 1,030
Line-of-Credit (Note F) 20,451 0
Current portion of long-term debt (Note G) 136 57
Total Current Liabilities 39,704 14,186
Long-term debt, less curent portion (Note G) 2,036 444
Deferred Taxes (Note I) 828 405
Other Long-term Liabilities 368 319
Shareholders' Equity (Notes A and H)
Preferred Stock, no par; authorized 2,000,000; issued, none
Common Stock, $.10 par, authorized shares 24,000,000 in 1995
and 8,000,000 in 1994; issued shares of 9,450,272 in 1995
and 4,596,244 in 1994 945 460
Additional paid-in capital 16,915 15,151
Retained earnings 26,891 18,576
Translation adjustment (7) (9)
Net unrealized loss on Marketable Securities (19) (39)
Total Shareholders' Equity 44,725 34,139
Total Liabilities and Shareholders' Equity $87,661 $49,493
<FN>
See notes to Consolidated Financial Statements
</FN>
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statements of Income
(in thousands except per share data)
Year Ended June 30 June 24 June 25
1995 1994 1993
<S> <C> <C> <C>
Net Sales $137,441 $ 75,046 $55,985
Cost and Expenses
Cost of Sales 98,359 50,981 35,924
Selling and Administrative 19,077 13,319 11,056
Research and Product Development 6,622 4,337 3,326
Interest 706 26 36
Other Expense, net (Note L) 281 337 593
125,045 69,000 50,935
Income before Income Taxes 12,396 6,046 5,050
Income Taxes (Note I)
Current 5,054 2,223 1,740
Deferred (973) (209) (79)
4,081 2,014 1,661
Net Income $ 8,315 $ 4,032 $ 3,389
Net Income Per Share (Note A) $ 0.84 $ 0.43 $ 0.37
Weighted Average Common Shares
and Common Share Equivalents 9,859 9,354 9,184
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
(in thousands of dollars)
Year Ended June 30 June 24 June 25
1995 1994 1993
<S> <C> <C> <C>
Operating Activities
Net Income $ 8,315 $ 4,032 $ 3,389
Adjustments to reconcile net income to net cash
and cash equivalents (used in) provided by operating activities
Depreciation and amortization 3,921 2,347 1,949
Provision for doubtful accounts 309 72 83
Provision for deferred retirement salary plan 49 (85) 85
Tax benefit deriving from stock option exercise and sale activity 898 156 90
Issue common stock to retirement plan 0 65 71
Issue common stock to employee stock purchase plan 67 41 9
Loss (gain) on sale of marketable securities 68 12 (1)
Loss (gain) on sale of property, plant and equipment 13 (36) 0
Changes in operating assets and liabilities:
Accounts receivable (17,811) (7,353) 3,253
Inventories (8,519) (7,018) (1,655)
Other assets (647) (210) (85)
Accounts payable 1,253 5,453 233
Accrued liabilities 3,780 1,577 (781)
Income taxes payable (158) 339 588
Deferred income taxes (973) (110) (120)
Net cash and cash equivalents (used in) provided by operating
activities (9,435) (718) 7,108
Investing Activities
Purchase of property, plant and equipment (15,371) (4,106) (1,922)
Purchase of marketable securities 0 (2,588) (4,054)
Proceeds from sale of marketable securities 3,184 1,725 937
Proceeds from maturity of marketable securities 115 178 0
Proceeds from sale of property, plant and equipment 12 11 12
Net cash and cash equivalents used in investing activities (12,060) (4,780) (5,027)
Financing Activites
Payment of debt and capital lease obligations (56) (87) (342)
Proceeds from line-of-credit 58,707 1,300 0
Payment of line-of-credit (38,256) (1,300) 0
Proceeds from exercise of stock options 1,284 388 185
Net cash and cash equivalents provided by (used in) financing
activities 21,679 301 (157)
Increase (decrease) in cash and cash equivalents 184 (5,197) 1,924
Cash and equivalents at beginning of year 1,361 6,558 4,634
Cash and cash equivalents at end of year $ 1,545 $ 1,361 $ 6,558
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statement of Shareholders' Equity
(in thousands of dollars)
Net Unrealized
Additional Gain (Loss) on
Common Paid-in Retained Translation Marketable
Stock Capital Earnings Adjusment Securities
<S> <C> <C> <C> <C> <C>
Balance, June 26, 1992 $452 $14,153 $11,155 $(32) $ 0
Net Income 3,389
Exercise of stock options 3 273
Issue shares to retirement plan 70
Issue shares to employee stock purchase plan 9
Foreign currency translation adjustment 27
Balance, June 25, 1993 455 14,505 14,544 (5) 0
Net Income 4,032
Exercise of stock options 4 540
Issue shares to retirement plan 1 65
Issue shares to employee stock purchase plan 41
Foreign currency translation adjustment (4)
Net unrealized loss on marketable securities (39)
Balance, June 24, 1994 460 15,151 18,576 (9) (39)
Net Income 8,315
Exercise of stock options 19 2,163
Issue shares to employee stock purchase plan 67
Two-for-one stock split 466 (466)
Foreign currency translation adjustment 2
Net unrealized loss on marketable securities 20
Balance, June 30, 1995 $945 $16,915 26,891 $ (7) $(19)
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
Notes to Consolidated Financial Statments
June 30, 1995 and June 24, 1994
(in thousands of dollars except share and per share data)
The Company designs and manufactures high-quality electronic equipment used in a
variety of communication networks worldwide. Principal customers include cable
television operators, telephone companies, major broadcast markets and
installers of broadband communication networks.
A.Summary of Significant Accounting Policies
Principles of Consolidation: The consolidated financial statements include the
accounts of the Company and its foreign and domestic subsidiaries. Intercompany
accounts and transactions have been eliminated in consolidation.
Reporting Periods: Management has adopted a fiscal year which ends on the last
Friday in June. For the reporting periods presented herein, the years ended on
June 30, 1995, June 24, 1994 and June 23, 1993. These years contained 53, 52 and
52 weeks, respectively.
Inventories: Inventories are stated at the lower of cost or market. Cost is
determined on the first-in, first-out method.
Property, Plant, and Equipment: Property, plant, and equipment, which includes
leased property under capital leases, is stated at cost. Depreciation or
amortization is calculated using the straight-line method over the estimated
useful lives of the assets.
Intangible Assets: Intangible assets include goodwill arising from excess
purchase price paid over the fair value of the net assets acquired with the
purchase of COMLUX and DataCable B.V., and a covenant not-to-compete. These
intangibles are being amortized using straight-line amortization over periods of
5 to 12 years.
Income Taxes: The Company adopted Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" (Statement 109) on June 26, 1993. The
cumulative effect of this change in accounting principle was not material to the
financial position of the Company. Thus, the cumulative effect was not portrayed
separately in the consolidated statement of income for the fiscal year ended
June 24, 1994. Under the asset and liability method of Statement 109, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Under Statement 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes the
enactment date.
Shareholders' Equity: In fiscal year 1995, a two-for-one stock split was
approved by the Company's Board of Directors. The additional shares were
distributed on December 5, 1994 to shareholders of record at the close of
business on November 4, 1994 on the basis of one additional share for each share
held. Par value of $466 for the additional shares issued was transferred from
Additional Paid-in Capital to Common Stock. All prior year per share and
weighted average share disclosures have been restated to reflect the two-for-one
stock split. The par value of Common Stock remained the same at $.10 (ten cents)
per share. Also, during fiscal year 1995, the shareholders of the Company
approved a proposal to amend the Amended and Restated Articles of Incorporation
to increase the number of shares of common stock authorized from 8,000,000 to
24,000,000.
Cash Equivalents: The Company considers all highly liquid investments with a
maturity of three months or less when purchased, to be cash equivalents. Cash
equivalents are reflected at the lower of cost or market.
Marketable Securities: Marketable securities at June 30, 1995 consist of
municipal bonds and equity securities. The Company adopted the provisions of
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (Statement 115) at June 24, 1994.
Under Statement 115, the Company classifies all of its marketable securities as
available-for-sale and records them at fair value. Unrealized holding gains and
losses, net of the related tax effect, are excluded from earnings and are
reported as a separate component of shareholders' equity until realized.
B. Marketable Securities
The Company adopted Statement 115 at June 24, 1994. The impact of this change in
accounting principle resulted in a net decrease in marketable securities of $65
and a net decrease in shareholders' equity of $39 at June 24, 1994, representing
the after-tax impact. Marketable securities as of June 30, 1995 and June 24,
1994 consisted of the following:
<TABLE>
<CAPTION>
June 30, 1995
Gross Gross
Unrealized Unrealized
Amortized Holding Holding Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Available-for-sale:
Municipal bonds $ 422 $ 0 $(30) $ 392
Equity securities 2 0 (1) 1
$ 424 $ 0 $(31) $ 393
June 24, 1994
Available-for-sale:
Municipal bonds $3,540 $10 $(48) $3,502
Equity securities 253 0 (27) 226
$3,793 $10 $(75) $3,728
</TABLE>
<TABLE>
<CAPTION>
Maturities of investment securities classified as available-for-sale at June 30,
1995 were as follows:
Amortized Fair
Cost Value
<S> <C> <C>
Available-for-sale:
Due after one year
through five years $422 $392
Equity securities 2 1
$424 $393
</TABLE>
<TABLE>
<CAPTION>
C. Inventories
June 30 June 24
1995 1994
<S> <C> <C>
Finished goods $ 4,751 $ 4,241
Work-in-process 3,826 4,157
Raw materials 16,406 8,066
$24,983 $16,464
</TABLE>
<TABLE>
<CAPTION>
D. Property, Plant, and Equipment
June 30 June 24
1995 1994
<S> <C> <C>
Land $ 417 $ 375
Building and improvements
under capital lease 1,727 0
Building 7,410 2,117
Machinery and equipment
under capital lease 137 552
Machinery and equipment 25,580 15,645
Leasehold improvements 665 581
35,936 19,270
Less accumulated depreciation
and amortization 13,807 11,021
$22,129 $ 8,249
</TABLE>
<TABLE>
<CAPTION>
E. Intangible Assets
June 30 June 24
1995 1994
<S> <C> <C>
Cost of intangibles:
Covenant not-to-compete $2,000 $2,000
Goodwill - COMLUX 1,752 1,752
Goodwill - DataCable B.V. 224 224
3,976 3,976
Less accumulated amortization:
Covenant not-to-compete 2,000 1,600
Goodwill - COMLUX 844 675
Goodwill - DataCable B.V. 157 112
3,001 2,387
Net Book Value $ 975 $1,589
</TABLE>
F. Line-of-credit
At June 30, 1995, the Company had short-term borrowings of $20,451 under a
revolving line-of-credit as a result of expansion of production operations and
facilities. On this line-of-credit, the Company may borrow the lesser of $23,000
or a percent of eligible accounts receivable. The borrowings bear interest at
variable rates generally equal to the London Interbank Offered Rate (LIBOR) plus
1.35%. The weighted average interest rate equaled 7.648% at June 30, 1995 and
6.1875% at June 24, 1994. Interest is payable in 30 and 90 days as billed. The
line-of-credit agreement is committed through October 31, 1995. Borrowings are
collateralized by accounts receivable and inventories, and are subject to
certain covenants. This line-of-credit was unused at June 24, 1994.
<TABLE>
<CAPTION>
G. Long-term Debt
June 30 June 24
1995 1994
<S> <C> <C>
Mortgage payable $ 402 $434
Capital lease obligations 1,770 67
2,172 501
Less current portion 136 57
$2,036 $444
</TABLE>
Mortgage Payable: The Company obtained mortgage funding through the Pennsylvania
Industrial Development Authority (PIDA) of $539 for construction of the Tipton,
Pennsylvania, manufacturing facility. The PIDA mortgage has an interest rate of
3% and requires monthly principal and interest payments of $4 through January 1,
2006. Assets totaling $1,475 secure the mortgage. The mortgage balance at June
30, 1995 was $402.
The Company has obtained a commitment for mortgage funding through the
Pennsylvania Industrial Development Authority (PIDA) for 40% of the cost of
building expansion at its manufacturing facility in State College, Pennsylvania,
up to $1,952. The PIDA mortgage will have an interest rate of 2%, which is
contingent upon meeting certain job creation commitments. The funds will be made
available at the completion of the project. Monthly payments of principal and
interest will be required through the year 2010 (fifteen years). A commitment
for additional funding for the expansion and renovation of the State College
facility has been obtained from the Pennsylvania "Sunny Day Fund." This funding
commitment totals $4,499 at an interest rate of 2%. This interest rate is also
contingent upon meeting certain job creation commitments. This funding will be
evidenced by two notes, the first of which is for $488 maturing in approximately
15 years and the other for $4,011 which will mature within a term equal to the
lesser of 7 years or 80% of the useful life of newly purchased equipment. The
Company expects that these funds will be made available in early fiscal year
1996.
Capital Lease Obligations: The Company has entered into a Lease/Option to
Purchase Agreement with the Mifflin County Industrial Development Corporation
(MCIDC) for a building and improvements located in Reedsville, Pennsylvania, as
part of an expansion of its manufacturing facilities. The Company is the
guarantor of several mortgage commitments by the MCIDC for financing the $1,727
cost of the project. The lease calls for monthly payments of $14 equal to the
monthly principal and interest of the various mortgage commitments to the MCIDC.
The term of the lease is for 15 years with an option to purchase the leased
premises at any time during the lease term for the outstanding balance of the
mortgage commitments plus closing costs. The mortgage commitments carry a
weighted average interest rate of 4.7%. For financial accounting purposes, the
lease is accounted for as a capital lease and, accordingly, an asset and
liability has been recorded. This was a non-cash investing and financing
transaction.
<TABLE>
<CAPTION>
Long-term debt at June 30, 1995 has scheduled maturities as follows:
Fiscal year ending
<S> <C>
1996 $ 136
1997 141
1998 131
1999 136
2000 142
Thereafter 1,486
$2,172
</TABLE>
Total interest paid on line-of-credit (described in Note F) and long-term debt
was $608, $25, and $36 during fiscal years 1995, 1994, and 1993, respectively.
Operating Leases: The Company leases real property and other equipment under
operating leases. Certain leases are renewable and provide for the payment of
real estate taxes and other occupancy expenses. The future minimum lease
payments for noncancelable leases with remaining lease terms in excess of one
year are as follows:
<TABLE>
<CAPTION>
Fiscal year ending
<S> <C>
1996 $ 654
1997 591
1998 506
1999 203
2000 8
$1,962
</TABLE>
Rent expense was $980, $710, and $538 for fiscal years ended 1995, 1994, and
1993, respectively.
H. Stock Options
The Company's stock option plans provide for the grant of options to key
employees with an exercise price per share of at least the fair market value of
such shares on the date prior to grant, and to directors with an exercise price
equal to the fair market value on the date of grant. Options granted to certain
employees are exercisable in cumulative annual installments of 20% per year
beginning one year after the date of grant. Options granted to non-employee
directors are exercisable one year after grant. Certain options held by the
Chairman are exercisable immediately. All shares and exercise prices have been
adjusted for the two-for-one stock split effective December 5, 1994.
<TABLE>
<CAPTION>
Option information for the three years ended June 30, 1995 is as follows:
Shares
<S> <C>
OPTIONS OUTSTANDING
AT JUNE 26, 1992 619,950
Options granted during the year:
$5.875 to $8.375 per share 220,650
Options exercised during the year:
$1.375 to $7.25 per share ( 54,900)
Options terminated during the year:
$3.0625 to $7.0625 per share ( 78,380)
OPTIONS OUTSTANDING
AT JUNE 25, 1993 707,320
Options granted during the year:
$6.00 to $11.625 per share 365,240
Options exercised during the year:
$1.375 to $7.375 per share ( 76,840)
Options terminated during the year:
$3.0625 to $9.25 per share ( 81,590)
OPTIONS OUTSTANDING
AT JUNE 24, 1994 914,130
Options granted during the year:
$11.6875 to $34.50 per share 198,594
Options exercised during the year:
$1.375 to $11.6875 per share (254,640)
Options terminated during the year:
$3.0625 to $26.375 per share (105,924)
OPTIONS OUTSTANDING AT JUNE 30, 1995 752,160
(prices ranging from $2.75 to $34.50 per share)
Total options exercisable at June 30, 1995 were 301,566.
</TABLE>
<TABLE>
<CAPTION>
I. Income Taxes
Income tax expense consists of the following components:
Year Ended June 30 June 24 June 25
1995 1994 1993
<S> <C> <C> <C>
Current:
Federal $3,692 $1,916 $1,397
State 787 316 167
Foreign 575 (9) 176
5,054 2,223 1,740
Deferred:
Federal (807) (182) (76)
State (166) (27) (3)
(973) (209) (79)
$4,081 $2,014 $1,661
</TABLE>
<TABLE>
<CAPTION>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at June 30, 1995 and
June 24, 1994 are presented below:
June 30 June 24
1995 1994
<S> <C> <C>
Gross deferred tax assets:
Accounts receivable, due to
allowance for doubtful accounts $ 208 $ 119
Inventories, due to additional costs
inventoried for tax purposes pursuant
to the Tax Reform Act of 1986 724 537
Inventories due to accrual for obsolescence 484 200
Vacation expense accrual for
accounting purposes 415 295
Workers' compensation expense accrual for
accounting purposes 221 0
Warranty expense accrual for
accounting purposes 695 231
Employee benefit plan accrual
for accounting purposes 147 128
Other 126 109
Total gross deferred tax assets 3,020 1,619
Less valuation allowance 0 0
Net total deferred tax assets 3,020 1,619
Gross deferred tax liabilities:
Plant and equipment principally due to
differences in depreciation (975) (533)
Total gross deferred tax liabilities (975) (533)
Net deferred tax assets $2,045 $1,086
Reflected on attached consolidated
balance sheets as:
Current deferred asset $2,873 $1,491
Non-current deferred liability, net (828) (405)
Net deferred tax asset $2,045 $1,086
</TABLE>
A valuation allowance is required under Statement 109 to reduce the potential
deferred tax asset when it is more likely than not that all or some portion of
the potential deferred tax asset will not be realized due to the lack of
sufficient taxable income. Based on the weight of all available evidence, the
Company concludes that a valuation allowance is not needed.
The components of deferred income tax expense (benefit) resulting from timing
differences in the recognition of income and expense for income tax and
financial reporting purposes, pursuant to the deferred method under APB Opinion
11, were as follows at June 25, 1993:
<TABLE>
<S> <C>
Inventory costs $ 12
State income taxes, net of federal benefit (2)
Accrued liabilities (86)
Other, net (3)
$(79)
</TABLE>
<TABLE>
<CAPTION>
A reconciliation of the effective income tax rate with the statutory federal
income tax rate is as follows:
Year Ended June 30 June 24 June 25
1995 1994 1993
<S> <C> <C> <C>
Statutory rate 35.0 % 34.0 % 34.0 %
State income taxes,
net of federal tax 3.3 4.8 2.1
Tax effect of foreign
income and losses 1.9 0 0
Tax effect of
foreign sales
corporation (2.7) (3.2) (2.0)
Other (4.6) (2.3) (1.2)
32.9 % 33.3 % 32.9 %
</TABLE>
Cash paid for income taxes was $3,652 in 1995, $1,468 in 1994, and $1,233 in
1993.
J. Retirement Plans
The Company has a retirement savings and profit sharing plan which qualifies
under Section 401(k) of the Internal Revenue Code. Participation is available to
all employees meeting minimum service and age requirements.
The Company also has a deferred retirement salary plan which is limited to
certain officers. Total expenses for these plans were $808, $321, and $444 for
fiscal years ended 1995, 1994, and 1993, respectively.
<TABLE>
<CAPTION>
K. Accrued Liabilities
Year Ended June 30 June 24
1995 1994
<S> <C> <C>
Accrued incentive plan expense $2,416 $1,127
Accrued vacation expense 1,295 928
Accrued salary expense 819 930
Accrued warranty expense 1,754 602
Accrued other 2,675 1,594
$8,959 $5,181
</TABLE>
<TABLE>
<CAPTION>
L. Other Expense and (Income)
Year Ended June 30 June 24 June 25
1995 1994 1993
<S> <C> <C> <C>
Investment income $(126) $(352) $(360)
Loss (gain) on
sale/write-down of investments 68 99 (1)
(Gain) loss on foreign
currency transactions (158) 63 360
Amortization of intangibles 614 614 614
Loan acquisition costs 17 12 0
Other, net (134) (99) (20)
$ 281 $ 337 $ 593
</TABLE>
M. Concentration of Credit Risk
The Company's customers are primarily in the cable television (CATV) industry.
The Company performs periodic credit evaluations of its customers' financial
conditions and generally does not require collateral. June 30, 1995 and June 24,
1994 accounts receivable from customers in the CATV industry were approximately
$29,279 and $14,185, respectively. Receivables are generally due within 30 days.
Credit losses are provided for in the consolidated financial statements and have
consistently been within management's expectations.
Sales to two customers were $29 million (21%) and $26 million (19%),
respectively, in fiscal year 1995. Sales to two customers were $19 million (25%)
and $13 million (17%), respectively, in fiscal year 1994. Sales to one customer
were $6.1 million (11%) in fiscal year 1993.
<TABLE>
<CAPTION>
N. Quarterly Results of Operations (Unaudited)
The following is a summary of quarterly results of operations for the 1995 and
1994 fiscal years:
1995 First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Net sales $27,554 $29,730 $29,985 $50,172 (2)
Gross profit 8,685 8,865 7,526 14,006
Net income 2,195 1,945 686 3,489
Net income
per share(1) $ 0.23 $ 0.20 $ 0.07 $ 0.35
1994 First Second Third Fourth
Quarter Quarter Quarter Quarter
Net Sales $15,719 $15,600 $17,828 $25,899
Gross profit 5,477 5,572 5,294 7,722
Net income 1,136 1,008 472 1,416
Net income
per share(1) $ 0.12 $ 0.11 $ 0.05 $ 0.15
<FN>
(1) Adjusted to reflect a two-for-one stock split effective December 5, 1994.
(2) The sales increase in quarter four is attributable, in part, to increased
demand for the Company's FlexNet series of 750 MHz amplifiers and strong sales
internationally.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Segment Information
The Company and subsidiaries operate in one industry segment, but in various
geographic areas as indicated by the following:
Year ended June 30, 1995
Sales to unaffiliated customers U.S. Canada Europe Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Domestic $ 83,864 $ 6,867 $ 8,504 $ 0 $ 99,235
Export 38,206 0 0 0 38,206
Transfers between geographic areas 10,108 0 0 (10,108) 0
Total Revenue $132,178 $ 6,867 $ 8,504 $(10,108) $137,441
Pretax income $ 9,719 $ 1,555 $ 1,122 $ 0 $ 12,396
Identifiable assets at June 30, 1995 $ 79,129 $ 3,213 $ 5,319 $ 0 $ 87,661
Year ended June 24, 1994
Domestic $ 56,013 $ 3,853 $ 2,193 $ 0 $ 62,059
Export 12,987 0 0 0 12,987
Transfers between geographic areas 3,321 0 0 (3,321) 0
Total Revenue 72,321 3,853 2,193 3,321 75,046
Pretax income 5,057 1,249 (260) 0 6,046
Identifiable assets at June 24, 1995 46,009 1,659 1,825 0 49,493
Year ended June 25, 1993
Domestic $ 42,132 $ 2,081 $ 4,460 $ 0 $ 48,673
Export 7,312 0 0 0 7,312
Transfers between geographic areas 3,200 0 0 (3,200) 0
Total Revenue $ 52,644 $ 2,081 $ 4,460 $ (3,200) 55,985
Pretax income $ 3,425 $ 578 $ 1,047 $ 0 5,050
Identifiable assets at June 25, 1995 $ 33,463 $ 839 $ 3,014 $ 0 $ 37,316
</TABLE>
Most transfers between geogrpahic areas are made at the cost of producing the
items plus a profit margin. Identifiable assets are those assets identified with
the operations in each geographic area.
Stock Listing
The Common Stock of C-COR Electronics, Inc., traded in the Nasdaq National
Market, was first offered to the public in February 1981. The Nasdaq symbol is
CCBL. The range of high and low price information as reported by Nasdaq follows:
<TABLE>
<CAPTION>
Quarter Ending High Price Low Price
<S> <C> <C>
September 30, 1993 8 7/8 5 3/4
December 31, 1993 9 3/4 8 1/8
March 31, 1994 9 7/8 7 5/16
June 30, 1994 12 3/8 7 1/8
September 30, 1994 19 5/8 11 1/2
December 31, 1994 36 20 1/2
March 31, 1995 31 3/8 18 3/4
June 30, 1995 28 17 1/2
</TABLE>
High and low prices have been adjusted to reflect a two-for-one stock split on
December 5, 1994. C-COR Electronics, Inc. has never paid a dividend. As of June
30, 1995, there were 624 shareholders of record of Common Stock.
General Counsel
McQuaide, Blasko, Schwartz,
Fleming & Faulkner, Inc.
State College, Pennsylvania
SEC Counsel
Ballard Spahr Andrews & Ingersoll
Philadelphia, Pennsylvania
Independent Auditors
KPMG Peat Marwick LLP
State College, Pennsylvania
Transfer Agent and Registrar
American Stock Transfer Company
New York, New York
Form 10-K
A copy of the Company's Annual Report on Form 10-K, as filed with the Securities
and Exchange Commission, will be furnished without charge to any shareholder
upon written request. We encourage shareholders whose stock is held by brokers
or banks to call the Investor Relations office at the Company's headquarters
(Telephone: 814-231-4402) to have their names placed on the financial mailing
list, enabling them to receive interim reports.
Subsidiaries of the Registrant: State of Incorporation:
C-COR/Comlux, Inc. Pennsylvania
C-COR Electronics Canada, Inc. Foreign (Canada)
C-COR Electronics Company Delaware
C-COR Electronics Foreign Sales Corporation St. Thomas, V.I.
C-COR Europe B.V. Foreign(Netherlands)
C-COR Europe Holding B.V. Foreign(Netherlands)
C-COR Royalty Corporation Delaware
Consent of Independent Auditors
The Board of Directors
C-COR Electronics, Inc. and Subsidiaries:
We consent to incorporation by reference in the registration statements (No.
2-95959, 33-27440, 33-35208, and 33-66590) on Form S-8 of C-COR Electronics,
Inc. and Subsidiaries of our report dated August 4, 1995, relating to the
consolidated balance sheets of C-COR Electronics, Inc. and Subsidiaries as of
June 30, 1995, and the related consolidated statements of income, shareholders'
equity, and cash flows for each of the years in the three-year period ended June
30, 1995, which report appears in the June 30, 1995 Annual Report to
Shareholders of C-COR Electronics, Inc. and Subsidiaries and is incorporated
herein by reference.
We also consent to incorporation by reference in the registration statements
(No. 2-95959, 3327440, 33-35208, and 33-66590) on Form S-8 of C-COR Electronics,
Inc. and Subsidiaries of our report dated August 4, 1995, relating to the
financial statement schedule as listed at Item 14(a)(2) of the Company's June
30, 1995 Annual Report on Form 10-K, which report appears in the Company's June
30, 1995 Annual Report on Form 10-K.
KPMG Peat Marwick LLP
State College, Pennsylvania
September 25, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,545
<SECURITIES> 393
<RECEIVABLES> 33,799
<ALLOWANCES> 657
<INVENTORY> 24,983
<CURRENT-ASSETS> 64,146
<PP&E> 35,936
<DEPRECIATION> 13,807
<TOTAL-ASSETS> 87,661
<CURRENT-LIABILITIES> 39,704
<BONDS> 0
<COMMON> 945
0
0
<OTHER-SE> 16,915
<TOTAL-LIABILITY-AND-EQUITY> 87,661
<SALES> 137,441
<TOTAL-REVENUES> 137,441
<CGS> 98,359
<TOTAL-COSTS> 25,699
<OTHER-EXPENSES> 281
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 706
<INCOME-PRETAX> 12,396
<INCOME-TAX> 4,081
<INCOME-CONTINUING> 8,315
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,315
<EPS-PRIMARY> 0.84
<EPS-DILUTED> 0.84
</TABLE>
